Investors often reject startups for sloppy pitches or unprofitable business models.
On Friday’s episode of ABC’s “Shark Tank,” billionaire Mark Cuban left a deal in less than two on-screen minutes for a different reason: the “dumbest marketing move ever.”
The company in question, a Los Angeles-based car air freshener company called Ride FRSH, was on track to make more than $750,000 in annual revenue at the time of filming, brothers and co-founders Donovan and Trey Brown said.
But they made their fatal error early: They gave Cuban, the owner of the NBA’s Dallas Mavericks, an air freshener with the Golden State Warriors’ logo on it.
“You got to read your room,” Cuban said, throwing down the air freshener. “Wrong move, wrong time.”
Cuban remained quiet for the rest of the negotiations, stewing over the loss his Mavericks took to the Warriors in the 2022 NBA playoffs earlier this year. Luckily for the Browns, the other Sharks were interested.
Ride FRSH had made $1.1 million in revenue in three years since launching, due largely to its subscription model. At the time of filming, the founders also said they were in negotiations with AutoZone, among other large retailers.
If the deal were to go through, AutoZone would buy $2.1 million worth of Ride FRSH air fresheners to distribute at 2,000 of their locations, the Browns said.
They asked investors for $200,000 for 5% of their company.
Lori Greiner quickly withdrew, saying the company skewed toward men because the products had traditionally masculine scents and shapes. Robert Herjavec left too, saying the company’s product reminded him too much of a long, miserable family road trip.
Kevin O’Leary said the Brown brothers valued their company too high, given their sales record. Their investment request valued Ride FRSH at $4 million, but the startup only brought in $540,000 in 2021 revenue, O’Leary noted.
The last remaining Shark, Barbara Corcoran, wasn’t initially impressed either. She congratulated the pair on their high sales, but said going into retail was a mistake because the brand was already growing independently.
The brothers responded that the retail plan was specifically to help offset rising customer acquisition costs. That got Corcoran to reconsider.
She offered $200,000 for 25% of Ride FRSH, contingent on their pending partnerships becoming official. After some negotiation, the two sides agreed on 20% of equity instead, and the Browns left the show with a deal.
On their way out, they apologized to Cuban.
Cuban smiled and told them, “It’s all good.”
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”
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