Knife Aid
Knife Aid is an online service that will help people cut better by helping them keep their knives sharp. The two Swedish entrepreneurs behind Knife Aid claim that knife sharpening is one of the few services that hasn't been "digitized." They claim that people don't know where to go for it or how to do it.
Thusly, by signing up online, Knife Aid will send a secure mail-safe envelope in which customers can send their knives kitchen sheers to the company for servicing.
Kevin reveals that in addition to being "Mr. Wonderful", he's also "Chef Wonderful" and has a deep interest in cooking and knives, claiming that he owns knives that were built by former samurai blade crafters.[1]
The entrepreneurs invite Kevin and guest shark Rohan Oza up to try the before and after version of their sharpened knives. Somewhat predictably, the dull knives fail to do much of anything while the sharpened knives cut like... well... hot knives through butter.
Knife Aid was inspired by a similar service the entrepreneurs had seen in Sweden that was aimed specifically at the commercial market. They decided they wanted to open it up to the average consumer and target the United States instead.
The entrepreneurs said that their service on average costs $10 per knife or pair of scissors sharpened and they don't differentiate based on size of blade or whether scissors or not. However, they have a minimum package size of four knives, so sending fewer back will undoubtedly increase the per unit cost to the consumer. Thus far, they have made $120,000 in sales all through Facebook and Instagram advertising. In the last month, Knife Aid booked $37,000 in sales.
One of the entrepreneurs had also been involved in Happy Socks and said that he still sits on the board. Both entrepreneurs stated that they have since re-located to the United States.
Making a Deal
Guest shark Rohan Oza kicked things off by asking why the entrepreneurs, if they'd had success elsewhere were even in the tank looking for money. The entrepreneurs admitted that they had failed in the United States before with a US-based partner which left them, they thought, with two options. The first was to go the traditional venture capital route while the second was to go "all American" and try to raise money on Shark Tank.
Lori claimed that she knew the market best (over Kevin's objections). She said she found them fresh, unique, and different and offered Knife Aid $200,000 in capital, $200,000 in credit, all in exchange for 20% equity.
Mark, who sat back through most of the deal, questioned the entrepreneurs about their channel strategy. They claimed that their big idea for expansion was to get their mail envelopes carried in stores like Williams and Sonoma where customers could find out about their service there in exchange for a small cut of the revenue.
Lori says that she could get them in without any problem. But Mr. Wonderful said that he had all of the same contacts as well as his Something Wonderful platform and offers them $400,000 for the same 20% equity.
Rohan asks if he can team up with Lori and the two revise their offer to a straight $400,000 in case in exchange for 20%.
Barbara says what's usually Kevin's line and thinks that the entrepreneurs are being a little aggressive with their valuation. But she teams up with Kevin to go a straight $500,000 for 20%.
The entrepreneurs respond to this flurry of offers by stating that they want to partner with the sharks who can show them the fastest route to growth. Lori notices them looking at Mark, who has just been sitting there idly, and asks if they're waiting for him to make an offer. They claim that they can feel energy coming off of him.
Mark asks what accelerant they think they need in order to blow up and they say that they want free sources of traffic, implying that they want free publicity from a Shark's Instagram, Facebook, and Twitter presence. Mark says he can do all of that but that he's going to wait and see how the other deals pan out.
The entrepreneurs return to Barbara & Kevin and Lori & Rohan and say that they want to know which sharks will give them one hour more than the other brands they have. Essentially, they want to be the number one sons. All of the teams insist that they're their guys and Mark accuses them of groveling.
The entrepreneurs ask Rohan and Lori to match the $500,000 for 20% and they do. This leaves the entrepreneurs with the need for a discussion and they step out into the hall to talk. Kevin, not wanting to let the deal go by, heads out to try and convince them with Rohan quick on his heels. Rohan asserts that he'll do whatever it takes and the entrepreneurs behind Knife Aid decide to close the deal with Rohan and Lori.
In the end, the entrepreneurs gave up 5% more equity than they'd originally offered but also got $100,000 more than they had asked for, resulting in a very reasonable bite of just $166,667 from their original valuation.
Analysis
Sharpening a knife is not difficult. It's really just time consuming. Sure, you can buy a sharpener that you pull your knife through but those tend to leave chips over time and ruin your blade. However, a good stone will do the job perfectly, it just takes about 90-minutes per knife. Still, if you like knives, it's a calming rewarding process. Put on a podcast and go to town.
Your Stats Shark can see where there isn't a service like this already but... finding a knife sharpening service also isn't difficult. Most of the places that will sell you a high quality blade also tend to offer sharpening services.
This isn't the craziest deal ever seen on Shark Tank but it is one that will certainly fall into one of the weirder frenzies on the show yet.
Notes
- ↑ Ugh... this is one of those brags that you begin to wonder whether you know too much or other people know too little. Is it true that you can get Japanese steel knives that were made by companies that have a history of crafting samurai blades? Yes. In fact, your Stats Shark has one. But they're not exactly uncommon and it seems that most Japanese knife manufacturers seem to draw on a legacy like that. But it also has no bearing on their current quality. It's akin to noting that a little German company named Bayerische Motoren Werke used to make airplanes and, hence, their logo is an alternating field of blue and white in a circle to represent that because that's how you feel when you drive their cars. But... does driving a BMW feel like flying? Not really. It's just marketing at this point.