Biz Tips: Shark Tank Deal: Prank-o Accepts $640,000 From Mark Cuban

Biz Tips: Shark Tank Deal: Prank-o Accepts $640,000 From Mark Cuban

Biz Tip:

Shark Tank Deal: Prank-o Accepts $640,000 From Mark Cuban

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In an unusual segment, company Prank-o, pranks the Sharks by introducing their bogus company, Rynarik, and asking for $75,000 for 14% of their company. They show them products such as a snack hat, a coffee pot that you can brew in the shower and dusters for your pet’s feet. When they went to hand out samples to the Sharks, they revealed what their actual company does. They sell empty boxes with funny items on the outside for consumers to wrap their actual presents in. Prank-o is actually seeking $640,000 for an 8% share of the company.

Since the company has launched, they have sold $10 million in prank boxes. This year they are projected to have sold $2.8 million. The product has nice margins as it is sold for $8 and is manufactured for $0.66 per box. They are currently being sold by large retailers and through e-commerce. Unfortunately, this is where the good financial news ends for Prank-o. In 2016/2017 they lost focus, tried to expand their business and create new products and ended up taking a loss for those years. The company is currently $1 million in debt with zero savings in the bank. They are currently operating from a line of credit where they have used $3 million. This is very concerning for the Sharks.

Lori immediately declines because she wants a business that is sustainable all year long, not just surrounding holidays. Daymond is out because he feels as though this is not a stable business. Barbara also declines to offer because of the financial situation that the company is in. She feels like it is not a worthwhile investment for her.

Mark decides to make them an offer, but only if they are willing to listen to him and take his advice. He offers them $640,000 for a 25% share in the company. He feels that 25% is fair because of all of the work that he will have to put into the company. Mark is interested in investing in their digital platform. He also has a vision of using these as an upsell for online retailers. Because he is a buyer, he could also potentially be a customer of their products.

Kevin O’Leary also extends Prank-o an offer. Since Kevin is in this retail space, his vision is to improve the website and rotate SKUs and smooth out the seasonality of the business. Kevin makes an offer of $640,000 for a royalty of $0.38 cents on every unit. There would be no equity in the company and this partnership would go on indefinitely. They respectfully decline Kevin’s offer and accept Mark’s as they feel that Mark knows how to grow and scale businesses.

What do you think about Prank-o’s product and Mark’s offer? Would you purchase this product? Sound off in the comments below!

For a full summary of this episode, check out this article. Shark Tank airs on Sundays at 9:00 PM EST on ABC.

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