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.