Mark Cuban took a million dollar gamble on this 'Shark Tank' product and it went as expected
Million-dollar deals are a very rare thing on "Shark Tank," and in its long run, only a few entrepreneurs have managed to get it from heavyweights such as Mark Cuban. Among them were the founders of Beatbox Beverages, Justin Fenchel, Brad Schulz, and Aimey Steadman. The trio impressed the Sharks on the show with their fun and innovative beverage and left with a $1 million deal from Mark Cuban. In the end, the gamble paid off after the company made a remarkable comeback.
In the episode, Brad, Aimy, and Justin entered Tank Season seeking $400,000 in exchange for 20% of their business. They began their pitch by explaining how taking a bottle of wine to parties was boring, and their product was set to change the game. They demonstrated that their brand of beat box-shaped alcoholic beverage had a fun and vibrant look, and the orange wine drank more like a spirit. The claimed BeatBox Beverages allowed the user to create mixed drinks and get creative, to make parties more fun.
Sharing the backstory, the trio explained that they met in business school in Austin, Texas, and came up with the idea when Justin wanted an alternative drink to bring to parties and events. Going beyond the 30-pack of beer or a box of wine, they decided to create a mix of flavored drinks that came in a box.
As they passed out samples and all the Sharks loved the drink except for Kevin O’Leary. Mr Wonderful, who is a famous wine seller and connoisseur, didn't like the flavors of the drink. When asked for the numbers, the trio explained that they had been self-distributing with a co-packer making their product. Their revenues were over $235,000 in the year before filming, and they were projecting $120,000 in sales in the coming quarter at the time. They shared that each box of BeatBox beverages sells for $19.99 per box, delivering great value. But they also revealed that they had $100,000 in debt.
While O'Leary didn't like the taste, he did see potential in the company as it could go viral and kill it in some markets. Before he could make an offer, Barbara Corcoran jumped in to make things interesting. She offered the $400,000 for 20% equity and sat back in her chair to hear more from others.
O'Leary then made his move, offering $200,000 for 20% as he claimed he’s worth twice as much as Corcoran. "I'll give you two 200,000 for 20% because I think the business is worth a million bucks right now," he said. "So you're cutting Barbara's offer in half," Robert Herjavec interjected.
At this point, Cuban jumped in to offer his two cents. He explained to the trio that he didn't see it as a wine product but something much more. "I don't see this as a wine product. You guys got that down, right? You guys don't sell wine, you guys sell fun!" he said. He explained that the company needed to reach more people quickly and grow at breakneck speed. "You need a lot of help if you want to create as big a splash as possible, and I think I'm best suited up here to do it," he claimed. He then offered the trio $600,000 for 33% equity, which would make him a partner in the business.
The entrepreneurs said that they weren't willing to give up so much equity, thus, they countered with an ask of $1 million for 33% equity. To everyone's shock, Cuban accepted the deal and closed it with the founders.
In an update shared with CNBC Make It last year, the three co-founders explained that Cuban's gamble paid off as the company hit big milestones after appearing on "Shark Tank."
