'Shark Tank' Recap: The Gadgets That Sparked a Feeding Frenzy
Entrepreneur's New Year’s Guide
It was a night of inventors on last week's Episode 8 of this season’s Shark Tank, featuring a line-up of new products that were truly innovative -- and, in some cases, truly weird.
By the end of the show, three of the four entrepreneurs walked away with deals. The one entrepreneur who didn’t still got some good advice, and likely the Shark Tank bounce that sends a wave of orders to the website of any start-up featured on the show, deal or no deal.
1. Sheets you don't have to wash
First up was AfreSHeet, a fitted sheet with seven waterproof layers that users can peel away and discard to get a clean, new sheet, instead of having to do laundry. The inventor, Maxwell Cohen of New York, sought $100,000 for a 20 percent stake in the company.
The company is just getting started, with sales of 400 units. Cohen reported a per-unit cost of a little over $7; the sheets sell for $29.95. The founder, who started the business in college, said he had invested $12,000. The sharks weren't wowed by the product. Lori Grenier said she’d need the sheet to be softer, to feature it at Bed, Bath and Beyond, where she puts many of her products; she said the sheets felt like paper. The other sharks weren't impressed with the business, mostly because there didn't seem to be one yet.
“You don’t have any orders,” Robert Herjavec commented. “You’ve tested the market. If they loved it, they would buy it. I’ve got to go out because the market is telling you that.”
Kevin a.k.a. "Mr. Wonderful" O’Leary was more blunt: “I hate it,” he said. “Shoot it, burn it, do something else with your time.”
More helpful was Mark Cuban, who pointed out that the big potential market for AfreSHeet most likely lay in the institutional market, such as hospitals, nursing homes and medical clinics. “You’re feeling your way,” said Cuban, but he wasn't ready to invest.
2. No more sweater shrinkage
Next up was another new invention that you didn’t know you needed -- Unshrinkit, a liquid that restores shrunken wool clothing, such as cashmere, wool and wool-blend sweaters and other garments that may have been accidentally washed or left in the dryer.
Entrepreneurs Nate Barbera and Desiree Stolar developed Unshrinkit while at Harvard Business School, and said they'd sold 500 units to produce $35,000 in revenue. The product sells for $12 to $15, a price hike from $9.99 instituted after -- according to the founders -- customers said they would gladly pay more. Unshrinkit costs about $1 to manufacture. Barbera and Stolar estimated that they would sell $130,000 this year. They sought $150,000 for 10 percent equity.
O’Leary initially offered $150,000 for a third of the company, followed by Daymond John, who wanted 25 percent, contingent on getting a licensing deal. Then Cuban spoke up, seemingly ready to go out since, he said, he doesn’t typically bid on clothing-related businesses. Regardless, he offered Barbera and Stolar $150,000 for 15 percent of the company. “They’ve thought it through,” he said. “They know what they’re doing.”
3. Industrial-strength hand soap that doesn't sting
The next pitch came from Bryce Hudson, an X Games motorcyclist who explained that the secret he'd found to getting dirty hands clean was -- more dirt. Hudson’s Grip Clean is an all-natural industrial-strength hand soap that contains dirt because, Hudson said, that's the best ingredient to absorb chemicals, oil and grease.
The company is pre-revenue. Hudson has five local motorcycle shops lined up to sell Grip Clean at $8.99 a bottle; he said the product costs $2.12 to make. He sought $85,000 for 20 percent of the company, predicting that he could get the cost down to $1 per unit if he could increase production to 20,000 units. Right now, Hudson explained, he is making Grip Clean in 5-gallon buckets in his garage.
The sharks were dubious, however, saying that Grip Clean didn't seem like a business yet and didn't look like it would produce enough profit to make it worthwhile for an investor. Herjavec commented that he had invested in a similar product and it didn’t pan out.
Grenier, however, concluded that she could help Hudson turn his venture into a business. “This is a great idea,” she said. “I’ll take it all over for you.”
To run the entire business, arrange manufacturing and packaging and handle other details, Grenier offered $85,000 for 35 percent. Hers was the only offer, and Hudson took the deal.
4. Tricking out your GoPro, cell phone or drone
Last up was Jeff Overall of PolarPro, which manufactures accessories for GoPros, drones and cell phones, including a line of lens filters that enhance and clarify video recordings. The company’s 31 items include a selfie-stick that also charges a cell phone, and a case that charges multiple batteries for video cameras.
Overall said that the margins on the products ranged from 75 percent to 300 percent. The company, he said, had started out in 2007, posting $8,000 in sales, but last year sold $2.8 million last year and is currently on track to hit revenue of $5 million this year. Overall was seeking $500,000 for 10 percent of the company, mostly to invest in research and development. His current profit, he said, was about $300,000 -- a figure O’Leary disputed because most of the company's profits are being rolled back into new-product development.
The sharks really liked PolarPro and started churning the waters with bids. Cuban offered $500,000 for 10 percent -- the deal Overall wanted. But the entrepreneur still insisted on hearing any other offers. John offered to arrange licensing deals for 15 percent, while Grenier argued that she could get the PolarPro products into stores for 10 percent. John wanted to go the route of a joint deal with Cuban, but Cuban turned him down.
Herjavec then upped the ante, saying he thought PolarPro needed more capital, and offering $500,000 for 10 percent if another shark would do the same. John countered with $1 million for 17.5 percent, but ultimately Hudson went with Cuban and Herjavec, at $1 million apiece for 20 percent. “I’m so stoked,” he told the camera as he exited. “This is gonna be huge!
The lesson from this particular Shark Tank episode? Listen to the market. A great idea has to be more than an idea; it also has to be able to scale into a real business, one that can produce enough profits to make it attractive for investors to commit their time and money. The pitches that attracted big money Friday were those where the entrepreneurs had gone out and established the product and a potential market rather than just cooking up a good but undeveloped idea.