Oct 13, 2024
The Pitch Deck
The Most Intense Negotiation Between Hopscotch Owner and Mark Cuban! | Shark Tank US
Summary
Business Model and Growth
Hopscotch transformed from a free app with 20,000 downloads in 2012 to a profitable subscription model in 2015, now boasting 6,200 subscribers paying $8/month or $80/year.
The app's revenue model includes an in-game currency that can be purchased and used across games, with Hopscotch retaining two-thirds of the revenue and plans to allow kids to cash out their earnings.
Educational Impact and User Base
Hopscotch enables kids to create games rivaling store-bought ones using a kid-friendly programming language, teaching real coding skills valuable for future education and careers.
The app maintains an active user base of 200,000 per month, down from its peak of 400,000 in 2015, indicating both sustained interest and challenges in user retention.
Entrepreneurial Approach
Samantha John's conservative approach as a first-time entrepreneur, including reinventing the business three times and valuing the company based on its assets, showcases a cautious yet determined strategy in navigating the startup landscape.
Timestamps
00:00 Hopscotch empowers kids to create and sell games using a kid-friendly programming language, teaching them valuable coding skills and entrepreneurship in the digital age.
01:33 A passionate pitch showcases the engaging digital Hopscotch game, Kaleida Cosmos, which has captivated over 2.2 million players.
02:52 A young Hopscotch user demonstrates coding a fun platformer game where a crocodile chases and eats an octopus, showcasing the platform's creative potential.
03:44 Hopscotch, launched in 2012 to help kids create games and earn revenue, faced initial download success but struggled with monetization as first-time entrepreneurs.
05:09 Hopscotch aims to eliminate its subscription paywall and find a sustainable business model after a drop in active users and current low subscriber count.
06:51 Mark Cuban expresses doubts about the owner's ability to scale Hopscotch and ultimately decides not to invest, despite acknowledging her bravery and potential.
08:31 Mark Cuban offers $400,000 for a 16% stake in the kids coding app Hopscotch, highlighting the importance of his involvement in its growth.
10:35 Mark Cuban and the Hopscotch owner engage in a tense negotiation, ultimately agreeing on $600,000 for 10% equity after initial disagreements.
Transcript
00:00 Next up is a business hoping to inspire budding tech savvy entrepreneurs. Hi sharks. My name is Samantha John. I'm here from Brooklyn New York seeking four hundred thousand dollars for four percent equity in my company Hopscotch. Back in the day when you were little sharks did you ever run a lemonade stand or mow your. Neighbor's lawn kids love running businesses because it's a way to make their own money and participate in the real world. But in today's digital economy. Lemonade stands are a thing of the past that's why I created Hopscotch. It's the best way for young entrepreneurs to build and run their first business on the internet all from their mobile device. They use the kid-friendly programming language I invented to make incredible games that rival anything you see in the store and that's not all shark by selling those games to the hundreds of thousands of children. In our community. They can turn their Creations into real currency and the best part they're learning real coding skills that will be valuable. Tools in their future college classes and even careers through our fun. Educational app parents will be blown away with what their kids can make they'll learn. Concepts from game design to Graphics animation and so much more so sharks you've all talked to kids about how they are the entrepreneurs of the future.
01:33 Here's your chance to put your money where your mouth is which one of you wants to Hopscotch with me into the digital age. Your last name is John my last name is John I feel and you were an affinity from Brooklyn yeah. We we might we might be family. I might have to call my mommy so in front of you. You have an iPad and I've chosen two of my favorite. Hopscotch games in a demo version of hopscotch for you to try you to pick the ones I did that I've posted all at the Hopscotch with my daughters oh so the first game I want you to try is called Kaleida Cosmos and it's a drawing game where uh everything you draw will be repeated eight times so you make this really cool kaleidoscope drawing and this game was made five years ago. In Hopscotch. It's since received over 2.2 million plays heck. It's a lot of fun to do isn't it yeah can I see your drawing well. I'm not sure I'm so proud of it. But there it is oh. I love it oh. I like that that's like a logo oh Kevin. I like that boring yes we call it man's inhumanity against man Damon. What you got that is really cool. It kind of looks 3D oh damned yeah.
02:52 The second game is a platformer game and that was created more recently in Hopscotch. This game was made by a kid who has been on Hopscotch for over four years. I got up to the first level oh my god well. I'm not winning this game. That's just this is Child's Play. Literally ah I'm so ill with mine. I actually want to show you guys a demo of how the coding in Hopscotch works so you can just get a sense of it. So this is the coding editor and you're coding with these cool characters. I'm just going to show you walk you through making this game where the crocodile is gonna go after the octopus and then it's gonna eat it um and then you can do. It's just a little bit more code. You can start to see how this turns into a game. So now the crocodile has all these other people and it's getting bigger as it eats more. It's pretty cute thank you Samantha tell us about you how did you come up with this you know.
03:44 When I was a kid. I never thought that coding was for me I was like computers. Those are for boys and it wasn't until my senior year of college. I took my first computer science class and it was it was so empowering. It was so creative and I was like why didn't I know that programming was so fun and creative and interesting and I could make things that people actually care about so Hopscotch actually launched in 2012. And at that time it was all free and our first week. We got 20 000 downloads so we got a lot of press. You guys are on top of the world you were dominating for kids programming languages. There was no Revenue. At that time you just no Revenue no Revenue model. We are first-time entrepreneurs. We were like grow grow honestly guys like when you comes to kids in school.There's some other Alternatives. But Hopscotch is the go-to name. They crush it right and by the way when I said I used it and put and posted an app. I meant it right. I've yeah I use scratch and then when my kids first got into it at school. We used Hopscotch and developed game. It's intriguing how do I make money. So we have a currency that you can buy in Hopscotch from the app store and then you can you'll be able to use that currency inside another kids game so that'll be the revenue you'll keep the two-thirds of the revenue from the app. You'll sell yes and then eventually we want to let kids share in the revenue as well. So we would do eventually let kids cash out that they earn in their game.
05:09 What's the active user base our active user base now is about 200 000 active users. A month what was your Peak our Peak was in 2015 I believe and we were at about 400 000. So what happened is we raised our first round of venture capital in 2013 after we launched the app and then we raised our second round in 2015. And then we saw the trajectory on where it was all about growth and we were going to have to continue raising capital and we didn't want to run the risk of just going out of business if we couldn't raise money. So we started switching to a subscription model so we are profitable now how many subscribers do you have uh. We have about 6 200 subscribers right now what's the cost per month.Uh the Hopscotch costs eight dollars per month or eighty dollars per year. How profitable are you now. So we're basically not really burning cash not really making cash. But that's kind of a decision to have a team you're breaking news and that's kind of why I'm coming to you Charlotte. We have the subscription business and it keeps us in business. But it's not really the right business model for Hopscotch. We want a little bit more Capital so that we can start getting rid of that paywall letting everyone in for free and playing a long game where they can start buying into it. And you hope that gets traction because by taking down the subscription paywall you give up that Revenue stream in perpetuity. I'm not really crazy about your business model of giving up what you've worked very hard to achieve a subscription. You know six thousand people paying you. Every month is a good business.
06:51 It looks like you want to scale but I just don't think it's figured out yet and uh. It's a little dangerous for me. So I'm out. I really love what you're doing thank you. I personally don't know how I would help you to blow this up as a business. So I'm going to say I'm out uh Samantha I'm. I'm not going to take a journey with you. I've I've been in your sector and spent many many years of my career in it. And I swore that when I left and I exited that that was it for me that I would try other things. I'm out what I see here is. Uh. You are a tremendously Brave young woman. You reinvented your business from what I'm counting here roughly three times you're going into another new model. How sure are you that your new model is going to work. I don't believe that you are sure I feel like I'm watching someone who's frightened and not quite sure which is the right way to go am I reading that right um. It's not that I'm not sure I'm sure that this is the right way to go of course. I'm frightened. I naturally am a very conservative person. I'm like no like don't spend the money hang on to everything I don't call that conservative. I call that smart thank you uh. But I also realize that to make Hopscotch what it needs to be we do need to take this step. You should trust you got. I'm sure you're going to do that. I wish I could give you the 400 000. Just because I believe in you. But I don't know enough about it. So sadly.
08:31 I'm out so first. I want to ask you a question can a kid do this on a lower end. IPhone yes okay. So honestly I mean I've been a hopscotch fan forever. I mean just talking to you like I look up to you for what you have what you've been able to accomplish and what you've been able to do for my daughters and my son. I mean thank you doing these games with them was thrilling to me. That's awesome.So. I'll make you an offer. You're not gonna. Like it four sharks are out. Mark is Samantha's last chance for a deal for her kids coding app and Marketplace Hopscotch. So my Foundation Mark Cuban Foundation. We do something called the AI boot camp and we want to introduce kids to high school kids primarily in minority communities because they don't get the chance right I could work with you to do a coding camp for kids how to make money with your phone right how to create games to make money yes and go in even if we have to provide them. So I'll give you the four hundred thousand dollars. But I want 16 16 yeah and I'll tell you why because this is a lot of work and I'm going to be that person you call or email. Mark. I would love to have you be one of our investors can I negotiate with you on the price Mark you know if you're valuing this as a startup. It's like a startup with an experienced entrepreneur with eight years of experience building programming languages for kids who's proven that she can get earned media who's proven that she knows how to run a profitable business she's proven. She knows how to earn 35 000 in Revenue per month after eight years and I'm not trying to take anything away from you at all. Obviously I'm incredibly impressed but the future of your company is truly in the balance right. Now you know you know. Hot Scotch is my baby. I need to value my company for all. The amazing assets that I have so okay so only because I'm a softy okay.
10:35 What would you do knowing that I don't want to come off the 16. What would you do so how about uh six hundred thousand for five percent. I'm out oh ouch. I'll give you one more chance. We're not close. You've got at least yeah we're not close. I think that maybe it might just be that the way I value Hopscotch just isn't quite there's no way in the world. You thought you were coming in here and getting four percent and if five percent is your end then you really did not want to deal. But yeah I was gonna. Say 600 000 for ten percent for 11. You got a deal how about you don't over negotiate. I can't believe I got a deal oh my God oh my gosh.