The Sharks Are Bewildered By Surprise Cake | Shark Tank US | Shark Tank Global

Summary

In this Shark Tank pitch, Jordan and Liz from Newton, Massachusetts, introduce 'Surprise Cake,' a reusable cake stand that hides gifts inside. They seek $200,000 for 8% equity in their company, showcasing their innovative product that adds a fun twist to gift-giving and cake traditions. Despite impressive sales figures—$550,000 in 2024 with a projected $900,000—they face skepticism from the Sharks. Concerns about scalability, profitability, and the cake industry's challenges arise, leading to rejections from all Sharks, except for an offer to renegotiate terms. The duo remains confident and determined to push forward.

Takeaways

• 😀 The Surprise Cake business combines traditional cake gifting with an innovative twist, using a patented cake stand that hides gifts inside cakes.
• 😀 Jordan and Liz are seeking $200,000 for 8% equity in their company, Surprise Cake, to scale their business and offer a full One-Stop shop for surprise cakes.
• 😀 The product is designed for various occasions, including birthdays, holidays, and gender reveals, offering an interactive and fun experience for customers.
• 😀 The cake stand costs $36.99, with an additional $7.99 for shipping, while the landed cost of the popping stand is just $8.
• 😀 Despite impressive sales growth (from $10,000 to a projected $900,000), the business struggles with profitability, expecting only $50,000 in net profit for the year.
• 😀 The founders overcame a legal roadblock (Kinder Egg law) by developing a stand to hold the gifts separately from the cake, making the concept feasible.
• 😀 The company has expanded internationally, filing a utility patent in the United States and internationally in the EU, Canada, and Australia.
• 😀 Sharks raised concerns about the potential challenges of entering the cake business, citing issues such as shelf life and freshness when shipping cakes.
• 😀 Mark Cuban criticized the founders for trying to chase revenue growth without focusing on profits, ultimately deciding to pass on the opportunity.
• 😀 Lori Greiner expressed interest in the business but found the valuation too high, offering a counterproposal of $200,000 for 12% equity.
• 😀 Several Sharks emphasized that while the product is fun and unique, the founders need to refine their business model to ensure sustainable profitability.
• 😀 The founders plan to expand by offering curated gift pods for different occasions, though some Sharks questioned the feasibility of this idea.

Q & A

What is the primary product introduced by Jordan and Liz?

The primary product introduced is the 'surprise cake,' which uses a reusable patented popping cake stand to hide gifts inside a cake. This concept aims to combine cake and gift-giving for celebrations.

What inspired the idea behind the surprise cake?

The idea for the surprise cake came from Jordan's dream the night before his daughter's 12th birthday, where he imagined hiding her birthday gift inside the cake. This led to the idea of combining cakes and gifts in a unique way.

What challenges did the founders face in developing their product?

The founders initially faced a challenge known as the 'Kinder Egg law,' which prohibits placing non-edible objects inside confectionery products. They solved this issue by placing the gifts inside a cake stand instead of directly in the cake.

How did Jordan and Liz come up with the idea of adding curated gift pods?

Jordan and Liz introduced the idea of curated gift pods to expand their product offering. These pods would contain gifts for various occasions and be placed inside the popping cake stand, offering a more complete surprise cake experience.

What are the founders’ backgrounds and expertise?

Jordan has a background in law and worked for the Department of Correction in Massachusetts. Liz is an Industrial Engineer who graduated two and a half years ago and collaborated with a product designer to develop the surprise cake stand.

What are the current sales figures for the business?

In their first five months, the business made $10,000 in sales. In 2019, they reached $280,000, and year-to-date, they have made $550,000 in sales, with a projected run rate of $900,000 for the year.

What is the price of the popping cake stand and its associated costs?

The popping cake stand is sold for $36.99, plus $7.99 for shipping. The landed cost of the popping stand is $8.

What are some of the concerns the Sharks have about the business?

Several Sharks express concerns, including the lack of scalability in selling a one-time-use cake stand, the challenges of adding cakes to the business, and the issue of profitability, as the company’s sales are growing but profits are limited.

Why does Mark Cuban reject the offer despite recognizing the potential?

Mark Cuban rejects the offer because he feels the company is overly focused on growing top-line revenue without properly managing profits. He believes that chasing revenue growth for ego reasons, rather than focusing on profitability, is a critical mistake.

How do Jordan and Liz respond to the Sharks' rejection?

Jordan and Liz express confidence in their business and their vision for a one-stop shop for surprise cakes. They plan to push ahead with their business strategy, believing that the Sharks will regret not investing in the idea.