Failure stories don't get featured on Shark Tank in the update segments. Why would they? Shark Tank wants to feature success stories. Plenty of entrepreneurs “fail” by not getting a deal, but manage to parlay their appearance on the show into further success for their business. Those stories get plenty of coverage; some companies that don't get a deal with the Sharks even return to do an update segment. What doesn't get as much press are the failure stories; tales of Shark funded deals that have gone bad.
Failure Stories of Funded Entrepreneurs: Cactus Jack
Barbara Corcoran had one of the more visible failure stories early on in Season one. Cactus Jack got a $180,000 investment; $90K from Kevin Harrington and $90K from Barbara. The two Sharks invested in Cactus Jack and his Body Jac after the entrepreneur shed 30 pounds to prove his invention worked. Fast forward to 2012 and Body Jac is no longer for sale. Barbara has publicly stated it was her worst investment in the Shark Tank. When Kirk Taylor met Barbara Corcoran last spring, she didn't go into detail about how the investment fell apart, but she was “visibly perturbed” about the deal when questioned. Cactus Jack's recap has even been removed from the ABC website!
Failure Stories of Funded Entrepreneurs: Hyconn
Hy-Conn was one of the first visible failure stories involving Mark Cuban. The company got a much hyped deal with Cuban in the Shark Tank in season two. Cuban offered Jeff Stroope $1.25 million for his company plus a three-year employment deal to run the show at a $100,000 annual salary.The deal never came to fruition. Entrepreneur Jeff Stroope has not been tight-lipped about the deal either. Stroope’s Facebook page claimed, Mark Cuban’s “ego” got the best of him during negotiations and backed out when he realized what he had done. Hyconn continues to move forward, albeit a a far slower pace than they would have if Cuban's funding had gone through. Here is the text of a post on Stroope's Facebook page made prior to the April 20, 2012 re-run of his segment:
“From the desk of Jeff Stroope, Founder – Hy-Conn LLC
Due to the delay of shipping parts since the airing of Shark Tank I felt that I needed to update you on the status of Hy-Conn. First I want to thank you for your interest in Hy-Conn.
As some people know by now the deal that was made on shark tank with Mark Cuban for $1.25M, with 7.5% royalties, & a 3 year employment agreement.
After the cameras were turned off some of the agreements that were made on the show started changing. Almost immediately Mark decided that he was not going to go thru with the agreement on Shark Tank. After which Mark said he didn’t own any manufacturing and didn’t want to own any manufacturing. This was not something that had to be done.
In my opinion, and in all due respect, during the recording of the show Mark let his “ego” (or whatever you want to call it) overload the reality of what he would do. After the cameras were off and he had a few weeks to think about it he realized he didn’t want to come up with the money. When we started having these issues it was decided that I didn’t want to continue. However, I do not have any anger or bad feeling toward Mark Cuban. This is a part of the business that I have to get thru. As it was said on Shark Tank by Robert Herjavec “never disrespect money”
The current status of Hy-Conn is that we have lots of potential customers for the Pro Edition, Home Edition, and now also the Oil & Gas Edition. However, we do not have enough customers to accept orders and use those funds to make the required molds and parts to get everything into production. I have been able to identify the manufacturing sources but the money is not there to get the parts made due to the minimum manufacturing requirements.
I have received a notice from Shark Tank that my episode with air again on April 20th. This is good news and bad news. The good news is that I will get more exposure to a much larger audience and the potential for getting enough orders/interest to start production. However, the bad news is that when the show airs I am not able to process orders.
I want to apologize for the current condition that we have and I want to thank you for your patience while I have been trying to solve this problem. A lot of people have asked if I wish I would have gone with Kevin O’Leary. The answer is I wish I would have gone with Kevin or Robert. However, when on Shark Tank you don’t get a do over. I have a couple of things moving forward slowly that if they do materialize I will have big news soon.
Stay tuned to our website and Facebook page for updates that are to come and don’t for get to watch Shark Tank on April 20th for the largest deal that was accepted in Shark Tank history. (Unless another deal is made between now and then that is larger)
Failure Stories of Funded Entrepreneurs: You Smell Soap
Failure Stories of Funded Entrepreneurs: Toygaroo
The most visible of all the Shark Tank failure stories is probably Mark Cuban and Kevin O'Leary's investment in Toygaroo, the “Netflix of Toys.” O'Leary and Cuban partnered on this deal with $200K ($100K each) for 35% of the business. The concept appeared to be a winner. Nikki Pope, a minority partner in the business and Toygaroo's public ambassador, was all over the media after “winning” on Shark Tank, pitching Toygaroo on all the major TV networks. Somewhere along the line, the business ran into trouble. In the fall of 2011, customer complaints about Toygaroo mounted and the company's CTO made some cryptic public statements on his personal blog. On April 2, 2012, Toygaroo filed for Bankruptcy. In an interview with the Toygaroo CTO, Phil Smy, he stated, “the business was growing. To be honest, that was the problem. Explosive growth is a difficult thing to handle for small businesses. I thought – and still think – it is a great idea.” As for the Shark investors, he said “I don’t think that the ‘big name’ investors we got really came through with what I had hoped.” He didn't elaborate on that last point, but it does make one wonder. Toygaroo has ceased all operations.
Many more failure stories exist in the Shark tank and we will highlight them in the coming weeks. To be fair, some companies that appear on the show fail on their own, but there will undoubtedly be more failure stories emerging from the Shark Tank in the future. Entrepreneurs want to tell success stories, not failure stories.
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