This blog reviews each episode of the Shark Tank from an Entrepreneur’s point of view. “Sharky Awards” are given to the Entrepreneurs with the best overall performance.
Platinum “Sharky Award”-Jeff from Hyconn
Jeff came in thinking big. He wanted $500K for 40% of his company. His company had no sales and the potential market for his fire hose connector (local government) isn’t spending any money these days. Normally the Sharks would have eaten him up and spit him out, but then Jeff reached into his pocket and pulled out a smaller version of his connector that can be used for garden hoses and was covered by his patent. Viola!
Now the Sharks were very interested. Mark Cuban ended up buying 100% of his company for $1.25 million, a 3 year employment agreement, and a 7.5% royalty. It wasn’t clear if the royalty was just for three years or forever (this would have been a good clarifying question to ask). Afterwards Mark said he thought this company had the potential to reach $50-$60 million in valuation, so he felt he got a real bargain. Nice to see a true win-win scanario once in awhile.
Gold “Sharky Award”- Jason and Mike from OragAudio
These two clever guys had acquired a 5 year license from China to sell a small speaker and a really cool vibrating gizmo that makes almost anything sound like a stereo speaker (sort of the current day version of Mr. Microphone in the 80’s). They had generated about $750K in Sales with $150K in profits, but hadn’t paid themselves anything yet. This is normal for a start-up but the Sharks used this as a weakness (no real profits) as a negotiating tactic. They also pointed out the fact that the company didn’t own the IP (intellectual property) and that the agreement would expire in 4 years.
None-the-less, the investors got excited once they heard these guys had already appeared on QVC and Jason and Mike ended up getting three offers. They eventually got just what they asked for….$150K for 15% of the company from Robert. BTW, the value of their business would have been higher if they had a 5 year agreement with the Chinese with a 5 year option to renew.
Silver “Sharky Award”-Julie from The Original Runner Company
Nothing wrong with Julie’s vision or confidence. She characterized herself as “The Vera Wang of Aisle Runners”. She actually had a great product and received great advice from the Investors….concentrate on the high-end of the market and forget the low-end. This is a more profitable and sustainable model for a small company like Julie’s. Remember, it’s not what you make, it’s what you keep that counts.
This was a small opportunity for the Sharks but I just had to give Julie a Sharky anyway. Why? My wife went gaga over her runners and Julie turned down Mr. Wonderful (Kevin O’Leary). If I’m not mistaken, Kevin has been in quite a slump over the past month. On this one he “got to the alter” but couldn’t consummate the deal.
The Shark Chum Award….Johnson with Mancandles demo’ed his “Farts in a candle” offering. Not a great selling strategy. In fact it stunk. I do predict great things down the road for this young man. Afterwards he recognized that “The Fart Candle clouded their judgement”….funny stuff.