Shark Tank show review? Why the hell not.
I must confess I am a big fan of three versions of the show Shark Tank. I like to watch the U.K. version called the Dragon’s Den (search Dragon’s Den U.K on YouTube), the Canadian version which is also called the Dragon’s Den (search Dragon’s Den Canada on YouTube) and the American version called Shark Tank. They all have the same basic premise of inventors and/or entrepreneurs pitching their ideas or products to real investors and trying to get a deal for a percentage of their company. The show originally started in Japan back in 2001 and has had several incarnations in many countries around the world. In my opinion, the best versions are from the the ones I watch from the U.K., Canada and America. The deals are always done on a tentative handshake basis with due diligence to follow. You might think that a deal is done, but either side has the option of not completing the deal for whatever reason they choose. Basically, if one party decides to back down, the deal is off.
The U.K and Canadian shows do a much better job than the U.S. version of explaining the agreement process and updating past deals. I like the American version of the show best because it has Mark Cuban. Simply put, he is a true businessman and really helps out the people he makes deals with.
I am not sure why, but for some reason I am feeling the need to start doing reviews of the American version of the show. I am not promising that I am going to keep up with reviews every week, but I will definitely review the ones that I find especially interesting. Why am I doing this? The show deals exclusively with financial matters so it fits perfectly into what this site is about : money.
Sharks : Mark Cuban, Kevin O’Leary, Lori Greiner, Barbara Corcoran, Robert Herjavec
#1 : Debbie Glickman - Fairytale Wishes, Inc.
Asking : $35,000 for 33% equity stake in the company
Product : Magical pillow spray to help your children sleep by chasing the monsters away.
Debbie was pitching some spray that costs her $2.16 to make but she sells for $9.99. She admitted that she only made $5500 last year after being in business for about 4 years.
I think this spray may work for some small children, but by using it you are implying to your children that you believe monsters exist. I think it would be better to just let them know from the beginning that there are no such things as monsters.
Quotes : Kevin O’Leary : “Some of the monsters that you sprayed for years have died of old age and you still don’t have any sales.”
Mark Cuban : “You aren’t an entrepreneur you are a wantrepreneur”
Deal : No.
#2 : Nathan Jones & Erick Jansen - The Freeloader
Asking : $200,000 for 15% equity stake in the company
Product : A backpack/harness that can hold a child up to 80 pounds
Nathan and Erick are firefighters from Austin,Texas that have each spent about $20,000 to develop a backpack system that can be used to carry children. It uses a 5 point harness that keeps your child safe and secure while you go about your business.
I like the overall idea of a specialty harness that can be used to carry kids, but this type of system is pretty much only for people who are in fairly good shape. They said that the backpack weighs about 5.5 pounds which seems a little on the heavy side to me. It also looks like it would make you sweat buckets considering how much of your back it covers. It might eventually be a good product if they can make the frame lighter and also use materials that allow air to flow to help prevent sweating.
Quotes : Mark Cuban : “You have to crawl before you ball.”
Lori Greiner : “I would love to help you because I love firemen.”
Deal : Yes.
Robert Herjavec made a counteroffer of $200,000 for 33% equity stake in the company, which the firefighters accepted.
#3 : Julie Deveau & Ozma Khan : Kookin’ Kap
Asking : $50,000 for 20% equity stake in the company
Product : One size fits all washable cooking cap that would replace a traditional chef’s hat, but wound up looking more like something off Little House on the Prairie. The cap claims to protect a someone’s hair from smelling like the last thing they cooked (in this case, fish) and allow them to jump from a dinner party to a night out on the town without the dreaded “stinky food” hair.
Company slogan : “Hair smell like Krap?! get a Kap”
This is a cooking cap that costs between $9.95 - $12.95 on their website but only costs $3.70 to manufacture. They have sold 1729 caps off their website during the last year. The margin to produce the cap is good, but the question is would someone actually wear this thing in the kitchen?
For reasons unknown to anyone other than Julie and Ozma, they thought they could repurpose a turn-of-the-century sleeping cap into something that people would not only wear while cooking alone, but also when company came over. Yep, the chef of the house is going to spend lots of time looking his or her best...then put a silly kookin’ Kap on their head when it comes time to cook. They even managed to mis-print the label inside of the cap saying the cap was flammable instead of non-flammable. I could see this this as a nice gag gift and nothing more due to the limited amount of people who would actually wear it.
Deal : No.
#4 : Chris Johnson - Rapid Ramen Cooker
Asking : $300,000 for 10% equity stake (Yep, that is a $3,000,000 valuation)
Product : A rectangular tray designed to perfectly cook a block of ramen noodles.
Company slogan : “The World's Fastest, Easiest, and Healthiest Way to Cook Perfect Ramen Noodles!”
Microwave safe, patent pending plastic tray that that is rectangular in shape and used to cook ramen noodles or other food items. The tray has a cost of $5.99 and can be found in over 2500 grocery stores such as Raley’s, Albertson’s, Safeway, Winco Foods and H.E.B.
This was my favorite deal of the show. Chris presented himself very well and had good answers to all of the Sharks’ questions. He said that he sold $164,00 worth of product in the last 3 months and $80,000 in the last month alone. He expects to sell over $2,000,000 worth of product this year, but needs some quick cash to build up inventory during this time of rapid company expansion. The product is patent pending but could easily be copied with a few modifications and possibly sold cheaper, so his window for getting rich while the gettin’ is good is small. I actually would purchase this product (if it were slightly less in cost) since it is definitely functional and above gag gift status. I think the product is going to make Chris rich. I wish that I had thought of it myself.
Quotes : Kevin O’Leary - “You are going to need a big wallet! Happen to have one?”
Kevin O’Leary - “Have some respect for money.”
Deal : Yes.
Offers : Kevin O’Leary : $300,000 for a $1.10 royalty per unit sold until he recoups the $300,000. Then, he gets $0.50 per unit sold in perpetuity.
Robert Herjavec : $300,000 for 40% equity stake
Kevin O’Leary & Robert Herjavec combined offer (while Chris was talking to a mentor) : $300,000 for 25% equity stake in the company plus $0.75 per unit until they recoup their $300,000 and then $0.25 per unit sold in perpetuity.
Mark Cuban : $150,000 for 20% of company plus $150,000 with an interest rate subject to negotiation.
End Result : Chris ended up making a counteroffer of $150,000 for 15% equity stake in the company along with a $150,000 loan. Mark Cuban thought about it for a few seconds before deciding to accept the counteroffer.
The meat of the potatoes
I did enjoy this episode mainly because the final pitch was better than all of the rest. The Rapid Ramen Cooker is a nice little invention that could make Chris Johnson a rapid amount of money, but it could also be copied very quickly. I think Kevin and Robert could also see that the product has merit but in the end their offer was a little on the greedy side. The offer of the combination of equity and loan by Mark Cuban seemed to have the most balance to it, and in my humbled opinion, he is THE Shark you want to work with.
The other three pitches were just “ok” with only one real product in the bunch. The monster spray and cooking cap were pretty much jokes, but the two firefighters with the backpack child carrier might be on to something that could end up being a good seller in the long run.