Oct 13, 2024
The Pitch Deck
CoinOut Entrepreneur SHUTSDOWN The Sharks & Treats Them As "Equals" | Shark Tank US
Summary
Innovative Digital Payment Solution
CoinOut digitizes loose change without requiring an app, financial info, or sign-up, allowing users to cash out at participating merchants by simply entering their phone number at checkout.
The company charges merchants $20/month and earns 3% on each transaction, targeting the 32% of U.S. transactions still done in cash according to the Federal Reserve.
Business Growth and Potential
CoinOut's franchise model aims to reach 30,000 locations and a $30 million run rate, with projections of 700 locations by year-end and 3,000 by next year.
Competitive Advantage
CoinOut's technology is difficult to replicate, requiring a banking relationship and regulatory structure, setting it apart from other payment systems.
Customer Loyalty and Data
The integrated loyalty program builds connective tissue between merchants and previously anonymous cash customers, tracking benefits in the cloud using only a phone number.
Timestamps
00:00 CoinOut digitizes loose change, making it convenient and efficient to manage money.
01:11 CoinOut allows customers to easily convert their spare change into digital currency without the need for an app or financial information, providing multiple cash out options.
02:18 Cash is not going away, CoinOut's technology is difficult to replicate, and it provides an effective loyalty program for retailers.
03:39 CoinOut charges merchants $20 a month and earns 3% on each transaction, and the founder turned down a full-time offer at Apple to pursue the business.
04:39 CoinOut entrepreneur challenges the Sharks, dismisses Kevin, and treats Mark as an equal in pitching his alternative payment system.
05:54 CoinOut entrepreneur focuses on one feature of a potential bigger solution, but the Sharks are skeptical and ultimately decide not to invest.
07:10 CoinOut entrepreneur confidently rejects contingency-based investment offer from the Sharks.
08:05 Entrepreneur rejects initial offer, confronts sharks, and negotiates a 12.5% stake with a condition.
Transcript
00:00 Next up is a solution for unwanted loose change hello sharks. My name is Jeff Whitton I'm from Mamaroneck New York and my company is coin out I'm seeking 250 000 in exchange for a seven and a half stake of seven half percent stake of my company sharks. We've all been here you're paying for your iced latte at the local coffee joint. Hey there and your morning is off to a great start until this moment getting back Loose Change oh I hate Loose Change. It's filthy. It doesn't fit in your wallet or your skinny jeans getting coins back from cash is a completely inefficient annoying and stupid way to transact instead turn your loose change into easy money with coin out the most convenient way to digitize or lose change. We're getting rid of those pesky pennies allowing people to take full control over their money.
01:11 Let me show you how it works so you're paying with cash. At a participating Merchant and your change is a dollar and 34 cents after handing over the cash. You simply ask the cashier I'd like to coin out when she turns a device you simply enter your phone number into the device at checkout and you can choose. If you want to coin out just the coins. The 34 cents or the full change the dollar 34 cents to your coin out wallet hit confirm and boom transactions complete. You'll get a text message confirming the transaction along with instructions to set up your account online later and the best part is. There's no app to download no financial information needed and no sign up required until you're ready to cash out sharks carrying around coins simply doesn't make sense so the next time you check out coin out. Can I pay with my coin out account. Next time I go to get a coffee. That's one of the options so we have four Cash Out options. Right now for customers you can transfer to your bank account. You can turn it into an Amazon gift card. You can donate to charity or the last option is redeeming it in store. Jeff why why are you not going to get crushed like a cockroach.
02:18 In this how can you possibly beat the giant payment operators long term. So. I'll tell you why please first of all cash is not new. No one has done this the reason why no one's done. This is because look everyone in the industry thinks cash is going away but it's not nobody thinks cash is going away. All the even the Bitcoin freaks don't think cash is all due respect. You are going to get crushed Mr Wonderful with all due respect. We're not going to get crush the technology we've built. It's of course. It can be replicated but it's difficult to build okay. You also you need a banking relationship and you need a regulatory structure in place. That's not straight. I feel like I'm at a funeral. Why would that retailer have that screen there and what's in there for them. First of all cash is very expensive for the retailer so think about from getting delivery armored truck delivery of all the coin. This happens at my local pizzeria. They get an armored truck delivery. It's crazy. It's so expensive. The cost is number one number two is this is an effective loyalty program for the retailers I just want to know if the Barista is good. Kevin let him talk is looking at fear at you because she knows that dead man walking with all due respect. Let me finish yes so the number two. The Loyalty program is key for these guys okay. We build the connective tissue between the merchant and the cash customer. That's previously Anonymous. I think it's a great idea.
03:39 I hate carrying change that's because you're rich walk me through how you make money at it. What's the the business model we charge. Merchants 20 bucks a month and then we also 20 bucks a month 20 bucks a month. We also earn three percent on each transaction so let me tell you my experience all right and this actually goes back to Shark Tank I was in law school. I was on the path to become a corporate lawyer and I watched The Scrub Daddy episode. I have my property textbook next to me and I'm looking at this guy and this guy's just teeming with emotion and energy and I'm like wow this guy like he really cares about what he's invested in and I said I want to be the next Scrub Daddy. I really did and this has been a long drawn out process. I studied the market okay hold on I had a full-time offer at Apple turned it down full-time clear path to corporate law turned it down. I've got a ton invested in this I'm related we raised 460 000 family friends some of my own money okay so Jeff.
04:39 Here's what I'm hearing people want to use alternative Payment Systems to simplify their lives right. The issue for you is getting people to use your application agreed that's not cheap and you're trying to get 20 bucks a month out of all the applications that that Barista could possibly run but okay fair fair points. However change is a big problem. No one's solved it okay let me just tell you how I solved it. Here's my credit card okay fine fine okay but however the numbers tell a different story. Mark 32 of all U.S transactions are still done in cash 32 30. That's more than credit more than debit. It's in the Merchant's interest to do more of these transactions. Data is King in this world if you go to any major coffee chain. Only 15 are on their loyalty program. They're not accessing any of these customers that are paying with cash because they don't want to download an app big. Merchants are going to love this I gotta give this kid a compliment. I don't think I've ever seen anybody go one-on-one with the sharks basically dismiss Kevin he got reprimanded by you you treat Mark as though he's equal here good for you. Jeff I'm here come out here that doesn't matter. We told you everything that's wrong with it. Yeah. You keep tell us what's working four months okay.
05:54 We've done 2500 transactions. The customers that use it love it and are coming back. The problem you're really solving is for people who don't like change the loyalty and the other stuff. There's a benefit yeah. But that's the fundamental problem yes right the part where you put in the phone number yes and stored it and then you use that in the cloud to accumulate everything right yes clever the best part of everything you've told me is that the idea that for any loyalty program the Barista just says put in your phone number if and when you decide to join you're going to have accumulated all these benefits yeah and we'll track that's brilliant the fact that you're focused on coin out is horrific right. I know you disagree you're trying to get both a consumer to be aware of it and the Barista to also be aware of it the fact that you just focused on one feature of what could be a bigger solution. I have a real problem okay. I'm out I hate coins. I don't even like to carry money period. So I'm definitely like your customer it could take off or. It could just fizzle right and I don't know how I'm gonna get my 250 000 back. I'm sorry.
07:10 I'm out fair enough look if we get to 100 000 locations which in the franchise model if it works. The Dominoes start falling you can get to that's a 30 million dollar run rate. The big retail at the time. The time is now these guys are dying for something like this how long would it take you to get a thousand retailers. We expect to get on to 700 locations by the end of this year. Next year. We'll expect to get the 3. 000. I totally believe you're going to make this thing happen. I'm going to give you your 250 for 15 percent. But it's contingent on you getting those locations by year ending because that's the missing key to this whole program with all due respect the contingency. There is untenable I'm not gonna do a contingency based on locations whoa but you said you could get the locations and I believe I can.
08:05 But it's not in my area enough to make the deal dependent that doesn't mean that I'm very confident in this business if you if you don't see. This is your confidence long-term Vision if it's going to be contingent on getting a number within six months. Then I don't think you fully believe in the vision. You didn't believe Mr Wonderful you would never make that sort of a deal but if it was only offer I had I might consider it. You said you don't have the confidence to get there. I do have the confidence when I borrowed money for my business. I guarantee that I'd pay them back within six months but and I would have never taken the original thousand dollars unless I felt entirely sure I would find some way to get that money back to that investor fair enough fair enough fair enough. But I'm out yeah okay okay. Jeff I'm gonna make you an offer. You wouldn't take a contingency deal at 15. How much pain are you willing to take if you don't have that confidence and you don't want a contingency. I'll do the 250 000 for 25 percent thank you for your offer um. I'd love to see if there are any other offers because it should cost you ten percent if you're not willing to be confident enough to scale at the rate. You believe it's wonderful.I haven't felt the love from you today at all. So I don't know I don't even know it's not about love. It's about money but you need to be my partner in this so there's been nothing that you've said today to convey that you're at all interested in the business Jeff when I started my business. My bank said every quarter you have to hit a certain level of sales for us to continue to give you the money of course. If I didn't hit him. They wanted their money back of course. Maybe the 700 locations is too much of a stretch okay but you've got to prove it out. Chateau. I'll give you the 250 000 15 Equity. But I wanna see a successful pilot with a large-scale retailer appreciate your offer thank you very much. I think it's a fair contingency how about would you come down to um. I would do 10 and look I think 150 000 15 your other offer is 250 000 for 25 from Kevin agreed but look I think we've proven that that the technology it's pretty cool. This is a huge idea a huge Market I don't think it'll move you got to make a decision hold on I'm not going to move you're not going to move at all at 15.That's that's you you know he's not moving you're in the world of Fury. So yeah I need to see that world get into reality. Maximum in my head was 12 and a half percent can you come down to twelve and a half percent so hang on a second you were willing to give up 12 and a half percent but for the other two and a half you're not willing to make that the 12 and a half percent was the highest that I wanted to go Jeffrey. I'm a simple guy okay so let's. So it's 15 you know if can. I just I have one contingency. If we do the deal Kevin can't use the product congratulations congratulations Jeff before you go don't forget to subscribe to the Shark Tank Youtube channel and ring the notification Bell to keep up with everything that's bubbling in the tank.