The Entrepreneur Behind Quickflip Had the Sharks Flipping Out
Juggernaut salesman, Rener Gracie, marched into the tank seeking a $500k investment in exchange for 5% equity stake in his company Quickflip. Fans of Shark Tank would notice the proposal as relatively steep, which was reflective in Daymond’s deflated initial reaction. However, from that point on, Grace spared no effort in enthusiastically presenting his company to the world and charming the Sharks with his energy and humor.
His company, Quickflip, makes and sells tops that reverse and conveniently transform into backpacks. Gracie had started off selling strictly hoodies through Quickflip but in response to customer feedback he expanded his product line to crewnecks, waterproof outerwear and began offering child sizes. To demonstrate the resulting backpack’s durability, Gracie performed several Jujitsu moves on his attacking brother as he wore the backpack. Through various maneuvers and takedowns, Gracie delivered his presentation without a pause or stutter and the Quickflip remained securely fastened to his back. The entrepreneur was surely an electric factory and his well-prepared presentation was a perfect balance of information and entertainment.
Gracie’s jolting spirit railed against Daymond slightly, causing the FUBU founder to ask, “Will we be able to talk at all during this pitch?” Nonetheless, the Sharks were intrigued by the entrepreneur’s ability to demand attention and spark the room with life.
Lori wanted to know more about Gracie’s background. The entrepreneur started by explaining how his grandfather was the co-creator of the fast-growing martial art Brazilian Jujitsu. Following his brother’s success using Jujitsu in the UFC, Gracie’s family had started a Jujitsu themed apparel company. He then used that existing infrastructure as a channel to launch, produce and sell Quickflip. Gracie’s situation is exemplary of how entrepreneurs can branch off of their existing businesses’ advantages to bring their own fresh idea to fruition. When starting a company, entrepreneurs do not always need to start from scratch but instead possibly implement a new idea to an existing supply-chain or even shifting that supply-chain altogether to produce the new product.
O’Leary was growing impatient and wanted to know more about the financials surrounding the business. Gracie revealed it costed Quickflip $13 to $15 to make a garment and they sell it for $40 to $50. The company has been operating for a matter of months and its lifetime sales amount to $577k, which resulted in $220k of profit. The company’s product is only sold direct-to-consumer online. The Sharks were skeptical of his high evaluation despite Quickfip being in such an early stage of the growth process. In return, Gracie presented the Sharks with his “four-legged-monster” plan for Quickflip to evolve from direct-to-consumer to retail.
The Sharks seemed rather impressed with the entrepreneur’s long-term plan but Robert asked, “Is this proprietary?”
Gracie shot back with a hard “Yes!” and was still surging with energy through negotiations. He had a total of four patents he was waiting on: two utility patents and two design patents. Robert asked Daymond if he thought Gracie could successfully obtain the patents and he said, “He can, but I’ve had 50 patents that I cannot protect and/or they’ll go around and get a knock-off.”
Daymond’s take on the pricelessness of patents in the clothing industry along with Gracie’s high evaluation, made some of the Sharks weary of making an offer. Mark was the first to go out on account of how awesome Gracie seemed to already be doing by himself. He didn’t see the extra value a Shark could bring to Quickflip by coming onboard. Daymond was the next to go out because he thought retail would be a confusing struggle because the garments appear as regular tops. Therefore, the customer wouldn’t recognize the value of a Quickflip top when visiting a brick-and-mortar store and advertising its utility where the product is shelved would add extra cost. O’Leary went out because of what he thought was an astronomical evaluation by Gracie.
Despite the issues the other Sharks voiced, Robert wanted to make a deal because he was impressed with Gracie as a businessperson. However, Robert said he didn’t like the high evaluation and didn’t know how to even structure the deal. Gracie returned by assuring the Sharks that he was willing to negotiate and he came into the Tank hungry for a deal.
Suddenly, O’Leary came back into the negotiation offering $100k + $400k as a line of credit for a 25% equity stake. Mark rightfully reiterated the offer as “half of his profits for a quarter of his company,” which was true since Quickflip had done a little over $200k in profit up to that point and $400k as a line of credit is far different from a cash investment. The difference between the two is that a cash investment or loan is given to the recipient all at once while a line of credit represents a specific amount of financing that a business can withdrawal from periodically under no fixed timeframe. The loan is paid back in a fixed timeframe but line of credit payments are “revolving” and if the recipient falls behind on payments it can result in higher interest rates. Also, in a line of credit deal the recipient cannot access the money in emergency instances that do not align with the ideals of the investor. For these reasons, a loan is more safe, stable and secure in the long-term.
Following O’Leary’s reentrance, Robert offered $500k cash investment in exchange for 25%. Then, Lori entered the race for a deal offering $500k for 15% but it was contingent on whether Gracie could obtain one of the patents he submitted for. To the Sharks’ surprise, Gracie did not take the offer despite it being the best available in the waters. Lori continued to explain how she would add value to Quickflip with her experience and connections, until O’Leary interjected with an identical deal just without the contingency regarding the patents.
Despite O’Leary’s tweak, Gracie decided to focus his attention on Lori instead. He tried to get her to drop her desired equity down to 10% by restructuring the deal to $250k cash and $250k line of credit instead of a straight $500k cash investment. As O’Leary tried to sway Gracie with one last point, Lori agreed with Gracie’s proposal and the two made a deal!
Gracie certainly stole the show during his pitch on Shark Tank with his big personality and emphatic spirit. Quickflip may be one of the most well-prepared and well-executed pitches in all of Season 10. It will be exciting to watch this company grow into the future with the help of Lori Greiner.