*It was one of the most controversial episodes in the history of the show, as Scott was unwilling to give them a piece of SCOTTeVEST, only the licensing of TEC-Technology Enabled Clothing.
*What ensued was a battle with Mark Cuban, a call to Steve Wozniak, and Scott walking out of the room with $1 million still on the table. But there are two sides to every story. If you just watched the episode as it aired on ABC, you may have thought Scott was an arrogant jerk just looking for free publicity... or hopefully you thought Scott was a brilliant businessman who just would not let the Sharks push him around. Well, this page contains the whole truth. To understand what really happened, please read the following 4 points:
“Sony Pictures Television, a Designee of Mark Burnett, and ABC may receive equity in or a share of revenues generated by the businesses included in this program.” Specifically, buried deep in the agreement (which you can see by clicking here), by 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. Since the business I was presenting was TEC-Technology Enabled Clothing®, I now have partners in that business, even though a deal was not made with The Sharks. Free? They make money out of every deal I make from here forward.
I believe that The Sharks were intentionally 'baiting' me the entire time I was being filmed. Because of the contract I signed, just one mention of the brand SCOTTeVEST, and I would be forced to give the sharks 5% equity or 2% of the profits of SCOTTeVEST. I went into the Tank pitching TEC, and I had to carefully tiptoe around the brand name that I spent years successfully building. If I slipped once and either mentioned SCOTTeVEST or countered their offer for SCOTTeVEST, part of SCOTTeVEST would be theirs automatically forever. Given the value of SCOTTeVEST, I could not risk it, especially that it appeared likely that The Sharks would not likely agree on a fair valuation for SCOTTeVEST. Imagine how hard it is to talk about your job without mentioning the name of the company. If I had, it would have cost me millions and for no good reason.
On a podcast (you can listen to it here), it was blatantly stated by Mark Cuban that his only goal was to make me cry on air, and I am not one to back down from a challenge. Imagine how you might have done in a similar situation knowing that Mark Cuban's goal was to make you cry on national TV. I think I gave it a pretty good shot, though unsuccessful.
I walked away from a deal with The Sharks when it became apparent that they were only interested in SCOTTeVEST. As I went to shake hands with them, all of The Sharks, other than Robert Herjavec, told me what an amazing job I did, including Mark Cuban. Robert Herjavec, however, refused to shake my hand, which has NEVER happened to me after all my years as a professional. When I told him as much, I turned and walked away. That is when you hear him telling me to "show some respect" as I was walking out the door. Doesn't ring true telling me to show respect when he refused to shake my hand after the other Sharks did so graciously.
I still firmly believe in the value of patents and the value of TEC. With all this background to the story, combined with my incredible passion for my companies, you can see why things got heated in the Shark Tank. Just remember, there are ALWAYS two sides to every story and you can see the full story below if you are interested in diving deeper into the Shark Tank.
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On Friday, March 2, I appeared on ABC’s reality show Shark Tank. The premise of the show is as follows: an entrepreneur enters “the tank” with an idea and an offer. He or she pitches the product or business, and the sharks decide whether or not they want to invest – the two parties either reach an agreement, or the entrepreneurs leave with nothing but some good exposure and a memorable experience.
Since the show aired on Friday, I have received overwhelming feedback from all over the board. The criticisms of those who took issue with the appearance fall into a few distinct categories. There are those who feel I used the platform merely for PR purposes – that I was never interested in a deal, but rather that I took advantage of the exposure. I am also receiving criticisms in regard to my demeanor – that I was disrespectful, aggressive, and less-than-cordial in my interactions with the sharks (although usually expressed in more colorful terms).
My response is as follows: I entered the tank in hopes of gaining a strategic business partner who would help me establish my licensing company, TEC-Technology Enabled Clothing®, in a way that I have as yet been unable to do. The exposure inherent in an appearance on national television is something no entrepreneur would ignore. It was only after it became apparent that none of the sharks were interested in making a deal for TEC® that I decided to focus on the PR value of the experience.
I knew that although I did not get a deal with one of the sharks, there would still be an opportunity to expose the world to TEC® and to SCOTTeVEST, and I was not about to let that opportunity slip by. That said, there was no “free” publicity. As quoted at the end of the show: “Sony Pictures Television, a Designee of Mark Burnett, and ABC may receive equity in or a share of revenues generated by the businesses included in this program.” I went in pitching TEC®. If I made a deal for SCOTTeVEST (or even mentioned the name), this company would also be subject to this agreement. Far from free publicity. Those who know me know that I am transparent to a fault; I cannot lie and I cannot act. What you saw was the real deal.
Publicity issue aside, I feel that the segment the public saw on Friday needs some context; there was a lot the public did not see from the interaction. The 60 minutes that I was in the tank was edited down to around 20. ABC, in the end, is trying to make good TV, and no one can blame them for doing that job well (which begs the question, wasn’t this a publicity stunt for them?). Granted, that is not the whole story, and to blame editing entirely would be a cop-out. What you saw were my honest reactions in the midst of a heated debate. I really did call Robert’s initial offer insane, and I did tell Robert and Kevin they were out. I argued fiercely with Mark Cuban about intellectual property rights (he later indicated in a podcast that he made it his mission to make me cry), about standing by my patent and about the essential “American-ness” of the patent system.
But let’s put this in perspective. How many times have you seen entrepreneurs – people who are really starting out, who have a great idea and need guidance and money – flounder into the tank and get taken advantage of? The difference between my segment and most others is that I am a businessman and that I was willing and able to engage the sharks in a serious business interaction. I most definitely wanted to strike a deal with one or more of them, to get TEC® off the ground as a licensing company with much more to offer than a single patent for a wire management system. But I was not about to turn wobbly kneed, forget why I was there, and sell away part of the company that my wife and I have put our hearts and souls into for over ten years.
Every time I watch the episode (which is not as many times as some people would like to believe), I see something else – I remember what happened to induce a reaction, or I think about what one of the sharks said that set me off. I see the moments in which I appear arrogant, and knowing myself, I see what I really was: cornered. A good friend of mine wrote after he watched the show: “[you] come across as a guy who just loves his company and product…” I am a guy who loves his company and his product, and in those moments, I was a guy who saw that company threatened. Those sharks are persuasive personalities, and they are powerful people. From a businessman’s perspective, these are the people we look up to. The pressures add up – the intimidation factor, the thrill of being in the company of the sharks –but as the sharks and the rest of America learned, it would not be bullied into taking a bad deal.
To recap: I entered the tank with a deal that I thought was reasonable. I would like to mention that over the course of the weekend I have had interest in TEC® alone, which confirms that this was a realistic pitch. The sharks wanted something else, however. What ensued was an aggressive negotiation between equals, and we ended up not making a deal – it is that simple. No one on that panel is involved in the future of TEC® or SCOTTeVEST, but I am confident that the future is bright for both. I want to thank my friends and followers for their support via Twitter, Facebook, and blogging; SCOTTeVEST was built on transparency and through direct relationships with customers. I want to emphasize that this is not “just TV” at this point. The issues that arose during the filming – about protecting intellectual property, about the value of my licensing subsidiary, and about what it means to negotiate in business – are very serious to me. Expect these debates to continue.