Shark Tank Recap: PostureNOW Owners Irk the Sharks (9/28/12)
Shark Tank will be entertained by a couple of celebrity guests tonight. But first, we take a look at the proposal of high-school sweethearts and married couple Liz and Dan Holtz.
The Holtzs own Liz Lovely Cookies, an enterprise that produces vegan, gluten-free cookies based on Liz’s own recipes. The sharks taste them, but Kevin isn’t impressed. He thinks gluten-free cookies are merely substitutes for people who can’t eat anything with gluten. Mark, however, sees the viability of gluten food since a lot of athletes need this.
A pair of cookies costs between $3.99-$4.99, which the sharks find a little expensive. The couple is looking for a $200,000 investment in exchange for 10% equity. Daymond, Barbara and Robert are out: they think that the couple’s investment requirements are stretched out for a costly product with limited shelf-life. Kevin’s out of the table for not believing the product and Dan’s sales talk. Mark is interested in the product but questions the enterprise’s valuation; he asks the couple to give him an offer given that he’s the only investor left. The couple ups the stake to 20% but Mark declines. Mark calculates his equity share at 33%.
Lee Dahlberg owns Rock Band, a trendy fashion company. Although he manufactures clothing, he’s branching out to selling arm bands with embedded stones which he claims have healing powers. The stones are created by artisans from China. Each arm band is packaged in a metal container. Among his clients for this product are Bono, Johnny Depp and Pres. Bill Clinton.
The problems with Dahlberg’s arm bands include licensing, patent holding and quite a long gestation period for his investment.
Kevin offers to buy off Dahlberg’s company plus a 7% annual payment. Barbara thinks Dahlberg doesn’t have much option but is willing to share with Kevin’s offer. Daymond and Mark are offering $100,000 investment for 40% equity. Mark and Daymond are also offering to help in licensing the product. Dahlberg takes the latter offer.
Tereson Dupuy owns FuzzieBunz, a firm that manufactures recyclable baby diapers. Last year, she racked up $3.9 million in distribution and internet sales alone (no retail) but profit was just $20,000. Although she has a patent, she attributes the low net profit to enterprises who have copied her product, particularly a Chinese manufacturer who used to produce the product for Tereson. She expects sales to go up by 70% if her patent problems will be solved, hence, her need for $500,000 investment in exchange for 15% equity.
Kevin thinks a partnership with him will allow his lawyers to take care of patent problems, but still, he’s out. Mark and Robert aren’t keen on the idea of having to deal with so many patent problems. Barbara and Daymond do not believe in the product per se.
Matt Franklin and Mike Lane are the owners of PostureNOW, and they just brought in “Dancing with the Stars” celebrities Jonathan Roberts and Anna Trebunskaya to market their posture-correction product. They want $100,000 in exchange for 15% equity. A piece of the product sells at $39.95. The company’s valued at $650,000 with a pending patent. The partners have calculated $330,000 in past sales and racked up a 40% profit. The owners have day jobs and consider their enterprise as a hobby, though Mike is willing to drop his job if the offer for PostureNOW is substantial.
Kevin offers 100,000, 50% ownership and 10% royalty because he thinks that the owners have yet to prove their product’s profitability. Mike immediately shuts Kevin’s proposal which earns Daymond’s ire.
Mike asks Daymond to reconsider; Daymond’s still out but he could’ve offered the same deal which Kevin gave sans the royalty. Barbara thinks the retail price is too high plus she’s not entirely convinced of what the product can do. Robert offers $100,00 and 40% equity but gets brushed off by Mike. In retaliation, Robert withdraws his offer. Mark offers $100,000, 30% equity, $5 share per unit sold until he gets back his investment. He also wants Mike to quit his job and work full-time for the firm. The pair dispenses Kevin’s proposal and take Mark’s offer.
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