A Bidding War Breaks Out During Scrub Daddy's Pitch | Shark Tank US | Shark Tank Global
Summary
TLDRAaron 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
- π€ Aaron Kraus introduces himself as the inventor of the 'Scrub Daddy', a high-tech kitchen cleaning tool.
- 𧽠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.
- π₯ 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.
- π° Aaron is seeking a $100,000 investment for 10% equity in his business to establish an independent manufacturing facility with automated equipment.
- π The Scrub Daddy has been successful on QVC, with increasing sales each time it is featured, indicating a strong market demand.
- π 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.
- ποΈ The Scrub Daddy is currently available in five supermarkets in Philadelphia and online, with plans to expand to more stores.
- π‘ 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.
- π€ Aaron is looking for a strategic partner to help expand the product's reach into retail stores beyond the current limited availability.
- πΆ Aaron mentions other products in the pipeline, such as 'Scrub Mommy' and 'Scrub Baby', suggesting a product line expansion strategy.
- πΈ 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
π¦ 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.
πΈ 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.
π€ 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.
Mindmap
Keywords
π‘Aaron Kraus
π‘Scrub Daddy
π‘Shark Tank
π‘Investment
π‘Equity
π‘QVC
π‘Patent
π‘Retail
π‘Manufacturing
π‘Financier
π‘Infomercial
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
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