Highlights
- Donna and Rosy Khalife seek $110,000 for 10% equity in Surprise Ride, a subscription service that delivers themed educational activity boxes for kids.
- Despite offering personalized boxes and having solid business figures, the sisters leave without a deal after turning down Robert Herjavec’s offer.
- After Shark Tank, they grow the business successfully, attracting investment from Kevin O’Leary, and eventually selling the company to Fat Brain Toys in 2018.
Overview
| Category | Details |
|---|---|
| Name | Surprise Ride |
| Founders | Donna Khalife, Rosy Khalife |
| Industry | Educational Subscription Boxes for Kids |
| Product | Monthly activity boxes with themes like art, science, and geography |
| Funding Sought | $110,000 |
| Investment Ask | $110,000 |
| Equity Offered | 10% |
| Valuation | $1.1 million |
Sisters Donna and Rosy Khalife pitch their kids subscription gift service called surprise ride in Shark Tank episode 510, originally airing on November 15, 2013. Donna is a Harvard MBA and former Wall Street “shark” who decided to start a business that would “make a positive impact on the world.” Little sister Rosy formerly dwelled in the world of digital marketing and advertising.
They came up with the idea for Surprise Ride when they found themselves struggling to find gifts for their nephews. They based their business idea on three principles: kids are brilliant, curiosity fuels success, and everyone (especially kids) loves getting surprises in the mail.
Each month, Surprise Ride sends a package with a themed group of activities that teaches kids something about the world around them. Past themes include Vincent Van Gogh, Barcelona, Ultraviolet light, and birds. The package includes supplies for a project, a booklet about the month’s theme, games, gadgets, books, snacks and other extras. You can subscribe for one month at $39.99 up to six months at $24.99 a month.
Surprise Ride Shark Tank Recap
Donna and Rosy come into the Shark Tank seeking an investment of $110,000 in return for 10% equity in Surprise Ride. They present the monthly subscription, explaining how they’ve worked with “experts to curate the best rides.”
They offer each of the Sharks a personalized Surprise Ride kit that’s tailored to their personal interests. The Sharks are impressed. Lori Greiner calls it a “very well constructed, quality surprise box.”
The boxes sell for $29.99 per month, with a discount for an ongoing subscription that brings the price down to $24.99 per month. They’ve sold 800 boxes in 4 months, and have 220 active members.
Kevin O’Leary explains that every company that comes to the Shark Tank with an internet subscription model needs to answer two questions: The cost of customer acquisition and the value of the customer once acquired. The girls have their numbers ready. The acquisition cost is $5.30, and the profit margin per customer is $130 over 12 months.
The sisters have a fulfillment center in Florida that is ready to scale the business. The Sharks are impressed with the girls’ business backgrounds, and their understanding of how the business will be scaled.
Who’s In?
Mark Cuban questions whether the investment will be enough, and Kevin O’Leary brings up the valuation of the company. The valuation doesn’t work for Daymond John. He goes out.
Kevin O’Leary agrees with John. He says “I’m tempted, but I’m going to pass.” He’s out.
Robert Herjavec believes the girls are underestimating the “hustle” it’ll take to move the business from a startup to a large-scale business, but he makes an offer. He’ll give them the $110,000 in return for 25%.
The girls ask if any of the other Sharks would like to make offers. Lori Greiner loves the gift boxes, but doesn’t believe that the sisters need an investment. She believes “you can do this doing it on your own.” She’s out.
Mark Cuban believes the pair are not ready to move from theory to business. Robert Herjavec, having heard the women plead with Lori Greiner, and the conversation with Mark Cuban, decides to go out.
“You are going to become legend,” said Kevin O’Leary. “You came into the Shark Tank, you had a deal, and you didn’t close it.”
The pair leave the Tank without a Shark deal.
Surprise Ride Shark Tank Update
In spite of Herjavec’s change of heart, the ladies benefited from the famous Shark Tank effect. Their business exceeded the expectation of 3,500 new customers in the first year, and met the goals the sisters had set a full year ahead of schedule.
““Shark Tank put us on the map in a way we couldn’t have achieved without a ton of capital,” says Donna.
Without spending a dime on marketing, the pair have enjoyed a huge jump in brand recognition and sales. In spite of Mark Cuban’s concerns that they “live in the land of theory,” the pair have followed Lori Greiner’s advice and learned to scale and run their business without a Shark investor, riding their success into the sunset.
Apparently, their success caught the eye of Mr. Wonderful. After the show, he contacted the sisters and invested in the business. He offered $50,000 in return for a 6% royalty until the investment is paid back, with 2 ½ % of the company. That story is featured in Beyond the Tank episode 110. Read a full recap and update HERE.
In November, 2018, the company was acquired by Fat Brain Toys for an undisclosed amount.
Posts About Surprise Ride on Shark Tank Blog
Kids Gift Subscription Service
Surprise Ride Information
Speak Your Mind