With the holiday season just around the corner, will the Sharks be feeling extra charitable when it comes to making deals in the tank? From DoorbBots to Slawsa, tonight’s entrepreneurs tried their best to get the Sharks to invest in their companies. In case you missed what happened in the tank, here’s a recap of the latest episode:
First into the Shark Tank was Jamie Siminoff, owner of DoorBot, seeking a $700,000 investment in exchange for 10% equity in his modernizing doorbell company. DoorBot is a high-tech doorbell that allows homeowners to see and communicate with guests at their front door via a smartphone app, that Jamie calls “caller ID for your front door.” The units sell for $199 apiece and cost $81.83 to make. Jamie sells DoorBots primarily direct to consumer, which has helped him hit $1 million in sales in the last 9 months. While some of the Sharks are skeptical about Jamie’s high valuation and ability to grow the business against cheaper competitors, Mr. O’Leary is quick to make his typical royalty-laden offer. Kevin offers Jamie $700,000 for 10% royalty, which drops to 7% after his investment is recouped, with 5% equity. Jamie isn’t interested in a royalty, so he counter offers with a $700,000 loan at a 10% interest rate, and a 3% equity kicker. With no middle ground in sight, Kevin bows out in his standard form, by telling Jamie, “you’re dead to me.” No deal this time.
Next up is a recap featuring Barbara’s favorite investments in the Shark Tank: Villy Customs, Tom & Chee, The Coop, Ride On Carry On, Daisy Cakes, Cousin’s Maine Lobster, and Ryan’s Barkery. From custom bikes to homemade dog biscuits, these companies have combined to create over 150 new jobs in the US, not to mention all have been greatly successful since appearing in the tank. Congrats!
Up next in the tank is a unique spin on two old favorites: slaw and salsa. Julie Busha entered the tank looking for a $150,000 investment in exchange for 15% stake in her company, Slawsa. The Sharks are easily impressed with Slawsa’s distribution in over 4,200 stores nationwide, including Kroger and Publix, and 200% year-over-year growth (including $500,000 projected sales 2013). Julie isn’t rattled by the Sharks’ rapid fire financial questions including how much she paid to buy out her partner ($50,000), the cost of Slawsa ($1.25 to make and sold for $2.25), the royalty offered to her former partner (.66%-2%) and where that royalty comes from (her own personal savings). But emotions run high as she describes her and her husband’s commitment to financial responsibility, both personally and professionally. She hopes to use a Shark’s investment to increase production. Julie hasn’t taken a salary from Slawsa yet, and she’s content to continue working sans salary if she has to. Despite Julie’s strong financials, the Sharks are having a hard time getting behind the product and jumping into a competitive industry. Without any offers on the table, Julie leaves the tank with a smile on her face, telling the Sharks that she hopes to make them regret their decisions.
Hoping to have a Magic Moment with the Sharks, Trevor George, Blake George, and Sanford Nelson are next in the tank, looking for a $500,000 investment in exchange for 15% equity in their custom photo-printing company, Magic Moments. The company’s premise is simple: users can use the Magic Moments mobile app to print their own photos on mugs, t-shirts, coasters, bags, and more. Taking it one step further, users can also sell their custom pieces through the app’s marketplace. Despite being pre-revenue, the guys hope their exclusive deal with CafePress will be enough to lure in an investment from one of the Sharks. So far, the guys have raised $500,000 from family and friends for 33% equity, but they’re still hoping to land a Shark. Unfortunately none of the Sharks are excited about competing among other tech giants (Zazzle, Shutterfly), and there are no Magic Moments in the tank for this trio. All of the Sharks are out.
Last into the tank are sisters Donna and Rosy Khalife, looking for a $110,000 investment in exchange for a 10% stake in their company, Surprise Ride. Looking to capitalize on the popularity of monthly subscription box services, the sisters created Surprise Ride, which caters to children by offering a monthly surprise box to teach them new hobbies and activities ranging from creating chocolates to designing mosaics. The subscription starts at $24.99/month for 6-12 month subscriptions, for $29.99/month for a single box. The Sharks are impressed with the quality of the product, and even more impressed with Donna’s ability to answer the notoriously tough financial questions like customer acquisition cost ($5.30) and average customer value ($130 over 12 months). Robert makes an offer of $110,000 for 25%, justifying his offer by saying is takes into account his executional risk, meawhile the other Sharks still have questions for the women. Donna’s Harvard MBA and Wall Street background shows the Sharks that she knows the industry… in theory. But when the Sharks begin to ask execution and strategy-based questions, Donna mistakenly tells the Sharks they have the skills in-house, when in fact they’re recruiting external vendors to handle marketing and SEO. With the pitch going downhill, Robert rescinds his offer, telling the women that they gave him too much time to change his mind. There are no other offers on the table, and Kevin sums their exit from the tank in true Mr. Wonderful fashion: “You came into the shark tank, had an offer and didn’t close it. Poopoo happened and you got a surprise ride.” No deal.