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+