'Shark Tank' judges team up to persuade entrepreneurs to take Daymond John’s life-changing offer
Investors on "Shark Tank" are mostly seen competing with each other to seal the deals for lucrative businesses, and at times, they even ruthlessly cut each other off. But on some occasions, they collaborate for joint deals or just come together to help each other as well. They did so when Daymond John tried to strike a rare royalty deal with the founders of 'Flated' on the show. While the three entrepreneurs, Ken, Monique, and Ryan, hesitated to close, Mark Cuban, Kevin O'Leary, and Lori Greiner jumped in to convince them to take John's $350,000 royalty deal.
The entrepreneurs entered the Tank seeking $350,000 for 5% of their company. During their pitch, they explained how their innovative product, which looks like a backpack, can hold all their gear for a road trip. They showed how traditional carriers are a hassle to take down and store, and how their inflatable air carrier, Flated, solved that problem. They claimed that it is the first rigid air carrier, topper, and deck that maximizes storage potential but minimizes storage problems. They further introduce their inflatable beds as well for the campers.
Ryan then shared the backstory, telling the Sharks how they pioneered inflatable paddleboards, which became a huge success, now dominating 90% of the paddleboard market.
O'Leary then asked about the numbers, and the entrepreneurs shared that Flated had achieved $277,000 in sales so far in the year of filming, and they were on track to reach $600,000 by year-end. They added that their best-selling product, the Air Topper, costs $740 to manufacture and sells for $1,800, with a healthy margin.
With everything laid out, the Sharks soon started making moves. Greiner was the first to drop out as she thought the $1 million valuation was too high. O'Leary followed the lead, citing the same problem. Cuban, too, dropped out as he felt that the product lacked the potential to achieve rapid sales growth. Herjavec admired the product but felt like the founders lacked the drive to run the company as they were working part-time.
In the end, it was only John who was interested in making a deal. He offered the trio $350,000, not for equity, but in exchange for an 8% royalty per unit until he got his money back.
Furthermore, John wanted to take 5% royalty in perpetuity after recouping the investment. As the entrepreneurs debated the deal, O'Leary and Cuban jumped in to justify it. "I think it's a very fair offer. Right now, you get to keep your equity, which means you stay in control of the business," O'Leary said. "Given the equity you would have to give up and the value you would have lost, it isn't a bad deal," Cuban added.
Ryan then countered with an offer of 7% royalty until the investment is recouped and then a 4% royalty in perpetuity. However, John refused to accept that. At this point, Greiner chimed in saying, "Remember, how you're going to feel if you walk out of here and you don't take his offer because. If I were to give you a little advice, I think you really could use him. I think he would really help you." After this, the trio accepted John's offer and closed the deal.
As per "Shark Tank" Recap, the deal was successfully closed, and Flated witnessed substantial growth as well. The company is still active with its products available on its website and Amazon.
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