It has been a while since I wrote about Shark Tank here, but that doesn’t mean I don’t often still get questions about the show.

The most common one? It’s whether I can connect people to Mark Burnett. (If you think I can, perhaps you aren’t ready for the intellectual rigors of pitching the Sharks. Here’s the general application link.)

But there are other things you didn’t know that I could tell you.

Producers get a percentage even if no deal is made.

If you pause the end credits of every episode, you’ll see this:

Scott Jordan, the owner of Scottevest (Season 3) explains, “merely appearing on the show, whether a deal is made or not, I have to give 5% of my “business” or 2% of the profits forever to the producers. So, my appearance was not free. … Free? They make money out of every deal I make from here forward.”

Jordan posted this scan of the pertinent contract clause:

Jordan says he went to great lengths during his segment to speak only about his product, but to make no mention of his brand name that would trigger perpetual equity ownership of his brand by Sony and ABC.

Entrepreneurs who agree to be taped by the show do it because thy think the national television exposure will compensate for the percentage. They may have a point. Most entrepreneurs report their websites are slammed following every broadcast. KissTixx, a lip balm product, saw its Web traffic skyrocket by 3,000% when its segment aired. Rackspace, the server host for Villy Customs bikes, reported 3.2 million hits in a span of just 25 minutes. Litter, a jewelry brand, sold more than $250,000 in goods within 72 hours.

With ratings steadily rising — Shark Tank is now Friday’s #1 show on any network, with more than 6 million viewers per episode — exposure will only lead to even more conversions. Is that worth a 2% royalty of losing 5% of future equity? Many businesspeople think so.

Update: Just before Season Five, there was a huge behind-the-scenes fight over this clause, and it would appear one of the Sharks threatened to quit it it wasn’t removed. I cover the rebellion in this post.

Each pitch begins with 30 seconds of silence.

The entrepreneurs never meet the Sharks before their pitch (this has been true since the pilot, when Tiffany Krumins struck a deal for Ava the Elephant, then called ‘Emmy’), nor do the Sharks know who is coming down the hall once the doors open. All the Sharks know is what the stagehands have pre-set on the oriental rug in front of them.

Then the Entrepreneur is released into the Tank while hand-held camera operators trail their progress down the hall. The visitor is instructed to wait on a spot on the rug and not to speak. This gives Production a time to clear the hand-held camera operators from the set and to get a few static shots of anticipation between the Sharks and the Entrepreneur. Finally, after an adrenaline-drowned, Wild West-style standoff, a cue is given and the business owner/s may commence their pitch.

The nickname for this long, painful pause is “the stare-down,” and it’s edited out for the broadcast, although the havoc it plays with the nerves frequently pays off in TV-ready dividends.

The Sharks are wired.

The control room can prod them to ask questions that need answering or wrap up the negotiations, if necessary. IFB earpieces are common host crutches in the reality show world, but take note that the Shark Tank pre-show title card confirms that the Sharks “invest their own money at their discretion.” You’ll notice, however, that Kevin O’Leary (always in the center chair) is usually the guy who applies pressure at key moments. It would be a dangerous drinking game to swig every time he asked, “What are you going to do?” because he often issues recaps so the editors will have a logical place to stick their commercial breaks.

O’Leary is the Shark who prompts tension because the control room has given him the role of segment narrator. He is a veteran of Canada’s Dragon’s Den, so he knows the format well. His role as the subtle pacemaker is a large measure of his value on this show, since few of his offers are realistic enough to be accepted by most of the Entrepreneurs. He also reliably embodies the soul of venal greed that drives the ethos of the Tank.

This makes O’Leary both the de facto ringmaster and the spoiler who compels the Entrepreneurs to make choices. Is he a plant? All the Sharks are. But whether by forcing decisions or lobbing spoiler offers, O’Leary is almost always the Prompter Shark.

Many deals fall apart.

Just as Judge Judy isn’t performing as a true judge but as a binding arbitrator, the buy-ins we see on Shark Tank are not done deals but actually good faith agreements. Due diligence kills many deals after they are shot. It could be that the patents aren’t airtight, or there’s irregularity in the books, — anything, really, can excuse either party from consummating their union. Nothing’s firm until everyone signs on the dotted line, and that happens off-camera much later.

In the case of one product Kevin Harrington (a Shark from the first two seasons) has sidestepped naming, a pattern of defective merchandise sank the deal. After Season 2 guest Shark Jeff Foxworthy took the bait with HillBilly Brand clothes, he says the owners confessed they only went into the Tank because they wanted publicity. And Season 1’s The Chef in Black, Dorene Humason, told me, her deal hit a rocky road almost immediately when she and her Shark investors clashed over strategy.

“From what I’m told, only about 50% of the deals you see made on Shark Tank actually officially get DONE,” writes Fleetwood Hicks of Villy Customs Beachcruiser Bikes. “As a guest on the show, you have the right to pass on the deal and the Sharks have the same right. The deal made on TV is simply a “good faith” agreement that you will begin the due diligence process. I’ve heard that some companies just go on the show to get PR, but my intentions were to close our deal. ” He did.

The weekly “update” usually shows you the deals that went right. But lots go wrong and you’re never told about them.

Daymond John has called out a plus-size designer named Gayla Bentley for taking his and Barbara’s money and then vanishing. “They’re not going to tell you they’re going to disappear. They’re not going to tell you they’re buying a Mercedes-Benz. They’re not going to tell you that type of stuff. They’re not going to tell you they have tax liens or their wife really owns the company.”

Here I am interviewing Bentley. Tell me—does she look like a scammer to you?

[tube]https://www.youtube.com/watch?v=-51PSXEWTNM[/tube]

They shoot way more than they use.

For many reasons — timing, mood, variety, legal concerns, telegenic performances, complexity — some segments don’t make it to the final broadcast. How many? As many as 40% to half. When I shot on-set interviews during Season 2, several Entrepreneurs interviewed with me that did not make it to the final show edit. (Out of respect for the businesspeople and the show, I did not release those interviews.) For Season 3, the reported ratio was 52 used but 82 shot.

Likewise, some negotiations can go on for an hour or much longer, but the key moments are edited into palatable acts for television. Everything you see is true, none of it is re-taped, and the elements that are crucial to the outcome are included. But rather than drowning viewers in a Shark Tank that subjects viewers to, say, long minutes of going over sales numbers and distribution plans that don’t amount to much, the editors compress events.

Daymond John says the longest interrogation was for a product called Plate Toppers, which went on for 2 hours and 45 minutes. By the end of the segment, the entrepreneur is so tired of standing he’s seen rubbing his legs. But he got the deal.

The pitch for the Nubrella Hands Free Umbrella aired and an update was filmed on location with Daymond John, but that update was yanked from its scheduled broadcast when the deal ran aground. I’m sorry that never saw the light of day. It was pretty funny watching Daymond walk down a public street wearing a plastic umbrella bubble hat on his head.

The ‘stew room’ is on separate sound stage.

The area where Entrepreneurs are interviewed after their pitch is not on the same sound stage as the Tank. The filming location is on another stage nearby. This is mostly so the talking won’t interrupt the filming of the next incoming pitch and also Entrepreneurs can be kept away from the people who are next up in the Tank. After all, nothing will unnerve a pitchman more than seeing the person before them fleeing in tears.

Yes, the Sharks fly into Los Angeles several times a year (often in July and October, if not more) and shoot several marathon days in which 20 or so business pitch, one after the other, with time in between to set up for the next one and get make-up touch-ups. Then the segments are mixed and matched over multiple episodes — which is why Barbara Corcoran and Lori Greiner wear the same outfit week after week. They have to for continuity, so the look will remain the same no matter when the segment airs. The guys are wearing the same clothes, too, but few people seem to notice that. Sexism!

The set, by the way, is on the Sony Pictures Studios lot in Culver City, California. It was once the M-G-M lot, where The Wizard of Oz and countless classic musicals (Easter Parade, Singin’ in the Rain) were filmed. The Tank (click here to watch my tour of it) is not on the same sound stage for every season, but it is on the same lot. If another major picture (like Spider-Man) or TV show (Jeopardy! or The Wheel of Fortune) is shooting, it can slip into just about any size stage.

Anyone can take a tour of the Sony lot. Click here for details.

The real sharks aren’t real, but they are from Reno.

The sharks you see swimming on either side of the corridor into the Tank are not there. They’re on video.

More surprising is where they come from. The end crawl credits the 1,635-room Peppermill Resort and Casino for them.

Maybe the sharks were downloaded from its Bimini Steakhouse, where “you dine in the surrounds of a virtual aquarium.” The fact they come from a casino means that like their human counterparts, Shark Tank‘s sharks are gamblers, too.

Here are the Nevada sharks up close:

[tube]http://www.youtube.com/watch?v=s6EgYFxs3w4[/tube]

After your pitch, you talk with a shrink.

“ABC sent in a psychiatrist to our room to make sure I was ok,” wrote Hicks. “I think they do that to make sure you aren’t depressed or freaked out, but, I was good because I was excited.” Then the network reminds you that if you breathe a word about the outcome to anyone before your air date, it will sue you to a crisp.

Now if it would just make sure some of those crackpots passed the psych test before they hit the Tank…

Update: I’m often asked how much the Sharks earn per episode. Until recently, there were guesses, but no proof. But now we have a paper trail that reveals a Sharks’ salary: It’s in my post How much do the Sharks make per episode?.

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