Business: Friday Night Lessons-Shark Tank and Beyond The Tank 5-15-2015

beyond.the_.tank_.766x432Nick Woodman was tonight’s guest shark. He’s the founder of the Go Pro camera. Kevin, Lori, Daymond and Mark sit in the chairs and get ready. The first group into the Tank is the appropriately named Shark Wheel  I’ve seen these guys on Facebook through designer Dallas Stokes. I believe in this product specifically for skateboard so I’m engaged in this pitch from the beginning. I’ve already been introduced to the product and watching the videos so in my mind, I’m sure the crew will get a deal.  Major Points in the pitch: Sales 4000 units 183k in 4 months. Which is a fantastic number for a new product. They are looking for 100k for 5%.

O’Leary goes right into attack mode by saying the guys have a “Nut Bar” factor, but Kevin wants in: 10% until he gets back dough and 2.5% equity right away.

Lori is out.

Daymond wants 20% and will jump on the licensing end.

Nick goes right into lowering the valuation by offering 100K for 15%. Nick seems to be an appropriate fit with Go Pro. It seems this would be the way to go, but then the Shark Wheel guys come out of no where with the information that they have already raised 600k from other investors… Disclosure is critical!

Kevin and Nick combine. It’s a friendly tank tonight. 150k at 10% until 500k is recouped and 5% equity. Mark comes in and the Shark Wheel guys have a trifecta: three sharks 275k 10% royalty til 500k recouped. They get a deal done and like I thought. This is a a learning moment for new business people, innovation is still possible and always gives you an edge when trying to pitch.

The update this week features the White House and a multitude of Shark Tank companies that have become more successful. I think it’s a perfect transition into Beyond The Tank although it comes way to early in the show. I would have preferred the traditional update on one company.

2nd Segment: Gato Cafe 100k for 20%.

My immediate thought: No way this funds. It’s customer service based and I can’t see any way to scale outside of franchising and who really wants to invest in a franchise? The concept has gravity and I like that the person wants to help save animals, cats, but pay to come into the cafe… Hell to the no.  What’s even worse is that its just a concept… Really Shark Tank? You chose these guys for the show? I get it. Giving people a place to hang out with cats and all, but there is no money in that. Daymond begins giving insight into the business and shares that these type of places are big in Japan. The person pitching states that California already has three of these type of cafes. Out of no where we fund out that Daymond represents Tara the hero cat. Daymond has his hands in everything!  Kevin tells a horrible story and is out. Daymond is out. Nick tells her to get a loan…I wonder what Mark is thinking since he always tells people to not get a loan.

My major take away? I like Nick. He gets that some people aren’t going to get an investor and that alternative funding  can take place with a loan if handled properly.

Oh if you really dig cats, visit the Gato Cafe website. They are doing a crowdfunding campaign.

swayCharger3rd Segment: Sway Motorsports Joe Wilcox 300k for 10%. Compact electric  transport $7,999.  350K in presales. Which seems kind of odd that there can be any sales on this since it isn’t in production. I have to listen closely and I’m already engaged because I’ve gone into DMX Ruff Ryders mode for this bike, trike, scooter, Spyder, combo. If I’m an investor I want in immediately. Which once again speaks towards what I said already, innovation is critical. You have to do something different. Joe worked for IDEO… dude is a serious designer.  What’s even more impressive is that he’s spent his own money!!!!  100-200k and invested on his own. This speaks volumes about commitment.

Kevin is saying that it’s a risk because there is no manufacturer.

Nick discusses consumer education in regard to whether you need a motorcycle license to ride it. I have completely looked beyond that. This thing is just dope!

Mark likes it.

Daymond looks at maintenance, which is definitely a concern that I didn’t even consider when I saw this thing. I should know better though because my son had a little electric car that the battery crapped out on years ago. It’s still in our garage and we haven’t gotten it fixed yet and probably never will. Which honestly doesn’t have anything to do with this, but I have to imagine that replacing the battery pack on this thing could get pricey.

Nick gives us a little bit of a back story in his preparation for dropping out. Joe has designed this with the intent to license the patent/design. Nick thinks he should keep the biz himself and grow it. Nick was in license talks with Kodak, but they failed. He creates Go Pro and the rest is history. Mark is out. Lori’s out. I thought it was dope, but no deal… until Joe begins to try and explain more about the biz. Mark flips it and tells Joe to “make me an offer.” Joe goes 300k for 20% and Mark says freaking yes!!!!!

My major point:Never give up on what you want when you’re truly invested in the idea and you’ve put more than just mind power into it. If you’ve put money into it and real creative inspiration and thought; just be ready to close the deal. [bctt tweet=”[bctt tweet=”Never give up on what you want when you’re truly invested in the idea and you’ve put more than just thought into it”].”]

Final Segment: Spikeball starts in San Diego which obviously catches my eye, Go Aztecs!  But…I cant see this growing unless its like hacky sack 500k for 10%… Stupid valuation.

The pitch has Spikeball teams Chico vs tiro demonstrate the game. I’m even further convinced that this is not that serious. We discover that it was originated in 1989 and it disappeared. My first thought, “If it disappeared, there’s a reason.” Mark looks like he’s in love with it though.  I’m still out and looking at this thing with the sideye until I learn that there have been over 500 tourneys and it sells memberships. The biz has been around 6 years and sold 29,000 units for 1.4 million and expects to do 3 million this year! The owner is pulling down a 175,000 salary. What in the entire fuck?!

Dick’s sporting goods is requesting 10000 through purchase orders.

Kevin says its worth 7 times which is much less than the ask.

Lori likes it, but doesn’t like the valuation.

Mark can’t see the valuation he’s out, although he had the dumbest grin and held the balls like Tom Brady during deflategate.

Kevin and Daymond are still in. Kevin offers a loan at 9% on 500k.

Daymond wants 25% and they counter at 15%… Daymond goes 22%, counter at 20%… They got a deal! I didn’t expect that at all.

Major point: [bctt tweet=”While you can think something is stupid, or without value your opinion is just that… your opinion.”]

Beyond the Tank starts.

1st Segment: Chordbuddy – a guitar training system in two months. Season 3 of Shark Tank. Deal was with Robert. There is an interesting back story about the owner going 16 months without selling a property in his real estate biz. He is now hiring people in his hometown of Dothan, Alabama with his company Chordbuddy. My wife was right. It seems that the show is about rebuilding a buzz around certain products invested in on the tank.

The premise of this segment is the launch of a new product: Mathbuddy. He wants to make it in the US. All of his cost for this product is in the licensing of songs for the music book.

Here is where I have a problem. Chordbuddy did 1.9 million in 2012. Dropped to 1.7 mill and then to 1 million. What’s the problem with this? The owner made a product, not a business. Once demand drops for the product, what is the business. I think the owner knows there is money in education and decided to try for some “certain” money. Went into education to capture that dough but I don’t like it. Education is fickle. I was in education for almost 20 years and I know how long it takes to get something approved for a school to purchase. They are not going to purchase Mathbuddy. Robert recognizes this and discusses the drop in sales and points to this advice, there are only two ways to make money: increase sales or lower costs.

The owner wants to make Mathbuddy in the US. Robert asks, “Made in the USA or staying in business?” He explains that he could potentially lose it all by trying to be made in the USA (I discuss this in an article on ARCH about the TPP). This guy doesn’t understand education. He gets to talk with state reps about Mathbuddy and the whole time I’m thinking BS. I don’t think it will fly at all. This is for the show. I don’t buy it.

2nd Segment

Mix Bikini is a company that was supposed to make these interchangable bikini sets. Note I said supposedly. The guy got  50k for 25% and one of my favorite sharks, Barbara, did the deal. Wow a deal without sales… Really Barbara? The owner, Frank claims to have spent 70k on the website. BS.

The guy does a party for the launch after getting the investment, wtf? The website crashes on Shark Tank night. No sales on the site. No Shark Tank bump. Barbara stresses that people forget about you in ten days. I’m thinking Barbara, where is your outrage? This dude stole 50 grand. In my head I’m saying, give me that 50K and in a year I’ll give it back to you with 20% interest. Dude is kinda shady.

His partner in Mix Bikini starts a food truck and it does well. Frank’s a hustler and not in a good way. Launched another bikini company and also a tech and travel company…what was the point of this segment?

3rd Segment

Bantam Bagels season 6.. Lori 275k for 25%. The deals got bigger and I’m wondering how a bagel company garners an investment?

Bantam has a storefront and a shipping biz through the website. Lori wants the name to be different for branding purposes. I really dig how they get into the discussing on Co Packing.  Everytime I hear this I want to call my sister in law and tell her to get her snickers cake and her hot wing sauce into a co-packer.   Bantam is being pushed to make more dessert like items because “Sweet balls” don’t need reheating so Lori wants to hit that market hard. I on the other hand can’t hear Balls without thinking about Tom Brady so for your listening pleasure:

They used Lori’s mom’s banana bread recipe. This segment is more engaging. The company changed the name and I’m thinking about trying some Bagel Stuffins… damn now I’m thinking about Doc Mc Stuffins oh well. It was an okay night. What did you think?