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+