Sorry for the delay on this recap of the third episode of Shark Tank. This episode featured the return of Kevin Harrington, he was a Shark on the first season, and is sometimes referred to as the king of infomercials.
Stay-At-Home mom requests $90,000 for 25% of Mod Mom Furniture business
First into the Shark Tank was Kiersten Hathcock and her business Mod Mom Furniture. Kiersten a former marketing executive, turned stay-at-home mom started her business after her husband lost his job. She taught herself carpentry and began making toy boxes with modern styling. She was looking for $90,000 for 25% of her business.
The key advantage of her product was that they were designed with both the kids and parents in mind, with modern styling for mom, and fun lids that were similar to a puzzle for kids. Kiersten had sales of $34,000 last year but she could only make three toy boxes a week. She had lots of orders; the problem was she was not able to meet the demand because she was still making the products herself. Her plan was to outsource some of the production to local Amish manufacturers, who could produce between 50 and 1000 toy boxes a week. That way she still kept the quality high but kept the cost reasonable.
Kevin O’Leary offered $90,000 per 33% of the company, and an additional 7.5% royalty until he got his money back. Robert offered the same deal, but he wouldn’t start collecting a royalty until she made $500,000 in sales, he believed that she should invest the money right back into the business, instead of paying a royalty right away. Kiersten accepted Roberts’s deal.
Fitness Stride owner rides away with nothing
Next into the Shark Tank was Stacy “Beast” Erwin With his business Fitness Stride. Fitness Stride is a resistance band that goes around your legs just above your knees, the idea being that you can lose weight doing normal activities, like sitting at your desk or just walking around your office.
They only cost about $10 apiece, but sell for close to $50, and currently for sale at major retailers like Foot Locker. Last year Fitness Strides sold $150,000 worth of product, and he made $60,000 on those sales. The problem is nobody knows about them right now, and although they’re in stores people don’t really understand what they’re used for. He wanted to develop an infomercial to help get the word out.
Kevin Harrington is the king of infomercials, but because this product lacks testimonials, and before and after pictures he felt that there was little he could do to develop an infomercial around the product. So he was out, and the rest of the Sharks followed suit.
Family idea, FlipOutz, makes Shark Tank flip for $100,000 investment
For the first time in Shark tank history a family pitch their business to the hungry Sharks. The Johnson family was looking for $100,000 for 20% of their business FlipOutz. FlipOutz was developed when mom Emily Johnson challenged the kids to come up with a great toy on a long road trip. Since then the families invested $250,000 to develop their product. FlipOutz Is a bracelet that holds five coins, these coins can be traded and tracked online, each coin has customized artwork making them fun and unique. They have only been on the market for six months but they have made $20,000 in sales, mostly selling online and through souvenir companies. The cost is only 69 cents per unit and then sells them for $4 a piece.
Although this product has a real potential to become a fad, the bigger potential is in the patents for the trading and tracking part of the business. They could license that to major company for promotions, or other products. The Johnson family had one last card up their sleeves; they already had an order for 2 to 3 million bracelets and 25 million coins.
Daymond was the first Shark to make an offer; he offered $100,000 for 33% of the business. Kevin O’Leary and Robert offered the same deal, for the same percentage. Daymond dropped his percentage down to 25%. After some negotiations Kevin Daymond and Robert all join together and offered $100,000 for 33%, The Johnson family took the deal!
PureAyre odor eliminator owner says that $75,000 deal stinks
Last into the Shark Tank was James Mitchell with his business PureAyre. PureAyre is a safe all-natural odor eliminator that breaks down the molecules in that odor instead of masking them with perfume. His product is not patented because other companies could just take his patent and change a single ingredient and then have a copy. Major companies like WD-40 have not patented their products for the same reason.
James had sales of $3.2 million, although this impressed the Sharks, but they quickly learn that that had been over multiple years and his sales have been dropping. One of the biggest reasons for his drop in sales was because Walgreens had pulled his products from their shelves. James believed it was because a major competitor had asked Walgreens to pull their product.
Again Daymond was the first to make an offer, he offered $50,000 for 50% of the business. Kevin O’Leary quickly offered $150,000 for 100% of the business, but he made it clear that he would fire James, but would pay him a 7% royalty forever. Kevin argued that this would make him a very rich man. Daymond later joined Kevin’s offer, and Robert added in another $75,000 to the offer, but James turned down the offer, and walked away without a deal.