Billions of photos are on Smartphones, and GrooveBook offers a $2.99 a month subscription. GrooveBook creates a photo book of 100 of your pictures then sends it out to you. Will the Shark Tank Investors bite on this deal?
GrooveBook has a $.70 margin on each book sold.
Their subscription includes the book and shipping. GrooveBook's profit margin is $.70 per book. With 18,000 customers they are not making money because their overhead is $21,000 a month. They priced so that everyone can afford to have the subscription and they have invested $400,000.
The Groove in the book is to make the book flexible so that they can ship at a lower cost, and he has a patent on the design. If he changes the design of the book, the postage goes up to $3-4. Brian said they would consider raising the cost $1 per book
Mark wants to make this a service business, and he has the hook with the design of the book that lowers the shipping cost with GrooveBook.
They are competing against so many photo sites, and their ace in the hole is to be able to license the design as a service.
Entrepreneur: Brian and Julie Whitman
Ask: $150k for 20% equity
Companies on this episode: Bounce Boot Camp, Wall DoctoRX, Eyebloc
From: Chatsworth, California
Season: Season 5 Episode 13
Sharks: Mark Cuban, Daymond John, Kevin O'Leary, Lori Greiner, Robert Herjavec
First Aired: 01/10/2014
Deal: Mark Cuban, and Robert Herjavec for licensing at $150,000 plus a 20% royalty back to GrooveBook.
What do the Shark Tank Investors say about GrooveBook
- Mark Cuban offers $150,000 for the rights to license GrooveBook as a service to other companies. They can keep the current business for themselves. Mark and Kevin come back at $150,000 for 80% and the rights to license GrooveBook as a service to other companies. They accept Mark and Kevin's offer to have 100% of the business themselves plus 20% of the business that Mark and Kevin create.
- Daymond John is out because of Robert Herjavec's point.
- Kevin O'Leary asked if he will sell the whole thing, at $750,000 for the entire business. He said he wants upside in the business, but he would consider selling the business. They countered Kevin's offer is saying at this stage of the game they would want $6,000,000 for the entire business. Kevin won't pay that much, and he asks if there is a middle ground. They keep asking for skin in the game, and he wants at least 50%.
- Lori Greiner said she would give $375,000 for 50% and she would also take Robert in on the deal. And, they would have to do it right now.
- Robert Herjavec thinks it is a phenomenal idea but the business does not exist without his other printing business. They need each other for the pricepoint to be so low. He is out.
GrooveBook after Shark Tank?
GrooveBook ended up hitting the home run, selling their business less than a year after the episode for $14.5 million plus a piece of the upside. And to think, they would have given up the business to Kevin O'Leary for six million dollars. How do you like that for a deal?