That's How The Cookie Crumbles On Shark Tank
An icon of the cookie industry has to hit up the Sharks for pocket change, but the real winner this week is a husband-and-wife team who manage to get four Sharks trying to outbid each other.
If you are an oldster like me, you probably have fond memories of Wally Amos -- that's Famous Amos, if you are only familiar with brand names -- and his delightful personality and even more delightful cookies. There was a time when Famous Amos bestrode the cookie world like a Mrs. Fields-esque Colossus, lording over all he surveyed. Alas, for Wally Amos, the good times didn't last, as he sold off more and more equity until all that was left was a brand he no longer had any stake in. And so now, he's forced to come on Shark Tank to ask for $50,000 for his new cookie venture.
I know the Sharks treated him nicely and I'm sure his Cookie Kahuna treats are mighty tasty, but boy, was this a depressing segment to watch. For one, none of the Sharks can be moved to give Wally so much as a brass farthing, though, honestly, that's for good reason. He's got limited distribution which is holding back his sales, his margins are atrocious for a food-based business, and his one marketable asset -- his name -- is still owned by the Famous Amos brand. Still, it's rather depressing to see a guy who's 80 years old and has known some success vying for the approval of a bunch of Sharks and coming up short. Adding to the pathos: Wally having to tote out his own Cookie Kahuna standee after having coming up short, and a thoroughly unnecessary epilogue in which Mark Cuban recounts the story of how Wally diluted his Famous Amos equity. It's all a big bummer, frankly.
But not every segment on this Shark Tank episode forced us to stare into the abyss and wonder why we even bother. For the second week in a row, we had at least one would-be entrepreneur extracting a killer deal from the Sharks even without much of a negotiating leg to stand on. So let's count down this week's remaining, non-depressing pitches in order of the ones that got the most with the least amount of bargaining power.
First, though, let's acknowledge the Shark Tank Update segment, which follows Daymond John -- this week's Designated Survivor Shark -- as he travels around promoting entrepreneurship on behalf of the president. Daymond's travels take him everywhere from Stanford University to Cuba. One place is a horrible backwater brought low by years of corrupt rule, and the other is an island in the Caribbean Sea. It is possible that last sentence was written by a graduate of one of the University of California's many campuses.
3. Raising Wild
Shelly Hyde and Kara Haught are sisters, but also moms. Do not worry if you forget at any point that they are moms, for they will be sure to remind you, repeatedly, during this segment as to their mom-itude. Anyhow, as moms who live in Florida, they like to wear swimsuits, but also as moms who must perform motherly duties, they need swimsuits that allow them to be active moms. What's a mom to do? Build a swimsuit for moms by moms is what. Because, you know, moms.
Shelly and Kara charge between $138 to $156 for their swim ware. I ran that price point by my wife, who is both a swimmer and a mom herself -- though since she doesn't mention that she's a mom as often as Shelly and Kara do in this segment, maybe she really isn't? Anyhow, my wife's reaction to the cost of Raising Wild swimwear was "Jesus, what?" My wife typically pays around a quarter of what Raising Wild charges, and her swimsuits seem to fit her and her active-mom lifestyle just fine.
So count me among the dubious about the merits of Raising Wild's business, even with its $130,000 in sales largely via direct-to-consumer appeals. Both Shelly and Kara insist that their business can "go huge," with Mark pointing out that "huge is not a number." The other Sharks seems to agree, dropping out one by one until only Barbara Corcoran is left. She asks for either Shelly or Kara to give her a reason she should invest in them. There's talk of a child diagnosed with attention deficit disorder, and that strikes a chord with Barbara, who decides that Raising Wild is worth an investment after all. It's not an equitable investment -- Barbara initially proposes a 51 percent stake for $100,000, or more than double the 20 percent that Shelly and Kara wanted to part with. Eventually, Barbara shaves a single percentage point off her offer for a 50/50 split, and Shelly and Kara take it, reasoning that it's better than walking away with nothing, especially for two moms, which the two of them are in case you forgot.
TekDry is one of those machines that can revive your phone after it takes an unexpected spill in water, whether that's a swimming pool or a sink or -- most likely -- a toilet. What you do is, grab your water-logged phone, run it down to a place that's got a TekDry machine, and pay your $69 to save your phone from the watery graveyard. TekDry's machines bury your phone in metallic beads, which surround that device with warm gentle heat. At the same time, air is sucked out of the chamber, which turns all that liquid covering your phone into gas.
While I've never had a chance to use TekDry's particular approach, I've looked at similar services for a former employer that didn't value my work enough to retain me, and the problem with these mobile-device rescue services is one of time: You've got to get your phone to a unit as quickly as possible, and unless there's one at a local retailer within a day's drive of you, you are pretty much boned. As of its Shark Tank appearance, TekDry was in all of 82 stores, with an agreement to expand to hundreds more big-box retail sites. That helps to explain why Adam Cookson and Craig Beinecke are asking for $500,000 for a 5 percent stake. That's a $10 million valuation in case you're as bad at math as I am.
It is safe to say the Sharks are not particularly swayed by that valuation, especially since TekDry has already had to raise millions of dollars in capital to get off the ground. That means an investment is likely to wind up diluted whenever more capital gets brought in, as Mark helpfully points out. So all the Sharks drop out, except for Kevin O'Leary, who smells a chance to do one of his wacky deals. He'll put up $500,000, but as a loan at 13 percent interest that he'll get back in three years, at which point he'll wind up with an equity stake in the company. Seeing as how there's no one else to negotiate with, Adam and Craig take the deal, and all that's left is for Mark to playfully suggest that he toss Kevin's phone into the demo toilet. Kevin forcefully declines.
1. Night Runner 270
I know that last week I was pretty unstinting in my praise for how deftly Leslie Pierson of GoodHangups handled the Sharks. Renata and Doug Storer don't exactly rise to that level, but they still get a very good deal for their light that attaches to footwear. The Night Runner promises 270 degrees of visibility, thanks to a light that throws off 150 lumens in front of where you're running. You also get a 30-foot distance with the beam.
The problem facing Renata and Doug is that they're in desperate need of an investment to help them fund inventory. Normally, that'd be the Sharks' cue to make the terms of any deal as predatory as possible, but for whatever reason, that doesn't happen here. The Sharks are practically falling over themselves to make a deal. Robert Herjavec is offering $250,000 for a 30 percent stake, while Kevin tries to undercut him by only asking for 15 percent. Lori Greiner tries to get cute by telling Renata and Doug that they should consider what's behind Door No. 2 -- Lori, there are already two offers on the table, CLEARLY YOU MEAN DOOR NO. 3 -- which turns out to be $300,000 for 20 percent. Mark, meanwhile, will offer $250,000 for 30 percent, but he's also providing unlimited financing on purchase orders.
The Storers nearly make the classic mistake of leaving the room to let the Sharks talk amongst themselves, but even that ends up working in their favor. Kevin, Robert, and Lori try a joint offer, but Doug balks at giving up the 30 percent they want. So we're back to every Shark for him or herself. Because Kevin seems more interested in a future business involving industrial safety rather than the current business targeting runners, the Storers opt for Robert's deal -- a good choice, given his expertise and the fact that they had every Shark but Barbara waving wads of cash in their general direction. Maybe they could kick a buck or two Wally's way, just to make this episode feel like less of a downer.