Shark Tank Investor Destroys $1 Billion Dollar Pitch

This is the biggest Shark Tank failure of all time. This is a deal that got away from all the sharks. And then a few years later, they went on to sell to Amazon for over $1 billion. I'm the Internet daddy. I am going to make you an offer. I'd like to offer you $56,000. Let's see how it all went down and how good the pitch was.

First into the tank is a product.

To ensure you always know who's at your front door.

Who'S there? It's Jamie here to come in. Sharks. Wouldn't it be nice to know who was behind the door before you let me in with my product? You can.

So before we get into the pitch, he is putting it on in demonstrable fashion by showcasing the product before he even walks out, which I like because it's highlighting the use case.

The doorbell has not changed since it was invented in 1880. Until now. Introducing the doorbot, the first ever video doorbell built for. For the smartphone. With Doorbot, you can see and speak with visitors from anywhere.

So he does a good job in really articulating that. Hey, there hasn't been any innovation at all in this space. It's a big, big problem, but there's no one really innovating. This is how he's gonna build his use case, I imagine of, like, the little wedge in the market that he's gonna go in and disrupt.

Mark, let's just say this is your house in Dallas.

So engaging an individual shark. He's obviously got a tech product. Mark Cuban's the tech guy. So by trying to integrate him as a part of it, just makes it so you can't ignore them. Whenever you're speaking directly to somebody and you're engaging them in the pitch, they're naturally going to get more interested because they have to participate in it.

When someone rings the door bot.

You.

Can see them and decline if it's someone that you don't want to talk to.

So not only did he demonstrate the use case before he even started his pitch, now he's showing a live demo of exactly how the Doorbot works and bringing up the smartphone. All of these applications are great. When I was in the Tank, there was a few instances where people came in, they were speaking about, like, a dating app or a particular product, and they had a big screen in there, but they didn't even show a demo. And it's like, if you only were gonna show us what this thing does or how it looks, why do you have this screen? And you're not taking the opportunity to do this. You want to show people what the actual product does. Do you have any renders of the idea? Can you show us what it is? Or do we just need to imagine it and write you a check for 500 grand?

Hey, good looking Doorbot guy.

Now he's adding comedy. He's got a cutout of Kevin o' Leary in here. The Sharks are all loving it.

It's your good friend, Mr. Wonderful. I wanted to have you join me on this deal with Doorbot. I think we can get them to go. All royalties and no equity.

This guy's trying to be funny right now, but he's actually alienating the room a bit and he's certainly alienating Kevin o'. Leary. Typically, those kind of things don't go down well. Like, you have to treat the T with the respect that it deserves. That is probably not a tasteful move that he's done.

What if you hit accept?

You hit accept, then the light goes blue and then you can talk to them.

So your voice comes out of it.

Your voice comes out of it. It's got a microphone and speaker. So it's two way audio, one way video.

The first question straight out of the gate wasn't around sales. It wasn't around, like, how big is the market? Or anything like that.

What if you hit accept?

Even though that he did two demonstrations from the product, he actually didn't show it in the full use case. That's going to open him up to a whole line of questions. So it's a great question from Laurie, but it also exposes, like, a bit of a flaw with his demonstration.

And how much does each one of these units sell for?

$199.

$199. It's difficult. Like, you can see also from the reactions of the other sharks, because there's nothing to really compare this to. Right. Other than those little holes that you kind of look through the door with the Peeping Tom or whatever they're called. That's not too much of an ask, knowing how much people pay on, like, private security.

What are your costs to $81.83 is our cost. Landed in our warehouse in the United States.

That seems very high.

We launched nine months ago. We've done in aggregate a million dollars in sales so far.

Good for you.

You've done a million dollars so far.

Wow. And the last month we've done $250,000 in sales. Our sales have grown month over month.

All online, Jamie.

All online, all direct.

So this is where people are Going to start getting really interested. So first of all he's got sales, a million dollars in sales, which is fantastic. And now he's getting down to the specifics, right? We did 250,000 DOL and he's starting to like ramp up the cadence. This looks like it was all very chronological. What you don't see is behind the scenes that it is intense, right? It goes for like an hour and 45 minutes where we're grilling these entrepreneurs, we're trying to find out everything that we can and then you start to actually get down to the juice to.

Give it to my wife who's at home, who's in the bedroom with my five year old. I'm away and at eight o' clock at night and it's dark out, someone.

Knocks on the door, my man. So he's like really trying to like give them exactly what it is that they want. We want something with a big tam, total addressable market that is going to be a mass market consumer good. And that's exactly what he's establishing. He's like, we're not going to be competing with these, you know, 500,000 multi thousand dollar home security services that have cameras in there. We are going to be giving it to the everyday. Tom, Dick and Harry, that's the big thing. In order to get your investment back from these products, they have to be something that has a big tam.

I think that you have potential to do a lot more with this, but I'm not connecting to that. This does enough at this time to distinguish itself as different from what else is out there on the market for the higher price point. And so for that reason I'm out.

It's always very, very telling to see how the entrepreneur reacts once they get their first no being on national TV and getting punched in the face with the first rejection. Some people, they kind of take it in their stride and they still roll with confidence. Other people, they really start to pucker up and get really stressed out and they feel like the doors are and they go into full sell mode. Let's see what he's about to do.

I like it. I think you're going to do great with it. But I've got to be able to say, you know what, when I jump in, I've got to add enough value that this company, instead of being worth 7 million, could be worth 80 million, 90 million. I just don't see that progression. And for that reason I'm out.

So you can start to see he's looking a bit concerned. Now, it's probably telling from the way that he involved Mark in the pitch, that that's the shark that he really, really wanted. It must be very difficult as an entrepreneur to stand and to basically hear these investors just say negative things about your business. And for someone that's like, got so much writing in it, the business becomes their identity. It's not just about these guys saying no. It's about people that have a lot more stature and credibility and people that are more successful, quote, unquote, in the business world than the people that are coming on and pitching them. Them looking down at you and your product and saying, this is not good enough. I am out. I don't think that a lot of people really understand the gravity of that situation and how stressed these entreprene are. Throughout this time, I'm wrestling with where.

This goes in the market. I just don't think it's for me.

I'm out.

That looked like he just made a rash decision. Like, Damon was like, I don't see where this sits in with the market. For that reason, I'm out. When we were in the tank, like, we would give these very long, kind of winded explanations of like, hey, I like the business because of this. You've done a great job on this. He was probably asking lots of lines of questions, maybe for 5, 10, 15 minutes. That is not what the producers want. They want you to be like, I think this business sucks. I'm out.

Personally, I'm a security guy. So the idea of having another access.

I've been waiting for what my homeboy Robert's gonna say. He is in the top three cyber security experts in the world. And whenever he goes quiet, that is his tell. I've noticed it in the tank, homeboy just sits there in silence. And, you know, he's swimming, he's looking like he's interested. And the more that he talks is typically when he's not in. So I know this guy, and I know that he's probably gonna be interested in this. I'm not gonna be surpr if he makes an offer right now.

Freaks me out a little bit because all those ADT and all those other ones are hardwired. I can't hack into those. Right. So I think you've priced a lot of value into it. But I think my real struggle with it is it's really not an Internet play.

It's a for the whole advantages that this guy's saying that is on there, that it's wireless and it connects to your smartphone, obviously, Robert knows the cybersecurity world very well, and he knows all the threats that are there. So he's already thinking about, like, hey, like, this could be a threat. Like, someone could just hack into the WI fi and get access to this thing and be able to see people going in inside of the house, what time they're doing it. So that's an interesting angle. And it's also one of those blows to the gut where it's like, not only is he looking like he's going to be out, but he's also delivering a fatal blow and saying, I think that the product is fundamentally flawed. However, I also know that this is his move. It's called the one, two step. Well, he'll lead you with the negative, and you think he's going to be out, and he's just setting the scene. He is a seasoned pro, this guy. He's been doing it over 17 years. He might come in here at this stage, plant seen as being very negative. But then he's saying, I think I can really help you. Let's see where it ends up going.

Price point is going to start dropping quickly as your volumes go up. For that reason, I mean, all right.

So he is out. I was wrong. And he's obviously very, very wary in the line of work that. That he's in. He runs a massive business in the cybersecurity space, and the last thing that he needs in his portfolio is something that puts. Puts all of that at jeopardy because he's behind a product that actually turns out to be a bigger cybersecurity risk than the actual benefits that it gives. Now we're just left with Kevin o', Leary, the person that he insulted. He's probably gonna rub that in, that he was making fun of him.

Jamie, let's take stock. What's happened here?

Yeah, here we go. Jamie, let's take stock. He's about to crush this dude.

Made a few jokes about Mr. Wonderful to begin.

He does not like the jokes. He does not like it when you make fun of him. And he ain't gonna let you get away with that.

The only person, Mr.

Wonderful, Kevin, is a genius at this. He always presses the advantage when he's the last shark out. If he is going to be in a position where he makes this guy an offer, he has cleared the field. He has no more competition. And he doesn't just go on pretending like that. That's not the situation. He makes it very apparent, and then I'm the only one left. You made fun of me. You Made fun of my royalty structure, but, hey, I'm the only guy here. I am your last chance.

I'll make you an offer.

You know that this guy made fun of the royalty. I guarantee you there is a royalty as a part of this deal.

I'll give you $700,000. I want a 10% royalty.

You're gonna make fun of me. You're gonna feel it, right? I'm gonna come for that royalty. And he's about to butter him up with a deal that's gonna be hard to pallet.

That drops down to seven after I recoup the 700,000 and I get 5% of the company's equity today.

A lot of people at home, when they watch the Shark Tank, they're like, oh, like these royalty deals, and, like, that doesn't seem fair and all of that. What you need to realize the amount of businesses that will ever get a successful exit. They are few and far between us as sharks. We have to have some mechanism to get back our investment. Otherwise, our money decided sits there and it rots. What they realized after doing a couple of seasons of Shark Tank in the States is like, hey, we're building out these big portfolios of businesses, but we're never getting any dividends or we're not making any money off the back of these, and we don't have any opportunity to do so.

Honestly, I do appreciate the offer, but at the same time, that money that you'd be taking on the royalty, I need to reinvest back in this business.

Okay, Jamie. It's that moment when I say, you're dead to me because you don't want to take my offer. I made you a very valid offer, I think, under the circumstances.

And look, usually Kevin's offers, they are. They ain't great. But to be honest, I felt like this one, it's a good and fair offer, proportionate to, like, where this guy's at in his business. And it's easy to always look at things in hindsight, but the reality of businesses and the. How high the mortality rate is, it's. It's all a huge risk. That risk has to be represented in upside.

Respectfully, Mr. Wonderful, we're gonna decline. Go kick some ass, Jamie. Thank you very much.

Good luck, Jamie.

Good luck, sharks.

I always like to see the talk about what the sharks say and then what the entrepreneurs say, and then I'm gonna give you my thoughts.

There was a moment where he actually considered it.

I would have done that to you.

Whatever happened to peeking through the window and Saying, go away.

Based on what we see here, it's not a great pitch. Right. There's a lot of things that he could have really answered, and he should have been more prepared to answer the whole security risk. But the biggest thing that I saw that he really didn't articulate, he didn't really set the scene. He didn't set the scene of, like, how many people have ADT home security, how much burglary is on the rise. All of the things to really hammer home how big this market is. This is how much revenue these guys are doing. This is the TAM of this market. This is the TAM of this market. This is how much revenue that they're doing. And we're going sit in this sweet spot. And what we've seen so far is we did $250,000 in orders last month in the last 30 days, and paint a better picture of what that future looks like. When you're watching that, you don't really get that feeling of excitement that they're just on this trajectory, about to disrupt this big category and this huge, huge problem. So Jamie was obviously in the tank pitching Doorbot. And after being on the tank, they obviously went through a rebrand, and they changed the name to ring. And that is the doorbell that we all know. You see them everywhere. They're on everybody's door. And he really became the category king. They sold to Amazon for a billion dollars. He went and actually did what he said that he was going to go do in its peak ring, went on to do over $165 million in revenue just before getting acquired by Amazon for $1 billion. He actually came back and made an appearance as a shark himself.

Sharks.

Well, well, well. Look who's back.

Welcome.

H. I was the only one that believed in you.

Congratulations, man. That is the biggest boss move that you can ever do. I know from conversations that I've had and with people that I've invested in on the show, like, their dream is to be sitting in that chair one day as a shark. And that's a very, very quick turnaround. That's incredible. And that is something coming full circle.