A Bidding War Breaks Out During Scrub Daddy's Pitch | Shark Tank US | Shark Tank Global

Summary

Aaron Krause, the 'Daddy of Scrub Daddy,' introduces his innovative cleaning sponge that changes texture with water temperature, enhancing scrubbing efficiency. Seeking $100,000 for 10% equity, he impresses the Sharks with his product's performance and sales figures from QVC and local supermarkets. After a heated bidding war, he secures a deal with Lori Greiner for $150,000 in exchange for 20% equity, promising to make him a millionaire within a year.

Takeaways

• 🎤 Aaron Kraus introduces himself as the inventor of the 'Scrub Daddy', a high-tech kitchen cleaning tool.
• 🧽 The Scrub Daddy is designed to change its texture based on water temperature, with a soft form for general cleaning and a firm form for heavy-duty scrubbing.
• 🔥 Aaron demonstrates the product's effectiveness by cleaning burnt-on food from a glass stove top and a stainless steel pan using only water, no chemicals.
• 💰 Aaron is seeking a $100,000 investment for 10% equity in his business to establish an independent manufacturing facility with automated equipment.
• 📈 The Scrub Daddy has been successful on QVC, with increasing sales each time it is featured, indicating a strong market demand.
• 📝 Aaron holds a patent for the Scrub Daddy and has two more patents pending, along with trademarks and domain names, showing a focus on protecting intellectual property.
• 🛍️ The Scrub Daddy is currently available in five supermarkets in Philadelphia and online, with plans to expand to more stores.
• 💡 The cost to produce one Scrub Daddy is about a dollar, and it is sold wholesale for approximately $2.80, indicating a reasonable profit margin.
• 🤝 Aaron is looking for a strategic partner to help expand the product's reach into retail stores beyond the current limited availability.
• 👶 Aaron mentions other products in the pipeline, such as 'Scrub Mommy' and 'Scrub Baby', suggesting a product line expansion strategy.
• 💸 The sharks debate the product's retail viability, with concerns about its perceived value and the reliance on QVC sales, highlighting the importance of diversifying sales channels.

Q & A

Who is Aaron Krause and what is he known for?

Aaron Krause is from Philadelphia and is known as the 'Daddy' of the Scrub Daddy, a high-tech scrubbing tool.

What is Aaron Krause seeking from the sharks?

Aaron Krause is seeking a $100,000 investment in exchange for 10% equity in the Scrub Daddy business.

How does the Scrub Daddy's texture change with water temperature?

The Scrub Daddy's texture changes by adjusting the water temperature; it becomes soft and compressible in cold water, suitable for general scrubbing, and hard and firm in hot water, suitable for heavy-duty scrubbing.

What is unique about the Scrub Daddy's cleaning ability?

The Scrub Daddy can clean effectively using just water, without the need for chemicals, and it won't scratch surfaces while cleaning.

Where is the Scrub Daddy currently being sold?

At the time of the pitch, the Scrub Daddy is being sold in five supermarkets in the Philadelphia area and on their website.

What has been the response to the Scrub Daddy on QVC?

The Scrub Daddy has been very successful on QVC, with reorder quantities increasing each time it is featured.

Does Aaron Krause have a patent for the Scrub Daddy?

Yes, Aaron Krause has a patent for the Scrub Daddy and has two more patents pending.

Why does Aaron Krause want to set up an independent manufacturing facility?

Aaron Krause wants to set up an independent manufacturing facility to have control over production schedules and increase capacity to meet demand.

What is the cost to make one Scrub Daddy, and how much is it sold for wholesale?

The cost to make one Scrub Daddy is about a dollar, and it is sold wholesale for about two dollars and eighty cents.

What are the other products in the Scrub Daddy line mentioned in the script?

Other products mentioned include Scrub Mommy and Scrub Baby, which are designed for cleaning baby bottles, and a holder with drain legs for the sink.

What is the final deal Aaron Krause accepts in the scriipt?

Aaron Krause accepts a deal for $150,000 for 20% equity, with the understanding that the equity amount is too high and he would consider coming down to 20%.

Outlines

00:00

🦈 Shark Tank Introduction and Scrub Daddy's Pitch

Aaron Kraus enters the Shark Tank with his innovative cleaning tool, the Scrub Daddy. He introduces himself as the 'Daddy of the Scrub Daddy' and explains his product's unique feature of changing texture with water temperature. Aaron seeks a $100,000 investment for a 10% equity stake in his business. He demonstrates the product's effectiveness in cleaning various food stains without the use of chemicals and emphasizes its non-scratch property. Aaron also discusses his sales figures from QVC and reveals his plans to expand production capacity with the investment, aiming to establish a strategic partnership for retail expansion.

05:01

💸 Negotiations and Offers in the Shark Tank

The Sharks express their initial reactions to Aaron's pitch, with some showing interest while others raise concerns about the product's retail appeal and reliance on QVC sales. Offers begin to surface, starting with a high demand for equity in exchange for the investment. Aaron counters with requests for more favorable terms, highlighting his experience and the potential of his product line, which includes 'Scrub Mommy' and 'Scrub Baby'. The Sharks engage in a bidding war, with offers ranging from a royalty-based investment to a higher equity stake, reflecting the competitive interest in the Scrub Daddy's potential.

10:04

🤝 Final Deals and Emotional Reactions

After a tense negotiation process, Aaron receives multiple offers, each with different terms and percentages. The Sharks adjust their offers in real-time, responding to Aaron's feedback and the dynamics of the room. Ultimately, Aaron decides to accept a deal that reduces the equity percentage while maintaining a significant stake in his company. The Sharks express a mix of excitement for the partnership and playful animosity towards each other. Aaron concludes the segment with a sense of fulfillment and satisfaction, having secured funding and a path to expand his product's market reach.

Keywords

💡Aaron Kraus

Aaron Kraus is the inventor and entrepreneur featured in the script, presenting his product to potential investors. He is referred to as the 'Daddy of the Scrub Daddy,' indicating his role as the creator of the product. His name is central to understanding the narrative of the video as it revolves around his pitch and the subsequent negotiations.

💡Scrub Daddy

Scrub Daddy is the name of the product being pitched in the video. It is described as a high-tech scrubbing tool that changes its texture based on water temperature, making it suitable for various cleaning tasks. The term 'Scrub Daddy' is repeatedly used throughout the script to emphasize the product's unique selling proposition and its central role in the video's theme of innovation and investment.

💡Shark Tank

Shark Tank is the name of the show where entrepreneurs present their business ideas to a panel of potential investors, known as 'sharks.' In the context of the script, it is the platform where Aaron Kraus is seeking an investment of $100,000 for 10% equity in his business. The term 'Shark Tank' is crucial for understanding the setting and the dynamics of the interactions between the presenter and the investors.

💡Investment

Investment is a financial term referring to the allocation of money in the hope of generating income or profit. In the script, Aaron Kraus is seeking an investment for his company, with the aim of expanding production and distribution of his product. The concept of investment is central to the video's theme, as it drives the negotiations and the decision-making process among the sharks.

💡Equity

Equity in a business context refers to ownership interest. Aaron Kraus is offering a percentage of his company's equity in exchange for the investment. The term is significant in the script as it highlights the stakes involved in the deal and the potential for the investors to benefit from the company's growth.

💡QVC

QVC is an abbreviation for 'Quality, Value, Convenience,' and it is a television network known for its home shopping format. In the script, Aaron Kraus mentions that he has been on QVC three times, and the sales figures are impressive, indicating the product's market acceptance. QVC is used in the script to establish credibility and to demonstrate the product's commercial potential.

💡Patent

A patent is a form of intellectual property that gives the inventor exclusive rights to an invention for a limited period. Aaron Kraus mentions that he has a patent on the Scrub Daddy, with two more pending, which signifies the product's uniqueness and potential legal protection against imitation. The mention of patents in the script underscores the importance of innovation and legal protection in business.

💡Retail

Retail refers to the sale of goods or services to consumers for personal use. In the script, the discussion about retail involves the potential for the Scrub Daddy to be sold in supermarkets, drugstores, and other retail outlets. The term is significant as it relates to the broader market strategy and the product's availability to consumers.

💡Manufacturing

Manufacturing is the process of creating goods or products on a large scale. Aaron Kraus expresses his desire to set up an independent manufacturing facility with automated equipment to increase production capacity. The term is relevant to the script as it highlights the need for scalable production to meet market demand.

💡Financier

A financier is an individual or entity that provides financial support for a business or project. In the script, one of the sharks offers to be a financier for the Scrub Daddy, providing funds in exchange for a return on each unit sold until the investment is recouped. The term is important as it introduces an alternative form of investment and partnership.

💡Infomercial

An infomercial is a type of television commercial that includes a detailed presentation of a product, often resembling a short film or documentary. The script mentions the potential for the Scrub Daddy to be featured in infomercials, which is a marketing strategy to increase product visibility and sales. The term is used to illustrate the promotional efforts and the product's potential for mass-market appeal.

Highlights

Aaron Kraus introduces the Scrub Daddy, a high-tech scrubbing tool that changes texture with water temperature.

The Scrub Daddy is soft and compressible in cold water for general cleaning, and hard and firm in hot water for heavy-duty scrubbing.

Demonstration of the Scrub Daddy effectively cleaning a glass stove top and stainless steel pan without chemicals.

Aaron seeks a $100,000 investment for 10% equity in the Scrub Daddy business.

The Scrub Daddy has been featured on QVC three times, with increasing sales each appearance.

Aaron has a patent on the Scrub Daddy and two more patents pending, along with a trademark and domain names.

The Scrub Daddy is currently selling in five supermarkets in Philadelphia and on the company's website.

Aaron aims to set up an independent manufacturing facility with automated equipment for increased production capacity.

The cost to manufacture one Scrub Daddy is about a dollar, and it is sold wholesale for approximately $2.80.

Aaron discusses the potential for the Scrub Daddy to be in every supermarket and drugstore, emphasizing its unique selling proposition.

Shark Barbara Corcoran expresses concerns about the product's retail appeal and compares it to a traditional Brillo pad.

Aaron reveals plans for additional products like Scrub Mommy and Scrub Baby, as well as a holder for the sink.

Shark Kevin O'Leary offers $100,000 for 30% equity and promises to get the product into retail stores within weeks.

Shark Lori Greiner offers $100,000 for 25% equity, emphasizing her QVC connections and retail expertise.

Shark Mark Cuban declines to invest, citing concerns about the product's dependence on QVC and being a one-product company.

Aaron negotiates with the Sharks, resulting in offers of $150,000 for 25% equity from Lori and a royalty-based deal from Kevin.

Aaron ultimately accepts Lori's offer of $150,000 for 20% equity, valuing the Scrub Daddy's potential and Lori's retail expertise.

Post-deal, Aaron expresses excitement about the partnership and the potential for the Scrub Daddy to become a household name.

Transcripts

[Music]

first into the shark tank is aaron kraus

who believes his product will make

everyday cleaning easier

[Music]

hi sharks i'm aaron krause from

philadelphia and i'm known as the daddy

of the scrub daddy the cutest but most

high-tech scrubbing tool in the world

today i'm seeking a 100 000 investment

in exchange for 10 equity in the scrub

daddy business it's the greatest kitchen

scrubbing tool you ever used because

scrub that it completely changes its

texture by just adjusting your water

temperature let me show you how that

works

here i've got some hot water here i've

got some cold water when i immerse the

scrub that is in the hot and cold water

a complete transformation occurs now to

show you that i've got 10 pound weights

here under the 10 pounds it's soft and

compressible and that's like a sponge

that's for your general scrubbing

applications but here

check that out it's hard and firm that's

going to be for heavy duty scrubbing

applications we burned on brown and

gravy tomato sauce cheese and mustard

onto a glass stove top and a stainless

steel pan i'm going to take the scrub

dye and you're going to see it's just

going to attack right into that burned

on nest scrubbing it right off and

remember i'm just using water here

there's no chemicals at all and it's

going to cut right through that

it won't scratch any of your surfaces

but it will clean them

beautifully now this grub dye is not

really smiling anymore so i'm going to

put him here in the warm water in just a

couple seconds

voila he's back to bright fresh and

clean every time sharks that's not just

another smiling face you put it on your

hand you can get to the bottom and clean

the sides in one move and that smiling

mouth

that cleans spoons knives forks spatulas

even large serving spoons on both sides

at the same time

sharks with your help scrub that i will

be scrubbing

and smiling in every kitchen in the

world

wow

rub daddy i never witnessed a live

infomercial that was fantastic that was

incredible do you have samples i do

where are you selling this now thank you

well currently we have it in five

supermarkets in the philadelphia area we

also sell it on our website

i've been on qvc three times over about

three months and how'd it go fantastic

they've invited me back over and over

and every time i go on they reorder 30

more than the last time so scrub daddy

is humming and what were your total

sales qvc wholesale just north of 100

000

only in four months do you have a patent

on this i actually have a patent i have

two more pending we have the trademark

we have domain names okay erin what do

you need the hundred thousand dollars

for what i want to do is set up an

independent manufacturing facility with

automated equipment why do you need to

go into your own facility the biggest

problem is i'm on their time schedule

are you saying that you could be making

more revenue if you're 24 7 making scrub

daddies the way qvc is going and we're

just about to launch in a whole bunch of

stores we're going to need that capacity

and i have 18 years experience running a

manufacturing plant that runs 24 hours a

day i know exactly what i need to do to

make this thing really efficient and i'm

looking to get a strategic partner who

can open this up into the retail stores

i'm only in five supermarkets that's it

what's your cost the cost to make one's

about a dollar what are you selling them

for

about two dollars and eighty cents

wholesale wholesale this needs to be in

every supermarket drugstore walgreens

it's so expensive

mrs slabinsky goes to the store and

picks this off the shelf and says hey

it's a piece of foam with a smiley face

on it costs two cents to make in china

that's what she's thinking

because a brillo pad which is

traditional product is what a 20 20

you're comparing it to the lowest end of

the lowest end you take it up to the

highest end talk about the the ones like

adobe pads or other pads out there that

are you know brand new daddy i i think

you've done a great job today but i

don't know if it's gonna work in retail

i don't i don't buy into that vision

just in the packaging

i just don't know if i see the

difference it doesn't sell on a shelf

correct but if you put it in display

shippers which we've built these

beautiful cardboard display shippers and

it communicates the message to everybody

end caps you're gonna have to pay for

those things

it's hard to get them even if you pay

for them

great job today but i don't see the

retail vision i'm out

i understand

like the product i think you're doing

great things you're doing it the exact

right way

but when i hear qvc no disrespect to

laurie when the company's sales are

completely dependent on qvc that's a

disaster waiting to happen

i've got 3 000 stores lined up right now

we're going to be in 3 000 stores i

understand but even okay put aside qvc

you're still a one product company right

not for long we've got scrub mommy we've

got scrub baby for doing baby bottles

i've got a holder that sits it on your

sink and it's got drains in the legs

you don't understand who you're dealing

with i am right

i'm not doubting the scrub market i'm

not doubting you are these scrub daddy

but i'm not a scrub pimp so i'm out

that hurts mark i wanted to work with

you so bad

our qpc does over 8 billion in sales a

year and i've done over 500 million yes

you have and you rotate products in and

out of there and once those products are

out they're out how about this deal

a hundred thousand for fifty percent

[Laughter]

let's start the bidding there

all right you're out

you know i'm somebody you can paint any

picture and i think that lori is a

vicious backstabbing shark that's all

true

but sometimes i love her as well because

she is the qvc queen

so i'm offering

50 000

for 15

if you can raise the rest from lori and

if she wants to do business with me

well here's the thing

so i'm offering fifty thousand dollars

for fifteen percent if you can raise the

rest from lori and if she wants to do

business with me

well here's the thing

you've heard me say before i can tell

instantly if it's a hero or a zero

and i think what you've got here is a

hero

no offense demon i don't need you

you don't

my offer is

a hundred thousand dollars for 30

percent

i will get you into infomercial right

away and

i'm pretty confident that we could get

this into all retail stores across the

country within literally

weeks

i'll tell you what i'll do for you

i'll give you a hundred thousand dollars

we'll never agree on what percentage i

should get i'm gonna change the model

completely you're gonna keep the whole

company

but i want to be your financier

i want you to give me 50 cents on every

unit sold until i get 100k back then it

drops to 10 cents in perpetuity

you just want to increase your cost of

goods sold by 50 nothing right why give

up 30 of your company just to sweeten

the pot a little bit i'm gonna give you

150 000

but 25

whoa

what are you gonna do i'm changing my

offer actually

a hundred thousand dollars but for 25

the experience the connections

everything that i have it will be

successful i am partnered with the best

of them

why give up any part of scrub daddy

think of the relationship you have with

the sponge

you're selling this thing out and it's

gonna cry it won't be happy anymore

i want the answer to one question all

right do you think 25 of the equity in

your company is worth more or less than

10 cents a unit in perpetuity and he's

going to talk where is he going to take

you it doesn't matter it does matter

because connections

you keep 25 of this business which may

sell 10 million of these and you keep it

all for yourself but you're going to be

keeping nothing because he doesn't know

how to get out you haven't had any

success you're an idiot you don't know

what to do

i know what to do exactly just did a

half a billion dollar deal with walmart

half a billion but that is so i think

what products okay i i like to write a

second letter

you can speak and it's saying

laurie go with kevin

aaron there are like children up here

it's awful let's recap yeah let's recap

please 150 000 for 25 okay from damon

kevin 100 000 for no percent and a tiny

tithe of ten cents you keep all the

equity

lori is offering you a hundred thousand

for twenty-five percent i offered 150

last time whoa i didn't hear that 100

lori oh well i changed my mind 150 000

for 25

i'll make you a millionaire within a

year

so mine just went to 175. whoa

is up to 175 yeah

mine just went to two

whoa

the good news is

i just made you an extra hundred

thousand

i'm out i wanted to stick it to her

ouch

[Music]

wow

i'll drop the 50 cents down to 25 cents

until the 100k is recovered and then go

to 10 cents

will you go to five cents

seven and a half is a deal

[Music]

aaron you've got two offers on the table

what are you gonna do

you have to make up your mind right now

you don't see the benefit of having me

as a partner i never said that you need

to tell me right now whether you're

going with me or not or i'm out

i'm here for you

i think your deal is awesome um

the equity amount is is too much would

you consider coming down to 20.

you know what i will

i'll go to 20. we got a deal got a deal

right good

way to go aaron

congratulations thanks look i'm so

excited

you are dead to me and the sponge is

dead thanks guys

scrub daddy you suck

that is awesome got a deal glory

it's it's a dream come true it's

absolutely a dream come true i don't

care how much money you have i'm so

satisfied to know that you lost an extra

hundred i know you'll get me back

gang buster huge hit in infomercial good

deal lori it's a great deal

you