Episode 2
August 16
(C-Note: Per the disclaimer at the top of
the show, the following are actual negotiations between entrepreneurs
and investor "Sharks". The Sharks are investing their own money at their
discretion. No offer is being made to, or solicited from, the viewing
audience. Please enjoy the show.)
First in the Tank...
OWNER: Craig French; Long Island, NY
PRODUCT: Crooked Jaw t-shirts
OFFER: $200K for a 20% stake
He and his partner are looking for an
investment from Daymond, specifically. He's living out of his parents'
house, as he tries to make it in the fashion bsiness. He wants the money
to give back to his mother. He's targeting the MMA market, having sold
1500 units online.
Daymond says that there are 1000 guys
like this one every year, going to their first trade show and coming
back with zero orders. Ten thousand, maybe. Daymond says that they need
to have a talent or the drive to build a brand on your own before asking
anyone for help. Craig has the passion. The Sharks like him, but the
brand needs more legs. Craig says he sold $5000 worth of product. Robert
and Kevin H. are out. Daymond pulls out when he says "You're nobody to
everybody." Barbara also is out. Kevin O is the last shot. "I can't give
you my money, because I don't see how I can get it back." He's out...
but he will take his shirts.
OWNER: Robert & Michael Allison, Las
Vegas
PRODUCT: Lifebelt
OFFER: $500K for a 10% stake
Lifebelt is a device that acts as a
failsafe for autos, killing the engine every time the seat belt is not
buckled. Seven years ago, a loved one lost his sister to a car crash,
the leading cause of fatalities in America. To get one of these
installed in Las Vegas, it costs $229, but one could easily install it
himself.
Robert loves the idea, but he's not going
to buy one to take to a mechanic. He suggests going to a car company
would make him very rich indeed. That's a step that Allison has been
through before. The only thing of value is the patent. Barbara's biggest
concern is that he isn't selling, so she's out. Kevin H and Daymond
follow suit. Kevin O makes an offer... the entire patent for $500K. "I
want to separate you from the patent, and you can never call me again."
Robert makes a better offer. "I'll give you a million dollars for 100%
of the patent... and you can call me once." Allison refuses. It's not
just about money for him. Robert tells him that he's stubborn. There's a
very obvious way to make money. The Sharks don't want to make a business
out of this, they want to sell the product. Allison... wants to make a
business. So all of the Sharks are out.
OWNER: Susan Knapp, Napa Valley
PRODUCT: A Perfect Pear
OFFER: $500K for a 15% stake
Her product, a cinnamon-pear jelly that
she evolved into a product that made $700,000 in sales. She expects her
profits to be in the double digits at the end of 2010. She is in 650
stores, but she needs more money to assist with production for
delinquent orders. This is the problem with America right now... people
with real sales can't get credit.
Robert thinks that she's overvaluing the
company. Kevin O suggests $500K for 70%. Denied. Daymond suggests $500K
for 51%. Kevin H goes $500K for 50%. Robert is in with Kevin on that.
She needs the money. They want control. She takes some time to think.
COUNTER! She wants controlling interest, 51%. Robert can't do that. He
is willing to share responsibility, but he can't give away funds he
won't control. She refuses Daymond's offer, so he's out. Susan thinks
long and hard... and she's in with Robert & Kevin H.
ACCEPTED: $500K between two sharks for
50%
OWNER: Mary Ellen Simonsen
PRODUCT: Sticky Note Holder
OFFER: $100K for a 20% stake.
She's tired of losing stickies. She
attaches a sticky pad to her laptop where she can put sticky pads. Oh,
and it folds into the computer. And she hasn't sold any.
Kevin: "It's so valuable that no one
should know about this. Come on. Who's gonna buy this from you?" He's
out. Robert says zero from zero is still zero. She's not secured a
patent on this. Overall the idea is useless and no one is going to pay
$9.50 for this. Barbara thinks that she can sell this on QVC. She's out,
but not because of her product.
And... the Sharks are out.
Finally...
OWNER: Marc Furigay, Chicago
PRODUCT: Classroom Jams Records, an educational record label and
publishing house
OFFER: $250K for a 10% stake
Marc is a high-school English teacher,
who has developed a new way to learn about Shakespeare... It's not just
an amazing teaching tool, it's an amazing business opportunity. The
first CD: the Shakespeare Sessions. A student summed up the problem:
"Why can't you give us something we can relate to?" He plays a sample of
"The Jubilee of Juliet, Part 1" on his guitar. They make money by
selling class sets nationwide, with one class set costing $500. He's
selling everything BUT the rights to the songs.
Kevin O wants to band the Sharks together
for a megadeal: $250K for 100% of the business with 5% royalties in
perpetuity. Great to imagine... BUT Marc wants to build the company as
well. The model of royalties are a great deal, sayeth O'Leary. Marc
wants to maintain equity, asking for an equal stake of the pie from the
other Sharks. Robert wants to give him the money on his own... but he
wants 100% with a buyback option for Marc for 49%.
Robert changed the offer... $250,000 for
51%. Kevin O says that he's just seen greed.
So what does Marc want to do? He rejects
Robert's offer in hopes of the joint offer. Remember... zero equity, but
5% of the profits for the rest of his life... Marc wants 8.5%... No
thanks. Five percent or nothing.... "Let's go into business."
ACCEPTED: $250,000 and 5% royalty for
the 100% stake
And with that, the Tank is now closed
until next week.
To see this episode in its entirety, go to
www.abc.com/primetime/sharktank.
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