Peter Can't Believe A Pyramid Scheme Business Model's Being Pitched | Dragons' Den

Summary

Barry Richey and Paul Lobo pitch their company, Air Oasis, to the Dragons, seeking £125,000 for 10% equity. Their product creates pure drinking water from air. While the innovative concept intrigues, the pitch falters as the Dragons criticize the unappealing taste of the water and question the sales strategy, particularly their door-to-door marketing approach. Despite claims of environmental benefits and cost-effectiveness compared to bottled water, the Dragons remain unconvinced, and ultimately, no investments are made. The pair struggles to defend the product’s taste and filtration process, leading to a failed pitch.

Takeaways

• 😀 Paul Lobo and Barry Richie are pitching their company, Air Oasis, which creates drinking water from air.
• 😀 They are seeking £125,000 in exchange for 10% equity in their company.
• 😀 The product works by extracting water from air using a condensing unit, seven-stage filtration, and UV light to ensure purity.
• 😀 They claim their machine provides the purest, freshest drinking water at a cost of 7 pence per liter, which is cheaper than bottled water.
• 😀 They emphasize that their product reduces the carbon footprint by eliminating the need for plastic bottles and delivery logistics.
• 😀 They plan to market the machine by educating the public through direct sales, similar to the Kirby vacuum cleaner model, with a commission-based door-to-door approach.
• 😀 The Dragons express skepticism about the practicality of the sales method and the public's willingness to change their water consumption habits.
• 😀 Barry's confident and forceful pitch raises concerns with the Dragons, especially his comparison of the product to high-end brands like Swiss vodka.
• 😀 There is a disagreement over the taste of the water, which several Dragons deem unpalatable due to a chemical aftertaste, with Barry attributing the issue to the machine needing more time to filter properly.
• 😀 Despite initial confidence, all the Dragons ultimately decide not to invest due to concerns about the sales strategy, water quality, and lack of evidence supporting the product's claims.

Q & A

What is the main product being pitched by Barry Richey and Paul Lobo?

Barry Richey and Paul Lobo are pitching a machine that produces drinking water from air. The machine works by sucking in air, condensing it, and filtering it through a seven-stage process, resulting in purified drinking water.

What is the investment being asked for, and what equity are they offering?

They are seeking an investment of £125,000 in exchange for 10% equity in their company, Air Oasis Ltd.

How do Barry and Paul claim their machine compares to bottled water?

They claim their machine provides a more sustainable and cost-effective alternative to bottled water, with a production cost of just 7 pence per liter, compared to the high costs of bottled water, which is responsible for significant environmental waste.

What is the unique selling point of their water machine for certain markets?

The machine does not require a traditional water supply, which makes it ideal for humid countries where clean water may be hard to access. It also reduces the environmental impact associated with bottled water and plastic waste.

How is the product marketed and sold to consumers?

The product is marketed through direct sales, with a focus on educating the public by demonstrating the difference in water quality. Barry and Paul plan to use a direct sales force, with some people working on a commission-only basis.

Why does Duncan Bannatyne criticize their sales approach?

Duncan criticizes their sales approach, comparing it to a pyramid scheme. He expresses concerns about the feasibility and cost of going door-to-door to educate people about the product, particularly when the product's taste and quality are questionable.

What are the challenges faced in proving the machine's effectiveness?

One challenge is that the water produced by the machine during the pitch had a poor taste, which led to negative reactions from the Dragons. The machine had not been properly flushed and was not yet fully operational, which affected the taste of the water.

How do Barry and Paul explain the bad taste of the water during the pitch?

Barry and Paul explain that the water's poor taste was due to the machine not having been set up properly, as it had not been flushed adequately. They claim that after more time, the water would taste better once the system is fully operational.

What is Peter Jones' response to Paul’s claim that he has significant personal funds?

Peter Jones questions why Paul isn't investing more of his own money into the business if he has so much in personal funds. He expresses skepticism about the request for external investment when the entrepreneurs have considerable resources themselves.

What do the Dragons think about the product’s potential for success?

The Dragons are largely skeptical about the product’s potential. They are unconvinced by the poor taste of the water, the questionable sales tactics, and the overall lack of a clear, scalable strategy for educating the public and convincing them to buy the product.