A Surprise Ride in the Shark Tank

By: Elizabeth Fancois, Writer & Designer
Twitter: @elizfrancois
Facebook: Elizabeth's Note Book

Donna and Rosy Kahlife, the sisters behind the company Surprise Ride, stepped into the Shark Tank seeking $110,000 for a 10% stake in their company. 

Surprise Ride is a monthly subscription service for children ages 6-11 that sends a monthly surprise box of activities and all the tools needed to complete that project. The “surprise” costs parents $29.00 per month, $89.97 for 3 months, $149.00 for 6 months, or $299.88 for a 12 month subscription. Payments are non-refundable, and presently the company doesn't offer the option of adding a sibling for an additional fee (hope your kids know how to share!)

Once the women were done with their brief introduction, they handed out Surprise Ride packages to everyone and explained what each activity entailed. Four Sharks seemed happy with their activity box except for Mark (hmmm… was that the grumble of an unhappy surprise?). Donna Kahlife, a Harvard grad who had previously worked on Wall Street, confidently answered all of the Sharks' questions: They identified their customer acquisition cost and the value of each customer, they explained that their business model allowed them to anticipate customer demands and minimize levels of inventory, and discussed their investment of $100,000 from Irvin Jacobs, the co-founder and former chairman of Qualcomm, in the form of convertible note.

Mark wasn't buying any of it judging by the suspicious way he was eyeballing her as he listened. Finally he jumped in and told her that $100,000 from Irwin and $110,000 from the Sharks – meant squat in the subscription business, due to the huge number that have gone out of business. And when Robert asked them what the next year’s sales projections were, Mark got hot under the collar at their projection and could barely contain himself as he retorted that there was not enough money to reach the $500,000 in sales they were projecting.

The company was being valued at $1.1 million, to which Daymond pointed out that the company was worth exactly what it had sold: 800 surprise boxes (that’s $25,000). Kevin felt that $3 - $5 million was needed to scale the company to the point of becoming a sustainable business. Robert, despite his reservation at the amount of executional risk involved, made a very generous offer of $100,000 for a 25% stake.

Like the man in the parable “A bird in the hand is worth two in the bush”, Donna pretty much ignored Robert's offer and instead darted towards the other Sharks to try and catch something better, but only caught air. Lori’s exit speech was long winded so an irritated Mark answered for her saying that she was out. Mark then gave Donna and Rosy some advice, saying that as entrepreneurs the women needed to roll up their sleeves, stick their hands in the mud, and get dirt under their nails – that’s the only way to truly know whether or not a business model has long term sustainability. In Donna’s feeble attempt to get a better deal, something horrific happened, she failed to close the deal and lost Robert’s offer “the bird in hand”. Despite her passionate plea for him to reconsider, Robert was out.  Kevin put it best: “you came into the Shark Tank and poo-poo happened” – I bet they didn't see that surprise coming.

This pitch really reflects something which Democritus once said, “It is greed to do all the talking but not to want to listen at all". In more ways than one, greed was the downfall of the Kahlife sisters in the Shark Tank. First, they overvalued a four-month old company saying it was worth $1.1 million based on sales of $25,000. Second, they demonstrated an unrealistic view of their ability to hustle and work for each subscription-based business dollar. And third, they failed to see the value in Robert’s offer. They really walked out of the Tank empty-handed. They lost the guidance Robert would have provided, access to his knowledge base, and probably a life long partnership.

“If you give a man a fish - he eats for a day. If you teach a man to fish - he eats for a lifetime.” ~Unknown Proverb~

Here are some of my thoughts on the pitch and product, and some suggestions I would offer to the two entrepreneurs:

Nancy Lublin says in her excellent book Zilch: The Power of Zero in Business, “overhead is the dreaded bogeyman of a business.” I would suggest to the Surprise Ride ladies, that instead of outsourcing their production to a facility in Florida, perhaps the women should step out of their comfort zone and start assembling the surprise boxes themselves to cut costs. Assembly work would have given this team (that’s been together for over 20 years) the opportunity to see how well they work together when faced with a tedious task. Assembly work would also given them time to really become at one with their product and allow them to really stick their hands in the mud and get dirt under their nails. 

I had some firsthand experience in getting dirt under my nails after designing a product that wasn't production worthy. I made 2,000 units in order to get 1,500 that passed QC. I muddled through at first and then became motivated to find better and more efficient ways to produce the units. Being forced out of my comfort zone changed my thinking and added value to my knowledge base.

Considering the amount of small parts in the Surprise Ride packages, I was surprised to see that there was no mention of the U.S. Children’s Product Safety standards during the pitch, such as compliance for domestic and imported products. Under the “Certain Product Disclaimer” of the Surprise Ride website, it does warn that small parts are a choking hazard and not for children under three years old. Choking is the fourth leading cause of death in children in the United States, and so parents should be sure to check through the Surprise Ride box before handing it over to their kids.

Despite Lori's positive feedback, I felt that the Surprise Ride choice of color for their box is muted and plain, as it contains none of the large blocks of bright primary colors that children prefer and respond more positively to. Understanding color psychology in marketing would have helped in selecting a color palette that appeals to a child’s mind.

During my brief stint as a nanny, I created several “rainy day shoe boxes”, one for each child which contained craft items, books, and miscellaneous toys and things for those house-bound days due to poor weather conditions. Too much pre-assigned value is being placed on what’s being offered in the Surprise Ride package. Ordering the Surprise Ride boxes for $29 per month (the non-subscription rate) per child (3 kids, baby not included) comes out to $87. That’s a little pricey for three activity boxes which the child may not even like. Over time this adds up to a large chunk of a parent’s disposable income that’s going towards the building of a birdhouse or some other minor project. 

I would hazard to guest that parents will eventually come to realize that a shoe box filled with all sorts of trinkets and treasures that they've collected for their child is just as exciting and a much cheaper ride. This is not a product I would recommend ordering, and it's not a business I would have invested in. Surprise Ride still has a lot to learn before they get to where they want to be. And for that reason, I'm out.

Jeff Hopkins2 Comments