Despite Technical Difficulties in Their Presentation, Haven Lock Kept Kicking
CEO of Haven Lock and former Army special operations helicopter pilot, Alex Bertelli, entered the Tank alongside Haven’s COO, Clay Banks. The entrepreneurs from Nashville, TN, were seeking $500k in exchange for 6% equity stake in their high security door lock company. The Haven Lock is a more efficient alternative to the traditional deadbolt lock. The product is placed on the floor in front of the door in the interior of the house or room, and a section of its flat surface lifts to block the door from opening on impact.
The duo presented the sharks with two doors side by side: one protected with a deadbolt and the other equipped with a Haven Lock. Their verbal pitch was rooted in alarming statistics regarding home break-ins in the U.S., such as, “1 in 36 homes in the U.S. will be broken into” and “a break-in occurs every 18 seconds in the U.S.” The statistics briefly conveyed a need for their product but their physical demonstration of the Haven Lock, however, seemed to be set as the “focal convincer” of their presentation.
Unfortunately, Bertelli began to run into issues as he struggled to kick-in the deadbolted door. The Sharks began chuckling more and more at Bertelli’s continuous failures to break-in the door equipped with Haven’s senior competitor. Banks seemed to be at a loss for words through the turmoil and confusedly began spewing more home invasion statistics. However, Bertelli returned from behind the door with a smile even after numerous tries and they proceeded to demonstrating the Haven Lock on impact.
Bertelli upped the stakes with his break-in attempts as he levied a high-flying, karate-like kick at the door with the Haven Lock. The Haven securely held up against Bertelli’s thunderous impact, then he unleashed the same kick at the deadbolted door, making it swing open as the Sharks flooded the Tank with cheers!
The duo then passed out samples of their products. Haven makes a strictly mechanical lock as well as an electronic-controlled lock that is used with a key fob or smartphone app. The strictly mechanical option sells for $182 and the electronic model sells for $349. Both Haven products flirt with a 50%-55% profit margin, but O’Leary was concerned that the cost of goods is too high. In return, Banks explained how they have only completed their first batch of production so they expect to bring the cost down in the near future.
Furthermore, the entrepreneurs have a patent issued in the U.K. but are still pending in the U.S. Banks assured the Sharks that Haven Lock is the only product of its kind on the market. The pitch seemed to slice open like a melon when Bertilli revealed that they had been having discussions with several schools to install Haven Locks in individual classrooms. Mark was impressed and expressed an “Oh, wow.”
Then, Lori wanted to know where their sales were at. Banks said they had just crossed the $250k mark in lifetime sales so they are relatively early on in the growth process. The sales were rather alarming because of their expensive proposal of $500k for only 6% of the company. Another negative factor came in to play when Banks revealed that they had raised $1.5 million with past investors and they faced $500k of convertible note debt. Lori then asked how the ownership of the company has been dispersed. Bertelli and Banks own 25% each and two other investors make up the other 50%.
After the Sharks figured out the ownership structure of the company, Daymond asked, “What are you gonna do with the money?”
Betelli answered by saying their biggest problem is inventory and they want to use part of the investment to scale inventory with suppliers. Unfortunately, O’Leary was the first to go out because he foresaw a long journey of trial and error in Haven’s attempt to scale. Barbra was the next to go out because she thought she wouldn’t make her money back in a decent timespan under their steep proposal. Mark went out on account of their thin margins, which he thought would cause troubles with cash flow that would be needed to scale the company. Greiner went out because she thought Haven was too early in the growth process to be investible for her.
Nonetheless, Daymond was still in so the eager entrepreneurs behind Haven Lock still had a chance. Daymond admitted that he would have to make a rather “Sharky” deal in order for it to be worth his involvement. Then, Daymond suddenly felt a change of heart and decided that he wouldn’t want to take more equity than Bertilli and Banks so he decided to go out.
The men behind Haven Lock exited the Tank fired up to continue to grow and operate their business. They will use their time on Shark Tank as a learning experience and will surely focus on points of weakness that the Sharks referred to.