Why This Startup Isn't Worried It Left 'Shark Tank' Empty-Handed
Liz Bohannon started with a chicken farm and advanced to a tank full of sharks.
After graduating from the University of Missouri in 2008, Bohannon traveled to Uganda with the fuzzy goal of helping the country’s women better access higher education.
When experiments in chicken farming and other ventures failed to raise the funds to get the women to college, Bohannon remembered the sandals she constructed during her collegiate days: rubber flip-flop bottoms tied with ribbon, which reduced the flopping noise when she walked across campus.
Bohannon improved upon the design, fashioning them from local materials. She developed a business model that involved employing Uganda’s female high school graduates who couldn’t afford to continue their education and turning a profit healthy enough to fund their schooling. In Uganda, high school graduates are given nine months before matriculating to earn enough money to pay college tuition (averaging between $2,000 and $3,000). Bohannon promised three women that, if they made sandals for the next eight months, they would get to college.
Returning stateside, Bohannon and her now-husband, Ben—a former project manager at a tech company—hawked all of their possessions and bought a Honda Odyssey minivan, which they drove and slept in during a six-month grand U.S. tour to convince boutique owners to order the sandal. “I’ve never taken so many showers with quarters before,” Bohannon said of the truck stops they’d visit for hygiene breaks. “I’d dry my hair by hanging my head out the window on the way to the next boutique.”
It paid off, big time. Now their business, Sseko Designs (Sseko means “laughter” in Lugandan), boasts a track record of bolstering Uganda’s university ranks with women while becoming the country’s largest footwear manufacturer. They formed partnerships with local organizations in Kenya and Ethiopia with the goal of becoming one of the largest employers of women in the region. Eventually, the couple plans to scale Sseko to build a production house that could produce for independent and major U.S. brands.
To get there, Bohannon and her husband appeared on ABC’s reality pitch competition Shark Tank on February 13, presenting their trademark customizable ribbon sandal designs (they also produce shoes, leather bags and other accessories) – but they walked away without funding.
“It was nonstop for an hour without a moment to breathe,” Bohannon said of the original footage. “Sometimes there would be two sharks talking at once, or one shark talking to Ben and another to me.”
During the televised version of the episode, the investors questioned whether the Bohannons’ pitch – 10% of Sseko for $300,000 – overvalued their company. But the couple, which was more than halfway through a $750,000 round of funding when the episode was filmed, had to stick to the same valuation it had already promised its four private investors. They closed on the full amount a month before the episode aired.
“On Shark Tank, they very rarely will give you money based on a valuation you came in asking for,” Bohannon said. “The negotiation is the meat of the show. Our challenge was to keep it positive. At the end of the day, you don’t want to give them any chance to make you look defensive. You’ve seen those episodes where the sharks turn on the entrepreneurs, egos get involved and the whole thing spirals out of control.”
The sharks – Dallas Mavericks owner Mark Cuban, real estate maven Barbara Corcoran, QVC entrepreneur Lori Greiner, technology expert Robert Herjavec and venture capitalist Kevin O’Leary – questioned why Sseko lost $90,000 last year, after three years of profitability, and planned to lose money again this year on projected revenues of $1.9 million.
The Bohannons explained that they plan to return to profitability at the end of 2015 after recovering from the costs of launching closed-toe shoes and woven and leather goods in Kenya and Ethiopia. The sharks also wondered whether Sseko was “hyper-focused” enough on profits or too loyal to a social mission, arguing that the more successful model of helping people is to become rich through business and then donate the money through philanthropy.
“The sharks believe in the classic philanthropy model, which is that if you’re going to do something good, you have to get rich first,” Bohannon said. “They don’t believe in baking in social impact from Day One. But people have a way that they operate and the likelihood that you’re going to show a super successful billionaire entrepreneur another way of seeing things is slim.”
Though they hoped at least one investor would fully support Sseko’s mission and lend visibility and connections to the business, the Bohannons said they knew the odds were stacked against them. Still, their appearance on the show was a boon to Sseko, with a 500-fold increase in traffic to the site and February sales up about 1,000%.
But they’re more interested in long-term results. “We don’t want to be an item business,” Bohannon said. “We want to be a lifestyle brand. We know it will take a few years to pay off, but it’s about belief in the long-run.”
By the end of the school year, Sseko will have sent 60 girls to college and employed about 120 more who are not of schooling age. But the boost in self-esteem Bohannon sees among her employees can’t be quantified. Bohannon remembered one worker, Sharon, who brought her husband, Moses, to tour the factory. “You told me it was all ladies here at Sseko,” she recalled Moses telling Sharon. “But here are machines! So where are the men?”
His respect for his wife grew as Sharon explained each woman’s role in the manufacturing process, from managing production to operating machinery. “He shook my hand and thanked me for the work we’re doing,” Bohannon said. “Then, looking at Sharon, he said, ‘I just had no idea that my wife was such a Big Lady and that ladies can do so much of the work I thought it was only possible for men to do. I am so proud of her and all of these ladies and want to show people what is being done right here in Uganda!’”