It was fins to the left, fins to the right, to quote Jimmy Buffett, when the Sharks jumped into a veritable feeding frenzy during Friday's fifth episode of the seventh season of Shark Tank. But before the billionaire moguls schooled around an incredible deal for a new kind of drone, the Sharks first ripped two entrepreneurs to shreds, and bit into a tasty deal on gourmet jerky.
First up was Three Jerks Jerky, with Jordan Barrocas of Miami and Daniel Fogelson of Los Angeles seeking $100,000 for 15 percent equity. The product is gourmet, gluten-free (not all jerky is gluten free--who knew?), and made from prime filet mignon. In 12 months, the Jerks have sold $250,000. The product retails for $11.99--twice the price of typical jerky--with one top flavor selling for $17. The cost is about $3.20 per package. The entrepreneurs need money to buy in bulk, boost inventory, and lower their overall cost of goods sold.
The Sharks love the product, and demonstrate a truly disturbing amount of knowledge about the world of beef jerky. "I'm a jerkologist," Daymond John announces.
The offers pour forth, with Kevin "Mr. Wonderful" O'Leary offering $100,000 for 33 percent equity, but eventually all the Sharks except Mark Cuban swim at the deal. Eventually, the deals come down to John offering $100,000 for 15 percent now, with the option to take another 15 percent at the same price. Robert Herjavec and Lori Greiner team up on the same offer. O'Leary ups his offer to $150,000 but still wants one-third equity to be properly incentivized, sparking a conversation about whether the smaller equity portions will motivate the other Sharks to give Three Jerks the attention it needs.
The two Jerks (a third Jerk partner is gone) take John's offer. "I love being a Jerk," he says.
(Wait--isn't that supposed to be O'Leary's job?)
Next up is Belinda Jasmine of Sand City, California, seeking $200,000 for 20 percent of Skinny Mirror, a mirror that enhances women's body image by subtly slimming the reflection. Jasmine, a surfer, explains that ordinary mirrors distort, causing most women to think they look two to three dress sizes larger than they really are.
Jasmine promotes the mirror as a way to enhance a healthy body image and boost esteem to get and stay healthy. "If you feel good, you look good!" she says. "If you like what you see, it gives you the inspiration to look and feel your best."
Sales are $85,000, mostly to hotels and clothing stores, which prompts the Sharks to give Jasmine a brutal chewing over, troubled by the ethics (yes, there's the E-word) of using Skinny Mirror to boost clothing sales. "It's supporting a falsehood," O'Leary says. "This is a lie to somebody."
Jasmine notes that she has turned down an order of $700,000 from one retailer who wanted the Skinny Mirror logo removed, but it's not enough to calm the Sharks, who feel that the brand will be damaged if consumers buy clothes that look one way in a store's Skinny Mirror and another way when the buyer gets home.
Jasmine stays unbelievably upbeat for the entire mauling she endures. The Sharks all pass, but her attitude makes it hard to believe that she won't succeed without them.
Another idea the Sharks hated Friday was Switch Witch. Modeled after the Christmas Elf on the Shelf (and Hanukah's Mensch on a Bench, which has Lori Greiner as an investor), Switch Witch is a plush doll and storybook that encourages kids to trade in their unhealthy Halloween candy for a gift. This is, evidently, a not-uncommon practice, and Rob Boulet and his sister-in-law, Lori Reilly, have formalized the concept and are seeking $55,000 for 25 percent equity.
After demonstrating the idea with three trick-or-treating kids (including a tyke in a shark outfit), the entrepreneurs explain that in one month after being featured on Yahoo News last year, they sold $115,700 of goods. Unfortunately, the new item went up the day before Halloween, giving them little time to build before the holiday. Switch Witch sells for $29.99.
The Sharks seem to like Halloween candy nearly as much as jerky, and don't like the idea of making kids give up their candy. Cuban thinks Switch Witch can work only if it goes viral, and he's never heard of it. Others feel that it won't work because Halloween doesn't have the buildup of Christmas or the longevity of Hanukah's 10 nights. John thinks Switch Witch is a hobby that could build into a business over time, noting that his big success, Fubu, was his hobby at first. In the end, the Sharks throw Switch Witch into the ditch.
The real feeding frenzy of the night was xCraft, a new type of drone from JD Claridge and Charles Manning. It can seamlessly alternate between hovering motionless and flying at speeds of up to 60 mph at heights of up to 10,000 feet, the inventors say.
XCraft has $173,000 in presales on Kickstarter and through its website. The Sharks love the idea of xCraft, especially licensing the technology for security, oil and gas drilling, and several other applications. They love it even more when Claridge and Manning reveal the Phone Drone, a prototype of their next product, which turns an ordinary smart phone into a drone. Projected price is $300 with a cost of about $100.
The Sharks cannot throw money at these guys fast enough. Even at 60 mph, an xCraft would be left in the dust by the speed of these deals. O'Leary starts by offering $750,000, and bidding quickly gets up to $1 million for 20 percent in an offer from Greiner. "I smell a nasty Shark fight that's about to commence," John says, warily eyeing Cuban, who's remained on the sidelines.
Brilliantly, the inventors calm things down with an audacious proposal: a Shark Tank syndicate offer, in which all the Sharks put up money and bring their own particular skills and expertise to the business. This brilliance is followed up by a boneheaded valuation, however: $10 million, which is a huge jump from the initial $2 million valuation the inventors sought. Says John: "Now I smell greedy people."
After chatting privately, Claridge and Manning revise the offer: $6 million with 5 percent going to each Shark. Cuban gets in on the deal as cries of "I'm OK with that deal" come from all over the panel. And just like that, the inventors have tripled the amount of cash raised and the valuation of xCraft.