Kevin O'Leary's 'royal' gambit fails again, but let's face it, there's only one reason he's on 'Shark Tank'
LOS ANGELES, CALIFORNIA: In the season 16 premiere of ABC's 'Shark Tank', Matthew Hall and Victor Adamo unveiled TruFit Customs, a revolutionary custom-fit mouthguard. The company's thinner and better-fitting mouthguards offer to improve performance without the poor communication drawbacks associated with larger industry staples, addressing an issue affecting professional sports.
The creators enticed many with their substantial development possibilities, seemingly identifying a lucrative niche in the sports sector. However, Mr Wonderful lost the deal to a Guest Shark, who made his debut on the October 18 episode, due to Shark Kevin O'Leary hoping to take a larger bite of the stake.
In the Friday episode, Matthew entered the Tank with a 5% request for $750K in TruFit Customs, which aims to use cutting-edge 3D technology to transform personalized sports gear, beginning with mouthguards and other dental items.
TruFit's innovative use of 3D scanning technology, which simplifies the traditionally challenging process of creating customized athletic goods, makes them very scalable. Given that they now have a substantial clientele in professional sports they provide Sharks with the chance to invest in a lucrative company that is positioned for tremendous development.
Their ability to serve both consumer and business sectors adds to their scalability and makes them a desirable investment prospect. Due to its unique digital approach to tailored sports gear and its existing partnerships with half of the NFL clubs, TruFit is positioned as a company with significant growth potential in terms of both revenue and market reach.
No wonder Kevin wanted to make some money off of it, so he noted, "Custom-fit mouthguards using 3D tech is a smart solution for athletes... Valuation’s a bit high, but I’m in! $750k for 3% equity, plus $2 per unit until I get $2.25M back. I think it’s a fair offer!"
Custom-fit mouthguards using 3D tech is a smart solution for athletes... Valuation’s a bit high, but I’m in! $750k for 3% equity, plus $2 per unit until I get $2.25M back. I think it’s a fair offer! #TRUFITCustoms #SharkTank #SportsTech
— Kevin O'Leary aka Mr. Wonderful (@kevinolearytv) October 19, 2024
While Mr Wonderful refused to budge from his offer, Guest Shark Rashaun Williams swooped in and met Matthew and his offer.
Kevin O'Leary and Royalty are two peas in a pod
It seems to be a recurring theme that entrepreneurs are more receptive to giving up a portion of their net worth (stock) than they are at reducing their gross margins for fear that doing so will destroy their company. After all those seasons, why doesn't Mr Wonderful understand?
It appears to us that companies that don't generate any money will almost never pay royalties. Although we like Kevin, we don't understand why he is so obstinate on this matter.
Since they are on TV, each firm receives a tremendous inflow of orders after the broadcast. If he receives a royalty in addition to any future purchases, he may easily recover his investment from that alone.
Compared to holding stock and waiting for an exit or profit distribution to be paid it reduces his risk and provides a more certain return. He doesn't care about the long-term success of the company because he is deducting it from revenue.
Kevin O'Leary's bluff is usually in favor of the founders
At times, we even believe he does it only to get the ball rolling on negotiations. We've witnessed him obviously toss crap out to persuade someone to lessen their equity with another shark or to make a deal.
He once genuinely offered something quite substantial, and when another shark reduced their stake, he immediately laughed. He enjoys squeezing his other sharks. Furthermore, he provides business owners with power over avaricious and irrational sharks. Uncle Kevin is watching.
He often makes the initial offer. Others, like Lori Greiner, simply wait for the conclusion. Depending on the sale, he may make thousands of dollars if he pitches it 100 times and closes five deals.
Kevin O'Leary loves playing the TV villain
The fact that 'Shark Tank' is a TV program is often forgotten. Kevin's "bad royalty offers" to assist in the creation of TV content are similar to how he played up the "villain" persona for several seasons.
For reasonable offerings, many businesses fail to attract the attention of sharks. Instead of investing in average (but not bad) enterprises, "royalty deals" are a method to keep things interesting without losing money.
Furthermore, Kevin is generally not even genuinely interested in those enterprises, and he is well aware that the royalty offers are awful. He constantly lets entrepreneurs hear other proposals since he normally doesn't get excited by rival shark offers.
Kevin's job is to make watching 'Shark Tank' entertaining.
'Shark Tank' Season 16 airs on ABC on Fridays at 8 PM ET