Risky business plans take the spotlight in Shark Tank, the ones that most investors avoid. By far, this is the most interesting show primarily for the way the sharks quickly articulate and calculate the medium and long-term impacts of such risks. We also see a visibly irate Barbara Corcoran when Mark Cuban tries to undermine her offer, something which can be described as nothing short of sneaky and snarky.
Let’s start with Erica Cohen and Lori Barbera, the owners of Baby’s Badass Burgers. Both women are currently operating a profitable gourmet burger truck business in Los Angeles. Erica and Lori’s problem starts the moment they reveal that a $250,000-capital infusion would be used to open a store and not to increase the number of trucks. All the sharks lose their cool when they realize that the women are selling a different business vis-a-viz what they’ve initially presented. The sharks estimate a $750,000 infusion to open just one store; the $250,000 amount they need plus their personal fund of $50,000 will not be enough to get the shop operating. The absence of concrete numbers and a shop model that will start from scratch turn off the sharks, more so when they learn that Erica and Lori refuse to replicate a tried-and-tested model which they deem as very time-consuming.
James Lavitola and Brian Pitt get their own share of flak for one major reason: they want a $5million capital infusion for Track Days, an idea that has yet to see the light of day. James and Brian plan to make a motorcycle-inspired movie with just a general story in their pocket and the sharks’ names in the executive producer line. The absence of details (e.g. names of actors, script) brings out the sharks’ bad side, calling it a “horrific” idea. They believe that James and Brian’s proposal will just hostage their money and here’s why: the amount will be deposited in an interest-bearing account until the partners come up with a definite movie proposal. Robert describes this as a risky action because the partners have nothing to capitalize on.
Mary Beth Lugo nearly loses a deal after revealing that KaZam’s future steps include the sales of bike with pedals. KaZam has made a name and created a niche for its pedal-less bikes, products which aim to teach children to develop balance in riding a bike. Mary Beth’s sales and work ethic are impressive but her business decisions appear to be weak. Good thing her sales pitch based on her business expertise on her original product convinces Mark and Barbara to join forces and invest $300,000 in exchange for a 32% stake.
Barbara and Mark may have settled on one endeavor but with Pink Shutter Booths, the good mood dissipates. Mark has already pulled out of the negotiation table when Barbara offers $300,000 for a 33% stake plus equal salary distribution with the two owners. Just when the owners are on the verge of accepting the deal, Mark comes back in with a counter-offer of equal salary distribution once sales hits $1million. This piques Barbara and even Daymond. The action also prompts the owners to get wishy-washy with their final decision, forcing Mark to withdraw his offer. The owners eventually go back to Barbara’s offer despite a higher equity requirement and the unconditional equal division of salaries.
That’s our recap of Shark Tank today, 5/10/13. We’ll have another recap next week. Until then, please check out our Shark Tank archives HERE.
Image credit: Shark Tank