Two ‘Shark Tank’ entrepreneurs show that if you’re indecisive in an arrangement with an investor, you run the risk of appearing amateur, conceited, and undependable. And you will probably go home with nothing.
In the most up to date sixth-season episode of ABC’s hit pitch show, San Francisco-based entrepreneurs Lei Yu and Tyler Freeman provide their business DrumPants, which offers wearable technology that utilizes your smartphone’s Bluetooth abilities to turn your body into a complete band. Its secondary functions, which Yu and Freeman say they prepare to expand on, can be utilized to do things like control discussions with a small pat on your pocket.
After raising $74,000 on Kickstarter in January, well past their $35,000 goal, they ask the Sharks for $150,000 in exchange for 5 % equity to take the product past its beta stage. That would give their business a $3 million valuation.
Freeman and some pals provide the investors a presentation, which investor Robert Herjavec rocks out to:
Yu states the 2 have actually secured 720 preorders for the item, which launches later this year, which they anticipate $220,000 in sales by the end of 2014.
Investors Lori Greiner and Kevin O’Leary find DrumPants fascinating but aren’t encouraged that it’s anything more than a niche item, so they bow out.
Herjavec concurs that he doesn’t picture countless individuals would wish to purchase a full-body instrument, but he’s taking a long view and is interested in the next step for the company. He provides $150,000 for a 20 % stake.
Investor Daymond John asks the business owners if they have an interest in licensing the item, to which Freeman states, ‘Absolutely,’ as Yu nods in contract. He provides $250,000 for a 20 % stake, stating he would help protect a company to include DrumPants to its catalogue to obtain upfront monetary and guaranteed yearly minimums.
Yu and Freeman ask if they can enter the hallway to discuss.
‘You understand exactly what takes place in ‘Shark Tank’ when you leave the tank? Nasty, nasty things,’ O’Leary cautions. ‘What is wrong? You have actually got 2 offers. You’ve got to make a decision.”
John concurs but lets the cofounders take a minute to talk it over. Away from the investors, Freeman reveals interest in John’s offer, while Yu says he doesn’t appear to understand the full capabilities of the innovation. The financiers beckon them to return, and Freeman and Yu return without a plan.
Freeman asks Herjavec if he ‘d drop his stake from 20 % to 15 % for the exact same $150,000, which is met with silence. Yu adds that it would be excellent to obtain a joint offer amongst the staying Sharks.
By this point, John is frustrated and says the pair’s indecisiveness has forced him to withdraw his offer.
Herjavec, likewise noticeably frustrated, says he is going to stick with his initial offer. Freeman invests a moment looking at Herjavec before asking financier Mark Cuban, who formerly had suggested Herjavec’s offer sounded excellent, if he wishes to include anything.
‘I believe exactly what your challenge is, and you’ve probably been hearing it your entire lives, is that you’re both very purposeful,’ Cuban says. O’Leary states they’re the opposite, but Cuban finishes his point.
‘However that’s part of the problem, right? Sometimes the ideal is the enemy of the excellent. Right? Paralysis by means of analysis,” Cuban says.
He states he was attempting to find out if his suspicion that the two were undependable was true. The product has possible, Cuban states, however needs a definitive push in a certain direction, and Yu and Freeman proved they would not be willing partners in a development plan. He says he’s got no deal.
At this point, Herjavec has actually had it. He tells the 2 that he understood he would withdraw his offer as quickly as the pair fulfilled his offer with a plea to Cuban.
‘This is an incredible example of 2 entrepreneurs who are incapable of deciding,’ O’Leary says. Yu starts to discuss why they’re still worth it, and she continues to talk as Cuban, John, O’Leary, and Herjavec start yelling for her and Freeman to leave.
‘That was the first date! Imagine exactly what would happen after that,’ John says, referring to what it would be like to deal with the DrumPants’ founders over the long term.
‘I guarantee you this happens to them every day of their lives,’ Cuban adds.
You can view the complete episode over at Hulu Plus.