Kevin and Lori's Intense Showdown Over Outer's Outdoor Furniture | Shark Tank US | Shark Tank Global

Summary

In this *Shark Tank* pitch, Jake Liu and Carrie Lynn introduce *Outer*, a revolutionary outdoor furniture company that has created a comfortable, durable outdoor sofa with an eco-friendly design. The sofa features a patent-pending outer shell cover to protect cushions from weather, eliminating the common problem of soggy bottoms. Additionally, Outer transforms the traditional shopping experience by offering a peer-to-peer showroom platform. The founders are seeking $750,000 for a 4% stake in the company, but after negotiations, they settle on a deal with Kevin O'Leary and Lori Greiner, securing a loan and equity offer to support their growth.

Takeaways

• 😀 Outer is an outdoor furniture company that offers a unique solution to soggy cushions, using a patent-pending 'Outer Shell' cover to protect cushions from the elements.
• 😀 The company was founded by Jake Liu and Carrie Lynn, and they are seeking $750,000 for a 4% equity stake in their business.
• 😀 The three-seater sofa from Outer costs $2,500, with modular pieces priced at $800 each, and the cost of goods sold is around $225 per unit.
• 😀 Outer aims to revolutionize the shopping experience by creating a 'neighborhood showroom,' where customers can test the furniture in other people's backyards.
• 😀 The company has generated $800,000 in sales in its first four months and projects $1 million in sales by the end of the year and $5 million next year.
• 😀 The company uses eco-friendly materials in its outdoor sofas, which are designed to be as comfortable as indoor furniture and as durable as camping equipment.
• 😀 Investors questioned the $18.7 million valuation of Outer given its early stage, with only $800,000 in sales so far.
• 😀 Kevin O'Leary offered $750,000 for 20% equity, emphasizing that while the valuation seemed high, he liked the potential of the business.
• 😀 Lori Greiner made a counteroffer of a $750,000 loan with a 20% royalty per chair until the loan is repaid, after which she would take 10% equity.
• 😀 Jake and Carrie countered Lori's offer, proposing a $750,000 loan with a 30% royalty per chair until the loan is repaid, followed by 5% equity in the company.
• 😀 Lori Greiner ultimately agreed to a deal with Jake and Carrie: $750,000 loan with 30% royalty until the loan is paid off, followed by 5% equity and 3% interest on the loan.

Q & A

What problem does Outer aim to solve in the outdoor furniture space?

Outer aims to solve common issues with outdoor furniture, such as discomfort, poor durability, and the problem of soggy cushions that get ruined by the elements.

How does Outer’s product address the issue of soggy cushions?

Outer has developed a patent-pending 'Outer Shell Cover' that protects the cushions from rain, morning dew, and other environmental factors. It can be easily pulled over the cushions to keep them dry and can be removed and stored when not needed.

What is the 'Neighborhood Showroom' concept introduced by Outer?

The 'Neighborhood Showroom' is a peer-to-peer showroom platform where customers convert their backyards into showrooms. This allows potential buyers to experience the product in real-life conditions before purchasing.

What is the price of Outer’s three-seater sofa?

The three-seater sofa from Outer costs $2,500.

What is the cost of production for each of Outer’s sofas?

The cost of goods for each sofa is about $225.

How much equity is Outer offering in exchange for the $750,000 investment?

Outer is offering a 4% equity stake in the company for a $750,000 investment.

What is the projected revenue for Outer in the upcoming year?

Outer is projecting $1 million in revenue for the current year and expects to reach $5 million in revenue next year.

What is the current valuation of Outer, and how has it changed?

Outer’s most recent valuation was $13.5 million after their last round of funding. They are now seeking a higher valuation of around $18.7 million.

What unique advantage does Outer have in terms of its supply chain?

Outer benefits from a family-owned factory that helps mitigate supply chain risks, as the family factory subsidizes the production costs and does not take a margin.

What offers did the Sharks make to Outer during the pitch?

Kevin O'Leary (Mr. Wonderful) offered $750,000 for 20% equity, while Lori Greiner proposed a loan of $750,000 with a 20% royalty per chair until the loan was repaid. After negotiations, the final deal included a $750,000 loan with a 30% royalty per chair, 3% interest, and 5% equity.