Shark Tank review

Shark Tank review

Reality television with business content exposes the audience to a vast array of business ideas and methods, as well as challenges that are being faced in dealing with businesses. One such reality TV show is the Shark Tank, which entails various aspiring entrepreneurs presenting their business ideals to a panel of investors-the sharks. Depending with the sharks’ interest to the business idea, offers to the entrepreneur can be made or rejected. This a review of Shark Tank season 4 episode 1 where the presentations Coatchex, BevBuck, and BuggyBeds are discussed, giving a further elaboration to Coatchex.

Season four of Shark Tank came with the highest number of business idea presentations in all its 26 episodes. Episode 1 had various presentations of which I highlight three of them. These are products-Coatchex, Bev Buckle, and BuggyBeds.

BevBuckle was created and presented by Jake Brenner who was seeking $50,000 for 10% stake from the sharks. The Bev Buckle is based on the concept of a buckle that can hold beverage using a magnet holder. It is a novelty product whose patent is held by Jake but had sold only 4,000 units in 4 year.  The accepted offer was from the shark Barbara Corcoran who offered $50,000 for 51% stake.

The next product BuggyBeds was created and presented by Maria Curcio and Veronica Perlongo, and were seeking $125,000 for 7 percent stake.  The product is based on the concept of using a glue trap that can detect bedbugs’ eggs before they hatched. The entrepreneurs had worked on the product for six months, of which they had witnessed success, and they held the patent. Currently, they were looking for distribution links. They got $250,000 for 25% stake from five sharks-Kevin, Robert, Mark, Daymond, and Barbara.

The first item presented in the episode was the Coatchex by Derek Pacque who was seeking $200,000 for 10% stake. The product is based on the concept of a coat check system that does not use a ticket. A name and photo is attached to the jacket and the user pays with a credit card. Derek was targeting this franchise to area developers. Derek shows belief in his product and he radiates energy of confidence and motivation on his business venture. Unfortunately, the sharks expressed high levels of uncertainty with this product, especially when Derek says he has no recorded sales yet and has not been able to test due to weather challenges.  Shark Mark stated seasonal problems with the coat, and states that looking to franchise the business is a terrible marketing idea. He also pointed out to an unclear business plan, although he liked the overall idea. Shark Daymond stated about the likelihood of competition on the product, while Shark Barbara did not understand why use of a ticket in the check system should be done away with. The only shark offer that Derek received was $200,000 for 33% stake from shark Mark, which shockingly he turned down.

Derek was confident in finding opportunities for his business and only needed more help in scaling the business. Agreeing to the $200,000 for 33% stake would mean giving a large chunk, about a third of his company to the investor. Derek was not probably ready for this kind of business equity with his company at the initial stages of the business venture.

However, the $200,000Coat Chex for 33% would have been one of the best deals given to a beginner entrepreneur with no proven record of sales yet.  Also, most investors are unwilling to invest in a business that seems to be seasonal. Yet, in this case, Mark was seeking only less than half the stake. It would have been a great opportunity for Derek to earn up the start up cost as well as have an opportunity to work with a seasoned billionaire. The offer would have helped him establish several CoatChex stores within a shorter time, and the price and valuation would have been determined faster with the presence of the CoatChex in various markets. On his own and without the adequate cash to franchise to several markets region wide or even worldwide, Derek may take a lot of time reaching out to the market. The disadvantage is that some players may have gotten the idea and will decide to come up with competing business models. Even if Derek makes it to keep the business up, he will be competing for market share with other new entrants and there is still uncertainty in this.

On the other hand, rejecting the deal may also not be so bad for Derek, as the product managed to get exposure to a wider audience. The show is a great platform that may introduce Derek to a wider audience some of whom will become the CoatChex target market.  Even if he left hanging the $200,000 for a third of his company, Derek’s presentation on the show has acted like an infomercial where he will reach out to potential customers.  It is now up to Derek to work hard to prove that his business model is worth a bigger investment negotiation.

In summary, the Shark Tank is definitely one of the superb business reality television shows that expose the audience to great business ideas as presented by aspiring entrepreneurs. It also teaches a lot about business pitching and conducting negotiation with investors that can help with funding for business start up, growth and expansion.

 

 

Work Cited

Shark Tank, season 4 episode 1 https://www.youtube.com/watch?v=5QGu3BSjHpw,2012.

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