Shark Tank episode aired February 5, 2016

This Shark Tank episode honored military veterans. I LOVED IT!

Each of the four presentations was awesome. The products and services were outstanding, and the entrepreneurs were passionate, well prepared, and knowledgeable. They knew their numbers and were poised and professional.

I am using my “Military Scoring System” to analyze the entrepreneurs…..5,4, 3, 2, or 1 Stars. Obviously, a 5 star rating would be the best and 1 the worst.

The entrepreneurs (in order of their appearance) were…….

Lisa and Cameron from R. Riveter……4 Stars 

These two military spouses have created a business that manufactures and sells handbags made by military spouses that are made with military materials (ex-tent fabric). They started the business with just $9K and currently have annual sales of over $300K.

They have provided great opportunities for other military spouses. Their products have great margins  (about 70%) and they are making money. Over 60% of their sales are online. The logistics and management challenges of a business like this are daunting (multiple locations, high employee turnover, working with military organizations, etc.), but the ladies seem up to it.

Shark Daymond recommended to Lisa and Cameron that they not take an investment at all. He felt they could continue to grow the company themselves. Mark Cuban offered $100K for 20% equity and they accepted his offer. BTW, R. Riveter pays homage to Rosie the Riveter, a cultural icon of the United States, representing the American women who worked in factories and shipyards during World War II, many of whom produced munitions and war supplies.

Tarik and Willie from Beartek…….2 Stars

These second cousins teamed up to develop a technology for people wearing gloves to control various military, commercial, or consumer apparatus with their fingers. Since their only product to date was glove-based, they had a difficult time convincing the Sharks that their business was worth $10 million and could become a ubiquitous technology. The risk/reward was not favorable enough to get a deal done with the Sharks.

I did love the Marine saying used by Tarik and Willie, “Improvise, Adapt, and Overcome “. It accurately describes the entrepreneur’s journey too!

Angela from Major Mom……..3 Stars

Angela was my favorite entrepreneur of the night. She was a Major in the Air Force who left the service 10 years ago. She was confident and engaging. You couldn’t help but like and respect her. She has annual sales of $550K in her “house clutter organizing business” and has generated enough profit to invest in the documents and materials needed to franchise her business. Her process and business model had been fine-tuned over 6 years in two locations.

Angela did not get a deal, but got some great advice from the Sharks. Shark Robert recommended she reduce the upfront franchise fee ($10K -$20K) and allow franchisees to pay it off over time with what they earn. Shark Lori thought Angela would be better off not franchising and growing organically. The basic issue here was HOW to scale the business, and how much work it will take to scale it.

I’m certain Angela will figure out the best path for her. I think the Sharks missed out on an opportunity here.

Griffin and Lee from Combat Flip Flops……..5 Stars

Griffin and Lee proved that you can “do well” and “do good” at the same time. Their annual sales are $300K  and they have excellent profit margins for their flip flops and other products. Almost 90% of their sales are online.

Mark, Daymond, and Lori invested $100K each for a total equity position of 30% in the company. The only suggestion the Sharks made is that it might be more profitable to cut back on the number of SKU’s offered and concentrate on just flip flops before expanding.

That’s the “do well” part.

Their products are manufactured in war-torn countries such as Afghanistan, Columbia, and Laos. They are made by locals who are not only grateful to have a job, but willing to reinvest their profits (matched by Griffin and Lee) in their communities. For example, in Afghanistan, profits are used to educate repressed Afghan girls who have never had an opportunity to go to school.

The over-arching belief is that “Business is more powerful than Bullets” and that we can win the hearts and minds of our adversaries better by exporting the American Dream rather than going to war with them.

Given today’s geopolitical risks, I am concerned for Griffin’s and Lee’s safety when they visit these countries. They may be at risk. They’re both former Army Rangers so I shouldn’t worry.

Griffin can explain this opportunity better than I can. Here he is at Ted Talks…….

 

 

 

 

 

 

 

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“Beyond the Tank” aired January 28, 2016

Alas, my winning streak has come to an end. For the first three episodes of “Beyond the Tank”, my forecast for each Shark Tank contestant has turned out to be very accurate.

The streak ended abruptly with Stephan from Tower Paddle Boards. I had given him the dreaded Shark Chum Award for making a terrible presentation. He actually froze and forgot his entire pitch. After what seemed like an eternity, Stephan rebooted and started his presentation. When he was done, I could tell he was brilliant, but the presentation got off to such a bad start, I had to give him the Shark Chum Award.

Fortunately for Stephan, Mark Cuban saw something in him and Mark made an investment in Tower. Stephan’s sales are now over $5 million a year and he is now planning to take Tower to the next level by becoming a Beach lifestyle brand.

Next up was Bobby and Judy from Squatty Potty. They sold $3 million worth of their squatting “stools” in the first 3 weeks after their appearance on Shark Tank! Shark Lori invested in the company and she’s helping them produce a video which will increase their awareness thru Lori’s social network connections. This will save a lot of money vs. going the infomercial route.

Next up was Leslie from Grill Charms from Season 1. Shark Robert invested and helped Leslie land a licensing deal that has allowed her to spend more time with her family while collecting quarterly royalty checks.

Tracey and Danielle from Wicked Good Cupcakes is Mr. Wonderful’s pride and joy. He had negotiated a great deal which pays him 45 cents a cupcake in perpetuity. He helped the ladies avoid a big potential pitfall by steering them away from introducing their new cake mix product, and encouraging them to sell  cookies with corporate logos instead.

 

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Shark Tank episode aired January 29, 2016

Four intriguing entrepreneurs appeared on this episode of Shark Tank but none stood out enough to win my Sharky Award, which is given each week to entrepreneurs giving truly outstanding presentations.

First up was Sara and Bob from Shefit. Their product is a customizable sports bra. It zips from the front and provides the right amount of “compression and encapsulation”. It sells for about $59. They had sales of $220K in 18 months and convinced Daymond to invest $25oK for one-third of the business.

Sara was a super high-energy entrepreneur, and was so passionate and excited about their business that she wouldn’t let her husband (and partner) get a word in edge-wise. On the other hand, her passion alone my be enough to propel this business to the next level.

Next up was Jeff and Casey from Co.alition, a maker of “smart backpacks” that allow the user to carry and charge their smart phones, tablets, etc. They gave an excellent presentation but made a strategic error by not combining and offering Co.altion with their existing backpack company that had annual sales of $450K. Investors hate to be offered equity in the new company, but not in the more established company.

There are several reasons for this. Potential investors are afraid the original company will divert the entrepreneur’s attention away from the new company. They want their interests to be perfectly aligned with the entrepreneur’s. Also, having an existing revenue stream lessens the risk to the investor.

These guys reminded me of the legendary Shark Tank contestant Scott Jordan (appeared in March,2012) of SCOTTeVEST, who had a similar product (only it was a vest and not a backpack) and two similar companies. He didn’t get a deal either. Hey wait, maybe these two should get together! Seriously.

Dave, Andrew, and John created a product called Icy Breeze which allows a large cooler filled with ice to become an outdoor air conditioner. They are selling this “portable AC unit” for $349 which the Sharks agreed was way too much for the average family.

I questioned the product’s applicability. It was originally designed for camping (where large coolers are allowed), but I couldn’t see it being used at a baseball game, on a golf course, while running, exercising, etc.

The knockout punch came when Dave told the Sharks he had invested $5.5 million of his own money to fund the company! Dave is a serial entrepreneur with over 30 patents.

He was offering the Sharks a mere 5% equity stake, which wasn’t enough to get them  interested. No deal here.

The fourth entrepreneur was Shaan from 2400 Expert. He was one of only 300 people out of 14 million to get a perfect score on the SAT’s. He had developed a number of online courses to help people improve their SAT scores. In his spare time, he was simultaneously an MBA student at USC and an MD student at Yale!

Shark Lori asked Shaan a very important question, “When you graduate, do you want to be en Entrepreneur or a Doctor?”. When Sean hesitated, the Sharks lost interest…..except for Mark Cuban who ended up making an “acqui-hire” deal for $250K for 20% equity even though he wasn’t terribly interested in Shaan’s courses.

One of the early definitions of acqui-hire is….

“When a large company “purchases” a small company with no employees other than its founders, typically to obtain some special talent or a cool concept”.

Mark has done this several times over his time on Shark Tank. This is also a hiring tool used by many technology companies as a way to build their domain expertise and/or development team.

 

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“Beyond the Tank” aired January 21, 2016

I must admit, I was not convinced Cousins Maine Lobster would be successful after their appearance on Shark Tank.  The co-founders, Jim and Sabin, didn’t display a very deep knowledge of business. I had said in my original analysis that Shark Barbara would have to provide lots of her Marketing expertise for these guys to survive.

She did, and they not only survived, they thrived!

I think what Jim and Sabin have accomplished is amazing….over $10 million in sales,  10 new franchises, and a new restaurant on Ventura Blvd. in L.A.

They have been very open to Barbara’s suggestions and have taken advantage of her business acumen. This was THE KEY to their success! They knew what they knew (Lobsters, Cooking, Maine, etc.), and they knew what they didn’t know. Barbara saw to it that they optimized the operation of their first truck before expanding to franchises, and (forcefully) suggested a re-design of the new restaurant before it opened. She kept them from making the “fatal mistake” that can spell doom for any start-up.

Next, Shark Daymond visited Mo’s Bows. Daymond didn’t invest in Mo’s Bows, but agreed to mentor him. He lived up to that promise.

For those that missed it, Mo was 11 years old when he first appeared on Shark Tank with his Mom. He’s now 13 and he’s more then tripled his sales! Mo wants to expand into men’s and women’s clothing, but Mom and Daymond convinced him that it’s too soon….he should continue focusing on bow ties until he is firmly established in that space. Since it’s up 20 times easier to sell an add-on product to a current customer vs. selling to a new prospect, Daymond recommended Mo’s next product line be men’s ties.

The segment included Daymond giving Mo a tour of his old neighborhood (Hollis, Queens,NYC) and telling him stories about how he and his Mom got FUBU off the ground. Good stuff.

I loved Bottle Breacher so much I ordered one for my Father-in-Law for his birthday (he loved it!). Mr. Wonderful and Mark Cuban invested in Bottle Breacher (a 50 caliber bullet that is turned into a bottle opener). Mr. Wonderful actually teared-up when he talked about how Jen started this business while Eli was deployed in Iraq. Mr. W. also admitted that this was one of the few times that emotion entered into his investment decision.

Following your heart isn’t always bad in the investment world. Sales at Bottle Breacher have increased from $500K to $3.5 million since their appearance on Shark Tank.

In this episode, Mr. W. and his team helped Bottle Breacher increase their manufacturing capacity from 600 units to 2000 units a day so they could clean up 20,000 backorders. They are now in a position to expand their product line.

 

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“Beyond the Tank” aired January 14, 2016

All three past contestants featured in this episode were winners of my Platinum Sharky Award. They are all doing very well. Two got investments from the Sharks and one did not.

The Paint Brush Cover got an investment from Shark Lori. They finally changed their packaging (at Lori’s urging) and now have their paint brush and roller covers in Home Depot.

I am very proud of Liz Lovely……Liz has overcome so many hardships. After her appearance on Shark Tank where she left without a deal, she went thru a divorce with her husband/business partner after 18 years of marriage. Despite the loss, she has increased her annual sales from $1 million  to $2.7 million.

Speaking of overcoming adversity, Mark and Hanna from Lollacup from Season 3 have gone thru hell. Hanna experienced a severe skin disease that was so painful she ended up spending her days in the bath tub. Her work ethic is so strong, however, she managed to send/answer emails while trying to deal with the pain. Despite these hurdles, they have almost tripled sales to $2 million since their appearance on Shark Tank.

 

 

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“Beyond the Tank” aired January 5, 2016

People constantly tell me they want to know whats happened to the Shark Tank entrepreneurs after their appearance on the show. “Beyond the Tank” profiles three past contestants per episode. From a personal standpoint, it helps me rate myself on my original analysis of the entrepreneurs. Based on this episode, I would have to give myself an A+. Here’s why…..

There were three companies featured on this episode of “Beyond the Tank”.

Grace & Lace was a Sharky Award winner and was in my Top 10 Best Presentations list for Season 5. Their sales are now over $10 million and they’ve figured out a way to increase their product design capacity which had become a bottleneck. This will fuel even more  growth in the future. Shark Barbara invested in Grace & Lace and continues to help them solve problems and grow revenues.

bee thinking appeared in Season 6, but did not receive an investment from the Sharks. Matt said that he realized afterward that he had set his company valuation way too high (probably double what it should have been). Despite not getting a deal, I had pointed out in my analysis, “Matt is all-in and I think he will do fine on his own”. His sales of bee hives have exploded and he now has Daymond interested in his company. Who says you need an outside investor for a start-up to be successful? Self-funding is still a very viable option.

Scrub Daddy is the largest selling product in Shark Tank history with over $75 million in sales since their appearance on October 26, 2012.  They had won my Sharky Award and were ranked 2nd in the Top 10 Best Presentations of Season 4. With over 100 appearances on QVC, Shark Lori deserves a lot of credit for their success.

Although I view Scrub Daddy as validation of my analysis and my Best and Worst rankings, I would love to see a follow-up story on Tom+Chee, the winner of my Best Presentation of Season 4.

 

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Shark Tank episode aired January 15, 2016

This was one of the most thought-provoking Shark Tank episodes ever. I had so many questions after watching this episode.

How can a company with no sales and with no product experience be worth $10 million? How can a company with $80K in sales be worth $14 million dollars? Are we entering a new Wall Street bubble like circa 2000? Has the whole investment world gone mad? Does this mean I just don’t get it (even though I co-founded an internet software company myself)?

I couldn’t give any Sharky Awards tonight, even though the entrepreneurs were very talented. Here’s why…….

David from Fixed billed himself as the “Ticket Hero”. He has created a smart phone App that helps people get out of paying parking tickets based on administrative errors on the ticket (wrong model, wrong license plate, etc.). He has ticketed people take a picture of the ticket and email it to him.  Then his software analyzes the ticket for errors and gets many of them dismissed. He gets paid a 35% success fee.

The cost to acquire a new customer is $5 and his average profit per customer is $5. This didn’t sound like a winning formula to me. He valued his company at $14 million with $80K in annual sales. Somehow he got Mark Cuban to invest $700K  for 7% of the company. The whole thing just didn’t smell right to me. I’ll be surprised if this deal gets past due diligence.

Ann and Dave from Hatch Baby had tons of relevant domain expertise in the baby care information industry. In fact, Ann gave one of the best verbal presentations I’ve ever witnessed. They have developed a smart scale that is designed to weigh the baby before and after feeding to determine how much breast milk he/she has consumed.

Ann said when she was a new Mom, she always wanted to know why her baby was crying. In the previous generation, parents would say, “Let the baby cry, its good for their lungs”. Now parents don’t want babies to cry, and are willing to spend big money to comfort them. Ann forecasted 20,000 units at $300 per unit for Year 1. Very optimistic.

Ann was so persuasive, that even with no sales and no product, she convinced Shark Chris Sacca to loan them $250K  (part of an existing convertible note capped at a $7.5 million valuation).

I really like twins Antonio and Tasha from Village Scholarship. I think they have a great concept that can help kids raise money to pay for college, but they hadn’t finished their website and were too early to the tank.

As Chris Sacca said afterwards,” Ideas are cheap. Execution is everything”.  I actually think these two will do very well on their own once they tweak their business model and scale back their short term vision.

The comic relief was provided Nicholas and Alessia from Beard King. They have created a beard trimming bib to prevent hair from messing up the sink.  Unlike the hi-tech contestants, they actually had real sales, a real product, a great marketing campaign (including a viral video that got 20 million views!), and big margins. They ended up leading a chant to entice Shark Lori to invest in their company, and Alessia abdicated her throne  and dressed Lori like a Queen (of QVC?). Very funny segment.

Lori was so taken, she took a 45% equity stake in their company.

 

 

 

Posted in Chris Sacca, Crowd Funding, Entrepreneur, Kevin O'Leary, Lori Greiner, Mark Cuban, Mr. Wonderful, Robert Herjavec, Shark Tank, Sharky Award, Tim McEneny, Uncategorized, Venture Capital | Tagged , , , , , , , , , | Leave a comment