There's no such thing as too much Shark Tank.
Many longtime fans of the show have been hungry for a behind-the-scenes look at what happens after the sharks invest in startups, and that's exactly what ABC delivered with the spinoff show Beyond the Tank. The series premiere on May 1 attracted 6.3 million viewers, while episode two on Friday played for an audience of roughly 5.6 million. (Shark Tank averages roughly 8 million viewers per week.)
If there's any lesson from the first two episodes of Beyond the Tank, it's that a deal with a shark can get ugly very fast. For Josh Hix and Nick Taranto, co-founders of New York-based food delivery startup Plated, their partnership with Mark Cuban was literally dead on arrival. After accepting Cuban's offer of $500,000 for roughly 6 percent of their company, the co-founders tried to renegotiate the deal based on their company's most recent growth.
"That's not the way I do business," Cuban said during the most recent episode.
Plated's co-founders never closed the deal with Cuban, but four months later, Hix and Taranto attracted an investment from shark Kevin O'Leary. Today, Plated is just under three years old is generating more than $100 million in revenue per year, according to the co-founders, but the business isn't profitable. The company has also grown so fast that it has moved into larger fulfillment centers 14 times in the past three years. On top of massive spending to switch facilities, the business lost $100,000 when one of their refrigerated food containers was stolen in Chicago.
"You have a history of screw-ups in the last year on logistics," O'Leary told the co-founders. "What's the matter with you?"
In an interview with Inc., Plated's co-founders said they disagreed with O'Leary about the company's real estate moves being mistakes.
"That's just the best way to manage the business and manage capital," says Hix. "It doesn't make sense to move into a warehouse that's ten times the size of what you need--even if you're going to outgrow it within a year--so we've been very deliberate about the real estate strategy."
After warning Hix and Taranto that they can't afford another costly mistake like having inventory stolen, O'Leary advises them to personally oversee the opening of a new Chicago fulfillment center.
"I can afford to lose my investment in you, [but] you can't afford to lose this company," he says.
When everything goes smoothly with the new facility, O'Leary stops criticizing the co-founders and begins congratulating them. "Josh and Nick pulled it off," he said. "It's a success."
Plated is averaging growth of 500 percent per year and expects to be profitable within 12 months, according to Hix. Last year, the company raised $5 million in a round led by ff Venture Capital. If everything goes according to plan, the company could claim a slice of a very large market, as Goldman Sachs research expects the meal kit industry to grow to between $3 billion and $5 billion by 2020, Hix says.
"Part of innovation is being comfortable with making mistakes, but also moving fast enough where you can recover from your mistakes," says Taranto. "We've definitely proved that we can test and learn."
While Plated seems to be growing healthily, not every Shark Tank business gets a happy ending. Stay tuned for more recaps of Beyond the Tank every week.