@ Postcard On The Run
Josh Brooks was the first to enter the Tank this season, offering a 5% stake in his business for a $300,000 investment. His business, Postcard on the Run is basically an app which allows users to write a postcard, sign it with their finger, and send it anywhere in the world. The app connects to the user’s address book to find the delivery address, and although is free to download, costs $2.49 per postcard. Brooks came into the Tank asking the Sharks to invest at the same $6 million valuation his initial rounds went for, and to join him in the memory business.
Here’s how the Sharks responded:
Mark started off saying that the app can be replicated very easily and is subject to the Silicon Valley Bubble, which will quickly the business to be bought out for a much less expensive valuation. Because of Brook's overpriced valuation, Mark went out.
Lori’s thoughts were that people would quickly get “postcard fatigue” and would stop using the app after sending a couple of cards. Add this to the fact that the patent was still pending, Lori was next to bow out. Kevin claimed he can start the same business for a lot cheaper and went out as well, followed by Barbara who said she didn't like that there was no “warm and fuzzy” emotional feeling generated by the postcards, due to the fact that the actual message was typed as opposed to handwritten. Here I will say that all of these reasons are quite valid.
However, one Shark still remains. Robert Herjavec, the technology mogul, loved the idea and felt that his kids would use the app all the time throughout their travels across the world. But at the same time, like all the other Sharks, he agreed that the valuation was set way too high (even with Selena Gomez being one of the investors). So he began the negotiation asking for a valuation of $3 million, which would give him a 10% stake in the company. Josh insisted that this was too high for him, and after a whole lot of negotiating, they finally agreed on a $4 million valuation, leaving Robert the newest investor with a 7.5% interest in the company.
The thought that entered many people’s minds when this business was introduced, was- how is this really different from sending a picture or video message to a friend or family member? The simple answer is that these postcards get printed and mailed, and subsequently (hopefully) hung up somewhere. But does this really happen? I mean, do we hang up birthday cards? Can’t say I know anyone who does. Do we hang up every picture we take? No, that’s what Instagram, Facebook, and every other social networking medium is for! Of course some pictures get framed and are prominently displayed over the fireplace, but everything else gets saved into a digital photo album in a cloud somewhere. Postcards are wonderful and all but it’s much easier to just receive a picture text which says “Hey Ma, havin’ a great time on vacation while you’re home working”. This way there is no cost, it gets delivered instantly, and it can be saved forever and ever without even taking up any space!
I am not sure how many people know this, but there was once a successful company called MySpace. MySpace was the popular social network before Facebook came and snatched all its users. That was a long time ago. In fact, I think it was around the same time when people used to send postcards to each other. In all seriousness, the app may look cool and be designed well, but it just seems to be stepping back into history and backing away from instant messaging. I therefore have to agree with Lori Greiner on this one, as I think people will use the app twice-if that many times-and will then revert back to sending picture messages or sharing via social networks. It’s just so much more convenient, and oh yeah- it’s free!
Brooks, who used to run marketing at MySpace, believes that because postcards are personalized and somehow connect to people more, this app is something unique, and defines what he considers to be the memory business. I agree, this is the memory business…it brings back memories of the days before instant messaging was created and we needed postcards to share our life experiences!
Overall Performance: Presentation: 42/50. Strategy: 22/25. Product: 13/25.