Ski-Z has an E-Z Day in the Shark Tank
As far as winter sports go, Skiing certainly ranks high in popularity, but no sport is without its specific issues. For example, the average skier understands exactly how tiring simply carrying skis uphill can be.
After all, you go up much slower than you go down. Well, at least you did…
Thanks to entrepreneurs Nick Palermo and Kyle Allen, and their ridiculously convenient product, Ski-Z, you’ll never struggle up the slopes again! This dynamic duo presented their solution to skiing’s most common problem and asked for $50k for 15% equity in return.
Ski-Z is a pocket-sized caddy made for your skis. Just wrap the Ski-Z around your skis, using its Velcro straps, and its wheel allows you to easily push or pull your skis on the snow. That’s about it, a wheel with straps, but honestly, its sheer simplicity might make Ski-Z the best product featured on Episode 7 of Season 10.
Why do I think this? Well… economically speaking, the simplest products usually cost the least to make, and since it only costs the entrepreneurs $3.50 to make a product they sold for $19.95, Ski-Z definitely fit that description.
“Nice price,” Daymond John said, impressed by their 82% gross margin. Ski-Z’s other major plus was its utility patent, which ensured that any similar products would have a very tough time competing.
Nick and Kyle revealed their sales history, and unfortunately, the Sharks took note of a particularly rough period.
Back in 2013, their first year of sales, Ski-Z made $230k. However, in 2014 they made $0 due to Nick being diagnosed with prostate cancer and Kyle going through an unexpectant divorce. Business for both entrepreneurs had been in a complete standstill until 2018 came around and the pair found themselves back in action, and they came back swinging.
They projected $575k in sales for 2018, a number that made every Shark look up in disbelief. Kevin asked them to explain how they would handle the distribution needed for such large numbers.
As it turned out, Nick and Kyle were communicating with a Denver-based distribution company, but they hadn’t begun making sales yet, despite Kyle having already bought over $350k worth of inventory.
The Sharks didn’t appreciate that, because it meant the entrepreneurs were the problem, not the product. They should have spent some time making sales before jumping into the tank, but luckily, Ski-Z’s value kept most of the Sharks interested.
That is, until Mark Cuban jokingly asked if Kyle had mortgaged his house to buy the inventory, because after several years of no sales, he shouldn’t have been able to afford it.
“Yes, I mortgaged my house,” was Kyle’s plain answer, to which Cuban shook his head disapprovingly. Kyle’s financial instability suggested instability for the business, and Mark wanted no part in that. Lori, Kevin and Daymond seemed to share the sentiment as well.
It was clear to Barbara Corcoran, however, that Nick and Kyle’s past failings weren't due to bad business structure, especially considering their gross margin. So, she made them an offer of exactly $50k for 15% equity, with the catch being that they had to accept right away.
"Here, let me make it easy for you, I'm out,” Mark said abruptly, then cautioning them not to overlook Barbara’s offer. He clearly backed out due to Kyle’s shaky personal finances. Ski-Z was great, but when operating on a scale like Cuban’s, there's no point in taking a risk where the benefits weren't on par with the potential consequences.
Other Sharks stood to gain more from this, but it soon became obvious that Barbara was the only Shark still interested. Ski-Z wasn’t getting a better deal and she and the rest of the tank were growing impatient. Noticing this, Daymond made things even easier by making a worse offer of $50k for 20%, and somehow, the entrepreneurs were still hesitant about accepting exactly what they’d asked for.
They were unsure if accepting Barbara’s offer would include any future credit lines if they ever needed it. She agreed to it but said that they should have made that part of their original ask. So, with their only reservation out of the way, they accepted the deal.
Despite Nick and Kyle’s mistakes both in and out of the tank, Ski-Z came out on top. More importantly, so did Barbara Corcoran, perhaps more than anyone else. Kyle’s inventory already possessed 7X the value of Barbara’s $50k offer, so she would see profits long before her initial capital even got touched. This explains why she made her time-sensitive offer right after inventory was mentioned; she didn’t want to give them the time to realize the mistake of undervaluing their product.
She knew that Ski-Z would sell like “hot-cakes.” The product was just the right size to be at the point of purchase in ski-shops everywhere, in fact, it was so convenient that you didn’t have to question if you really wanted to buy one.
Rather, the question was, if you frequently went skiing, why wouldn’t you?