Coming on AfterShark: The brilliant Jonathan Miller, who made the Sharks look desperate
Somehow, this wily 29-year-old managed to talk Kevin Harrington out of wresting his company from him to giving an offer that not only supplied every penny he needed, but also preserved Miller's control and granted him a royalty. Even the Sharks' jaws, tired from chewing up weak-kneed entrepreneurs, fell open in shock.
Miller presented Element Bars, a Web-based company that custom-makes and ships energy bars according to each customer's tastes. Asking $150,000 for 15% of his business, he started the way all good foodie entrepreneurs do: with a tasting. Cleverly, to proverbially butter up the Sharks, he created a special bar for each of them (Barbara Corcoran got the "Sweet and Smart" bar). Kevin O'Leary ("The Mr. Wonderful" bar) praised the food, but he wasn't impressed with the valuation. Miller objected, smoothly saying he had worked in venture capitalism and he knew he was right. O'Leary was conflicted: "If you worked in venture capital, then you know my job is to squeeze your head like a teenage pimple right now."
Herjavec liked the taste, but he wasn't biting. He said that since Miller was a smart V.C. guy, he couldn't believe his start-up was really worth a million dollars yet. O'Leary kept working to bring the price down, and Daymond John pounced, suggesting the Sharks could simply steal his idea if they wanted to. Even after O'Leary called "I'm out," bushy-tailed Miller kept going, passionately promoting the taste and his manufacture method. "You're like a micro- or min-Shark," said Corcoran, before bowing out. Then Miller dangled the possibility of offering the Sharks a higher percentage of the company. John: "I would have to have 75%." Miller pounced: "Is that an offer?"
It was a negotiation like we haven't yet seen from a entrepreneur. Miller didn't show the slightest whiff of desperation. If anything, he bubbled with passion, insisting that the Sharks should want to go into business with someone as slick as he was. Herjavec was tickled: "Oh my god, this guy's great! ... You should forget this business. Come work for me!" Then infomercial king Kevin Harrington ("As Seen on TV") piped up and revealed his hand, saying he thought Miller's idea was the future. He offered all the money Miller wanted, but with total ownership for a 4% royalty. John, sensing he was about to lose yet another deal, tried singing his own praises : "Remember, I am a marketing and branding genius, and I will put that stuff everywhere." Miller, in a striking show of resolve, told John that his 75% offer would "demotivate" him as a businessman, and counter-offered with 20%. John quit. Soon enough, only Harrington remained in the game, and suddenly, it was he who had the whiff of desperation. Miller politely rebuffed any offer that would cause him to lose control of the business. In a telling show of his hunger for the deal, Harrington again offered the full $150,000 -- but this time, for just 35% of the company, plus the 4% royalty as promised. Miller insisted he meet him in "my negotiating range" of 25%. Harrington, showing his colors, lowered his equity requirement to 30%. Finally, after what looked like a long, edited-down session, Miller agreed, keeping control of his company without having to put up any of the risk. "Outstanding! You crazy chicken!" crowed, O'Leary, trying out his self-invented catch phrase again. Daymond John summed it up: "The best thing you sold here was Jonathan. You're a star." The Sharks said Miller deserved a seat of his own on the panel.
Was it always Miller's intention to part with 30%, or had he expected to get away with more? Why did the Sharks keep throwing in counter-offers when usually, they bristle when someone turns them down? And what told him that Harrington was ultimately going to choke? We'll find out later today when we interview him on WalletPop's AfterShark post-show.
And make sure to bookmark our AfterShark page, where every week, we add more interviews with the Sharks, the entrepreneurs, and the small business owners who dared to turn their noses at the big money.
So what else happened in the Shark Tank on Sunday night?
* David Chodosh, a toy inventor from Manhattan Beach, California, offered The Fizz, a cup of ice cream that attaches to the top of plastic soda bottles and makes an instant float. After spending $50,000 of his own money in it, he wanted $150,000 for a quarter of the company. Once again, it was snack time in the Shark Tank -- but unfortunately, Chodosh's novelty wasn't on the menu. He hadn't been able to interest the ice cream companies, and he had no notable inroads in the soda industry, either. Herjavec said, and everyone else pretty much agreed, that the only way to sell the product was to license it to the ice cream companies, but that wasn't something that made room for him as a businessman.
* The next to try their luck were Buck and Arlene Weimer, a couple married for more than four decades. Perhaps they're even braver than Jonathan Miller, because they went on national TV to try to get $55,000 for Under-Ease Underwear, bloomers that are designed to mask flatulence. "I've been wearing [them] for 15 years!" chirped Arlene, a sufferer of Crohn's Disease. Buck, rather than divorcing her, created his dowdy-looking bloomers designed to trap her gas and release it through a charcoal filter secreted in the backside. Arlene admitted that sales were declining, but she blamed that on a lack of promotion, because sales always spike when they get publicity. The Sharks, though pleased with the way the Weimers handled the topic, decided the market was too small. In this case, it was the millionaires who were the old farts, and they all passed. But the Weimers got some more publicity.
* "My company is really running on fumes," lamented Kimberly Cayce, who has put her life savings into Kalyx Technologies. She wanted $125,000 for a 25% stake, and to snag it, she was accompanied by a fleet of eight athletic women wearing her product: a line of newfangled sports bras. Her "power sling" was the key, but she couldn't afford to file her patents. Admitting that was bad enough, but unfortunately, she also told the Sharks how desperate she was. Faced with competition from the likes of Nike and Champion, and the fact that she planned to sell directly online, her prospects sagged. Spanx it wasn't. O'Leary did his best Simon Cowell: "I think you know you're dead. This is over. Now, you came here to hear the truth. I just gave it to you... There is no hope." Cayce departed in tears. Once she was gone, Herjavec and O'Leary battled across Corcoran's face: "You can kill the idea, but you can encourage the person," chastised Herjavec. "Life is hard, then you die. Get over it," O'Leary said. Herjavec: "We swim in different waters, my friend." Awkward pause. "I've gotta change chairs," deadpanned Corcoran.
* We got an update from Mr. Tod, who scored the very first deal of the season for his pie factory on an episode six weeks ago. "Business is booming," he reported, and he recently sold thousands of pies in five minutes on QVC. Revenue has tripled, and he's on course to make a million dollars this year. "Hey, if I hadn't got the money from the Sharks, I don't know where I would be right now. The doors could be closed. I could be homeless once again. But I got the money... and it's turned my life and business around." Unfortunately, he didn't say whether McDonald's was still a potential distributor of his pies, which was one of the enticements that convinced Daymond John to make an offer in the series pilot.
* A nerdy think tanker and a lobbyist, both of whom dream of pork, arrived with their barbecue rub and sauce. Brett Thompson grandly introduced himself as "the CEO of Pork Barrel BBQ," and along with his partner Heath Hall, he wanted $50,000 for a 10% stake. While the Sharks had their third boardroom snack of the hour, the guys laced their pitch with governmental clichés ("our inaugural product" has "a bipartisan blend of all-natural herbs and spices"). Saying he once lost his money in a barbecue venture, Herjavec wanted more about the business plan, while Corcoran couldn't seem to keep her mind on the game, saying she couldn't stop imagining the round-faced Hall performing as his own pig mascot. Barbecue sauce, it turns out, isn't quite as tempting as blood in the water, and citing a host of qualms (tricky distribution, a crowded market), four of the Sharks turned their noses up at it. Corcoran, though, inexplicably offered $50,000 for half the business, and won it.