Manscaped Grooms Itself a Sweet Deal on Shark Tank
With a name like “Manscaped”, you are sure to turn some heads. Father & son team Steve and Josh King did just that on Shark Tank Season 10 Episode 4. While they didn’t get the valuation they were looking for, they ultimately walked out of the Tank with a wonderfully “groomed” deal.
The Kings pitch their San Diego-based company to the Sharks as a below the waist grooming and hygiene kit for men. Josh’s idea and vision combined with his father’s guidance and chemical engineering connections helped turned this taboo topic into a money maker. Manscaped generated $2.1 million in sales in 2017, using true, humorous horror story videos and women’s desire to have their men properly groomed to market their product.
Guest Shark Charles Barkley was immediately out after him and the Sharks poked fun at the idea of “manscaping”. O’Leary did not see a way to make 5x on the $500k investment the Kings were asking for, so he went out as well. However, the Kings did receive interest from Robert, Lori, and Mark.
Robert understood the idea of manscaping and really liked the Kings’ humorous approach and brand. However, the Kings’ 7% equity stake was not attractive to him whatsoever given Manscaped’s poor operating margins and infancy as a company. Robert countered the Kings’ offer with a $500k for 35% equity offer of his own, which was met with no response from the Kings.
Lori also enjoyed the humorous angle and thinks even the Kings’ accents add value to the brand. She also really liked Mark’s observation that this product is not just for men, but also indirectly for women as well. She decides that she will go for $500k if Mark splits it with her.
Mark likes the idea of teaming up with Lori, given that she can sell the product to women on QVC. He offers the Kings $500k for 25% between himself and Lori. The Kings try to get the pair to go down to 20%, but Mark and Lori stay firm, explaining that their expertise and connections can help Manscaped’s bottom line by increasing sales AND cutting costs. The Kings accept the $500k for 25% offer, gaining needed capital to continue operations as well as two great strategic partners.
While Manscaped generated an impressive $2.1 million in Sales in 2017, they only made about $60-80k in operating profit per month, all of which went back into the business as research & development expense. The company also spends about $120-150k in advertising per month. These two expenses bring Manscaped’s operating and net margins down significantly, which is why Robert, Lori, and Mark all cut Manscaped’s valuation drastically.
A humorous approach to this product was the right move for the Kings. Anytime a product or service is directly related to a more “taboo” topic, an alternative approach is sometimes the only way to attract attention. The Kings proved their approach worked by explaining that they sold 3000 units in April in just 13 days after 4 months of testing their advertising strategy.
While the business model and cost structure may not be perfect, Lori and Mark believe they have the market reach to increases sales and expertise to get costs down and scale. There is some risk that their kit-to-repeat purchase model may not work in the long term. Manscaped is relying on customers to continually buy hygiene products after initially purchasing a one-time kit that includes those hygiene products as well as a razor and trimmer. Repeat businesses are more attractive than one-time sale products/services, but not as attractive as something that is recurring like Netflix or Dollar Shave Club. Ultimately, Manscaped has a great opportunity to grow with Mark and Lori’s help, but the long-term health of this company is anything but certain.