You’d think that hearing Barbara Corcoran say, “You’re a wild-ass entrepreneur” would be a compliment, but on Friday’s latest episode of Shark Tank, it was about as far from a compliment as a business owner could get.
It was also far from the only painful moment Friday, as four different businesses pitched to the moguls, at times severely trying the patience of their would-be investors. Some owners didn’t know their numbers. Some had unrealistic valuations. And others were months or even years away from being able to demonstrate that they had an actual business in which to invest.
Nonetheless, the sharks found enough to like that two businesses walked away with deals, and one owner actually walked away from two good offers.
The first pitch came from a trio of entrepreneurs, Tony Gauthier, Scott Hoag and Wesley Osaze, who sought $100,000 for a 20 percent share of Sprëtz. Sprëtz is a natural combination breath spray and hand deodorizer; when you eat, drink or smoke something smelly, Sprëtz allows you to not only cleanse your breath but your hands.
The trio said that their product was pre-concept, but that they had personally sold 1,000 units at $3.95 in 60 days without any marketing efforts. The sharks were impressed by the presentation, but not so much with the product and the lack of a track record.
Mark Cuban said it would take a $1 million marketing effort to educate consumers about Sprëtz, a conclusion that wasn't exactly intuitive. Robert Herjavec felt the retail space for breath fresheners was too intensely competitive, and the rest of the sharks just didn’t see the product being worth the effort.
Lori Greiner didn't want to invest in the product, either. But, she told the entrepreneurs, “I would invest in you; you’re amazing. Get out there and grind. There are more great ideas to come.”
This produce delivery service aims to give customers healthy food, eliminate food waste and environmental damage and donate one meal to the impoverished for every one delivered. The company buys unused, blemished or ugly produce from local farms because, hey, once that bell pepper is diced who cares if it was misshapen? Founder Evan Lutz was looking for a $50,000 investment in exchange for 5 percent equity.
Hungry Harvest works off a weekly subscription model, where customers buy a bag of produce for $15, $25 or $35. On the up side, the company doesn’t have an inventory issue, since Lutz can buy the produce he knows he’s already sold. On the down side, he’s got 500 active customers and even though he’s grown sales from $37,000 in his first six months to $104,000 in the last six months, Hungry Harvest isn’t profitable yet and Lutz still isn’t taking a salary.
In general, the sharks loved the mission, but not its money-losing business. “What disturbs me is how much you are in love with the idea,” Corcoran said. Greiner suggested Hungry Harvest might provide some synergy with Plated, a company that delivers fresh meals and counts Kevin O’Leary as an investor.
Herjavec liked the social mission, and offered $100,000 for 10 percent of the company, saying, “I can help you run this business. Let’s give people hope.” Cuban winced when Lutz insisted on hearing other offers, but after O’Leary passed, Lutz took the deal with Herjavec.
Related: 6 Innovative Women to Watch in 2015
Maureen Emerson and Alanna York pitched what looked like a great product to style and control curly hair, but York very soon tested the sharks’ patience. Her and Emerson's Curl Up & Shine hair treatment impressed the sharks, but it accounted for only $30,000 of the company's $85,000 in sales last year. York said the duo had a line of products because distributors insisted on carrying more than one item. She added that they had stopped advertising, that sales were flat and that the two had a ton of inventory. They sought $50,000 for 20 percent equity in the business.
York runs her business, Controlled Chaos, and has a successful hair salon in Portland, Maine, but the more she talked, the more the sharks balked, concluding that York had stumbled into any success she had achieved. As she talked in circles, O’Leary commented, “Your story is one of chaos and confusion.”
Nonetheless, a really good product for curly hair had definite appeal, and Greiner offered $51,000 for 50 percent of the business, followed by Corcoran, who offered $50,000 for 51 percent equity, but vowed to take just 33 percent of the profits. “I trust your gut creatively 150 percent,” Corcoran said. But, she added, about the business end of things, “I don’t trust you for a second. If you’re a smart businesswoman you would hand me the control because I know how to build a business.”
Greiner countered with an offer of $60,000 for 50 percent and a promise to move the product on QVC, where she has an impressive track record of sales. York took the offer.
“I’ve been on QVC for two years in my head,” York said, even though her presentation suggested she had been to quite a number of places in her head, including some purely imaginary planets, in terms of her business acumen.
If Alanna York annoyed the sharks, Lindsey Laurain simply drove them nuts. Again this was an entrepreneur with an impressive product -- a one-piece silicone placemat for kids that adheres to the table surface, so bowls and plates can’t be spilled, tipped or thrown. The mats retail for $24.95 and wholesale for $12.50, and her margin is about 50 percent, giving her $1.2 million in sales on 85,000 units.
Laurain stunned the sharks, however with her valuation for EZPZ: She sought $1 million for 5 percent of the company, which prompted O’Leary to ask, “I’m going to pay 16 times sales for a rubber matt with a face on it?”
Laurain countered that, after getting big interest (but no purchase orders that she mentioned) at a recent international trade show, she was projecting $20 million in sales for the next five years, and wanted to value the company for five times what she sought. Herjavec complained that her presentation was short on data and all over the map, and Cuban commented, “I’m not going to do a deal with you no matter what because I would go nuts,” while both O’Leary and Corcoran made offers.
O’Leary offered the $1 million for 5 percent equity deal Laurain was asking, but he wanted 20 percent equity if she didn’t hit her $10 million sales projection for next year. Corcoran also offered $1 million for 5 percent but said she would make her investment over a four-year period. “I totally believe in you, but I think you’re your own worst enemy because of your optimism,” Corcoran said. “The last thing I’m going to do is throw a million dollars at you.”
Laurain's response was a surprise: She said she was wounded by the sharks’ doubts and rejected both offers. “I think I’m going to move on,” she said. “I’m sad at the way this is portrayed because we have orders.”
That prompted Corcoran to offer this advice on the value of pessimism when it comes to launching a business: “You’re a wild-ass, enthusiastic entrepreneur, but you’re missing the self-doubt card.”