The second of the double-header Shark Tank episodes in the week leading up to the Superbowl proved less contentious between the judges but boasted more extreme products. Charles Barkley joined the tank as a guest judge, sitting alongside Mark, Lori, Kevin, and Robert to hear about products that protect you and your family from a tornado or just protect your sub sandwich (in my part of the country we call them hoagies) from getting soggy in your cooler.
The Product: Life Lift Systems
The Entrepreneur(s): Levi Wilson and Tim Todd
The Ask: $550k for 15%
The Pitch: A tornado shelter that expands upwards from a small box underneath your mattress to full size in 60 seconds. Though their flagship product is essentially a box spring that transforms into a shelter, they are developing the same concept for pool tables, workbenches and other nondescript home items.
The Profits: $550k in revenue over the course of a little over 3 months
The Cost Breakdown: They sell the shelter including installation for $6k to individuals and $4850 wholesale. It costs $3600 to make.
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The Negotiation: None of the sharks live in or are from Oklahoma or any other Midwestern state that experiences tornadoes regularly, so a good portion of the pitch is spent learning exactly what life is like for those who deal with “tornado season” or things of the like. The life lift systems shelter withstands 250mph winds and the weight of an entire car. The shelter is laid in concrete, so it could possibly be the only thing standing should your home fall prey to a tornado. Once they let the sharks know about the costs, however, it’s clear they’re going to need to change their business strategy in order to suit the needs of any investor. The sharks all want them to raise their prices because their current margins will drive them out of business. Robert is interested in what their business plan is to make money, and Levi replies that they’re aiming at wholesaling to dealers and have two lined up on the way. Compared to other companies that come on shark tank, this is somewhat meaningless, but because this is a niche market that is targeted at specific people in Oklahoma and other midwest states where this is a need, it means more. Charles is curious about the valuation and Kevin once again hounds them for their margins, insisting that they raise prices by $3,000. Robert says he likes the product but doesn’t love it and pulls out. Kevin adds that they’re not really selling a shelter, they’re selling life insurance, and that it’s an interesting idea but not one that’s right for him so he pulls out as well. Mark and Lori both talk about how much they love the product and offer competing bids. Both go in at $550k for 25% of the company and begin to pitch themselves. Mark highlights his presence in Dallas as proof of his accessibility and proximity to the area. Lori seems to take personal offense to this, pushing back on claims that she is inaccessible and emphasizes her availability to them if she were to get 25%. The business owners counter them asking if they’d come down to 20% which is a no go for both of them. After hearing that, they question whether or not anyone would come down to 20% with a royalty of $100 per unit. This intrigues both Mark and Lori (and surprises me, a company with such high costs should never be giving up that kind of capital when it needs to fund purchase orders) and they both quickly agree. Levi looks terrified to make a decision as Lori makes her final pitch predicated on marketing. Ultimately they decide to go with Mark who lets them choose: do they want to give up 20% of the company and a royalty or 25% of the company with no royalty. They chose 25% (good decision).
The Deal: Mark invests $550k for 25% of the company.
The Product: Fresh Bellies
The Entrepreneur(s): Saska
The Ask: $275k for 5%
The Pitch: Fresh Bellies is baby food seasoned with savory herbs instead of fruit sugars. The goal of the food is to adjust baby’s palates to position them towards healthy food as they grow rather than conditioning their palates for sweetness and sugar.
The Profits: They’re projecting $570k in revenue at the end of the year but thus far they’ve been in business for 6 months and have done almost $100k in sales.
The Cost Breakdown: It costs $1.99 to make and retails for $3.59
The Negotiation: Right off the bat the sharks aren’t fans of the product itself. They make faces and comment on the overpowering nature of the seasonings (particularly the garlic one). Things only get worse for Saska when the line of…