Kevin O'Leary and Daymond John go head-to-head for FOAM Coolers deal in 'Shark Tank'
Imagine a cooler that is both strong enough to endure the pressure of a road roller and light enough to float freely in water. Frustrated by bulky, uninspired designs, Chad Lee and David Kittle set out to redefine convenience and style, creating a game-changing solution to keep your beverages perfectly chilled.
In Season 16, Episode 6 of ABC's 'Shark Tank', the inventors behind FOAM Coolers pitched their innovative product to a panel of eager Sharks. The founders walked into the Tank seeking $150K for 10%.
FOAM Coolers scored a deal before appearing on 'Shark Tank'
By the time the duo appeared on 'Shark Tank', the company had already generated $114K in sales. But on their way to the ABC show, they got a commitment for another $137K, bringing their total to $251K for the year.
One of the company's challenges has been its direct-to-consumer (DTC) model. They retail their coolers for $99 but do wholesale for approximately $50, depending on the channel, and then they land it for $25.
FOAM Coolers try to bank on their Target contract
A week into filming 'Shark Tank, FOAM Coolors launched in Target, where they sell directly. However, they weren't able to get into every Target store, starting with just 97 locations.
They claimed that they were moving slowly as they didn't want their products to come back after getting slashed down at Walmart. Daymond John, Daymond John, however, expressed concerns about the price of the cooler, noting that it resembled any other styrofoam cooler and didn’t have a high-end appearance to justify the cost. They both defended their cooler, highlighting that they had invested $150K into the business. They also emphasized that they didn't have the option to take back their products from Target.
Lori Greiner felt the reason Target made the deal with FOAM Coolers without having seen the product is that they had seen tons of products, and they have a category buyer. She felt that FOAM Coolers had disrupted a category. Kevin O'Leary was confused and wondered how they disrupted the category without making any sales. Lori clarified that the founders controlled the buyer and not vice versa.
Sharks fight to get bigger bites out of FOAM Coolers
Lori promised to be their customer but refused to make a deal. Mark Cuban failed to see any risk/reward in investing in this business and also chose not to invest. Guest Shark Todd Graves claimed this wasn't in his wheelhouse, so he didn't offer a deal either.
Kevin believed that if the products were successfully sold through Target, things were either going to take off or they wouldn’t. Despite his doubts, Kevin made an offer that reflected the risk. He offered the duo $150K for 33.3% of the company, making himself the third partner of the company.
Daymond saw the product getting a license and branding deal in the future, so he tried to undercut Kevin by offering $150K for 30%. Both the Sharks are met with a counteroffer of 17%. In the end, the founders had to give into Daymond's 30% equity offer.
'Shark Tank' Season 16 airs on Fridays on ABC at 8 pm ET. For those who miss the episode, it will be available on demand the following day and on Hulu. Additionally, viewers can explore past seasons and episodes on Amazon Prime Video and iTunes.