220: Why I’m Giving Away $50,000

Podcast: Download (Duration: 25:34 — 35.4MB)

Ask four experienced online business operators what matters most when evaluating a company, and you will get four different answers. In this episode I sat down with Mike Jackness, Greg Mercer, and Scott Voelker to introduce the 5 Minute Pitch, a Shark Tank style show where we gave away $50,000 to a bootstrapped online business, and we spent most of the conversation arguing about how to rank numbers, team, and product.

Greg Mercer founded Jungle Scout, Mike Jackness built ColorIt and EcomCrew, and Scott Voelker runs The Amazing Seller.

Between us we have built physical product brands, software companies, and content businesses, and the disagreement about what predicts success turned out to be the useful part of the discussion.

This post breaks down each judge’s evaluation framework, where they agree, where they split, and what those criteria tell you about the weak spots in your own business.

Key takeaways

• Greg Mercer ranks numbers first, team second, product last. Good unit economics and cheap customer acquisition matter more than what you sell.
• Mike Jackness and Scott Voelker both rank product first, on the grounds that a unique product is what creates a seven or eight figure business.
• Scott’s refinement is that it should be products, plural, since a single product hits a ceiling and a product suite does not.
• My own split is product first to get past round one, then people from there, because a strong team can pivot around a weak product.
• Scott looks for existing audience presence, since an established following in a niche means you can sell almost anything into it.
• Trend-driven products are the shared red flag. A fidget spinner business with great numbers is still a business chasing the next product.
• Refusing to disclose numbers is disqualifying. Transparency is the baseline expectation in any evaluation.
• Momentum matters. Judges want to see forward motion already happening that capital could accelerate.

Why numbers matter more than product to some investors

Greg Mercer’s position is that unit economics decide everything and the product itself is the least important factor. His questions are about customer acquisition cost, margins per sale, market size, and how scalable the model is.

His reasoning is that a business acquiring customers cheaply at good margins in a large enough market works regardless of what it sells. A membership site, an odd physical product, or software all qualify equally under that test.

Team ranks second for him, and the logic connects to the first point. The people who figured out how to acquire customers profitably are the people who could do it again if the current product went away.

That ordering puts product last deliberately. Greg cares that a team found something that works, not whether he personally finds the niche appealing.

Why a unique product beats good numbers for other investors

Mike Jackness ranks product first because a genuinely differentiated product is what creates a seven or eight figure business. His framing is that people being impressive is nice and the business still has to have something behind it.

Scott Voelker lands in the same place with an important addition. He evaluates products plural rather than a single product, because every individual product eventually finds its ceiling.

What Scott wants to see is a product suite or a credible plan for one. A founder who knows the next two SKUs their audience wants and cannot fund them yet is exactly the case where capital produces growth.

Market durability is part of the same judgment. A trendy product with acceptable numbers is a worse bet than an ordinary product in a market that will still exist in ten years.

Why a strong team can survive a weak product

My own ranking splits by stage: product gets you past the first round, and people determine who wins from there. A team that is flexible and open to trying new strategies can solve around a mediocre product.

That is the practical bet. Numbers that are merely acceptable today can be fixed by people willing to pivot, and no amount of good current performance saves a team that cannot adapt.

Mike’s expectation is that the eventual winner scores well across all three. More than one competitive advantage is what separates a well-rounded business from one that happens to be strong in a single dimension.

Why an existing audience is worth more than a product

Scott Voelker’s first filter is whether the founder already has a presence in their market, because an existing list or following means you can sell almost anything into that niche. Someone known in bass fishing can introduce new bass fishing products almost at will.

The contrast he draws is with a team that is good at launching products generally. That team can replicate its process in a new market, and it is always starting over from zero demand each time.

His preference is for the runway. Specialization in one market means years of accumulated trust and a clear path forward, rather than repeatedly figuring out an unfamiliar category.

That is also where he can add the most value. Helping an established niche authority extend their product line is a different job from helping a generalist find their next opportunity.

Why trend products are a red flag in business evaluation

A trend-driven product means you are permanently chasing the next product rather than building on the last one. Scott’s challenge to Greg’s numbers-first position uses the fidget spinner as the test case.

A fidget spinner business can post excellent numbers while the trend lasts. The audience is undefined, the demand evaporates, and the team has to find another hit from scratch.

The alternative he describes is a defined market you serve for a decade. Bass fishing customers will still be buying bass fishing products in ten years, which makes every product launch an addition rather than a replacement.

What makes a founder’s story compelling to investors?

The story that lands is one where the founder has genuinely put something on the line. Mike’s favorite example from a previous competition was a founder who took a six-figure real estate commission and put all of it into inventory.

The detail that made it memorable was the scale of the commitment. Rather than ordering a 500-unit sample run, he ordered a full container and then had to figure out how to sell it.

Origin stories tied to a real problem also carry weight. A military family who developed their product idea while moving repeatedly between postings has a reason for existing that a generic opportunity does not.

Scott looks for purpose behind the brand without demanding it be grand. Some articulated reason the founder chose this business, plus a specific plan for what capital would do, is the standard.

Why refusing to disclose numbers disqualifies a business

Withholding financial information during an evaluation ends the conversation. Mike specifically cited a business in a previous competition that would not disclose certain figures as the one that turned him off most.

The expectation is full transparency going in. Anyone asking to be evaluated has to accept that evaluation requires seeing the actual numbers.

What does momentum mean when evaluating a business?

Momentum means the business is already moving forward under its own power, so that outside help accelerates something rather than starting it. Scott wants evidence of direction and forward motion before any capital is involved.

The specific test he applies is whether $50,000 plus mentorship is genuinely all that is missing. That is different from a business that needs a fundamentally different strategy.

The outcome he wants to point to is a founder reporting a 3x or 5x within six months to a year. That only happens when the underlying business was already working and constrained by resources rather than by strategy.

Frequently asked questions

What do investors look at first in a small online business?

It varies by investor. Greg Mercer looks at customer acquisition cost, margins, and market size first, while Mike Jackness and Scott Voelker start with product differentiation and market durability.

Is the team or the product more important in a startup?

Judges split on this. The argument for team is that good operators can pivot around a weak product, and the argument for product is that genuine differentiation is what creates a large business in the first place.

Why do investors avoid trend-based products?

Trend products produce strong short-term numbers and leave the business chasing the next hit once demand collapses. A defined long-term market lets each new product build on the last.

Does having an audience help you get funded?

An existing following in a specific niche is a significant advantage, since it means distribution is already solved and new products can be sold into demand that already exists.

How much should you disclose when pitching your business?

Disclose everything relevant. Withholding financial details reads as a warning sign and has cost founders serious consideration in past competitions.

What kind of business is too established for a grant or competition?

A company already operating comfortably at scale, where the prize would not change its trajectory. These competitions look for businesses where the money makes a monumental difference.

What should you say you would do with the money?

Give a specific plan. Naming the two products you would add, or the exact constraint the capital removes, is far stronger than a general intention to grow.

Does a business need a mission to be fundable?

It needs a reason to exist that the founder can articulate, and that reason does not have to be grand. Scott Voelker looks for purpose and a clear story behind why the founder chose this business.