#27: Bombas—The Shark Tank Pitch That Got Everything Right (And What Businesses Can Learn From It)

Summary

Summary of Episode #27: Bombas—The Shark Tank Pitch That Got Everything Right (And What Businesses Can Learn From It)

Presented by StoryBrand.ai

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Introduction

In Episode #27 of Why That Worked, hosted by Donald Miller and Kyle Reed of StoryBrand.ai, the focus is on dissecting the successful Bombas pitch from the television show Shark Tank. The episode delves into the elements that made Bombas' presentation stand out, offering valuable lessons for businesses aiming to craft compelling pitches and effective messaging.

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Unpacking the Bombas Pitch

Initial Presentation and Storytelling

Kyle Reed initiates the discussion by referencing the universal curiosity about why certain Shark Tank pitches succeed. The episode zeroes in on Bombas, a company known for its athletic leisure socks with a philanthropic mission.

At [00:55], the Bombas pitcher introduces the product:

"Bombas are athletic leisure socks engineered to look better, feel better, and with a mission to help those in need. The mass market athletic sock hasn't changed in decades. Same basic colors, same styles, same cardboard feel."

Strategic Use of Contrast

The guest speaker praises the opening statement for its effectiveness in establishing a clear contrast. By describing traditional socks as having a "cardboard feel" ([02:14]), Bombas positions their product as a superior alternative without directly stating it. This technique creates a "story loop," piquing the audience's curiosity about what makes Bombas different and better.

"If I said to you sports cars really haven't changed in decades, what did I just say about the sports car I'm about to release?" ([01:20])

Highlighting Substantial Improvements

Bombas mentions "seven substantial improvements" ([03:39]) to their product, signaling that their socks offer significant enhancements over the standard market offerings. While they do not delve into each improvement initially, this approach establishes Bombas as an innovative player in the sock industry.

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Effective Messaging Techniques

Use of Sound Bites

One of the critical factors in Bombas' pitch success is their use of clear, memorable sound bites. The guest speaker emphasizes the importance of succinct, repeatable phrases that capture the essence of the product without overwhelming the audience with details.

"These are sound bites stacked on top of each other that are rehearsed and even nailing." ([07:57])

Creating a Narrative Around Quality

Bombas effectively communicates the quality of their socks by highlighting features like Peruvian Pima cotton and the elimination of irritating seams. These points are presented as part of a compelling narrative that illustrates the product’s superiority.

"Peruvian Pima cotton. This is a natural fiber that wicks moisture, breathes, stays warm in the winter, and cool in the summer." ([07:21])

By naming specific features like the "Honeycomb arch support system" and "performance footbed," Bombas adds a layer of authenticity and professionalism to their pitch, making their product more tangible to potential investors and customers.

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Business Strategy Insights

Exclusively Online Sales Model

Bombas leveraged an exclusively online sales model, a strategy that aligns with modern consumer purchasing behaviors. The guest speaker relates this to other successful brands like Magic Spoon, highlighting the advantages of starting online before expanding to wholesale.

"Exclusively online is a great way to get a brand going... focus on messaging, marketing, customer service, making everybody happy." ([12:47])

Philanthropic Differentiation

A standout element of Bombas' strategy is their commitment to donating a pair of socks for every pair sold, addressing a significant need in homeless shelters. This philanthropic angle not only differentiates Bombas from competitors but also resonates deeply with socially conscious consumers.

"We learned that socks are the number one Most requested clothing item at homeless shelters. That really stuck with us. So for every pair of socks we sell, we donate a pair." ([04:05])

Word-of-Mouth Marketing

At the time of the pitch, Bombas had achieved over $450,000 in sales without spending on advertising, relying solely on word-of-mouth marketing. While effective for proof of concept, the guest speaker notes that this strategy is not scalable in the long term.

"Word of mouth was our proof of concept." ([13:07])

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Investment and Scaling Challenges

Response to Investment Questions

When questioned about how they would utilize the investment, Bombas' response focused on hiring and expanding their team, which the guest speakers critique as insufficiently detailed and lacking strategic depth.

"We're going to hire people... we're going to hire the customer acquisition specialist." ([13:43])

The guest speakers argue that a more robust plan focusing on scaling manufacturing and targeted marketing strategies would have been more compelling to investors. They suggest that Bombas should have articulated a clear vision for growth, such as:

"We're going to do a massive radio campaign targeted at conservatives listening to conservative talk radio because they tend to be evangelical and they tend to not know how to change the world, and they're going to do it through buying socks." ([20:07])

Valuation and Deal Terms

Bombas secured an investment of $200,000 for 17.5% equity, a deal the hosts consider advantageous for the investors, specifically Damon John from Shark Tank. The significant lifetime sales of over $1.3 billion further validate the pitch's success and the potential of Bombas' business model.

"$200,000 for 17 and a half percent... over 1.3 billion in lifetime sales." ([18:33])

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Conclusion and Key Takeaways

Success Factors

The episode concludes by highlighting the primary reasons behind Bombas' successful pitch:

1. Effective Messaging: Clear, concise sound bites that communicate value and differentiation without overwhelming details.
2. Strong Storytelling: Utilizing contrast and narrative to position Bombas as a superior product in a stagnant market.
3. Strategic Differentiation: Combining product quality with a meaningful philanthropic mission to resonate with consumers and investors alike.
4. Sound Bite Execution: Approximately 50% of their pitch was perfectly crafted sound bites, which were crucial in securing investment, while the remaining portions lacked the same level of precision.

"The sound bites saved them. The sound bites got them an investor." ([20:15])

Lessons for Businesses

• Prioritize Clear Communication: Ensure every aspect of your pitch is crystal clear and directly addresses the company's value proposition.
• Leverage StoryBrand Framework: Use storytelling techniques to create a compelling narrative that distinguishes your product from competitors.
• Focus on Key Differentiators: Highlight what makes your product unique and how it adds value to the customer’s life.
• Prepare Robust Scaling Plans: When seeking investment, present detailed and strategic plans for how funds will be utilized to foster growth and scalability.

The episode underscores the importance of meticulously crafted messaging and strategic storytelling in securing business success and investment, using Bombas as a prime example of these principles in action.

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Final Thoughts

Donald Miller and Kyle Reed wrap up by encouraging listeners to reflect on their favorite Shark Tank pitches and consider how the principles discussed can be applied to their own business endeavors. They reiterate the value of StoryBrand.ai in helping businesses achieve clear and effective communication.

"Curious about how StoryBrand AI can help you create clear, effective messaging? Well, you can try it out right now and create a free customized tagline for your business. Just go to storybrand AI." ([20:43])

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This episode serves as a comprehensive exploration of the elements that contribute to a successful business pitch, using Bombas' Shark Tank presentation as a case study. By dissecting the strategies employed by Bombas, Donald Miller and Kyle Reed provide actionable insights for entrepreneurs and businesses aiming to enhance their messaging and pitch effectiveness.

Transcript

[Kyle Reed]

Foreign.

[Donald Miller]

You're listening to the why that Work podcast presented by StoryBrand AI. If you've ever wondered why certain brands, trends, or cultural phenomena find success while others don't, you're in the right place. Every week, we unpack why something worked, then give you actionable insights that you can use in your own life. Now let's dive in with your hosts, Donald Miller and Kyle Reed.

[Kyle Reed]

You've probably seen the show Shark Tank and thought, why did that idea take off? Or would my pitch hold up? Well, today we're going to unpack a couple of Shark Tank's most successful product pitches and launches of all time.

[Guest Speaker]

I'm ready to look at them and say, what worked?

[Kyle Reed]

That's right, worked. So the first one I pulled that we pulled together was Bombus. I think it'd be fun as we watch this because it's a longer pitch, but it'd be fun. I want to, like, find. Why don't we pause some moments and you kind of give a breakdown? I think that'd be fun.

[Guest Speaker]

Okay.

[Kyle Reed]

All right, so here we go. This is Bombas. Shark Tank pitch.

[Shark Tank Pitcher]

Bombas are athletic leisure socks engineered to look better, feel better, and with a mission to help those need. The mass market athletic sock hasn't changed in decades. Same basic colors, same styles, same cardboard feel. Until now.

[Kyle Reed]

Stop.

[Guest Speaker]

All right. Mass market athletic socks hasn't changed in decades. Brilliant.

[Kyle Reed]

Yeah. What put that in, like, story brand. What did they do there?

[Guest Speaker]

If I said to you sports cars really haven't changed in decades, what did I just say about the sports car I'm about to release?

[Kyle Reed]

It's different.

[Guest Speaker]

It's frickin different.

[Kyle Reed]

It's gonna be awesome.

[Guest Speaker]

And what does that do? It opens up a story loop. What's different about it? And honestly, what's better? So he's already positioned this as a better one. Now we're getting to where they. How they really made the money. And the money was, we introduced a better sock. Right. For you. For you. We introduced. It's for the customer. We introduced a better sock.

[Kyle Reed]

Okay, so let me go back 10 seconds. I'd love to hear from the very beginning. With that in mind, I want to hear the start again.

[Guest Speaker]

All right, this is going to take us six hours to get through this. 10 minutes.

[Shark Tank Pitcher]

Bombas are athletic leisure socks engineered to look better, feel better, and with a mission to help those in need. The mass market athletic sock hasn't changed in decades. Same basic colors, same styles, same cardboard feel.

[Guest Speaker]

Okay, stop. Real quick. Cardboard feel.

[Kyle Reed]

Yeah.

[Guest Speaker]

Excellent.

[Kyle Reed]

Yes.

[Guest Speaker]

Now, have you ever put On a pair of socks and had it feel like cardboard.

[Kyle Reed]

No, no, no.

[Guest Speaker]

Okay, so we can learn something from this. It doesn't have to actually be accurate. You know, I've put on socks that don't feel. Feel very good or worse. You walk like a mile in them and suddenly have cuts on the bottom of your feet or whatever that carpet burn.

[Kyle Reed]

Those old white tip socks.

[Guest Speaker]

Yes, I know what cardboard feel means, but those two words, cardboard feel, are very strategic. So now we're against something. Right? We're better than something. And that something is specific. It's cardboard feel. And most people listening to us, they don't have a cardboard feel thing.

[Kyle Reed]

It reminds me of the episode we did about the slate truck where they. The manual or the electronic cup holder that hold. It's like, I've never seen that. But it immediately you.

[Guest Speaker]

And it makes you. And by the way, nobody except for us would sit there and go, I've never had a shoe, a sock. What is this guy? He's, like, lying. He's exaggerating. Cardboard. I've never put on a sock that feels like cardboard. Nobody's gonna say that.

[Kyle Reed]

But when he said it, I immediately go, yeah, my socks. I need new socks. You know, so it did a lot of work.

[Guest Speaker]

If you said, most healthy cereals taste like cardboard. Well, it doesn't actually taste like cardboard, but everybody knows what you're talking about.

[Kyle Reed]

Absolutely. Yeah.

[Guest Speaker]

Yeah. So now we're against something. And it said it in two words really, really good there.

[Kyle Reed]

Yep.

[Shark Tank Pitcher]

We spent two years on research and development and came up with seven substantial improvements to the athletics stop.

[Guest Speaker]

Seven substantial improvements, like numbering it and saying that many improvements just says, okay, this thing has to be in a category all of its own. This is a. They are presenting this as a much superior society. But they didn't say superior sock. They said, seven substantial improvements.

[Kyle Reed]

Really good page, which is another. They opened up another story loop there.

[Guest Speaker]

Right, right. What are they?

[Kyle Reed]

Because what are they? I want to know now.

[Guest Speaker]

Yeah, within.

[Kyle Reed]

Probably within 30 seconds.

[Guest Speaker]

Well, within 10 seconds, they went from cardboard feel to the best to God made. These are the socks God wears. Right.

[Kyle Reed]

Good talks.

[Guest Speaker]

Stay the size that God wears. Yeah. I mean, you know. Okay, so that's another lesson for everybody here. The contrast was fast. The contrast from cardboard feel sock to the best and most comfortable sock in the history of the world was 10 seconds. And so now we've got a gap in between their product and everything else that you've tried. Really good pitch right here.

[Shark Tank Pitcher]

We learned that socks are the number one Most requested clothing item at homeless shelters. That really stuck with us. So for every pair of socks we sell, we donate a pair. So we hope you'll join us to make better socks for a better world.

[Guest Speaker]

Okay, stop for a second. They did not explain the seven things.

[Kyle Reed]

Yeah. They moved to that.

[Guest Speaker]

Which says something you don't actually have to. Ah, right. Here's a discipline that none of us have. Nobody listening to me has this discipline. They didn't get into the weeds. Yeah, they didn't get into the weeds. You know, this reminds me, like Jeb Bush running for president. Like, we've got to have a better education system. And then he just goes into, you know, there's 12 things. And let me explain to them the nuance. Stop. There's 12 things that we need to do in our education system that is really going to revolutionize this country and prepare us to compete. Not only compete, but beat China. Doesn't have to say what they are.

[Kyle Reed]

And also sets him up. That Jeb example. But it feels like it sets them up as experts.

[Guest Speaker]

Yes.

[Kyle Reed]

Because they've got it. I'm trusting you that you've done what you said you're going to do.

[Guest Speaker]

Some coach said, I'm not going to let you talk about what the 7R.

[Kyle Reed]

Yeah.

[Guest Speaker]

And they fought that coach.

[Kyle Reed]

I guarantee they want to talk about it.

[Guest Speaker]

Yeah.

[Kyle Reed]

Every feature, every reason.

[Guest Speaker]

Because it's their baby.

[Kyle Reed]

Yeah. Yeah. And you lose in this situation they're pitching, I think people would tune out immediately, you know, to what they're being said.

[Guest Speaker]

I do, too. Yeah. It got boring. And you're not allowed to get boring.

[Kyle Reed]

So how does a business, when they're making an elevator pitch, you're recommending highlighting those features. But do they talk about one or do they not talk about.

[Guest Speaker]

Well, I think when I talk about storybrand, I talk about, you need sound bites. You need sound bites that are repeatable, that people can remember in order to understand what you're offering, what problem you solve. I don't get into the fact that they're survival sound bites and the brain is hardwired to survive. And these things have to be associated somehow with your brain's desire to keep you on the planet and help you move ahead. I don't get into that. It's just not necessary to get into that. And people get. Then. Now they're thinking about like, oh, we're like monkeys and we're trying to survive in the jungle. You know, I don't need to think about that. I need them thinking, I need sound bites.

[Kyle Reed]

Yeah.

[Guest Speaker]

And so you don't want to get them. The whole idea is like, you don't want to say anything that's going to confuse anybody or distract from the point.

[Kyle Reed]

They clearly did something right.

[Guest Speaker]

Well, and homeless people have some really good socks.

[Kyle Reed]

They have great socks.

[Shark Tank Pitcher]

We'd like to take a quick moment while you're trying them on to take you through our seven substantial improvements. We started with Peruvian Pima cotton. This is a natural fiber that wicks moisture, breathes, stays warm in the winter, and cool in the summer. Up by the toes, we got rid of that annoying seam that's always causing irritation, creating our.

[Guest Speaker]

Stop. This is so this is. First of all, let's do acknowledge what we said before. They didn't get into the weeds. Now they're getting into the weeds.

[Kyle Reed]

But they have a moment too. I think it's a good move.

[Guest Speaker]

Yeah. Not only that, but while these guys are putting on their socks, they're talking. And so it's not really getting boring. There's sort of a tactile demonstration that's happening here. Also, that first point. You notice how succinct that was?

[Kyle Reed]

Yes.

[Guest Speaker]

And it's scripted, man. These are sound bites stacked on top of each other that are rehearsed and even nailing.

[Kyle Reed]

It's funny, I was thinking how much Peruvian material I have in my wardrobe. I don't think I have any. But when he said, I was like, ooh, that kind of sounds nice, Peruvian. But I like that they went to.

[Guest Speaker]

Then the next move, rather than like, Arkansas or.

[Kyle Reed]

Or cashmere. They nail it, though, with the seam. They remove that seam. So now. So they went from like, kind of.

[Guest Speaker]

Like, oh, there's no seam right there.

[Kyle Reed]

Yeah, that's. That was. The second point was I said, we've removed that annoyance.

[Guest Speaker]

You'll never make a sock puppet now. But okay.

[Kyle Reed]

But yeah, it hurts some markets, but not these guys.

[Shark Tank Pitcher]

In the midfoot area, we created our proprietary Honeycomb arch support system and added our ultra comfortable performance footbed. And back by the heel, we created a Y shaped stitch to create a natural cuff around your heel and added a blister tab for the ankle sock.

[Guest Speaker]

See, they're naming things.

[Kyle Reed]

Yes.

[Guest Speaker]

Like, the performance footbed is not an actual thing.

[Kyle Reed]

No, but it's a great, great word.

[Guest Speaker]

Yeah.

[Kyle Reed]

Great descriptor.

[Guest Speaker]

Yeah, it's okay. Let's make it thicker right here. Yeah. But we can't just. The difference between him saying it's kind of thicker on the bottom versus performance footbed.

[Kyle Reed]

Yes. I love that.

[Guest Speaker]

All right, Honeycomb. What do you Call it.

[Kyle Reed]

Well, it's the. Sorry, I'm caught up now on those words you just said. It's that exaggerative, like, use of words that's a little bit more descriptive, a little bit more exaggerated out that I think does so much work there. Versus, like you said, like, we just added an extra padding.

[Guest Speaker]

Figuring out a way to unpack ideas in somebody's brain with succinct short sound bites. A performance footbed means I'm going to be able to run faster. Right. It's not thicker footbed, you know, or thicker bottom.

[Kyle Reed]

Yeah.

[Guest Speaker]

It doesn't elicit the fact that I'm going to run faster.

[Kyle Reed]

But so many people do that.

[Guest Speaker]

Yeah. So. But what's in it for me?

[Kyle Reed]

Oh, they. Performance foot bed.

[Guest Speaker]

What's in it for me? What's in it for me? What's in it for the customer?

[Kyle Reed]

Yeah, that's good. Yeah, the honeycomb thing kind of tripped me up a little bit because that was a quick one. But yet their whole brand is everything in me.

[Guest Speaker]

Wants to try on one of these socks.

[Kyle Reed]

Well, Bobby has.

[Guest Speaker]

Bobby. Are they good? Are they good? Are they come over? Are they comfy? They are. Don, how does the performance footbed feel?

[Donald Miller]

It's very cushiony.

[Kyle Reed]

Don, does it feel honey?

[Shark Tank Pitcher]

It really is.

[Donald Miller]

I mean, I love my bombas.

[Guest Speaker]

Sorry, guys. I love my bombas. This is fantastic. I don't think.

[Donald Miller]

Here's the thing, too. I was gonna say the B. I don't think is incorporated in the design.

[Kyle Reed]

Anymore, but anyway, that was their law. Okay, carry on, Carry on. Specialty sports socks are everywhere.

[Guest Speaker]

How are you different?

[Shark Tank Pitcher]

Our primary difference is that.

[Guest Speaker]

Hey, stop. He had an answer.

[Kyle Reed]

Yep. Sound bite.

[Guest Speaker]

Yeah, he had an answer to the question, how are you different? Right. And you need a scripted answer to that question.

[Shark Tank Pitcher]

We tested socks from everything down to your cheap mass market multi packs, all the way up to your 18 to $22 niche athletic running socks, which is what you're talking about. We found out the major things that made those socks feel so much better and brought them down to a $9 price point.

[Guest Speaker]

Wow. So, okay, what's his differences? His difference is those $22 socks have this, this, and that. We do the exact same thing. We brought it down to a $9 price point. So our differentiator is we're affordable.

[Kyle Reed]

Yeah, that's really good.

[Guest Speaker]

Also a nine dollar pair of socks. This was probably what, ten years ago?

[Kyle Reed]

2014.

[Guest Speaker]

So, yeah, ten years ago.

[Kyle Reed]

Ten years ago.

[Guest Speaker]

All right, so this is ten years ago. A $9 sock is probably a $15 pair of socks. That's not cheap, but you notice what he did. $22, $9. Now they look affordable.

[Kyle Reed]

Correct. You anchored it so well.

[Guest Speaker]

Anchored it.

[Kyle Reed]

That's really good.

[Donald Miller]

If you don't communicate clearly, all your emails, your website, social media posts, everything you're communicating will be ignored. Storybrand AI is like the world's best communication expert writing it for you. Imagine having the world's best communicator writing your tagline. Just type in the name of your company, answer a few prompts, and voila. Hey, that's a good one. Use it to write your social media posts, website, wireframe emails, lead generating, PDF, product or service descriptions, anything you need for your business. What would happen to your revenue if every word that left your business was crystal clear and worth paying attention to? StoryBrand AI is your competitive advantage. So you'll know, you'll say it clearly. Try it right now and let us write your custom tagline for free at storybrand AI. And now back to the show.

[Shark Tank Pitcher]

I have a question philosophically about this.

[Guest Speaker]

Idea of giving something away every time you sell. You have to double your sales to.

[Kyle Reed]

Give me the equivalent returns that I.

[Guest Speaker]

Get from a company that's not doing.

[Shark Tank Pitcher]

The same thing or your sales because of the goodwill that you're putting out there.

[Guest Speaker]

What's your wholesale?

[Shark Tank Pitcher]

We sell exclusively online.

[Guest Speaker]

Okay, let's stop there for a second. Just a business strategy. Exclusively online is a great way to get a brand going. Yeah, we did this with that cereal brand. What was that cereal brand?

[Kyle Reed]

Magic Spoon.

[Guest Speaker]

Magic Spoon. They were exclusively online and then they figured out how to wholesale. These days you don't have to go through Amazon right now. You don't have to go through Walmart, you don't have to go through Target. You can get your brand started online. Just focus on messaging, marketing, customer service, making everybody happy. Focus on that and then distribute. That's just a little business strategy. Less about messaging.

[Shark Tank Pitcher]

In the $450,000 that we've done today, we have SPEN $0 on advertising or customer acquisition. So all of those sales have come from people telling other people about our product. That's the concern. Word of mouth is not a scalable strategy.

[Kyle Reed]

Right.

[Shark Tank Pitcher]

So word of mouth was our proof of concept.

[Guest Speaker]

Right.

[Shark Tank Pitcher]

That is what took us. Okay, so what's the next. So the next step is we're taking this money and hiring people. The customer acquisition specialist, who is gonna raise our base daily sales from 500 to 3, 3 to $5,000 a day to build our baseline, pushing. Hold on. Partnerships Globally, hotel recognized.

[Kyle Reed]

David, that's not a good answer for me.

[Shark Tank Pitcher]

I don't think you've done a good job of telling me what it's going.

[Kyle Reed]

To look like and what the key advantage is going forward.

[Guest Speaker]

I'm happy, I don't know that they're doing a great job right here. I think they needed to come back to with a superior sock at less than half the price of retail. And a 54% profit margin affords us to actually shrink to a 10% profit margin over the next 10 years and explode through advertising.

[Kyle Reed]

Yep, exactly.

[Guest Speaker]

And that's what they should have said. And then now you're going, okay, we're going to do a 10 year growth with a 10% profit margin and then we're going to optimize for profit at 10 years from now and we're going to rake in the money. That's the plan. So you're betting on something that you're going to get a small return on. Your money will be paid back. Your $200,000 for 5% will be back in your hand probably within five years. You'll double your money within 10 years. And that's when you actually start making your. That's what you needed to say also too.

[Kyle Reed]

If they don't lead with we're hiring more people. But they lead with, we're using this money to scale up our manufacturing.

[Guest Speaker]

If we're hiring more people. Everybody knows labor cost is the burden on an organization.

[Kyle Reed]

Yeah. It's almost like if they came in with more of like, what we're missing is X Manufacturing. Damon, John, your connections, that would have been a different answer. Versus, we're gonna hire more people.

[Guest Speaker]

Yeah. When I heard you just now say that you wanted to use the money to hire in people. I hate when I hear that you are two smart guys and I feel you should be doing everything to run everything that you can right now, the two of you. So I really don't like that strategy.

[Kyle Reed]

Emma, that's the QVC queen. She's the product. She made her money in qvc.

[Guest Speaker]

Well, also, we're gonna hire more people. You know, when we talk about the airplane, I use a metaphor of an airplane for running a business. The fuselage, the body of the airplane is where everybody sits. It's gotta be the most efficient part of it. And you know, if you add 10 seats to that airplane, your wings have to be bigger, you have to burn more fuel. It dramatically affects everything else. So you get as few people in the fuselage of that airplane as possible so you can be as efficient. And as soon as they said hire, I was the same way. I was like, you're going to do what?

[Kyle Reed]

Yeah, yeah.

[Guest Speaker]

Well, even if you're going to do it, don't say it.

[Kyle Reed]

Yes. What also makes them lose a little credibility as far as they know what they're doing.

[Guest Speaker]

That's right. We're going to hire some people who know what they're doing.

[Kyle Reed]

Yes, exactly.

[Guest Speaker]

All right, now listen, they're, like, worth 10 times what we are criticizing them.

[Shark Tank Pitcher]

We need the additional equity to go out and raise capital. Capital. Without giving away 40% of the company. What are you raising the capital for? We're raising the capital to hire and spend on marketing and, you know, build out our team inventory and product as well. Inventory and product finance.

[Guest Speaker]

I invested in a company recently, a recycling business. The proposal came in for $25,000, you can own. It was 10% of the company. The company didn't exist. Like, the guy's just starting it out. And he came back and he said, okay, well, you know, $5,000 a month. You know, that gives me five months of salary to get going. And I just said, no. I said, turn in receipts on recycling bins, bumper stickers to put on the recycling bins, postcards to send to neighborhoods. I will give you $25,000 to the receipts of things that grow the business.

[Kyle Reed]

Not to pay for that.

[Guest Speaker]

I will give you nothing to live on. You know what that did? It creates a hungry person building a business. And just everybody needs. Everybody listening, needs to hear that. Because you start. Because then the guy goes, I got five months from out of money. Let me figure out what I'm going to do next. No, if you want to feed your family, you got to get a bumper sticker on a recycle man. You know, his business is doing incredible today, by the way. He would have done it anyway. He's not that guy. But that is a thing that you want to think about. Like, if you're investing of just like, invest in the thing that actually makes money and make sure the owner is hungry.

[Kyle Reed]

And you got to. I think the other thing I'm telling you, you got to have an answer for when someone is saying, here's what I'm going to give you money for.

[Guest Speaker]

Right.

[Kyle Reed]

It's really important how you.

[Guest Speaker]

Yeah, they didn't seem to have.

[Kyle Reed]

Because they didn't. Your. The investment you made. Yeah, that was a bad answer. Like, well, it gives me five months of living expenses. I'll figure it out. Yeah, that's a horrible answer.

[Guest Speaker]

You'll Figure out where you get your next investment.

[Kyle Reed]

Exactly. No, it's $5,000 a month to buy more bins, more XYZ, to grow this.

[Guest Speaker]

Literally receipts.

[Kyle Reed]

Yes. Yeah.

[Guest Speaker]

Like, you know, call me when you want to buy something, and I'll pay for it.

[Kyle Reed]

And I'll pay for it. Yeah, yeah, but I need to see it.

[Guest Speaker]

Like, the next thing you know, he's called me and he said, I need a trailer. We got so much business. I need a trailer.

[Kyle Reed]

You love that expense.

[Guest Speaker]

Yeah. I'm like, bill me, let's go. You got a trailer, brother?

[Kyle Reed]

Yeah, that's good.

[Guest Speaker]

Yeah, he's doing awesome.

[Shark Tank Pitcher]

$200,000 for 17 and a half percent.

[Guest Speaker]

That's it.

[Shark Tank Pitcher]

All right, you have a deal.

[Kyle Reed]

We'll take the deal.

[Guest Speaker]

Yeah.

[Kyle Reed]

Nice.

[Guest Speaker]

All right, so, okay, what are the numbers now?

[Kyle Reed]

So over 1.3 billion in lifetime sales. Holy smokes.

[Guest Speaker]

So Damon John got a great deal on that. I think probably what happened was they spent a ton of money on radio advertising and inventory. I think the homeless shelter thing was a massive differentiator. There's no question that ended up being a positive thing. I would just say be really careful with that. If you're going, hey, you can buy a pair of socks, and we're going to give away a pair of socks. That's not what sells it. You can buy a pair of socks, and there's seven things that make it better. You know, the performance footbed, all that kind of stuff.

[Kyle Reed]

I think that would have.

[Guest Speaker]

Yeah, I think without that, it doesn't work.

[Kyle Reed]

Okay, so wrap us up here. Why did this work?

[Guest Speaker]

Sound bites. I would say they got 50% of their sound bites dialed in so well that it made this pitch work. And 50%, you could tell when they started winging it. What are you gonna do with the money? How do you not know what you're gonna do with the money? And we're gonna hire people, you know, I. You know.

[Kyle Reed]

Yeah. So start out strong with the sound bites performance.

[Guest Speaker]

And by the way, the valuation they got, the investment they got, it wasn't what they wanted. So what happens if they dial in the other 50%? What if they actually say, we're gonna do a massive radio campaign targeted at conservatives listening to conservative talk radio because they tend to be evangelical and they tend to not know how to change the world, and they don't want to do it through the government, and they're gonna do it through buying socks.

[Kyle Reed]

There you go.

[Guest Speaker]

Now we go. Okay, now we're onto something. These guys have thought through this.

[Kyle Reed]

The sound bites saved them.

[Guest Speaker]

Yeah, that's a great way to say it.

[Kyle Reed]

It saved them.

[Guest Speaker]

The sound bites got them an investor.

[Kyle Reed]

This has been fun. I've enjoyed it.

[Shark Tank Pitcher]

This would be our whole show.

[Kyle Reed]

You know what?

[Guest Speaker]

Why that Shark Tank pitch?

[Kyle Reed]

Yeah, yeah. Don't tempt Don with a new idea for a show name because it could change. You know what would be fun? I think people should leave us comments of other, like, their favorite Shark Tank episodes.

[Guest Speaker]

Yeah. Yeah. I'm curious. Great episode.

[Kyle Reed]

Yeah. Thanks for joining us, everyone. Be sure to leave us a comment on your favorite Shark Tank pitches. We'd love to see them.

[Guest Speaker]

And.

[Donald Miller]

Thanks for listening to the why that Worked podcast presented by StoryBrand AI. If you like the show, follow wherever you get your podcasts. And if you're Enjoying this on YouTube, hit that subscribe button and leave a comment letting us know what you think and what you want the guys to talk about in a future episode. Curious about how StoryBrand AI can help you create clear, effective messaging? Well, you can try it out right now and create a free customized tagline for your business. Just go to storybrand AI. Thanks for listening and we'll see you next time.