Shark Tank episode aired December 9, 2018

The trend continues….as the stock market goes up (it was going up when this episode was taped), the deals become more generous. When the market is going down, money becomes tighter and fewer deals get done. Call it the Shark Tank Wealth Effect!

A prime example of this trend was on display when Summa, Bill, and Kayla from Pop it Pal entered the tank. Their product is a pimple popping simulator. Seriously?

Well, believe it or not, they got two offers and accepted the deal offered by Mr. Wonderful which called for him to invest $250K for a 5% stake plus he will receive  royalty payments that would allow him to recover 3X his investment.

One thing that can be learned from Pop it Pal is how to harness the power of social media. They had produced four “pimple popping videos” that received over 30 million views! As a result, they are expecting sales of $900K this year. Only in America!

Next into the tank were David and Joanna from Yumble. They produce kid’s healthy meals that are sent to the homes of their 3000 customers.  They knew their numbers including their customer acquisition costs. They were initially $100 per customer and are now $40 per customer. Their sales were $1.3 million.

Three of the Sharks were interested. Guest Shark Rohan Oza teamed up with Lori Greiner and made an offer of $500K for 12% equity. Guest Shark Bethenny Frankel also offered $500K but for half the equity. This put the company valuation at about $8 million……a very rich valuation. I think Bethenny could have included a royalty component of the deal to reduce her risk ala Mr. Wonderful.

Shahil from BollyX has created The Bollywood workout. He and his troupe put on a great show and even got the Sharks up to do the dancing workout with them (see below).

BollyX

Unfortunately, their revenue didn’t measure up to their entertainment ability (only $20K per month after five years in business). The dagger came when Shahil told the Sharks he had raised $1.7 million and only had $75K left in the bank. It was very entertaining but no deal here.

Allison and Stephen from Mother make infused apple cider vinegar beverages. Despite its taste, apple cider vinegar offers health benefits including weight reduction, lower blood sugar levels, etc. Forecasted sales are $1 million this year. Guest Shark Rohan Oza has tons of experience working with food and beverage companies so this one was right up his alley. He has a strong track record scaling young beverage companies and getting them acquired.

Mother

It was interesting to hear Rohan say that large beverage companies are essentially “subcontracting” their new product development to entrepreneurs. The successful beverage entrepreneurs will  eventually get acquired for many millions of dollars. Rohan offered $400K for 25% equity, and Allison and Stephen accepted. I consider this a low risk-high reward deal. It was clearly the BEST DEAL OF THE EPISODE.

Note: Congrats to Sharky Award winner Tipsy Elves who have had sales of $100 million since their appearance on Shark Tank in 2013.

                                 OVERALL RATING OF THIS EPISODE………………..B

 

 

 

Advertisements
Posted in Uncategorized | Leave a comment

Shark Tank episode aired December 2, 2018

Four for Four…..Each of the four entrepreneurs got a deal from the Sharks. This happens very rarely. The Sharks showed tremendous generosity as Christmas approaches.

Mitch from Hire Santa got everyone in the Christmas spirit by bringing a dozen or so Santa’s (and Mrs. Claus) into the tank with him. Mitch will generate about $1.2 million in revenue renting his stable of Santa’s this year. The business is highly seasonal (only lasts about 10 weeks a year), so I was surprised the Sharks were interested. Shark Barbara ended up with a combo deal calling for $200K investment for 10% equity. Barbara will be able to recoup her investment by taking a percentage of the on-going profits thereby reducing her risk.

hire santa

Next into the tank were Nick and Kyle from Ski-Z. Their product is a small wheel that acts as a “caddy for your ski’s”. The business was started five years ago and went dormant for four years as Nick and Kyle dealt with cancer and divorce. They’re making a comeback in 2018 and have Purchase Orders for over $500K in business. Shark Barbara scooped up another relatively low risk deal with $50K for 15% equity.

Ryan and Arik from Prank-O make fake product gift boxes. That’s right, just the boxes! Ryan and Arik possess a wicked sense of humor and are very creative. However, they both lack business expertise. The result has been $4 million in short term debt with annual sales of $2.8 million.

prank-o

Mark Cuban to the rescue! Mark has invested in several whimsical enterprises in the past  (remember “I Want to Draw a Cat for you”?). He will invest $640K for 25% equity in Prank-O. However, he warned Ryan and Arik that “You’ll have to listen to me!”. If they do, this should be a win-win deal.

Sam from Oat Meals wants to make oatmeal a food that can be eaten for Lunch and Dinner in addition to breakfast. She has created a number of tasty dishes which combine oats with truffles, bacon, cheese, etc. The Sharks LOVED the taste of her combinations.  She currently has one small restaurant in lower Manhattan which nets about $500K per year in sales with negligible profits. Sam has a second source of income as a spokesperson for Quaker Oats.

Barbara almost scored a trifecta when she made an offer that would have radically changed Sam’s business by displaying/selling her products on carts vs. traditional brick and mortar retail stores.

Shark Lori’s vision was more closely aligned with Sam’s. Lori wanted to get her products into Starbucks. Lori offered $500K for 1/3 of her company. Sam had watched one of Lori’s previous investments, Bantam Bagels and liked what she saw (now at $40 million in sales) and thought she and Lori could do the same thing with Oat Meal. Sam accepted her offer. Even though this is a high risk investment, this wins my Best Deal of the Episode award because of its upside potential.

                 OVERALL RATING OF THIS EPISODE……………………………..B+

 

 

 

 

 

 

 

Posted in barbara corcoran, Lori Greiner, Mark Cuban, Shark Tank, Sharky Award, Tim McEneny | Leave a comment

Shark Tank episode aired November 25, 2018

This episode must have been shot before the last six-week stock market correction, because the Sharks were very bullish and generous in their offers. Over the years I’ve noticed the direction of the stock market seems to have an influence on the Sharks bidding tendencies!

For example, Joe and Megan from Vade Nutrition came into the tank asking for $250K and walked away with a deal with  Guest Shark Alex Rodriguez (ARod) and Mark Cuban for $700K (albeit at a slightly lower company valuation so two Sharks could help “blow this up” and have an incentive to focus on this project).

Joe and Megan’s product was dissolvable protein powder packets for shakes. The packet looked like plastic but it dissolved and was edible/drinkable. Their delivery system was patent pending and was truly unique.  I think it could be used with other foods and drinks and have other applications such as camping and the military.

Jeff from Lockstraps had developed a strap that was more secure than a typical chain and combination lock and could be used to secure larger objects such as a motorcycle.  Unfortunately, Jeff had turned over the design, manufacturing and distribution of his product to a third party and their “re-design” resulted in significant quality problems and  customer returns.

Jeff finally admitted that the product was “not selling well”. Shark Barbara pointed out that most entrepreneurs are involved in every detail of their product launch, but Jeff was not. No deal here.

BEST DEAL OF THE EPISODE

Adam and Matt from Bottlekeeper came into the tank looking for $1 million for 5% equity for their product that solves an age-old problem…..keeping beer cold!

These two guys had bootstrapped their company and had sold $9 million of their product in the last 12 months (LTM). Their cost to make the Bottlekeeper was $3.50 and they sell it for $34.99 per unit. Very impressive results for a bootstrapped company!

Bottlekeeper

Adam and Matt from Bottlekeeper- Best Deal of the Episode

They raved about the results they experienced from Facebook advertising. They spent $4 million a year with FB. They had also spent $500,000 in legal fees to stop the knock offs. Even with “patent protection”, it can cost a small fortune defending your patents and stopping the violators.

Four of the five Sharks were very interested and the bidding and negotiating was intense. One of the trends in Shark Tank deals that involve lots of cash is to change the structure of the deal so it includes a return of money invested based on sales of the product (think royalties). This allows the entrepreneur to give up less equity and it reduces the risk for the investor.

Sharks Lori and Mark Cuban ended up getting the deal offering $1 million for 5% equity plus receiving $1.50 per unit sold until $2 million is recouped (2X the amount invested). This should be a win-win. Mark and Lori will almost certainly double their money in a couple of years, and Adam and Matt only gave up 5% equity to get two Sharks to help them grow the company.

Kristoffer and Victor from Nui made Ketogenic cookies. The Sharks liked the taste of the cookies and nutritional benefits of Ketogenic cookies (low carbs). They had sold $1.1 million in the last six months and Sharks Barbara, Mr. Wonderful, and ARod made offers.

ARod ended up getting the deal by relating to Kristoffer and Victor’s story and by saying his girlfriend (Jennifer Lopez) loved cookies and ate a cookie every night before she went to sleep. The deal called for him to invest $300K for 25% equity.

                           OVERALL RATING OF THIS EPISODE…………………………A-

 

 

 

 

Posted in Entrepreneur, Shark Tank, Sharky Award, start-up, Tim McEneny | Leave a comment

Shark Tank episode aired November 18, 2018

I really liked this episode….not because of the number or size of the deals, but because of the lessons learned thru the experiences of these entrepreneurs.

For example, sisters Morgan and Arley from The Handbag Raincoat had developed and patented a “raincoat for ladies’ handbags”.  Even with a patent, two large competitors copied their product. Morgan and Arley fought back and had them stop selling the knock-off products. They were lucky because it only cost them $10,000 in legal fees to accomplish this (it costs much more in many cases). The total cost was much higher when considering the time and energy needed to defend the patent. It distracts an entrepreneur from the job of running and growing their company. Getting a patent is one thing, defending it is another.

The Handbag Raincoat

The Handbag Raincoat

Morgan and Arley had spent no money on marketing their product despite raising $360K prior to Shark Tank. Guest Shark Sara Blakely (the Spanx founder) had a large competitor copy her product when Spanx was a start-up. She decided NOT to pursue the Spanx patent violator and put all of her money and effort into growing her company rather than spending it on legal fees and litigation. She said she spent her time and limited capital “innovating, marketing, and selling”.

As Mr. Wonderful said, “Patent litigation is not a good way to add value to a company”.  Revenue growth is generally the best way for an entrepreneur to increase company value.  Morgan and Arley had not concentrated on growing their business. No deal here.

Next into the tank was John from rewardstock. John had developed a smart phone app that maximized the value of customer reward miles, points, etc. It did this by transferring miles to other reward plans that offered transfer incentives. It sounded pretty complicated, but the app’s algorithms automatically recommend specific reward transfers.

John ended up getting a deal with Mark Cuban which called for a $320K investment for 10% equity plus some advisory shares (TBD). Given the fact that rewardstock sales were only $50K in its first two years,  Mark might have overpaid. I think he invested more in John  than rewardstock. I believe he can leverage John’s expertise in other areas of the Cuban empire.

Next up was Evan from Wisp. Evan was a very good product visionary. He had created a sweeping system that worked more effectively than a broom and a dust pan. Unfortunately, Evan was an awful businessman and manager. He desperately needed a partner who could run the business while he concentrated on inventing new products.

For example, Evan lost money last year on Sales of $1.4 million. He had raised $2.5 million from 22 investors and still had debts of $250K. He only had $50K in the bank. The list goes on. His product vision was an A+, but his execution was an F.

Because of all the financial issues, theoretically Mr. Wonderful would have been a great partner. He offered $500K for 50% equity. Evan accepted the offer but Mr. Wonderful backed out before Evan could even shake his hand. Evan tried to get Lori involved in the deal after taking Mr. Wonderful’s deal and it rubbed Mr. W the wrong way. I don’t think Evan and Mr. W. could have worked together anyway.

Kate from The Kambucha Shop sells a Kambucha Brewing Kit that allows customers to make their own Kambucha drinks at home. What’s Kambucha you ask? It’s a trendy drink that offers some health benefits. It’s touted as a detoxifying and energy boosting drink. It takes 10 days of fermentation to make at home. The Sharks didn’t care for the taste (does that mean it’s really healthy?).

With no debt and $1.6 million in sales this year (and profits of $500K), the Sharks were interested. Recognizing this is a trendy product with lots of competitors entering the market, Kate wanted to ramp up sales as quickly as possible. She got an equity and Line of Credit offer from Sharks Sara and Barbara and quickly accepted. These three can maximize sales and increase the company valuation in a hurry.

                                 OVERALL RATING OF THIS EPISODE ……………A-

Posted in business startup, Entrepreneur, Shark Tank, Sharky Award | Leave a comment

Shark Tank episode aired October 28, 2018

This episode had one of the strongest entrepreneur line-ups in Shark Tank history. To use a 2018 Boston Red Sox metaphor, there were no easy outs in this group. Each entrepreneur has built a company with real revenues that are gaining traction in their respective markets.

First into the tank were Josh and Steve from Manscaped. Their product helps guys with “grooming and trimming below the waist”. I was shocked to hear that the percentage of men who manscape has grown from 6% to 73% in the last decade. Josh and Steve have built their company using social media and by producing humorous videos. The videos alone have generated over 48 million views!

With Sales of $1.5 million and growing, Sharks Mark and Lori could easily justify investing $500K for 25% equity giving the company a valuation of roughly 1X Sales. Lori will see if women will buy this product as a gift for their men by offering the product on QVC.

Next into the tank was John and Chelsea from boom.boom. Their product is a nasal inhaler that provides a refreshing burst of menthol or peppermint. They had sales of $1.1 million and had great margins when selling their product online for $7.95. Unfortunately, the price point at retail was just $3.99 and their margins were too thin to get a good offer from the Sharks.

Shark Robert made an offer of $300K for 36% equity. John and Chelsea could not convince Robert to reduce his equity requirement to 20%, which was as low as they could go, based on investor deals made prior to their appearance on Shark Tank. They wanted to keep current investors happy by not giving the Sharks a better deal than they had gotten.

Billie and Holly from Cave Shake were next into the tank. The Sharks didn’t love the taste of this Keto, Paleo, Vegan ready-to-drink shake, but they liked Billie and Holly a lot. One of the interesting aspects of their pitch was that they had “given up” 15% of the equity in their company to an incubator used by Coke to identify and assist new and promising beverages grow. Ultimately these companies can be acquired by Coke for inclusion in their product line. I actually love the business model of this incubator. They get a 15% share of their portfolio companies (for free) plus a commission on everything they sell over a certain dollar amount. In return, they provide expertise, connections, and potential sales…..seems like a low risk but a high potential reward! I wonder if Coke also pays them an annual fee as well.

Guest Shark Charles Barkley, the NBA great, ended up investing $250K for 20% equity. Charles has had an on-going struggle with his weight, and is hoping to become part of a company that can help him and others lose weight.

BEST DEAL OF THE EPISODE 

I loved the eclectic threesome of Danh, Gary, and Metta World Peace (formerly known as Ron Artest of St. Johns University and  L.A. Laker fame). Gary and Metta were there to support Danh, who is the driving force behind Butter Cloth, maker of men’s soft dress shirts.

butter cloth

Danh came to the U.S. from Vietnam. He has a background in sewing and has been a designer of clothing for several U.S. companies. As the Sharks put it, Danh is the “real deal”. Also, he has put $240K in personal savings into the company. He’s “all in”. How can anyone resist investing in a guy who is “the real deal and is all in?”

Butter Cloth has sold over $500K of shirts in less than 6 months. I can’t help but think the  Danh can design many other clothing items. Danh got a good offer from Shark Robert for $250K for 25% equity and he took it.  Afterward, Danh said he was “living the dream”. This should be a win-win deal.

                             OVERALL RATING OF THIS EPISODE…………………………..A

Posted in Shark Tank, start-up, Tim McEneny | Leave a comment

Shark Tank episode aired October 21, 2018

Great episode!

First into the Tank was Sara and her mom Marilyn. Their company, Soupergirl, makes all natural soups. They were seeking $500K for 10% equity which placed the  company valuation at $5 million….a big ask.

On the positive side, Soupergirl has steadily increasing sales. Starting in 2016, their annual sales were $1.4 million followed by $2.4 million in 2017. Their estimated sales revenue for 2018 is $3.4 million. On the negative side, their costs are too high and their net profit is only about 5% of sales. More bad news….they have racked up debts of $640K.  As Mark Cuban put it, “You’re at risk of going out of business”.

They refused to use a co-packer because they wanted their soups to be perfect and they thought only they could make them perfect. Mark reminded them, ” Perfection is the enemy of profitability”.  No deal here.

Dmitri from Bundil has created a mobile app that automatically rounds up purchases and automatically invests the “spare change” in several crypto currencies such as bitcoin. It looked a lot like other apps that basically do the same thing, but invest in other assets such as stocks. Mr. Wonderful took a flyer and agreed to invest $100K for 50% of the company. Dmitri jumped at the offer.

Best Deal of the Episode

Guy from Beyond Sushi owns and operates restaurants in New York and L.A. that serve plant-based sushi (no fish!). Guest Shark Matt Higgins knows the restaurant business and he did most of the questioning of Guy, who handled the questions flawlessly. Guy knew “the numbers” and explained how he was going to expand his L.A. footprint and increase his sales to $5.6 million and generate a profit of $300K, not bad in a time of hyper growth.

Note: Matt Higgins incubates and invests in companies across sports and entertainment, food and lifestyle, media and marketing, and technology (he’ll be a great Guest Shark!).

Matt and Shark Lori agreed to invest $1.5 million for a 30% share of L.A. and a 15% share of New York. These three will make a great team and I’m predicting a “Homerun” right here and now! I think this will be a great national business in the very near future.

In the most emotional presentation in Shark Tank history, the three children of Keith Young gave a great presentation about their Dad’s patented cutting board, Cup Board Pro. The oldest child, Kaley (age 24) was rock solid as she explained their mother’s passing several years ago (breast cancer) followed by their father’s recent passing (9/11 related cancer). Meanwhile, the Sharks (and I) were  in tears during the presentation.

cup board pro

Each of the five Sharks agreed to invest $20K for 4% equity for a total of $100K for 20% equity. They also will donate all of their profits to a charity that helps 9/11 Firefighters. I can only remember one other case where all five Sharks went in on a deal together. A special Sharky Award is being given to the three siblings for their composure, strength, and dedication to the legacy of their Mom and Dad.

Shark Tank

Cup Board Pro- Sharky Award Oct. 21, 2018

PS….They received orders for 26,000 cutting boards (over $1 million) within 18 hours after the show’s conclusion!

                     OVERALL RATING OF THIS EPISODE………………………………….A 

 

 

 

 

Posted in Shark Tank, Sharky Award, Tim McEneny | Leave a comment

Shark Tank episode aired October 14, 2018

An eclectic group of products (and entrepreneurs) were featured on this episode of Shark Tank. I would say all of the products were so unique that they likely have no direct competitors!

Normally, the Sharks will not invest in companies with decreasing sales, too many SKU’s, excess inventory, or entrepreneurs that have a full-time job that they won’t leave to run the new company. The Sharks overlooked each of these red flags to make three deals.

Best  Deal of the Episode

Tyson and Myles from Shed Defender gave a great presentation with the help of their dog. Their product was a “onesie for dogs” that helps minimize the impact of shedding. It is a product that solves an actual problem. As they said, “shed happens” and it can create many problems for dog owners and their families.

Shed-Defender-on-Shark-Tank

Since consumers will spend almost anything on their dogs, I think this niche product will do quite well. Tyson and Myles had already sold 25,000 units and are forecasting sales of $2.5 million next year. Their gross margins are a very healthy 80% plus.

This drew interest from three of the Sharks and ended up making a deal with Lori calling for a $250K investment for 25% equity. This should be a win-win deal.

Next into the tank was Nathan from Lug Bug. He had spent $750K of his own money to develop a gadget that facilitates carrying a baby seat. Some of that amount went to securing four patents. He had sales of $283K in the previous two years and that did not get the Sharks excited. Nathan received no offers. As Shark Barbara put it, “What good are patents if you don’t have sales?”

Erin from Ta-Ta Towels had created a product that I cannot describe, so here’s a pic….

ta-ta towels

The sizes range from a Big C to H, and they cost about $45. They help control sweating.

When the product first launched, Erin experienced a “viral moment” with her Ta-Ta Towels selling like hot cakes. She sold $1.1 million in the first year. She also made every one herself. She expected this surge in demand to continue into year-two and she bought a ton of inventory to prepare for the increasing demand. Alas, it didn’t happen and Erin is now sitting on excess inventory.

This is not an uncommon scenario for a niche or novelty product. Once the initial fascination with the product dies down and the initial demand is met, the demand often slows. The reason….entrepreneurs spend all of their time and money meeting the initial demand and don’t invest in marketing and add-on product strategies to continue to grow sales. I believe this is what happened in this case.

Potential investors do not like to invest in companies with decreasing sales. None-the-less, Shark Lori was very interested and made an offer of $200K for 40% which Erin gladly accepted. With Lori’s marketing expertise, she’ll get this product back on track in a big way.

Keisha from Sanaia Apple Sauce had just returned from a trade show and shared the feedback she had received from the attendees. It was very encouraging but there were no firm orders for her new apple sauce. The target market is basically everyone between the ages of 8 and 80.

It turns out that Keisha has not gone full-time as she already has an executive position at a Fortune 500 company. Normally this is a red flag for investors as they become nervous about commitment to the new product/company. But Keisha had self-funded her company  with $250K and had to take care of her extended family financially. This made leaving not a practical option. Instead, she had built a team to run the new company.

Mark Cuban made an offer of $150K for 15% and Keisha accepted.

                      OVERALL RATING OF THIS EPISODE…………B

 

.

 

 

 

 

 

 

Posted in Entrepreneur, Shark Tank, Sharky Award, start-up | 2 Comments