Transcript

00:00 Next into the tank is a new idea in the outdoor furniture space. Hi sharks my name is jake liu and I'm carrie lynn. We're the co-founders of outer. We're seeking 750 thousand dollars in exchange for four percent equity stake in our company imagine for a moment. It's early in the morning. The house is still quiet your coffee just finished brewing. It's a perfect spring day. The birds are chirping. You look outside at your outdoor sofa coffee in hand.You inhale deeply oh. The cushions are wet and now so are my pants. We call that the soggy bottom syndrome sharks that's just one of many problems with outdoor furniture. It falls apart easily. It's very uncomfortable or they're stored in the garage somewhere never to be used at outer. We've solved all of those problems we've created the perfect outdoor sofa that's as comfortable as your bed and as durable as your camping equipment all while using eco-friendly materials. Most importantly no more soggy bottoms without patent-pending invention. The outer shell cover let me show you how it works in the evening all you have to do is cover up and then pull the outer shell over and the cushion is completely protected from the elements. If you know there's a rainstorm coming all you have to do is take it and go with you. So it's very easy to carry and store cool. For the next morning. There's going to be a layer of morning dew on here. But all you have to do is open. It up flip. It open the perfect sofa ready for you to enjoy. So we've created the perfect outdoor sofa. But we realized that the shopping experience wasn't great typically when you see an outdoor sofa. You see it inside in a climate controlled environment where it never has seen sun rain or bird poop. So we've actually revolutionized the shopping experience.

02:03 We've developed a proprietary peer-to-peer showroom platform. It's where we convert our customers showrooms into our showrooms and in doing so customers can see touch and feel the sofa before they decide to buy. It's something that we call the neighborhood showroom. It's the sharing economy for retail so sharks who is ready to join us to bring life outside how much does the sofa cost so the sofa you're looking at right. Now the three-seater is 2500 okay. I don't think that's what does it cost you land so so each share is 800 so they're modular by the way I don't know. Retail. Cost is eight eight twenty dollars. You can average it out and then the cost of goods made is about two twenty five or so two twenty five yeah. So I wanna make sure. I understand. This is instead of having a showroom where you have your own retail space so to speak. Your customers are opening up their backyards. Exactly you guys do. I understand that right you got that perfectly. So what do I get paid for allowing that to happen yeah. So we're testing uh that right now and uh you you're expected to make about 20 to 50 dollars per visit and the platform that we built when you you have to book a visit. You can't just show up to somebody's home randomly right thank you so much 750 000.

03:13 Four percent puts 18 eight 18.7 million yes. Why is this worth 18 plus million dollars so kevin. They're. They're so the outdoor furniture market in the u.s. Nine billion dollars. Oh that's the worst answer. It's a very bad thing to say kevin how big is the bankruptcy market in the u.s. It's really really big well go ahead jake. Uh we we just launched about four months ago and we did about eight hundred thousand dollars in sales. To date. You haven't made any money yet have you uh. We're not making money yet why 18 million. What's the reason yeah um so we first of all we just closed our last round uh with our vc backed at what valuation that was 13.5 million valuation. So you came into the shark tank and raised it even more how much do you project this year. This year. We're going to close out at least a million dollars. Next year. We're projecting five so how many partners do you have and what percentage of the company do you two own.I own sixty percent carry on 25 and my family factory owns 15 so another. Another answer to the valuation is because we've actually taken out the risk on the supply chain so they essentially giving us that cost right your family's subsidizing you by not taking a margin because they own 15 percent of the business that's right have to pay for the inventory until we sell it that's interesting so guys uh you know. The valuation is crazy. You know you're gonna. You only sold 800 000 hopefully 1.5 and you're you're evaluating it. Over 18 million dollars.

04:41 You know exactly what's going to happen to you here right so. I'm out so so for me coming from silicon valley. I'm used to seeing mass evaluations all the time and and i. I frankly. I way overpaid for a number of deals that I think can potentially change the world or actually have a huge impact. I don't think it's it's world-changing for me so for that reason. I'm out hey guys. I think it's a great business. Could it be 100 million dollar business yeah. It really could be but look at it from my end right. Let's just say you do 200 million dollars. Sure and your margins are 10 net margins. You'd be thrilled to death you're making 20 million dollars. I'm making 5 of that. That's I mean that's not bad money. But the risk reward for versus what you're asking just is not there well.

05:29 The current d2c brands have a multiple of anywhere from three yeah but that's great you and you found the vcs that pay those kind of multiples right that ain't me that's not shark tank for those reasons. I'm out. I like it. I I really do but I don't need any disrespect to the previous vcs. They are not mr wonderful. I am you may not like this offer but I'm going to make it anyways. Three sharks are out but kevin seems interested in terry and jake's outdoor furniture company outer you may not like this offer. But I'm going to make it anyways now traditionally to get back my capital. I would want some kind of cash flow in the form of you know maybe I'd make it dead or maybe. I'll make a royalty. But I'm in a generous mood today. I'm feeling first.

06:25 So I'm going to give you 750 000 straight equity. I want 20 percent. I don't care if he laughs. He didn't give you any money um. I want to hear lori. I love it. I want to be part of it but you've just started selling it. How about this let me throw a different type of offer at you so give you a 750 000 loan as a line of credit. But I want 20 in royalty per chair. The royalty until I get paid back the 750 into a million and then at the end of the day. I'll have 10 of the company. You know grasshopper you've learned from the master that sounded like your kind of deal. I know there's only one mr wonderful and he is amazing. I could easily do that deal and even bait it because that's my kind of deal. She basically. Laurie learned that from the master would you match that deal or how would you beat that deal if you want him to match my deal and you would pick him. Then. I'm going to go out and do that I'll do it. No. I'll do the deal seriously you're going to lose me and that you will regret forever. I'll do it forever. Let's equity that's ridiculous yeah baby just to shake it up make a decision make a decision guys. So I'll go for it yeah okay all right so our counter to uh. Lori's offer is um 750 000 uh in loan. Uh enrolled he will pay back to the 750 and on the equity side.

08:25 We would love to bring it down to four percent. What we ask for when we come in. You want me to get up every morning and be like. I can't wait to blow that up. I mean you need that passion you need that and I'm worth it. I'm worth it. Kevin's willing to do five percent 750. I think that's really attractive. But we do want to work with you I i feel that connection. So is there any way you can match that we'll even throw in the million dollars. So it's a million dollar pay back to the royalty but five people you want to raise the royalty. Uh the royalty like you want to kick up the royalty and I'll go down in the percentage. You can afford it especially with how many will sell uh what's your offer on the royalty well. Why don't we go to 30. 30 works. I think 30 works 30 up until 1 million. So 750. 000 is a loan okay. I get 30 a chair until a million okay. It's paid off. We'll make it three percent interest and five percent equity.

09:26 Let's do it lori do it. It's good this is so brilliant in the outdoor space wait. Till they see the other things. Honestly. It's brilliant. We're working more products. Congratulations. Guys thank you guys thank you guys you.