BoxLock Owner Struggles To Answer The Reason For His Valuation | Shark Tank US | Shark Tank Global

Summary

Brad Ruus, CEO of Boxlock, pitches his smart padlock system designed to secure e-commerce deliveries from theft. The device allows delivery drivers to scan and secure packages in a storage container, notifying users upon delivery. Despite pre-sales of 800 units and partnerships with carriers, investors express concerns over the high valuation of $20 million, the need to change user behavior, and the complexity of scaling the solution across different delivery networks.

Takeaways

• 📦 BoxLock is a smart padlock designed to secure deliveries from theft.
• 🏡 It is installed on a storage container outside the user's house.
• 🔐 Delivery drivers use the lock to scan the package's tracking number, and if it matches, the lock opens to allow them to place the package inside.
• 📱 Users receive a notification on their phone once the package is securely delivered.
• 🚀 The product is currently in manufacturing and has not yet reached consumers.
• 💸 Brad has pre-sold 800 units on Kickstarter, priced between $89 to $109.
• 💼 The cost to manufacture each unit is expected to be around $65.
• 📈 The company is seeking $1 million for 5% equity, valuing the business at $20 million.
• 📈 The valuation is justified by the unique opportunity to solve a widespread problem.
• 📱 The company is working with carriers on driver awareness and training programs.
• 📉 Some investors are skeptical about the high valuation and the need to change user behavior.
• 💼 One investor offers a $1 million loan with a royalty and interest in return.

Q & A

What is BoxLock and who is Brad Ruus?

BoxLock is a smart padlock designed to secure package deliveries. Brad Ruus is the CEO and founder of BoxLock, a company based in Atlanta, Georgia.

What is the main problem BoxLock aims to solve?

BoxLock aims to solve the problem of package theft, specifically from porch pirates, by providing a secure storage container that can only be opened by delivery drivers using the package's tracking number.

How does the BoxLock system work?

The delivery driver scans the tracking number on the package with the BoxLock padlock. If the package is destined for that address, the lock pops open, allowing the driver to place the package inside and secure it.

What is the current status of BoxLock's product development?

At the time of the transcript, BoxLock is in the manufacturing phase and has not yet been delivered to consumers, but 800 units have been sold on pre-sale.

How much investment is Brad Ruus seeking and for what percentage of the company?

Brad Ruus is seeking $1 million for 5% of his company.

What is the current valuation of BoxLock based on Brad's ask?

Based on the $1 million for 5% ask, the company is valued at $20 million.

What has been the cost to manufacture BoxLock units so far?

The cost to manufacture the next order of BoxLock units is expected to be around $65 per unit.

How does BoxLock plan to make drivers aware of how to use the device?

BoxLock is working with different carriers on driver awareness and training programs to ensure they know how to use the device correctly.

What is the retail price for a BoxLock unit?

The retail price for a BoxLock unit is expected to be $129.

What is the concern of the investors regarding the high valuation of BoxLock?

The investors are concerned that the high valuation does not reflect the current stage of the product and the challenges of changing user behavior and the need for widespread adoption by delivery drivers.

What is the proposed deal by one of the investors involving a loan and royalty?

One investor proposed a deal to give Brad Ruus $1 million as a loan, with a royalty until the investment amount plus an additional $500,000 is recouped, and an 8% interest rate.

What is the final decision of the investors regarding the investment in BoxLock?

Most investors decided to pass on investing in BoxLock due to concerns about the high valuation, the need to change user behavior, and the complexity of the problem being addressed.

Outlines

00:00

📦 BoxLock: The Smart Padlock for Package Delivery

Brad Ruus, CEO and founder of BoxLock, introduces his invention aimed at solving the problem of package theft from doorsteps. He seeks $1 million for 5% equity in his company. BoxLock is a smart padlock that attaches to a storage container outside a home. Delivery drivers can use it to scan the package's tracking number, and if it matches, the lock opens, allowing the driver to securely place the package inside. The system notifies the homeowner upon delivery. Brad has invested about half a million dollars in R&D, and the product is currently in manufacturing. He has pre-sold 800 units on Kickstarter at prices between $89 and $109, with the retail price set at $129. The cost to manufacture each unit is projected to be around $65. BoxLock is designed to work with major carriers like UPS, USPS, and FedEx, and Brad is working on driver awareness and training programs.

05:00

💸 Valuation and Investment Concerns

The investors express concerns about the high valuation of $20 million for BoxLock, especially since the product has not yet reached consumers. Brad argues that the market is large and the problem urgent, but the investors are skeptical about the business model and the need to change user behavior. They worry about the costs associated with training millions of delivery drivers and the complexity of the problem. One investor offers a deal where they would lend $1 million at 8% interest, with a royalty until the investment is recouped plus an additional $500,000, and a 2.5% equity stake. Another investor suggests a royalty of $3 per unit. Despite the potential of the product, some investors remain unconvinced due to the numerous challenges and the need for a widespread adoption by carriers and drivers.

Keywords

💡Burst into the tank

This phrase metaphorically suggests a disruptive entry into a market or a solution that addresses a significant problem. In the context of the video, it refers to the innovative solution 'Boxlock' offers to the issue of package theft. The phrase captures the attention and sets the tone for the introduction of a new product aiming to revolutionize package delivery security.

💡Boxlock

Boxlock is the name of the smart padlock system introduced in the video. It is designed to secure package deliveries by allowing delivery drivers to scan the tracking number on a package and securely place it in a storage container. The term is central to the video's theme as it represents the solution to the problem of package theft, which is a growing concern in the e-commerce industry.

💡Porch Pirates

Porch Pirates is a colloquial term used to describe thieves who steal packages left on doorsteps. The video addresses the increasing problem of package theft, which is a significant inconvenience in the era of online shopping. The mention of 'Porch Pirates' highlights the need for a solution like Boxlock to secure deliveries.

💡E-commerce sales

E-commerce sales refer to the revenue generated from online transactions. The video script mentions the skyrocketing e-commerce sales, indicating the growth of online shopping and the corresponding increase in home deliveries. This growth is directly related to the problem Boxlock aims to solve, as more packages mean a higher risk of theft.

💡Smart Padlock

A smart padlock is an electronic lock that can be controlled via a digital interface, such as a smartphone app. In the video, Boxlock is described as a smart padlock that allows delivery drivers to access a secure storage container using the package's tracking number. This technology is integral to the product's functionality and its promise to enhance package security.

💡R&D

R&D stands for Research and Development, which is the process of creating new products or improving existing ones. The script mentions that Boxlock is currently in R&D and manufacturing, indicating that the product is in the advanced stages of development but not yet widely available to consumers. This phase is crucial for ensuring the product meets the needs of the market and functions as intended.

💡Pre-sale

A pre-sale refers to the sale of a product before it is officially released. The video mentions that 800 units of Boxlock have been sold on pre-sale, which is a common strategy used to gauge market interest and generate funds for production. This indicates that there is a level of consumer interest in the product before it is widely available.

💡Valuation

Valuation is the process of determining the worth of a company or an asset. In the video, the CEO seeks $1 million for 5% of his company, implying a valuation of $20 million. The discussion around valuation is significant as it reflects the perceived value of the company and the potential for return on investment for potential investors.

💡Patents

A patent is a form of intellectual property protection that grants the inventor exclusive rights to an invention. The mention of patents in the video script suggests that Boxlock has unique technology or designs that are protected by law, which can be a significant asset in securing investment and preventing competitors from copying the product.

💡Venture Debt

Venture debt is a type of financing where a company receives a loan from an investor in exchange for agreeing to pay back the loan with interest and potentially equity or royalties. In the video, one of the investors offers a venture debt deal, which includes a loan with a royalty agreement. This type of deal is less risky for the investor than equity investment and provides the company with the funds needed to grow.

💡Royalty

A royalty is a payment made to the owner of a patented invention, trademark, or copyright for the right to use it. In the context of the video, the investor proposes a royalty payment structure as part of a venture debt deal. The royalty would be a percentage of sales revenue, providing the investor with ongoing income from the success of the product.

Highlights

Burst into the tank is a solution to protect online shopping deliveries from theft.

Boxlock is a smart padlock designed to secure package deliveries.

E-commerce sales are expected to exceed half a trillion dollars, increasing home deliveries.

The founder had a personal experience with package theft, leading to the creation of Boxlock.

Boxlock allows delivery drivers to scan and secure packages in a storage container.

Users receive a notification when their package is delivered and secured.

The product is currently in manufacturing and about to be shipped.

800 units have been pre-sold on Kickstarter at prices between $89 to $109.

The retail price for Boxlock is set at $129 per unit.

The cost to manufacture each unit is expected to be around $65.

Boxlock scans tracking numbers from major carriers like UPS, USPS, and FedEx.

The company is seeking $1 million for 5% equity, valuing the company at $20 million.

The founder argues that the unique solution to a big problem justifies the high valuation.

The founder has no patents but believes in the market potential and current progress.

One investor is concerned about the need to change user behavior for the product to work.

Another investor points out the high costs and complexity of educating millions of delivery drivers.

An offer is made to provide $1 million as a loan with a royalty and interest.

The founder negotiates for a higher loan amount and a royalty rate per unit sold.

The final offer includes $1.5 million in total payback, including interest, and a royalty rate.

The founder seeks a partner with experience in the delivery space to validate the business model.

Transcripts

burst into the tank is a solution to one

inconvenient aspect of online

shopping hi I'm Brad ruus I'm from

Atlanta Georgia and I'm the CEO and

founder of boxlock I'm here today asking

for 1 million for 5% of my company

e-commerce sales are set to Skyrocket

past half a trillion dollars this year

that means that Americans are receiving

more packages and home deliveries than

ever before but there's a huge problem

how are we going to protect all the

deliveries from porch Pirates and

package thieves like millions of other

people I had cameras installed to be

able to keep an eye on all the

deliveries we received literally the

very next day I watched some guy walk up

and steal two packages off our front

porch and so that's why I created box

lock box Lock's a Smart Pad loock you

put it on a storage container outside of

your house when your friendly delivery

driver walks up he's going to use the

lock to scan the tracking number on the

package if that package is out for

delivery to you the lock pops open

giving him access he's going to put the

package inside lock it up you're going

to get a notification on your phone

letting you know that your package has

been delivered sec securely we know it's

a win for anybody who buys anything and

anybody who ships anything and that's

why we know box lock will be a win for

you to I'd love to share some samples

with you sure and answer your questions

thank

you oh thank you you're such a gentleman

you're welcome thanks a lot thank

you so Brad um it wasn't long ago that

someone very much involved in security

came in here and asked for a ridiculous

valuation I was the only shark that

believed in him and now look what

happened what happened he could have

made a lot of money instead he made some

and now he's working you're right beside

me

now this is looks feels really great and

solid so what have you put in so far

where is the product at today right now

in in R&D we've probably put in uh about

half a million dollars it is in

manufacturing right now uh it is in the

process of shipping so you haven't

gotten any into the consumer's hand yet

but what have been your sales we've

actually sold 800 units on pre-sale and

what were the units being sold for uh

the units at that point were being sold

between $ 89 to I think $109 on

Kickstarter how much now uh so they're

going to retail for $129 what's your

cost to make them our next order should

be around $65 per unit what are you

scanning we're scanning the tracking

number on the package we automatically

collect tracking numbers from UPS USPS

FedEx every one of the carriers how long

is it going to take to make drivers

aware of how to use this device so we're

working with the different carriers on

driver awareness and training programs

because if this doesn't work immediately

they're going to put the package back in

front of the door and move on what we

found is that these guys care a lot

about making sure their deliveries are

secured so why don't we just jump right

into the looming question here you want

$1 million for 5% that means you're

saying the company is worth $2 million

even the ring guy wasn't that aggressive

what's the reasoning behind that

this is a really complicated problem

right and it needs it it needs to be

solved just because it's a big problem

doesn't mean you get a big valuation for

walking in when ring came in at 7

million we were at a three plus million

doll year run rate of sales of a product

yep so so we're in Market we're actively

working with the carriers right it is

all up and and and running I want to

make sure I understand I have to buy the

Box you have to buy a box separately

yeah what's your box cost that box is

likely going to reach retail between $1

and $129 but why are you valuing the

business at that price right now we

dealing facts today that this stuff is

all working this is it's it's all up and

running we know all that You' already

explain that explaining why the market

is worth something you may we need to

understand why the business is worth

something because we have this unique

opportunity to be able to as I said

solve a problem that no one else has

been able to solve but that's the reason

it's worth $20 everybody's really real

fact like I have this amount of sale

these amount of patents I have I mean

real facts that we can take so let's

talk about the patents you know I'm just

s I'm just such not a patent person I

had no patents protecting me I out

executed I I think I I love the market

by the way I mean I I literally sold my

company for over a billion dollar to

Amazon so I know package delivery I

control front doors I don't like that

you have to change the user Behavior to

do this you know why ring worked is

because we didn't have to change the

behavior of the customer it still was a

doorbell still work it just enhanced it

this changes where you put the package

how you deliver the package the timing

of the package delivery and asking for a

$20 million valuation you know it's just

it's so far away from me that I'm

out yeah Brad there's so many problems

that you have to solve with so many

constituents that it's going to cost you

hundreds of millions of dollars and

years in order to get it done there's no

path least resistance that gets you to a

profitable company that I can see and so

for those Reasons I'm out okay when I've

asked you to explain the reason why the

business itself cost that much today 20

million you were not able to explain

that to me in any tangible ways so with

that I'm

out okay you know Brad you're climbing

Mount Everest without an oxygen tank

that million is going to be vaporized in

3 months and just training costs of all

the millions of delivery guys good luck

on that Journey I'm out

am I the only one left yes you are the

only one left oh my gosh listen QVC

ships

320 million packages a year alone this

is a big problem this is a really good

solution I've been working on something

like this now for several years we

haven't quite come to a

finalization so I will give you the

million dollars as a loan but I want a

royalty and I want you to tell me what

royalty you'd be willing to give me is

your expectation that that or that

royalty is capped at a certain amount of

sales uh I would do the royalty until I

make my money back plus another 500 plus

another

$500,000 let me make sure I get that

right $1 million plus another $500,000

back in royalty so a whole total of 1.5

million plus the interest R 8% interest

and 2 and a half% of the company in the

end listen you have learned grasshopper

from the master I have I sit next to

Kevin for many many many years this is

this is a venture debt deal vure de you

understand why I can bring you the

customers but there are so many ifs here

this is like walking on a tight rope

between two hundred story buildings I

mean this is really

risky uh well so I greatly appreciate it

I'd love to see if we can figure out how

to get that loan up to a million5 dollar

and then I would love to see the royalty

at $3 per unit it

shuaa Lori that's a lot of

capital boy it's like I just Lori Lori

worried really worried I would have

really what you Lor so I'm going to

throw it back to Jamie right now because

Jamie I am I'm going to throw it to

Jamie because I think he'd be a great

partner I do Jamie I know there is no

one in this space who spent more time

than me thinking about this problem and

trying to figure out how to solve

it you don't have the part that

everyone's looking for which is the

network of these out there in the field

and and that trajectory you don't you

don't have that yet I think that's

that's my problem you're missing the

part that I would actually be wanting to

invest in so for that I'm I'm still out

out

oh good luck with it good luck I I hope

it really works out thank you thank guys