'Shark Tank' contestant gets forbidden from taking Kevin O'Leary's greedy deal by other judges
Kevin O'Leary is one of the most ruthless negotiators on "Shark Tank," and he focuses on squeezing out maximum profits for himself. He tried to cut a similar deal with the founder of 'Hampton Adams', Seneca Hampton. But he was saved from a greedy royalty deal with Kevin O'Leary by the other sharks. While the entrepreneur, who created an innovative athletic tape, had just one $500,000 offer on the table, he chose to take the advice of the sharks and leave the show empty-handed.
Hampton entered the Tank seeking $500,000 for 10% equity in his company. In his pitch, he explained how all athletes need tape to enhance their performance and prevent injuries, but how it can be a hassle to cut and apply such tape. Thus, to solve this problem, he created Hampton Adams, an easy-to-tear-off yet strong athletic tape. He then demonstrated the tensile strength of the tape by lifting a 45-pound weight with a strip.
Hampton shared that he had made $24,000 from sales. When the Sharks gasped at the tiny amount, he added "yesterday" with a dramatic flair. He then shared that the lifetime sales of the company were $12.2 million, and the product was primarily sold on Amazon.
He further shared that the sales for the current year were projected to be $6.2 million, but his margins were only 20% as he spent 20% pre-tax cash on ads. He added that he needed the help from Sharks to keep up with inventory, and he already had offers to sell the company.
Robert Herjavec stepped back first, raising concerns over the cash problem of the business. He thought the problem would ultimately kill the business, and Hampton should sell it before it comes to that. When the entrepreneur asked if Herjavec would be interested in buying it, he politely declined before dropping out.
Next was Mark Cuban, who complimented the entrepreneur and asked if he would be interested in coming to work for him. However, Cuban felt the business wasn't investable, so he dropped out as well. Lori Greiner praised the product, but she wasn't interested in making a deal. Barbara Corcoran felt Hampton needed to get really smart, really fast, but she was out too.
This left the entrepreneur with only O'Leary, who seemed to be interested. After complimenting the product, O'Leary put out a classic offer of $500,000 for 10% but with a $1.50 royalty until he gets $1.5 million back. "I'm trying to make a million off my $500,00. I'll take the 10% because you might sell it before I ever get back my dollars. I got to be honest with you, I don't know how else to do it," O'Leary said.
Before Hampton could make a counter, the other Sharks jumped in to help him. "You can't do this deal, Seneca. You're digging a deeper hole. I'm going to use Kevin's own quote, I forbid you to take this deal," Herjavec told the entrepreneur. Cuban too chimed in, saying that he didn't have enough margins to pay a royalty to Mr Wonderful, so it was a bad deal.
While O'Leary argued that the royalty would go away after he made a million dollars, the other Sharks felt Hampton had better options. After some back and forth, Hampton chose to take the advice and decline O'Leary's offer.
While the entrepreneur refused to make a deal, it appears that the business is still going strong. Hampton Adams is still selling on its website and Amazon.
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