Walking away from a partnership with billionaire Mark Cuban is a bold move for any entrepreneur, but that's exactly what PhoneSoap co-founders Wes Barnes and Dan LaPorte did on Friday's episode of Shark Tank.
The two entrepreneurs came to the tank seeking $300,000 for 7.5 percent of their cell-phone cleaning company, and ended up attracting multiple offers from the sharks.
PhoneSoap's flagship product is a phone charger that kills bacteria on mobile devices using ultraviolet light. Cousins Barnes and LaPorte first got the idea for the product after discovering that cell phones have 18 times more harmful bacteria than any surface in a public restroom. Within the first six months of being in business, PhoneSoap generated nearly $540,000 in sales, an impressive start for the new company, but not enough to win over all the sharks.
"The average consumer is relatively lazy, and I'm not sure they see this as a major issue that they're willing to spend money on," said host Robert Herjavec, who passed on investing.
When Barnes mentioned a plan to pitch the product to commercial customers, such as hospitals, however, Cuban's ears perked up.
"This is not something that everybody's going to buy, but on the commercial side, that's interesting," he said. "From a health care professional's perspective, I could carry anything bad into [a] waiting room, which could then be picked up and distributed through the hospital."
Cuban offered the co-founders $300,000 for 20 percent of the company, but co-host Lori Greiner quickly made an offer of her own: $300,000 for 15 percent.
"I want to take this unit, put it on QVC, put it in my show, and sell hundreds of thousands of dollars like that," she said.
When LaPorte asked both sharks if they'd be willing to lower their equity stakes, Cuban refused to budge, but Greiner made a compelling counteroffer.
"I'll go down to 10 [percent] if you take the deal right now," she said.
Before Cuban could revise his offer, Barnes and LaPorte took Greiner's deal.
In the end, Greiner's lower equity stake and confidence in PhoneSoap as a consumer product were what won over the founders.
"We don't want to slow down where we are now," said Barnes.
Stay tuned for more recaps every week.