CertifiKID: Data Mining for the Win
Season 10 Episode 18 of Shark Tank introduces us to the family friendly CertifiKID. Brian and Jamie Ratner have developed a mom-approved brand that curates family deals via a website and app. CertifiKID deals range from everyday adventures to summer camps. Some of their offerings include strawberry picking, laser birthday party packages and amusement park admission. The company is based in Washington D.C. and currently caters to families in the metropolitan areas of Washington D.C., Baltimore, Philadelphia, Chicago, Los Angeles and Atlanta.
The Business Model
Jamie Ratner conceived CertifiKID when she saw a niche market in moms looking for family deals. The market responded and within three months Jamie and Brian were turning a profit. CertifiKID currently sends a daily newsletter to over a million subscribers.
Each day subscribers receive a curated sampling of local deals to choose from. When subscribers choose a deal from the sample, or CertifiKID’s larger selection, they buy a discounted voucher. Customers get a discount on admission and CertifiKID gets a percentage of the sale. CertifiKID has captured $30 million in sales since its inception in 2010.
The business model benefits businesses and consumers. Businesses sign up at no-cost and parents sign up at no-cost. CertifiKID receives a profit from each sale, but they are also investigating new avenues of income such as lucrative paid advertisements.
Taking on a partner is a calculated risk for Brian and Jamie. They were looking to advance their marketing and sales strategy through the expertise of a shark and $600,000 in financial backing. In return they offered an 8% stake in the company.
The most interesting thing about CertifiKID is where it is going. The Sharks shared diverse viewpoints on challenges and opportunities for growth. Mark Cuban disliked the hurdle of maintaining long-term customers with similar content, yet Daymond saw continued value in the company. Barbara saw the future of CertifiKID in entrepreneurship. She maintained a fortune could be made in franchising the company to mothers looking to start a small business. She offered partnership if they ascribed to her philosophy. Kevin saw growth in data mining. He said, “You want to control that database, because that’s where the value is.” He also had a few prospective businesses that could buy their data.
CertifiKID owners Brian and Jamie articulated a similar vision for the future of their company. They were exploring better ways to exploit their data. They naturally gravitated toward Kevin, but he strikes a hard bargain. Kevin posited that eventually they will look to sell the business and he offered $600,000 for a 20% stake in the company, contingent upon receiving three times his money on exit. Daymond reasserted his offer of $600,000 for 17.5% equity, but he failed to provide an articulated strategy for growth. He became disenfranchised with CertifiKID’s preference for Kevin and rescinded his offer.
It’s a Deal
For a time, it appeared that Kevin and Brian had reached an impasse, but then Brian began to budge. They traded counter offers until they reached a deal for a $600,000 loan in exchange for a 19% stake in the company, without a contingency. Brian and Jamie see the value in a strategic partnership with Kevin. They share a vision of expanding marketing and sales while building CertifiKID’s data mining capabilities. Brian and Jamie left energized by the opportunity to consolidate and grow the company with their new partner.