Shark Tank episode aired January 13, 2017

There are three sure-fire ways NOT to get an investment from the Sharks…… not knowing your numbers, not listening to the Sharks (and constantly interrupting them), and coming into the Tank with an unrealistically high company valuation. All were on display in this episode.

On the positive side, I was impressed with 21 year-old Vlad from Pinblock. This immigrant from Ukraine was motivated by the death of his Father and came to America to become a successful entrepreneur. Vlad had invented a toy building block system and has two patents pending. Pinblock looks something like Lego’s, but each piece has exactly the same design but with different colors. Pinblock allows you to build 3D models, wearables, and pixel art. He had prepared a mosaic of Mr. Wonderful using Pinblocks that strengthened his presentation. Mr. W. has lots of experience in the toy industry and understands how brutal it can be. He ended up striking a deal with Vlad for $100K for 50% of the company. Vlad understood the drawbacks of being a 50-50 partner (vs. a majority owner), but made the right move by accepting the offer. As he said, “What 21-year-old gets a deal from the Sharks?”. Vlad is the winner of this week’s Sharky Award (Youth Division).

Sharky Award

Sharky Award- Pinblock January 13, 2017

I also liked Lisa from Nicepipes Apparel. She had created leg and arm warmers for people working out at yoga studios and gyms. She had put $300K of her own money into the business, which probably motivated her to inflate her company valuation to $1 million. Based on her sales, the value of the company was closer to $300K.  Lisa listened to the Sharks’ criticism but held her own. This impressed Shark Barbara so much that she made an offer contingent on her portfolio company Grace & Lace investing alongside her. They have tremendous experience in marketing  similar products using social media. Lisa turned down the offer and will go it alone. Tough decision , but the Sharks agreed…..she’s one tough cookie. Unlike Vlad, Lisa wanted to own 100% of a small business vs. owning a smaller percentage of a larger company.

LaTangela from Grease bags gave a very good presentation but had no sales of her oil absorbent product, and her costs were too high. Despite those drawbacks, Shark Barbara made an offer for $75K for 50% of the company and LaTangela accepted. Barbara said she wanted to have LaTangela “sell real estate in her spare time”. I think she was serious and LaTangela may wind up in the real estate industry. She’d make a great agent.

Elana from  Mama’s Milkbox was all wound up. I think hanging out with Elana would be a blast, but it would be challenging to work with her from an investor’s point of view. She was really excited and very passionate about her line of clothing that facilitates breast-feeding. Elana made a couple of errors in her presentation…..she didn’t listen to the Sharks and continually interrupted them. They kept trying to tell her that her business model was broken. She also had to admit that she had no idea about costs, margins, profit/loss, etc. Her best move happened when she walked off the stage and looked into the camera and said, “I need a stiff drink”. Bottoms up!

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

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Shark Tank episode aired January 6, 2017

This episode featured four entrepreneurs that were long on vision, but short on Revenue. They all have potential, but they were all a little early to the dance . The result…..very few offers by the Sharks, only one deal, and some valuable lessons learned. Yet another episode with no Sharky awards.

Tara and Jason from PDX Petdesign kicked off 2017 with a whimsical presentation featuring their “cat companion products”. Their Licki Brush allowed a cat owner to put a plastic brush in their mouth in order to scratch their cat’s back (the same way the mommy cat would do it?). The Sharks were hysterical! Their company valuation was way too high. With Sales of $180K an “ask” of $1 million  (valuation) would have been a bit rich. They valued their company at $2 million which turned off the Sharks. No offers here.

Laura and Michael from Basic/Outfitters sold a box of men’s underwear, socks, tee shirts, etc. online for $60. Their margins were fine and their sales were respectable at $351K, but they had sold 75% of their business before getting to the Tank. That leaves Laura and Michael with a scant 25% equity in the company they co-founded. Mark Cuban described them as “The worst I’ve ever seen” when it comes to Capital Management. Investors want to make sure that their entrepreneurs have enough skin in the game to keep them motivated. They did manage to get two offers contingent on the Shark’s equity coming from the current investors. When it became obvious that Laura and Michael couldn’t make that happen, Lori and Mr. Wonderful backed away from the deal.

Cade from Victory Coffee is an impressive guy. He is a veteran who started a coffee company which relies on patriotism as its primary differentiator. Cade was a little too early to the tank……he had sales of just $30K . Mark Cuban told Cade to “Just Sell!” (more product) and quickly exited. Shark Robert reminded Cade that it can take a long time to secure funding. In fact, “Howard Shultz  was turned down by 242 Venture Capital firms before he could secure financing for Starbucks”.

Although there is lots of competition in the coffee industry, I have a funny feeling Cade may “will this to happen”.

Jason and Angelica from Naturally Perfect Dolls gave an excellent presentation and got a deal from Shark Daymond who himself has three daughters who could enjoy these multi-cultural dolls. With just $1,500, this husband and wife team made their first doll….Angelica…. and it sold out very quickly. They then ran a highly successful Kickstarter campaign to finance their early growth.

The dolls are excellent quality and are designed based on facial features of Angelica and her daughter. That said, there’s lots of work to be done here. First, the cost per doll has to be reduced from $35 to $10. Second, they have to compete with toy giant Mattel who just launched a similar line of dolls. Third, they have to focus on sales in the short term to improve their cash flow. As Shark Robert said, “You have to change EVERTHING”. With Daymond’s help, I think they stand a good chance of making it in the brutally tough toy industry. He invested $200K for 30% equity with Jason and Angelica  retaining 30% each. 10% will go to a charitable organization….TBD.

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

 

 

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Shark Tank episode aired December 9, 2016

The annual Shark Tank Christmas show aired last night. Although there was no single business that got me too excited, there were several lessons to be learned from this episode’s entrepreneurs.

Sarah from Sealed by Santa has built an online service that allowed parents to have “auto-Santa” send customized letters to their kids. Kids can even have an online video chat with Santa! With $355K in current year sales, Sarah got three offers and ended up taking a half equity, half debt deal from Shark Lori.

Starting a business can be a very emotional and draining experience. There are many ups and downs. Add to that the stress of being newly divorced with two young kids and you have a situation where you can burst into tears at any moment. Sarah started crying when she said, “If you want something done, give it to a single Mom”.  As Shark Barbara has said many times,  “People give away their power when they cry”. Fortunately, Sarah still got a great deal with a great partner.

Jim from Polyglide had created a material that could be used to build an artificial ice skating rink. Although his product looked and felt great (Shark Robert actually skated on it),  Jim lacked the outward appearance of “high energy”, sales ability, and confidence. For example, when asked about his competitors, he said he had six, but he couldn’t explain why he had the best product. When asked how he ranked vs. his competitors, all he would say was he was in the top six! No deal here.

Brad and Charlie from DigiWrap made customized tissue wrapping paper and customized gift bags. What made them different from their competitors is their ability to handle small runs (even one piece) profitably.

They had done a good job anticipating push-back from the Sharks. When it became obvious that weren’t going to get any reasonable offers, they proposed a combination deal that included equity and royalties on their products. Of course any kind of royalty deal is music to Mr. Wonderful’s ears!  Brad and Charlie eventually struck a deal with Mr. W. Their anticipation, preparation, and flexibility paid off.

Don and Jake from Hand Out Gloves made high quality gloves with zippers that allows all five fingers of each hand to exit the gloves without dropping them. Their target market is skiing and snowboarding. Don was a very successful businessman from a prior venture who gave young Jake credibility. Don eventually ended up putting in $300K of his own money to improve the balance sheet. This prompted Shark Barbara to invest $300K for 25% equity. Should be a win-win deal.

                     OVERALL RATNG OF THIS EPISODE………….C+ 

 

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Shark Tank episode aired December 2, 2016

This episode featured many different financing techniques and scenarios. Debt financing, down rounds, equity kickers, Silicon Valley valuations, were just a few of the scenarios on this episode. I’ve often said that when it comes to outside investment in a company, you’re only limited by your imagination. This episode proves my theory.

Ryan, Dave, and Chris from Inboard have developed an electric skateboard that sells for $1,400! They had previously raised $2.7 million which they used to develop their unique in-wheel motor technology, and grow the company to the point where they received $5.6 million in pre-orders. Now they needed money to produce and ship their product.

Rather than give up a chunk of equity, they opted for a $750K, 36 month term loan at 9% interest. However, they also need to pay a 4% equity kicker to secure the loan. The hope is that Sharks Lori and Mr. Wonderful can help them grow and are worth the 4% kicker.

Renaldo from PetPlate prepares and ships healthy food for pets. Despite having a great educational background (MIT),  relevant experience in the food industry, and a reasonable company valuation, there was no deal here. With only 100 subscribers, the Sharks weren’t convinced this could be a big enough business to warrant an investment.

Jeffrey and Michael from Nootrobox make chewable coffee. They came into the tank with a “Silicon Valley company valuation” of $40 million (with sales of $1 million). A multiple of 40X Sales is high even by Silicon Valley standards. If this were to be valued as a food company (which it is) the valuation multiple would be closer to 2X sales.

Not only did they have an inflated valuation, their presentation was awful. Although they may be very talented scientists/engineers, they could not articulate or prove their value proposition and left the Sharks cold. No deal here.

Lisa and Abe from Nomiku have created a device which cooks food “Sous Vide” style with the press of button. They have sold $3 million of them since 2012. They had previously received $875K in their “seed round” (early investment by a Venture Capitalist or Angel Investors), and received a $2 million convertible loan at a $10 million company valuation. The problem here is that the company valuation is now just $5 million. This is referred to as a “down round”.

Guest Shark Chris Sacca took a liking to Lisa and was interested in making a deal, but because of the down round, that would have left them with very little equity. He ended up making an offer of $250K for 10% under the condition that Lisa and Abe go back to their current investors and convince them that the Lisa and Abe end up with a 40% interest in the company. Chris’s rationale was that founders need to retain a significant equity position to stay motivated.

It sounded to me like there are too many moving parts in this scenario and the deal may never get done.

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

 

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Shark Tank episode re-broadcast on November 25, 2016

This week’s Shark Tank episode was originally aired on September 23, 2016.

Shark Tank episode aired September 23, 2016

Excellent Shark Tank Season 8 premiere!  The show featured two food/beverage companies, one footwear company, and one technology company. Also, for the first time ever, the show  included all six Sharks (normally there are five).

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Shark Tank episode aired November 17, 2016

After last week’s terrific show, this episode was uninspiring….no Sharky Awards will be given this week.

That said, there were a couple of deals.  Ben and Ariel from Pupbox have a subscription- based service that caters to puppy dogs.  Each month they ship a doggy care package with toys, treats, etc. Since most dog owners are crazy about their dogs, this is a good business. They expect to do $2.5 million in sales next year. Most of their marketing efforts are thru social media. In fact, they have 75K followers on instagram. They struck a deal with Shark Daymond for $250K for 15% equity. He is also a dog-crazy dog owner.

Vance from Line Cutters gave a very powerful demo of his fishing line and thread cutters. He cut four lines of varying thickness with ease using his ring-like cutting tool. Like most great innovations, this came out of Vance’s own personal experience as a passionate fisherman. He often became frustrated when cutting his line and so he invented Line Cutters. He did a deal with Daymond for $120K for 33% of the company.

Hunter and Alex from Barbell made denim clothing for weightlifters. The pants contained 1% spandex and that allowed people with large thighs to comfortably wear their pants. These guys have a great business! Their sales are $2.3 million and they have a net profit of $500K per year. They would have scored a deal but they came into the tank with a valuation of $10 million……probably double what it should have been. Also, the Sharks were not crazy about denim clothes in general, because “the older they get, the cooler they look”.  This could hurt repeat business.

Catherine from EnergyBits was totally possessed with the idea of taking 30 (or more) algae pills everyday to increase your energy level. She also came into the tank with an absurdly high valuation of $10 million. With sales of $300K and no proof that this actually works, she was operating in an alternate universe.

OVERALL RATING OF THIS EPISODE……….C-

 

 

 

 

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Shark Tank episode aired November 11, 2016

This episode had the strongest group of entrepreneurs in Season 8. After showing several mediocre episodes during the World Series, the Election, etc. the Shark Tank producers brought their “A” game tonight. Each entrepreneur got a deal! I can’t remember the last time all four entrepreneurs got a deal.

There were two entrepreneurs deserving of a Sharky Award for their excellent presentations.

Sharky Award

Sharky Award- Chi’ Lantro

Jae Kim from Chi’ Lantro has a fleet of food trucks and three restaurants serving his Korean Barbecue. Despite having college expenses and a failing business, Jae Kim had managed to save $30K to start Chi’ Lantro. This speaks volumes about him and and his determination. Self-funding is THE best way to fund a start-up, but it requires you to cut back on personal expenses and live below your means…..something many people aren’t willing to do. Mark Cuban said Jae had achieved the “American Dream” by starting his own business with his own savings.

His business had sales of $4.7 million this year and will have sales of $6 million next year.Shark Barbara had invested in Tom + Chee (they won my Sharky Award for Best Presentation of Season 5) and has helped them grow from $1 million in sales to $51 million! Since this is a similar business and her experience and knowledge is transferable, Barbara invested $600K for 20% equity……..a great deal for her and Jae Kim.

Shark Tank

Sharky Award-Milk Snob

Equally impressive was Melanie from Milk Snob. Her product is a baby’s car seat cover that doubles as a mom cover-up, allowing them to comfortably nurse their babies in public. She had sold $1.2 million of her product in the last 18 months. She knew her numbers! Her price to consumers was $36 and her cost to produce one unit was $7. With margins like that, and increasing sales, the Sharks became very interested.

Melanie had targeted Shark Lori as her desired partner. She got her wish when Lori agreed to invest $150K for 10% equity. This is another good deal for both parties.

Jack from Jack’s Stands & Marketplaces is a 10 year old dynamo. He builds lemonade stands and trains kids how to run them effectively. So far he has sold 7 stands, but would like to expand his business outside of Denver. He got a $50K low interest loan from guest Shark Chris Sacca. Jack will definitely be in the running for a Season 8 Sharky Award for Best Presentation in the Youth Division.

Junior from Toor had developed an app-driven Real Estate Lock Box. There was some discussion among the Sharks that something very similar to this already exists. Even with the confusion, Junior landed a deal that included some equity and debt financing. All the Sharks agreed Junior was a great salesman, but I have a funny feeling that this deal may not happen once due diligence begins.  Too many unanswered questions, no sales history, possible patent infringement, etc. Looks too risky to me.

OVERALL RATING OF THIS EPISODE…………A+

 

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