Shark Tank is arguably the most popular reality TV shows in America focused exclusively on entrepreneurship.
It lets entrepreneurs pitch their innovative entrepreneurial projects and products to a panel of successful businessmen and investors with the goal of securing an investment deal – usually equity in the business (average ~23% in season 10) in exchange for funding (average $286k).
Because of this, it’s very curious to see how well the businesses featured on the show are doing.
In this article, we’ll investigate some of Shark Tank’s biggest failures: businesses that failed to capitalize on the huge opportunity of being featured on the show, and some of the biggest missed investment opportunities from the sharks.
Contents
10 Failed Shark Tank Companies
1) ToyGaroo
What was ToyGaroo: “The Netflix for toys”, a subscription service allowing you to rent different toys every month
ToyGaroo’s founders: Hutch Postik, Nikki Pope, Phil Smy, Rony Mirzaians, Young Chu
ToyGaroo at Shark Tank: Season 2, Episode 2
Investment: Raised $250k in two funding rounds from Mark Cuban and Kevin O’Leary
Why did ToyGaroo fail?
According to founder Phil Smy, with whom we have an in-depth interview about ToyGaroo, it was for two major reasons:
- Sourcing prices: it was hard to source the toys affordably. They were hoping for their newfound investors to help them with contacts at Mattel, but nothing came out of it.
- Shipping costs: the toys had very different dimensions, so shipping costs would get out of hand. This was a problem because they were running a “free shipping” model. They wanted to get out of it to deal with the problem, but their newfound investors were against it.
“Like most SharkTank appearances, we got a spike when the show aired. Which was not what we needed as a sudden influx into a business that depends on stock is not a good thing!”
According to Phil, the business would have been much better off growing slowly and organically, as this would have given them more time to deal with some of the sourcing and shipping problems we mentioned above. This, combined with the lack of consensus about the shipping issue, brought Phil to the opinion that the participation in Shark Tank was actually detrimental for the business.
See also Crisply shown, as a TV broadcast NYT Crossword ClueAll in all, ToyGaroo is a great illustration that Shark Tank is not always a home-run for the participants. The free publicity could come at the wrong time when the business cannot make good use of it, and the relationship with the investors could turn sour.
2) ShowNo Towels
What was ShowNo Towels: A towel shaped like a poncho (with an opening in the middle of the towel for the head)
ShowNo Towels’ founder: Shelly Ehler
ShowNo Towels at Shark Tank: Season 3, Episode 4
Investment: Raised $75k for 25% equity from Lori Greiner (which didn’t materialize in this way)
Why did ShowNo Towels fail?
Right from the start, the relationship between Shelly Ehler and Lori Greiner also took a hit. According to Shelly, Greiner warned her not to cash the check on the next day and later on tried to change the terms of the deal (asked for 70% of the company instead of 25%, and when Shelly Ehler refused, Greiner changed the deal to a loan that could be used only for sales rather than other expenses).
“[My] Shark Tank deal [with Lori Greiner] turned to crap. I once cursed my ‘Shark Partner’ for kicking me to the curb. But now I thank her. She taught me so much more than she thought she did and none of it was about business,” – a quote from Shelly’s blog post, which is currently taken offline.
Moreover, the company had a lot resting on one big deal with Disney. After not impressive-enough sales of the product online, and a profit margin insufficient to meet Disney’s expectations, the deal fell apart after many months of trying to move it forward. Another deal that fell apart was a royalty deal with Franco Manufacturing. The failure of both deals and the tension between the founder and investor lead to the dissolution of the business.
Three years after shutting down ShowNo Towels, Shelly Ehler is back in business. She restarted the website and is currently focusing on selling the towels mainly to people with disabilities – a market Lori Greiner didn’t deem large enough to pursue.
3) Sweet Ballz
What was Sweet Ballz: Maker of cake balls retailing at convenience stores
Sweet Ballz’s founders: James McDonald and Cole Egger
Sweet Ballz at Shark Tank: Season 5, Episode 1
Investment: Raised $250k for 25% equity from Mark Cuban and Barbara Corcoran
Why did Sweet Ballz fail?
See also The Everest ResultsThe story of Sweet Ballz is a classic story of two founders falling out. James McDonald and Cole Egger got into a lawsuit shortly after the Shark Tank deal was struck. McDonald was suing his partner because he believed he was developing a competing product behind his back – Egger started operating the competing Cake Ballz brand. Things between the two partners went far enough for a restraining order to be issued.
The problem was that the conflict between the founders took place closely after the Shark Tank episode featuring the product was aired, which resulted in a big missed opportunity for the business. The site was offline and the Sweet Ballz domain even redirected to the Cake Ballz website for a short while.
After the completion of the lawsuit, the Sweet Ballz website is back in the ownership of James McDonald who was the original creator of the Sweet Ballz brand and product. With the missed Shark Tank opportunity and the dying out of the cake balls fad, however, the business is not doing great and McDonald only runs it as a side gig.
4) Body Jac
What was Body Jac: A fitness machine designed to make push-ups easier for out-of-shape people
Body Jac’s founder: Cactus Jack Barringer
Body Jac at Shark Tank: Season 1, Episode 5
Investment: Raised $180k for 50% equity from Kevin Harrington and Barbara Corcoran
Why did Body Jac fail?
In the show, Barbara Corcoran told Jack Barringer that to finalize the investment deal, he had to lose 30 pounds to prove the machine worked. He did so and the deal went through, however, the business didn’t reach any success afterward. The website selling the product was discontinued in 2012 and Corcoran mentioned in interviews that investing in this company was the “worst business deal she had ever made”. There isn’t any public info available for the exact reasons behind the failure of the business.
5) CATEapp
What was CATEapp: A privacy app that hides calls and messages from selected contacts (i.e. a messaging app for cheating)
CATEapp founder: Neal Desai
CATEapp Shark Tank: Season 4, Episode 2
Investment: Raised $70,000 for 35% equity from Kevin O’Leary and Daymond John
Why did CATEapp fail?
After the episode aired, the CATEapp had 10k new downloads (most new customers being women). Since the privacy functionality of the app could also work for government and law enforcement, Neal perused those markets. However, it seems the app didn’t become popular enough because it went offline and the last post from its social media accounts was in 2013.
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6) Breathometer
What was Breathometer: A portable device working with a smartphone app that measures blood alcohol levels (a portable Breathalyzer)
Breathometer’s founder: Charles Michael Yim
Breathometer at Shark Tank: Season 5, Episode 2
Investment: Raised $1m for 30% equity from Kevin O’Leary, Mark Cuban, Daymond John, Lori Greiner, Robert Herjavec
Why did Breathometer fail?
The idea sounded great – obvious from the fact that all five sharks wanted in on the action and invested together. However, the business ran into a lot of problems after the deal. They had trouble fulfilling all the orders they were receiving, and after a short while it turned out the device didn’t work as advertised. The results the device was giving were not accurate and occasionally it reported a blood alcohol level far below the actual value. This is a big problem because it could encourage people to drive when they are in fact in no condition to do so. The Federal Trade Commission got involved and ordered Breathometer to make full refunds to all of its customers (and take the product off the market).
Mark Cuban called it the “worst execution in the history of Shark Tank” and blamed the founder for miss-spending the capital.
Despite this being a significant failure, the company is still alive (albeit its unknown if the sharks are still in on it). It is currently pivoting and advertising a new (yet similar) product – Mint, which is supposed to measure biomarkers associated with bad breath and gum disease. The company has a partnership with Philips in the area of oral hygiene.
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