I am an avid fan of the show Shark Tank on ABC which airs every Friday evening on ABC at 8pm EST. What I love about this show is it not only gives individual inventors the platform to truly launch their product successfully but, it also exposes a lot of key gaps in the individuals products specifically with regards to “Valuation”. If you watch the show like I do the first thing I want to know is the current valuation and what the existing sales figures look like. This post will represent the first in a series of episode reviews that will cover each product and my feedback from a product development standpoint. I urge you to please subscribe and follow this blog as well as leave comments on what your opinion is for each show.
This weeks episode is the 10th of the 4th season. If you would like me to review any past shows please leave in the comment section.
Inventor: Bruce Gaither
Product: NO FLY CONE (www.noflyzone.com)
Requesting: $25k for 15% stake
For this particular scenario, Bruce thought it would be beneficial to bring with him Family Guy creator Seth MacFarlane i hopes that the celebrity endorsement would entice the Sharks to invest. The product is essentially a cone shaped fly trap that requires the use of a dogs fresh poop to attract the flies to the cones sticky underbelly. As Bruce presents his product to the Sharks you can immediately see looks of disinterest. Kevin is the first to bow out followed by Mark Cuban whom gets a Stewie impression from Seth MacFarlane. Daymond, Lori and Robert also soon follow as they are not interested or do not have any expertise to help with the product.
Feedback: In my opinion not all ideas should become products and this would be one of those. First, sticky fly traps have been around for decades and they are not only simple and effective but they are cheap. The idea that someone would purchase a more complex product by paying more and introducing dog poo to make it work is ridiculous. This is one idea that should have been dropped early on in the product development stages (most likely in the market analysis).
Inventor: Ginelle Mills
Product: COOL WAZOO (www.thecoolwazoo.com)
Requesting: $65k for 25% stake
Ginelle came into the Shark Tank well prepared and with a great presentation. As any good Marketer, she was able to create the story behind the “need” which ultimately led to the product solution Cool Wazoo. The Cool Wazoo is essentially replacing 4-5 products that mothers typically purchase for their child (swing cover, highchair cover, changing mat, etc,…). She started out with a good story about her personal experience with her child getting burned on a swing. But, this is where the story went horribly wrong. Ginelle started telling the Sharks that the product was on the Today Show and that she initially got a warm reception with orders but, that almost 85% of the products had to be returned for defective purposes. She then was on the show The Doctors where she was forced to give each audience member one of the Cool Wazoos as part of the promotion, leaving her without any inventory and basically broke. She said the unit cost is roughly $30 being made domestically and she only receives $2.50 margin on wholesales sales. This was an immediate sign of her inexperience. The Sharks all bailed out after they learned of the past disasters. Ginelle then was reduced to tears and then was able to attract Lori back in to offer her the original requested amount.
Feedback: From a product standpoint, Ginelle has a great product in which will surely be successful, with the proper leadership and financial controls. In my opinion Lori should had asked for a larger stake to ensure she has greater influence in the direction of the product. Having said that, $65k will only really be enough to build probably 5-7k units in China and spend the rest on marketing. This may be enough to get her back in the black but, considering she is broke, I think there will be more investment needed to get it really launched. Last comment would be to remove the tears from a presentation. Investors want to put money behind people who are strong and results-driven and not emotional.
Inventor: Michael Tseng
Product: Plate Topper (www.platetopper.com)
Requesting: $90k for 5% stake
Michael entered the Shark Tank appearing to be very prepared and with an “As Seen on TV” presentation in which even garnered some laughs along the way from the Sharks. The product is a replacement for the disposable container and lid systems out there such as Tupperware. The Plate Topper is a clear acrylic lid with a silicon rim that creates suction on an existing plate to seal it from the outside. The product is very impressive and appears that he will get some bites from the Sharks. Kevin is the first to offer the requested amount. Lori then jumps in and says “I want to add a zero to the offer for $900k and 30% stake” this shocks the room and Daymond is forced to up the ante to $1million for 25% stake. Normally, the Inventor would be drooling at these offers but, Michael begins to get arrogant and secretive with the valuation and the desired counter offer. Daymond drops his offer. After the Sharks ask him for his counter he finally says $750k for 5%. So then the room erupts saying he came in and pulled the “bait and switch” by luring them in for $90k. Robert drops his offer. Mark eventually allows Michael to exit the Tank and call his brother for advice. When he returns with a new offer of $1.5million for 10%, Mark is furious and drop out. Finally Lori being the only Shark left, says she will invest $90k for 8% stake. Michael takes it.
Feedback: This presentation is the worst example of greed and lack of integrity by an Inventor. Michael should have had a rock solid vision of the product valuation and held firm throughout the meeting. Instead he got greedy and started seeing offers come in as a way to raise the bar beyond the realistic value. Consider this, if you look at Michaels (and brothers) counter-offer of $1.5million for 10% stake, this means they feel that the company is worth an astonishing $15million!!! There is no gimmicky product that is worth that much and I am surprised that Lori even decided to stay in the game considering the attitude of the Inventor. Word of advice to any Inventor out there, spend time and money analyzing the market and competition and if you are going to valuate your company on potential sales you better have concrete figures to discuss. There is nothing wrong with confidence and passion but, it can often come across as arrogant so tread lightly.
Thanks everyone for reading this weeks post. Stay tuned for weekly reviews of Shark Tank.
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