We'll Never Be Royals (On Shark Tank)
Everybody's like Uber, beard kings, apps fighting parking tickets, scholarships, baby scales, Lori with a gold crown -- we don't care, we aren't caught up in this show that aired.
Something rubbed me the wrong way about this episode of Shark Tank, and no, it had nothing to do with the fact that none of the products pitched tonight served any essential purpose; that's par for the course on this show, frankly. And it's not irritation at someone undeserving walking away with a big fat check: deserve's got nothing to do with it, as Clint Eastwood growled in Unforgiven, a movie about an entrepreneur struggling to revive his dormant murder-for-hire business.
No, the problem this week is that every single pitch seems to contain varying degrees of cynicism, seasoned liberally with an amoral world view that nothing is quite so important as separating your fellow passengers on this big blue orb from their money. Whether it's a product designed specifically to prey on the terrors of panicky new parents or Mark Cuban reciting from A Child's Treasury Of Ayn Rand Platitudes, every segment in this episode feels gross.
Also, guest Shark Chris Sacca mentions Uber. Like a lot.
But which segment is the grossest? Let's rank them in order of ones that left me mildly perturbed to ones that had me ready to smash the wheels of capitalism so that we can begin again in an economy based entirely on hugs.
4. Beard King
The issue here is not necessarily the product itself -- a tarp that affixes to your mirror while wrapping around your neck to catch all your bread trimmings, which is inoffensive enough. Rather, it's the way Beard King pitches, which is that the responsibility for cleaning up all that beard detritus falls not on the guy who created the mess but rather the poor woman he tricked into living with him. So rather than explain to your fella that maybe he could tidy up once in a goddamn while, ladies, you're suppose to plunk down $29 on an oversized version of a bib from a particularly sloppy barbecue joint and affix it around the neck of your slothful man-baby. When you put it that way, I guess there's a cosmic justice to it.
Nicholas and Alessia Galekovic have amassed impressive sales -- $140,000 in just eight months -- on the strength of a video they put together for Beard King that managed to go viral. So now they're framing themselves as masters of viral marketing, which is sort of like me saying that I'm ready to play for the Lakers because I sank a 30-foot jumper that one time. The Galekovics figure their growing sales, insanely high margins, and viral marketing wizardry should get them $100,000 for a 20% stake.
The Sharks aren't biting for various and sundry reasons. Robert Herjavec thinks they're doing just fine without taking someone else's $100,000; Mark doesn't really think they have the core competencies they're claiming; and Kevin thinks that Beard King is a product and not a company. "How do I get my money back?" he wonders.
"By investing in us," Alessia replies.
Oh, so that's how that works.
Anyhow, if there's one person who loves marketing products based on the notion that a woman's work is never done, it's Lori Greiner, who makes like she's going to drop out before demanding 51% of the company. Nicholas and Alessia manage to talk her down to 45%, which is a remarkably good deal for Lori, so if she wants to strut around in that cape and crown the Galekovics present her with, I'm not going to squawk about it.
3. Village Scholarship
Tasha and Antonio Adams want to create a business that brings crowdfunding to academic scholarships. "Well, that sounds pretty honorable," you're thinking. "You must be a real jerk to object to that." Well, their plan is more conceptual at this point, and really poorly explained: you raise money from family and friends and maybe even your extended social network, and then you get matching funds from...somewhere, I guess. The whole scheme doesn't make a lot of sense. "Okay, it does sound ill-conceived," you might concede. "But still: scholarships! That's a good thing, right?" Possibly...right up until Tasha and Antonio mention that they'll be taking 8.5% of any scholarship money collected. "Oh," you may be thinking after learning that detail. "Well, that sucks."
Indeed, it does, though Antonio would like you to know it's the going rate among crowdfunding sites. But that's not exactly a great comparison, Chris Sacca points out, since with something like Kickstarter, you're paying that percentage fee to get your product out in front of the wider world, whereas under Village Scholarship's setup, that 8.5% is being siphoned off from your friends and loved ones. Whether it's the unfocused pitch, the fact that there's no business in place, or that not-at-all-cool 8.5% fee, Tasha and Antonio can't find any takers, and underfunded college kids will just have to settle for being squeezed by the interest on their college loans.
I'm well into my third decade as a licensed driver, and in that time, I think I've gotten three, maybe four parking tickets. Instead of paying them off like a law-abiding sucker, what I should have done was downloaded David Hegarty's Fixed app, which simplifies the process of contesting tickets. Fixed goes through your ticket, looks for any clerical mistakes the ticket writer may have made, and fires off a contest letter to the city; if it gets you off the hook, you pay Fixed a 35% success fee. (You will not have to pay that often, and you might have had better luck contesting the ticket yourself if this two-year-old L.A. Times article is anything to go by.) Hegarty says he's in four cities now, and wants $700,000 in exchange for a 5% stake to help him expand to more cities.
That's a $14 million valuation, which seems a little high for a company that's pulled in $80,000 in revenue this year. But don't worry, David says, because there's a plan in place to get the company up to an $11 million run rate, though the details of this plan are either a closely guarded secret or a victim of the Shark Tank editing room. In addition to handling parking tickets, David also wants to evolve into tackling tickets for speeding and moving violations, so maybe that's part of the plan.
It's a plan that won't include Robert, who finds the jump from $80,000 to $11 million just a little fanciful for his taste. Kevin O'Leary thinks that a business predicated on depriving governments a primary source of revenue is cruising for a regulatory bruising, and Lori and Chris Sacca are similarly uninterested. That leaves Mark Cuban, who's all, 'Screwing the government out of money? Yes, please' as he hands over $700,000 for 5% plus an additional 2% structured as some sort of advisory share. I just hope Mark maintains that anti-government zeal the first time his sports car hits a pothole that's gone unrepaired due to budgetary constraints. Mark and David can gripe about how regressive parking tickets are -- and they do have a point that it targets people who can't afford garages -- but speeding tickets and moving violations are a decidedly different ballgame. It's an app that's increasingly designed to spare people the consequences of not holding up their end of the social contract. In other words, it's right in Mark's wheelhouse.
1. Hatch Baby
Few products get my goat like the ones that are sold to new parents with the words "YOU'RE DOING IT WRONG" stamped on the box, so forgive me if I judge Hatch Baby a little bit harshly. It doesn't help that Ann Crady-Weiss leads off her pitch by noting that more than 90 percent of moms have anxiety in their first few weeks of parenthood. Boy, if only there were a way to make a buck off that!
There is, in the form of a $299 changing table/scale that features wireless connectivity for beaming all your baby's vitals into a smartphone. (New parents aren't concerned about a high price tag at all, Ann assure the Sharks, which is good because $299 is astronomically high for a product your kid won't be using by his or her first birthday.) Anne explains a convoluted scenario in which you press a feed button to record your baby's weight, feed your baby, then weigh the baby again to determine just how much milk he or she consumed. It's a wonder that previous generations of mothers didn't hurl their babies into canyons rather than endure having to raise children without such detailed data just a series of button presses away.
Doubtless, parents with babies struggling to put on weight will benefit from the kind of data the Hatch Baby provides. But many more parents will feel pressured into buying a high-end scale that does nothing but overwhelm them with data they have no use for. And based on the fact that Ann and her husband Dave are valuing their company at $10 million, I think they're counting on that fact. As Kevin notes, Hatch Baby's valuation means that everyone in America will have to buy one even though the device is priced at a level that not everyone can afford.
That, coupled with the fact that Hatch Baby has sold actually zero of these things, leaves each of the Sharks unwilling to pony up $250,000. They drop out, and Ann and Dave walk away empty-handed. Or, that's the way things would work, if anyone on Shark Tank actually followed the goddamn premise of the show, because all of a sudden, Ann is asking if any of the Sharks want to join in the still-open round of funding for Hatch Baby. That means putting up $250,000 for a convertible note for a valuation to be set at a later time, and if Chris Sacca can jump in on equal terms with the other Hatch Baby investors, he's game. So wait, after everyone drops out, you're allowed just to float a new proposal now? Christ, I thought there were rules.