Shark Tank Recap: “Transformer” Suits Thrills Kevin O’Leary, Wins Over Mark Cuban’s Offer (11/09/12)
Barbara Corcoran is back in the Shark Tank and joins Mark Cuban, Kevin O’Leary, Robert Herjavec and Daymond John.
Drew Beaumier owns Drive Suits, a mechanical suit that enables a user to move on wheels without getting into a car or any moving object; the suit itself has tires and moves at 12 miles an hour.
Drew’s product is still a prototype. He currently markets the suits in events where he is paid by the hour. He needs $150,000 for a 20% stake in his enterprise; the funds will be used to fully develop the suits. Although Drew has a trademark, he doesn’t have any patent and has yet to make a sale.
Kevin suggests that Drew partners with a toy company to enable him to efficiently develop the product. It also disturbs him that Drew is just making $3,400 for an 8-hour job, very low for his potential.
The absence of a patent and proprietorship, plus questions on safety, costing and shipping lead Robert, Daymond and Barbara to pull out of the negotiation table.
Mark takes the cash offer to manufacture 20 units, advertise the suits and see how the public will respond to it. Business decisions will be made after the results come in. However, Mark thinks that his equity share should be 40%.
Kevin’s good with the cash offer but wants a 30% stake under the condition that he and Drew will partner with a toy company for the production of the Drive Suits.
Drew takes Kevin’s offer. Barbara and Mark think Drew made a big mistake in choosing Kevin.
David Cox owns PC Classes Online, an enterprise that provides live computer lessons to consumers aged 50 and above. He needs $150,000 in exchange for 15% equity. David wants to bundle his service with computer hardware manufacturers.
Upon questioning, David changes is idea of bundling to that of an add-on. This immediately sets off the sharks and prompts Kevin to call him a bozo. The sharks dislike the idea that David is having trouble differentiating a “bundle” from an “add on”.
Moreover, the sharks are outraged that David doesn’t pay his online teachers for the services he charges to his clientele. To date, he has made $35,000 in sales. Kevin thinks David appears to be an online pimp.
The sharks think the service is outdated and that David is confused. None of them take on David’s offer.
Bill Lyons owns Revestor, an internet-based real estate service provider which offers indicators on the viability of a particular property. It also provides a list of properties given a user’s investment budget. Bill needs $250,000 in exchange for 10% equity to market his software.
Bill crunches data from two sources: firms that have listings of properties being sold and firms that have listings of foreclosed real estate. The sharks aren’t convinced that Bill’s service will be able to forecast values in the long run, something very important to any investor.
Although Bill’s service is available in 10 cities, he has yet to make a sale. Bill is banking on his previous success of building a $20million company which made money from mortgages, etc. in the real estate industry.
The sharks question Bill’s business concept, presentation and company valuation. Robert even has the impression that Bill’s pitch makes him appear as a con artist. They refuse to offer him anything.
Beverly Vines-Haines and Charlotte Clary are the owners of Ice Chips, a brand of natural candies sweetened by Xylitol. The pair of grandmothers needs $250,000 in exchange for 15% equity in their company. They need the money to automate their production process, which is currently being done manually.
Beverly and Charlotte report that this year’s current sales have already reached $342,000; both are looking at doubling the amount by the end of the year. By automating their production, the pair is hoping to reduce unit cost from $1.10 to $0.78; a unit retails at $5.
Initially, Barbara offers $125,000 in exchange for 33% equity. The sharks find this is unfair especially since this would force the owners to give up more or less 70% of ownership when another investor comes in to fund the other $125.000. Kevin offers to finance the other half in partnership with Barbara, each getting 20% of equity.
Barbara declines to partner with Kevin; she thinks Kevin is all about money. She decides to drop her equity share to 20% instead and a promise to market Ice Chips in thousands of retails stores.
Daymond offers $250,000 for 30% equity under the condition that the owners will have the candies manufactured by someone else.
Mark enters the negotiation by working with Barbara; he’s giving $125,000 for another 20%. Barbarra likes the idea.
Kevin joins Daymond, where they split the investment fund in exchange for a 35% stake. Daymond drops Kevin and offers the full amount in in exchange for 25% equity. Daymond feels that Barbara’s offer is full of crap.
Barbara gets back by tagging her deal with Mark as honest as opposed to Daymond’s vindictive offer. The surprising part is that the grandmothers state for the record that they know the difference between the two offers. They decide to go with Barbara and Mark.
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