Transcript

00:00 Hi my room I'm Darwin I'm Sue and we're the king sisters from San Francisco California. They smell really good. It's French. Lavender wow that's amazing the three of us were born and raised in Korea and when we were teenagers we immigrated to America. I went to Stanford Business School and I went to Harvard Business School and I went to Parsons full of design. Our dad sacrificed so much to send three of us to school in the U.S financially he had to work all the time and the fact that he had to just let his daughters go at such a young age I think that was really hard for them how was your day. It takes me. But he's not asking me on a second date yeah. One day at lunch we were discussing a common problem and came up with a solution in the tech space that could really work. We quit our high-paid job and moved to San Francisco and we just started our own business. Let's talk about our upcoming marketing initiative. We believe we have something very big on our hands something that can potentially change lives without the money from the Sharks. We won't be able to execute on our growth plan not to mention to disappoint our family after all that they have sacrificed hello. My name is Arun Taiwan and Sue and we're the king sisters from San Francisco. Today we're raising five hundred thousand dollars in exchange for five percent equity in our company coffee meets. Bagel is here to profoundly change how people discover and fall in love sharks. I know what you're thinking.

02:02 It's another dating site. We all know online dating sucks why because it treats people as a piece of information you search for from a huge database. People want to go back to time of happenstance where you just stumble upon someone special maybe through a friend. That's why we created coffee meets Bagel. We took the proven concept of daily flash. Sale sites immersed it with social networking elements to create the highest quality dating service for singles. Here is how it works every day at noon. We create one perfect match who is a friend of a friend. You have a 24 hours to review their profile information and choose to like or pass on the match. Mutual like leads to a private chat line that expires in seven days. The secret to success in online dating is winning over women single women are tired of signing up for dating websites only to get hit on by creepy strangers bombarding them with disgusting messages and that is why women love coffee meets Bagel.Since our national launch. We've been growing a double digits monthly and now with your help and investment. We can help singles all around the world so sharks who's going to be our perfect match. So it's very interesting. What does the bagel got to do with it. Let's just be honest. There's still a little bit of stigma with online dating. So our customers actually love the fact that our name doesn't seem to you know do anything to do with dating service when they talk about it. Nobody really knows what they're talking about hey hey everything bagel today. Today I got a stale Bagel.

03:54 Today. It's like a code for them oh that's cool so tell us about your business model. Our core service is free but there's premium features that you can unlock using virtual currency in the form of coffee beans like what one of the most popular items we have is called open sesame. We actually tell you how many mutual friends you have between you and your match. We don't tell you who they are. What good is that well you buy it. It's a mystery. A lot of people want to know how am I connected to this person and how much do I pay for the coffee beans. Each Bean is equivalent to about two cents but open sesame. For example it's 95 beans do. Both parties have to like each other to be a match exactly so. This has to be a mutual consent and how do you curate so we have a proprietary machine learning algorithm that takes into consideration all the users data and we require all users to sign up through Facebook. So instantly from day one. We can learn a lot about the user including their friends but you only source from Facebook. You don't use a questionnaire. Don't you do any of that right. Now. So it literally takes like less than a minute to sign. The idea is you don't have to make someone go through the application process.

05:08 Exactly. The most important question have you met the man of your dreams. So um. I am yours married with the guy that she met long long time ago. I met my current boyfriend on coffee meets. Bagel you see the picture of the two of us on the wall. I'm meeting a lot of you know interesting people through coffee mix bagels and I'm still looking all right how many users so right. Now we have several hundred thousand users. Our business really ramped up about 200 000 or a 700 000. So it's between one and five why just tell us what it is. You want an investment you can't not tell us yes. But I think that's a good range. It gives you a good idea. No it doesn't no but why won't you give us the actual number. We're actually not sharing the exact user number right. Now okay I'm out well you gotta share that are you kidding okay what were your sales. So last year we made eighty seven thousand dollars but get this this year. In the first five months. We made 270 000 wow so it's growing very quickly forecast for this calendar year. All in at this current rate we will make a million. Next year. We aim to make 10 million dollars all right. The million dollars in sales. What will you make what's your profit so right. Now our profit is negative spend a lot of money salaries to pay our developers and do you guys take a salary today right. Now we take hundred thousand dollar salary.

06:36 Each year. Sorry you take a hundred so three hundred thousand dollars. You're drawing out of the business right a year a year a year but that is still a significant pay cut for all of us whatever we're making prior. We actually raised 2.8 million dollars in external funding. So far wow our notable investor actually is of one of the co-founders of match.com who absolutely love their idea and he was our very first investor on the million dollars how much would you lose this year. We'll lose a million dollars. You'll lose a million dollars on a million dollars in sales yes which is why we actually have to raise more money because we're trying to ramp up our growth you're projecting 10 million dollars for the second year. Exactly how much money will you make on that 10 million. We will break even on 10 million you'll break even let's go let it go let it go and here's why we plan to bring on about 4 million users next year who's going to generate about 2.50 cents each. Hence the 10 million and what's your customer acquisition cost 30 cents. Next year we plan on spending about three to four million dollars on marketing spending and acquire 4 million users. So we are assuming a slight increase in customer acquisition costs.

07:47 You know you're an All or Nothing play. What do you think for All or Nothing because you're losing so much money. You're not really into building a business game. You're in the raising money and getting users. Game. I think you've got to hit a home run not saying you're not going to. But it's risky. I know it is our decision to invest more and accelerate growth. But we can't just as well. Just grow this business as a fascinating dilemma because I hear where you're coming from the Baseline model works. You want to pour gasoline on that fire exactly. It's a pretty big bet and and while I'm doing it. I part with 500 000 and I get five percent one of the problems for me now in Shark Tank. In season.

08:33 Six is I've come to realize I'm really valuable big time and it's made me very greedy. I don't do five percent deals that's worthless to me. I wouldn't do this. I'm out if we really thought this was all or nothing. We would have raised a lot more money from the beginning. Now we actually have a choice of just growing the business traditionally or raise more money to make this big you've raised a lot of money. You're not making money and you're each drawing a hundred thousand dollars. That's three hundred thousand dollars out of the business that seems very high. Salary. I mean most people don't make anywhere near that and you're just growing big concern. I have also is the fact that somebody else could do. This people are knocking off everybody on the internet all the time. So for that reason I'm out I think one thing for sure is you're great at raising money thank you. I also think this is a site that's needed. I think the women I know that have been on the typical website feel like a piece of meat and a meat locker exactly looked over. They don't you know it's almost insulting yes. This is a site that gives women a little bit more control and I like all of that.

09:48 But I'll tell you what I don't like the break even at 10 million a break even and I'm only only five percent of the stock. That's spooky doesn't seem like enough upside for the enormous risk. I'd be taking so for those reasons amount thank you let me ask you a question if I offered you 30 million dollars for the company would you take it all five sharks are out but Mark Cuban has just made the largest offer in Shark Tank history. Let me ask you a question if I offered you 30 million dollars for the company would you take it foreign. I would not be taking it because we see we see this business going growing as big as Match.com and you know how much revenue they're generating 800 million a year. They're becoming a billion dollar Revenue company and we think this model and the product has potential to be as big as match. He offered you 30 million dollars and you didn't even Flinch she should feel confident. It's a newer ephemeral version of Hot or Not which is brilliant. But I don't know how protectable that is well. I give you total credit and I think you guys have done some brilliant things. I don't think the risk reward is there for me and for those Reasons I'm still out good. Luck thank you excellent presentation what they say like in dating never settled while 30 million dollars may sound like a lot of money. You ain't Mr Mark Cuban because this baby is going to explode.