Move beyond ‘Hunger Games’ of pitch competitions

In planning an industry funding forum, I was asked if it would include a Shark Tank like ‘pitch competitions’ — an activity where businesses would make presentations about themselves in order to win a prize.  Having a long history of evaluating businesses and participating in pitch competitions as both competitor and judge, I view pitch competitions as similar to the “Hunger Games.”

The book, “The Hunger Games,” by Suzanne Collins, tells a story of youth who compete to the death.  The competition is not really about determining who is best, but to provide entertainment to the citizens of and to demonstrate power by the ruling class over the populations from which the youth are taken.

The stated goal of nearly all pitch competitions is to determine a winner.  The winning business is held out as an example of entrepreneurship and innovation whose values, spirit and drive are to be emulated.  We want businesses with these attributes to succeed and contribute to our economic growth and prosperity.

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Yet, if that is the goal, why do we have to pick a single winner?  Why do we give a prize only to the survivor?  Without taking on the whole subject of competition and the “everyone gets a trophy for participation” issue, we should ask ourselves what is the goal of a pitch competition.  Are we seeking the best businesses to which we want to provide funding while acknowledging we have limited money and can’t fund more than one?  Are we helping young entrepreneurs practice their communication skills? Are we seeking to solve a problem?  Or, something else?

Almost always, pitch competitions use angel investment criteria in judging scorecards.  Major points are commonly awarded to the business that appears will make the most money in the shortest period of time with a quick cash exit.  This may be helpful to angel investors who do not want to invest the time to make their own investment selections, but like the race between the turtle and the rabbit, it ignores the steady, long-term profitable businesses that are the backbones of local communities.

If our goal is to assist businesses in finding funding, then why are competitions structured to select only one business or a few to be winners?  Shouldn’t all businesses that meet certain minimum criteria gain access to capital (or at least support in raising capital)?  Wouldn’t we all benefit more from a “Final Four” or “Sweet Sixteen” or “Everyone Better than This” competition?

When it comes to investment, the amount of time and energy expended in conducting most pitch competitions is a poor use of community resources and those of the competitors.  Prizes to the winner are usually so small that they are often excused by the winner also gaining public recognition.  Justification for participation in a pitch competition is even harder for the losers. 

In The Hunger Games there is a situation where the heroine, Katniss, is practicing her archery skills.  Although her life depends upon these skills, the observers are ignoring her while talking, eating and drinking in a sky box.  She sends an arrow into the box in an effort to make the point that, for her, the Games are not just entertainment.

If our goal is to help young entrepreneurs enhance their speaking skills, would not competitions be improved by requiring pitches focused on how the success of a business will benefit the community instead of upon getting rich?  And, wouldn’t the quality of the pitches be improved by training both the competitors, the judges and the audience about successfully operating a business as a community asset?

How does Shark Tank or any imitation of it teach entrepreneurs any real skills?  Other than demonstrating that wealthy people can have quirky personalities, why are pitch competitions commonly judged by angel investors with no training in business evaluation or experience in operating a small business?  I once observed a judge berate a student competitor for allocating a portion of the business’ projected profits to a charity as a misuse of assets that should be preserved for growth.  Are we teaching Gordon Gecko’s “greed is good?”

If our goal is to solve a problem, shouldn’t the competition identify and prioritize the problems based upon community needs? One of the very few competitions that I favor is 10-10-10 founded by Tom Higley (https://www.meetup.com/Friends-of-10-10-10-Denver/).  This competition seeks to solve “Wicked Problems.”  Problems are defined by experts and community input.  Solving these problems will have true impact! Shouldn’t all competitions have a stated outcome other than awarding a prize to single business of whoever shows up?

I once challenged a competition scoring system that was held out to enable picking the winners.  I asked does it actually predict the future and select those businesses that will succeed or does it simply pick someone to win.  If competition eligibility is based on no more than paying an entry fee, does it really matter who wins?  Or, must the competition, if nothing else, be entertaining to viewers of reality television in order to sell tickets?  Do the observers in the audience need to dress up in the gaudy hairstyles and costumes of Panem, the Capitol of The Hunger Games?

If management is the single greatest factor in why a business will succeed, then why are competitions typically limited to startups and to rookie entrepreneurs?  The Super Bowl is a competition of professional football athletes for a reason.  Why are pitch competitions not comprised of professional entrepreneurs?  My answer is that professional entrepreneurs are not invited because most would decline to participate and they would provide little in the way of entertainment.  Good, solid business operations cannot compete with sitcoms for a viewing audience.

If pitch competitions, like the businesses they judge, are required to justify their existence in the context of the resources they need, then most would fail.  However, as pitch competitions have become a hallmark of entrepreneur culture, I would be surprised to see them discontinued.  Better planning of pitch competitions with solution of specific problems as a goal would go a long way to improve them. If, however, the true goal of pitch competitions is simply to give angel investors a way to pick their investments, then call President Snow and “let the Hunger Games continue!”

Karl Dakin is principal with Dakin Capital Services LLC. Reach him at kdakin@dakincapital.com.