I just caught a tiny bit of the show Shark Tank. Regular readers will know that I hate this show. In November of last year, I wrote about how evil it is the way we deify these people, Business Will Not Give Up on GOP. In January, I wrote about the the vagaries of wealth, Arbitrary and Inequitable Distribution of Wealth and Incomes. In February, I wrote about how small minded the “sharks” are, Herd Mentality on Shark Tank. And in May, I returned to the deification issue from a different angle, Heroes for a Debased Culture. But today, I have something different, although mentioned in the past: the “sharks” are generally idiots.
In the clip I saw, there were a couple of guys selling socks (Bombas Socks, if you are interested, and you shouldn’t be). They had one of these stupid “social justice” kinds of businesses where for each pair of socks they sell, they give a pair to a homeless shelter or some such nonsense. Sound familiar? It is the sock version of TOMS shoes. Slavoj Žižek dealt with this in a 2009 lecture First as Tragedy, Then as Farce. In it, he talks about how people can feel good about themselves buying a five dollar cup of coffee at Starbucks because a nickel goes to help sustainable agriculture or some such. It is what it is. If the upper middle class want to feel that all they have to do to be socially responsible is to be good consumers, it’s not my fight, even though it shows them to be silly and ultimately evil people.
The point of this approach to the business is that it is a gimmick. It’s like when you were a kid and your mother sent you to get something at the store. You could go to market A where the owner gave you a sucker or market B where you got nothing. You went to market A. The lazy do-gooder goes to the coffee shop that gives a negligible amount of profit to the cause du jour. So from a business standpoint, it is just a marketing cost. See how simple it is? Even I understand it and I don’t get business at all.
Enter the stupidest of the “sharks” (which says a lot): Kevin O’Leary. He asks, more or less, “Why should I invest in this? If you are giving away one pair of socks for each one you sell, aren’t you cutting your profits in half?” This is like saying to the CEO of Coke, “Why should I invest in your company when you are spending all this money on advertising? I mean, you’re just throwing away profits!” But it’s worse than this. And it gets at one of the reasons I hate these kinds of “social justice” companies.
If a do-gooder buys a pair of socks for four bucks (these are actually nine), he figures that half the money goes for his socks and half the money goes to help that grateful homeless man. Of course, that isn’t it at all. Let’s assume the socks only cost a dollar to manufacture and distribute. The buyer gets two dollars worth of good feeling, even as the seller only invests half that. So as long as you have the right kind of lazy idealists as customers, this is a great way to market your product.
So why is it that Kevin O’Leary didn’t understand such a basic concept in marketing? There are loads of similar kinds of ploys. There is no real difference between this sock deal and the old “buy one, get one free.” He didn’t understand because he’s not smart and he’s not very competent. None of them are. You know the old Edison saying, “Genius is one percent inspiration, ninety-nine percent perspiration”? Well, modern business seems to be zero percent inspiration (Give away a pair of sock for every one sold? Really?!) and fifty percent connections and fifty percent just being a cold hearted bastard. The Bombas Socks segment had it all, in exactly those percentages.