Gonna switch up how I "review" the episode haha. Last time I felt like it was more of a recap and I don't want to go into the "recap" business.
1st Idea: Five-Minute Furniture; $250k for 25%
This guy is dressed for success. Company valuation is at 1 million. Seems high. Seems like a very good idea. I have seen something like this before, but not sure what it was on. This would have come in handy for myself a few months ago. The price on these probably have to be high though.
NO SALES! Ugh. Knew it was to good to be true. Apparently has a main company that comes up with ideas, has approx. 80 products, has gotten a total of 1 million in investments, and says he hasn't been able to pay back the other investers any money from their initial investment.
I like Kevin and Lori's offer from an investor standpoint, but from the other side of the table, I wouldn't sell this patent for $250k. It's getting even money back but the sharks would make any money from the product. If I was in this situation I wouldn't mind selling the entire product patent but would want some type of royalty, like 3%. My commercial break prediction is he doesn't do the deal unless there is a royalty.
Outcome: NO DEAL
Update: The Man Candle
Nothing really to say here. A candle that is to attract the male audience, but I doubt there are any flavors that would make me want to go out and buy a candle. But he is apparenlty doing pretty good, so good for him. That is the best part of this show, even without a deal the free advetising you get from the show can help even the worst people.
2nd Idea: The Painted Pretzel; $100k for 25%
The beginning back story reaction, "ooo, pretzels! (sarcasm)."
Valuation of company is at $400k. From the beginning story seems like a somewhat accurate valuation. And just like that they have like $75k in sales from the past 12 months. So another overvaluation. But there appears to be potential here at least with back orders.
Kevin's analysis on these people's companies and ideas are almost always spot on. And he makes the show what it is. I love it when he talks haha. He is right though, for $400k he can go anywhere and get someone to make fancy pretzels, and for a lot cheaper. Not a lot of drama in this segment, Mark offers exactly what she wants, and she takes it. Huge opportunity for her to work with Mark. They can increase sales over 100% just from selling them at some of the companies he owns (Mavs, Landmark Theaters).
Outcome: DEAL
3rd Idea: Esso Watches; $35k for 20%
$175k company valuation, seems high for a beginner watch company.
UGH, these ideas are stupid. Mark right away notices the scam just as I did. These commercials are stupid. Daymond notices that two of his watch designs have been copied from someone he knows. I kinda feel bad for him though. Maybe all the other scams have a guy like this that came up with the idea, but this seemed like a guy that tried his best to come up with a business, but ended up settling for a whack watch. He does seem very knowledgable with search engines though, zero cost on advertising is good for any business.
BUT with that said, it's all about making money, and he has sold $120k and made $70k in profit, so I am surprised Kevin didn't do something like $10-15k for 20% and basically just sit back and make money.
Outcome: NO DEAL
4th Idea: Readerest; $150 for 15%
Another overvaluation, woo hoo.
As someone who wears glasses 100% of the time, I have never had a problem losing my glasses or dropping them or anything like that. But it is possible that people with sunglasses or reading glasses who aren't entirely depentant on glasses may be a little more careless and this is a problem for them. I do like the look of glasses like that hanging on his shirt, seems somewhat stylish.
Even with the extreme overvaluation of the company, I'm surprised more sharks aren't in on this product. With the current commercial break, it leaves with Mark on the verge of making an offer that I think this guy will accept without even knowing the offer. He held out against Lori because he wanted to hear Mark's offer, and I don't think Mark is gonna lowball him. Commercial prediction will be a deal with Mark!
My predictions suck haha. Mark goes out. He accepts the deal with Lori, as he should have with everyone else out.
Outcome: DEAL
Out of all the deals the furniture deal looks the best. That is something that everyone could use and would make it easier for everyone that ever puts furniture together. Everything else is a niche market or a scam. Of course with Lori's connections with QVC I am sure the glasses holder will make a lot more money than these other 3 ideas combined.
Friday, February 24, 2012
Sunday, February 19, 2012
Shark Tank Season 3 Week 5
For those that don't know, Shark Tank is a reality TV show that features 5 wealthy entrepreneurs who are considered "the sharks", and they listen to product and company ideas from the everyday person who have think they have the next great idea. Basically it's poor or inexperienced entrepreneurs (everyday people) who are looking for an investment and knowledge from "the sharks". Since I don't really watch reality TV I guess you can say this if my favorite reality show. And because it talks a lot about something I care about, running your own business and of course MONEY, I figured I'd start a weekly blog to talk about each product/business on the show.
If you have never seen the show before it comes on Friday nights at 7 o'clock (I think) on ABC. I'm not going to go into great detail about the sharks, but I have said this and until I see otherwise I will always say this, if you go on this show and you want to make major money, team up with Kevin O'Leary or Robert Herjavec. If you want to make money and have a good time doing it, team up with Mark Cuban or Daymond John.
Anyway, there are obvious spoilers on here so if you watch the show but haven't seen this episode yet, come back and read later or go to hulu, I am pretty sure the episodes are on there.
1st Idea: The Last Lid; seeking $40k for 20%
First off, I've never used a trash can like that. The ones I have been around are the rolling type with a lid attached, so this is clearly a very biased opinion from me, but I think it is a stupid idea. Maybe one day I'll end up using a trash can like this, but until I do, I would never think about buying that. Now maybe there is a market for this, and if that is the case, then they are gonna need some better designs if they want to sell this product seriously.
The first MAJOR kicker here is that they have ZERO sales. Most people on the show always overestimate their product/business by a huge amount. Like Daymond says, seeking $40k for 20% means you are valuing your company at $200k.....with ZERO sales. Assuming they have put like one or two thousand dollars into this product, if they wanted to stick with $40k for 20% they should have offered some kind of royalty to the investor to get his investment back. Basically they have an idea and want you to give them a large sum of money for a tiny part of their company, so you take all the risk. No investor would do this, and that is why you see them dropping like flies on this offer. Kevin also brings out a huge problem, they are only making 42% profit on each lid sold, and that number should be much closer to 200%-300%
But Daymond drops a huge bomb, and basically says you have one chance to adjust your offer and if it is good enough he'll accept. These two people go into this by crazy overvaluing their company, and at the end change their offer to $40k for 60%. This is still an overvaluation, but it shows that they realized they overvalued their company and are now willing to give control to someone else for the same price. I was surprised to see Daymond accept the offer, that is until he revealed he himself tried to buy just a lid a month back and couldn't find one anywhere.
End Result: DEAL
Update: Powerdecal
When I saw this update I got crazy excited. When I first saw this idea I was going crazy at how low the light was being sold for, thinking it could easily go for $50-$80 and knowing I would pay that much for it. It is currently being sold for $25. I see that they are put into Best Buy, and to my surprise a while back looking in a sports shop, they had this product and I didn't even recognize it from the show (new name, previous name was like lifelight or something like that). Anyway, they have all major sports licenses and after checking their website I can say I will be buying this one day in the future.
2nd Idea: Ledge Pillow; seeking $30k for 25%
Good News! She has sales! She has sold all of 83 of these big boys. IN 3 YEARS! That is not even 1 a week. In terms of the product, I'm sure women with large breasts do have a problem sleeping on their stomach because of their big boobs. But this is assuming that they want to sleep with pressure on their stomach, which I am sure is as much of a pain as pressure on their boobs. Maybe the occasional person would want to buy this, but like everyone pointed out on the show, it is a very small market that she is targeting, and with a low price point, there isn't a lot of money in this product and would be more of a side thing she should do to make a couple extra bucks, not something she should spend hundreds of thousands of dollars trying to make the next big thing.
They also point out her lack of wanting to succeed, having only sold 83 in three years basically shows you don't care about this enough to do it full time, so why should they invest in something that you don't care about. So the end result isn't that surprising......
Result: NO DEAL
3rd Idea: Talbott Teas; seeking $250k for 20%
Now this is a company. Or at least in terms of sales and products. Until you actually taste the tea, you can't decide on whether you like the product or not. This company kind of got a back way into making money, and that was being one of Oprah's whatevers of the month. So from that alone they got publicity, although I never heard of them because I don't watch Oprah or care about her show. But this is a well run company. Their profit is at 50% (before they pay themselves), at the time of filming they had $500k in sales in 2011, and it appears they are only on the way up. A few sharks dropped out due to personal reasons, Daymond already is invested in a tea business and Mark doesn't eat-live-breath tea so he doesn't want to do a deal that he isn't 100% committed to.
Kevin on the other hand realizes the potential and growth but also realizes the mis-valuation of the company, but counteroffers $250k for 40%, which is almost a perfect valuation. Robert realized the mis-valuation but decided to drop out because they didn't realize how much they mis-valued their company. After some back and forth hassle to try and lower the equity, Kevin did something that he says he rarely does, and drops the equity down to 35%. That right there tells me that this company has huge potential. Kevin sold his business for BILLIONS, so when he changes his offer to increase his chances of investing in a company, you know it has to be worth something.
Anyway, with everyone else out and no other offer to consider, they end up doing the deal, which is a good deal for them. It appears they will all end up agreeing to grow the company a little more and then try to sell it to a larger company at 5-6 times the value, which could be close to a billion dollars by the time this happens.
Result: DEAL
4th Idea: M3 Girl Designs; seeking $300k for 15%
First thing that jumps out to me is that this is they type of deal these investors are looking for, because while there is a big investment, if the valuation is correct there can be even bigger returns. My initial thoughts on this company that sells bottle cap necklaces and other girl jewelry is clearly I would never buy this stuff, and I don't see other people buying this stuff, but I suppose young girls like this type of thing and because it is a cheap type of "jewelry", they have huge sales and have profited $1 million. I knew these sales would have all the sharks in on the idea.
Again, the first shark that realizes the potential is Kevin, but he also realizes the mis-valuation and counter-offers $300k for 30%. Lori decides to jump on board with Kevin and do a deal together but take the equity up to 40% and will mentor the young girl. Mark Cuban then decides to join in with an offer, but wants to team up with Lori, and to no surprise, she dumps Kevin and teams with Mark, but take the equity back down to 30%, so Mark and Lori's offer is $300k for 30%. Robert and Kevin then decide to go into a deal together for the same offer, $300k for 30%, which basically makes it a picking game for the three girls to decide who they want to work for, since all the offers are the same. If this was randomly my business, I am easily going into business with Kevin and Robert, but because this is run by this young girl and her sister and mother, it is obvious they are going to pick Mark and Lori because of the QVC connections and having a female investor.
After a quick discussion, they decide they would like to work with 3 sharks, Robert, Lori, and Mark, leaving Kevin out in the cold! But they make a huge mistake and lower the equity to 20%. Mark, Lori, and Robert all decide 20% is to low, and that they can't do it unless it is 30%. The girls finally decide that is the deal they want, but want season tickets to Mavs games from Mark Cuban. Obviously they don't know much about pro sports and that season tickets are sold out usually a year or two in advance, but Mark says anytime they want to chill with him in his suite box they can. So they agree on that and do the deal with Robert, Lori, and Mark for $300k for 30%.
I suppose this is a good deal for them, although like I said before, I don't have any interest in this product so I can't say that I think it is a good idea, but obviously the sales say so, so I guess it is just a wait and see type of game. I do like that they didn't back down with just 2 deals on the table and decided to switch it up and make it a 3 person deal. Other than the obvious mis-valuation that everyone does, another huge mistake people often make are doing a deal that is clearly not in their favor just because it is the only deal on the table.
Result: DEAL
At the end of the day, this episode didn't really make me jump out of my chair. I loved the Powerdecal update, because when that was first on the show I was very interested, but none of these products made me want to go online to look for more information on them. The surprising thing is that there were 3 deals made out of the 4 ideas. Usually it is just 1 or 2 deals that are made out of 4 ideas, with once or twice no deals being made.
Anyway, I feel like this turned from being a review of the episode to more of an episode recap, so next time I'm going to try to not describe the episode itself since I assume anyone reading this will have watched the show.
If you have never seen the show before it comes on Friday nights at 7 o'clock (I think) on ABC. I'm not going to go into great detail about the sharks, but I have said this and until I see otherwise I will always say this, if you go on this show and you want to make major money, team up with Kevin O'Leary or Robert Herjavec. If you want to make money and have a good time doing it, team up with Mark Cuban or Daymond John.
Anyway, there are obvious spoilers on here so if you watch the show but haven't seen this episode yet, come back and read later or go to hulu, I am pretty sure the episodes are on there.
1st Idea: The Last Lid; seeking $40k for 20%
First off, I've never used a trash can like that. The ones I have been around are the rolling type with a lid attached, so this is clearly a very biased opinion from me, but I think it is a stupid idea. Maybe one day I'll end up using a trash can like this, but until I do, I would never think about buying that. Now maybe there is a market for this, and if that is the case, then they are gonna need some better designs if they want to sell this product seriously.
The first MAJOR kicker here is that they have ZERO sales. Most people on the show always overestimate their product/business by a huge amount. Like Daymond says, seeking $40k for 20% means you are valuing your company at $200k.....with ZERO sales. Assuming they have put like one or two thousand dollars into this product, if they wanted to stick with $40k for 20% they should have offered some kind of royalty to the investor to get his investment back. Basically they have an idea and want you to give them a large sum of money for a tiny part of their company, so you take all the risk. No investor would do this, and that is why you see them dropping like flies on this offer. Kevin also brings out a huge problem, they are only making 42% profit on each lid sold, and that number should be much closer to 200%-300%
But Daymond drops a huge bomb, and basically says you have one chance to adjust your offer and if it is good enough he'll accept. These two people go into this by crazy overvaluing their company, and at the end change their offer to $40k for 60%. This is still an overvaluation, but it shows that they realized they overvalued their company and are now willing to give control to someone else for the same price. I was surprised to see Daymond accept the offer, that is until he revealed he himself tried to buy just a lid a month back and couldn't find one anywhere.
End Result: DEAL
Update: Powerdecal
When I saw this update I got crazy excited. When I first saw this idea I was going crazy at how low the light was being sold for, thinking it could easily go for $50-$80 and knowing I would pay that much for it. It is currently being sold for $25. I see that they are put into Best Buy, and to my surprise a while back looking in a sports shop, they had this product and I didn't even recognize it from the show (new name, previous name was like lifelight or something like that). Anyway, they have all major sports licenses and after checking their website I can say I will be buying this one day in the future.
2nd Idea: Ledge Pillow; seeking $30k for 25%
Good News! She has sales! She has sold all of 83 of these big boys. IN 3 YEARS! That is not even 1 a week. In terms of the product, I'm sure women with large breasts do have a problem sleeping on their stomach because of their big boobs. But this is assuming that they want to sleep with pressure on their stomach, which I am sure is as much of a pain as pressure on their boobs. Maybe the occasional person would want to buy this, but like everyone pointed out on the show, it is a very small market that she is targeting, and with a low price point, there isn't a lot of money in this product and would be more of a side thing she should do to make a couple extra bucks, not something she should spend hundreds of thousands of dollars trying to make the next big thing.
They also point out her lack of wanting to succeed, having only sold 83 in three years basically shows you don't care about this enough to do it full time, so why should they invest in something that you don't care about. So the end result isn't that surprising......
Result: NO DEAL
3rd Idea: Talbott Teas; seeking $250k for 20%
Now this is a company. Or at least in terms of sales and products. Until you actually taste the tea, you can't decide on whether you like the product or not. This company kind of got a back way into making money, and that was being one of Oprah's whatevers of the month. So from that alone they got publicity, although I never heard of them because I don't watch Oprah or care about her show. But this is a well run company. Their profit is at 50% (before they pay themselves), at the time of filming they had $500k in sales in 2011, and it appears they are only on the way up. A few sharks dropped out due to personal reasons, Daymond already is invested in a tea business and Mark doesn't eat-live-breath tea so he doesn't want to do a deal that he isn't 100% committed to.
Kevin on the other hand realizes the potential and growth but also realizes the mis-valuation of the company, but counteroffers $250k for 40%, which is almost a perfect valuation. Robert realized the mis-valuation but decided to drop out because they didn't realize how much they mis-valued their company. After some back and forth hassle to try and lower the equity, Kevin did something that he says he rarely does, and drops the equity down to 35%. That right there tells me that this company has huge potential. Kevin sold his business for BILLIONS, so when he changes his offer to increase his chances of investing in a company, you know it has to be worth something.
Anyway, with everyone else out and no other offer to consider, they end up doing the deal, which is a good deal for them. It appears they will all end up agreeing to grow the company a little more and then try to sell it to a larger company at 5-6 times the value, which could be close to a billion dollars by the time this happens.
Result: DEAL
4th Idea: M3 Girl Designs; seeking $300k for 15%
First thing that jumps out to me is that this is they type of deal these investors are looking for, because while there is a big investment, if the valuation is correct there can be even bigger returns. My initial thoughts on this company that sells bottle cap necklaces and other girl jewelry is clearly I would never buy this stuff, and I don't see other people buying this stuff, but I suppose young girls like this type of thing and because it is a cheap type of "jewelry", they have huge sales and have profited $1 million. I knew these sales would have all the sharks in on the idea.
Again, the first shark that realizes the potential is Kevin, but he also realizes the mis-valuation and counter-offers $300k for 30%. Lori decides to jump on board with Kevin and do a deal together but take the equity up to 40% and will mentor the young girl. Mark Cuban then decides to join in with an offer, but wants to team up with Lori, and to no surprise, she dumps Kevin and teams with Mark, but take the equity back down to 30%, so Mark and Lori's offer is $300k for 30%. Robert and Kevin then decide to go into a deal together for the same offer, $300k for 30%, which basically makes it a picking game for the three girls to decide who they want to work for, since all the offers are the same. If this was randomly my business, I am easily going into business with Kevin and Robert, but because this is run by this young girl and her sister and mother, it is obvious they are going to pick Mark and Lori because of the QVC connections and having a female investor.
After a quick discussion, they decide they would like to work with 3 sharks, Robert, Lori, and Mark, leaving Kevin out in the cold! But they make a huge mistake and lower the equity to 20%. Mark, Lori, and Robert all decide 20% is to low, and that they can't do it unless it is 30%. The girls finally decide that is the deal they want, but want season tickets to Mavs games from Mark Cuban. Obviously they don't know much about pro sports and that season tickets are sold out usually a year or two in advance, but Mark says anytime they want to chill with him in his suite box they can. So they agree on that and do the deal with Robert, Lori, and Mark for $300k for 30%.
I suppose this is a good deal for them, although like I said before, I don't have any interest in this product so I can't say that I think it is a good idea, but obviously the sales say so, so I guess it is just a wait and see type of game. I do like that they didn't back down with just 2 deals on the table and decided to switch it up and make it a 3 person deal. Other than the obvious mis-valuation that everyone does, another huge mistake people often make are doing a deal that is clearly not in their favor just because it is the only deal on the table.
Result: DEAL
At the end of the day, this episode didn't really make me jump out of my chair. I loved the Powerdecal update, because when that was first on the show I was very interested, but none of these products made me want to go online to look for more information on them. The surprising thing is that there were 3 deals made out of the 4 ideas. Usually it is just 1 or 2 deals that are made out of 4 ideas, with once or twice no deals being made.
Anyway, I feel like this turned from being a review of the episode to more of an episode recap, so next time I'm going to try to not describe the episode itself since I assume anyone reading this will have watched the show.
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