This was the first time since I’ve been analyzing the Shark Tank TV show (3 years) that I had to watch an episode twice before forming my opinions. Why? (No, I didn’t fall asleep while watching!)……Frankly, I couldn’t believe what I was seeing. Many of the Sharks’ decisions baffled me.
Of the four contestants, I only agreed with one outcome. On that basis, the winner of tonite’s Sharky Award for entrepreneurial excellence is……..
Platinum Sharky Award…..John, Sal, and Anthony from The Paint Brush Cover
After a rocky start, these three landed a great deal from Lori. They ended up getting twice as much capital as they asked for and getting a partner who will help them get their appropriately named product on QVC in the big box stores with “lightning speed”.
These guys were great! With over 60 years of painting experience, they were knowledgeable and passionate. Sal got so excited when Lori made her offer, his eyes almost popped out of his head. He looked like he had just scored JWOW’s phone number at a Jersey Shore bar.
Seriously, John’s opening verbal presentation needed some work. Entrepreneurs, you either need to memorize your presentation or just speak from the heart and touch the key points. John tried to memorize each word but stumbled. These guys were so lovable that the Sharks applauded when he finally got thru it. Most people wouldn’t be so lucky.
The Best of the Rest…….I was stunned that the Sharks wouldn’t make a deal with Cameron and Joel from Kodiak Cakes. They had their healthy pancake mix in 1600 Target stores. They were forecasting Sales of $5 million for the coming year. They had a premium product with very good margins. They had a 17 year track record. They gave a great presentation.
What’s not to love here?
The valuation was way too high according to the Sharks.
Cameron and Joel came in with a reasonable valuation (slightly high but that’s to be expected). They were valuing their company at roughly 10X pre-tax profits and 1X to 1.5X Revenues. A bit rich, but a reasonable starting point. The best offer they got was 3X pre-tax profits. These bottom fishing Sharks blew it! All low-ball offers were declined. Even Mark Cuban congratulated Cameron and Joel for turning down the Sharks offers!
In the “You’ve got to be kidding me” category were Christie and Courtney from Monkey Mat. These two engaging Mom’s had created a portable mat for kids to play on that cost $39.99 at retail!
….and this company was valued at 6X Revenues by the Sharks!!!! Lori and Mark plan on cost reducing this product so it is treated like a throw away umbrella. They believe this will make this a high volume product and “blanket” the market.
I’m still baffled by Nick and Josh from Plated. Let me get this straight, you order food ingredients, they ship them to you, and then YOU have to cook them! Maybe if you live an hour or so from a market this might be a good thing.
These two had great pedigrees (Harvard, Dartmouth, Georgia Tech, etc.) but didn’t seem to know much about food. They were data driven entrepreneurs with Harvard MBA’s that had somehow convinced other investors to value their company at $9 million!
Mark Cuban occasionally invests in the entrepreneur and not the company…..this was clearly one of those times. He plunked down $500K for 5.56% of the company with the ability to get Advisory Shares down the road. These are shares companies can use to compensate their advisors.
I am now convinced we’ve entered an investment “bubble” and many companies are over-valued. I will be interested to see how this turns out. But I’m still baffled!