Pitch #1: Jones Scones
Elevator Pitch: scones
The Entrepreneur(s): J. Jones
The Ask: $100k for 25% equity
The Deal: no deal
- Yes, that’s the elevator pitch. Scones.
- Okay, okay. Jones claims his scones are “proper English scones”, not those rebellious American scones covered in orange glaze or maple frosting who refuse to line up neatly on the store shelf and instead hide behind trees and fences all uncivilized-like and who refuse to pay their fair share of taxes even though English scones were paying much higher taxes unlike the ungrateful American, um, scones.
- The Sharks had a bone to pick with Jones Scones. Each month Jones sells $5k worth of scones. But let it be known, at one point Jones was selling $100k worth of scones because Jones Scones had grown. When asked what happened, Jones bemoaned his old manufacturer had blown the scones and had to be disowned. Jones was forced to postpone and scale back his scones without money or a loan. Robert rightfully asked – Jones, given what’s known after 10 years in business about Jones Scones and the opportunities blown, how will you atone and get back in the zone with your scones? Well, Jones’ whole tone was that he couldn’t do it alone. Robert and Lori backed out – they felt lacking confidence to deal with the unknown alone makes one prone to being overthrown. Kevin’s out too – he thinks Jones Scones can be easily cloned and dethroned. Damon likes Jones, but a business about scones makes him groan. At this point, Jones thinks all cards have been shown, thanks everyone, and leaves on his own. But wait! Mark doesn’t condone Jones having flown despite Mark’s reply not being known. Was that an opportunity blown? Probably not.
Pitch #2: Lugless
Elevator Pitch: door-to-door baggage delivery service
The Entrepreneur(s): Brian Altomare
The Ask: $100k for 10% equity
The Deal: no deal
- I thought Brian started off with the wrong angle – cost savings for everyday travelers. His opening line was that baggage fees are costing people a lot of money, and his service is a better, cheaper alternative. Well, baggage fees average around $25 for the first bag, maybe a little more for the second. But based on his pitch and his website, it seems shipping a standard suitcase is $59. In the middle of his pitch, I think he finally said that the savings happen if you are checking multiple bags, especially oversized luggage. Yeah, maybe – but I agree with Robert, who said the business should focus purely on the “premium service” angle.
- The business model is an interesting one. Basically, creating a business on top of somebody else’s infrastructure that essentially competes with the infrastructure provider. For Lugless, this means shipping luggage via FedEx (but lowering the price by negotiating bulk discounts). Virgin Mobile does this too – it leases network bandwidth from Sprint and sells low-cost wireless phone service. In Lugless’ case, it would be fairly easy for FedEx to enter the business (if the market opportunity was big enough, of course). FedEx already has a network of drivers to handle local pick-up & delivery; and of course, it has the infrastructure to ship anything, anywhere in the world. FedEx may be content letting Lugless & its competitors manage the niche and drive traffic to FedEx’s core business – but it just adds to the investment risk for what seems to me an overhead-heavy, complex logistical undertaking.
- Here’s what would be interesting to me – a service that alleviates my need to pack, or pack a lot. E.g. there are services out there that rent out bulky baby gear – strollers, car seats, etc. – and have the gear waiting for you at your destination. How about a service that rents out “pre-packed” suitcases for you at your destination? Perhaps you give them your clothing & shoe sizes, list some other preferences (e.g. business or pleasure travel), and voila – a suitcase full of everything you need will be ready and waiting for you.
Pitch #3: Geek Chic
Elevator Pitch: multi-use furniture inspired by geeks
The Entrepreneur(s): Robert Gifford
The Ask: $100k for 5% equity
The Deal: Robert Herjavec offered $300k for 25% equity
- $2MM in sales last year – geeks rule! Oh wait – $100k net loss. Screw it – geeks still rule!
- First thing I thought of when I saw Robert Gifford demonstrate his table with the hidden role-playing game surface – poker table! The whole Texas Hold’em fad has faded somewhat, but I think high-end poker tables are probably still very much in demand.
- I thought Kevin’s advice to Robert Gifford was actually interesting. He said that Robert may have more success sticking with his small niche and running a lifestyle-business rather than trying to sell to the mass-market. The mass-market furniture business is very competitive with a lot of pressure on margins; Robert may be better served making high-end products (and Robert Herjavec even suggested he up the price quite a bit).
Pitch #4: Stella Valle
Elevator Pitch: women’s jewelry with an empowering brand
The Entrepreneur(s): Paige Dellavalle & Ashley Jung
The Ask: $150k for 25% equity
The Deal: Lori and Mark offered $150k for 35% equity
- Paige and Ashley were both in the military before starting Stella Valle. They designed their jewelry to blend “both masculine and feminine characteristics”. I didn’t really know whether this was a differentiator or not – you either like the style, or you don’t. But then Lori had a great comment – the design plus the founders’ story together create a brand that feels empowering to women. I thought that insight was right on the money. Stories are very effective at reaching an audience at a deeper level (I should hope so – helping consumers and businesses tell their stories is what I do at my current company Bazaarvoice!).
- The margins are insane! Some examples they gave – pieces they make for around $45 sell for $399, and pieces they make for around $3 sell for $99. I’m going to start my own line of jewelry. It’s going to look like it was designed by someone without artistic talent or style, and it will be coupled with the inspiring rags-to-riches story of a man without artistic talent or style who went on to create a very successful jewelry line.
- They totally pulled the “troop card” – Paige chided the Sharks for hesitating saying Ashley went to Afghanistan for them for 15 months while the Sharks sat at home making money. But hey – she did friggin’ go to Afghanistan! All is fair in love and venture capital.
Past-Pitch Update: Scrub Daddy
Elevator Pitch: versatile sponge that changes texture with water temperature
The Entrepreneur(s): Aaron Krause
The Deal: Lori had offered $200k for 20% equity
- Holy moly! Scrub Daddy had sold $100k in the 6 months leading up to Shark Tank. After Shark Tank, they sold $2 million in 15 weeks! $500k of that was on QVC alone. Lori thinks the Scrub Daddy is a $100 million product.
- It’s just a sponge with a face (okay, plus the cool water temperature texture changing thing). But it just goes to show how lucrative a consumer products business can be, when it feels like so many people are obsessed with starting technology businesses in particular.
- I’ll be darned if I didn’t go to Amazon and buy a 4 pack of Scrub Daddies right after watching the update on the episode!