From "Inside the Shark Tank With Mark Cuban," March 2014. Illustration by John Ueland

Inside the Shark Tank With Mark Cuban

On the set of "American Idol" for entrepreneurs, the billionaire smells blood.

Sound Stage 25, a cavernous hangar of a building, sits on the Sony Pictures Studios lot in Culver City, California. Seventy-five years ago, it belonged to MGM, which used it to film parts of The Wizard of Oz, but today it’s the setting for an episode of the ABC reality show Shark Tank. Five millionaire and billionaire investors, the Sharks, sit in leather chairs: Robert Herjavec, Daymond John, Lori Greiner, Kevin “Mr. Wonderful” O’Leary, and Mark Cuban. Behind them, a fake nighttime cityscape peeks through dark wood plantation shutters. Before them is a supplicant, an entrepreneur who has invented an ingenious lighting system for bicycles. (The episode has yet to air, and a nondisclosure agreement prevents sharing more details.) The entrepreneur hopes to leave with $150,000 in exchange for 10 percent of his company.

John strikes first. “I’m going to get the party started,” he says. “Three hundred thousand dollars for 30 percent.” 

There’s blood in the water. The other investors snap to attention, and the intensity of the interrogation picks up. The entrepreneur takes a deep breath and remains calm, giving responses so succinct that they almost sound scripted.

“Do you ever watch the show and wonder what we write on our pads?” Greiner asks. “What I wrote was: smart, driven, idea worth millions. I don’t know if I should even throw out my deal. I’m gonna sit back and think about this.” 

O’Leary tosses out an offer: “I’ll give you $150,000 and take 7 percent royalty until I get my $150,000 back, and then I’ll drop it to 1 percent in perpetuity.”

Before O’Leary finishes his sentence, Herjavec interrupts: “Incredibly clever and smart idea. I’ll give you $300,000 for 10 percent. I think you are valuing yourself too low.”

The entrepreneur surveys the panel and rocks back and forth on his feet. An hour into the process, he seems to have played his audience perfectly. He has the Sharks fighting each other to get a piece of the action. Then Cuban speaks up.  

“Let me jump in here,” he says. “You are so full of shit. Bullshit, excuse my French. Robert is right. You have come in here with your company undervalued. It’s undervalued, and you know that. There isn’t a Stanford graduate-degree holder in the last 15 years that would even consider valuing their company at $1.5 million when they have something unique, original, and innovative like you do. You’re a Stanford advanced graduate with an experienced background and $600,000 in sales with a loan, which is rare, and other sources of capital. You have people throwing money at you, and you’ve had a manufacturer give you terms and equity. You don’t come in and ask for a $1.5 million valuation unless you are just bullshitting us. I don’t have a better word. There is just no chance.” 

Cuban smells a scam. He thinks the man has come to the show just to get exposure for his product. He’s not really interested in making a deal. Cuban glares at the man. Several stagehands leave the catering area and head to the side of the stage to watch the spectacle.

“Did you just insult him?” O’Leary asks Cuban before turning to the entrepreneur. “Is Mark right? Are you bullshitting us?”

“Yes, and he is insulting us,” Cuban says. “There is no chance on God’s green earth that this deal will ever close because you’d be an idiot among your friends to value this company at $1.5 million or even $3.5 million. The numbers don’t add up.” 

Greiner pounces on the entrepreneur: “You must answer to that right now.” 

The entrepreneur clears his throat and presses on: “I have come here looking for investment and to talk to you guys and to use your connections and get access to your networks and—”

Cuban cuts him off and screams, “You are so full of shit! That’s just bullshit! Capital is the least of your worries. Connections are the least of your worries. I’m being brutally honest because one of the problems we face here is that people come in here, and they know the power of the program. You’re too smart. The clincher for me was when Robert put up twice the amount you asked for at the same valuation, and you didn’t even put on one little bit of a smile. I’m out.”

The camera pushes in on Cuban. He sits with his fists under his chin, and light reflects off his Dallas Mavericks cuff links. His mouth is pulled so tight it is almost invisible. His head is turned slightly to the right, and his dark brown eyes, shifted to the left, dare the man to speak. 

SCHOOL OF SHARKS: The season 5 cast includes (clockwise from left) Mark Cuban, Daymond John, Barbara Cororan, Robert Herjavec, Lori Greiner, Kevin O'Leary.

What began as a respectful analysis of a business turns into a feeding frenzy. The Sharks are all talking at the same time, and crew members, usually mute when the cameras are rolling, are talking loudly. “This is the most intense deal,” one says. “I can’t see how they can edit this.” The entrepreneur eventually leaves the set, and the Sharks continue the debate off-camera. Cuban and O’Leary have to stay in their leather chairs and rerecord the parts where they swore. Then the director finally dismisses them for lunch. 

The black sound curtains split open, and Cuban walks toward me. Like a blitzing linebacker who has just gotten a sack, he pumps his fists in the air and hollers to nobody in particular. He pulls at the collar of his starched white shirt and unbuttons it almost to his waist. Makeup artists and stagehands look down or turn the other way to avoid making eye contact as he bounces over the cables on the wooden floor. I can feel the heat of his body when he steps up to me. 

“I gave you a good one, didn’t I?” Cuban says. “That guy was so full of shit. I could be wrong. I hope I am. I really do. I’ll see you at lunch.”

Cuban turns, walks through the darkness, and pushes through the door. A strip of sunlight flashes across the floor of Sound Stage 25, and his silhouette vanishes into the light.

• • •

I got hooked on Shark Tank, the American Idol for entrepreneurs, when I watched Mark Cuban negotiate a deal in late 2011, during Season 2. I’m not alone. Since its debut in August 2009, Shark Tank’s ratings have increased steadily. You think Mad Men is popular? The Season 6 finale was watched by 2.4 million people. On January 24, Shark Tank, the highest-rated show on Friday nights, reached 8.1 million viewers, its biggest audience to date. The same week, The Bachelor pulled in 8 million. Cuban has emerged as the driving force on the show. He started as a guest Shark in Season 2. His aggressive antics impressed the producers, and he was invited to join the cast in Season 3. 

Cuban has brought more than just bluster to the show. He has made more deals than any of the other Sharks.

He has brought more than just bluster to the show. Cuban has made more deals than any of the other Sharks and invested the most money. Late last year, he told ABC News that he had “invested in 28 companies through Shark Tank, and only one has failed.” This season, he made the largest deal in Shark Tank history when he offered $2 million for a 20 percent stake in an entertainment company that creates live horror attractions. And he has changed the way the show operates. In October 2013, he threatened to quit if the producers didn’t remove a contractual clause that required every entrepreneur to give Finnmax, Shark Tank’s production company, either 2 percent of their profits or 5 percent equity in their business, whether they made a deal or not. Cuban felt the obligation scared off entrepreneurs. That clause no longer exists.

But one Friday night, I got to wondering about Shark Tank. Was I a rube for getting so wrapped up in the drama of the dealmaking? We all know how “reality” television works. Were the Sharks prepped before the pitches? Were the entrepreneurs really that nervous? Was it all really real

On a whim, I emailed Cuban, whom I’ve never met, asking if I could shadow him on the set. Within five minutes, he answered yes. After a brief exchange in which he looped in producers for the show, a plan for my set visit emerged. Feeling cocky, I pushed to see what kind of access I could get. I asked Cuban if I could fly out to Los Angeles with him on his jet. His instantaneous reply: “No way.”  

Not every deal comes together like you hope. But on September 13, having flown commercial, I got to see for myself how the show is put together.