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Shark Tank Season 11

Rawseed

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About five years ago, I stopped watching television. Not because I didn't enjoy it. But, because I enjoyed it way too much.

I figured if I was going to be an entrepreneur, I should spend my free time building a business or learning about building businesses. So, that's what I've been doing.

There are still a few things that I do watch:
  • The Profit on CNBC
  • All Marvel movies in the theaters
  • All Star Wars movies in the theaters
  • Black Mirror on Netflix
  • Random Netflix documentaries
  • Whatever the woman I'm dating wants to watch on date nights
However, the only thing I watch religiously is the ABC/CNBC reality show, Shark Tank.

I've seen every episode of the first nine seasons at least four times each. And every episode of Season 10 at least twice.

Ultimately, my goal is to create a productocracy that gets me onto Shark Tank. I know that @Likwid24 did it, so why not me? Hopefully, they don't cancel the show before I can get on.

Last night was the first episode of Season 11 aired. After learning a lot from taking notes from the Undercover Billionaire, I've decided to do the same with Shark Tank. I've learned much passively watching the show. I know I'll learn even more actively watching it.

There are already a few Shark Tank threads on the forum. But, I've decided to start a new one just for Season 11. If the mods want me to move it, I'll gladly do so.

In future posts, I'll share my opinions and takeaways from the businesses, products, business models, and pitches of the companies. Hopefully, others will add their perspectives.
 

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Scot

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I need to watch the first episode because Daniel Lubetzsky, founder of Kind Bar was on there as a guest shark. I actually just emailed him Friday to congratulate him on his guest shark status and tried to pitch him on my own round.
 

Bertram

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I need to watch the first episode because Daniel Lubetzsky, founder of Kind Bar was on there as a guest shark. I actually just emailed him Friday to congratulate him on his guest shark status and tried to pitch him on my own round.
Is a Shark Tank deal still ahead on your trajectory, @Scot or are you beyond it by now?
And @Rawseed , your content summaries are really valuable! Thank you for taking this on!
 
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Rawseed

Rawseed

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I need to watch the first episode because Daniel Lubetzsky, founder of Kind Bar was on there as a guest shark. I actually just emailed him Friday to congratulate him on his guest shark status and tried to pitch him on my own round.
That's awesome. Hopefully, you get a response.

I'm about to start watching the episode myself.
 

Scot

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Is a Shark Tank deal still ahead on your trajectory, @Scot or are you beyond it by now?
And @Rawseed , your content summaries are really valuable! Thank you for taking this on!
Oh, I'd never go on Shark Tank. But I wouldn't mind pitching to some of the more Food & Bev focused guest sharks in the real world.

Shark Tank operates on their own unique investment spectrum. They essentially count the appearance on TV as part of the investment value, which skews how they value their investment. If I were to go on Shark Tank and they used their valuation models, I'd get $50,000 for 50% of my company haha.

Every time you see an entrepreneur go into Shark Tank with a round open, that has other investors in it, they never get a good deal. Because Sharks use a completely unrealistic valuation model than everyone else in the business world.
 
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Rawseed

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Oh, I'd never go on Shark Tank. But I wouldn't mind pitching to some of the more Food & Bev focused guest sharks in the real world.

Shark Tank operates on their own unique investment spectrum. They essentially count the appearance on TV as part of the investment value, which skews how they value their investment. If I were to go on Shark Tank and they used their valuation models, I'd get $50,000 for 50% of my company haha.

Every time you see an entrepreneur go into Shark Tank with a round open, that has other investors in it, they never get a good deal. Because Sharks use a completely unrealistic valuation model than everyone else in the business world.
You could always go for the exposure and not take a deal?
 
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Rawseed

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Episode 1 started off with a great montage with the Sharks dropping some great quotes:
  • There's a freedom that comes from being an entrepreneur
  • There's a sense of empowerment that comes from working for yourself
  • Being an entrepreneur allows you to be the ruler of your own destiny
  • It allows you to take your life into your own hands
  • Freedom is the ability to take control of your own life
  • As an entrepreneur, no one can fire you or tell you what to do
  • One great idea could give you the power to set yourself free
  • One great idea can change your life
  • If you put your mind to it, anything and everything is possible
First business was Blueland, an eco-friendly cleaning company. They asked for $270k for 2% of their business. Valuation: $13.5M
  • They essentially concentrate cleaning products.
  • So far: bathroom cleaner, glass cleaner, and multi-purpose cleaner
  • They turn an entire bottle of product into an alka-seltzer
  • Great idea that decreases the use of plastic, packaging, space, weight, and water
  • They had only been operational for a month and had revenues of $200k with direct to customer sales
  • They didn't mention their margins
  • They were already setup to launch in an unnamed big box chain
  • One of the founders had great domain experience with a degree in chemistry and years of working with a large non-toxic cleaning company
  • They had already raised $3M at the $13.5M valuation. So, they didn't have much wiggle room in their equity ask
  • Cuban thought they didn't want a deal. So, he was out
  • Herjavec thought changing customer behavior would be too difficult. So, he was out
  • Lubetzky initially offered $1M for 25%
  • O'Leary offered $270K for 6%
  • Lubetzky and Greiner joined forces then offered $270K for 8%
  • The entrepreneurs countered to O'Leary with $270K for 3% with a 50 cent royalty on every $39 kit until he recouped his $270K investment.
  • O'Leary agreed.
  • They have a great product.
  • Innovation through packaging and decreasing waste.
  • It's not even a new idea. It's almost like powered Tang or frozen OJ.
  • Not sure how they can defend it though.
  • How can they stop a company like Method from copying them?
The biggest lesson learned was from Lubetzky, the founder of KIND. He presented this framework called the Three Cs:
  1. Creative - An entrepreneur should first find an idea by being creative
  2. Critic - Then they should move on to becoming the biggest critic of their idea. Is it really direct and/or better than their competitors
  3. Crusaders - Then they need to market the hell out of it
Lol. That's only the first business. It was easier taking notes for the Undercover Billionaire.
 

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foodiepersecond

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Hulu only has 9 seasons available. The first few seasons were pretty rough and cheesy. I wonder how the show will go about with recent events of Kevin Oleary.
 

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Shark Tank operates on their own unique investment spectrum. They essentially count the appearance on TV as part of the investment value, which skews how they value their investment. If I were to go on Shark Tank and they used their valuation models, I'd get $50,000 for 50% of my company haha.
The Dragons Den (UK equivalent that is in season 13 now) must be a totally different beast as we have entrepreneurs coming on with businesses that often only have $25,000 or less in sales, are running at a loss but still value their business at $500,000+.

Madness.
 
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Rawseed

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Business #2 was Minus Cal. They asked for 500k for 20%. $2.5M valuation.
  • They presented themselves as selling a science-based snack bar and a diet tablet that block fat when you eat them.
  • They claim to have created a natural fat blocking agent from fermented green tea.
  • They claim that the ingredient decreases cholesterol by up to 20%.
  • They claimed that the ingredient decreases up to 100 calories of fat per meal.
  • They claim to have funded a scientific study 12 years ago that proves their claims.
  • They recently launched and had no sales.
  • Cuban destroyed them as he does with all health and supplement companies. He hates when companies make claims that aren't fully backed by rigorous studies.
  • In my opinion, the product either doesn't work or it works while causing disaster pants. So, compliance would be horrible.
  • Even if it works and you don't care about disaster pants, 100 calories a meal equals one pound lost after eating 35 meals. Not worth it in my opinion.
  • They didn't receive a deal.
Business #3 was BabyToon. They asked for $50k for 50%. $100K valuation.
  • Designed, created, and presented by a 10 year old girl.
  • Their one product is an alternative to the normal spoon.
  • Normal spoons are too long and sharp for babies.
  • Their spoon is a baby spoon combined with a teether.
  • It's easy for babies to grasp, 100% soft silicone, ideal for pacifier clips, and is made in the USA.
  • It seemed like a good product, but they only had $5K in sales.
  • The little girl seemed to lack focus. Her poor sales tell me she's more concerned with her fifth grade homework than she is on building a baby spoon empire. Joking.
  • Her spoon was made for $6.60 and sold for $15.00. Both numbers seem kinda high in my opinion.
  • She had poor sales and bad margins, but she did have patents.
  • Greiner ended up giving her what she wanted.
  • Greiner is really smart. So, I'm assuming she invested in the marketability of the little girl and not the product.
  • Greiner could probably put her on QVC and sell 100,000 spoons based on just the kid's story and cute factor.
  • Greiner also probably knows how to get the production cost down. The product looked like one piece of silicone without any moving parts.
  • But still, she valued a spoon at 20 times revenue.
 
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Bertram

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That's awesome. Hopefully, you get a response.

I'm about to start watching the episode myself.
Wait, what? It's Monday morning. Don't we all have cubicles we belong inside?

Hulu only has 9 seasons available. The first few seasons were pretty rough and cheesy. I wonder how the show will go about with recent events of Kevin Oleary.
I just watched Season 11 Ep 1 on Hulu.
 
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Wait, what? It's Monday morning. Don't we all have cubicles we belong inside?


I just watched Season 11 Ep 1 on Hulu.
That must have been updated today. I literally checked middle of last week and it wasn't. Still missing season 9 and 10 although a few weeks ago half of season 10 was available. Guess they have to iron out the rights or something.
 

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I wonder how the show will go about with recent events of Kevin Oleary.
This is one of the big risks of going on a show like Shark Tank... Two good friends of mine did a deal with O'Leary in Season 10, and the only tangible value they got from the deal (other than the cash) was the ability to associate themselves with his name/brand when dealing with customers/vendors/partners.

Now, they can't even do that, so they've essentially given up a piece of the company for very little in return (in my opinion).
 
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Rawseed

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Business #4 from Episode 1 Ta Dah! Foods. They asked for $300k for 10% of their business. $3M valuation.
  • His pitch started off great
  • He has two main products: falafel street wraps and stuffed falafel ball
  • Sharks loved the food
  • He's Egyptian-American, so he has domain experience with eating falafel his whole life
  • The product is vegan, gluten-free, and tasty.
  • Chick peas are also a decent source for vegan protein.
  • Decent margins. Makes both products for $1.09.
  • Sells the wraps for $3.99, almost 4X
  • Sells the balls for $4.99, almost 5X
  • I thought he'd definitely get a deal
  • Then he started presenting his other numbers
  • He had a co-packer problem, so his sales petered out
  • $2.3M in 2016. $1.7M in 2017. $1M in 2018. $1M over the past 12 months.
  • Over the past 12 months, they had a $200K loss on the $1M in sales
  • The founder only had 25% of the equity. Three of his friends owned the other 75%
  • The company had $445K in debt
  • They give 25% of their profit to various charities
  • Three of the Sharks bowed out
  • I thought he was done.
  • Then Lubestky, the CEO of KIND gave him two offers: $300K for 20% and $500K for 25%.
  • I was thinking this guy really is Kind
  • The entrepreneur countered by asking for $500K in a line of credit for purchase orders
  • Lubetsky said he'd give him $1M LOC, but he wanted to buy out some of his friends' equity to get his 25% equity and to give some equity back to the original founder
  • Seemed like a no brainer to me, but the guy was trying to be loyal to his friends. That's exactly why I don't have friends.
  • Cuban jumped in and criticized Lubetsky's deal. He offered the guy $300K for 20% with a $500K LOC
  • The guy made the smart move though and went with Lubetsky. He's a giant in the food space.
  • I'm not sure it was a great deal for Lubetsky though.
  • The business has an annual loss of $200K and has $445K in debt
  • They had $1M in revenue, but it was decreasing
  • But, Lubetsky gave him a value of $2M
  • That was more than Kind
 

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I always liked Shark Tank, however I have learned so much more from The Profit! I love Marcus. That said, they are complete different approaches. You get to see the investment part on ST and learn on their reasons to invest in something or pass, with TP you also get to see what he does to flip the business, and I love that they explain stuff like why he decides to eliminate certain products, why he invests in branding the business, and stuff like that.
 

Bertram

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Business #4 from Episode 1 Ta Dah! Foods. They asked for $300k for 10% of their business. $3M valuation.
  • His pitch started off great
  • He has two main products: falafel street wraps and stuffed falafel ball
  • Sharks loved the food
  • He's Egyptian-American, so he has domain experience with eating falafel his whole life
  • The product is vegan, gluten-free, and tasty.
  • Chick peas are also a decent source for vegan protein.
  • Decent margins. Makes both products for $1.09.
  • Sells the wraps for $3.99, almost 4X
  • Sells the balls for $4.99, almost 5X
  • I thought he'd definitely get a deal
  • Then he started presenting his other numbers
  • He had a co-packer problem, so his sales petered out
  • $2.3M in 2016. $1.7M in 2017. $1M in 2018. $1M over the past 12 months.
  • Over the past 12 months, they had a $200K loss on the $1M in sales
  • The founder only had 25% of the equity. Three of his friends owned the other 75%
  • The company had $445K in debt
  • They give 25% of their profit to various charities
  • Three of the Sharks bowed out
  • I thought he was done.
  • Then Lubestky, the CEO of KIND gave him two offers: $300K for 20% and $500K for 25%.
  • I was thinking this guy really is Kind
  • The entrepreneur countered by asking for $500K in a line of credit for purchase orders
  • Lubetsky said he'd give him $1M LOC, but he wanted to buy out some of his friends' equity to get his 25% equity and to give some equity back to the original founder
  • Seemed like a no brainer to me, but the guy was trying to be loyal to his friends. That's exactly why I don't have friends.
  • Cuban jumped in and criticized Lubetsky's deal. He offered the guy $300K for 20% with a $500K LOC
  • The guy made the smart move though and went with Lubetsky. He's a giant in the food space.
  • I'm not sure it was a great deal for Lubetsky though.
  • The business has an annual loss of $200K and has $445K in debt
  • They had $1M in revenue, but it was decreasing
  • But, Lubetsky gave him a value of $2M
  • That was more than Kind
Brilliant as always! But here are a couple of critical mistakes that I hope you can just fix really quickly. Then I'll delete this bit. Thanks for this generous information!
TaDah! gives 25 percent of their EQUITY to charity not profits! That's what floored the sharks.
Just one of the products is vegan.
Lubetsky made a huge marketing coup for KIND with two 1M offers. The second is a "wait-and'see" offer to buy down the partners' equity.

And I would like to be your friend, obviously you need a good one.

Here's what went down between Cuban and Lubetsky and T, and these three good equity-owning friends. What a bad shark, and for no other reason than the thrill of the bite!

The three friends who hold equity were not necessarily greedy and selfish. It sounded like they had just stepped in to help TaDah launch. Maybe they had done so reluctantly. In any case Mark Cuban stepped in and poisoned that relationship right on live TV. He argued that if these other partners had any sense then they should not be willing to give up their equity now that Lubetsky was rescuing the company. Cuban repeatedly interrupted to enforce this idea.

Cuban effectively created a harsh bargaining position for Lubetsky and T. to buy the other friends' equity.

I don't know why Cuban would step in and do that to a deal he had no part in.
Envy? Back pain? Xenophobia?

Actually I think I know. I've learned from doing real estate and other deals that some of the finest sharks in business never feel satisfied with the deal until they can deliver a last-minute underhand blow, a stab in the flank, "even a rape," as one elite broker calls it. They bite in any direction as a deal comes to a close, and not just across the bargaining table. Then they'll all shake hands and smile. This attitude is just a manner of business play among sharks.

While Cuban was out of the deal-making he just kept on biting for the sheer pleasure of being the shark that he is.
 
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Rawseed

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@Bertram Your assessment was great. I just didn't want to get into too many details with my summary. There were a couple of mistakes you made though.

TaDah! gives 25 percent of their EQUITY to charity not profits! That's what floored the sharks.
It wasn't equity. They sorted through that during the episode. You can also see it on their website: About

Just one of the products is vegan.
You're right. The balls are certified vegan. The wraps are certified vegetarian. Collection Template

Lubetsky made a huge marketing coup for KIND with two 1M offers. The second is a "wait-and'see" offer to buy down the partners' equity.
As I said in my summary, he made two offers:
  • A $1.5M offer ($300K for 20%)
  • A $2M offer ($500K for 25%)
The $2M offer had the stipulation that he is able to buy out or buy down the other partners at a fair value.

And I would like to be your friend, obviously you need a good one.
Thank you. I do have to warn you. Previous friends have said that I have "stalkish" tendencies.
 

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I always liked Shark Tank, however I have learned so much more from The Profit! I love Marcus. That said, they are complete different approaches. You get to see the investment part on ST and learn on their reasons to invest in something or pass, with TP you also get to see what he does to flip the business, and I love that they explain stuff like why he decides to eliminate certain products, why he invests in branding the business, and stuff like that.
I love The Profit and I've learned so much watching it. Ultimately, I want to be an acquisition entrepreneur just like Lemonis.

But, I do question some of Lemonis' business practices as detailed here:

 

BellaPippin

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I love The Profit and I've learned so much watching it. Ultimately, I want to be an acquisition entrepreneur just like Lemonis.

But, I do question some of Lemonis' business practices as detailed here:

View: https://media.giphy.com/media/WxDZ77xhPXf3i/giphy.gif


Oof I don't want to jump to conclusions but they seemed to have plenty of info not just "claims". I watched the Inkkas episode. I agree some of the owners did seem like they just wanted a free ride on other episodes. But the tactics they describe ugh idk. I wish it wasn't true but it's also not impossible.
 
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Rawseed

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I just watched the first half of Episode 2.

Company #1
  • Circadian Optics
  • Offered $750K for 10% = $7.5M valuation
  • Malaysian-born entrepreneur that lives in Minnesota
  • She had a great 'WHY' and gave a great presentation
  • Product: Sunlight lamps that provide light therapy
  • Differentiators: Beautiful product. Designed for offices.
  • Lifetime sales: $7.4M
  • Most recent year sales: $4M
  • This year's sales will be $5.6M
  • 70% Gross profit margins
  • 25% Net profit margins
  • Greiner and Cuban offered $750K for 20%
  • Corcoran and O'Leary also offered $750K for 20%
  • Greiner and Cuban increased their offer to $800k for 20%, which includes $50K for the entrepreneur to give to her parents who invested everything they had to pay for her trip and schooling in America
  • I like the entrepreneur. She quoted "No Balls, No Babies". She encouraged other entrepreneurs to ignore the risks and go for their dreams
  • The Sharks paid $4M for an already profitable company with $5.6M in revenue and $1.3M in net income
  • Seems like they got a great deal
Great update on the company Mush from Season 10. They are doing really well. The founder encouraged other entrepreneurs to simply start even if they don't know how

Company #2
  • Boost Oxygen
  • Offered $1M for 5% = $20M valuation
  • The founder/CEO and COO presented
  • Product: Supplemental oxygen
  • Differentiators: Portable and affordable
  • They're essentially trying to bottle oxygen like some genius did with water decades ago
  • They have 95% market share
  • This years sales will be $6.4M
  • This years net income will be $1.5M (23% net margins)
  • Three skews sell for $14.99, $9.99, and $7.99
  • Aggregate costs are $2.05 each
  • Approximate gross margins are 86%, 79%, and 74% respectively
  • A couple of the sharks were concerned about having to educate the consumer about the need and benefits of the product
  • O'Leary offered a venture debt deal with a $1M loan for 36 months with a 9% interest rate and a 7.5% equity kicker.
  • The entrepreneurs countered with a $1M loan for 36 months with a 6% interest rate and a 5% equity kicker.
  • They met in the middle with a $1M loan for 36 months with a 7.5% interest rate and a 6.25% equity kicker.
  • I'm not sure how to value a deal using venture debt
  • A good deal for O'Leary because he's guaranteed a return on his $1M and he gets to participate in any upside with his equity
  • The company is profitable, has good margins, and 95% market share.
 

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Last couple was brutal to watch, I can’t believe you can get on shark tank and know so little about finances. Brutal to watch
 
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I just watched the second half of Episode #2

Business #3
  • Face Yoga with Koko
  • Offered $200K for 20% => $1M valuation
  • Product: Face exercises for wrinkle reduction
  • Differentiator: All natural wrinkle reduction
  • High energy, entertaining, and funny presentation
  • Face yoga is apparently big business in Japan
  • Entrepreneur only had $17K in lifetime revenue
  • Entrepreneur has a second business that has $500K in annual revenue selling cosmetic products to the elderly for age-related body odor
  • She should have known that the Sharks hate an entrepreneur with divide attentions
  • She should have known that the Sharks wouldn't be interested in a business with only $17,000 lifetime revenue
  • No deal
Business #4
  • Atlas Monroe
  • Offered $500K for 10% => $5M valuation
  • Product: Fried Chicken
  • Differentiator: Vegan. Made from organic non-GMO wheat. No soy. Taste better than real fried chicken
  • Entrepreneurs have an awesome product
  • Entrepreneurs have a great 'WHY' and story for their product
  • Have a large fast food chain interested in selling their product
  • They can't keep up with demand
  • Make the product for $2.67
  • Sell the product for $22.99
  • Great gross profit margins (~87%) on the six-piece chicken
  • Unfortunately, they didn't present the rest of their numbers well
  • Their total revenue in the past year is somewhere between $60K and $76K
  • They fear using a co-packer because they don't want to reveal their recipe
  • They didn't seem to be good operators
  • They didn't seem to know their numbers
  • Cuban offered them a contingency deal: $500K for 30% => $1.7M valuation
  • They should have taken that deal
  • The other Sharks bowed out
  • Cuban and Oza then offered them $1M for 100% of the business with a 10% royalty in perpetuity
  • They smartly declined that deal
  • They wanted Cuban's original deal, but he took it off the table
  • They left with no deal
  • Both Impossible Foods and Beyond Meat have multi-billion dollar valuations
  • If they hire a CEO or COO, they could really grow this business
  • They just need help from a seasoned, but honest business person
Another great episode. I love Shark Tank.
 

Bekit

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They fear using a co-packer because they don't want to reveal their recipe
Interesting how fear makes people make dumb choices in business. Sounds like their business is crippled in various areas where it shouldn't be, based on the strength of the product.

  • Product: Fried Chicken
  • Differentiator: Vegan. Made from organic non-GMO wheat. No soy. Taste better than real fried chicken
Alternatively, I wonder if the reason they can't share their recipe with anyone is some kind of sketchy business where they get the thing to taste like chicken... by using chicken as an ingredient
 

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  • Cuban and Oza then offered them $1M for 100% of the business with a 10% royalty in perpetuity
  • They smartly declined that deal
This wasn't smart, they don't know what the terms NET and Gross mean and failed to grasp even the most basic questions they were being asked regarding their finances. I have no doubt they would have made FAR more money taking that deal then they will going off on their own.

You can say this stuff would be easy to learn but if they don't understand something so basic there's no way they understand more complex aspects of their business. They have a huge mountain to climb and need tons of help, getting a 10% royalty would have made them much more than they will going forward. They 100% should have taken the 1M offer
 
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Rawseed

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This wasn't smart, they don't know what the terms NET and Gross mean and failed to grasp even the most basic questions they were being asked regarding their finances. I have no doubt they would have made FAR more money taking that deal then they will going off on their own.

You can say this stuff would be easy to learn but if they don't understand something so basic there's no way they understand more complex aspects of their business. They have a huge mountain to climb and need tons of help, getting a 10% royalty would have made them much more than they will going forward. They 100% should have taken the 1M offer
They can figure things out. Every one starts from somewhere.

You didn't come out of the womb understanding those terms. They just need the right mentor and some guidance.

The answers to two key questions will determine whether or not they are successful in the future:
  • Do they realize how ignorant they are in regards to business?
  • Do they have growth mindsets?
If the answer to those two questions are yes, then this can become a nine-figure valued business.
 
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Interesting how fear makes people make dumb choices in business. Sounds like their business is crippled in various areas where it shouldn't be, based on the strength of the product.
Their fear is very appropriate. They haven't built a brand yet. So, the only thing they have that's proprietary is their recipe. If a company like Impossible Foods or Beyond Meat gets their recipe, they're done.

I'm sure Coke was secretive about their recipe early on as well. Now, that they have a strong brand it doesn't matter.

Alternatively, I wonder if the reason they can't share their recipe with anyone is some kind of sketchy business where they get the thing to taste like chicken... by using chicken as an ingredient
Your skepticism is baseless.
 
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