Beyond the Tank Episode 110

Beyond the Tank episode 110 aired Thursday, February 4, 2016. Three past Shark Tank companies get an in-depth, 20 minute update segment on what their life is like after Shark Tank and viewers get to see them interacting with their investor/sharks. Beyond the Tank episode 110 features a look at Mark Cuban and BeatBox Beverages, a wine in a box company he invested in during season six. We also get an update on The Coop, a kid’s playspace business Barbara Corcoran invested in during season 4. Last up is Surprise Ride, a kids gift subscription service that left the Tank without a deal in season 5; Mr. Wonderful contacted them after the show and got involved with the business Beyond the Tank.

Each Episode of Beyond the Tank has these “back stories” and Shark Tank updates. We’ll recap them here.

Beyond the Tank Episode 110 Recap

BeatBox Beverages

In Season 6,  Aimy, Brad and Justin brought Beat Box Beverages to the Shark Tank. They hoped to invade the boxed wine market with unique new flavors and a fun marketing ploy. Mark Cuban didn’t see Beat Box “as a wine product.” He tells the trio “You don’t sell wine. You sell fun.”

He makes them an offer, $600,000 in return for 33%. The Beat Boxers make a counteroffer, asking $1 million for 33%. Mark accepts, and Beat Box is on its way to greatness.

“I invested in Beat Box,” says Mark, “because at heart, I’m a 25-year-old, and I saw that this was going to be a party phenomenon.”

“Since Shark Tank, it’s been a life changing moment for us,” says Brad. In 18 the months before the show, Beat Box had done $230,000 in sales. In four months after their Shark Tank appearance, they cleared $440,000.

They’ve just launched in four new states. The Beat Box crew’s goal is to expand into all 50 states. The process is difficult. Separate licenses are required for each state. They’ve been able to land shelf space in Walmart. Expansion is the problem – they’re in 100 stores, but want to be in 1,000 stores by summer. The expansion provides some serious challenges.

Mark has some concerns. “I understand what Beat Box is going through. It’s really tempting to want to say yes to everybody on everything, but because there’s only three of them, we really have to pick our battles and know where we can be supremely successful.”

“We aren’t going to be competing with the big companies in the alcohol industry by out spending them,” says Justin. “We have to do it in more creative ways, like understanding what new flavors our customers want.”

Aimy agrees. “I think that’s how we stay cool and relevant.”

“If we don’t innovate,” adds Brad, “We’ll die.”

The trio head over to Flavorman, a food science company that helps companies develop new flavor concepts. They hope to create at least five new flavors for Mark to try, to expand their line from 4 flavors. Each flavor has to be approved by the Tobacco and Trade Bureau, a federal licensing regulator, before being approved in each state, a process that takes time. By creating new flavors early, and getting them approved, they provide for expansion later on.

The come back to the meeting with three new flavors for Mark. “The goals of the meeting with Beat Box today is to help them define what they need to do, to get from where they are today to $100 million in sales,” says Mark.

Mark’s not a fan of expanding too quickly, but the entrepreneurs explain the legal hurdles and convince him. They then move on to the discussion of how to fulfill Walmart’s expectations of expanding into 1,000 stores. They ask Mark how to make that happen, and he responds “You don’t.”

He wants them to focus on growing their management team first, in order to provide the man power to support the expansion.

“Now the question becomes, how do you keep expanding and growing? You do it one win at a time,” says Mark. “By winning this, constrained distribution becomes a marketing plan… You use this time to hire some people, get them trained,” he says.

Mark advises them to take the next six months to train a distribution management team before attempting to expand further into Walmart. In the meantime, Mark recommends setting up a “bottle service” party at local bars.

The trio love the idea. “We don’t sell wine, we sell fun. Hey, someone told us that once,” says Justin.

“We’ve been doing really well in liquor stores, but doing box service could open up new channels which would mean whole new avenues for us,” says Aimy.

The test party with the “box service” is a huge success. The group hoped to sell 10-15 boxes, and ended up selling 40.

“The beauty of Beat Box,” says Mark, “Is that it sells itself. All the early signs are that it’s a grand slam, it’s just a monster. The future’s so bright, they’ve got to wear… speakers.”

The Coop

In Season 4 of Shark Tank, Juliet and Lucinda come in with their concept for a fresh take on children’s birthday parties, called The Coop. The hard-working best friends manage to land a $150,000 deal with Barbara Corcoran in exchange for 15% equity.

“The minute I laid eyes on these two moms,” says Barbara, “I knew they had the enthusiasm and energy to make a big business, and I also liked that they liked each other.”

The Coop was netting an average yearly revenue of $350,000 before appearing on Shark Tank. In the year since their appearance, sales had increased to $430,000. They’ve been happy with the growth, but it’s been slow. More than half of the gross profits are plowed back into the high-end parties they put on in individual family’s homes.

“We had requests for franchises, but weren’t ready, but we wish we struck when the iron was hot, and it was really hot,” says Lucinda.

The work of running the business seven days a week, for a relatively modest profit margin, is taking its toll on the women and their families. They’re both beginning to feel as if it’s important for them to increase profits, in order to keep The Coop afloat.

“This year we’re primed and ready to go. I believe that franchising is the next step for The Coop,” says Juliette.

Barbara shares their concerns. “It’s great to be here, but I have an ulterior motive,” she says about their pending meeting. “This business is not making any money, and these girls are killing themselves for nothing.”

Growth has been steady, at about 10% a year. While Barbara is impressed with their drive and growth, she feels they’ve hit a plateau. She points out  the disproportion between the profits they make from the home parties and the amount of work they put into the business. The women work so hard to create a truly special theme party for their customers. The home parties are a lot more work, because the girls care so much that they’re perfect.

“You know who puts themselves out of business the fastest in all kinds of business, is the perfectionist,” Barbara tells them.

The girls have set up a model franchise with one other person at the Frisco/Texas location. The ladies believe they’re ready to go into franchising, and have investigated a franchising company to begin creating and managing franchising. The cost would be $47,000.  “You haven’t really figured out the formula about how you can make money,” says Barbara. “And that disturbs me and makes me wonder about my investment. I don’t think you should do a franchise,” she advises.

She likes the way the deal is working with their current partnership. ”I think you’ve found the model that works for you, says Barbara.

The girls are already committed to meeting with a lady in San Francisco, who wants to go into a partnership model. Barbara agrees to go to the meeting with the girls.

She’s confident that the ladies will implement her advice and succeed. “They want to build an empire and they have just seen for the first time how they’re going to do it. I can’t wait to see how they’re going to operate.”

The partnership model is a slower process, but gives the girls more control over the new stores. Starbucks works on a similar model.

Adine Le comes to the meeting as a potential partner, but she has a hurdle to overcome – she has to win Barbara’s approval.

“I want to make sure this lady deserves Lucinda and Juliette,” says Barbara

The lady Shark has some pointed questions for the potential partner, but Adine Le knows what she’s getting into, and what she wants out of the deal.

“I could do it on my own, but I was really impressed by their model, and I feel we’re a great natural fit,” she says.

Adine negotiates for control of 7 counties in the Bay Area- she wants first right of refusal in that area. Barbara negotiates the option to give her first right of refusal, but if she wants to buy in to a new territory, she’d have to buy in at the price offered- so now a partnership is $35,000, but if it goes up to $75,000, she’d have to buy in at that level. The meeting is a success, and Adine becomes the newest partner of The Coop. Barbara is convinced. “Adine is the perfect fit,” she says.

“It’s beyond exciting,” says Lucinda, “To be signing a new location. It’s the original dream to have lots of Coops, and that’s happening.”

“I think that as mothers, and as business owners, you have to put your kids first, and your business first,” says Juliet. “You’re always last in the equation.”

“Now, we need to form partnerships and watch the Coop grow,” adds Lucinda.

With Barbara’s help, The Coop has grown wings, and is set to fly.

Surprise Ride

Donna and Rosie brought Surprise Ride to the Shark Tank in Season 5. The mail-order service delivers a crafts and activities box monthly to subscribers.

“Going on Shark Tank was one of the hardest things we’ve done. It was so nerve-wracking.” Relates Donna.

The pair went in asking for an investment of $110,000 in return for 10% of the company. Robert Herjavec made an offer of $110,000 in return for 25%. The girls waffled, asking if there were any other offers, and Robert backed out.

“You gave me time to change my mind,” he tells them.

The only other Shark to show interest was Kevin O’Leary. Even though they’ve sold 500 boxes, he felt that the company was at the “proof of concept” stage. He was “tempted but is going to pass.”

“We were so disappointed when Robert took the deal away. He wanted us to make a quick decision. Their expertise and knowledge would’ve really taken us to the next level and helped us reach even more families,” relates Donna.

The pair didn’t give up.  “Since not getting a deal on Shark Tank, we have learned a lot. It was a big impetus, that we had a lot more work to do,” says Rosie. “When we went on Shark Tank, we had sold 800 boxes and had $20,000 in sales. Since then, we’ve shipped over 30,000 boxes, and we have $1 million in sales.”

Rosie and Donna have a deep motivation to succeed. “As immigrants,” says Rosie, “Our parents struggled so much, to give us an education and keep a roof over our heads. We need to succeed for them.”

The girls recognize that their biggest challenge is the cost of customer acquisition. They’re about to get some help with that. Donna gets a call from Kevin O’Leary. He was in town and wanted to stop in and see how things are going. The girls are thrilled to have him visit.

“When Surprise Ride came into the Tank,” says Kevin, “They asked for a valuation that was ridiculous. I was always intrigued with Surprise Ride. I liked the product, the concept. I made all my money in the education software market, so I’m very aware of what children 3-5 do with their hours when they’re awake. So, I’d like to see what happened with Surprise Ride. They asked for too much in the Tank, so did they die? Has reality struck them yet? These are all questions I want answered.”

“We’re really excited to share our progress,” says Donna.

The girls update Kevin on their progress. “When we came to Shark Tank, we said we’d make $500,000 in sales. We not only hit the $500,000; we’ve cleared $1 million in sales in one year. We have a 30-35% profit,” says Donna.

Kevin asks about their employee compensation policy. The girls explain that they give equity in the company to their employees as part of their compensation package.

Kevin wants to know how they feel about their Shark Tank experience. Donna explains that they’ve learned a lot, but regret not having a Shark’s experience to help guide them. “It’s beyond the capital. It’s the experience,” she says.

He asks about their customer acquisition problems. The girls agree that it’s one of their most challenging problems. The customer acquisition costs can quickly outpace lifetime profit earned from a single customer.

“There’s two types of companies that come onto Shark Tank,” says Kevin. “There’re companies like yours, that comes on once, and doesn’t get a deal, and fades into oblivion, or there are companies that get me as an investor, and they never fade away. The other thing I’ve noticed, this remarkable phenomenon over the last three years, is that all my women deals are making a lot of money. This is really interesting.”

Kevin is still interested in Surprise Ride. He has an offer for the girls. He’s willing to help them with their customer acquisition problem. He offers them an investment. He offers $50,000 in return for 6% royalty until the investment is paid back, with 2 ½ % of the company. Take it or leave it deal.

The girls visibly struggle with the decision. “I’m having flashbacks of when were in the tank,” says Rosie, “And Robert gave us that deal and we didn’t take it quickly enough and he took it back.”

“Surprise Ride is at an interesting juncture,” says Kevin. “I think these girls have learned a lot since appearing on Shark Tank. I think they’ve learned from time, that you don’t want to take an opportunity and squander it. Now I own a piece of this company. I like what they’ve done so far. I’m going to pour gasoline on this deal, and take this to $10 million in sales.”

Surprise Ride has won what is perhaps a first in Shark Tank history- a second chance at a Shark investment, and they are well on their way on the road to big sales and success.