No Deal

BottleKeeper


BottleKeeper is a product from a company out of El Segundo, CA, that solves the age old problem of how to keep one's beer cold. Using a super structure that looks like an ordinary aluminum drink bottle, the BottleKeeper holds a beer bottle inside it and keeps it cold by insulating the beverage from outside temperatures. And not just cold, safe too.

The safety of the bottle inside the BottleKeeper was demonstrated by having returning guest shark Alex Rodriguez throw a baseball at a stack of them. Even after being hit by his soft lob, the bottle inside the demonstration model remained intact (though Mark Cuban's pride was certainly hurt as he had stood up to participate before they opted for the baseball player).

The stainless steel exterior hides neoprene insulation inside that sits between the bottle and the super structure and keeps the bottle cold.

The BottleKeeper, for those who routinely suffer from warm beer, can be had directly online through the company's website or on Amazon at a $34.99 retail price. 15% of their sales come through Amazon and BottleKeepers are only sold there to prevent knockoffs from gaining too much of a foothold. The cousin entrepreneurs claim that their margins are at 90% because the BottleKeeper only costs $3.50 to manufacture but that their average net income is 10% because of marketing costs.

Sales for the BottleKeeper have been strong. The company has grossed $1,000,000 in just the last day, $2,000,000 in the last month, and $20,000,000 in total since launching the product three years before. However, despite having grossed $9,000,000 in the last year, the company has only realized a net profit of $500,000. Among other costs was $400,000 spent enforcing the two patents the entrepreneurs have on the BottleKeeper and the $4,000,000 spent on Facebook ads to acquire customers.

When asked about their extremely high $20,000,000 valuation, the entrepreneurs explained it as having been given to them as the value by an investment bank who decided it should be based by multiplying the company's gross (quarterly, presumably) revenues four times.

This deal aired on Episode 10.06.

Making A Deal

The entrepreneurs stated that they were looking for a shark to help get them into retail as well as to form a partnership but had a tough hill to climb on this deal.

As Mark pointed out, even if the BottleKeeper continued to be a runaway success, by valuing the company at $20,000,000 and asking for a $1,000,000 investment, there was no real upside to the sharks for any type of exit. Kevin dropped out of the deal early because he didn't think the valuation was accurate and was, in fact, way too high. Barbara also dropped out because she didn't like the costs associated with the business and the small profit margins in return.

Alex Rodriguez asked Kevin to come back in on the deal, to give the entrepreneurs the $1,000,000 they were looking for in return for 20% equity but the founders balked (no doubt because of what it would do to their sky high valuation). The tank then quickly dissolved into round after round of royalty deals after Lori made an offer that was very much like one Mr. Wonderful might make until the entrepreneurs settled on a team deal from Lori and Mark.

Mark and Lori would give the entrepreneurs the $1,000,000 in capital that they were looking for at just 5% equity but, to sweeten the pot, they would also get a $1.50 per unit royalty on every item sold until it had earned back $2,000,000 in profit for the sharks, at which point it would go away and the sharks would just be shareholders.

The entrepreneurs agreed (no doubt because it preserved their valuation) and brought both Mark Cuban and Lori Greiner on as investors in a product built to keep people's beers cold.

Scroll chart to see it all!

Scroll chart to see it all!




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This page was last edited on 28 October 2019, at 09:10.