Welcome to my first weekly review of the latest episode of Shark Tank! I’ll use these posts to talk about my thoughts and first impressions after watching the entrepreneurs pitch their ideas. Basically, it is my opinion of what went down. It is not meant to be an exact recap – for that (and to watch the episode), I’ll post an official link.
Pitch #1: Shell Bobbers
Elevator Pitch: a shotgun shell converted into a fishing bobber
The Ask: $80k for 20% equity
The Deal: Mark Cuban offered $80k for 33% equity
- An inexpensive impulse buy targeted to a whole boatload of people who love hunting and fishing. It’s not really a market I know much about, but I do live in Texas and yeah – I think it would sell.
- The entrepreneurs did run a market test at Ace Hardware and had encouraging results, though I wouldn’t say they had a ton of data.
- Mark Cuban ended up doing the deal – and despite the other Sharks telling him he was crazy, I have to agree with Mark. Clearly these guys are smart – they noticed a potential niche product, they tested the market, they knew their numbers, and they declined a deal form Kevin they knew wasn’t good business. I’ve seen too many pitches where the entrepreneurs come in unprepared or clueless as to how to develop a product. $80k for Mark is a drop-in-the-bucket (I bet I could raise that money by rummaging around Mark’s sofa cushions for loose change). In exchange for that money, Mark gets 2 entrepreneurs with good instincts, who just need capital, and who won’t take up much of his time.
Pitch #2: Wicked Good Cupcakes
Elevator Pitch: gourmet cupcakes in a shippable jar
The Ask: $75k for 20% equity
The Deal: Kevin offered $75k for a $0.45 royalty per jar sold
- Man I wish someone invented Smell-o-Vision and/or Taste-o-Vision! Nothing like dense, mashed up cakey-goodness you can eat with a spoon!
- The shelf life was short (I believe the entrepreneurs said 7-10 days) – but what a unique gift to ship on holidays instead of the more typical flowers or chocolates. Reminds me of a previous pitch on Shark Tank for custom, personalized ice cream pints.
- I’m never very comfortable with royalties – and I’m always wary of what I think are often Hail Mary deals from Kevin. All he really did was give them a $75k loan with interest for life (even after he recoups his initial $75k). What incentive does Kevin have to invest further in the entrepreneurs, perhaps help them develop other product lines, etc.? Then again, I also think entrepreneurs sometimes get too protective of their ideas and end up keeping 100% of nothing, instead of say 60% of something. So more power to the cupcake ladies!
Pitch #3: nPower Peg Kinetic Energy Generator
Elevator Pitch: charge devices on-the-go by harvesting kinetic energy from walking
The Ask: $2 million for 22% equity
The Deal: no deal
- At first glance, this looks like a really interesting device for the sports crowd. Hikers, cyclers, etc. can stick this device in their backpack and use it as emergency power for their cell phones if they get stranded.
- But if you look at the price – $199 per device ($110 to manufacture), things start to break down. That is a very high-cost device that requires an equally high retail price to support decent margins – but now you are competing with an extra battery (or two) thrown into a person’s backpack for a fraction of the cost. I can’t imagine you could bring the price down enough – even with bulk manufacturing – to compete against extra batteries or some of the one-time charging packs I’ve seen.
- That’ why I think the Sharks said – “I hope you aren’t pitching this product, but alluding to something bigger.” It turns out the entrepreneur was indeed – what he really wanted to do was use the same technology to harness energy from ocean waves. I just don’t know why he would try to commercialize his technology first, if his true passion was solving the bigger energy crisis (surely there are plenty of alternative energy grants out there for the taking?).
Pitch #4: The Mission Belt
Elevator Pitch: a belt without holes, but rather a ratcheting system in the buckle
The Ask: $50k for 20% equity
The Deal: Daymond offered $50k for 37.5% equity; Nate (the entrepreneur) gets to do what he does best!
- The entrepreneur (Nate Holzpfel) is a true hustler. Landing in Los Angeles the night before taping Shark Tank and going door-to-door to sell 20 belts? Awesome. I love people who love what they do – you can’t help but get excited when they talk about their passion.
- Here’s the other thing I love about Nate – the dude does his research. It happens quickly – but, mid-way during his pitch while talking about how he likes to hustle, Nate alludes to Mark Cuban’s story of how he (Mark) survived on ketchup and mustard sandwiches while building his empire. It’s a small detail, but it showed Nate researched his audience to the point where those details were second-nature. At my various jobs, I’ve been known for my presentations – very simple, concise, and clear. What people don’t often know is I put in hours and hours preparing ahead of time – going over the story in my head, figuring out the best transitions, going over and over my notes until the presentation is second-nature. In any selling situation – whether selling belts or selling a team on a product vision – preparation makes all the difference.
- And finally – kudos to Nate for accepting Daymond’s offer to be head of sales in the new company (and letting Daymond take care of manufacturing, licensing, distribution, etc.). I see too many founders insist on remaining CEO of a company, even if their strengths and passions lie elsewhere. Being great at driving a vision and creating a new company from scratch can be very different from helping a company mature and reach larger milestones – and there’s no shame in being good at one and not the other.