The first entrepreneurs into the Shark Tank this week were presenting their business Sandcloud and were seeking $200k in exchange for 8% of the business. They have developed a soft, comfortable, and lightweight beach towel out of Turkish cotton.
As for their numbers, they sell for $47 and cost $10 to make. They did $30k in sales during their first year, but jumped up to $430k in year two. So far this year, they have seen $1.6Mill in sales and are on track to hit $3Mill. On these sales, they will see $800k in profit because they are pouring much of what they are making back into their marketing.
What these guys have done is obviously impressive. To take this business to $3Mill in sales so quickly is already amazing, but the fact that they did it with this unassuming little towel is practically mind boggling! What it really seems to come down to is the cause behind their business. Their mission is to help protect and preserve our oceans and the marine life that resides there. They accomplish this by donating a percentage of the profits, and partnering with several organizations.
One thing that I want to comment on is their claim that Millennials need a social cause to get behind in order to support a business. Now, I’m not here to argue that having a cause doesn’t work. Obviously it does, and these guys are definitely proof of that! What I do have to disagree with is Millennials “needing” a social cause. That kind of thinking is a bit narrow. I’d like to think that we are generally educated consumers looking for the best product for our money, rather than a bunch of suckers willing to buy anything from a company that says they give to charity. I know that’s not what they were trying to say, but it’s always a bit frustrating to hear these lines that portray Millennials as such a stereotype.
Anyway, sorry for the little rant. Let’s move onto the Sharks! Mark offered them $400k in exchange for 25% of the business. This was drastically lower than the valuation they walked in with, but would give them twice the amount of money. As we covered earlier, money is always something they need to fund their massive marketing efforts. Mark ended up dropping out though, because the entrepreneurs wanted to hear other offers. From there, things didn’t get much better. They did end up making a deal with Robert, but it was at $200k for 15%.
On top of that, Robert came out and said that he doesn’t get it. He doesn’t understand the appeal of the actual product, but he does see that what they are doing is working and making a lot of money. This is not unheard of with investors, but it’s always nice to have a partner that understands your business. Of course, it seems like they know exactly what they are doing and don’t necessarily need a strategic partner. They needed the exposure that Shark Tank would give them and the money necessary to continue advertising and extending their brand.
So good luck to the guys over at Sandcloud! Despite my earlier comments on “Millennial stereotypes,” I am always excited to see businesses that have a charitable purpose behind them! I hope you are able to keep growing and keeping pouring into this excellent cause!