tv The Profit CNBC May 25, 2015 9:00pm-10:01pm EDT
ed we got a deal. (man) the sharks are back looking for the best products and businesses america has to offer. if they hear a great idea, they're ready to invest, using their own money... you need me very badly. i know how to sue people. and fight each other for a piece of the action. you seem a little desperate at this point. i'm not the least bit desperate. you haven't shut up since you o--made your offer. but first the entrepreneurs must convince a shark to invest the full amount they're asking for, or they'll walk away with nothing. i want your help and i want your money. no, no, no. you're so full of crap. (men, chanting) kiss, kiss, kiss, kiss, kiss, kiss. i feel the fire. (laughs) oh! (laughs) (laughs) who are the sharks? they're five self-made, filthy rich investors. kevin o'leary is a venture capitalist
who started a software business in his basement, which he eventually sold for $3.2 billion. barbara corcoran turned a $1,000 loan into a real estate empire worth hundreds of millions in the shark-filled city of manhattan. daymond john is a fashion and branding expert who grew his homemade hats and t-shirts into the globally recognized fashion brand fubu. robert herjavec, the son of an immigrant factory worker, is now a technology mogul who sold his first internet companies for over $350 million. and mark cuban, a self-made, billionaire entrepreneur and the outspoken owner of the 2011 nba champion dallas mavericks. ♪ i'm dallas robinson... and i'm mike buonomo... (both) and we're from salt lake city, utah. we first met in college, and we just kinda clicked. some ideas just percolate up.
we've created something that creates a chemistry between two people that's absolutely amazing. yeah? yeah, i think that's right. we grew up with a very strong moral background, and we always walk, uh... (chuckles) a little bit of a fine line with our product, but we feel like we've found a way to come together with our moral backgrounds and still promote this awesome product. so everybody's been super supportive about our venture, uh, especially our wives. they've gotten jobs to help support our-- what do you-- our endeavor. yeah, our endeavors. (chuckles) it would be huge to get an investment with one of the sharks. we've gone as far as we can by ourselves. we have to have somebody to help us get through the next level. ♪ hello, sharks. i'm dallas robinson... and i'm mike buonomo, and our company is kisstixx.
we're seeking a $200,000 investment for 20% of our company. now just a few years ago when i was a high school senior, i focused on two things-- having fun in the sun and trying to get the cute girls to kiss me. now i quickly found out that these activities don't always mix well. while playing in the sun, my lips would get dry and chapped, and at that point, no one wanted to kiss me, so i tried every lip balm out on the market, and the only thing worse than kissing dry, chapped lips are chapped lips that taste like cherry cough syrup. it's disgusting, so i knew there had to be a better way to soften up my lips and ramp up my game with the ladies, and that's why i created kisstixx. kisstixx is a high-quality lip balm that comes packaged in two compatible flavors-- one for you and one for your partner. when you kiss, these amazing flavors combine, creating a chemistry reaction that's bursting with flavors and aroma. now we have several delicious combinations here for you, including strawberry daiquiri and piña colada, so when you kiss, you get miami vice, just like the drink.
(chuckles) we have peaches and cream, raspberry and lemonade, and our best seller, fire and ice, where one heats up while the other cools down, creating a fun tingling sensation that you will never forget. now fortunately for you guys, we brought with us our fully functional kissing booth, so a f--a kissing booth always features a beautiful lady, so, barbara, we were wondering if you could come down and help us on this one? no. hold it right there. who's gonna kiss me? kevin! (men laugh) come on down! come on--come on down and help us out. (chuckles) i love it. like mike said, this is our best seller, fire and ice, okay? wait. wait. did you invite him? absolutely. absolutely. get down here. yeah, absolutely. (laughs) i've been waiting, barbara. barbara, you're already hot enough... all right. so for you, we got some ice to cool you down... (chuckling) yeah. so there's some ice for ya. you can go ahead and just put it on. all right. this is the fire. since you're-- fire. (men laughing) we figured, since you're, you know, a little hotheaded, we got the fire for ya, right? absolutely. barbara, are you really gonna kiss kevin? no, i hope not. (laughs) here you go. there's the fire for ya. we'll find out real soon. all right. (chuckles) wow. tingly. feels good. mm. ooh.
listen, barbara, if i turn to stone, i'm gonna be pretty unhappy. (all laughing) (men, chanting) kiss, kiss, kiss... and then kiss kiss, kiss, kiss, kiss... to mix the flavors. barbara, let's go. (laughs) come on, sweetie. oh, no. just a little peck. (chants) go, go, go, go, go. you have to do it just to make sure it works. i'm backing you up here. come on. let's try it out. (robert) smooch, baby! (laughs) don't grab her. don't... (laughs) i'm ready, baby. kevin, no fondling. you have to commit to it. don't get your dentures locked up, guys. (laughs) i feel the fire. (barbara and robert laugh) i feel the fire. (mark) oh, lord. i'm gonna get ill. oh! (laughs) i didn't get there. (laughs) no, you have to hold it for just a second... all right. yeah? you gotta-- so you can get the full effect. (laughs) ohh! let's hold it, sweetie. ready? (laughing) hold it. you gotta hold it. a little longer. ohh! (laughing) yes! (laughing) yes. oh, my god. yes. (laughs) tasty. very tasty. ohh. ohh. (high-pitched voice) that's so disgusting. why did i have to see that? (laughs) that's so disgusting. did you feel anything?
it worked. (barbara) oh, god. you definitely get a, uh, change in flavor. so the question is, who's feeling the chemistry and ready to invest in us? w--so do you have any sales of this stuff? wait, wait, wait. just for the record, i want to say... (chuckles) you know how when you kiss someone, it can change your feeling? this didn't change a thing. (men chuckling) it confirmed-- it confirmed it all. but you'll always remember it, so... oh, god. (chuckles) yeah, so will the whole world. (chuckles) (robert) yeah. how does it work? we had in our minds, we wanted it to tingle, we wanted it to change flavors, so a team of chemists came up with our formulas. they're better than anything out there. they actually work, and they do the tingle sensation. what about revenue? what about sales? we've been doing this just barely a year last month... (daymond) here we go. and we actually-- (robert and mark chuckle) we hit a milestone for us, which is $80,000 in sales. total for the year, right? um... what do you think a business that does $80,000 in sales is worth? sales and a half. okay, so that would get you kinda into the $100,000, $120,000 range... sure. and you're telling me your business is worth a million dollars, because you want me to give you $200,000 for 20%. right.
what's the problem? this. it's our new vendor paperwork that's setting us up with one of the largest drugstore chains in the united states, walgreens, so... dallas, can i see it? have they placed an order? is it a test or-- can i see it? is it a test or is it in every store? what they want to do is roll us out in 7,500 stores for valentine's day promotion. $540,000 is what they're gonna order in product, see how it goes. what's it cost you to make one of these? yeah. depending on volume, between 86 cents and $1. and that's for one of them or for-- that's for the package that you see right there. everything all together. the whole package of two? mm-hmm. and what are you gonna sell them to--to your big retailer? we're wholesaling 'em right now for $3 a unit, and then they're retailing 'em at about $5.99. so how much will you make on that order? we'll make $337,000. dallas, how did you get walgreens? well, i went out and tried to find people who knew people at walgreens. we went to them, and they brokered us in to walgreens. mike, tell me about the other $80,000, not the walgreens. who bought that $80,000?
we sell on our web site, but we're in over 100 retail locations right now. um, we actually just got approved for-- in 485 associated food stores that we started distributing to two weeks ago. where do you see it going? we've got several ideas for other mix-and-match kissing products that we want to bring out after the fact. like what? the next thing that we have is called kiss mists, and it's, like, a breath spray, so it's the same kind of idea. oh, that's cool. we want to roll out gum as well, so you can do the kisstixx gum. that's actually very cool. (barbara chuckles) uh, it could just be the aftereffect of kissing kevin o'leary... (laughs) (kevin and dallas chuckle) my gut is saying big-time no. i'm out. it's a bad memory. (mark and daymond laugh) you're telling me it's worth a million bucks, and i can't get there. that's what's really holding me back. i'm certainly impressed with what you've done. now i didn't turn to stone when i kissed barbara, but...
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witanywhere on any device.you can manage your account anytime, just sign into my account to pay bills, manage service appointments and find answers to your questions. you can even check your connection status on your phone. now it's easier than ever to manage your account. get started at xfinity.com/myaccount dallas and mike have three more chances to make a deal. what's interesting is that the two people that kissed aren't doing the deal, so i don't know what that says.
i'm on the fence. push me one way or another. you've got two of the hardest working guys you'll ever meet up here. we won't let you down with this. we went and knocked doors and did summer sales and just to get enough money to make this our dream and keep this going. so how would you use the 200k? well, we'd use $167,000 of that for the walgreens order. um, that's gonna-- okay, so for inventory. yeah, for inventory, and then the rest of it, we want to get more distribution with it, and we want to get our name out there. i like what you're doing, but i think your valuation's too high. i think you can be fun, hip, innovative, and kinda a little bit edgy, which is cool, so i'm willing to give you the $200,000 for the--for 40%, but the other good news is, as you grow, i'll be there to help you finance all that other inventory without asking you for more equity.
mark has made you a better offer than i would. i'm out. i love to compe and win against mark cuban. (mark and daymond laugh) so does everybody. yeah, but i usually do. um... compete but not win. (chuckles) it's a better offer than i would have made. i'm out. you need to make a decision. time to decide. well, we would love to accept your offer. we'd love to work with you. i know you would, and i would, too. awesome. thanks, guys. (chuckles) thank you. (speaks indistinctly) thanks so much. thanks. (chuckles) congratulations, guys. you guys are doing a great job, man. you both are. thanks. (dallas) thank you. appreciate it. kevin, was there a tingle after you kissed barbara?
yeah, you get a little burst of flavor. did you get a little excited? well, it was more than that. (laughs) oh, no. (laughs) i had a--i had a burning sensation. (sharks laugh) i can't believe we got a deal with mark, um, but even more unbelievable is that we got barbara and kevin to kiss, so... (chuckles) it might not work out between them, but it sure worked out for us, so... (chuckles) worked for us. sweet. ♪ last season we watched kimberly nelson strike a deal with barbara corcoran with her homemade cake business, daisy cakes. pleasure. let's see what she's up to now. what an experience being on "shark tank" has been. oh, my goodness. amazing! prior to "shark tank," we sold 2,000 cakes in a year, and now we're averaging over $100,000 in sales a month, and because of this huge increase in orders, i was forced to find a larger bakery.
i've moved from my small kitchen with four ovens to a much larger bakery with big walk-in ovens, and the production has increased dramatically, from being able to bake eight cakes at a time to about 160 cakes. one of my favorite things is that i've been able to ship my cakes all over the country, even all the way up in the north pole. i write little notes to people on the boxes, so that, um, they know that some southern love is coming their way. oh, my gosh. this looks beautiful. working with barbara is absolutely amazing. she is so smart and creative. most of all, she's extremely well-connected. since i was a little girl, i have been baking. this is my life's dream, and now thanks to "shark tank" and thanks to barbara, it has all come to fruition. ♪
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next up are stephanie and daniel rensing with tools to make life easier for the home baker. hello, sharks. my name is stephanie... and i'm her husband daniel... and our business is the smart baker. we are seeking $75,000 for a 25% stake in our company. home baking has never been more popular than it is today. more and more people are getting back into the kitchen and making things from scratch to help them save money. our goal at the smart baker is to make those bakers' lives easier. since most recipes call for an amount much too high for just two people, i'm always left on my own to scale recipes down and convert odd measurements. i'd always wind up with a baking disaster that no one wanted to eat. (mouths word) (mark and kevin laugh) my husband and i created a way to solve this problem
and have all this information at a baker's fingertips when they need it. and where better to put this than on their apron? what's unique is that it's printed upside down, so you can read it while you're wearing it. within two weeks of creating the cheat sheet apron and putting it online, we quickly went from selling a few a week to over 50 a day right out of our garage. we've also designed a line of parchment paper that comes in precut, flat sheets that are made to fit the most common size baking pans. plus, we've added unique lift tabs that put us ahead of our competitors. oh, good idea. our newest hot item is our line of cupcake and treat towers. unlike other disposable towers made of cardboard, the smart baker's cupcake and treat tower is reusable and made of washable, durable p.v.c., eliminating the need to constantly replace after every use. with your help, we can make everyone a smart baker, and we'd like you to be one, too. thank you, stephanie. here you go. look at that. thank you. okay, so this is very cute. let's talk about what matters-- money. do you have any sales?
we do. uh, overall we've had about $72,000 in sales. in the past three months alone, we've had over $34,000. what do you think you'll do for the rest of this year? we're hoping to end the year out at about $140,000. we hope to net about $100,000. great margin. that's how you start a small business. so are you living off this, or this is a hobby? right now, for me, this is a full-time job. last year, i was an elementary art teacher, but i actually just found out yesterday that i lost my job... oh. wow. that sucks. so smart baker will now be full-time for me, and i'm gonna need to make it work. one door closes, another one opens, right? are you selling everything on a web site, going to trade shows? how are you actually selling the product? currently we're selling them online, through mail-order catalog with the aprons. we've done, uh, some trade shows. what's your best seller? currently our best seller is the cupcake tower. we've done about $40,000 in sales since october.
what does it sell for? retail, $59.99 to $64.95. i think what puts our cupcake towers apart is that it could be for a big, grand event like a wedding, but using our modular design, you could take off a tier or two, and you have a smaller structure, good for smaller parties. (robert) stephanie, do you mind me asking how long you've been married? eight months, but together ten years. so you went out for ten years and have only been married for eight months? that's his fault. (all laugh) did--did you ever date anybody else? nope. high school sweethearts. no. yeah. wow. no kidding? the reason i asked is you have such a great relationship, the way you finish each other's sentences... (chuckles) without arguing. what is it with the syrup all the time? robert gets so sappy on everything. my goodness. let's say you had the time and the help to focus just on getting more sales. what would you do? the first thing i would do is the trade shows. when people see the product, they fall in love with it. yeah. you know what, guys? i-i like what you're doing, but i think i'm such an internet geek i'd probably have a hard time on the retail side. you have a strategy there, and i might be the guy to hold you back, so for that reason, i'm gonna say i'm out.
okay. thank you. okay. thank you. now i buy your premise that, the economy being soft, casual dining dollars are down. i'm just wondering, though, how do you scale this business? you're sort of on the cusp of being a hobby versus a business. your valuation is not crazy. you're asking for a value of $300,000 on something that might make $100,000. trouble is, you gotta eat, literally... correct. so you gotta pay yourself most of the profits, so for me, as an investment, it's--it's very marginal. not enough meat on the bone to invest in it. i'm out. i know i can be like kevin sometimes, where i think i know everything about everything... (chuckles) but you don't. you're not like me. but in this case... (chuckles) i actually don't know that much about the baking and--and cooking business. i will definitely be a customer. i just can't add value to you. okay. i'm out. three sharks are out. daymond and barbara are stephanie and daniel's last chances to make a deal.
are you making an offer? i'm not sure. so, stephanie and daniel, i want to offer you the $75,000 for 40% of your company. is that the only offer? it's the only offer i heard. the only offer you heard. it's a hard one for me. i could argue either side of it. do you have any debt? (stephanie and daniel) no. no debt. you know, i bought a business in the tank here named daisy cakes. she had, for the year, $3,000 in sales. do you know she's been selling $100,000 worth of cakes a month? wow. that's awesome. but i made a deal with her that i was wondering, perhaps you might consider, because it gave me an opportunity to get the money back out, if you might pay me a f-- well, he'll call it a royalty. i'm calling it a return, a 5% return on what you sell, and if you'd be willing to do that, i was going to make the exact same offer
the guy who knows nothing about baking just made, $75,000 for 40%, but let me tell you what i do know. i know distributorship. i know the baking business. i know the technology piece of the food business, and i know the marketing business. and she knows how to kiss butt and lie. (laughs) oh. you understand the difference between the shark and the sharkette's offer? this one comes with a 5% royalty on top of it. this one comes with everything needed to make your business a huge business quickly, and let me tell you something, i could take your sales, and i could quintuple them in a month, simply because i've set up the network to do it, which was not easy to set up and very expensive. this guy doesn't know a darn thing about the baking business. you know what? the only problem about this is that i don't remember seeing barbara around the thanksgiving table. she's not family. she doesn't know what i know, so she can basically tell her great resume and say how much i don't know. she doesn't have a clue. so you're in the baking business? i might be.
i did fail to tell you one thing. the royalty on-- is totally ended the minute i recoup the investment. tell them anything else you want to tell them... i've told them everything. 'cause you-- you seem a little desperate at this point. stephanie... i'm not the least bit desperate. (speaks indistinctly) you haven't shut up since you o--made your offer. this is why i love the tank. you have two offers. what are you gonna do? i'm gonna counter barbara's offer, see if she is willing to do $100,000 for the 40% with the 5% royalty. i'd have to say no on that. (mouth full) wow. does your previous offer still stand? it's $75,000 for 40% with the 5% of sales off the top until it's repaid, definitely.
you got a deal. i think we will take it. (barbara) whoo! there you go. yes. whoa. that was so exciting! (stephanie and daniel laughing) (laughs) mwah! how about me? oh. he can dip you, too. no, no. i want a kiss. i just felt left out. he can dip you. (laughs) yes. thank you very much. thank you. congratulations. great. the smart bakers. thank you so much. (kevin) ohh. i'm so excited. yeah. (chuckles) (high-pitched voice) oh! (normal voice) got what we came for, baby. what were you doing putting your nose in that business? i was gonna license it, that's all. license it. i don't like to lose, but i'm happy for them. ♪
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nk is lyle schuette with a household product he invented for his wife. hi. my name is lyle schuette, and i'm from derby, kansas, and my product is the heat helper. i am here today to ask for $100,000 in exchange for 50% equity in my product. the heat helper is an amazingly simple device. it saves energy and money, especially in times when we need it now, when the economy is tough. i came up with the heat helper out of pure necessity. (chuckles) my wife had injured her back and during her recovery asked if there was any way that i could raise the dryer up so when she did laundry she wouldn't have to bend over to get the clothes in and out of the dryer, "and while you're at it, can you heat up that end of the house?" now my mother-- she was a very smart woman. now i remember back home on my parents' dairy farm in wisconsin, my mother would take her old panty hose
and stick on the back of the dryer. why? because she could catch the heat and the humidity that came out of the dryer, so during laundry day, our home was a lot more comfortable. now before i explain how the heat helper works, you must first understand how an electric dryer works. an electric dryer works by pulling in air through the back of the unit, heating that air up. then it blows the air out of your home. what a waste. now what the heat helper does is take that same amount of air that your dryer uses, filters it, and then blowing it back inside your home. it pays for itself in the first year. i call the heat helper... (taps) common sense in a box. (robert chuckles) now let's do some business. (mark, daymond, and robert laugh) first question i have to ask is, if my wife hurt her back and i didn't volunteer to do the laundry for her... (barbara laughs) i'd be black and blue. how did you get away with that? well, i started a dirt business, and i'm normally gone all day long, and since my wife, at that time, was a stay-at-home mom, it was all right for her to do that. she--she cut you
some slack, huh? yes, sir. lyle, what's a dirt business? i am a terra firma relocation distribution engineer. (sharks laugh) (chuckles) in other words, i move a lot of dirt. i'm a drainage contractor, and i sell topsoil and compost. lyle, how did your wife hurt her back? she fell in a hole of a pond i was digging on our farm. (laughs) i knew it was dirt. (chuckles) i knew it. you didn't do that on purpose? i told her to go left. no, i told her to go left, and she went right, and next thing i know, there she was. and then you made her do the laundry. (laughs) oh, god. dirt bites again. so-- did you help her out of the hole, or did you build something? in the words of my wife, she never saw my old butt move so fast. ah! (chuckles) have you had any sales? i've had 680 units sold, all through the web site. how much does a unit cost? $99, and--and we have sold 'em at lowe's and at walmart. and how much can that save me in my heating bill? well, an average family of four will save roughly $189 a year. lyle, you said you were in home--lowe's? lyle, what--
yes, we've been in lowe's for three years and in walmart. how many have you sold in the last year? probably 20. why is that? why--why did you fall off so dramatically? i ended the company in 2003, because my dirt business took off, where i could not do both. lyle, the walmart and lowe's deal you had-- was that on a national basis or just regional? that was my local two lowe's stores and my local walmart. okay. we had to sell 'em as a special order item. they--until i sold-- did you try to go national? the response i got when we did call is, you need to sell a certain amount of units, and once you get to that point, they would consider 'em to put me on the shelf. so--okay, so that's where we're getting. why do you feel that the units didn't sell? well, special order items mean there's a display at the store, but you can't pick it up. that's terrible. you have to order it that day... deadly. mm-hmm. and then he has to come back in another day or two. so great presentation, um, but if lowe's and those guys couldn't really sell,
i don't want to get into a space where the professionals weren't able to do it, so i'm out. lyle... yes, sir? i love you. you're the first-- i love you, too, man. (chuckles) no, no. let me tell you why. (mark, barbara, and robert laugh) you're the first guy i've ever met that made money selling dirt. i sell manure, sir. (chuckles) hey, if you can sell poo-poo and make money, that's fantastic... yes, sir. but it's not gonna be a huge business, and for that reason, i'm out. lyle, you got busy with your dirt business, and it kinda sat on the side, and now you're here showing it again, bringing it back to life. there's something used and warmed up about it and over that makes me uncomfortable. (inhales deeply) so i'd have to say i am out. well, i never lost interest in it, barbara. but you brought it back from the dead. i mean, to me-- it--yeah, and--and the same unit we have--i built for my wife 10 or 11 years ago, we still use. all the ones that we have sold, we haven't had one return or complaint, because there's only one moving part. lyle, you saw a need from your wife, and you created a product.
not an investment right now. (chuckles) i'm out. lyle, i gotta tell you, your heart's in it. it's a good idea. it fills a need, but it's just tough to write a check to somebody who's not eating, sleeping, and breathing the business, and so for that reason, i'm out. yeah. thank you, lyle. thank you. i thank all of you folks. have a great day. all right. (daymond and barbara) good luck. you, too, lyle. good luck to you. all right. bye-bye. (chuckles) what a great guy. he is. yeah, a very nice guy. one fun guy. he should have let us invest in his dirt business. (chuckles) i didn't get a deal today, and that kinda disappoints me, but, you know, life's too short. get over it, and it's all right. i'm still coming home, honey. ♪
next into the tank is scott jordan, who hopes to entice the sharks with the patent for his clothing technology. hi. my name is scott jordan. i'm the founder and c.e.o. of tec, and i'm seeking a $500,000 investment in exchange for 15% of my company. you see, i'm a gadget guy. i gotta have my stuff with me wherever i'm going. at any given moment, i've got my cell phone, my digital camera, my tablet, my laptop, and all the gadgets and gizmos and headsets and batteries that go along with it.
the list is never-ending. technology certainly has made my life easier, but it can be a lot of stuff to carry around, especially when you travel as often as i do. so what if i told you i had everything on this desk in the vest i'm wearing right now? introducing tec-- technology enabled clothing. (clicks and whirs) (electricity hums) (whooshes and clicks) tec is a patented system that lets you carry everything you need, know where it is, and access it easily in specially designed pockets. we've engineered our pockets to fit almost any device, and these pockets are layered into clothing so that there are no bulges and everything is balanced. many of these hidden pockets have unique features, like-- check this out-- cleartouch fabric that allows you to see and control your device right through the fabric without ever taking it out. we've even developed a patented system to wire your headphones right through the lining,
so you no longer have to contend with this tangled web of wires every time you have a call or want to listen to your music. i intend to license tec to every major clothing company, because i know that this can become the next huge ingredient brand, like gor-tex, velcro, polartec, and so many others. right now tec is poised to revolutionize the clothing industry, and this is a billion-dollar opportunity. all right. i've told you about my pockets. now it's time for you to reach deep into yours. scott, two days ago, i'm flipping through the back of "men's journal" magazine, and there was a similar product, and i thought, wow, what a great idea. yeah. is that you? (chuckles) that is-- it is a great idea, and--and it is my product. i formed a retail company to prove the concept of technology enabled clothing, and i've been running that company for a-a number of years, waiting for the patent, and now that it is issued, i'm here seeking an investment in technology enabled clothing as a licensing company
to bring this system-- the intellectual property along with the registered brand name and the product know-how-- to other clothing companies. tell me about the retail business, 'cause that proves the concept. yes, it does. it's like-- what are the sales in the retail business? well, to date, it's $5.1 million, and we're on track to do $12 million this year. the retail business-- is that real-- that's not part of this. (mouths word) that's not part of it? no. is the idea now that we're not gonna sell this retail, we're simply gonna step back, take the intellectual property, the i.p., and license it to others? that--that's exactly right. i-in terms of the offer i'm presenting here today, it's for the intellectual property and the brand name, the bigger idea, the billion-dollar idea. right. the sharks have discovered scott only wants to sell a stake in licensing the patent and not in his lucrative retail clothing business. scott, you're saying that the proprietary patent,
which you say you have now... yes, i do. is what you're selling me, right? right. why aren't you bundling it all together? why are you being so greedy and savage? 'cause i'm like you. (chuckles) oh. (laughs) what i'd like you to understand is that what my other company has been doing has been building the brand of technology enabled clothing for years. what is the technology we are buying? i see that you can put the speakers through the hood. now i know burton-- uh, n-not through the hood, but through the pocketing system, yeah. headphones-- uh, i know burton has done this for years, so what exactly do you have that's different from all the other ones that i know exist? well, th-they infringed on our patent. have you ever protected it? yes. and you collected? did you win? yes. i've settled with 11 of the largest companies, including v.f. corporation, north face... sure. ralph lauren, calvin klein... okay. under armour, spyder. are you getting an ongoing royalty? uh, it's subject to non--uh, confidentiality agreements... but wait a second, though. and so--
is it getting a royalty stream from the settlements? you don't have to tell me how much. uh, yes. okay, listen. and is that part of your bottom line? stop right now. stop right now. you need me very badly. yes. i know how to sue people. (mark, barbara, and scott laugh) this is going to be wonderful. i want it all, though. why are you just giving me a taste, when i want to eat the whole pie? but, kevin, kevin, hey. let's not get--let's-- i don't need you for the other company. kevin. kevin. kevin. yes, you do. oh. (chuckles) i just don't. the problem is, there's leakage in the deal. i don't get any of the good stuff, just the risky stuff. no, it-- no, it's not risky. so, scott, what exactly is the property that you own that you can defend and have defended? a garment with no wires in it but the capacity to wire things in it. is it a design patent? yeah, design and utility patent. and it's been issued? not only issued, not only tested in litigation, but recently reexamined and passed reexamination. so basically, the patent is attributable to the wires? that's right. only the wires? so they--for example, this pocket here has a hole in it that leads up through here.
that's ridiculous. that is ridiculous. that's just common sense. wires in, wires out. that's what's killing this country, that we get dumbass patents that people then turn around and sue, when it's just common sense stuff. yes, i love this country. it's ridiculous. but, uh-- you're being un-american. think--think about-- think about this. i understand as a businessman exactly what you're saying, especially as an ex-lawyer who hated dealing with lawyers so much i stopped practicing law. running a wire through a piece of clothing? i'm telling you, mark. i mean, i-i-- that's a patent? are you kidding me?! who cares? retail value. no, you're crazy. no, no, no, no. you're so full of crap. (daymond) scott, the cases you have defended have been when--argument's sake, let's say one of my designers-- and i have 30 of 'em-- decide to wire something, a hood or something else like that. it goes out. we don't even know you exist and have that patent. you hit us. we say, "instead of paying the attorney bills, "give him 50 to go away 'cause we don't have time for this," and that's it. and that's the reason why you've got to defend all of those-- and that horrible, horrible, horrible, horrible.
i love it! why do you say that? that is what this country was formed on... you're a lawyer. you're gonna say that. coming up with a unique idea and defending it. scott, just to be really clear, you came up with a fantastic idea. you patented that idea. you went out and built a business on your idea that'll do $12 million this year, $24 million next year... if not more. and now you don't want to sell us any of that business. you just wanna take the idea and sell us the patent of it. yes, i do. my other business only has a very insignificant part of a much larger market. no, because your other business could end up being the billion-dollar business that we have nothing in. did you start it just to cap off at $12 million? you're gonna grow that business. um... and you're gonna have the first right to this technology and not have to pay us. that's all negotiable. okay? i mean... so... i'm here to negotiate. would you sell me 15% of that business for $500,000?
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yeah, but that is-- that's insane. why is that insane? because we're gonna make t-- how much money are you gonna make on that $12 million? $2.1 million. you just called him insane for offering you a half a million dollars. for a company that's making $2 million? yes. so then why are you here? honestly, i want your connections. i want your expertise, i want your help, and i want your money. (kevin) look... may i just stop you there? i have to ask you something. do you have a business partner? yes. they must be a saint... (laughs) because you strike me like you'd be one pain in the neck-- he's a lawyer. what do you expect? yeah, but beyond that. you're tough. you know who the partner is? (robert) who? my wife. oh, god. is she a lawyer, too? yes. (laughs) (barbara) and you know what? shocking! scott, scott, just to be clear, i'm out. i understand. scott, okay, so we're talking about $1.2 million free cash? yeah. what's a clothing company trading at these days? let's call it five times? no. why? inter--internet clo--'cause we're direct to consumer. we're internet clothing company.
what's it worth? $30 million. $30 million? $30 million on-- who's insane now? 'cause it's growing at 100% a year. it has intellectual property. that's where it's unique. it's online. it's building a brand. a lifestyle brand. it--it's not--first of all, the intellectual property is built about running a wire the clothing. a rivet, a wire, velcro. it doesn't matter what it is. it matter because wireless is what's next. wires will not go away with battery power, and--and for the time being, for music. people will always prefer to listen to music with wire headsets. sound quality's better. you don't have to worry about pairing issues. i-i don't agree. i'll put low power bluetooth into the shoulder. let it distribute to all the other devices and to the headphones. i'd kick your ass. so i'm out. you were out from the moment you sat down, so i--you know, you're no loss. what is your problem? why would you say a comment like that to mark? you called me insane.
no, i--your valuations were insane. i think it's an insult that you wouldn't offer us part of the bigger picture. i'm out. three sharks are out, and scott has one offer on the table from robert. (kevin) you know, they asked a scorpion why it would kill something it was floating across the pond on. 'cause it's its nature. you're a lawyer. it's your nature to be like this. i'm okay with it. mark brings up a great point about wireless. you gotta admit that. it hasn't happened today. it's coming, and technology changes, and there will be very low-cost wireless headphones. it'll erode your share. in the meantime, you're doing a great job building this business. now robert made you an offer. he said, bundle them together and he'll give you 500k for 15%. i'll go in with him on that deal and go 50/50, or i'll offer you a million bucks. if he wants to come in with me, we'll double it for 30%.
i gave you $500,000 for 15%. i don't need o'leary on that. would you consider that? fine, then i'll make the-- i'll make the same offer. you can choose between us. i'll make you the same offer 'cause i think combining them together in the clothing industry, with the risk of wireless taking some share away in the next 36 months-- 500k for 15%. scott, is--is there a premise under which you're gonna entertain and offer in the real business? well, i-i have a call that i need to make. you know who was on my advisory board? steve wozniak, the cofounder of apple. i-i need to talk with steve wozniak. tell woz i said "hi," too. i will. would you like to say hi, kevin? sure. i sold him a ton of software. i wastheir education business for years. you shouldn't be able to take nonsense like that and turn it into a patent, and then fill up the legal system, and then create unlimited uncertainty for companies.
it's wrong. it's absolutely wrong. i agree with you, mark. i love him. steve, thanks. oh, my god. it's very good to hear from you. here--here's the deal. i got two offers on the table. uh, both from, uh, kevin and, uh, robert. they're the same amount-- $500,000 for 15%, which is what i asked for, but they're insisting that i include my other retail company. i'm--i'm sorry. that's just too much for this kind of offer. i-i mean, i don't think this offer's good enough for, you know, giving up, you know, um, you know, what you've got going already. what he's doing right now is, he's trying to figure out, is he serious about selling the real business or not? if i believe he will, maybe i'll make him a real offer. all right, come on back. ready or... i-i don't wanna... we were just talking bad about you, but it's okay. (laughs) you can interrupt. um, you know, steve says hi. (grunts) he doesn't know you. sorry. (daymond and barbara) ohh! (laughs) no, i'm kidding. i...
first, before i relay steve's comments, um, would anyone else like to, you know, reconsider? why don't you tell us what woz said? woz, you know, just thought that it was an awfully low offer for such a well-established business. did woz agree, though, that the only logical play was that it's one business, not two businesses? um, you--we didn't talk about that specifically, although woz knew what i was pitching because i've discussed this with him. your answer to $500,000 for 15%, i'm taking it, is no. um, i-i wanted you give you another opportunity and, uh, you know... to bid against himself? well, i mean, to--to rethink. why don't you counter? i mean, to rethink the logic of one m-- you know, scott, the way it works in the tank is, we make an offer, you counter. all right, then let me be clear. kevin, you're out. you're out. i don't--i don't need you. wow. you had $1 million sitting here. will your wife represent me in suing you for wasting my time? (laughs) because that's all you're doing right now.
you didn't come to make a deal. i didn't waste your time. don't waste ours. (speaks indistinctly) hey, scott. you know what? seriously, what the hell? you point at me and you tell me i'm out? uh... bye-bye. (robert) show a little more respect. ugh! that was exhausting. that was painful. as my mother always said, the fish stinks from the head. why are we still talking about it? i went in looking for a deal. i truly did. but unfortunately, the valuation that they put on my other company... combined was just insulting. i had no other choice. i had to walk.
letonight on "thprofit"...cus. we head back to some of the business i've partnered with over the past year. -carolyn? -carolyn: i'm carolyn. -nice to meet you. -lemonis: when i make a deal, i come in with a plan and a check. man: thank you, marcus. woman: i was gonna work you a little bit more. lemonis: [ chuckles ] but what happens after the cameras shut down... michael: i've let it slide for three freakin' years! lemonis: ...may surprise you. one struggling novelty sporting good company has been totally transformed. wow. look at this place. but the owner is still making the same sort of short-sighted decisions that nearly brought them to the brink. i'm pissed that you bought the printer. i'm not gonna lie. if you were me, would you stop putting money in this business?
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