Shark Tank Deal Falls Through
Despite striking a deal on TV, Philly entrepreneurs are once again searching for investors.
If you watched Shark Tank on Friday, you might have seen Philly-based ZOOM Interiors strike a deal with Barbara Corcoran.
After other sharks like Mark Cuban and Lori Greiner passed on spending $100,000 for a 20 percent equity stake in the tech-meets-design business, a visibly uncertain Corcoran offered $100,000 for 33 percent — and they struck a deal.
Yay! Cue the hugs and the happy Shark Tank theme music…
But a funny thing happened in the next few months — both sides soured on the deal. The 24-year-old ZOOM co-owners Madeline Fraser, Elizabeth Grover, and Beatrice Fischel-Bock were hoping Corcoran would serve in a mentorship role, but instead found themselves dealing with a guy named Mike, her head of Shark Tank business operations.
Although Corcoran graciously answered emails and was “so nice,” said Fischel-Bock, Corcoran “has a lot on her plate and is a busy lady. So after the due diligence process, she didn’t see it as worthwhile.” And without Corcoran on board as a mentor, the ZOOM team didn’t want to give up one-third of their business.
“Giving up 33 percent means she would have more than each of us and that made us really uncomfortable in the end,” said Grover.
The ZOOM team says they’ve made lots of changes since filming the episode and that they’re once again on the hunt for investors.
“We’re worth more than we were 11 months ago. Now, we’re ready to go out and look for investors with our new game plan in place,” said Fischel-Bock. “We have nothing but good things to say about Barbara.”
It’s been 11 months since the ZOOM team filmed their segment and they say they’ve changed their business in many ways. In the episode, Cuban came off particularly blunt, calling them out for saying “we’re still young” and telling them to get rid of their part-time jobs and “sleep on the floor” like he did in his youth. They took his advice and committed to ZOOM full time.
They also abandoned the idea of automation (which all the sharks seemed to hate) in favor of hiring trained freelance designers to help them with consultations. They also redesigned their pricing structure from a commission model to flat fees. (Read more about the business here.)
“A lot of companies pay a lot of money to get feedback from a panel like that — that was an amazing, invaluable experience,” said Fraser.
As for the “Shark Tank bump,” the ZOOM owners say they’ve been getting a steady stream of traffic on their website and social media platforms — but not quite the deluge of publicity they were hoping for. Although they picked up just a modest 200 or so Twitter followers, they’re happy to report that their free design consultations are now booked for several weeks.
“Our millennial market is not at home watching TV on a beautiful Friday night in May. The episode is now up on ABC.com and went on Hulu [Saturday] evening,” said Fraser. “Our market is watching on their laptops later on.”