Beware of Sharks!

I don't currently have a TV, but I'm not one of those people that thinks TV is lowbrow or beneath me. I rather enjoy a good show. Particularly after a hard day's work, there is often nothing more relaxing, and being in-the-know about current TV can often play an important role in conversation (or social networking in MBA speak). Living sans roommates for the first time in my life, I'm too cheap to pay for cable, but fortunately hulu seems to offer just the right reprieve from real life.

Recently, Shark Tank, a new ABC reality series about entrepreneurship and venture capital has made its way to hulu and, as you might imagine, I figured it would be right up my alley. Most of the business ideas thus far have been horrifically bad, yet the "sharks" still invest because otherwise the show would be pretty boring.

If there is one reoccurring theme in the four episodes that have aired thus far, it's that entrepreneurs are fools. They are fools because they invest their life savings into two-bit ideas, fools because they utterly lack common sense about whether there is actually a market for their products, and fools because they value their companies on average about 10X higher than the investors.

The show is, of course, sensationalized. The sharks invest in businesses that no one would ever buy into in reality, and the show makes it appear that decisions are being made on the spot that clearly are not. But the notion that entrepreneurs are fools is an important message and I think there's truth in it. In some sense you have to be a fool to risk your livelihood on something where the odds are so poor. One in ten start-ups succeed. The only reason VCs play these odds is because their big scores offset all the losses (plus they have enough ego to believe they are good at choosing companies). But, for the individual, bootstrapping a company, these odds should be very very scary. And yet, this culture of big bets and big returns--this entrepreneurial spirit--is precisely what makes the U.S. so successful. To be sure, we should preserve it with our every last dollar.