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 GUPPIES: Michael Szymczak and Jason Lucash
THE COMPANY: Orig Audio
SYNOPSIS: A way to turn ANYTHING into a speaker
SEEKING: $150K for a 15% stake
PRODUCT/SERVICE: Using vibration technology to turn anything into a speaker (literally). The products are Folding eco friendly speakers powered off your iPod. And an audio player called The Rocket.
WHAT'S THE SKINNY?: Within 1 year they had $750K in sales. $500K from the folding speakers, $250K from The Rocket which retails for $44.99. The product is sold in over 500 stores across the country. They don't take any salaries so they haven't netted anything yet so there actually is no profit. The Rocket is licensed from a factory in china that needs to be renewed in 5 years. They were also asked to come on QVC with their product.
STATS: Kevin thinks the value they want for their business is a problem because they haven't made any profit so he's out. Mark Cuban doesn't want to get into a negotiation battle with the other sharks, so he decides to add a very interesting twist to the negotiation: He tells them he'll give them $150K if they give him a percentage they'd like, only if they ignore the other sharks. He gives them a 24 second shot clock on the decision and won't even allow them to even consider any of the other sharks offers. The other sharks aren't too fond of this and begin to make offers. Daymond offers $300K for a 100% stake. Barbara offers $150K for 25% and the connection of her partner in new York who owns As Seen On TV. Robert offers $150K for 15% plus the opportunity to get more funding when needed. This almost turns into a feeding frenzy until Mark Cuban drops out due to his shot clock violation not being adhered to. Mike and Jason decide to call a time out and step out into the hallway to think it over. When they return they decide that they like the idea of uncle Rob being in their pockets so they close the deal with Robert and walk out with the exact amount they came in for....
CAME IN SEEKING: $150K for a 15% stake
WALKED WITH: $150K for a 15% stake
GRADE: (Guppy): A+
GRADE: (Sharks): A+
COMMENTARY: Mark Cuban got, a little, ... let's just say, real creative on the negotiating end of this one with some fancy maneuvering. The sharks were pretty much all over this one as well. Jason and Mike managed to get the exact amount they came in seeking without giving up any more equity! Very good job. They executed.
WHAT DO YOU THINK? COULD THEY 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...........