Hydroviv Filters out the Tank to Score a Deal with Mark Cuban
Startups geared towards health and wellness have become the mainstream trend of our generation. Products are constantly pouring in claiming to be new solutions to common problems. What most seem to forget is the best answer to looming health concerns is actually a free/old-fashioned one, Water.
It has been proven that water is the best thing you can put into your body. Although, many are unaware that the source of their water has actually been contaminated by harmful chemicals. So how can people consume this commodity and be confident that it is actually safe to drink? The answer is given in Episode 19 of Season 10 of Shark Tank with a company called Hyrdoviv.
Eric Roy, a Ph.D. chemist from Washington, DC came into the tank asking for $400,000 for 10% of his company, Hydroviv [hahy-droh-veev], which creates custom water filters designed towards the consumer’s specific area.
Roy began by illustrating that when traveling, it is easy to notice that the water tastes different than what we’re used to. He then explains that the taste isn’t the only thing that’s different, it's the water’s chemistry. He then states that millions of US households have become victim to contaminants that exceed public health goals. Since these issues vary by state, it is not only difficult to identify the individual contaminants but finding the right solution is twice the challenge.
This is when Roy introduced his custom filtration system that is optimized for each customer’s water. When an order is placed, Hydroviv’s team of ‘water nerds,’ dig through water quality data for that customer’s area and then build a filter that is accurately matched. Examples include if a location is susceptible to lead contamination, they add more lead removal solutions. Once the system is built, it’s then shipped directly to the customer who can install it under their sink to their current faucet.
The company’s core product is the under-sink filter but also sells filter/ice-maker for refrigerators as well as shower filters. The system costs $48 landed to make and sells for $190 while the filters cost $10 to make and go for $55.25 if the customer signs up for their subscription since filters last 6 months.
The inspiration for Hydroviv occurred while Roy was developing technology for the Department of Defense and heard about the water crisis occupying Flint, Michigan. Through conducting the research, Roy found that current filtration systems were not designed to handle these kinds of situations. After designing the right product, Hydroviv was created and then donated to people and child-centric organizations in Flint.
Though the Sharks were impressed by Roy’s overall contribution, Mr. Wonderful swept in to shift the attention towards the company’s sales. Hydroviv will do over $325,000 in 2019 and projects $1.7 million next year. Customers can obtain a Hydroviv system through their website which drives 100% of sales.
Roy seemed to have appealed up to the sharks up to this point by identifying the problem his product solves and knowing his numbers. Then came Rohan Oza’s question about how the investment is going to be allocated. Roy illustrated that even though Hydroviv receives 2,000 organic visitors to their water quality blog (which are converted to sales), he has not spent anything on marketing or advertising and would like to hire an internal marketing manager. This answer met the disapproval of Rohan, Barbara, and Mark who all pointed out that marketers will not accomplish the same job that Roy could.
After pointing out the difficulty that the company will face to create awareness for the consumer, Rohan goes out. Shortly after, Lori agreed through indicating how early it is and how complicated the marketing is going to be and joins Rohan by going out.
Mark points out that instead of hiring marketing people to think of different angles, Roy should be on the front line bringing attention to this water problem and gaining the trust of the consumers. After explaining his interest in products that ‘do well by doing good,’ Mark Cuban offers $400,000 for 20% equity in Hydroviv.
After thanking Mark, Barbara expresses her disinterest in entrepreneurs that say they need help in sales/marketing because the entrepreneur should always be in charge of that area. Barbara goes out and as Kevin attempts to make a point, Mark begins to illustrate his impatience which causes Roy to accept Mark’s offer.
The key differentiator for Hydroviv revolves around the fact that while popular filters, like Brita, may claim to remove a bunch of chemicals, they are incapable of doing so efficiently. Since filters can only fit so many solutions inside, when companies try to solve all of these problems at once they actually don’t do any of the jobs well. While Hydroviv specializes in finding the specific problems of each consumer’s water and then blending the filter accordingly. This is a great example of how companies can sustain over time through specializing in one area, focus on each customer and then gradually grow from there.
Though customization is always difficult to scale, Hydroviv seems to have cracked the code on growing their systems to scale. The future is promising for Hydroviv due to the fact that not only are consumers becoming more aware of what they are putting into their bodies, but they are also more likely to become loyal to a company that is honest and believes in doing good.
Hydroviv will begin to see growth in their home filtration systems due to the exposure of Shark Tank. An important area of opportunity for Hydroviv also lies in the philanthropic and institutional side that inspired this company in the first place. Hydroviv should continue to donate to areas that are under crisis while looking at schools and hospitals that could implement Hydroviv’s proprietary filters throughout their system.