Shark Tank episode aired February 28, 2014

Four strong entrepreneurial personalities on the show tonite. A subtitle for this episode might be “The Arrogant vs. The Confident, where do you draw the line?”.

One of the “confident” was the husband and wife team of Irene and Noam from Bambooee. They win tonite’s Sharky Award.

Sharky Award
February 28, 2014

They gave a compelling presentation featuring their “paper towel replacement” made of bamboo which could be recycled by washing it. I kept thinking that a cloth hand towel could do the same thing and was far cheaper, but the Sharks loved their concept. Irene and Noam sweetened the deal by including other products which they had been selling. When they revealed their total annual revenue of $1.6 million, the Sharks got excited.  Shark Lori got the deal by offering $200K for 10% equity….exactly what they asked for. Well played!

The Arrogant…….Jenifer and Haley from Zipit Bedding was in the proof of concept phase of the business with only 1000 units sold. Despite their limited experience, they seemed to be very inflexible regarding their distribution strategy. They wanted to use a TV Direct Response campaign in addition to a retail approach. The Sharks were adamant that the DR approach was not a good strategy for them, but they wouldn’t agree.

Doctor Amy from Buzzy had a great product……one that dramatically reduces the pain experienced from an injection at the Dr’s office. It was good to hear that Amy found that the U.S. cost to manufacturer her product was now equal to China’s.  This may help bring back manufacturing to the U.S.

Amy drew a hard-line on the company valuation, and rejected the offers made by three Sharks based on a $3 million valuation. Considering her sales were $1 million the previous year, a 3X revenue valuation was quite reasonable.

Lori from Cheek’d had a new approach to online dating. I really liked her passion, but after three years she wasn’t even close to profitability (it normally takes 3 to 5 years to hit the break-even point in a new business). As Shark Robert pointed out, ” Doing the same thing over and over but expecting a different result is the definition of insanity”. Amy refused to listen to the advice the Sharks offered. It’s time for Amy to move on.

So how do you know when you’re being arrogant and not just confident? There is no magic answer, but when you’ve heard the same advice from two or more credible sources, it’s time to carefully consider their advice.

 

CNBC Shark Tank episode aired February 25, 2014-Part 2

One of the things I really like about the Shark Tank TV show is that almost every episode raises a big issue facing today’s entrepreneurs. In this episode, the US patent system was “examined” and became the subject of an intense debate between the Sharks and lawyer, turned entrepreneur, Scott Jordan.

Scott had developed and built a very successful online business selling his Technology Enabled Clothing (TEC). TEC will gross about $12 million in Sales this year, and is growing at an annual rate of 100%. He had received a patent for this clothing line which allows you to “embed” your mobile devices, iPads, etc. in inside pockets. Actually, the patent is just for the wire running thru the clothing which allows the user to listen to music without carrying a separate wire.

Scott had already threatened to sue 11 competitors for patent infringement and received a settlement of some sort from each of them. When the Sharks learned about this, Mark Cuban went nuts. He said, “Dumb-ass patents…..that’s what’s killing this country. How can they issue a patent for a wire running thru a piece of clothing?”

I totally agree with Mark on this one. Patents are acting as a tax on many industries and are hurting innovation…..particular in anything to do with technology. Patents are being granted on “obvious, everyday technologies” and the patent holders are bringing lawsuits on those “infringing” on their “dumb-ass patents”.

I have been involved in several such frivolous software lawsuits and it is truly a travesty and huge waste of time and energy. It’s hurting businesses of all sizes.

Scott had separated his retail business from the “larger opportunity” which included the aforementioned patent and the Sharks didn’t like that one bit. They wanted the retail business to be included with the patent. Scott received two offers on the combined company but turned them down after talking to his advisor, Steve Wozniak, the co-founder of Apple on the phone.

Then Scott committed the cardinal sin of investor meetings. He insulted the Sharks. He pointed at Kevin O. and declared “You’re Out”, and then pointed at Robert H. and announced “You’re Out. I don’t need you”.

Good TV, but Entrepreneurs should never, under any circumstances, be disrespectful to their audience. It will come back to haunt Scott someday.

Winners of this week’s Sharky Awards

Platinum Sharky Award…..Dallas and Mike, Kisstix

These two had created a his-and-hers lip balm that created an exciting flavor by combining two flavors when kissing. Despite only having $80K in sales last year, the two buds were asking for $200K for 20% of the company. They used a huge Walgreen’s order for over 7000 stores that they had recently received to convince the Sharks to invest. They succeeded in getting a $200K investment from Mark Cuban for 40% of the company. The highlight of the presentation was when the entrepreneurs got Mr. Wonderful and Barbara C. to kiss to demo their product. Interesting to note, that neither had any interest in the product after that traumatic experience.

Gold Sharky Award……Stephanie and Daniel, Smart Baker

This husband and wife team got a nice investment from Shark Barbara. Their business makes unique aprons, cupcake towers, and other baking related products. Barbara’s offer was a little different, but I liked it. She offered $75K for 40% of the company but with one additional condition. She would be paid 5% of every sale until her $75K was repaid. This is a good way for an investor to minimize their risk, while still funding the company during its initial growth phase.

Barbara was the best match for Smart Baker because of her previous success with Daisy Cakes….a Season Two participant on Shark Tank. The other Sharks could not add as much value as Barbara.

Shark Chum…Lyle from Heat Helper is a great guy and gave a great presentation. His only problem was he abandoned this business about 8 years ago to go into the “Dirt Business”. Heat Helper seemed like a “warmed over” deal to the Sharks and they all passed.

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Shark Tank episode aired February 21, 2014

Tonite’s episode featured four strong entrepreneurs. Three of them have a good chance of becoming successful and they will share a Sharky Award.

Sharky Award
February 21, 2014

Jason from Escape and Evasion is a former CIA agent. He gave a compelling demonstration of a couple of escape tactics and had $300K+ in annual sales. He wanted the Sharks to invest in his seminar business and his newly purchased Utah ranch which was to become his “corporate headquarters”. The Sharks didn’t want to get involved in the ranch but were interested in his seminar road show. I can see this becoming a nice $5 million business. Jason accepted Daymond’s offer of $150K for a 45% stake.

Diamond Dallas Page of DDP Yoga did not get an investment from the Sharks. I think they missed the boat.

DDP Yoga has many of the right ingredients for a successful start-up……They have $3 million in annual sales,  a knowledgeable general partner who has personally used this yoga technique, a great customer success story, a strong business partner, profitability, rapid growth, etc. The Sharks fixated on their need to migrate from DVD’s to the online world and so DDP received no offers.  This is not the first company to have to deal with disruptive technologies and be forced to change their platform to stay competitive. Ever hear of Netflix?

Erica from  Southern Culture Artisan Foods is a powerful young lady. I would invest in her any day. She couldn’t get her pancake mix into all  the Whole Food stores in the region so she called each one individually and convinced them to give her some shelf space.  She is a hard worker and a determined entrepreneur. She accepted an offer from Barbara. They will make a great team.

Shark Chum Award……Brian from Moberi pedals “$2,000 Blender Bikes” to make smoothies in Portland. Having visited Portland this summer I can see how this could be very successful.  This business will have a tough time scaling, however. Key West, Fl. might be a good next location. Mr. Wonderful asked a good question…..”Brian, what do you want to do with your life?”

Update…….Glad to see previous Platinum Sharky Award winner Gameface is doing so well. They are licensing their “facepaint 2.0” product to NCAA and NFL teams. Their sales will exceed $2 million this year.

CNBC Shark Tank episode aired February 18, 2014-Part 2

This week’s episode featured an eclectic group of entrepreneurs. One had his act together and wins this week’s Platinum Sharky award.

Platinum Sharky Award…..Fleetwood Hicks, Villy Custom

Fleetwood’s company sold custom “fashion” bicycles online. He’s leveraged his experience in the fashion industry to create a company that allowed customers to configure their own bike’s during the ordering process. He clearly had a great product and plenty of passion. He had a great command of the numbers and could easily defend his retail price of $640 per bike. He also did a nice job negotiating with Mark Cuban and Barbara Corcoran on their equity percentage. He ended up getting a $500K investment for 42% of the company.

I was a bit surprised the Sharks didn’t drill into the current and future manufacturing challenges of building a highly configurable product. With over a million permutations and combinations of bicycle parts and colors, it could become more costly than anticipated.

Gold Sharky Award…….Queenie and Andrew,Boot Illusion

This clever product allowed women to give a new look to shoes and boots they already owned. Boot Illusion ended up getting a $100K investment from Barbara. Queenie was totally engaging and full of passion, but was unorthodox in her approach to say the least. For example, she thought up this product in a dream about boots her girl friend was wearing (in the dream). She also had a dream about Turkey (the country) manufacturing the Boot Illusions, and got on a plane the next day to fly there despite the fact that she didn’t know anyone there and wasn’t exactly sure why she was going. Not all entrepreneurial journeys are straight forward, but I can’t recommend relying on dreaming as a technique to launch a new product.

The Shark Chum Awards…….Jim from Airbedz had developed a great product and had four patents on it but had glaring weaknesses in Sales & Marketing. Jim needs to consider taking on a partner with expertise in these areas. If he would have had this partner standing next to him during the presentation, he would have gotten an investment.

Scott Olson from Sky Ride had been the inventor of roller-blades and claimed he had made a lot of money but his partner embezzled it all. His latest invention is a bicycle-like object on a track in the sky. I felt like I was watching Christopher Lloyd in “Back to the Future”. The moral to this story…..inventors don’t always make great entrepreneurs. He too needs to consider a partner who can help him and not steal his money.

CNBC Shark Tank episode aired February 18, 2014-Part 1

The entrepreneurs appearing on this episode of Shark Tank were all passionate about their products. Two received investments from the Sharks and two were sent packing. This week’s Sharky Awards for entrepreneurial excellence go to:

Platinum Sharky……Shelly Ehler, Show No

Shelly’s product was a towel for kids. The towel can be worn like a pancho while changing bathing suits, clothing, etc. There were two things I loved about Shelly…..her passion/commitment to her product was obvious. Second, her ability to make things happen without having the money. She told a story about meeting a neighbor who was a patent attorney who had been admiring the drapes in Shelly’s home. Shelly knew she wanted to patent her towels so she cut a deal to make her friend drapes in exchange for the cost of a patent. This is the type of creativity needed by new entrepreneurs who are just starting out. BTW, Shark Lori  gave her $75K for 25% of her company. Lori actually wrote a check on the spot without due dilligence (this is a fantasty!).

Gold Sharky…….Eric Corti, Wine Balloon

Being a wine drinker, I personally thought this was a goofy idea, but the Sharks saw something in this gadget. The Wine Balloon keeps red wine from going bad after the bottle is opened (my solution is to just finish the wine!). Eric did have actual sales history selling 700 units for $22. He had spent $65K of his own money to get this off the ground.

Suddenly, and without warning, the Sharks started circling and wanted to buy Eric’s entire company. He was offered $600K by the Shark team of Mark and Lori . Based on Eric’s original request of only $40K for 30% equity, this seemed absurdly high. He started to dicker over the deal. This spooked the Sharks and they rescinded their offer, eventually reducing their offer to $400K which Eric accepted.

This was “made for TV” negotiating at its finest. Eric did walk away with $400K but should have taken the higher deal when offered. He out-smarted himself to the tune of $200K. The Moral: Take a great deal when you get it. Say yes and move along. Stop talking!

Shark Chum …. Kelly Chaney of PuppyCake  made a very good presentation. I liked her. She was poised and professional but lacked the passion/commitment to do whatever was necessary to ramp up her business. After four years of being in business, she had sold only $23K of her product in Year 4. She told the Sharks that “Being in Sales is not my strong suit”. She needs a partner who is a killer sales and marketing pro. This business might work if she does.

Ivory Tenelle from Swilt was asked “How many shirts/robes have you sold?” Her answer was 100. This turned off the Sharks. Entrepreneurs….You need some sales history before any investor will become interested in your company. Why? All investors want to minimize their risk. This is the Shark’s favorite question!

Shark Tank episode aired February 14, 2014

Four totally different entrepreneurs appeared on tonite’s Shark Tank episode. One started an entertainment company, one had a finance company, another had a home repair product, and the other had a marriage conflict resolution product.

I think two stood out, and they will receive tonite’s Sharky Awards.

Sharky Award

Platinum Sharky Award……….Melissa from TenThirtyOne Productions

As the name implies (think 10/31), this company was the perfect contestant for the pre-Halloween show. Melissa was a former manager for Clear Channel-Los Angeles and knew how to promote her haunted hayride enterprise. So much so, that she sold out her LA haunted hayride every day for 17 straight days in October. This resulted in her grossing $1.8 million and clearing $600K last year.

With plans to double her maximum capacity and start a NYC haunted hayride , she ended up getting $2 million for 20% from Mark Cuban. Although this was a very rich valuation ($10 million), Mark stated that he believes this kind of family entertainment has a great future, so he followed his gut and made the deal.

Gold Sharky Award……….Spencer and Eric from FiberFix

These two gave an “infomercial ready” presentation. They had the Sharks fighting for the deal, but they undervalued their company and the Sharks knew it.

Spencer and Eric almost blew it by coming back with a counter offer and asking Lori Greiner for a $2 million Line of Credit in addition to $120K for 12% equity. It lead to a good discussion about the difference between a Line of Credit (LOC) vs. Financing Customer Orders (Purchase Orders). Lines of Credit can be used for any expense within the enterprise, whereas financing a P.O. is essentially a loan for approximately 80% or more of the value of the Purchase Order. It is used to pay the manufacturing and shipping cost for that order.

Lori accepted the counter offer once it was understood that she would not provide the LOC, but would finance individual P.O.’s.

Shark Chum Awards……Amanda and Jason from Elephant Chat had created a product designed to help husbands and wives communicate their feelings. The product was a stuffed elephant (“the elephant in the room”) that could be left at the scene of the crime (ex-when hubby leaves the toilet seat up). This would facilitate meaningful dialog according to the couple. Enough said.

Jason and Val from Total Merchant Resources in NJ were self-described mini-Sharks. They made loans to small businesses and took over their credit card processing. This was right up Mr. Wonderful’s alley. Mr. W’s offer required them to give up 50% of their business……an offer they couldn’t refuse.

CNBC Shark Tank episode aired February 11, 2014-Part 2

Although all four entrepreneurs were passionate, no Sharky Awards will be given this week. This was a sorry group of entrepreneurs…..each with one or more glaring weaknesses. There are some good lessons to be learned from this episode, however.

No one received offers from the Sharks until the last twosome of Arlene and Desare of Go Go Gear somehow managed to get an investment from Daymond despite their “insane” company valuation and their “horrible, horrible, horrible strategy” (per Mark Cuban) of going to Europe before penetrating the US market. These two worked for a big company for a number of years before getting laid off. They then proceeded to start a company in an industry they knew nothing about and spent about $400K of their own money in two years. It was obvious these two had a ”big company” mindset and did not have a good understanding of how company valuations are even calculated.

By giving away 65% of their company to Shark Daymond, they risk being pushed out of their own company some day. Since these two are pretty clueless in the ways of small business, I can only assume that was what Daymond had in mind.

Nick Romero from The Ave had a nice little business printing custom images on hats, shoes, etc. Nick was a gutsy guy who fought for everything he had and was given nothing. Nick was a little too much of a hustler, however. He said he wanted to live “the LA lifestyle” and said he thought he could get by on a six figure salary! He wasn’t sure what he would do with the money if the Sharks invested in him. This was a red flag for the Sharks. This is a very common question investors ask entrepreneurs before investing. You need a definitive answer to this question…..including how much you will pay yourself.

Blake St. Clair invented a solution to a problem that doesn’t exist. His Bark’ems To Go allowed dog owners to carry food in molded plastic while away from home. I suppose this would eliminate a plastic bag or two. Not enough of a value proposition here.

The three guys from Brewer’s Cow made beer-flavored ice cream. They kept contradicting each other when asked questions by the Sharks. It was obvious these guys knew how to make a good product, but knew very little about the 4M’s of entrepreneurship…..Mindset, Marketing, Money, and Management. When multiple partners are presenting, at least decide before the presentation who will field what type of questions.

CNBC Shark Tank episode aired February 11, 2014

This blog reviews each episode from the entrepreneur’s point of view. Each entrepreneur is eligible to win the prestigious “Sharky Award”.

Platinum Sharky……Randy & Darrell with Ride-On Carry-On

This husband and wife team put on a great show. They had sold about 2000 units in the last 12 months at a price of $39.95. They had also spent about $150K on a patent. Given their passion, expertise in the field, and track record, they had no trouble getting $50K for 25% of the company.

They ended up accepting Barbara’s offer even though Kevin O’Leary (the self-proclaimed Mr. Wonderful) had given them a slightly better offer. They connected with Barbara even though “Uncle Kevin” topped her offer. Chemistry and culture are important in selecting an investor……always trust your gut. Well done!

Jeff Foxworthy had the funniest question of the night. He asked, “Kevin,who is calling you Mr. Wonderful?” There was no answer.

Gold Sharky….Mike and Shon with Hill Billy

These guys developed and trademarked a great brand. They ended up selling their entire company to Foxworthy, Daymond, and Robert for $75K plus 7% royalty. Considering their last 12 months sales were $50K-$60K, they made a great deal. They will make a lot of money and will not have to compete with the retail giants.

Silver Sharky……Ken from Uncle Zip’s Beef Jerky.

I found myself rooting for Ken. In the end, he’s better off without a 3rd party investor. He’s regional and too small for an outside investor. He also had decreasing sales. I would suggest he consider taking on a partner with complementary skills and giving him/her a piece of the business when certain milestones are reached. He needs to increase sales before asking for outside funding. I loved it at the end when he said, “I’m not gonna quit”.

Shark Chum Award…..Johnny and Vinny (from The Soprano’s) with The Broccoli Wad

Seriously? A rubber band to hold paper money? Barbara showed some creativity by funding this company and cutting Johnny down from 100% to 60% ownership and giving Vinny half of her stake. I wouldn’t have given them a $10 metrocard myself, but Barbara seemed confident that this train wreck could be salvaged and somehow thrive. This was an offer you could refuse.

Shark Tank episode aired February 7, 2014

(This episode was originally aired on October 18, 2013)

I must admit, I love husband and wife owned businesses……especially when the partners have complimentary skills. There were two such businesses tonight and they are both winners of Sharky Awards for entrepreneurial excellence.

Platinum Sharky Award…….Mark and Amber from Ruffle Butts and Rugged Butts

Platinum Sharky Award
October 18, 2013

These two design and sell clothing and bloomers for young boys and girls. Amber was the creative force and also had lots of business acumen. These two had a great track record with last year’s sales of $3.7 million. They projected sales of $4.5 -$5 million this year.

Kevin O’Leary (Mr. Wonderful) thought they had far too many SKU’s (2,700) but Amber pointed out that this was a fashion oriented business and they had to continually introduce hip new products to know how they would sell. Mr. W. thought this would add additional cost and reduce profitability.

Mark and Amber did a great job of negotiating and ended up getting $600K for 9% equity from Lori Greiner. Lori is a great partner for them and will help get them on QVC. This was a very good deal and a job well done.

Gold Sharky Award…….Theresa and Robert from Veggie Mama

Gold Sharky Award
October 18, 2013

These two made healthy frozen snacks called Garden Pops. Theresa and Robert were all-in…..they had invested $140K in their business and had only generated $30K in sales. Robert had also quit his job as a lawyer. Talk about total commitment!

Mark Cuban thought Robert quitting was a good idea if, for no other reason, the world was better off “having one less lawyer”.

Mark and Barbara Corcoran ended up making a deal for $75K for 20% even though both weren’t interested at the outset. This shows the power of getting multiple bids for a business and generating a “bidding war”.

Shark Chum Awards…..Dr. Edna Ma from Bare Ease is incredibly accomplished. She has two jobs, a family, and is starting a new business. The Sharks were afraid she couldn’t focus full-time on the new venture. Her product was numbing cream with panties to ease the pain prior to a “grooming” session. I loved the fact that she had created a version for men. She named it “Numb Nuts”.

Matt and Mike from Rent A Goat did not do a very good job of explaining how their business worked. Believe it or not, goats really are used for landscaping hilly properties in California. The goats they brought on stage consumed all the vegetation available to them in a matter of minutes. That’s about how long Mike and Matt lasted before the sharks ate them up and spit them out. The sharks thought their business had a low barrier to entry and they would end up having lots of competition if their concept worked.

CNBC Shark Tank episode aired February 4, 2014-Part 2

This episode featured a passionate group of entrepreneurs. By far the most interesting of the four fledgling businesses was Litter (think jewelry, not garbage). It is the recipient of tonite’s top prize……

Platinum Sharky Award…..Rachael and Macenzie, Litter

Litter is a company that designs, makes, and sells unique upscale jewelry. They had actual sales of $78K last year and are forecasting $150K in sales this year. They did an excellent job presenting their products to the Sharks. They scored big points when they told the Sharks they had just received a sizeable order from Urban Outfitters (always good to mention a large company as a customer). The sisters’ expertise and passion was designing jewelry and not selling or manufacturing it. Accordingly, they had to give up the majority of their company to get an investment from the Sharks. Mark and Daymond teamed up to offer $80K for 70% of the company plus an annual salary (TBD). Their offer was accepted based on the value Mark and Daymond will add to their business. I think this business will be extremely successful.

Gold Sharky Award……The Mastronardo brothers, Nardo’s Natural

I would give the brothers an A for passion and an F for forecasting. Their cosmetics business did $30K in sales last year and they were projecting $4.8 million in two years….totally unrealistic! This hurt their credibility with the Sharks and they all went out….except for Barbara who came to their rescue with an offer of $75K for 50% of their company. She insisted they change the name of the company to something more appealing.

Shark Chum Awards…..The most passionate entrepreneur of the night was Tony Devine who created The Original Profender….a device to help basketball players shoot better by making them shoot over a long-armed cardboard defender. The retail price was $500 (Tony thinks big). Unfortunately, the same end result can be accomplished with a $5 broom held by a coach.

Todd from Rent-a-Grandma wanted to replace teenaged babysitters with “more mature women”. He received zero interest from the Sharks who thought his business was too small, not profitable enough, and difficult to scale (grow).