By: Pete Troshak
Daryl Stevenett has invented seemingly magic pills called Life Caps. Just take one pill in place of eating a meal and Stevenett claims that you will have all the nourishment you need and never be hungry. According to Stevenett, the pills even have a special side effect – losing a pound of weight a day while on them. The pills have a five year shelf-life and cost roughly a dollar per pill retail. Daryl markets the pills to campers, hunters,and hikers, and to anyone who want to have a bottle on hand in case of emergencies such as earthquakes, tornadoes, and hurricanes. He claims that he has gone as long as 17 days without food living just on Life Caps and water, and that he walked into the Shark Tank on an 8 day fast living only on the pills and water. He has averaged almost $100,000 in sales of the pills per year for four years, and arrived at the Shark Tank looking for a $200,000 investment for 30% of his company. Although Stevenett failed to land a deal, his pitch sure left us with many mistakes to learn from.
The Sharks know that items with these promises are fads that are never as good as advertised. These “miracle-cure” items generally have short sales lives and frequent safety issues. Stevenett should have realized that he didn't have a chance to get a deal from the very beginning. He tried to hand out samples and Mark Cuban refused to allow any of the Sharks to ingest them due to his concerns about the product’s safety. Lori checked out the ingredients and said they were similar to her daily vitamins. Stevenett spouted some mumbo-jumbo about how they are more than vitamins and that they drive the body’s metabolism and cause excess body fat to be burned. At that point, the Sharks asked if the pills had been medically tested or FDA compliant, and received a "no" for an answer. As a rule, the FDA does not approve diet supplements but Stevenett has not had any other testing done to make sure that the pills are safe for consumption. Mark dropped out almost immediately, but not before hammering Stevenett for safety concerns and questioning how he has been profiting on sales of the pills for four years without bothering to pay for testing. Daymond, Lori, and Robert each dropped out with similar concerns, with Robert labeling Stevenett’s disregard for consumer safety as “irresponsible.” Finally, Kevin went out stating that he can’t see a way to make profit off the pills, and suggests that Stevenett’s best bet might be marketing them to people fearing a pending Zombie apocalypse.
So what can we learn from Stevenett’s failed pitch?
1) Have a Market. Life Caps were being marketed at too limited of a market - people who would buy outdoor/survival items. The Sharks (and other investors) look for items that they can sell in large quantities to make huge profits. A niche product that someone will buy one bottle of and put in the closet for an occasional trip or a natural disaster will never sell in huge enough quantities to gain interest from the Sharks.
2) Be Honest. Stevenett was probably marketing the pills to the wrong market. He described them as an emergency item out of one side of his mouth, but touted it as a diet aid out of the other. If you are selling something that works best as a diet pill, market it as that and don’t camouflage it as something else. As PR Web reports, a report done in April, 2013 pegged the weight loss industry as a $61 billion-a-year industry, and the number of dieters in America alone at 108 million people. It seems obvious that this is the better market to sell to, especially in comparison to the market consisting of a handful of weirdos sitting around waiting for a Zombie attack!
3) Safety First. Inventors have to be able to assure investors that their creations are safe for the public. Stevenett did no testing on a product that has potential to create serious medical issues and possibly even death if someone had a bad reaction to the contents. His product might be safe, but without testing it before his pitch he pretty much ruined his chances to make a deal. The Sharks (and other smart investors) won’t have anything to do with a product that could endanger a customer’s health and create a costly legal hassle and bad press for the product and investors. If you have an item that needs to be tested for some kind of possible safety issues, get it done as soon as possible, and do it before you bring your product to people you are going to ask for money from.
4) Maximize Exposure. The biggest lesson learned from this pitch is that free exposure can be priceless. There is no doubt that Stevenett, like anyone who regularly watches Shark Tank, knew that the Sharks were unlikely to partner with him and his type of product. However, the episode that his pitch aired on was the show’s highest rated night ever with over 8 million viewers. That figure doesn't even include the potentially large audience who might watch it later online or on demand. Stevenett’s unsuccessful pitch earned him slings and arrows from the Sharks, but it still reached a massive audience. This definitely led him to sales and exposure he never would have gotten otherwise, and possibly even other investors who were willing to take a risk. The bottom line: In the Shark Tank, there is no such thing as a completely failed pitch.