ZinePak founders Brittany Hodak and Kim Kaupe were the only 100 percent self-funded entrepreneurs on Inc.'s 35 Under 35 list last year, and it was that distinction that attracted the attention of Shark Tank producers last summer. ZinePak packages CDs from artists like Katy Perry and Brad Paisley along with glossy magazines, interviews, and merchandise that appeal to what they call "superfans."  The $3 million company has been growing steadily, thanks largely to an exclusive deal with Walmart to distribute its products. So what enticed the founders to dive in with sharks? 

Hodak and Kaupe gave Inc. the inside scoop.

Inc.: ZinePak was already extremely successful, so why did you think you needed to add a 'shark' to your lives?

Brittany Hodak: Kim and I had been considering looking for funding because we recognized that as much as we loved being a self-funded company, at some point every company's journey becomes about being able to scale and grow quickly. When the show contacted us, we thought maybe the stars were aligned, because who better than a shark to understand a business that's all about superfans?

Inc.How did you mentally prepare yourselves to be on the show? 

BH: I reminded myself that I was likely as prepared or more prepared than anyone who'd been on the show before. I'd watched every episode, read literally hundreds of articles, both by the sharks and former contestants, and read biographies by each of the sharks. I also knew ZinePak's numbers"‹ cold. I told myself I had done everything necessary to prepare, and the only thing left was to relax, smile, and represent the company the best way I could.

Kim Kaupe: I used two tactics before taping Shark Tank to help me feel prepared on a personal level. The first was putting myself in uncomfortable situations over and over again, whether it was taking a brand-new class at the gym and positioning myself in the front, or striking up a conversation when I would normally pretend to be invisible."‹ The second was to download and use Andy Puddicombe's Headspace meditation app. Learning to rise above the chaos in my mind was key in being able to feel a sense of calm in an uncomfortable or distracting situation. "‹

Inc.You went in asking for $725,000 for 10 percent of your company, and the sharks were a bit taken aback, particularly Kevin O'Leary. How did you win over "Mr. Wonderful"?

BH: He tried to be snarky right out of the gate, but we kind of put him in his place by knowing our stats. He questioned our rationale for choosing to have an exclusive arrangement with Walmart. We explained that in the music industry, exclusives are part of the game and that Walmart's music sales eclipse those of its next three competitors combined. I think we earned his respect, and he became almost an advocate. So he really was wonderful to us after the initial comments he made. 

Inc.: Mark Cuban opted out, because he says he sensed "desperation" due to the declining market for physical CDs. But you got three offers from the remaining four sharks: O'Leary offered you $725,000 for a 30 percent stake; Daymond John offered the same for 25 percent; and Robert Herjavec and Laurie Greiner joined forces to offer $725,000 for 20 percent. It was a virtual feeding frenzy, and still, you countered. 

BH: We didn't want to do a deal that valued our company at less than $5 million. We know how valuable our company is, and we only want to work with people who share that vision. It was about finding the right partner, not just a partner. So we asked Robert and Laurie to do a deal for 14 percent, and they offered to meet us in the middle at 17.5 percent.

Inc.: And are you confident that you chose the right sharks? 

KK: There are superfans for everything, and we'll need help growing into other verticals. Laurie has a great relationship with QVC and with brands like Bed Bath & Beyond, and Robert has a lot of connections within the world of sports, like Nascar and soccer. Those are both areas--the brand space and the sports space--that Brittany and I had set our sights on to grow into in the next couple of years.

Inc.You taped the show in September, so what's happened since then?

KK:  We're still under the terms of our confidentiality agreement. But there's a ton of negotiation after you leave the show. The sharks don't know you before you go into the take, so it's kind of like an arranged marriage where you meet at the altar. Afterwards, you need the time to get to know everyone on a deeper level and understand how you can work together and how the deal is going to be structured. There's a lot of work to be done after you walk out of the tank. 

Published on: Apr 27, 2015