This episode featured four millennials with great businesses. I never realized that many millennials have a social cause that they feel passionately about, and in many cases, donate up to 10% of their profits on an annual basis.
(Note….I hope it’s 10% of their after tax profits and not 10% of their revenue. For example, if a young business has $500K in annual sales with $50K in profits, 10% of the top line is $50K, and 10% of the bottom line is only $5K……big difference! Donating 10% of sales is probably not sustainable in the long run.)
I’m giving two Sharky Awards for entrepreneurial excellence this week. The first recipient is Bruno, Brandon, and Steven from Sand Cloud. They have developed a line of very creative beach blankets and towels. With a cost of $10 and an average price of $47, they have nearly 80% margins. They have demonstrated nice growth too.Their sales history……$30K two years ago, $430K one year ago, and $1.6 million in Year-to-Date sales with a forecast of $3 million for the full year. These sales were mostly generated by advertisements on Facebook.
The Sharks liked what they heard, and a bidding process ensued with Shark Robert getting the deal with a $200K investment for 15% equity. Robert said they reminded him of another company in his portfolio, Tipsy Elves who make “ugly Christmas sweaters”.
It’s interesting to note that when Sand Cloud started their business, the first beach towel they designed was not well received by potential customers. They then walked up and down the beach to ask real live beach-goers what they wanted in a beach towel. This “Focus Group” led them to start over with an entirely different product line. Customer feedback is a good thing.
The second Sharky Award goes to Nathan and Jim from Elephant Pants. These two young men from Brooklyn put on quite a show. After walking into the tank with an elephant wearing pants, they confessed that it wasn’t a good representation of their company. They then ran behind a wall and changed into very baggy, colorful pants and tops and danced to “You Can’t Touch This” by M.C. Hammer. The Sharks were hysterical.
But don’t be confused by the showmanship. These guys are the real deal. They have sold over $7 million of their products in just two years! Their unit cost averages $6 with a selling price of $24…..great margins. They sell only online and advertise on Facebook and Instagram.
Another bidding war broke out and Shark Daymond got the deal by investing $500K for 17.5% equity (2.5% of that will be Advisory Shares which vest over time). Daymond had to admit when they danced to Hammer, they had him. Daymond and the guys danced one more time to celebrate their deal.
Best of the Rest……..Abby from DARTdrones runs a national drone training business that has had sales of $520K in 18 months of operation. She got a $300K investment for 10% equity from Mark Cuban to help build additional curriculum. This will be needed as Abby’s business is now focused more on commercial customers rather than private customers.
Abby graduated from Babson College outside of Boston. They are well-known for their focus on entrepreneurship.
Will and Ron from Ora did a nice job presenting their nutritional supplements that are made from “real foods” rather than chemicals. They have had sales of $415K in their first 10 months. They had received $150K in the form of a convertible note at a $2.2 million valuation, but were asking the Sharks to invest at a $7 million company valuation. As you might expect, this did not go over well with the Sharks and there was no deal made.
PS….This episode brought the Sharks total investments to over $100 million since Shark Tank started eight years ago.
OVERALL RATING OF THIS EPISODE………..A