Barbara Corcoran on funding innovation
Most bank executives, at some point in their career, need to go before their boss to pitch an idea for a new project and, presumably, ask for money to accomplish that objective. Sounds a bit like contestants on the ABC TV show Shark Tank, right?
What better person, then, to advise bankers on making those pitches than Barbara Corcoran, one of the show’s lead “sharks,” or investors. Corcoran, a successful entrepreneur in her own right, having made a fortune in New York City real estate, will appear as a general session speaker at the upcoming BAI Retail Delivery 2015, where she will show how smart decision making – which includes funding innovative products and services – can move your organization forward.
In the following interview, Corcoran touches on a few of the themes she will present onstage, including how bankers can pitch innovative new projects to their bosses
Q: Many banks today have innovation teams. What advice would you give to bankers when they go in front of their bosses and say, “Joe, please give me a million dollars to fund this?” How should they go about that whole exercise?
Corcoran: A couple of years ago, I gave a speech in Las Vegas and was on a panel of judges watching some young and middle-aged bankers pitching their company on some new projects. Let me tell you, they were terrible. Their charts were loaded with numbers and I had a hard time grasping the main idea. They got into the details too quickly, so they were boring.
Well, you know what? When you’re asking for money, entertainment value is very important. It’s got to sound sexy. Sure, you have to back up the idea with solid statistics, but it’s got to sound appealing. These guys were selling numbers with numbers and I thought they lacked common sense.
The other thing is, they were making projections over many, many years and I think nothing’s sexier than a short-term result. I don’t care what business you’re in. The bankers, however, were showing projections from one to 10 years and, if it was my money, I wouldn’t have invested. I like to see what’s happening quickly, an interim report card on the money.
There were about six teams pitching, with between three to five people per team. I noticed each team gave everyone a chance to pitch, which I guess is democratic. But oftentimes, the strongest guy didn’t have the most to say. The senior guy would do the pitching, for example, rather than somebody younger who could really sell. So, that was a lost opportunity.
Q: What sort of financial services projects do you think sharks would be interested in funding today and what sort of decision making process would they go through in reaching a decision?
Corcoran: Everybody has specific things that really turn them on. But I would say, for investors collectively, that the idea of something being a first always turns us on. If something has never been done before, it’s like a headline that captures everybody’s attention right away. We start leaning in and listening a little bit harder which, of course, is what you want people to do. And associated with the perception that something hasn’t been done before is the thought that I can maybe make a killing on this. Whether you can or not, there’s that pleasant association of being in on a secret – that you’re going to get there first.
If a service or product has been done before, we ask ourselves: how smart is the entrepreneur? For all of us investors, that’s the second major card to play because there are a lot of people who have great ideas but lack the ability to execute. If the contestant doesn’t have a record of success, it’s a longshot for us.
You’ll notice on Shark Tank that, once we like the business model, the questions immediately turn to finding out what the entrepreneur is all about. Frankly, over all the years I’ve been on the show, all of the businesses I’ve made money with have nothing to do with the business model presented. The winners, for me, have been the exceptional entrepreneurs; they could have been pitching anything and I think I would have made money on them.
Q: So, it’s really the quality of the person who comes up with the idea rather than the idea itself?
Corcoran: Yes. Whether it’s a new pizza pie or the latest, greatest app that everybody’s going to want to buy for tens of millions of dollars, in the end it always comes down to the individual and their capacity to succeed.
Q: Any thoughts about what kind of financial services innovations might attract funding today?
Corcoran: Anything that has crowd funding associated with it and applied to a specific industry turns me on, as well as a lot of other investors, because you can actually visualize who’s going to buy the damn thing. Who are you really going to sell it to and where are you going to get your traction?
Q: What kind of innovations would you like to see come out of your own personal bank?
Corcoran: I personally would like to see easier-to-use software. Many of the financial services that I see feel complicated. I’d like to understand it in a sound bite really quickly: how’s this going to save me time and why is it secure for me? I don’t have patience for a lot of the lingo in financial services. Financial services need simple sales pitches. I understand there are regulations, but couldn’t you, in the top line copy, slam home your main proposition like, one phone call can save you 15% or more? Right now, nothing garners my attention for some reason.