Safety Nailer
A quintessentially Shark Tank device, the Safety Nailer from Virgina Beach, VA, is a handy little gadget that will protect your fingers as you try to get a nail or screw seated. They have two versions, one for larger framing nails and screws and a smaller one for finishing nails. Both work by magnetically closing a plastic hinge around a nail or screw. This then provides the user with a larger surface area to hold onto and a small shield to protect fingers along the top, in case they miss with their hammer.
While the product was being represented by a man and a woman in front of the sharks, neither of them actually invented it. Instead, the woman entrepreneur's husband invented it. He was also the best friend of the male entrepreneur. This friend and friend's wife combo, teamed up to bring the product to market and to produce the first 2,000 unit run.
Currently, the Safety Nailer is $1.75 per unit in landed cost. Each unit then sells for $9.99 on Amazon or direct to consumer. In the last year, the Safety Nailer brough in $40,000 in sales. In the year in which this deal was filmed, the Safety Nailer had already booked $85,000 and the entrepreneurs believed it would finish out the year with over $100,000 in sales, netting $2-3,000 in profit.
Making A Deal
Kevin becomes the first shark to go out when the male entrepreneur reveals that he hasn't yet quit his day job designing waste water plants to go full time with the Safety Nailer. Barbara follows, stating that it lacks "sex appeal."
The male entrepreneur reveals that their company has recently filed a patent for a second product. But before it can be revealed, Mark says it's not really about the products for him but that he needs to know his money is going to someone who will work 365-days a year on the project and he doesn't see that with this, so he's out.
But the entrepeneur persists and pulls out a "clacker" type toy, the kind of thing that has two arms that spin around a handle. Except that, in this case, the arms have been loaded with repelling magnets and, once started, seem to infinitely repell one another.
Guest shark Rohan Oza brings things back to the product that was actually pitched and says that he loves the Safety Nailer and that he sees it as an easy licensing deal. He also states that he had been thinking about pitching Lori on going in on it with her but that she was displaying her "I don't know face." But Lori says that she agrees that it's a deal that would work well with licensing.
Mark suddenly comes back in and says that he's throw in money just for the rights to the clacker. This makes it a three-way team up offering $100,000 for 50% of the business plus the rights to the "clacker" toy for Mark. The entrepreneurs attempt to counter at 33% equity and Mark asks if that means he can take home the toy they brought in to demonstrate. The entrepreneurs say, naturally, of course, and a bargin is struck.
Obviously, there was going to be a bit of a bite taken out of the value of the business when three sharks (and their required equity to remain "interested") is factored in. In this case, it was a bite of over half the original value, or $411,255. However, this deal shows the importance of always trying to negotiate for a better deal. Had the original 50% ask remained, this would have resulted in a company valued at only $200,000 or a bite of $514,286. In essence, the entrepreneurs sold Mark a $103,000 clacker.
It should also be noted that, though Mark Cuban stated he was willing to put money into the deal in exchange for the rights to the clacker, re-watching the deal and the way it played out seems to indicate that this is in addition to his expected share of the equity and not structured like Manscaped, where Mark essentially purchased equity for both he and Lori without her having to put any money directly into the deal.