I enjoy the Shark Tank and the idea of “the little guy” getting a chance to take an idea or an invention to the next level with the significant capital and expertise of the sharks. Unlike my co-author, Kirk Taylor, I don’t do any back end research on the would be investors; I like reacting purely to what I see on the screen when the show is broadcast.
Friday’s episode featured Kevin and Mellissa Keirnan, the inventors of The Last Lid. Their segment started off with a cute video and a slick pitch. The clownish background music and the sarcastic quips from the sharks gave this product a campy introduction. I didn’t like their chances based solely on the production editing. There were immediate objections and derogatory laughter from the sharks. Robert got out immediately.
Then the begging began. And Lori , the TV sales expert on the panel, bailed quickly followed by the rest of the sharks. When Daymond was the only one left, Mr. Kiernan dropped his pants and gave away 60% of the company, much to the chagrin of his wife. Daymond John was soundly mocked by the other sharks.
What struck me most about this pitch, is there was really nothing more than an idea and a cute video. The sharks want numbers, they want past sales figures to scale the value of their investment. There was no real meat to this presentation and the product itself was nothing more than a piece of heavy-duty cloth and a couple of clips to hold it in place.
Melissa was heard to say “you just gave away 60% of the business,” to which Kevin replied “who cares!” Who cares indeed- there is really nothing here-yet. Mr. Kiernan strikes me as a good salesman with an idea and a passion for a product, but not much of a businessman in the ways and means of bringing a product to a mass market. I would be willing to bet he has a stable of products or ideas for products “in the can.” Normally, I would scoff at an entrepreneur giving away 60% of their business but Kevin really had nothing more than an idea.
The key to this whole pitch was the very telling words of Daymond after being mocked by the other sharks. He said he invested because he had recently looked for a replacement top for his garbage cans- with no success. Daymond needed this product. This is one of the oldest reasons for starting any venture or creating any product: FIND A NEED AND FILL IT. Mr. Kiernan found a need for 20% of the sharks and he filled it.
As the owner of three lidless trash cans, I could identify with Daymond and see the NEED for this product. Even if it was nothing more than a concept as of Friday’s show, Mr. Kiernan found a need, filled it, and secured the funds to get it off the ground while securing Daymond’s access to retail channels. Daymond John, as a clothing mogul, can probably be very helpful in sourcing manufacturing for what is basically a “hat” for trash cans. I have no doubt that this product will find its way onto the shelves of stores like Walmart, KMart and perhaps even the Home Depots of the world. For folks looking for trash can lids, two Last Lids for eleven bucks is not only a drop in the bucket as far as a household spend goes, but a guaranteed workable solution.
There are around 115 million households in the USA. I will be conservative and guess that at least 50 million of those households have at least one trashcan. If I rather unscientifically project the need for this product, based on the percentage of sharks who needed it, at 20%, then there are 10 million households out there that need a new trash can lid. That is quite a few potential customers. If they achieve 1% market penetration, they’ll sell 100,000 units (two lids per unit). At eleven bucks a unit, that’s $1.1 million in sales-probably about $300,000 in profits on that run of sales. Kevin and his wife clear $120,000 on that deal. Not bad for sewing together some heavy duty cloth and putting together a cutesy video and a quick presentation.
The best part is Mr. Keirnan will now have credibility AND a sales channel for future ideas which, if he has half a brain, will be exploited solely for his gain. Daymond walks from the deal making $180,000 under this scenario and gets his replacement trash can lids. They’ll both benefit from additional sales as well.
But wait-like most As Seen on TV type products- there’s more. At the price point Mr. Keirnan is at, sales of 1 million units or more seems utterly attainable. For a guy who had a lot of sizzle, but not much steak for the sharks, I’d say he made out OK.
All he did was find a need and fill it- with a little help from the sharks.
Rob-This is an incredible story about us! Thank you so much for writing this, we look forward to to a prosperous future with “Last Lid!” Melissa and Kevin Kiernan
Nicely put Rob! My thoughts exactly after catching this episode on my DVR a few minutes ago. Finding a need and filling it is the key to any successful business/product. Though your market may only spark the interest of 20% of the population, your costs are low and there is a genuine need that can easily be met. Smart deal : )
“If they achieve 1% market penetration,” —
Never analyze anything on that basis. The first 1% is by far the hardest part of the market to acquire.
The extrapolation in a living, breathing business that captures 1% isn’t linear. Meaning, you don’t get to say if you grab 1%, and your product costs X, therefore you’ll make $X off that 1%. Doesn’t work like that. The cost of getting to that 1% is such that you typically wipe out all margin. There are at least a dozen reasons why that’s the case. For example, you don’t just build enough inventory to acquire the 1%, which means you spend beyond base cost to stock inventory in the beginning. The marketing costs to get the 1% are radically greater than they are to get the next 1%. Most likely the Kiernans do not in fact see any money from the first million in sales.
Good points, but I think the marketing benefit of just being on the show are HUGE- you can’t put a number on it. Even folks who don’t get funded probably make a lot of sales by association. When I wrote this (and when I write future posts), my intent is to think out loud about the deal and the pitch. I am looking at it from the perspective of “does it make sense to ME and do I think it will sell.”
The whole 1% example was really reducing the numbers to the absurd to make a point, not as a business case study. The Last Lid is going to make money. Is it a million dollar a year venture- not sure- but I’d bet a pile of dough that they will sell a million units before it’s all said and done. That makes everyone money.
@Jonathon,
That is exactly how you analyze it. If you have market penetration of 1/3/5/10/20 for analyzing estimated revenue.
Estimating profit and how well you can penetrate the market is a whole other ball game. Also the manufacturing costs they stated in the show were high.
So here ‘s the solution-get the large cans on wheels that have an attached lid with the elastic closure. Our garbage company supplies them to us. Hold a ton-rolls and the lid is NEVER lost.
I have one of those too- but I also have two (lidless) trash cans as well.