This episode was the Season 4 finale! Regular Shark Tank recaps will resume with the start of Season 5.
Pitch #1: Three-Day Rule
Elevator Pitch: exclusive online dating club
The Entrepreneur(s): Val Brennan
The Ask: $200k for 10% equity
The Deal: no deal
- Val said she was a lawyer working 16 hours a day with zero time for a love life. Her solution? Start a startup!
- The online dating space is very competitive. Val’s main differentiator seems to be “we use various tricks to keep the riff-raff out”. Once you’re allowed into the site, it’s like any other dating site. So the question is – how effective is she at keeping the riff-raff out? They require an invitation or endorsement in order to apply (ala the Gmail model), they screen applicants using a survey, and finally they charge $100 a month. But I’m just not convinced the screening will be effective, and if it is effective that the business model is sustainable. Dating sites can be tough to run – there is constant turnover if you are successful. Limiting your audience makes consistent cash flow and growth that much tougher.
- Here’s an idea – how about a set of tools or processes to help women feel more safe at existing online dating sites? I know women get hounded with solicitations when they join a dating site, and that can add to the creep factor and make legitimate reachouts get lost in the noise. Instead of trying to compete with existing dating sites, I think there is an opportunity to help these sites become more effective. One idea – form a company that audits dating sites to see how well they filter out creeps (and charge these sites to get this objective, 3rd-party approval – sort of like the Better Business Bureau stamp).
Pitch #2: Ryan’s Barkery
Elevator Pitch: all-natural dog treats
The Entrepreneur(s): Ryan & Daniella Kelly
The Ask: $25k for 25% equity
The Deal: Barbara accepts the deal as proposed
- Ryan got the Sharks to each taste a dog treat. It probably helped that the Sharks didn’t want to say no to a 12-year old kid. Well played, Ryan.
- I love Ryan’s pitch – dog treats so fresh they should be slapped. Though I think his dog Barkley needs to work on his pitch – I think the Sharks were more excited after eating the dog cookies than Barkley was.
- Ryan is definitely a hard worker – he gets up at 5am every day to bake cookies, and runs the business at night after going to school and finishing his homework. I think that story moved the Sharks. But most of the Sharks bowed out, and I have to agree – from a business perspective, it didn’t really seem like a big enough business (their main distribution channel was Ryan’s brother’s lacrosse practice). I’ve seen other “wonder kids” appear on the show with amazing businesses, and some got funded while others didn’t. Maybe Barbara accepted the deal because she saw potential, but I suspect she sees more potential in nurturing Ryan as a young entrepreneur vs. Ryan’s bakery business.
Pitch #3: Tom and Chee
Elevator Pitch: grilled cheese & tomato soup restaurant
The Entrepreneur(s): Tru Quakenbush & Cory Ward
The Ask: $600k for 10% equity
The Deal: Barbara is contributing $300k for 15% equity and franchise rights to New York; Mark is contributing $300k for 15% equity and franchise rights to Texas
- A restaurant that only sells grilled cheese & tomato soup? Sign me up! Can’t wait until they come to Texas. Not sure about the grilled cheese made out of glazed donuts, though.
- The Sharks laughed at the entrepreneurs initially – especially when they claimed their food could be viewed as “health conscious” – but they stopped laughing when they heard the numbers. In one year, the 2 corporate Tom & Chee shops grossed $1.5 million. The entrepreneurs just started franchising – $35k one-time franchise fee, 7.5% recurring monthly franchise fee, and ~$250k in expenses to start a franchise. But the first franchise – opened in Louisville, Kentucky – grossed $100k in sales in the first month!
- I knew Mark was going to do the deal – especially given his interests in sports stadiums, concert halls, etc. I was surprised though that he went in with Barbara instead of going it alone.
- I thought it was smart that Mark – then Barbara – negotiated franchise rights. They know the Tom & Chee concept could take off and have set themselves up to get a return not just from investing in the corporate entity, but in individual franchises. I’m sure both Mark and Barbara have teams to stamp out and manage franchises like a well-oiled machine.
Pitch #4: Verbalize It
Elevator Pitch: 24/7 human-powered live translation service
The Entrepreneur(s): Ryan Frankel & Kunal Sarda
The Ask: $250k for 15% equity
The Deal: Kevin offered $250k for 20% equity
- There is always an interesting duality between certain business models – i.e. take a pain point (in this case, translation) and create a business model where machines solve the pain point, and another where humans (at scale) solve the pain point.
- In this case, it wasn’t clear to me how the entrepreneurs would be able to scale up enough to offer translation services in many different languages 24 hours a day, 7 days a week. The Sharks repeatedly asked the the same question, but the entrepreneurs essentially kept answering “we’ll use crowd-sourcing and get lots of people to sign up as translators”. I wish they talked more about how they would entice people to sign up for their service; perhaps information on how they’ll identify the most popular languages & usage times and optimize around bottlenecks; etc.
- When asked how they will compete with machine translation, the entrepreneurs said that machine translation doesn’t work. But it does – I use iTranslate Voice for the iPhone (also available for Android) and it is pretty darn accurate (or at least good enough). Though I do agree with Mark Cuban, who said there will always be reasons to go with a human-powered solution over a machine-powered solution, and vice versa.
- The entrepreneurs chose Kevin at 20% equity (I think to keep the most equity), but they should have gone with Mark at 25% equity. Mark seemed excited about the space – plus he was heavily invested in a machine-translation startup and had a lot of domain knowledge and understanding of the marketplace (worth way more to a startup than an extra 5% equity, IMHO). But I will say I HATE BULLYING by the Sharks! Clearly Mark was excited about the business, but like he’s done in the past he tried to bully the entrepreneurs into accepting his deal without entertaining other offers. I think that’s bullpoop. If Mark’s deal is the best deal, then it will be chosen. Mark thinks he might save money but I think it starts the relationship off on the wrong foot; plus, I’m sure Mark wouldn’t want entrepreneurs he invests in to be bullied into making major business decisions. Sharks – if you are reading this (and I doubt you are) – make a fair, mutually beneficial offer and give the entrepreneurs time to make one of the biggest decisions of their lives. If your offer is truly the best offer, and you are truly the best partner, then trust that the entrepreneurs will make the right decision.
Past-Pitch Update: montage of all Season 4 updates
- This week, Shark Tank aired a montage of all the past-pitch updates shown throughout Season 4. It’s always great to see updates on how entrepreneurs and various business ideas are doing!