Thursday, April 28, 2011

Watch Shark Tank - Week 1 /Episode 2 - Toygaroo

The following are actually REAL negotiations between entrepreneurs and investors (Guppies & Sharks). The sharks invest their own money at their discretion. The guppies get devoured into a belly of finance, or spit back into the ocean of hard knocks to fend for themselves. The entrepreneurs must convince the sharks to invest the FULL AMOUNT, or walk away with NOTHING.



THE GUPPY: Nikki Pope, Los Angeles CA
THE COMPANY: Toygaroo
SYNOPSIS: Toygaroo offers a cost effective way for parents to de-clutter their homes and keep their children challenged and entertained.
SEEKING: $100K In exchange for 10% Stake.


PRODUCT/SERVICE: Toygaroo is the NetFlix for toys. Consumers can visit the website, pick a plan that's right for them, fill their wishlist with toys they'd like to receive for their little spoiled snotty-nosed brats, and have them shipped to their doorstep. The added bonus is that when the kids get bored with or outgrow the toys, they can throw them in the box, use the provided return label, send them back to the company, and the company will send them their next box of toys.

WHAT'S THE SKINNY?: There are over 300 different types of toys in the catalog. Toys get sanitized and shrink wrapped upon return, and there are no competitors in the field. As far as damage control, 0 toys had to be replaced in 6 months. If a child does break the toy, it's sold to the member at a discounted cost.

BUSINESS MODEL/HOW DOES IT MAKE MONEY?: All members have a membership fee of $35-$85/Month. At a test launch, 500 members paid $42/month for a box of toys worth over $200, but it cost the company $50-$90. In about 2 1/2 months the company breaks even on each customer. Nikki wants more marketing and exposure. She has got a waiting list of over 1,000 people just through word of mouth in a small amount of time. For every $1,000,000 in sales there must be $64,000 reinvested in toy inventory to cover 1 year of toys. Kevin tells Nikki she doesn't have a $1 Million Dollar Business, but nevertheless he still wants to invest.

STATS: Nikki owns 10% of the company, but has power to make decisions.
Kevin offers $100K for 35% Stake. Mark & Robert offer $200K for 40% Stake.

So Kevin offers $100K for 35%. Nikki came in targeting Kevin for his experience with big toy companies. Nikki wants Kevin, a self-proclaimed 'control freak' to RAISE HIS CASH OFFER without raising the equity percentage. Robert then turns to Mark and offers to SPLIT a deal with him offering $200K  for a 40% Stake to trump Kevin's offer of $100K for 35%. Experience (in the toy industry) vs. Capital. But Mark and Kevin also have experience with internet growth and social networking. What a shootout. The palms might be a little itchy as Nikki asks Kevin to MATCH Mark & Roberts $200K in order to close the deal with her. But no sooner than Kevin agrees to Nikki's terms, he turns to Mark and makes him an offer to SPLIT the deal with him instead, cutting Robert out in less than 2 seconds!,  As the murky waters of equity are shaken and stirred in the SPLIT-SECOND DECISIONS of this foaming financial feast! Nikki finally closes the deal with Mark & Kevin for $200K in exchange for 40% Stake in the company, as the jaws of the Great White & the Bull Shark, sink their teeth into the flesh of the 'fresh meat' of Toygaroo, ........ another guppy digested in the capitalistic waters of th SHARK TANK, all in a days work.

CAME IN SEEKING: $100K for a 10% Stake.
WALKED WITH: $200K for a 40% Stake.
GRADE: (Guppy): B
GRADE: (Sharks): A
COMMENTARY: I think Nikki could have pressed  for and gotten $200K for 35% if she would have negotiated a little tougher. That's actually what I thought she got at first until I realized Kevin said he'd MATCH their offer. But still all in all, she got more finance than she came for. But at what cost? Well, ... in the end she still pretty much came out on top. She accomplished her goal of securing more finance. Good job Nikki!


"We make money by making friends, and we enlarge our circle of friends by making money for them, by helping them, by being of service to them. The first Law of Success then is SERVICE. And this in turn is built on integrity and justice." - Charles F. Haanel


CHECK OUT THE SHARK FINS SECTION FOR ARTICLES AND INTERVIEWS. ALSO CHECK OUT THE SHARK TEETH SECTION FOR HELPFUL TOOLS OF THE TRADE.

WHAT DO YOU THINK? COULD SHE HAVE GOTTEN THE SAME CAPITAL (OR HIGHER) WITH A LOWER STAKE? WHERE THE SHARKS FAIR IN THEIR NEGOTIATIONS? DID BOTH PARTIES COME OUT ON TOP? POST YOUR COMMENTS AND TEST YOUR NOODLE AT THINKING LIKE A BILLIONAIRE...........


1 comment:

  1. Great site! I don't think toygaroo is doing so well. They halted new sign ups due to "explosive growth" and have taken down their facebook page due to numerous complaints. Their rating on BBB.org is a D. Oh, they don't answer their phones either. I think the sharks Mr. Wonderful and Mr. Cuban are getting their fins eaten with their 200k di-vestment. One for the guppy!

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