As you may know, I love the TV show Shark Tank.
The show turns on its head the adage, “People buy based on emotion, and justify their purchases with logic.”
The vast majority of the time, the “Sharks” on Shark Tank base their investment decisions on objective numbers, and do not allow themselves to be emotionally moved by the presentation skills of the entrepreneurs seeking investment funds.
However, on rare occasion, even the Sharks cave in to their emotions.
On a recent episode, billionaire Mark Cuban, for the first time I’ve ever witnessed, made an emotional investment that couldn’t be justified by the numbers.
That Won’t Work, But…
The entrepreneurs presenting their opportunity were two sisters who had created “stick-on” decorations for t-shirts.
For example, one “stick-on” was a bow-tie you could stick on your t-shirt so that, in a humorous way, you looked like you were wearing a tuxedo.
The product was fun, but sales were not great, and one by one, each of the Sharks panned “the numbers,” and responded with the words entrepreneurs on Shark Tank hate to hear: “I’m out.”
But the two sisters were very personable, and very likable.
When the Sharks said, “I’m out,” you could see they were doing it almost apologetically, like they really wanted to help out the two sisters, but they still let “the numbers” control their final investment decisions.
And then Mark Cuban did something extraordinary.
After he had criticized the business for having no future potential, he offered the sisters $200K to purchase the entire company.
He told the sisters in a very straightforward manner that he saw no potential in the business, but he wanted to help them by getting them out of the business so that they could pursue a more worthwhile venture.
The sisters, after some hesitation, with tears flowing down their faces, accepted Mark’s offer.
I think they knew that Mark was right about his assessment of the company’s potential.
Not willing to fully admit that he made an investment decision based on emotion, Mark still justified the decision with logic saying, “I can somehow find a way to use those products with the Dallas Mavericks.” (He owns the Dallas Mavericks NBA franchise)
What Was I Thinking??
Later, upon reflection, I was interested in my own reaction to what had transpired.
Purely from a numbers perspective, I should have scolded Mark for caving in to his emotions.
But that was not my reaction at all.
In fact, I was overjoyed for the two sisters, and my admiration for Mark Cuban grew because of the generosity he had shown those two entrepreneurs.
But wait a minute!!
What about the numbers??
Objectively speaking, investor extraordinaire Mark Cuban had made a poor investment decision, yet there I was, deeply emotionally moved, and applauding him for making a terrible business decision.
What gives?
The $$ Value of Emotions
We humans are not machines.
We are spiritual beings living a human experience.
We place value on things that make us feel good about ourselves.
And we are willing to pay hard-earned money for those things.
Mark Cuban’s investment in the two sister’s company will almost certainly not pay off financially, but the investment was worth it to Mark for the emotional fulfillment it gave him personally.
Recall that I finished yesterday’s article with the claim that it’s a curious phenomenon that professional marketing and sales people, who would be very unlikely to invest in a for-profit business without understanding, and agreeing with, its marketing and sales strategy, will freely give their hard-earned money to pro-life pregnancy centers without asking any questions at all about the center’s marketing and sales processes.
I believe the primary reason we do that – myself included until about a year ago – is because we are investing in something that gives us deep emotional satisfaction.
And that emotional satisfaction is worth paying money for.
In the same way that Mark Cuban was drawn to help the two sisters, we also are strongly drawn emotionally to the team members who work at pro-life pregnancy centers – people who sacrifice their time, talent, and treasure in pursuit of a cause we consider worthy of investment.
Investing in that team and their center makes us feel great, but is that investment necessarily a good thing for the pro-life pregnancy center itself, objectively speaking?
I don’t think so.
More tomorrow….
Regards,
Brett