Charles Barkley, Cave Shake, and Impact Investing

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“I prefer to invest with minorities—blacks and Hispanics—because I think they have the hardest time getting money,” said Charles Barkley in an interview on Shark Tank in Season 10, Episode 4. “But it’s not just minorities: I want to help poor whites. We’re in the same boat. We don’t have economic opportunity. … When you grew up poor, you have a moral obligation to go back and bring as many people along for the journey with you as possible—and that’s what I’m always going to do.”

For Barkley, a former NBA Hall of Fame basketball player from Leeds, Alabama, joining Shark Tank as an investor is about using venture capital as a tool for economic empowerment. In the interlude between two pitches, the episode features a short interview with Barkley as he relates the reasons behind his commitment to impact investing. Recalling his childhood growing up with his mother and grandmother, in a family of limited means, Barkley is now hoping to use the economic power he has as a venture capitalist to help more people achieve social mobility.

“Entrepreneurship is really important, because you give people power,” said Barkley. “The power to control your own life is a big deal. And I love when I work with people and I give them that power where they can control their own destiny.”

Barkley’s commitment to impact investing was tested immediately in the episode when founders Holly Heath and Billie Cavallaro sought from the Sharks $250,000 in exchange for a 10% share in their health-related, liquid supplement company Cave Shake. Was Barkley’s interview on his investment values a foreshadowing of his interest in impacting the health sphere?  

The founders of Cave Shake, pitching their company by performing a lively back-and-forth skit to the Sharks, claimed that their product is a liquid-based supplement that works “great as a dessert, snack, or meal replacement.” It is dairy-free, gluten-free, low-carbs—essentially a sweet treat without the sugar.

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“Have you ever tried to cut sugar, gluten, or carbs from your diet?” asked Holly, as she deliberately elongated her words and performed the skit in a dramatic, high pitched voice. “Do you ever wake up, eat your pancakes, then need a nap? Are you ever craving sweets so bad that you can’t resist the urge any longer and you melt down?”

“Cave Shake to the rescue!” Billie exclaimed.

Introducing their slogan, the duo shouted together, “The treat without the cheat!”

After a short moment of laughter and applause, the Sharks each got to sample the four flavors that Cave Shake currently produces. Upon taking a sip, Robert Herjavec immediately exclaimed “Oh, I hate it!” while Mark Cuban expressed the complete opposite sentiment, confessing “it’s actually good!”

Despite their mixed personal reactions, the Sharks together posed questions about the health concerns they had toward the product. Learning that each bottle of Cave Shake contains a high number of 480 calories, many Sharks were no longer on board. The founders explained that the calories in the drink should not be a cause for alarm, because the recipe is inspired by a Keto diet, which tricks the body into burning fat for fuel. It costs the founders an average of $1.86 across the four flavors to make the product, and they sell it at $7.99 for retail, mostly in health-food stores in Southern California. In 2017, their net sales were $270,000, and this year to-date they have sold $182,000, essentially doubling their sale at the time of the recording of the show.

When the founders announced that they recently partnered with Coco-Cola—in the hopes of justifying Herjavec’s challenge “why are you worth two-and-a-half million”—they did not receive the positive reactions that they had expected from the founders. Instead, tension escalated immediately: the fact that the founders gave up 15% to the incubator for free while offering a less compelling deal to the Sharks were immediately pushed to the forefront.

“Put yourself in our shoes,” said Cuban. “Why would you even listen to someone saying give me 250,000 for less equity than someone else who is offering similar expertise that I gave for free?”

“I know incubator deals inside out,” added Kevin O’Leary, further escalating the tension. “Don’t make me peal you like an onion.”

After a tense back-and-forth where Holly and Billie stumbled and struggled to answer O’Leary’s questions about the details of the incubator deal, O’Leary, frustrated by the apparent lack of knowledge that the founders exhibited, announced tersely that he is out. More rejections ensued: Herjavec because the product “tasted bad” for him and that the branding is confusing, Cuban because there is still “too much work” to do with the product at this stage, and Lori because she prefers to eat her calories over drinking them.

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The burden now rested with Barkley. Barkley, although expressing that he liked only two of the four flavors, was appealed by the drink’s potential impact for the health food community. Following the guidelines of a Keto diet, the liquid product does provide an arguably healthier alternative to sugar- or gluten-based products. Barkley offered to give $250,000 in exchange for 20% of the company’s shares. The other Sharks initially expressed shock at the prospect of this offer, given that the products currently exhibits apparent flaws. “What did you like about the product,” asked O’Leary, part serious, part sarcastic.

“I struggled with my weight since I retired—I would like to be involved with a product that helps people lose weight,” said Barkley. “Any time it comes to investing, it’s great to have a great product, but you’re really investing in people. … Especially as you’re getting older, it sucks to try to lose weight, so you need every short cut you can get.”

As Holly and Billie accepts Barkley’s deal, after a brief back-and-forth that leaves the terms of the deal unchanged, the future of Cave Shake and Barkley’s impact toward the health community remain to be seen. Circling back to Barkley’s initial revelation of his investing philosophy that “entrepreneurship is important, because you give people the power to control their own lives,” it remains to be seen whether the alleged “sweet treat without the cheat” can give people the necessary agency to control their diet and sugar cravings—and ultimately their own body.