Friday, April 18, 2014

@ Velocity Signs: Sometimes Quality Trumps Quantity

velocity signs shark tank
By: Pete Troshak
Twitter: @Shak74

Have you ever seen one of those guys standing on the side of the road holding an ad for a business and felt sorry for them? It's a miserable job, and frankly the sight of a disheveled, sweaty employee tiredly waving a sign in the heat is neither professional nor likely to draw a lot of customers. Scott Adams and Josh Faherty came into the Shark Tank with a solution for this advertising dilemma. Their company is Velocity Signs, and their products are large rechargeable waving signs that are placed in the ground or on sidewalks outside of businesses. The signs have a heavy base that sits on the lawn, and consist of a directional arrow front-piece that bobs and weaves creating a dynamic and eye-catching 3D form of advertising that points customers in the direction of the business. Scott and Josh were asking for $225,000 for 15% of their company. The company made a quarter of a million dollars last year, and is projecting to grow to $2.5 million next year.

velocity signs on shark tank battleThe signs cost roughly $2,000-$3,000 each, and their customers have averaged a 15% increase in business after installing the signs. Scott and Josh have a definite plan for the money they were asking for, and a new smaller item they are working on that is aimed mostly at real estate salespeople who want a dynamic ad for their services or open houses. Despite being knowledgeable and giving an informative and energetic pitch, the investors didn't receive a lot of interest from the Sharks initially. However, this pitch led to one of the most heated and cutthroat Shark battles of the season!

Here's what happened:

Kevin dropped out first, reasoning that he wants to see another year of sales from the company to judge if it was investment worthy or not. Robert went out next, reluctant to invest because he had lost money in another sign business already. Mark went out citing that he didn't think they would be able to sell more than one sign to each client, which would put a ceiling on the company's upward growth. Barbara voiced how she loved the real estate sign concept, and said that she would probably invest if she could see that product. But because it was not yet in the picture, she went out. Lori was now the only Shark left, and unlike the other Sharks, she immediately saw the potential in this business. She said it is an "extremely smart new way to draw attention to brick and mortar stores" and praised the inventors for making an item that will help keep small businesses alive. She then made her offer of $225,000 for 30% of the company. But before the entrepreneurs could even think about accepting it, Kevin and Mark jumped back in eager to join her deal, giving each of them a 10% stake in the company. The problem was, Lori didn't like this too much as 10 seconds earlier she was the only one interested in investing.

lori and barbara shark tank battleSo instead of coming to some sort of agreement with her fellow Sharks, Lori went on to make a speech about how she was the one Shark who believed in the product, and how she should be the one they partner with. This was a big mistake though, because once Mark and Kevin gained interest, they didn't need Lori in their deal. So, Mark simply said that they can cut Lori out and team up with Robert for the same terms. Robert liked this idea. Seeing that she was now going to lose this battle, Lori dragged Barbara back in and made a slightly better offer at $225,000 for 25%, claiming that her offer was so much better because of her and Barbara's connections. This got Mr. Wonderful worked up as he argued that he and the other two men have the same connections that Lori does, and can offer more value with three Sharks as opposed to two. Once they were trying to sell themselves, Mark lands the biggest blow of the fight, stating that unlike the women on the panel he owns physical businesses that can feature this product. Mark also dangles the biggest carrot in describing how he would put a Velocity Sign outside the NBA's Dallas Maverick stadium that would become a viral photographic landmark representation of the sign business. Although Lori claimed that she and Barbara own plenty of business that could use these signs as well, at this point Scott and Josh seemed more interested in working with the men. And after trying to lower the percentage by 5% and being rejected, the entrepreneurs ultimately chose to partner with Kevin, Mark, and Robert, giving up 30% of their company in exchange for $225,000.

In the post-pitch interview, Scott and Josh explained that their decision was ultimately made because they saw the value in three Sharks versus two. The inclusion of Mark offering them promotion outside of an NBA arena also undoubtedly helped tilt the decision towards the male Sharks. But they still showed appreciation for Lori sparking the interest which got them a deal.

In hindsight, it seems like the two inventors might have missed out by choosing quantity over quality, and not making a deal with someone who is as passionate about their business as they are. They could have made a deal with Lori who seemed to understand and believe in their business, even when all other Sharks dropped out right away. Along with Lori they would've gotten Barbara, who also saw the positive of the product and who could really target the signs to the real estate market. But instead, they chose to partner with the three male Sharks, all of whom had just moments earlier evaluated the business and only noticed the flaws.

Although in this particular case this decision might not make it or break it, it is important to think about what you would have done in such a scenario.Would you rather have three people working with you who are only looking at the bottom line, or two people working with you who believe in your product and your mission? It’s one thing to find people to invest in your business who just collect checks, but it’s a lot harder to find someone to partner with that is as passionate about your company and who will champion it as hard as you will. Sometimes quality trumps quantity.

Wednesday, April 9, 2014

Five Incredible Business Influencers to Follow on LinkedIn

One of the greatest resources on the web for entrepreneurs is LinkedIn and their Pulse news app. Business influencers from around the world contribute qualitative and informative articles on various topics, each which gets read by thousands, if not millions, of subscribers and news readers. Trying to keep up with each influencer's postings can be quite arduous and time consuming, so I've put together a list of my Top Five LinkedIn Influencers which I strongly recommend following::

1) Jack Welch. As one of the world's most respected CEO's, Jack needs no introduction. Like his leadership, his articles are filled with guidance and advice which is easy to take to heart. And if you find that you want to keep learning under him, you can always enroll in the Jack Welch Management Institute to advance your education.
2) Mark Cuban. Being that this is Blog Shark Tank, it would have been almost hypocritical to exclude Mark Cuban from my Top Five List. Mark usually posts once or twice a month to his blog, Blog Maverick, and shares those articles with his followers on LinkedIn as well. Although most of his recent articles have been about his battle with the SEC, they are worth reading if you appreciate his unique articulation of opinion and style when it comes to doing business.

3) David Sable. The CEO of Y&R, one of the largest marketing firms in the world, brilliantly combines current events, brands, and philosophies in his Weekly Ramble. His perfect-length articles are filled with humorous phrases and quotable quotes, and usually end with engaging, open-ended questions for his readers to ponder.

4) Jonah Berger. Jonah is a marketing professor at the Wharton School of Business, and the author of a best-selling book on viral marketing, entitled Contagious. His passion for analyzing why things go viral surfaces in every one of his articles, all of which are enjoyable to read.

5) Arianna Huffington. Although Arianna's articles are not always strictly about business, she has a very unique perspective on all worldly matters ranging from politics to entertainment to culture. She is no doubt a high-profile influencer and the brainpower behind the wildly successful Huffington Post.

Thursday, March 27, 2014

@ Packback Books: When You’re in the Tank, it’s Not that Easy, Right?

backpack books shark tank
By: Pete Troshak
Twitter: @Shak74

Twenty years ago if I told you that instead of going to the local book store to get the latest bestseller you would be downloading books on a device the size of a pad of paper that can hold the equivalent of a small library, you would have never believed me. The way we digest print media has changed, and along with that comes opportunity for innovative minds to market and sell books in new ways to niche markets.

Young entrepreneurs Casey and Mike have created their company, Packback Books, to address one of these niche markets. The duo was looking for $200,000 for 10% of their company. Their website offers pay-per-use access to college text books on a rent-per-day basis at $5 per day. The average rental would cost the student $34 a semester as opposed to the price of buying the textbooks, which even used can cost over a hundred dollars each. Packback Books only has a deal with one major publishing company so far, and pays them 75% of their income for each rental which is apparently the industry standard for licensing publications for rental. The publisher’s gain from Packback Books renting their books because they earn revenue with no effort on their part, and it is better than the alternative, which finds many students buying used books with don’t benefit the publishers at all.

Here's what went down in the Tank:

shark tank backpack booksDaymond dropped out because it isn't a market he has experience with, and Barbara dropped out because she doesn't believe the service will be a success. Kevin O'Leary has loads of experience with the other publishers Casey and Mike are trying to make deals with, and warned them that they will be as bald as him by the time they reach an agreement with all of the major companies in this market. He dropped out due to what he believes will be a long uphill climb before the company is successful. Robert didn't see the company becoming profitable at all, and went out as well. Mark Cuban though believed in the service and wanted to invest, but wanted more equity than what they came in asking for. So, the two partners went out to the lobby to discuss a new proposal for him. When they returned, they countered him asking for 17.5% for $200,000. Mark then countered with $250,000 for 20%, and what happened next was pretty unexpected. Casey countered with $200,000 for 20%. Did you catch that? Casey spoke too quickly and knocked $50,000 off the price by misspeaking, which caused shocked reactions from the rest of the Sharks and an immediate "yes" from a smiling Cuban. Seeing these reactions, the entrepreneurs realized the error, and Mark allowed them to agree to what he previously proposed: the $250,000 for 20%. Casey and Mike agreed and there were hugs and high fives exchanged between them and Mark.

In a post-pitch interview, Casey explained his error as that he meant to say $250,000 for 17.5% but just slipped. The show closes with him saying “when you’re in the Tank, it’s not that easy, right?”

The Packback Book guys pitch was overall a success. Despite most of the Sharks really not being interested, they were able to get a substantial financial deal with Mark Cuban, who is one of the best possible partners for them among the Sharks in the Tank. Their pitch did teach two valuable lessons though:

negotiating like a shark
1) Listen carefully and don’t speak too quickly – Casey made an error and proposed an offer to Mark that was less than Mark’s last offer. Since Mark was the only Shark still involved, he could have easily tried to hold them to that and threaten to drop out if they didn't agree. It wouldn't have been the best way to negotiate and start a business relationship with someone, but it was an option for Mark to act that way. Business negotiations are not always pretty and usually not this nice; make a mistake like this in most dealings and it will cost you. In business dealings you need to pay attention carefully, think before you speak, and when you do respond, take your time. Casey and Mike got off easy, losing only a possible 2.5% of their company, but it's still a loss, and this type of mistake could have been much more costly.

2) Don’t let a useful Shark swim away without a fight – Mark is a great partner for Casey and Mike, his knowledge of running tech companies and business savvy has a great chance of helping them to succeed. But they did let the Shark with the best connections in this market swim away without giving up a fight. Kevin O'Leary has an extensive amount of experience and contacts in the publishing industry. Having his endorsement and backing of their service would have potentially made their road to profitability a lot smoother and straighter. Granted, Kevin seemed very opposed to getting back into this industry so it would've been a tough sell, but in the part of the negotiations that were broadcast, Casey and Mike really didn't put up a fight when he dropped out. They could have shown some more passion in their service, and in doing so, it might have made Kevin reconsider or at the very least let the other Sharks know how strongly they believed in their business. This was the key moment of these negotiations. Even though they eventually made a deal and left happy, the outcome might have been even better for them if they had put up more of a fight. But then again, when you’re in the Tank, it’s not that easy, right?

Monday, March 24, 2014

Define Bottle and iReTron: A Tale of Two Pitches

By: Pete Troshak
Twitter: @Shak74

kid entrepreneurs on shark tank
Last week's Shark Tank featured entrepreneurs ranging in age from six to sixteen who have invented items to make the world a better place. Two of the pitches featured inventors of roughly the same age who displayed business savvy combined with an impressive level of social and environmental consciousness beyond their years. Only one walked out of the Tank with a deal, and we are here to analyze why.

Thursday, March 20, 2014

10 of the Most Ridiculous Shark Tank Products Ever

Throughout the past five seasons of Shark Tank, America has seen some of the strangest products (and entrepreneurs) out there. In case you missed some, here are 10 of the most ridiculous Shark Tank products ever:

ionic ear shark tank
1) Ionic Ear (Season 1, Episode 1)
In the very first episode of Shark Tank, Darin Johnson introduced his idea for an implantable Bluetooth device. And yes, implantable meaning it would be surgically inserted into your ear. His valuation only made the whole thing crazier, asking for a whopping $1,000,000 for a 15% stake in the business. You guessed right, he walked away empty-handed while being laughed at uncontrollably by all the Sharks.

squirrel boss shark tank

2) Squirrel Boss (Season 4, Episode 23)
After being frustrated from wild squirrels eating all his bird food, Mike DeSanti invented a way to keep them away - by shocking them! Want one? It'll cost you $50!

throx shark tank
3) Throx (Season 1, Episode 8)
After constantly losing one of his socks in the wash, Edwin Heaven decided that a good solution would be to just sell socks in a package of three. I don't think any more needs to be said.

4) Esso Watches (Season 3, Episode 6)
esso watches shark tankThe Sharks showed no mercy when Ryan Naylor introduced his "negative ion" bands to them, and tried convincing them how his watches can improve their balance. Mark Cuban could barely look at him without being disgusted over the falsity of his claims.

wake n bacon shark tank
5) Wake n' Bacon (Season 2, Episode 2)
Inventor Matty Sallin trotted into the Shark Tank asking the Sharks for a $40,000 investment in his alarm clock which wakes you up with the smell of bacon. The Sharks went out after agreeing that sleeping with an oven next to your bed is probably not the best idea...even if it means you'll be a little late.

flip n notes shark tank

6) Flip-n-Notes (Season 1, Episode 2)
The look on the Sharks' faces when they were listening to Mary Ellen Simonson demonstrate her product was priceless. Flip-n-Notes is a sleeve that goes on a laptop to provide space to stick post-it notes on. Gotta love it when people create problems that don't really exist in order to invent a solution that is not needed.

man candle shark tank7) Man Candle (Season 2, Episode 8)
Johnson Baily wanted a candle that could make his house smell fresh, while at the same time give off a manly aroma. And by "manly aroma" I mean footballs, golf courses, and gas. Just plain ridiculous.

arkeg shark tank
8) Arkeg (Season 4, Episode 12)
Brant Myers and Dan Grimm created the Arkeg drinking game to combine their two favorite activities: playing video games and drinking beer. Unfortunately for them, they are about three decades too late.

man medals shark tank9) Man Medals (Season 5, Episode 2)
James O'Brien came up with the Man Medals concept after continually being asked by his wife "do you want a medal for that?" after doing some chores. Unsurprisingly, his cute idea with practically no sales got no bites from the Sharks.

track days shark tank10) Track Days (Season 4, Episode 24)
Stuntman James LaVitola and his buddy Brian Pitt pitched their motorcycle movie concept to the Sharks in need of $2 million. The problem was, there was no clear plan or actors yet. Just a bit too early for the Sharks.

Thursday, March 13, 2014

@ Squeeky Knees: The Faces Don't Match the Feedback

I know what you're thinking.

It doesn't make sense. Why do all the Sharks have huge smiles on their faces, and yet have such negative comments about this company?

Which pitch made the Sharks smile like never before and simultaneously receive such harsh criticism?

The answer is...

Squeeky Knees was created by Ivan Barnes and Lisa Evans, a young couple with two adorable children. After constantly repairing boo-boos on her kids' knees, Lisa took her mother's advice to come up with something that would prevent her kids' knees from getting scuffed up and bruised in the first place. And so, Squeeky Knees was born!

Squeeky Knees are soft, squeeky pants for the baby on the go. Each leg contains a squeaky knee pad which minimizes bruises, and maximizes awareness as to the kid's whereabouts. Ivan and Lisa came into the Shark Tank asking the Sharks for an $80,000 investment in exchange for 20% of their company. The problem was, none of them were interested in investing. Here's why:

Tuesday, March 11, 2014

@ Buffer Bit: Tastevins, Time Machines, and Shiny Shoes

shark tank buffer bit
By: Pete Troshak
Twitter: @Shak74

If you are the kind of person who stores your power tools near your shoes, boy does Mike Quinn have a product for you. Quinn is the inventor of the Buffer Bit, which is a furry drill bit for your cordless power drill that you can use to shine your shoes. The bit is priced at $19.95 (each costing him $9 to produce), and comes with three different wool pads for polishing different surfaces. The bit can also be used to polish your vehicles and other aluminum and chrome products. Similar items that are self-contained and that just polish shoes can range from around $30 to $100, so this is quite a bargain. Quinn entered the Shark Tank asking for $75,000 for 25% of his company, valuing his Buffer-Bit business at $300,000.