Season 5 | Episode 504 | EP504
In Season 5, Episode 4 of Shark Tank, Gus & Pete Hamborg approached the Sharks seeking an investment of $100,000 in exchange for 15% equity in ‘Hamboards’. The company is currently based in Orange County, California.
The Hamboard is a cross between a longboard and a surfboard. The idea is that the Hamboard is meant to recreate the experience of surfing on water...but on land. The intention is for the product to be marketed to surfers who wish to keep themselves in shape during the ‘off-season’ as well as to those people who want a slightly different ‘boarding’ experience on land.
The duo had already achieved $225,000 in sales by the time they entered the Shark Tank on their Hamboard Biscuit and Hamboard Classic models. They were predicting that by the end of the year they will have earned $350,000. At the time of the pitch the duo already had a couple of sales reps doing the rounds and attempting to get the product into more and more stores. They were currently in the process of increasing the amount of sales reps they had on the road in order to increase their distribution.
The duo announced that margins were pretty healthy on the product. They announced that their most popular Hamboard sells for $525 and production costs are less than a third of that price. They were also planning on introducing a variety of different accessories for use with the Hamboard later on in the year. Again, these would have rather healthy profit margins. Of course this piqued the interest of at least a couple of Sharks. After all, they are all about making profit.
A couple of Sharks did exit at this stage simply believing that the Hamboard was far too niche to really take the world by storm. Kevin also believed that the land surfing business was not yet at the stage where it could be successfully launched.
Daymond John: $100,000 in exchange for 30% equity. He wanted the product brought to market as quickly as possible.
Robert Herjavec: $300,000 in exchange for 33% equity in the company. He believed that $100,000 would not be anywhere near enough to get the company ‘off the ground’.
The duo haggled with Robert Herjavec on his stake who happily accepted a revised offer of $300,000 in exchange for a 30% equity in the company. This was 3% less than was originally being offered.
Robert Herjavec tends to only invest in well executed businesses that have paying customers. If you want to capture Robert’s attention quickly, have a good story, be humble, know your numbers and understand good timing.