Ten Of The Best Businesses To Come Out Of Shark Tank
In the episode of Shark Tank that aired on October 25, 2012, the sharks were fighting over Scrub Daddy, maker of a bright yellow sponge in the shape of a smiley face. “When a company’s sales are completely dependent on QVC, that’s a disaster waiting to happen,” said billionaire Dallas Mavericks owner Mark Cuban. “I’m out.”
“What about this deal?” offered financier Kevin O’Leary. “$100,000 for 50%?”
Scrub Daddy’s inventor, Aaron Krause, turned O’Leary down. Then QVC personality Lori Greiner jumped in: “You’ve heard me say before, I can tell instantly if it’s a hero or a zero, and I think what you’ve got here is a hero.” O’Leary tried again with a royalty offer, but Greiner won the bidding with an offer of $200,000 for 20% of the company. O’Leary wasn’t happy. “You are dead to me and the sponge is dead,” he said, tossing the yellow plastic disc as Krause exited the studio. “Scrub Daddy, you suck!”
It turns out O’Leary had reason to be bitter. Since first appearing on Shark Tank three-and-a-half years ago, the $3.99 Scrub Daddy sponge, made of a polymer produced in a German factory and then cut and packaged in Krause’s Folcroft, PA plant, has made its way into hundreds of stores, including Wal-Mart, Home Depot, Bed Bath & Beyond and CVS. It’s also a regular on QVC, pitched by Krause himself, who says he can sell 200,000 sets of 10 sponges in a single 24-hour period. Total retail sales hit $50 million in 2015, he says, which translated to annual revenue of more than $20 million for the company. He won’t divulge its margins or profits but says it has no debt and is very much in the black, with a staff of 55.
Scrub Daddy boasts the most revenue of any business to appear on Shark Tank since the show first aired in 2009. Aspiring entrepreneurs, mostly in the startup phase, appear on the reality show and pitch to a panel of so-called sharks, who then negotiate a deal, usually a flat sum in exchange for a percentage of the company and the promise that the shark will help the business as a senior advisor. The show airs on ABC and is syndicated on CNBC and other stations around the world. Its ABC viewership is some seven million per episode, which contestants say gives them a supercharged jolt in sales. “My episode re-aired in March,” says Krause, “and I instantly had 5,000 people on my site.”
ABC says it doesn’t rank the show’s success stories, so I combed through clips, reached out to the six main sharks and interviewed more than 25 contestants, who track fellow alumni. I looked for businesses with substantial revenue that have clocked serious growth and healthy profit margins since appearing on air, and that show promise moving forward. Herewith, a list of 10 of the best businesses to come out of Shark Tank, listed by 2015 revenue:
Product: Superior sponges
2015 revenue: More than $20 million.
Air date: October 2012
Shark: Lori Greiner
Deal: $200,000 for a 20% equity stake
Aaron Krause, 46, had invented buffing pads to use in his car-polishing business in Folcroft, PA. To scrub his greasy hands, he used a piece of polyurethane he put inside the pads. It worked like a charm. When his wife asked him to clean the filthy lawn furniture, he tried the sponge and found that it removed dirt without scratching the finish. It worked just as well on dishes, drying quickly and resisting odors. He cut out two holes for fingers and a smile that could wrap around silverware. He first sold the sponge in a small chain of grocery stores, then on QVC, but sales didn’t explode until his Shark Tank appearance. He’s since added products including Scrub Mommy, which is soft on one side and rough on the other.
Product: Toilet stool
2015 revenue: $18.7 million.
Air date: November 2014
Shark: Lori Greiner
Deal: $350,000 for 10% equity stake
Robert Edwards’ mother Judy was constipated. He’d read that raising knees above the hips could ease the problem so he designed a horseshoe-shaped footstool that fit around the front of a toilet. It worked well for Judy, 67. Next she and Robert, 40, made some wooden stools and gave them to friends as Christmas gifts. In 2012, they started selling white plastic versions of the stools online. Their Shark Tank appearance spiked sales but the $29 stools also got a huge boost from a whimsical YouTube video of a unicorn using a Squatty Potty to excrete rainbow-colored soft serve ice cream. The video has 19 million views and counting. Radio Host Howard Stern is a Squatty Potty fan. The company has 10 employees in St. George, UT and Robert is predicting 2016 sales of at least $25 million.
Product: Holiday clothing
2015 revenue: Between $10 million and $15 million.
Air date: December 2013
Shark: Robert Herjavec
Deal: $100,000 for 10% equity stake
Corporate lawyer Evan Mendelsohn, 32, was tired of working 80 hours a week drafting contracts and endodontist Nick Morton, 34, was sick of doing root canals when Mendelsohn noticed the popularity of holiday parties where people wear ugly Christmas sweaters. Googling led him to the conclusion that there was no central spot for buying the sweaters. He suggested to Morton, his friend from their days at University of California at San Diego, that they start a company selling a line of whacky holiday sweaters. Together they invested $140,000, designed the sweaters themselves, and sold out the first batch of 5,000 by December 1, 2011. TheShark Tank appearance was “like throwing gas on a fire,” says Morton. Their San Diego company has branched into other holiday wear, like a $35 stars and stripes t-shirt for the Fourth of July and $25 green plaid St. Patrick’s Day leggings.
Product: Smartphone breathalyzer
2015 revenue: Between $9 million and $10 million.
Air date: September 2013
Shark: Mark Cuban, Lori Greiner, Robert Herjavec, Kevin O’Leary, Daymond John
Deal: $1 million investment for 30% equity stake
Serial entrepreneur Charles Yim, 32, says he was out drinking with colleagues when he was inspired to invent a $50 breathalyzer that plugs into a smartphone. Shortly after the show aired, two Silicon Valley venture capital firms invested an additional $700,000. Yim then went through Stanford’s medical accelerator program, StartX, and formed a partnership with the Cleveland Clinic. He also won a Shark-Tank-like competition called Extreme Tech Challenge, hosted by Richard Branson. Yim is getting set to launch another smartphone plug-in device, called Mint, which will sell for $99. It quantifies the bacteria in the user’s mouth, indicating problems like gum disease. Next up: A breath-analysis gizmo that can measure fat burned. Yim is shooting high. “Weight loss is a $200 billion market,” he says. “We’re going to be a billion-dollar company.” He’s expecting to add 20 to his Burlingame, CA staff of 30 by year’s end.
Product: Obstacle course races
2015 revenue: $8.4 million.
Air date: April 2014
Shark: Mark Cuban
Deal: $1.75 million for a 25% equity stake
Six years ago insurance litigator Brad Scudder, now 33, suggested to law school buddy Rob Dickens that the two try putting together a company that staged obstacle course races. Dickens, then practicing law at Milbank, Tweed, Hadley & McCloy says he was “pretty tired of the greed on Wall Street,” and ready to give Scudder’s idea a try. The pair’s strategy was to offer a challenge to contestants that included daunting features like fire pits along with fun contraptions like trampolines, and to make the races a doable 5K. With the rising popularity of experiential entertainment, Dickens, 37, says Shark Tank staffers reached out to their Boston-based company, which had annual revenues of $4.3 million in 2013. The TV exposure boosted awareness of their Rugged Maniac race brand, says Dickens, helping it double revenue in two years. The company now has 40 employees and races in 28 cities in the U.S. and Canada.
Tower Paddle Boards
Product: Stand-up paddle boards
2015 revenue: $7.2 million
Air date: March 2012
Shark: Mark Cuban
Deal: $150,000 for a 30% equity stake and the right of first refusal to invest in founder’s future businesses.
Stephen Aarstol, 43, had just hired his first employee at his San Diego start-up, which sold stand-up paddle boards online, when he got a call from a producer at Shark Tank in 2011. Despite extensive prepping, at the taping in Los Angeles he forgot his lines. “I froze in the middle of my pitch,” he recalls. Despite the flub, Mark Cuban liked Aarstol’s strategy, selling his fiberglass and inflatable boards direct to consumers from his website. His prices range from $500 to $1,000, half of what buyers pay for comparable boards in stores. Aarstol says he learned Internet retailing from his previous venture selling high-end poker chips online, though that business faded. He doesn’t pay for Google ads, instead focusing on optimizing his website with content so that it appears at the top of Google searches. His Shark Tank appearance gave Tower a huge boost, sending revenue from $265,000 in 2011 to $1.3 million in 2012. This year he’s planning to add three employees to his staff of six and with Cuban’s encouragement, will sell beach-related products like trendy wood sunglasses.
Grace and Lace
2015 revenues: $6.4 million
Product: Women’s apparel
Air date: November 2013
Shark: Barbara Corcoran
Deal: $175,000 for a 10% equity stake.
Melissa and Rick Hinnant’s business was born of tragedy, Melissa, now 36, had been hospitalized in the spring of 2010 after going into premature labor. For the two weeks before her stillborn birth, she took up crocheting, eventually crafting a pair of frilly boot socks that drew copious compliments. In 2011 she offered the socks on the DIY site Etsy and sold out 400 orders in two days. Melissa hired local seamstresses to help and after four months, Rick, 42, who says he relies on prayer to guide his decision making, started applying to Shark Tank. He got nowhere after five tries until a friend connected him to a producer who loved the couple’s tragedy-to-triumph story. Rick says Corcoran helped them get coverage in Cosmopolitan and Success magazines. They now use 25 Asian manufacturers, which produce a range of women’s apparel, 70% of which sells direct on Grace and Lace’s website at handsome margins. A $34 product typically costs $5 to make, says Hinnant. Based in Austin, TX, the company plans to add 5 to 10 people to its staff of 45 employees.
Product: Portable lamp
2015 revenue: More than $6 million.
Air date: January 2015
Shark: Robert Herjavec
Deal: $350,000 for a 10% equity stake.
Jakarta-born Max Gunawan, 35, was designing store interiors for GAP when he says he started “tinkering and building stuff” after-hours, eventually coming up with a portable lamp thatconceals itself in what looks like a hard-cover book that fans out 360 degrees. The light shines through its Tyvek pages, from thin LEDs hidden within the book’s covers. Its rechargeable battery produces eight hours of light. The $190 Lumio, which sells on the company’s site and in select stores including both the San Francisco and New York museums of modern art and Neiman Marcus, can be mounted on the wall or hung from the ceiling by a leather strap. Gunavan quit his Gap job and launched Lumio in 2013 on Kickstarter, where he set out to raise $60,000 but wound up with $585,000. He says his profit margin is 15% and his biggest challenge is keeping inventory in stock. This year he’s adding three to his three-person San Francisco staff and introducing a pocket-sized $125 mini-Lumio. All the sharks made pitches but Herjavec offered the sweetest deal.
Tom + Chee
Product: Restaurant chain
2015 revenue: $5.4 million
Air date: May 2013
Shark: Barbara Corcoran
Deal: $600,000 for a 30% equity stake.
When Trew Quackenbush, 38, met Corey Ward, 40, Quackenbush was working with Ward’s wife at a Cincinnati restaurant called Palomino, where Quackenbush was executive chef. Ward was an art director at a company that made novelty playing cards. The two pooled $2,400, and, helped by their wives, set up a food tent in Cincinnati’s Fountain Square where they sold home-made tomato soup and grilled cheese sandwiches. The tent was a hit and they started opening restaurants. By the time they went on Shark Tank, they had sold one franchise (franchisees pay $40,000 up front and turn over 6% of sales), and they had a healthy 20% profit margin in their restaurants. Menus include a salad with grilled cheese croutons and a range of grilled cheese donuts made with ingredients including chocolate mint candy and lemon mascarpone. The episode aired on a Friday and by Monday morning, Ward says they had gotten 2,400 franchise requests. He and Quackenbush now own four restaurants and they have 31 franchisees.
Nuts ‘N More
Product: Protein-enriched nut butter
2015 revenue: $5 million
Air date: March 2013
Shark: Robert Herjavec and Mark Cuban
Deal: $250,000 for a 35% equity stake
Friends Peter Ferreira, 35, Neil Cameron, 41, and Dennis Ianotti, 40, were fitness buffs sick of drinking chalky protein shakes. To cook up an alternative, in 2010 they convened at the Portuguese bakery in Providence, RI run by Ferreira’s parents, and concocted a line of nut butters fortified with protein and flax seed and infused with flavors like cinnamon raisin, white chocolate and pumpkin spice. The butters range in price from $7 to $15. The partners had sold $100,000 worth when Ferreira, who worked a day job as a web developer, applied to Shark Tank. The show “opened up the door to the mass market,” says Ferreira, who now works for Nuts ‘N More full time, while Cameron has hung onto his job as a manager at drugmaker Sanofi and Ianotti still works for a marketing firm. Nuts ‘N More sells from the company website and through GNC, The Vitamin Shoppe and Whole Foods. Ferreira says the sharks have helped him negotiate better deals with suppliers and upped margins to 50%. Nuts ‘N More has its own store in Providence and 12 employees.
By Susan Adams