Friday's new episode of Shark Tank brought in a duo of baby sharks and two guys who raised the question of what constitutes a viable long-term business. And then we all wondered: Did Mark Cuban get snookered by a gold digger?

BeeSweet Lemonade

The pitch: First up is 9-year-old Mikaila Ulmer and her dad, Theo, from Austin, Texas. A born entrepreneur, Mikaila launched her honey-sweetened-lemonade business at 4-1/2 years old. After being stung twice, she became fascinated by bees just before finding an old family recipe for flax-seed lemonade. (This is a switch from most 4-year-olds, who would all be all like, "Die, you evil honey bees! Die, die, die!") BeeSweet sells in 30 Whole Foods stores in four cities. Mikaila wants $60,000 for 10 percent of the company (dream on, little dreamer) to finance an offer to expand to four Southwest states.

Shark bait: Mikaila is so cute the sharks could just eat her up (like a great aunt, not a Great White). Nonetheless, they aren't rolling over for this cutie-pie lemonade chum and want the numbers. Each bottle sells for about $3 and costs $1.50. Theo says the cost goes below $1 per bottle with the new deal. Year-to-date sales for eight months are $25,000 and grow each month.

Feeding frenzy: Mikaila tells Mark Cuban her biggest challenge is balancing the business with school. Kevin "Mr. Wonderful" O'Leary quips, "You're right--school's gotta go." He wants his CEO full-time, so he's out. Robert Herjavec explains that the drink market is really tough, and he's out. Mark tells the girl she's incredible, "but this isn't quite a company yet. Come back when you graduate middle school and probably own half the place." Lori "Queen of QVC" Greiner says, "I think you're doing every single thing right," then promptly pulls out because she is allergic to lemonade. (A clear fig-leaf for her "warm-blooded shark" reputation. She invested in a sponge company, and does anybody think Lori stills scrubs her own bathtub?)

Swim away? The last shark circling is Daymond John, and it doesn't look good. Daymond admits he doesn't know the market--but has new partners who do, an outfit that supplies East Coast convenience stores. Contingent on getting BeeSweet into those stores, he's in for the full $60,000 but wants 25 percent equity to split with his partners. Mikaila announces, "It's a deal." Dad breathes a sigh of relief because, let's face it, those 529 college plans don't fund themselves.

Bite marks: Most of the sharks weren't going to be good partners for BeeSweet. Kevin and Robert have no background or existing businesses to help, and Lori can't hawk it over QVC. Mark could have pushed BeeSweet into concession stands in Dallas and other NBA cities, a move he's made before. But with Daymond's deal, BeeSweet not only expands into four Southwest states but also gets a big chunk of the East Coast in what is clearly a honey of an opportunity.

BrandYourself

The pitch: Patrick Ambron, 27, runs the online reputation-management service BrandYourself. The company offers free and low-cost methods to improve your personal standing in online search results and competes with firms charging thousands of dollars. (No sense Googling the guy, since he's surely deleted all his spring break pictures). Patrick wants $2 million for a 13.5 percent share, a valuation that got the sharks smelling money--or was it blood?

Shark bait: It's a weak pitch when Kevin O'Leary's first question is, "How do you make money?" BrandYourself has 300,000 free users, 5,000 paying $100 a year, and 5,000 "concierge" clients paying $5,000 a year. It went from $400,000 in first-year sales to $800,000 in the second, with a total of $2.2 million since 2012. That puts Patrick's valuation at more than 15 times current sales.

Feeding frenzy: Mark Cuban asks whether BrandYourself offers a way to scrub social media. It doesn't (yet) and that answer clearly loses him. When Patrick offers that BrandYou is "the best company in the industry," Robert Herjavec shoots back, "Better is not a differentiator." Kevin jumps back in and notes that he's paid $10,000 to $15,000 for similar service (so what's he hiding?) and that while BrandYourself might get him as a customer, he's out at a valuation of $15 million. This brings out the revelation that BrandYourself recently looked for $5 million and raised $3 million at this valuation. Suddenly, the blood is in the water.

Swim away? Lori Greiner sees a great concept that would eat up millions in advertising, and passes. That leaves Robert and Mark, the two tech guys who could most help BrandYourself--or expose its weaknesses. Cuban bails, fearing the company will hit a roadblock with social media and other online developments. Robert--who made his money selling computer security services--sees a business appealing to non-savvy computer users, but rejects the valuation, offering $2 million for 25 percent. Partly because of how that would dilute earlier investors, Patrick passes. He tries to counter: "That $2 million would go a long way..." but Kevin cuts him off: "Don't worry. It'll go a long way for someone else who'll get it right after you leave."

Bite marks: The valuation loomed large here--the sharks never delved into the background and successes of Patrick and his partners. Valuations based on previous rounds of fundraising rarely go down well with the sharks. Their attitude is that just because someone else was stupid enough to pay too much for a tiny cut of the businesses, it doesn't mean they are. As for having the best product on the market? Go ask Sony how that worked for Betamax.

iCPooch

The pitch: Brooke Martin and James Pelland want $150,000 for 20 percent of the company. Their product addresses separation anxiety among dogs by providing a way to mount a Wi-Fi-connected iPad or other tablet at the dog's level, which allows owners to have two-way video chats with their dogs and give them (the dogs) a treat while away. Brooke, 14, came up with the idea at 12 years old and beat 39 adults in a venture-capital contest. James is a friend of schoolmates with tech experience who left General Dynamics to run the company.

Shark bait: With 10 million dogs suffering from separation anxiety in the U.S. alone, Brooke and James think there's a market. Is there? In two months, they've shipped 115 units at $149, with a cost of $60 each. iCPooch is on Amazon, and has a test going that will sell an undetermined number through a few Bed, Bath and Beyond stores. But just 115 units sold? This dog likely ain't gonna hunt for the sharks.

Feeding frenzy: Yoyo the dog got smiles and "awwws" demoing the product, but didn't get the sharks feeling warm and fuzzy. Mark Cuban thinks iCPooch is too hard to convey and too expensive, since it needs an additional iPad or other tablet to work. Lori Greiner doesn't like the 40 percent margin and doesn't see a great market. Kevin O'Leary looks like he wants to strangle a puppy. Saying he thinks dogs need to be alone so they'll appreciate it when the owner gets home, he tells Brooke: "I hate this very much as an idea. Very much." This prompts Robert Herjavec to reassure her: "The great thing about Kevin is that he's mean to adults and children in the same way."

Swim away? With only two sharks left, Robert doesn't see enough product moved: "When I don't know if something's going to work, I like to rely on sales." Likewise, Daymond John fears iCPooch would cause more anxiety for dogs, not less, and would want to see more sales, adding, "I don't think it's tested enough."

Bite marks: This puppy had no business swimming in the tank with such limited sales. The sharks aren't angel investors throwing a few bucks at a good idea. They want to see an established concept, both in sales totals and proof that a product works and creates satisfied customers. But, as with BeeSweet Lemonade, they were impressed by this mini-shark's young accomplishment. As Lori told Brooke: "You're 14 years old and you've already thought of one pretty clever item. I can't imagine what you're going to do in another dozen years."

The Home T

The pitch: Ryan Shell, a New York marketing exec by way of North Carolina, wants $250,000 for 5 percent of his company, which sells high-end gray-on-gray T-shirts featuring an outline of your home state, plus pillows, tote-bags, and more. Ryan says his relocation from North Carolina, and his yen for barbecue, sweet tea, and the other comforts of home, prompted the business, which donates 10 percent to the National Multiple Sclerosis Society for research.

Shark bait: The 5 percent offer brings laughs from the sharks, but the $30 ultra-soft T-shirts impress. Ryan says that in the first 12 months, with no one other than himself working on the business, he's netted $540,000 on $1.1 million in sales. He sells mostly online, has 56,000 likes on Facebook, where he also advertises, and earns a lot of word-of-mouth, grassroots sales. While impressed with the numbers (and insulted by the 5 percent offer) the sharks immediately bare their teeth. Is this a product or fad, or is it a real business?

Feeding frenzy: "You cannot protect any of this," Daymond John says flatly, adding, "Have you ever seen us take a deal for 5 percent?" Kevin O'Leary is even more blunt: "There's no chance in T-shirt hell this is worth $5 million. There's nothing proprietary about it." The overall sentiment, led by Daymond, is that Ryan is "a gold digger"--an entrepreneur who wants to promote his business on Shark Tank but doesn't want to sell any part of it, and crafts a deal he knows the sharks will reject. "I don't believe you really want a deal," Daymond says. "I'm out."

Swim away? Other sharks note that apparel companies typically build quickly to a level of sales, but inevitably fade. "The hard part is going from a product to a company," Mark Cuban says. Ultimately, Robert Herjavec offers $250,000 for 35 percent of the company and Lori Greiner offers the same amount for 30 percent. "That's less than I'm making now," Ryan complains, and rejects the offers. He looks stunned and turns to walk away when Daymond offers $250,000 for 20 percent. But Ryan seems swayed by Mark, who tells Daymond: "He would be the moron of the century if he sold $1 million in sales for a $1 million valuation." Ultimately, Ryan walks, telling the camera, "Maybe I just completely screwed that up."

Bite marks: It was Mark vs. the rest of the school of sharks on this one. While Kevin, Daymond, and the rest saw the business as a commodity or fad that could easily be knocked off, Mark saw a guy being asked to sell at a valuation where, if sales held up for just another year or two, the investors would double or triple their money.

It all came down to the question of: "Is this a product or a business?" If Home T is the equivalent of a Hula Hoop, then the majority sharks are right and, as Daymond said, Ryan should "take the money and run." Yes, companies sell at a multiple of current annual sales, but only if those sales are expected to be reasonably steady and growing. For most sharks, that's not going to be a T-shirt company. And even though Mark defended Ryan, in the end, he didn't make any offer.

Brian O'Connor is author of the forthcoming book, Everything I Needed to Know About Business I Learned From Shark Tank (An Unofficial Guide), coming this fall from Riverdale Avenue Books.

Published on: Mar 23, 2015