What Is The Difference Between A Business-Plan Contest And A Beauty Pageant?


#1. Both rely on judges’ instincts rather than an unbiased measure of achievement.

Business plan competitions, or pitch competitions for those who do not want to waste their time reading an entire business plan, are one of the most popular entrepreneurship activities in many business schools, universities, incubators, and communities. The latest incarnation of this phenomenon is the shark-tank type competition. Judges decide whether a particular plan or pitch is attractive, using their “superior” instincts.

Ditto for beauty pageants. Judges pick a winner from among attractive contestants using their instincts.

#2. The lures are very similar.

The lure of business-plan competitions is that they promote the look of the venture and give publicity to the winners and the sponsors, usually universities, business schools, banks, and economic-development agencies who want to do something productive in area venture development. The entrepreneurs make connections and potentially get financing. And the banks and service firms get customers and clients.

Ditto for beauty pageants. Beauty pageants promote participants’ looks and give publicity to the contestants and the sponsors – usually promoters, beauty-product companies, and media.

#3. Both are superficial.

Judges in business-plan competitions will tell you that they evaluate potential in a venture. Judges have to be truly talented if they can pick winners at the startup stage (except for picking the medical venture that has developed a cure for cancer) given that VCs wait for Aha, i.e., for real proof of potential, before they invest. What exactly are judges in business-plan competitions judging? Beauty? Looks? Perceptions? Thankfully they don’t make entrepreneurs strut in swimsuits.

Ditto for beauty pageants. Beauty pageants value superficial beauty. There is a question where you get to show your sympathy for the poor and the oppressed, and a talent contest where participants have to show that they have some real expertise. True, but you don’t get a chance to show off your sympathy and talent if you don’t pass muster in a swimsuit.

#4. Neither is an accurate predictor of future success.

Winners of business-plan competitions are not guaranteed to succeed. Many things can go wrong between a business plan and a successful business. It is called risk, which is why most professional VCs wait for real proof, not superficial proof based on the opinions of a few judges. Yet VCs fail on 80% of the ventures they finance.

Ditto for beauty pageants. Winning a beauty pageant does not guarantee great successes in life. Yes, some winners do succeed. In the world we live in – looks and color do matter, but should they count? 

Is there a better approach for entrepreneurs?

Is the proportion of false positives and false negatives in a business-plan competition worth the investment? When this issue was raised with sponsors or supporters of business-plan competitions, the response was that the publicity was great. Is that all that matters? By that token public hangings also generate a lot of publicity. Is that what venture development has descended to?

Switching to a results-based approach, rather than a swimsuit competition, will mean that judges will be evaluating real results, not hopes, dreams and shapes. Winners can be picked from all races, genders, and socioeconomic and educational backgrounds because the results can be quantified and ranked. Most importantly, this approach can create lasting jobs and economic growth rather than the false hopes of wishes and skewed intentions.

MY TAKE: Can we take the resources spent on business-plan competitions and invest it in educating entrepreneurs in the skills and strategies of unicorn entrepreneurs. Can we offer more resources and “prizes” to entrepreneurs who take off with limited capital and have proven expertise than to those who have the right pedigree, the right education, or the right social standing? This can channel resources to those who can offer real returns, rather than PR.

And judges should be made to invest significant amounts of their own capital in the ventures they pick as winners. That may put an end to the beauty contest in the entrepreneurship industry. Shark Tank should come out of the closet and disclose if judges have done due diligence on the products they so casually finance on TV or have subsequently invested in the ventures they claim to love without any due diligence. Mark Cuban, where art thou?