Pitch #1: Misto Box
Elevator Pitch: coffee of the month subscription service
The Ask: $75k for 15% equity
The Deal: they offered Mark Cuban 30% equity for $75k; Mark accepted
- I don’t know – I’ve seen a lot of “blah-of-the-month” subscription services, including coffee. When these guys first pitched, I kept waiting for their big differentiator but didn’t really see any.
- I also found their business model a little risky. The club is $12.50 a month, and the economics/margins really only work because they convince small coffee producers to provide coffee samples at little to no cost in return for exposure and a possible online distribution channel. To be sustainable, they really have to prove that their monthly samples result in repeat purchases (or producers will stop supplying low-cost beans). But then they really need to convince customers who find a brand or two they like to continue to purchase through Misto Box’s site. It reminds me of Match.com’s paradoxical problem – the better they are at what they do, the more their customers will drop their service and the harder they have to work at acquiring new ones.
Past-Pitch Update: eCreamery
Elevator Pitch: custom, personalized ice cream pints delivered to your door
The Deal: no deal
- I loved this idea when I first saw it. Such a unique gift vs. the traditional flowers and chocolates.
- Apparently, getting exposure on Shark Tank – deal or not – can change a business. These guys made $2MM in revenue over 5 years before Shark Tank – after Shark Tank, they made $0.5MM in 3 months! I dub this “the Shark Tank effect” (or maybe “feeding frenzy”?).
- The entrepreneurs had a great quote – “A win can sometimes be disguised as a loss.”
Pitch #2: Squirrel Boss
Elevator Pitch: bird feeder that zaps thieving squirrels with electricity
The Ask: $130k for 40% equity
The Deal: no deal
- Look – I have bird feeders. My wife and I do battle with squirrels every summer. We even put giant, ugly plastic domes over our feeders in an (unsuccessful) attempt at keeping the squirrels away. But zapping them?
- The weirder thing to me – you had to physically be present and watch the squirrel mount the bird feeder in order to manually zap it (yes, I said “mount”). That was the first question the sharks asked – his reply was “Yup, that’s the biggest complaint I get!” and then he moved on without answering the objection.
- Basically, the dude needs to work on his presentation. He sounded like a circus barker to me, and his pitch was sloppy. He actually had sales ($196k), but he had already taken over $100k in angel funding and was denied a patent (he claimed a bad patent attorney). At least try to pretty up the pitch by talking about competitors, addressable market, comparable sales from similar items, etc. Heck, I didn’t even hear the usual “If I could capture just 1% of the squirrel-proof bird feeder market, I’d have a bajillion dollars in revenue!”
Pitch #3: Vermont Butcher Block & Board Company
Elevator Pitch: handcrafted wooden kitchen items
The Ask: $400k for 25% equity
The Deal: no deal
- Um, why was he wearing a tie-dye suit? I get that he wants to stand out and “be himself”, but I think it’s an unnecessary distraction during a pitch.
- Then again, the guy had $800k in sales the previous year and was on track for $1.5MM in sales this year. Maybe I should start wearing a tie-dye suit.
- As the pitch went on, it became clear the entrepreneur knew his stuff. I liked that he had a small retail store but referred to it as a place to test products (I like anyone who believes in the power of “test, don’t guess”).
- The guy had passion; he had proven sales; he had demand that he was having a hard time fulfilling; and he clearly knew his stuff. But no shark offered him a deal. I suspect in the end it was a lot of money for an area they probably just weren’t interested in. Though I have seen the Sharks fund some out-there, immature companies before – sometimes I don’t get their logic.
Pitch #4: Mee-Ma’s Louisiana Gumbo Brick
Elevator Pitch: a frozen brick of BYOM gumbo base (Bring Your Own Meat!)
The Ask: $200k for 20% equity
The Deal: Lori and Kevin jointly offer $200k for 50% equity
- Wow – Carol (the entrepreneur) inspires me! She and her family (including her young daughter) built the business from scratch. They worked their way into CostCo and racked up $0.5MM in sales purely from demoing their product in person at 1 CostCo a week for 3 days each week for 2 years. CostCo liked her product so much they offered to make her a permanent item in their regional Louisiana stores – but she doesn’t have the money to fulfill the purchase order. Oh – and she’s homeless.
- Apparently, even though her family made $0.5MM in sales over 2 years, the entire family is living off the margin and there just isn’t enough money to support everyone and grow the business. I’m still surprised that it would get as bad as homeless – I would hope these kinds of small businesses & inspiring stories are exactly what small business loans were designed to promote.
- I was also surprised that so many of the Sharks dropped out. Carol very clearly knew her stuff (or at least more than other entrepreneurs who’ve pitched on the show). She had proven sales, and a purchase order in hand. I always thought the Sharks sought out opportunities where demand was proven (the hardest part), and the part that was left was the (relatively) easier task of scaling operations to meet that demand. Again, sometimes I find the Sharks contradict themselves and are inconsistent in their decision-making process.
- Ultimately, Kevin and Lori couldn’t help but invest – it was clear that they so wanted to help Carol achieve the American Dream she was fighting so hard (and well) to achieve. Actually, it was Kevin who pushed for the deal to happen – it was nice for a change to see Kevin show some heart 🙂