Narrator: Tonight on "Shark Tank,"
Katrina Lake, the founder of billion-dollar
online fashion company Stitch Fix
joins the Tank.
I had the exact same epiphany.
What you guys have done is amazing.
I love this business.
Yes, you can tell, and it's infectious.
Look, I see two cockroaches with glasses on.
You know, we think this is a really fair offer.
Katrina, they've said no to you seven times in different ways.
Don't you want me? Don't you want me?
[ Laughter ]
Cuban: You got to decide right now.
I don't want to even deal with all these meatheads.
Narrator: First in the Tank is a reinvention of a product
that hasn't been innovated in over 100 years.
-Hi, Sharks, I'm Lindsay. -And I'm Asher.
And our company is Bite Toothpaste Bits.
We're asking for $325,000 for 5% of our company.
People first used to brush their teeth with this --
Ox hooves and bones.
Mmm! And then in the 1800s, we started using this --
-Eggshells and soap. -A little better.
And then, in 1886, there was a major innovation --
the first toothpaste tube was invented.
And after 150 years, toothpaste hasn't really changed.
And why? Toothpaste sucks.
Sharks, we are swimming in plastic.
About 1 billion plastic toothpaste tubes
end up in our landfills and our oceans every single year,
and even though people care more about what they're putting
in their bodies now, most toothpastes are still filled
with things like artificial flavors and preservatives.
And that's not good because we swallow 5% to 7%
of our toothpaste every single time we brush our teeth,
or 1.4 gallons over the course of your lifetime.
Bite Toothpaste Bits are dry tablets
that are not only good for your teeth,
they're good for our bodies and the planet.
And our bits come in glass jars that are fully recyclable,
but they're meant to be kept and refilled
with our compostable refill packets.
Meaning no more plastic toothpaste tubes in landfills.
It's as easy as bite, brush, repeat.
Big paste is on a race to the bottom.
And they've gotten away with gunking up our bodies
and our planet for far too long.
Who's ready to take a bite out of big paste with us?
How does it work?
You all have jars in front of you.
You just pop a bit in your mouth, you bite down,
and you start brushing with a wet toothbrush,
and it's gonna foam up like magic.
There you go! There you go, there you go, there you go.
I've brushed before.
So, our tablets... [ Laughs ]
...they're flavored with natural mint peppermint oil.
-[ Gurgling ] -[ Laughs ]
Lori, your face is priceless.
[ Laughs ]
So, is the goal here because the toothpaste
isn't as healthy for me as your product,
or are you just trying to get rid of the plastic?
Well, it's two-fold.
So, when I created this,
I was traveling full time for work,
and I went through those little toothpaste tubes,
and I was like, "This is so wasteful."
So I started looking into alternatives,
and that's when I learned about all
of the really nasty chemicals that's in most toothpastes,
and I was like, "I don't want those in my body."
So I started looking into how I can make my own.
I'm not a dentist, and I'm not a chemist,
so I made friends with them. -[ Laughs ]
I talked to every dentist and every dental hygienist
I possibly could, I took online chemistry classes,
and I tried almost 100 different ingredients,
putting together our formula that we use in our tablets.
And she was hand-cranking these in our living room.
-[ Chuckles ] Yeah. -Seriously?
Are you married?
Yeah, well, we've been dating for six years.
Want me to marry you now?
[ Laughs ]
-You know, I do that. -I heard you're ordained.
Yeah, it's true. 'Cause I'm just wondering,
six years, like, let's get going here.
-Yeah, exactly. -We got companies to build.
Lake: So, Lindsay, so this was me.
So, I travel a ton, I had the exact same epiphany of just,
like, "What are all these chemicals in the toothpaste?"
I went down this rabbit hole.
I don't think I found you guys,
but I found a tablet-based toothpaste,
and the dentist told me, "Don't use that,
it doesn't have fluoride, and you need fluoride."
We're actually in development with a fluoride line.
We are in the middle of testing right now,
and we will be seeking ADA approval,
and we will be the only fluorinated tablet
on the market in the U.S.
I wanted to speak to how it tastes --
Lindsay, I just learned from Katrina here
that there's competition.
There's lots of other people doing this, right?
McCormick: There's a few on the market.
The form of toothpaste in a tablet is not new.
What is new about ours is that it comes in glass bottles,
compostable refill packets, and we're 100% palm oil free.
Lindsay, do you guys have sales?
Uh, we're on our way to $1.3 million.
-Oh, that's good. -Wow.
-Boom goes the dynamite! -In 10 months.
So, when I came up with it, I figured no one would buy it,
but I knew I wanted it,
and that would be great, and that's enough.
So, I built this site on Shopify,
and then a popular women's magazine was like,
"We would like to, you know, showcase this."
So, we took -- It was like an iPhone video,
like, you know, me brushing my teeth.
Within a day, it was like 2 million views.
-That's amazing. -Have you taken any money?
-Zero dollars raised. -And no debt.
What do you sell it for? What does it cost you?
Uh, the 1-ounce bottle, which is our 1-month,
that costs $12 plus shipping.
Um, for the 4-month, that's $30, shipping is included.
That is a subscription.
What's your cost on this?
Our cost on that, shipped, is about $3.50.
-Wow. -All right, guys, look,
all of the Sharks here over a decade...
...have learned that when they get a hit
that is a non-proprietary consumer good...
...they get knocked off el pronto
by many, many, many knock-offs. -So, we already had --
I think something's that's also pretty extraordinary,
it's our customers.
They are very vocal.
So, my first version of these had a small amount of palm oil,
and our customers were like,
"Hey, you have palm oil in your formula.
What is this?"
And I was like, "Oh, wow, you're right.
Palm oil is responsible for the devastation
of the rainforests in Indonesia
and the orangutan population,
and that doesn't align with our values."
So, we completely reformulated our entire line
within four months.
Once we did that, our sales doubled that month,
and they've continued to climb.
That's great, you're listening to your customers.
-You're just online? -Yes.
You're 100% online?
We are entirely direct-to-consumer right now.
How many subscribers do you have? What's your churn?
Yeah, so we have just under 10,000 subscribers.
You know your customer acquisition cost now?
Yeah, our customer acquisition cost, blended, is about $4.50,
and our AOV is close to $27.
-That's great. -That's nice.
[ Chuckles ]
Can you keep this run up
with these phenomenal customer acquisition margins?
Because they're great. What you've done is amazing.
When there's nothing proprietary,
and when you get a full-fledged binge of knock-offs,
I think your customer acquisition goes up
and your margins go down,
and then all of a sudden, it's a real cat fight.
Consumers are becoming incredibly conscious,
and they're looking for products
that are truly trying to make a difference.
But it's our base that is fanatical about us
that will help us continue to grow --
Look, I can't think of a more competitive shelf.
It's more competitive than pretty well anything else
in terms of just linear foot, gross margin,
the fighting it out, all that stuff.
And especially with that backdrop,
I mean, what you guys have done is amazing.
And doing this all bootstrapped
and in this short period of time,
and the product is awesome,
and the packaging is great, and the brand is great.
But I think this is a really crowded space
and potentially getting even more crowded.
I wish you guys had fluoride in the formulation.
So, with that, I'm out.
-Thank you. -Thank you.
I guess I'm sitting here, I'm thinking,
"How can -- How can --"
You're only offering me 5% for $325,000.
Like, where do I fit?
Maybe this isn't a business that needs funding right now.
We don't want dumb money.
We've had institutional investors approach us.
We look at all of you guys that are up here,
and we want a Shark.
Look, not in a million years would I do it for 5%.
I'd do the $325,000 for 20%.
$325,000 for 20%.
Thank you for your offer, first of all.
I'll tell my reasons why, listen.
I'm just telling you right now, what I look at
is risk versus reward, and I think the margins
a year from now will be significantly less,
and your customer acquisition costs will be higher, too.
You know, using the "Shark Tank" platform
in a consumer product like this is fantastic,
but it doesn't make you impervious to competition.
It just brings in a lot of knock-offs.
That's my offer. I'll give you $325,000 for 20%.
Well, listen, I usually find that the most successful people
have the strongest principles.
They believe in something so much that it drives them,
and clearly you have that.
But I'm really kind of on the fence about this.
I tend to follow my gut, and I think here, I'm gonna go out.
Guys, I love it when there's a stodgy old industry,
and somebody walks in and says,
"Let's just turn this upside down."
Are you guys selling on Amazon at all?
Hunt: We experimented with it, and we took it off.
Because we just wanted to focus on building
our relationships with our customers direct to consumer.
But that's where your knock-offs can take root.
Yes, we would definitely consider going back on Amazon.
When you run with the elephants,
there's the quick and the dead, right?
Right. We've stayed away from Amazon because of that.
However, our customers are looking for us on Amazon.
On Amazon, exactly.
And we should be there for them.
So, guys, I'll make you an offer.
Narrator: Three Sharks are out.
Asher and Lindsay are seeking $325,000
for 5% of their toothpaste tablet company, Bite.
Kevin has offered $325,000 for 20% of the company,
but Mark is also interested.
So, I'll give you the 325K, but I need 15%.
Wow, you're undercutting Kevin.
Uh, what would you think about doing $325,000 at the 5%,
and then we give you an additional 2% as an adviser?
2%? Guys, look, if I'm --
If you really want me to work,
if you really want me to take all our Amazon expertise
and get you specialty Prime locations,
into their different programs for sustainable products,
7%, even with 5 plus 2, you know, is not gonna get it done.
-[ Chuckles ] -Hmm.
So, would you have any flexibility on how much equity
you're willing to part with today?
'Cause, I mean, we're quite far apart.
Oh, and by the way,
Kevin had an offer on the table 20 minutes ago.
Yeah, I'm not going to change my offer.
I've been here before.
There's a fair amount of work ahead
and a lot of competition coming.
But I'm not coming down from 20%.
So, you should focus on Mark here and see if you can get him.
Mark's giving you a good offer.
Yeah, um, that's our --
Lindsay, you have something really rare
that very few people come in here with these kind of sales.
You own 100% of the company. -Yeah.
There's no shareholder advisers.
I know, so that's why this is a big deal.
-And it should be a big deal. -That's why I'm like, "Man,
Mark, I want to work with you, but this is a lot."
Herjavec: But it also means you have the flexibility.
He's at 15%, you're at 7%.
So 15%, okay.
What have you decided?
We really, really appreciate the offer, Mark.
We just can't do that to our valuation.
-Understand completely, guys. -It's Mark Cuban.
-[ Laughs ] -I know, and you're such a G!
You don't have to explain.
I respect you guys, appreciate it.
I'll be a customer, and I wish you the best.
Well, hang on! Kevin is left.
Oh, Kevin, I'm sorry. [ Laughs ]
Well, I'm sorry.
It all comes down to Mr. Wonderful.
Thank you very much for your offer.
Now that Mark's out of it, this gives me more leverage.
I'll do it for 25%.
[ Laughter ]
-Congratulations, guys. -Thank you.
-Good luck, guys. -Thank you, thank you.
Thank you guys so much.
-Thank you. -Thank you.
We wanted to work with Mark or Kevin or really any of them,
but to go so far away from what we're asking for,
we just couldn't -- couldn't do it.
It is shocking when someone says no to me.
When was the last time that even happened?
-That was a good offer! -That happens all the time.
Are you okay? Do you need a hug?
Mark, why'd they walk away from that?
They're rolling right now.
When your business is going like this,
and you haven't hit the real adversity yet,
then you don't know.
When things are good, you think they'll be good forever.
Right. Everybody's a genius in a bull market.
I was born and raised in San Francisco.
My mom is an immigrant from Japan,
and my dad is from Minnesota,
so I grew up in a very vibrant, bilingual,
Growing up, I always thought I wanted to be a doctor.
I went to Stanford, I was pre-med,
but ultimately decided that wasn't for me.
After college, I got a job at a consulting firm
working in e-commerce.
I really fell in love with retail,
and I think in particular, apparel retail.
I felt like there was no technology
that really was being applied
to help make the category better.
At Stitch Fix, we take this idea of personal styling,
and we make it accessible to all.
We get to know our clients through a style profile
which you can fill out online.
Based on that, our stylists are able to get to know you
and send you products specifically curated
just for you to try on in the comfort of your home.
Simply keep what you want, send back what you don't want,
and get this great personal experience
for the whole household.
Combining data science and styling
was really not something that people had done before.
Fundraising was really difficult.
Over 50 venture investors said no to me.
Being a female business leader in Silicon Valley,
you don't always feel like your voice is heard.
It's really male-dominated.
I wasn't always obvious, where people thought, "Oh, yes,
of course she's gonna be a public company CEO someday."
In early 2011, we got our first commitment
from a venture investor, Steve Anderson,
and that was really when we were off to the races.
[ Cheers and applause ]
The stock has opened. This crowd is excited.
You can see Katrina Lake over there with her crew.
Lake: In 2017, we took the company public.
At the time, I was the youngest female founder/CEO
to take a company public ever.
I was up there with my family and my son,
who was one at the time,
and I think it was really a symbol of what's possible
being a parent and being able to prioritize parenthood
and your business at the same time.
Stitch Fix today is a company with over $1 billion in sales.
We have over 3 million clients across the whole country,
and we have over 6,000 employees.
I've watched "Shark Tank" for years,
and I love that it showcases all kinds of entrepreneurs.
It's such an important part of helping people to see
that entrepreneurship is not available to only a select few.
What I love about entrepreneurship
is the optimism.
You're believing in something
that lots of people don't believe in,
and you are taking a point of view
that's not a common point of view,
and that optimism is super infectious, really energizing.
It's an environment I love being in.
Narrator: Next into the Tank
is an affordable solution for baby gear.
-Ohh! -[ Laughs ]
Oh! [ Laughs ]
Hi, Sharks, I'm Joe Maier, and this is my mom, Fran Maier.
We're from San Francisco, California,
and we're seeking $500,000 for 5% equity in our business...
-Oh, wow! -BabyQuip!
Sharks, everyone knows that when you travel with kids,
the amount of baggage you have to lug around can be insane.
You need a pack mule just to carry this crazy amount of gear.
But the problem is a pack mule
is pretty hard to come by nowadays.
So, what happens?
The parent becomes the pack mule.
[ Light laughter ]
Joe: Look at this poor dad.
Why can't traveling with kids be easier?
Fran: Well, now, you can have all this delivered straight to your door!
Our online rental platform connects traveling families
to our independent local providers
to supply all of your baby gear needs.
Joe: We offer everything from full-size cribs, car seats,
high chairs, toy boxes, and more.
You name it, we got it.
Simply log onto our website,
enter your destination and travel dates...
Choose one of our local providers to rent from.
From there, simply select any of our clean, safe...
[ Laughter ]
...and insured baby gear.
And it's literally as easy as that.
Once you arrive at your destination,
our providers will deliver your equipment right to your door.
With BabyQuip, we say leave that baggage behind.
So, Sharks, it's time to pack up this mule
and get him out of here.
[ Laughter ]
So, Fran, I have 13-month-old twins.
Oh, I know! That's great.
It is -- It is an adventure to travel.
What does it cost on average?
Like, how much is a double stroller?
Probably $15 to $20 a day depending on the market.
So, you've got to ship it to wherever the location is?
No. Our secret sauce, we have 500 providers.
If I'm the provider, am I saying,
"I'm gonna rent that out for $30,"
or are you setting the price?
Our providers set their own prices.
The providers pick their own pricing?
-So it's not a set menu? -No, no, no.
We are a marketplace for baby gear rentals.
I've never heard of this. Like, every time I go --
Right. That's why we need you!
What do you take from the transaction?
We take 24%.
-24%? -24%? -Greiner: Wow.
That's really healthy. This is so we can build
a business that will scale, that will grow,
and we put more than one provider in every market.
Okay, so, let's go right into sales.
Now that I'm going 24%, which I like.
Mr. Wonderful likes that. -Good.
We started this business in the middle of 2016.
Since then, we've done $3.7 million in gross revenue.
-Wow. -That's top line.
-What's your percentage? -We keep about 24% of that.
Not quite a million on the $3.7 million.
What about investors?
Um, so we've raised $2.4 million to date
on a valuation of $8 million. -Oh.
What do you need the money for?
[ Chuckles ] We need the money
to continue our growth, grow awareness.
This last bunch of money
will get us to profitability next year.
And tell us about you. Tell us about your background.
So, I'm a serial entrepreneur.
My first startup was Match.
-Match? Wow. -Match.com?
-Online dating. -Come on! High five.
-All right, thank you. -Wow.
-Uh, hey, guess what -- -What?
We sold it for way too little, way too early.
Cuban: What did you sell it for?
Less than $8 million.
And it's a long story short --
You sold Match for less than $8?
It's a long story.
-Hey, listen, a lesson learned. -It was pre-Internet, though.
You sold it kind of like pre-Internet.
Yeah, we didn't know, Mark, how good we had it.
We weren't quite as smart as you were.
Lake: What's your background, Joe?
I'm an engineer.
I've kind of been an adviser to my mom over here.
The tech needed a lot of work
and needed something that could really scale,
but the value in our company isn't the technology.
The value is really our providers.
90% of our providers are stay-at-home moms
looking for a side hustle.
They are super passionate. They're always sharing ideas.
I mean, I love this part.
I think, at Stitch Fix, some of the magic of our business
is in the stylists, which is a very similar model.
How much are you paying to acquire on each side?
Okay, so, we are acquiring a customer for about $22, $24.
But you also pay to acquire on the provider side.
Is that right? -Right. They cost $115.
Their value to us is really in the thousands.
I have some who haven't even left.
What does your data tell you the typical use case?
Is it a family traveling in a hotel?
Our data shows that the biggest segment are private residences.
-Really? -These are mostly grandparents.
They really like the service that we're providing.
A third of our business is vacation rentals,
and that's up from being 20-something percent.
-How long do they rent for? -It seems so logical to me
in the vacation rental space.
Yeah. Really strategic.
I'm really surprised because the scale issue --
to your point, you got to be national.
I don't know if you can get big
unless you have a national brand,
like a hotel chain supporting you.
The route you're going down seems super risky to me.
It's a great idea. I wish it was corporate-oriented.
Thank you, Robert.
So, you are unbelievable to me.
I love this business.
Which, yes, you can tell, and it's infectious.
But for me, I'm still a little bit confused
about how all of this works.
At this moment, I just don't think I understand it enough
to buy in, and so I'm sorry, I'm out.
Thank you, Lori.
Guys, you have the exact same problem
as any ride-sharing service.
You got to spend $100 per provider to acquire them,
then you have to go out and you have to build your brand
so that people call you,
then you have all this territory to cover.
It's not that -- -We're doing it, Mark.
You're not, though.
To get to where you are doing 100,000 transactions a month,
where you're making real money,
you're gonna have to continue
to raise a lot of money after that.
$5 million -- -I think we're profitable
after $500,000 more, and my --
You may be cash flow break even,
but you're gonna have to deal with that equilibrium
having enough providers, making sure they make enough money,
spending enough on marketing to generate enough transactions.
That's the challenge for this business,
and those are the reasons I'm out.
Katrina, I'm one of you, man.
I'm in San Francisco. I'm a female founder.
Come on, we need some support.
Uh...I have a couple challenges with this.
Like, the marketplace works
when you're looking at a huge market opportunity.
There's gonna be tons of transactions,
and I can take a relatively small percentage,
and the math works.
Here, you know, I think the 24% is great today.
Once you start introducing partnerships --
Well, we get other stuff, yeah.
Once you start introducing more, is it still gonna be 24%?
I don't know. How big is the market?
I don't know.
I think it's just too risky for me.
Unfortunately, I'm out.
Herjavec: Fran, you got Kevin left,
and God knows he needs a side hustle.
-I know. Come on, Kevin. -Good luck with that.
Look, I am not like any of your other investors.
I'm Mr. Wonderful,
and I'm way more valuable than a random VC,
not that these aren't wonderful people,
but they're not a Shark.
Is there an offer coming?
I'm just helping you get over the hump.
Take a deep breath. -Get ready.
Want to roll the drums?
[ Imitates drum roll ]
I'll give you the $500,000...
Cuban: Oh, is that all? That's nothing for you.
I respect the fact that you've raised money already,
but you are so far from being worth $10 million.
How would you make that deal?
Would you make it on a convertible note?
[ Laughter ]
'Cause if you made it on a convertible note,
then that wouldn't knock out all of my --
I know exactly how that works.
Come on, that's fair.
Are you willing to take 20% dilution?
What do you say, Fran?
No, I don't think so. 10%.
10% with some other sort of deal.
You're getting closer.
I can't do 20%.
You're still a startup. You're still --
But I can't have it wipe up all my notes.
Why is that my fault?
-I get diluted to 30%. -But why is that my fault?
And you don't want me to be diluted to 30%.
You decided to ask for $500,000, and then you say to me,
"I'll give you half a million dollars for 5%"?
That -- I'm not gonna do that.
I'm willing to talk about it, but 20% --
-And we are talking. -[ Chuckles ]
Get him, Fran! Get him!
-Greiner: Come on, get him! -Fran -- Fran --
Don't you -- Don't you want me? Don't you want me?
[ Laughter ]
Fran, I have to feel loved.
I have to feel the love. And the love is --
This is making me uncomfortable.
[ Laughter ]
-Come on, Kevin. -I'm taking inordinate risk.
I'm giving you half a million bucks.
I'm giving you a solid opportunity.
Come in on a convertible note.
I don't have to do them. That's the whole point.
I get what I want.
Can't do it.
Cuban: Way to stand your ground.
Good for you, hold your ground, Fran.
Congratulations, guys. -Congrats.
-Thank you. -Good luck to you guys.
-Thank you. -See you guys.
It's all right.
I would have taken a deal at a lower valuation,
but he was all the way to $2.5 million,
and that was just too big of a delta from our goal.
Narrator: Next up is a healthier version of a decadent treat.
[ Bell rings ]
[ Bell rings ]
[ Laughter ]
Hi, Sharks. My name is Frankie Yamsuan.
I'm seeking $180,000 for 18% of my company, Coconut Girl.
[ Chuckles ]
I don't know about you, Sharks, but I love summertime.
There is nothing better than relaxing by the beach
with some creamy ice cream.
But let's be honest, these sweet treats
don't really help the waistline, especially during bikini season.
We all want to indulge and treat ourselves
without compromising our healthy lifestyles, right?
Well, that's why I created Coconut Girl,
the best-tasting, dairy-free, gluten-free
nice-cream sandwiches that are out of this world.
Our guilt-free sandwiches are made with all-natural,
good-for-you ingredients like organic coconut milk,
honey, dates, and maple syrup.
So, Sharks, whether you're bumming it on the beach
with our Beach Bum Maple...
[ Chuckles ]
...saying "Aloha" to Aloha Chocolate...
...or want to hang 10 with our Hang Loose Vanilla,
Coconut Girl has any flavor you're craving
to satisfy your sweet tooth,
and all without any of the guilt.
Bring that over here. Come on.
[ Laughter ]
...who's ready to take on this sweet deal
and ride this wave with Coconut Girl?
Me, me, me. Feed me. Feed me.
-Ready? -Pick us! Pick us!
Are you guys ready for some ice cream?
-I'm so happy about this. -Thank you.
No calories, right?
-[ Laughs ] -Thank you, Frankie.
You're welcome. Mr. Wonderful.
Thank you, Frankie, AKA Coconut Girl.
-You're welcome. -Feed me.
Come on, Frankie, you should've come down here first.
-[ Laughs ] -Greiner: I have chocolate.
-Saved the best for last. -Thank you.
-We have one of each, right? -Feed me.
Yamsuan: Yes. So, you have all three flavors,
and they all have the same cookie,
which is made out of almond butter.
Herjavec: Oh, my God.
It's my version of chocolate chip cookie.
-This is amazing. -Thank you.
And there's a crunch to the cookie,
which is pure cocoa nibs, no added sugar.
O'Leary: So, Frankie, this is no dairy?
No dairy, made with coconut milk.
So, isn't the compromise heavy-duty calories?
-Not more than ice cream. -With my products,
my main focus is the good-for-you ingredients.
So, this is why I created it.
I was sick and tired of the health food industry
lying about what's healthy, the low fat, no fat, zero sugar,
but it was actually making me sick and fat.
So, Frankie, you said this is for the beach,
and when I put on my Speedo, I got to look good.
[ Laughs ]
So, how many calories, Frankie?
The package that Mark is holding.
So, this is actually rather large for 250 calories,
but with healthy ingredients.
Yes. And the great thing about my products, you know,
compared to the conventional ice cream,
because of the nutritious ingredients,
one sandwich will fill you up.
Frankie, what are your sales?
Yes, so, this is year 3 for me being in retail.
Last year, I did $120,000.
The year before, I did $60,000.
So, this year, I'm on track to do $300,000.
Good for you.
How are you selling it?
Sell them in big-box retail stores
just in Southern California at the moment.
And you have a co-packer that does this?
Um, I did have a co-packer that was producing the baking parts.
Um, they got really busy, so now I'm back to square one,
and I'm full-on producing everything on my own.
How are you gonna scale this business
if you don't have a co-packer?
Well, the main goal is to obviously scale it up to there.
But I've made my products really efficient.
When I first started the company,
we actually used to do them by pints,
and I saw a bunch of my customers
making them into ice cream sandwiches.
I was like, "That's brilliant,"
so I switched over and just focused on the sandwiches.
How did you get into this? What made you --
I've always wanted to be an entrepreneur.
You know, I was born in the Philippines.
I came here when I was 5.
I saw my mother work two jobs to give us an opportunity.
Um, you know, I struggled specializing in one thing,
so I dropped out of UCLA,
but I was always passionate about health and fitness.
I was always obsessed with creating healthy alternatives
to everything that I loved, the sweets that I missed.
And, you know, so I was just doing it in my home kitchen,
and I realized there was a business to it,
so thought of the name, and so I created this icicle tricycle.
So, every weekend, I would go to fitness events.
So, when a grocery store approached me
and asked if I did wholesale, I lied.
I said, "Yeah, I do wholesale."
That's always the right answer.
So I, you know, went online,
and I figured out how to do barcodes, nutrition labels.
I just learned on my own and figured it out.
What stores are you in?
Whole Foods is my biggest account.
How many locations?
Um, for Whole Foods, 30.
But we just got the green light
to be in Hawaii, Nevada, and Arizona.
And I just got picked up by one of the biggest
natural food distributors as of last week.
What do you sell it for, and what does it cost you to make?
So, they retail for $4.99, up to $5.49.
Is that expensive?
No, that's normal.
My biggest competitor, who launched a dairy-free product,
actually upped their price to match mine at $5.49.
-Oh, really? -Yes.
But you didn't say how much it costs you to make.
Oh, it costs me about $1.
-Just $1? -Just $1, yes.
-Wow. -And it's you doing everything?
I'm doing everything. I have part-time help,
but that's why I'm here asking for funding
because I need to get back to what I'm good at,
which is the sales and marketing,
and be the face of my brand.
You want to find somebody to do logistics
and operations for you?
How do you distribute this? It's, like, a frozen product.
So, right now, we were direct distributor
up until we got picked up by UNFI.
So now, they pick up from my facility,
and that's the reason why we're now getting the green light
to be in Hawaii, because they cover that region.
And how are you selling online? Can you ship these?
I do not. It's possible.
I have customers all over New York --
But with the dry ice and everything,
it just gets really expensive. -The dry ice
is just very costly right now, and I don't have staff
to fulfill individual orders.
So, we don't do direct to consumers at the moment.
So, beyond hiring people, what would you use the money for?
-To lower my food costs. -Okay.
I'm confident that I can get it down to 50 cents. So --
-50 cents? -50 cents.
My packaging costs -- -You know what, Frankie?
I'm hearing enough.
I love healthy foods, right?
It goes really, really well.
I don't even want to hear what these people have to say.
I'll give you the $180,000, but I want 25%.
Oh, that's what I was gonna offer.
But you got to tell me.
I don't even want to deal with all these meatheads.
I like the deal, too. I'm your customer.
Frankie, Frankie, you got to decide right now.
If you want to listen to other deals, I'm fine with that.
I want to respect Lori.
Okay, then I'm out.
[ Chuckles ]
I'll give you one last chance, right?
You can take the chance to hear what she's saying...
...or you can go with Alyssa's Cookies --
Are you willing to go down, though?
O'Leary: You know, I'll help you, Frankie.
I'll do it for 20%.
And I'll squeeze Cuban's head for you.
Only because he's an idiot, okay, I'll do 20%.
-Oh, yeah! -Wow.
-Deal? -And he's getting up.
-Oh, my God! -Deal?
-It's a deal. -Done!
You're killing it. You're absolutely killing it.
Do you want a ride? [ Laughs ]
No, I'll let you take that out.
I want to see what else you have.
Nice try, Kev.
Thank -- You owe me a big thank-you.
-I saved you 5%. -Oh, my God.
-Nice try, Lori. -Ah!
[ Laughs ] He tried to kill me!
O'Leary: There she goes. Bye, Frankie.
Greiner: Well, Frankie, congrats!
-Now give me my $5. -I had a great offer.
[ Laughter ]
Yamsuan: They loved it, and I'm so excited
to make this the next household brand.
I wanted Mark Cuban to be my Shark, my partner,
and it's happening, so I'm really excited.
Narrator: Next in the Tank is a product
with the goal of making kids love their glasses.
Hey, Sharks, I'm Nathan Kondamuri.
And I'm Sophia Edelstein.
We're from New York City,
and we're the co-founders of Pair Eyewear.
When I was a kid, I hated wearing my glasses.
I mean, let's face it, there's nothing fun,
fashionable, or exciting about the entire process.
Not to mention parents have to shell out a fortune
for something their kids don't even want to wear.
That's why we decided to innovate
the entire eyewear experience
and take it to a whole new level.
Introducing Pair Eyewear,
the first-ever continually customizable glasses
where kids can...
All: Swap the top!
[ Laughter ]
Our patent-pending magnetic technology
allows kids to easily swap on any of our --
-Cool. -Very cool.
-Wow. -Oh, wow.
Yeah, any of our full range
of fun, hip, and dynamic frame tops.
Designed to mold to any personality,
we've created the perfect pair of glasses for kids,
all for a fraction of the price
of those big-box retailers.
And now, as the biggest Dallas Mavericks fan,
you know John is gonna swap on that blue top
to rep his team for the big game.
And after choosing her favorite polka-dot top,
you know Annie's ready to dance in style for her ballet recital.
In less than a year since launching,
we've started a glasses revolution
where kids everywhere are saying goodbye to their boring frames
and hello to their parents.
We're raising $400,000 for 10% in our company.
So, Sharks, which one of you wants to pair up with us and...
All: Swap the Top?!
-[ Laughs ] -We've got some samples for you.
Cool. Good job, guys.
Thank you very much.
I like your glasses.
How do the glasses feel?
They're very comfortable, and they're light.
Here you go.
Edelstein: Amazing job, guys. You guys did so well.
See you guys later. -Good job, guys.
So, what's your background, guys?
How did you come up with this?
The idea for Pair came from my experience
of wearing glasses as a kid.
You know, I remember going to the optical store,
having to choose between five really boring options
and leaving with this horrible blue frame
that I hated wearing.
-Aww. -Oh, you have no idea.
My lenses were that thick, right?
-It's a huge stigma. -It was horrible.
And I was the kid walking around with the tape on the frame
because I would break them all the time from sports.
That's a huge problem with kids that we found out.
So we actually met at Stanford University
where we were both undergraduates,
and we went out and we interviewed
over 500 families,
and you couldn't imagine the number of stories we heard
about kids breaking their glasses, losing them,
and from the parents' perspective,
they just feel like the bad guy.
They have to remind their kids on a daily basis
to wear the pair of glasses
that they simply don't want to wear.
I love the fact it gives kids a little bit of control.
-Exactly. -Exactly, it's a daily choice.
-Here's the big question. -Yeah?
How much is it?
It's $95 for the frames,
plus the lenses, plus all of the add-ons
that are doctor-recommended for kids.
So, that's anti-glare coating and scratch-resistant coating.
What is each add-on?
Each one is sold for $24.95.
And what's your cost on each add-on?
Kondamuri: So, huge margins on the tops.
We have 70% margins on both the bases and the tops.
-And how do you sell them? -That's fabulous.
Where do I buy them?
Everything is sold directly online right now,
which is something really different
in the glasses space for parents and kids
because before, parents had to bring their kids
kicking and screaming to the optical store.
But through Pair, it's so easy that you can do it
sitting on the couch from the comfort of your iPhone.
I understand in the eyeglass industry,
there's one Italian company that has 80% share.
In Market Square, there's a dominant player with 80% share.
Innovation comes from people like you.
-Yeah. -And as soon as they prove it
in the market with, you know, some critical mass,
a few million in sales, they knock it off
and crush you like a cockroach.
Why are you ever going to get scale
in a market that has an 80% share behemoth in it?
Something that's unique about the eyewear industry
is that these behemoths don't actually innovate at all.
I agree. They wait for you to do it.
Then they acquire you, hopefully.
And then they acquire --
Or they may not be interested in the kids market.
Guys, how much money have you raised?
Tell us about your investors.
So, we began by bootstrapping the business
while we were in college.
We had to reach out to some family and friends
to get some prototypes made.
We raised $150,000.
Congrats. Then what?
We beta tested with around 75 families
to get feedback on how the product worked,
how the frames worked for kids...
-Great. -That's great.
...and that's when we began to think about
how we would launch this brand, how would we go to market.
Did you raise more money?
We raised $1 million at that time...
-Wow. -...at a $4 million valuation.
And then the million you raised,
was it from big equity firms or individuals?
It was from a couple of venture capital firms.
You know, nobody's asked you if you have any sales.
Yes, so we have $100,000 of sales in the last eight months.
Cuban: Okay, so, wait, wait, wait.
What were your sales last month?
How many actual customers did you have?
Last month was $15,000 in sales.
-Yes, $15,000. -That's horrible.
So, we basically used the marketing spend
to acquire customers, but we've only spent $50,000
on actual marketing spend to acquire $100,000.
Well, how much money do you have left?
I'm just nervous about how much capital
you have left in the bank.
We have $150,000 left in the bank.
That's something to be nervous about.
What have you spent it on?
Kondamuri: So, a third of that million was spent on product development,
a third was operations,
and a third was legal, FDA patents.
How much do you have in inventory at cost right now?
Kondamuri: So, we have a good amount because we wanted
to build up the product, but then once we had
the customer acquisition cost where we wanted it,
to start scaling.
Herjavec: Look, my overwhelming view,
and I hate to say it because you're so positive,
I'm not sure I see it as a standalone company.
I almost see it as a feature. Just my gut feeling.
I'm sorry, I'm out.
-Thank you, Robert. -Thank you.
O'Leary: Guys, I'm gonna take a stab at it, okay?
Your sales are $100,000,
which is really underwhelming, I got to be honest with you.
I was expecting something materially higher.
You have a behemoth competitor
that has consolidated the worldwide market
in one company for 80% in Italy.
I don't think your patent is gonna protect you
if they decide to pursue this.
So, the way I look at it is,
I see two cockroaches with glasses on.
[ Laughter ]
That's what I'm worried about.
I hope they don't crush you. Good luck to you. I'm out.
Cuban: Your problem is cash, right?
So, knowing there's a possibility
that you wouldn't get a deal here,
you must be out there raising money already.
So, tell us about that.
Absolutely. So, we are raising money right now
where we've had investors interested,
and we're potentially raising $3 million,
and we have about $1.5 committed in verbal commitments.
And at what valuation?
That would be at roughly a 9 pre-money valuation.
And so here you are, coming in at...
Cuban: Yeah, $4 million,
so someone's getting ready to take a big haircut.
So, we talked to them, and they are just as excited as we are.
I think the way we see it
is that we only get this opportunity, you know,
once in a lifetime, and we see the incredible value
of bringing a Shark onto the team.
Guys, look, you're in a cash crunch, you're raising money,
as would be expected, and you're in the Bay Area,
so I get that it's available to you.
Entrepreneurs love to work with Sharks.
Right? They may have said, "It's okay.
Let's see what kind of deal you have to cut."
But when it all comes down and the rubber hits the road,
that always creates friction.
That's not a battle I want to fight.
Congratulations on what you've accomplished
on being so innovative, but for those reasons, I'm out.
-Thank you. -Thank you.
Okay, so, three Sharks are out. You still have two Sharkettes.
Let's see what happens.
I love you guys.
I think you guys are super smart,
you're really thoughtful, you've got that grit,
and all of that is super compelling.
At Stitch Fix, we have a big kids business,
and so I know this market well,
and I think Lori and I have
really complementary platforms here.
Right. And I think the two of us together
could really be great, compelling Sharks for you.
Is there an offer in the future?
So, here's our offer. We feel that, you know,
it's very risky as far as you've taken in a lot of money,
but you don't have a lot of sales.
So, we think a fair offer would be
we'll give you the $400,000,
we'll do it for the 10%,
but we'd like to get a royalty
until we get our money back,
and we're gonna do $2 for each pair of glasses,
and then the royalty will stop after we're paid out.
We think that you will accelerate so much more with us
that you won't mind the $2 royalty.
Don't you wish I'd never taught Lori about royalties?
Narrator: Three Sharks are out.
Lori and Katrina are offering $400,000
with a royalty of $2 for each pair of glasses sold
until the initial investment is paid back
for a 10% stake in Sophia and Nathan's eyeglass company, Pair.
We think you guys will be incredible partners.
We know a royalty is tough as a cash-strapped business,
and we want to invest all of our cash
back into growing revenues, growing customers,
so we all get that better, bigger outcome.
See? They are smart.
Would you guys be willing to do 10% for the 400K
and 2% advisory shares?
We want you guys on as advisers, we want your guys's input.
You know, not all money and not all advisers are the same.
Yeah, I think there's -- We really want to make sure
that you guys have the time and space
to not be penny-wise, pound-foolish.
I built a business that's over a billion in sales now.
I did it with very little capital.
Like, you're talking about being in a cash-strapped environment?
I've been there.
So, you know, we think this is a really fair offer.
We think we can really do a lot to accelerate your business,
and we'd love to work with you.
Um, we know that. Unfortunately, we won't be able
to take any royalty deal just because --
But the thing is we feel --
'Cause, you know, you saw we talked a while --
Katrina, Lori, they've said no to you
seven times in different ways.
They're not gonna give you royalties.
Kondamuri: We want to work with you guys.
We just know a royalty is so difficult.
Look, we respect the fact that you're sticking to your guns.
We'd love to work with you here,
but respect you if you want to walk away.
Can we do $1 royalty?
-Oh! -Do $1 royalty?
And...if we do $1 royalty --
You just gave us this whole speech about no royalty.
We don't want to walk away without a deal.
We don't want to walk away from these two.
That's what we came here for.
-We know these two are gonna -- -How about $1.50?
We'll meet you halfway.
-$1.50, we'll take the deal. -We'll take the deal.
-Oh, my gosh. -$1.50, let's do the deal.
[ Applause ]
Thank you, guys.
-I'm so excited. -Wow!
Thank you so much.
-Wow. -Thank you so much.
Edelstein: That could not have gone better.
They're both incredible entrepreneurs,
and we can't wait to grow this business with them.
I'm feeling so lucky. Mm-hmm.
Welcome to the royalty.
[ Laughs ] Welcome to royalty.
[ Laughs ]