Shark Tank US | The Woobles Turned $200 into $5.3m!

Summary

In this Shark Tank pitch, Justine and Adrian, the founders of a crochet kit company, seek a $250,000 investment for 5% equity. They explain how their fun, educational kits teach crochet through easy-to-follow videos, targeting mostly adult customers. With impressive margins and $5.3 million in sales, they plan to expand through licensing and retail. After negotiating with multiple Sharks, they accept a deal from Barbara and Mark for $450,000 in exchange for 6% equity. The business aims to empower customers by helping them learn new skills, driving both personal confidence and business growth.

Takeaways

• 😀 The company creates fun and simple crochet kits that teach beginners how to crochet by making adorable characters.
• 😀 The founders, Justine and Adrian, are a husband and wife team who have a background in education and tech, specifically in user experience (UX) and Wall Street.
• 😀 Their product is not just about crochet; it’s also about boosting confidence and teaching new skills to customers of all ages.
• 😀 The company has achieved significant success, making $5.3 million in sales to date, with an expected $7 million in sales for the current year.
• 😀 Over 90% of their sales are direct-to-consumer through their website, leveraging online advertising with a blended customer acquisition cost (CAC) of $16.
• 😀 The average order value is $57, with most customers buying two kits, leading to high profitability with an 86% gross margin and 32% net margin.
• 😀 The founders are seeking a $250,000 investment for 5% equity to help them expand into licensing, wholesale, and retail markets.
• 😀 Customers are asking for more popular characters, like Baby Yoda and Marvel characters, indicating potential for licensing opportunities.
• 😀 The company’s valuation is described as low because they are looking for mentorship and guidance from experienced investors to grow the brand.
• 😀 Investors Mark and Lori team up to offer $450,000 for 6% equity, combining their expertise in licensing and retail to help scale the business.

Q & A

What is the main concept behind the business pitch in the script?

The business pitch revolves around a company that creates crochet kits, aimed at teaching beginners how to crochet while making fun and adorable characters. The kits come with step-by-step video tutorials and are designed to boost confidence through learning a new skill.

What differentiates their crochet kits from others in the market?

Their kits focus on teaching beginners to crochet by making fun characters like animals, rather than traditional items like pot holders. The kits are designed to be enjoyable, educational, and accessible, offering a confidence boost for users.

Who is the target audience for these crochet kits?

The target audience is primarily adults who want to learn a new skill and experience the confidence boost that comes with it. While some might buy them for children, the majority of customers are adults purchasing for themselves.

What are the financials of the business, in terms of cost and pricing?

Each kit costs $3 to make, they wholesale for $15, and retail for $30. The company achieves an 86% gross margin and a 32% net margin year-to-date.

What is the company's approach to customer acquisition?

The company spends about 20% of its revenue on advertising, with a customer acquisition cost (CAC) of $16. The average order value is around $57, with customers typically purchasing two kits per order.

What are the three key reasons the business is seeking an investment?

The company is seeking investment for three main reasons: licensing, wholesale expansion, and mentorship to help grow the business further.

What are the future growth opportunities the company sees?

The company sees significant opportunities in licensing, where customers are asking for character kits based on popular franchises like Disney and Marvel, as well as in wholesale and retail expansion.

How did the founders' previous careers influence the business?

One founder, Justine, had a background in UX design, working on education products at Google, which led her to appreciate the importance of learning new skills. Adrian, the other founder, had a successful career on Wall Street but left to pursue his own definition of success and a desire to help people, which eventually led to the creation of this business.

Why does the business emphasize the importance of learning new skills?

The business believes learning new skills, like crochet, can be a powerful confidence booster. As people age, they often stop learning new things, but this business encourages people to continue growing and exploring new interests.

What offer did Mr. Wonderful make to the founders, and how did it evolve?

Mr. Wonderful initially offered $250,000 for 10% equity. However, after some negotiations, he increased his offer to $350,000 for 5% equity, showing a strong belief in the business's potential.