'Shark Tank' founder agrees a deal with Kevin O'Leary — despite other judges warning him against it
Among the investors on "Shark Tank," Kevin O'Leary is known for his cunning negotiation skills as well as harsh criticism that can break an entrepreneur's confidence. Hence, entrepreneurs come to the show keeping in mind that it won't be easy to clinch a deal from Mr. Wonderful's jaws. Even the other sharks on the panel are wary of him. However, Winston Mok, the founder of Woosh, not only aimed to get an investment from O'Leary but went against everyone's advice to take a royalty deal.
Mok entered the "Shark Tank" seeking $500,000 for 10% of his advanced air filter company. He explained how changing the air filters of HVAC devices can be a pain point for consumers as they don't know when to do it. He then demonstrated how his patent pending smart air filter worked. He explained that his filters came with integrated sensors that connect to Bluetooth and sense when the filter needs changing. "The smart air filter is made of two parts, a filter and a reusable frame. The filter connects to Wi-Fi and has integrated sensors that track the performance of your filter so when it's time to change we send a notification and a filter replacement in the mail," the founder said.
He came up with the idea during the 2019 California Wildfires and told the Sharks that he had quit his job at Google to dedicate himself full-time to the business. Since the company was pre-revenue, O'Leary was the first Shark to offer his thoughts on the business, saying that the 5 million valuation doesn't make sense. Mok then revealed that the company had already raised $62,000 and had struck a partnership with Emerson's 'The Sensi,' which is a Fortune 200 company and a 130-year-old HVAC giant. "They want to bundle our product with their smart thermostat," he explained.
"Oh now that's interesting," O'Leary remarked before claiming that the bigger players in the market could still crush Mok like a "filter roach." The entrepreneur then claimed that the other big players didn't see them as competition but as partners, and they were working to create smart thermostats for homes. "It's all about licensing and licensing, I tell you," Mok said to O'Leary.
"Listen, Winston, I've heard enough I'm going to make you an offer because you're my favorite filter roach," Mr Wonderful said. He then offered the $500,000 but for 12.5% equity and something more. "I want 50 cents royalty on every filter," O'Leary told the founder. When asked when it would stop, O'Leary said, "Never. Oh, well maybe when you and I are both dead!" After O'Leary's offer, the Sharks started dropping out one by one.
It all then came back to Mr Wonderful, who was drooling over the royalty deal. However, Mok wasn't willing to give up both equity and cash flow, so he countered O'Leary with an offer of 12% instead. "I'm not doing it for 12. I want 15%! I feel a little insulted that you just let me sit there listening to all these sharks squawking," O'Leary said in response. When O'Leary started to push Mok for a deal, the other sharks kept telling him not to accept the offer. "It's insane! I believe that's the fastest way to go out of business," Cuban remarked. However, Mok wasn't ready to leave the tank without a deal.
He told O'Leary that he would be willing to do the royalty deal if O'Leary came down a bit on the equity side. "So, if I stay at 10% on the equity, you'll do the 50 cents?" the Shark asked. As soon as Mok said yes, O'Leary struck a deal.
In the end, Mok said that he did not feel gamed even a bit. "I feel amazing and I'm so happy Mr Wonderful called me the filter roach. Now I'm the filter grasshopper and now I'm going to learn from the master," he said as he left the tank.
