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The Shark Tank questions thread

Xeon

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Ok, so I've watched several episodes of Shark Tank, the ones scattered randomly around YouTube.
I don't live in the US so I'm not sure where I can watch all the full complete seasons and episodes.

This one:
View: https://www.youtube.com/watch?v=dXQiE-f9RuM


At 4:47, the lady tells Robert she's selling the homebake cookie kit between US$7 - US$12.
At 4:54, Kevin asks her what's the cost to make one kit, and she says US$3.89.

Then the sharks exclaimed in exasperation saying the margins are not high enough?

If they're selling for say, average US$9, and cost per kit is US$3.89 (with overhead and everything), that's US$5.11, more than 50% margin. Exactly how high of a margin do these sharks want? 200%?
 
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Scot

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Ok, so I've watched several episodes of Shark Tank, the ones scattered randomly around YouTube.
I don't live in the US so I'm not sure where I can watch all the full complete seasons and episodes.

This one:
View: https://www.youtube.com/watch?v=dXQiE-f9RuM


At 4:47, the lady tells Robert she's selling the homebake cookie kit between US$7 - US$12.
At 4:54, Kevin asks her what's the cost to make one kit, and she says US$3.89.

Then the sharks exclaimed in exasperation saying the margins are not high enough?

If they're selling for say, average US$9, and cost per kit is US$3.89 (with overhead and everything), that's US$5.11, more than 50% margin. Exactly how high of a margin do these sharks want? 200%?

For food products, you need really big margins because you have to wholesale. Often times there’s a distributor in the middle two, so there’s the price you pay, then the price you sell to the distributor, the the price they sell that to the retailer, and the price the retailer sells to grocery. Everyone wants 60-100% profit margin.
 

Xeon

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For food products, you need really big margins because you have to wholesale. Often times there’s a distributor in the middle two, so there’s the price you pay, then the price you sell to the distributor, the the price they sell that to the retailer, and the price the retailer sells to grocery. Everyone wants 60-100% profit margin.

That explains it. Thanks!
 

ZF Lee

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For food products, you need really big margins because you have to wholesale. Often times there’s a distributor in the middle two, so there’s the price you pay, then the price you sell to the distributor, the the price they sell that to the retailer, and the price the retailer sells to grocery. Everyone wants 60-100% profit margin.
How about hand tools like drills and torchlights? Or furniture, lighting and electronics? They seem to follow a similar retail pattern, but are they exceptions?

I have seen a good episode on a guy with innovative lighting, and they didn't ask him many tough questions to start throwing money at him.
hqdefault.jpg

lumio-shark-tank.jpg
 
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Scot

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How about hand tools like drills and torchlights? Or furniture, lighting and electronics? They seem to follow a similar retail pattern, but are they exceptions?


Don’t know. I sell salad dressing not hammers haha
 

ZF Lee

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Don’t know. I sell salad dressing not hammers haha
Hehe, that's alright.
My hunch is that probably things are stricter since electronics and industrial wares are more complicated, with durability and functionality in question.

However, with every Tom, Dick and Harry into cheap China manufacturing, I suppose there's many ways to bust the gatekeepers.

I was wondering about it because I was looking into Senheng, a notable electrical appliances chain shop in my country. Probably they have a much more different setting than the USA.
 

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I can't say for certain, but sometimes the Sharks see other uses for products that the entrepreneur isn't even thinking of. Maybe it fits into another business they own or they know of a way they can leverage the technology to do something else so the intrinsic value is a lot higher than what everyone is led to believe.
 
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Xeon

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Xeon

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Start at 08:41 - Basic Outfitters

View: https://www.youtube.com/watch?v=lQuCimc0lUM


I can't believe this, they sold 75% of the company to investors leaving them with only 25% ownership of the company, and then they want to sell the remaining 25% to Kevin/Lori to get the funds they need, but at that point, they basically have zero ownership of the company and are basically employees.

This is the most WTF WTF WTF moment I've seen till now in Shark Tank lol :rofl:
They could have made it so great but....
 

Scot

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Do you ever plan on pitching on Shark Tank?

If not, why does this matter?
 
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Xeon

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Do you ever plan on pitching on Shark Tank?

If not, why does this matter?

1) Unscripted mentions Shark Tank so I thought I can pick up some general tips on business
2) It's better than watching anime
3) I find Marc Cuban's insights to be very mind-opening and things that I never thought of before
 

Scot

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1) Unscripted mentions Shark Tank so I thought I can pick up some general tips on business
2) It's better than watching anime
3) I find Marc Cuban's insights to be very mind-opening and things that I never thought of before

Nothing wrong with watching shark tank, but if you don’t plan on pitching to them, don’t worry about the crazy things they demand.
 

foodiepersecond

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Potato Parcel:
View: https://www.youtube.com/watch?v=DAgfS57S5QM
(start from 31:55)
Potato Parcel After Shark Tank - Life After the Shark Tank
Potato Parcel - Send A Message to Anyone...On a Potato!

No offense, but exactly what problem does this potato parcel product solve?
I don't see it fulfilling any need, other than it being a really lame idea which these two somehow managed to pull off.

This business is based on the concept of novelty?

I kinda want to challenge someone to do a CENTS analysis on this. This boggled my mind and they seem to still be in business getting about 10k a month in revenue. I understand things can blow up via memes or viral videos but for it to STILL be in existence? Any other business in Shark Tank or elsewhere that seemed just wonky but turned out to be profitable?
 
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TheCj

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Something to keep in mind, I believe to be on the earlier shows the pitching companies had too agree to a contract. This contract signed off a percentage of ownership or royalties of there business to the show for just being on since is national advertising.

So a lot of the pitches are on there for the exposure not necessarily to make a deal.

Also out of the deals that do get done on the show, many of them never finalize once further due diligence is done.
 

foodiepersecond

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Something to keep in mind, I believe to be on the earlier shows the pitching companies had too agree to a contract. This contract signed off a percentage of ownership or royalties of there business to the show for just being on since is national advertising.

So a lot of the pitches are on there for the exposure not necessarily to make a deal.

Also out of the deals that do get done on the show, many of them never finalize once further due diligence is done.

I heard that about the show getting equity but Mark Cuban threatened to leave if they didn't take that clause out. Its just insane to me how well it did and is still doing.
 

TheCj

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I heard that about the show getting equity but Mark Cuban threatened to leave if they didn't take that clause out. Its just insane to me how well it did and is still doing.

Yeah, I remember the same thing about how they changed it due to Mark Cuban putting pressure. He was maybe doing it to help the businesses on the show. Yet I think it also benefited himself and the dragons since a lot of the actual successful businesses were only there for the marketing exposure, and were just wasting there time. Also recall the actual pitch sessions can be hours sometimes and they reduced it to minutes for the show.

Like everything on tv, everyone has there own agenda for being there. The dragon's promoting there own brands. The tv studio, the people pitching, watching a bit of the Canadian version some of the pitch's definitely felt staged with actors, to fill in time. Wouldn't be surprised if they had a quota of accepted made deals on the show just so the whole episode isn't no's. Since some deals the dragons would be very dramaticly eager to do a deal over a businesses that wasn't as engaging as others that they passed on without much fanfare.
 
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foodiepersecond

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I have two data points for those who are curious...

First, I interviewed Barbara Corcoran on my podcast a few weeks ago, and asked this question specifically -- what percentage of deals that were made on the show were actually consummated. She said that it was very dependent on the shark. She said that personally she had only backed out of one deal (the founder had lied about financial information during the pitch), but that the other sharks didn't necessarily have the same track record. Talking to her outside the show, she said that all the sharks were well over 50% follow-through, except for one.

Turns out I knew who the one was, as a good friend of mine was on the show a few months ago, and did a deal with Kevin O'Leary. He dragged his feet and the deal almost didn't get done. It was at the very last minute that he agreed to do it, and the show aired. Otherwise, it wouldn't have aired and they would have wasted a lot of time. He told me that Mr. Wonderful has a very low follow-through rate, well below 50%.

Anyway, that's some additional info for those who are curious...
Whoa please link the podcast
 

Scot

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I have two data points for those who are curious...

First, I interviewed Barbara Corcoran on my podcast a few weeks ago, and asked this question specifically -- what percentage of deals that were made on the show were actually consummated. She said that it was very dependent on the shark. She said that personally she had only backed out of one deal (the founder had lied about financial information during the pitch), but that the other sharks didn't necessarily have the same track record. Talking to her outside the show, she said that all the sharks were well over 50% follow-through, except for one.

Turns out I knew who the one was, as a good friend of mine was on the show a few months ago, and did a deal with Kevin O'Leary. He dragged his feet and the deal almost didn't get done. It was at the very last minute that he agreed to do it, and the show aired. Otherwise, it wouldn't have aired and they would have wasted a lot of time. He told me that Mr. Wonderful has a very low follow-through rate, well below 50%.

Anyway, that's some additional info for those who are curious...

I have a friend who struck a deal with Robert on the show but it fell through afterwards. A lot of it had to do with the founder though.

I also know another company that actually made a deal with Cuban before the show, and they pretend pitched on the show.
 

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