At the Shark Tank Blog, we like to give as many updates as we possibly can about business that appear on the show. In this Power Pot update below, Caleb Light – VP of sales at Power Practical writes about his experience pitching the PowerPot on Shark Tank. Caleb – along with company founder David Toledo – pitched the PowerPot to the Sharks on episode 524 which aired on April 11, 2014. There are excellent insights about the “inner workings” of what it takes to pitch in the Shark tank.
A little over a year ago, we got an email from a producer of Shark Tank via the ‘contact us’ form on the website. Being a huge fan of the show, I was a little dumbfounded that they would actually reach out to us asking us to apply. Some of my buddies, like Kisstixx, have been on Shark Tank in the past so I knew the opportunity was great, if indeed the guy who reached out actually was a Shark Tank producer.
As a team we decided it was worth our time to at least set up a call with the producer. After speaking with him, it was very apparent that this guy was legit and that there was an opportunity but the likelihood of actually making it through the application process to pitch is very, very low.
Power Pot Update on Shark Tank Terms
The producer sent over the paperwork and there were some terms in there that made us really hesitant to even apply. Our primary concern was the producers wanted 5% equity in our company, or 2% royalties just to be on the show. After informing our board of the terms, they said that was a deal-killer and that we would not be moving forward. I was devastated; this was supposed to be my chance to pitch our killer products on national television in front of the ‘Sharks’. Later that week, I got another email from the producer announcing that they had eliminated the terms and that they would require no equity or royalties to apply and if selected pitch – hell yeah, we could move forward!
After going through the application process, we were notified that we had been selected to pitch to the Sharks and we would be flying to LA – game on. Prior to flying out to pitch, we invited some of our current investors to come in and be ‘sharks’ to prepare for the pitch/question and answers. Being someone that follows the show, I didn’t want to be ‘that guy’ that didn’t know the numbers or have a solid plan for use of the money we were trying to raise. They came in and fired every question they could think of and we would respond, then we would talk about the answer and make sure we were saying exactly what needed to be said, no more, no less.
We landed in LA and some of the Shark Tank crew was there to pick us up and take us to our hotel. There were a couple other companies in the van and we quickly exchanged what we were working on, the amount of revenue we had done so far, and the ask for the Sharks (in terms of the amount of money trying to raise and the equity that was being sold). Anticipation and excitement was evident and spewing from everyone.
Getting Ready to Pitch
The next day was spent on the pre-pitch and going over a bunch of legal stuff. The legal talk took an hour or so and was dry as can be expected. Then on to the practice pitch, this entails arranging how the table of your products and then pitching all the show’s producers. I don’t think I have ever been so nervous for a pitch and I have pitched in front of hundreds of people multiple times. I suppose the good thing was that I got all the nerves out on that pitch. The biggest concern that the producers had was that the equity we were offering for the amount was too low and that the Sharks wouldn’t be interested. After the pitch we had a day off and luckily David and I both have friends in LA, so we had some things to do besides sit on the hotel room. For you sushi lovers out there, if you are ever in LA you have to try Yamashiro in Hollywood. Hands down one of the best sushi places ever!
On our day off, we got notified that we would need to be ready to head to Sony Studios to pitch at 7:30 a.m. and we would in the first companies to pitch. That night my buddy Adam came over to our hotel room and drill us one final time with every question that we could think of and to be totally honest we only got asked one question that we didn’t prepare for – which stumped me but David nailed it, so all the preparation paid off.
We boarded our van and we were off to Sony Studios at 7:30 a.m. sharp and they brought us to a little RV where we would hang out till it was our time to pitch. There were around six companies that arrived in the first group with us and we were slated to go fourth. David and I were pacing back and forth, going over our lines for our pitch and trying to calm the nerves down. I have never been more excited about pitching, which I honestly love doing. Right before we hopped on the golf cart to head over to the studio where we would actually pitch, we had to get our hair and makeup done. First time for everything I guess.
Jumping in the Tank
Walking into the studio where we pitched and shot was an experience in itself. It was hands down the biggest ‘warehouse’ I have ever been in with ceiling that we like 60 feet high. In the middle the Shark Tank studio was set up and on one side was 5 RV for the Sharks and anyone that was with them. We got miked up and did a quick sound check and doubled check our demo and table of products. This was the first time the Sharks saw us and first time they were exposed to our brand. There is no interaction with them other than the occasional connection of our eyes. We walked back out through the doors and it was time for THE PITCH!
As the doors opened up David and I started walking down the hall toward the Sharks, the whole time looking at them while they size us up. We hit our spot and then you wait for all the cameras to get lined up and then something like 30 seconds to a minutes someone says go and its on. It felt like forever as the Sharks are eyeing us down, wondering if we are real or something that they are going to destroy. David opened the pitched full of energy, which he nailed and we laid it down. Great transitions, demo went down without a flaw, and we both were full of confident energy. Not just in the product but in ourselves – both are key for investor pitches because they are not just investing in a product but the people executing on the plan.
The Sharks immediately came at us firing off questions. As they fired them off, we fired back answers to those questions that were concise and to the point. All the preparation paid off, we knew our numbers, we knew the plan, and overall we know our business. As the shown in the episode all the Sharks graciously bowed out except for Mark Cuban.
The deal we pitched was $250,000 for 10% equity. As the pitched progressed, Mark was interested but he had a couple concerns that took some convincing to resolving. His biggest concern, was that since we had already raised a round of financing, have a board of directors, and hired a CEO, that we had all the pieces that we needed to succeed. That may be true but I really wanted to bring him to the table because like I said on the show, closing a deal with him means we may never need to raise another round of funding which is a huge deal.
Mark Cuban and High Fives
Mark countered our offer with $250,000 for 20% equity. A little heavy but he is at least interested enough in us to make a counter-offer. David and I were faced with a dilemma – take his deal, which would then result in a down round from our previous investment. This was something that we weren’t interested in doing because we really respect our current investors and really value the trust that they put in us by giving us money to execute on our dreams to be entrepreneurs. We knew we had to sweeten the deal, so we decided the best thing to do would be draw on our ‘future’ employee option pool. These are shares of the company that we set aside in 1st round for future hires. We came back with a counter offer of $250,000 for 12% equity, 3% ‘advisory shares’ (shares we had already set aside), and a seat on our board (this is important for investors because it gives them more control of upper management, boards hire and fire upper management). I was hoping that this would sweeten the deal enough that he would be interested in investing and to our luck, he took the deal! David and I were so excited and pumped up that we missed the high five on the way out – at least we didn’t mess anything else up.
We walked out of the room, hopped on a golf cart, and before too long we were back at the hotel. It was over, we closed Mark Cuban and we couldn’t tell anyone. David and I were beaming with excitement and none of my family or friends could experience it with me, until that the show actually aired. Pitching on Shark Tank was a once in a lifetime experience, not only because it was on national television but you have one shot to get one of the Sharks on board. I couldn’t be happier with the outcome, national exposure and we closed Mark Cuban! We believe that the more smart people you are able to bring to the table, the higher the probability of success.