On Friday's episode of Shark Tank, Cuban and guest shark Chris Sacca invested $100,000 each for a combined 10 percent stake in weekend home rental company Rent Like a Champion. Founded by Notre Dame alumni Mike Doyle and Drew Mitchell, the business specializes in renting out homes in small, college towns to visitors attending college football games and other weekend events. The co-founders started the business in 2006 in South Bend, Indiana, renting homes to Notre Dame fans in town to watch Fighting Irish football games. (Airbnb was founded in 2008.)
So what makes the company different from Airbnb?
Rent Like a Champion operates in non-traditional vacation rental markets where Airbnb has little or no inventory. It also focuses on event-based rentals that attract large crowds, like college graduations, parents' weekends, and reunions. The company makes money by taking a 15 percent fee from homeowners and an 8 percent fee on the renter side.
Last year, Rent Like a Champion processed $2.3 million in rentals, from which it took in $530,000 in fees. The company is projecting $4.1 million in rentals this year and $950,000 in fees. While college football rentals may sound like a relatively small market opportunity, college football fans spent $2.5 billion on lodging to support their favorite teams in 2014, according to the company.
So what made Cuban and Sacca invest?
Part of the reason has to do with the fact that Sacca passed on investing in Airbnb early in the company's history, a decision he says may have cost him hundreds of millions of dollars. Sacca and Cuban were also impressed with the company's long track record and recent revenue growth.
"We can point to 10 football seasons' worth of rentals, and over the last three years, we've been growing between 70 and 80 percent each year," Doyle says.
Rent Like a Champion plans to use the Shark Tank investment to expand its coverage area from its existing 20 college towns to the more than 40 that average 50,000 fans or more per game. The company also plans to cater to other small town events that attract large crowds, like PGA tournaments, Nascar races, and motorcycle rallies, according to Doyle.
"Those are the types of places where this model makes a ton of sense," he says.
Despite the strength of the pitch, Doyle and Mitchell nearly killed their own deal. After receiving their offer, the co-founders said they wanted Cuban and Sacca to join them at a Notre Dame tailgate party. Sacca agreed, but Cuban wouldn't bite.
"You're looking a gift horse right in the mouth," Cuban said. As an Indiana alumnus, he hates Notre Dame. Mitchell and Doyle quickly dropped the tailgate provision and accepted the offer.