The Sharks Question What Makes Must Love Stand Out From Its Competitors | Shark Tank US

Summary

In a pitch to the Sharks, Hannah and Molly, best friends from Los Angeles, present their plant-based ice cream company, Must Love, seeking $600,000 for 75% equity. They offer healthier, indulgent treats free from cheap oils and artificial additives, with flavors like peanut butter swirl and cashew cookie. Despite growing sales, the company operates at a loss due to the cash-intensive nature of the food industry and aggressive marketing. Their products are available in Sprouts, select Whole Foods, and Costco, retailing for $5.99 with a cost of $1.80. The duo has self-invested $200,000 and raised $1.4 million from friends, family, and angels at a $14 million valuation. They face skepticism from the Sharks about their valuation and the competitive frozen dessert market, ultimately leaving without a deal.

Takeaways

• 🍦 Hannah and Molly are best friends from Los Angeles, California, seeking $600,000 for 75% equity in their company, Must Love.
• 🌱 They offer a healthier, plant-based alternative to traditional ice cream, using simple ingredients and avoiding cheap oils and artificial preservatives.
• 🍌 Must Love's products include dairy-free ice cream in pints with flavors like peanut butter swirl and cashew cookie, as well as novelty bars.
• 🎨 This summer, they launched plant-based, non-GMO sprinkles that pair well with their ice cream, with colors derived from plants.
• 📈 The company has been growing double year-over-year since its launch in 2017, with $1 million in sales year to date and a projected $1.7 million in revenue for the year.
• 💸 Despite the growth, Must Love is currently running at a loss of about $400,000, which they attribute to the cash-intensive nature of the food industry and marketing costs.
• 🛒 Must Love products are available nationally at Sprouts Farmers Market, certain regions of Whole Foods, and have recently launched in Costco.
• 💰 The ice cream retails for $5.99, with a cost of goods at $1.80, indicating a significant margin that could be attractive to investors.
• 🤝 The founders have invested $200,000 of their own money and raised an additional $1.4 million from friends, family, and angel investors at a $1.4 million valuation.
• 🦈 They are currently in a seed round with an $8 million valuation and are on Shark Tank to negotiate and potentially secure an investment.
• 🔄 Some 'sharks' expressed concerns about the high valuation and the company's current losses, ultimately deciding not to invest, while others highlighted the competitive nature of the industry.

Q & A

Who are Hannah and Molly and what are they seeking on the show?

Hannah and Molly are best friends from Los Angeles, California, who are seeking $600,000 for 75% equity in their company, Must Love.

What is the main issue with the ingredients commonly found in ice cream according to Hannah and Molly?

The main issue with common ice cream ingredients is that they often include cheap oils like canola and palm, artificial preservatives and flavors, and even ingredients derived from petroleum, wood pulp, and beetles.

What makes Must Love's ice cream different from traditional ice cream?

Must Love's ice cream is different because it is plant-based, made with simple ingredients, and free from artificial additives. It is also marketed as being healthier and good for you.

What are some of the flavors and product types offered by Must Love?

Must Love offers flavors such as peanut butter swirl, cashew cookie, and snickerdoodle dough in pints, as well as novelty bars like dipped crunchy peanut swirl and dipped vanilla.

How does Must Love ensure the vibrancy of their sprinkles without using artificial colors?

Must Love ensures the vibrancy of their sprinkles by using plant-based, non-GMO ingredients, which also provide the vibrant colors.

What was the sales growth of Must Love from its launch in 2017 until the time of the pitch?

Must Love had $355,000 in sales at launch in 2017 and has grown double year-over-year, reaching $1 million in sales by the time of the pitch.

What is the current financial status of Must Love in terms of profit and loss?

At the time of the pitch, Must Love is running a loss of about $400,000.

What is the retail price and cost of goods for Must Love's products?

Must Love's products typically retail for $5.99 on the shelf, and their cost of goods is $1.80.

How much investment have Hannah and Molly raised for Must Love prior to the show?

Prior to the show, Hannah and Molly had invested $200,000 of their own money and raised an additional $1.4 million from friends, family, and angel investors.

What is the current valuation of Must Love and what stage of funding are they in?

The current valuation of Must Love is $8 million, and they are in the seed round of funding.

What are some of the challenges faced by Must Love in the competitive frozen dessert market?

Some challenges faced by Must Love include the cash-intensive nature of the food industry, the need for significant marketing to secure and maintain shelf space, and the competitive nature of the frozen dessert market, especially in the dairy-free and novelty segments.

Outlines

00:00

🍦 Pitching Must Love: A Healthier Ice Cream Alternative 🍦

Hannah and Molly, best friends from Los Angeles, California, introduce their company, Must Love, seeking $600,000 for 75% equity. They present a healthier, plant-based alternative to traditional ice cream, highlighting the undesirable ingredients commonly found in 'healthier' ice creams, such as cheap oils, artificial preservatives, and flavors. Their product line includes pints with flavors like peanut butter swirl and cashew cookie, as well as novelty bars. The base of their ice cream is simple, made from bananas or oats, sweetened with real fruit, and free from dairy and harmful additives. They've experienced significant growth since launching in 2017, with $1 million in sales year to date and a projection to reach $1.7 million by year's end. However, they are currently running at a loss of about $400,000, which they attribute to the cash-intensive nature of the food industry and the costs associated with marketing and securing shelf space in grocery stores. Their products are available in Sprouts Farmers Market, certain regions of Whole Foods, and have recently launched in Costco. The retail price is $5.99, with a cost of goods at $1.80. They have previously invested $200,000 of their own money and raised $1.4 million from friends, family, and angel investors.

05:01

💸 Negotiating the Shark Tank Valuation and Strategy 💸

The entrepreneurs are currently in a seed round with an $8 million valuation and are on Shark Tank to negotiate and potentially secure an investment. They acknowledge the show's history of deal negotiations and express their readiness to negotiate. However, they face immediate pushback from the sharks, who argue that their valuation is too high and that their ask of $600,000 is excessive. One shark shares a cautionary tale from a similar investment, where increasing sales margins were eroded by supermarket demands for promotions and marketing initiatives, ultimately leading to a low net margin and an exit from the investment. Another shark points out the lack of product differentiation in a crowded market of clean, natural, and wholesome products. A third shark declines due to a conflict of interest with an existing investment in a competing ice cream line. The final shark suggests that a lower ask for a smaller equity share might have been more successful, implying that the entrepreneurs may have overvalued their company and their potential contribution to a deal.

Keywords

💡Plant-based

The term 'plant-based' refers to a diet or product that is derived from plants, excluding animal products. In the context of the video, Hannah and Molly have created a line of plant-based ice cream treats, emphasizing the use of simple, plant-derived ingredients. This is a key aspect of their product's appeal, as it caters to consumers seeking healthier and more environmentally friendly options, as seen in their offerings like peanut butter swirl and cashew cookie flavors.

💡Dairy-free

Dairy-free products are those that do not contain ingredients derived from milk or other dairy sources. The video's theme revolves around creating indulgent treats that are not only plant-based but also dairy-free, which is important for individuals with lactose intolerance or those following a vegan diet. The founders mention that their ice cream is 'simply good for you' and is made without the use of dairy, showcasing their commitment to inclusivity and health.

💡Indulgence

Indulgence, in this context, refers to a treat or something that provides pleasure or satisfaction, often associated with food items that are considered a luxury or a special treat. The video's main theme is about redefining indulgence by offering plant-based and dairy-free alternatives that still allow consumers to enjoy a sense of indulgence without the traditional ingredients, as evidenced by the founders' statement, 'must love is more than just dairy-free ice cream, it's simply good for you.'

💡Equity

Equity in a business context refers to an ownership interest in a company, often represented as shares or stock. In the video, Hannah and Molly are seeking $600,000 for 75% equity in their company, which indicates they are looking for a significant investment in exchange for a controlling share of their business. This is a crucial part of the negotiation process as they present their business proposition to potential investors.

💡Shark Tank

Shark Tank is a reality TV show where entrepreneurs pitch their business ideas to a panel of potential investors, known as 'sharks'. The term is used in the script when the entrepreneurs acknowledge that they are aware of the show's format and the negotiation process involved. The mention of 'Shark Tank' sets the stage for the high-stakes investment pitch that is the central focus of the video.

💡Valuation

Valuation is the assessment of the value of an asset or business. In the script, the entrepreneurs are seeking an investment at an $8 million valuation, which means they believe their company is worth this amount. The valuation is a critical point of discussion, as it determines the equity stake the investors would receive for their capital.

💡Revenue

Revenue refers to the income generated from the sale of goods or services. The video mentions that the company has grown from $355,000 in sales in 2017 to a projected $1.7 million in revenue for the current year. This growth is used to demonstrate the company's potential and success to the investors, highlighting the scalability and market demand for their product.

💡Cost of Goods

Cost of goods sold (COGS) is the direct cost attributable to the production of the goods sold by a company. In the video, the founders reveal that their cost of goods is $1.80 for a product that retails for $5.99. This information is vital for investors to understand the profit margins and the financial health of the business.

💡Negotiation

Negotiation is the process of discussion and compromise between parties to reach an agreement. The script mentions that the entrepreneurs are 'ready to negotiate', which is a key aspect of the Shark Tank format. It shows their willingness to engage with the investors on terms that could lead to a successful investment deal.

💡Seed Round

A seed round is an early stage of venture funding for startups, typically used to develop a prototype or initial product launch. The video's entrepreneurs are currently in a seed round, seeking investment to further grow their business. The seed round is part of their fundraising strategy and is a significant step in the company's development.

Highlights

Hannah and Molly, best friends from Los Angeles, are seeking $600,000 for 75% equity in their company, Must Love.

Must Love offers a healthier, plant-based alternative to traditional ice cream with simple ingredients.

Their products are free from cheap oils, artificial preservatives, and flavors, focusing on health and indulgence.

Must Love's ice cream is made with a base of bananas or oats and sweetened with real fruit.

The company has experienced double year-over-year growth since its launch in 2017.

Must Love has a product line that includes pints and novelty bars with flavors like peanut butter swirl and Snicker doodle dough.

This summer, Must Love launched plant-based, non-GMO sprinkles that complement their ice cream.

The company's products are available nationally at Sprouts, Farmers Market, and in certain regions of Whole Foods, with a successful launch in Costco.

Must Love's products retail for $5.99, with a cost of goods at $1.80.

Hannah and Molly have invested $200,000 of their own money and raised an additional $1.4 million from friends, family, and angels.

The company is currently in a seed round with an $8 million valuation and is looking to raise funds on Shark Tank.

Must Love has a conservative projection of $1.7 million in revenue for the current year.

Despite the growth, the company is running at a loss of about $400,000 due to the cash-intensive nature of the food industry.

The brand has managed to secure and maintain shelf space in new stores, indicating strong market positioning.

The founders have a background in restaurant business and hold MBAs, with specialties in operations and marketing.

The negotiation on Shark Tank is expected, with the investors acknowledging the show's history of deal negotiations.

Some investors express concerns about the company's valuation and the competitive nature of the frozen dessert market.

A few investors decide to opt out due to personal experiences with similar businesses or concerns about product differentiation.

Mr. Wonderful suggests a lower equity ask for a smaller investment, indicating a potential strategy for the founders.

Transcripts

[Applause]

next up is a healthier version of a

favorite

[Music]

Indulgence hi sharks my name is Hannah

and I'm Molly we're best friends from

Los Angeles California and we're seeking

$600,000 for 75% equity in our company

must love look at this table of

ingredients over here they're cheap oils

like canola and palm and artificial

preservatives and flavors not to mention

monoglycerides di glycerides things I

don't even want to try glycerides and

you won't believe what these ingredients

are for medicine paint I Got It

Cosmetics

no it's ice cream gross right ice creams

marketed as better for you often have

unwanted ingredients even ingredients

made from petroleum wood pulp and even

beetles gross right that's why we

created a line of plantbased indulgent

treats made with simple ingredients must

love but must love is more than just

dairyfree ice cream it's simply good for

you fun that comes in pints like peanut

butter swirl or Molly's favorite cashew

cookie or Hannah's personal favorite

Snicker doodle dough and Novelty bars

like dipped crunchy peanut swirl or

dipped vanilla which tastes just like a

chocolate frozen banana but how do we do

it we start with a simple base of

bananas or oats and sweeten with real

fruit and from there we add in all the

Crave worthy stuff that you really want

in your ice cream but sharks we didn't

stop there this summer we launched

sprinkles they're plant-based non GMO

and go perfectly with our ice cream even

the vibrant colors come from plants must

love is bringing plant-based Indulgence

to your family's freezer pantry and more

so sharks who's ready to fall in love

with must

love so please dig into your samples and

I'd love to tell you about what you have

from our banana line we brought you our

signature dipped vanilla bars and also

our cashew cookie Pine which is about

the chocolate around it they're dipped

in chocolate but it's vegan there's Noir

vegan there's no Dairy e great it's very

good thank you banana eat yes you must

love bananas I thought it was going to

taste terrible it's pretty good Kevin

from you that means a lot thank

you I just want to say I'm not vegan at

all and I've eaten so much of this I

feel

sick this is really really scrumptious

thank you so much so um tell us about

you yes thank you um so we're actually

best friends who met in undergrad at

Berkeley we've been in restaurants for

15 years both our parents immigrated

here from Korea and are uh started their

own businesses really came here for

their American dream and after we both

got our mbas separately I was at MIT

you're an MBA from MIT yes what was your

specialy your focus um I focused on

operations and I focused on marketing

jeez so you're asking for 600,000 7

half% that's a pretty Punchy valuation

so I'm assuming now this is sold like

hot bananas we launched in 2017 we had

$355,000 in sales and since then we've

grown double year-over-year

year to date we've made $1 million this

year we're going to end this year 1.7 in

revenue and that's a very conservative

number what's your profit we're running

a loss at about $400,000 uhoh

wow okay so why do you you're running a

loss so the food industry um I'm sure

you're all aware you know it's a really

cash intensive business you know when

you get into a grocery store you need to

First pay for that marketing to be able

to be there and to reach those consumers

going the frozen section hard to

displace other products yes we've fought

too the nail for every position we've

been in and the the Frozen space is very

competitive where the growth has been is

dairyfree and novelties so that's really

our sweet spot of where we're hitting

and we have kept our Shelf space in all

the new doors what stores you in we

don't even know tell us tell us what

stores you're in what is it cost and

what does it cost for you to make it

we're available nationally at Sprouts

Farmers Market and as well as in in

certain regions of Whole Foods this year

we launched in Costco we tested with

them last year and it was wild

successful blew them out of the water

they retail for $5.99 on shelf typically

and our cost of goods is 180 so how much

money have you raised if any and from

who we both invested $200,000 of our own

money right off the B for you okay

you're serious we also raised in The

Last 5 Years

1.4 from a ser friends and family and

then angels and in valuation was the one

four raised that we're actually in a

seed round right now why we're here

we're here we're raising at um an $8

million valuation so this is part of the

seed round right now okay guys how could

you come on Shark Tank you you've

watched the show I I pres yes right

knowing every single deal in the history

of Shark Tank has been negotiated do you

not think you're going to have to

negotiate yeah we're ready to negotiate

and we've spoke with the other investors

who have participated in the seed round

and they're very excited for you guys to

be part so excited that they gave us the

exact offer that everybody else is going

to get well we're here to get to know

you you're here to get to know us no

you've known us for 13

years you know to come to us and offer

us the same that you're offering the

streets I mean at least show us the

respect of knowing where the value is

that we're going to bring I'm out thank

you we really appreciate the feedback

there's two problems you're not worth 8

million bucks you're also asking for

$600,000 part of your strategy on Shark

Tank you have to decide how much you're

asking for you're you're in the the top

quartile of ask it's too much for me I'm

out I just want to say I I've invested

in a business like this actually on

Dragon's Den it was exactly as you've

got here in essence so it was frozen

dessert what happened to that business

whilst the sales were going up but sadly

the margin reduced because as we got

into Whole Foods Costco and others and

all the supermarket they wanted to have

the product two for one they want to

have the specials they want to have the

end cap every single quarter another

marketing initiative when the brand then

started to actually go down we had to

invest more we ended up with less than 3

or 4% net margin every single year what

ended up happening was that the

manufacturer was making more money than

we were mhm and I got out I almost I

just got my money back so just because

of that of my experience I'm

out sorry guys the problem I have look

the products are good they're just not

differentiated enough I get that they're

clean natural wholesome ingredients yes

but there are multiple products and the

number of products that that meet that

criteria and check that box is growing

very quickly there's not that one

trigger that makes someone say okay I

have to try this and for that reason I'm

out thank you honestly I think we've

captured new customers with very small

listen let me tell you what I think okay

because I really know this space

actually because I did a deal a year ago

with frozen farmer and we created what

we call frobert which was a combination

of sorbet and ice cream you know

everybody up here at the time said oh my

God brutal space you're never going to

make it you remember that and it was no

actually he was wrong it was a hard road

but we're going to hit 20 million in

sales this year but you are so

competitive with my frozen farm and what

we're already doing that I would not be

being fair to her if I invested in

another ice cream line and so for that

reason I'm out we so appreciate that

thank you so much

Lord look thank

you for 200k it's a flyer I would have

tried it for 2 and half% no I would have

asked for 15% yeah they would have

laughed at you no they would have said

Mr Wonderful I'll do the deal and I'd be

up there right now just like that what

alternate universe would this Happ

there's only one Mr wonderful thank God

for that