Alice's Table is a company from Boston, MA, that wants to bring more women into business by hosting flower arranging classes and providing "businesses in a box" kits so that they can teach other women the art of putting flowers in a vase.
The business is structured similarly to many "paint night" events hosted at bars around the US where women can take the classes to learn flower arranging and then, if interested, pay a fee for an initial box of supplies to start hosting their own nights with the idea of establishing an independent business.
The entrepreneur claims that she hosted classes for eight months and sold $100,000 in tickets and holds this as proof that women can start real businesses with her format.
Affiliates to Alice's Table are called "execs" in company parlance. A new "exec" can begin their own class teaching business by purchasing a starter kit for $699 that includes the necessary tools, aprons, and literature. The cost to the company for these kits is $550. The "execs" who purchase these kits then begin scheduling their own classes and recruiting students, selling tickets for attendance, 30% of which goes back to Alice's Table. Tickets are priced at $65 per class.
This deal aired on Episode 9.17.
Making A Deal
The sharks took issue with the value of the company, believing that $4,000,000 was a little too high for a business that teaches flower arranging. However, the entrepreneur stated that she didn't value the company as a flower business but instead as a "company in a box" that could expand into other areas with the flower arranging classes being just the starting point.
Mark Cuban and guest shark Sara Blakely teamed up to bid on the deal, offering the $250,000 the entrepreneur had asked for in exchange for 10% rather than the 6.25% originally offered. However, this only represents a bite of $1,500,000 from the original value, a cheap proposition when considering that it includes not one but two sharks.
Additionally, this deal includes the right for Mark and Sara to buy in for an additional 10% in the next fundraising round.
The Stats Shark hates these kinds of businesses. They are structured as a pyramid where people sell down to the people below them and pay up to the people above them with the idea that the army at the bottom should be selling to real, actual customers but it often does not work out that way. Instead, people at the top and mid-level of the pyramid end up moving a lot of product to the "affiliates" below them who wind up investing a lot of their own money buying inventory they will never actually move unless they can recruit their own affiliates. Think Herbalife, which has been roundly criticized.
These businesses exist in a range of different areas. This one is to teach women how to arrange flowers. The Stats Shark knows someone who was suckered into hosting "paint nights" at bars where she lives and had to pay an upfront investment amount as well as buying all the supplies from those above her. Ostensibly, she could make as much or as little money as she put effort into but, in realty, she had to do all of the legwork of arranging these nights with no support or marketing from above, meanwhile she had to pay them for everything. And that was after the bar took their cut, of course.
While the entrepreneur claims to want to expand into more categories than just flower arranging, the Stats Shark just sees this as more areas of interest to con people out of their hard earned money with the promise of setting up a business that will never materialize.
- The Stats Shark has a particular dislike for these types of businesses because, though they sound like a way for entrepreneurs to get started, they are more often structured like pyramid schemes. See the analysis section for more.
- "Herbalife pays up after being accused of pyramid scheme" (Source: New York Post)