This is the seventh instalment in a series of articles wrote from my time on Shark Tank.
SHARK TANK #7: Behind the Sharks’ goss on the pitches; and tips on not getting caught with your pants down
There is a lot of confusion around protecting a brand and business name. People think that having a domain name and business name is all the protection they need for their product but this isn’t true and if you’re relying on this, you’re going to get burnt.
You must have the basics!
For inventions you need to consider Patents and for all business, you need to register your Trademark (name or logo, or name of your product).
Naming your “baby”
If you haven’t come up with a name yet for your new idea or business then consider making one up from scratch, for example, “Google”. Now we know this is taken but when they trademarked this name they had no problems protecting it as the word itself was unique to them.
Last week we saw Ash from the business The Scrubba had no issues with registering the trademark as the word is made up. Surprise, surprise Ash is a trademark and Patent attorney so he knew the path of least resistance.
The price of Boost
As with most start-ups, when I started Boost I didn’t understand Trademarks and the protection that you need, so I went with the name Boost. Because it’s a common word, the money that I have spent on registering and fighting for my name has been in the hundreds of thousands! I love my name, Boost, but if I knew then what I know now, I would have come up with a made-up name. Maybe Boozt. Every episode you will hear us Investors talk about trademarks and patents, and the value of these. I can’t stress enough how important this is. A smart decision now could save you a fortune later.
What should you do?
IP Australia are following the shark tank series and explaining in detail how IP and Patents work in the business world relating, it to the show. If you are looking at starting up your business I would go to ipaustralia.gov.au. With all the years of dealing with IP Australia, I have always found them very helpful and informative.
$160,000 for 20%
This pitch was a lesson in the value of transparency and IP (Intellectual property). There were massive holes in its presentation; one was transparency. He said that he had it patented, which meant it is on public record, and when questioned he said it was patent pending. Either way, we were perplexed as to why he would not tell us what we were to be investing in. The banger for me was when he said that he was not selling the IP as it was excluded from the deal. I did have a hissy fit over this as he was taking the only thing of value out of the business, which is the IP, or as Steve put it – screwing us. I don’t think he was, in fact, doing that intentionally but by removing the IP from the deal, that’s the reality of what he was doing. Hence my dramatic, “I am out! So out, so out, so out!” (I wonder if he knew I was out?) OK, maybe I did overreact…
I am sure if I understood what he was pitching to us we may have been more interested but at the end of the day you have to trust your partner and it is very hard to do so when that partner is being cagey.
The Party People
$400,000 for 5%
The Business of the party people was a good business but with an 8m dollar valuation you would want the business to be significantly more profitable for this valuation to make sense. He valued the business with more stores and just expected that the new stores would make the profit that the existing stores do. People often think that more stores means more profit but this is not always the case. There is a risk in opening stores. In fact, all the profit he is making now can be sucked up in a store that is losing money. I did my numbers, and the business for me made sense at 2 million. I always understand and respect people’s decision not to do a deal, as it is a huge step into the unknown when you take on a partner. But what he did not value was what the right partner can bring to your business.
$150,000 for 20% share
Megan is a good businesswoman who has created a great business in wholesale. Her current business is turning over $800,000, meaning she is returning about $150,000, which is a good business that she should be proud of. It then started to get complex with the factory being split; but more importantly her focus would be split between the two businesses – retail and wholesale.
Retail is a tough business and there are many competitors in her space, which means I would have to focus solely on making her retail concept work. Maybe the retail business could be great for her in the future but she needs to do more work to understand her business model.
I felt for Megan as she is a smart, successful business women who is achieving great things in her business. One thing I would tell her if she is reading this is that she should be extremely proud of what she has achieved to date and that most people fail in business, so despite the presentation I admire what she has achieved.
Hummingbirds early education centre
Rebecca and Lea
$80,000 for 20%
These two women have been dealt hard cards in life with having disabled children. Instead of being victims, these women are finding solutions. The business they have created has not only helped their own children but has given support and hope for others in a similar position to themselves.
The business model was great and they have what it takes to really drive this concept to reality. What they needed was not only money but also someone to really guide them. With me being based in Melbourne this would have been a challenge. When Steve and then John put their hand up to invest I knew they had great partners and Steve being in Queensland was going to be able to make a huge difference.