In the Shark Tank, they don’t believe in subscription models and that’s a mistake!

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By Morten Suhr Hansen

Af Morten Suhr Hansen

In these weeks, season 8 of the Shark Tank is running in Denmark and leaving large parts of the country in front of their TV screen. The show, where young Danish entrepreneurs are sent to the ‘sharks’ in the form of experienced investors has become a surefire success. But this season is not quite like the others, because ever since the first episode it has been debated whether the investment strategies from the sharks actually reflect the true entrepreneurial landscape in Denmark. I won’t enter this debate, however, I would like to focus on the relationship between the sharks and subscriptions.

In the fourth episode, the sharks are visited by the subscription company Meum that sells shavers for women on a subscription plan. A company that probably would have landed an investment a few years ago, but this year, the appetite for subscription companies is not as apparent as it has been in previous years. “During these uncertain times, subscriptions is the first thing that people cut from their budgets. I think it’s a strategically wrong decision to be betting on a subscription model” – this is the concrete verdict from Coolshop owner, Jacob Risgaard.

Several members of my network has asked me about this comment – is this true? Are subscriptions really the wrong strategy in these times? Well, the short answer is ‘no’ and the longer one is a bit more nuanced…

Low consumer trust hits subscriptions as well

Jacob Risgaard is right about one thing: that consumers have become more critical and careful in recent years. This hurts subscriptions as well as many other categories. Almost all companies are experiencing falling demand, especially in luxury product segments. This means that many subscriptions are looked after and only the subscriptions that offer extraordinary value for customers will survive in the long run.

When I am still optimistic om behalf of the subscription model, it’s because right now, I experience that many of our customers and other subscription companies still believe that subscription is just the right strategy.

Last week, I visited a large, Danish B2B company that sells its products built around strong subscription concepts that offer great value for the customers of the company. This reminds me that B2B is a space that is moving towards ‘Everything-as-a-Service’.

But private consumers are also ready to subscribe. This doesn’t just apply to products that are normally too expensive to buy in cash: Glasses, cars, bikes, appliances, computers and other forms of electronics. These products will become increasingly more popular to subscribe to. Not just because it gives us economic freedom, but also because it offers freedom and flexibility.

The sharks are still hungry when it comes to real subscriptions

This is also why the sharks are inconsistent, when they consider potential investments. No later than the very next episode, the company Bubbles comes in. Their product is a very special educational support for ADHD students. This product is sold as a subscription for municipalities and schools. The young entrepreneurs end up with an offer from all six of the sharks and leaves the tank with an investment that increases the valuation they came in with.

This deserves our recognition, but it is also clear evidence that the right product combined with a strong service and sold on a subscription is a winning formular – now, and in the future.

Since the dawn of time, in difficult and challenging times, some companies endure and some of them don’t. This is true, no matter the business model. For the companies that are left with strong and unique products and a strong service model, subscription is just the right strategy. And those companies will even be stronger, when consumer trust soon returns.