I’ve written before about Shark Tank, the television show that features business owners who make presentations to wealthy investors who are referred to as “sharks.” Each of the sharks is an experienced entrepreneur who became wealthy by successfully starting and growing multiple businesses.
During each show, individual business owners attempt to persuade one or more of the sharks to invest in their business, in exchange for an equity share in the business. After a business owner gives a presentation, the sharks have an opportunity to ask questions and make comments. The sharks frequently refuse to invest in a business by declaring “I’m out.”
Before any of the sharks are willing to invest in a business, they quickly determine whether the business owner is a genuine entrepreneur. The dictionary defines an entrepreneur as “a person who organizes, manages, and assumes the risks of a business or enterprise.” The sharks always look for entrepreneurs who have the talents and skills to identify opportunities, take calculated risks, recognize and effectively deal with threats, and promote and sell their products.
I recently watched an episode of Shark Tank where the business owner, Lindsey Laurain, asked the sharks to invest $1 million in exchange for 5% equity in her company. The product that her company manufactures and sells is “The Happy Mat,” which is a silicone place mat for children. The place mat self-seals to a table and has compartments that hold food, which prevents children from spilling their food.
During Laurain’s presentation, it was obvious that the sharks believed that she was a genuine entrepreneur, but each of them concluded that she was not being realistic about the value of her company. A few of the sharks told her that she was reckless in the valuation of her company and was overly optimistic as to what her future sales were going to be.
Two of the sharks made offers to invest in Laurain’s company, but both of their offers required that she agree to give up more of her company than she had proposed. One of the sharks who made an offer was Barbara Corcoran, a 69-year-old woman who had become a multimillionaire as a real estate investor and consultant in New York. To justify her offer, Corcoran made the following comments to Laurain:
I want to draw a parallel between you and me. When I was 22 years old and in your shoes, wild enthusiasm made me want to be the queen of New York real estate. What was so important in my journey to make it wasn’t my optimism which I had in spades, but it was the self-doubt and the insecurity that I felt all along the way that made me pause and think, oh my God, I better be careful. Can I do it? How will I make it? Who Do I use? Who do I trust? My judgment card built my business. You’re a wild, enthusiastic entrepreneur. Very capable. You’ve got a great product. All that’s fine, but you’re missing the self-doubt card.
Corcoran’s point was that Laurain needed Corcoran’s guidance and advice in order to keep Laurain’s overly optimistic attitude from getting in the way of effectively growing her business. Laurain didn’t agree with Corcoran and turned down Corcoran’s offer. She also turned down an offer that had been made by one of the other sharks.
After Laurain left the “shark tank” — the area where the presentations are made — one of the other sharks, Robert Herjavec, said, “Barbara, I think that was the best advice you’ve ever given. She’s wildly optimistic. But great entrepreneurs live in paranoia.”
That last sentence jumped out at me, because I rarely hear anyone say it. I stopped what I was doing — exercising — and wrote down the sentence, “But great entrepreneurs live in paranoia.” Only an experienced entrepreneur would understand what Herjavec meant by that statement.
Over the years, I’ve had to periodically tell my business clients that they have to consciously practice what I call “healthy paranoia.” Whenever I mention these words for the first time to someone, I get a puzzled look. Why? Because the word paranoia has a bad connotation.
There are two definitions that are normally associated with the word paranoia. The first definition has to do with mental illness. The second definition is what Herjavec was referring to: “A tendency on the part of an individual or group toward excessive or irrational suspiciousness and distrustfulness of others.”
So what did Herjavec mean when he said that great entrepreneurs live in paranoia?
Entrepreneurs who have built and maintained successful businesses have had to learn the hard way that in order to achieve and sustain success, they must train their minds to be suspicious and distrustful of others, especially their competition.
Over the years, in order to properly represent my clients, I’ve had to learn to be suspicious and distrustful of certain people that I do business with, while doing my best to give others the benefit of the doubt.
In my opinion, I have no other choice but to be suspicious and distrustful of the people I’m up against in a legal conflict. Those people include opposing parties, attorneys, and at times, judges. By being suspicious and distrustful of those people, I’m forced to think about and figure out the tactics they may use to deceive and trick me. I have to also develop strategies to outwit them and stay a step ahead of them at all times.
If you were to accuse me of being paranoid, I would freely admit that you are correct. But as I said above, I prefer to call this type of behavior healthy paranoia.
In my opinion, if I’m going to protect myself, my clients, and my business, I have no other choice but to develop the mindset and skills to consistently practice healthy paranoia.
I’ll have more to say on this topic next week, and how it relates to our relationship with God.