Shark Tank US | Mark Cuban’s Top 3 Biggest Deals — Transcript

[Music] [Music] Hello, my name is Jeff Strou. I'm the owner of Hon LLC. I'm here today to ask for an investment of $500,000 for 40% equity in my business. Now, let's suppose for a moment that someone that you know or loved lived in a house that caught on fire, and they could have been saved if only firemen could have gotten water to the structure just a moment sooner. Now, I've been a fireman for 15 years. I tried thinking of ways to save time in supplying water to the fire scam because there were too many homes and American dreams being destroyed by fire. So now I've come up with a solution. Hon. Hon is the world's fastest way to connect and disconnect from a hydrant. Let me show you how that's done. I have two professional firemen going to help me demonstrate this. Now, Damon is on this side. He's going to help me connect the Hon with the standard hose to this side, and Kevin is on this side to connect just the standard hose, which is the way it's done today. Okay, gentlemen, let's begin. Now, as you can see, the Hon is already connected. It's ready to turn the water on. The other side, we're still trying to screw it on. Okay, now he's got it tight. Okay, now let's disconnect to show the speed on that. Okay, begin. You can see the speed it takes to disconnect the Hon versus your standard hose that's being used across the United States today at a fire scam. Every second matters. Your standard connection can sometimes take 30 seconds or more. Hon can be done in less than 3 seconds and disconnected in a second. Now, there are over 33,000 fire departments across the United States. Now, there's millions to be made at this market alone. Who's ready to make millions with me? Where are you from? Jeff, I'm from Arkansas. What about your base department where you worked? What are their customers? They love it. They want to use them. The only reason we're not using them yet is because me working there, they can't buy them straight from me. How are you going to sell this? So let's say it was what, 20 seconds difference? It was an 8-second difference on my account. Can I go to a fire department and say you're going to save 8 seconds by this? Do you think that there's budget for this? I do. Basically, the last month is when I started making my sales calls, and out of 11 departments that I visited, I've had four that gave me hard POs. The other six are working on getting the paperwork together to give me the PO. What did you sell them for this size here? The smaller one is sold for $215. The larger that goes on the steamer valve is $385. Jeff, the only negative to your story is you're selling to the government. Your sector is under stress for budget cuts. They don't have any money. Assuming they liked it, how much money would that particular firehouse have to put out to buy enough of them to equip their typical equipment? Most fire departments where I've got it figured out are going to average about 35 units. It's $7,000 roughly is your typical sale. If you said you sold typically 35, that's a lot of money going along that line. Nobody has budget. Isn't the real play here if you could get fire departments to mandate this product? If you could get municipalities to say you have to have this hose because it saves lives. Have you been able to get fire departments to approve it that way? We're working toward that. We have not got that approval yet. Are there distribution systems that provide direct products to fire stations like that jacket? Is there a company that distributes that directly? Yes, there is. Have you talked to them about this product? Yes, I have. And what have they said to you? I went into them trying to make a deal for them to buy the patent. After they looked at it, they said that at present time they weren't ready to buy it, so they wanted to help me distribute them. They want to put it in their product line. And how much capital do you need to get it into distribution? 500,000. I can't get over the fact that the distributors want you to take on the financial challenge of making the products, so they don't believe in it to that extent. So I'm out. I keep weighing that 8-second savings pitching a municipality against spending $7,000, and I don't think they're going to do it. I'm out. Jeff, I love the design. Why can't you use it for oil pipelines? Or why can't you even use it for the hose I have at home? Because I can never screw in that stupid hose at home like that one. Why'd you wait so long to show us that? Yeah, no kidding. Now, that will be made out of plastic. This is part of the same deal, part of the same thing. Do you have a patent on that? That patent falls under the same thing. Have you tried to sell this? No, I haven't. The main reason why is because I've been focusing on the fire side. Wait, wait, wait. Let's stop. There's nothing wrong with the fire thing, but you're realizing how difficult it is to change the entire industry. Now, on the other hand, there are two or three hose makers in the U.S. that supply all the big boxes. They're huge. Why wouldn't you go to them and say I have a better way to attach your garden hose to every home in America, and you can pay me 20 cents and you can manufacture this yourself? That's only one call to them. I haven't worked on, like I said, I haven't worked on the household side of it at all other than making a sample to see if that would function like that. Let me just tell you, don't listen to him. 20 cents is way too low. Jeff, do you have anything else in your pockets? No, sir, no. This is a big deal. You know what, Jeff? I like this so much. What if I offered you $1.25 million for your company plus a three-year employment agreement at $100K per year to run the show, and I'll pay you a percentage of the profits once we hit certain hurdles that we agree to? Wait a second. Before you even consider that madness, Jee, I find this kind of thing distasteful, watching a great entrepreneur be taken advantage of. Wait a second. I think you're passionate about this fire element of your business. That's where you came from. I just want the garden hose piece. All right, I'm going to pay you $500,000 for 100% of that, and I'll pay you back a royalty of 3% in perpetuity if we become partners, which is what this would be. You're selling out from underneath us an important part of the company, and so we don't want to give that away. We—what are you talking about? We, my partner. He's my partner. I'm not taking everything, his whole life from him like you are. I'm not either. I'm paying him a salary in Arkansas. $100,000 is going to go a long way. You're sucking the life out of him. Jeff, what do you think about Mark's offer? I would want to know what the percentage is, long-term percentage. Okay. I would want at least 7 and a half percent royalties long term. I was going to make an offer along the line of Mr. Cuban, but that's more generous than I was going to be. At $1.25 million, I was not. At $1.25, I'm out. I'm going to leave my offer exactly the way it is because I don't have to change it. If you go to the dark side—what is this with this dark side stuff? You're—this is the enlightened side. It disturbs me immensely to watch you suck the life out of this man. He's worked hard to get to where he is, and you're just taking it all away from him. It's such pooey, right? And that's the most polite word I can come up with. Come up. My offer is very simple. I give you $500,000 for everything except the fire hose for 5%. It gives you the cash you need for everything else. It leaves you free from the tyranny of Mr. Cuban, and you know that's what it's going to be like. Let me put it on the table, Jeff. $1.25 million for 100% of your company. I've never seen greed like that. That's unbelievable. Employment agreement, so you're making $100,000 per year for 3 years minimum, and I think we're going to work together forever, plus 7.5% royalty on everything sold. If you accept that, Jeff, I want a moment of silence for what died in here today. That is ridiculous. 100%, you don't do 100% deals. That's crazy. But between the two offers, Mark, I like your offer a lot better. I'll accept it. Yes, this is one smart man. One smart man. Good move. All right, partner.

a house that caught on fire and they could have been saved if only firemen could have gotten water to the structure Just moment sooner now I've been a fireman for 15 years I tried thinking of ways to save time in supplying water to

the fire scam because there was too many homes and American Dreams being destroyed by fire so I now I've come up with a solution hon hon is the world's fastest way to connect and disconnect from a hydrant let me show you how

that's done I have two professional firemen going to help me demonstrate this now Damon is on this side he's going to help me connect the hon with the standard hose to this side and Kevin is on this side to connect just the

standard hose which is the way it's done today okay Gentlemen let's begin now as you can see the hon is already connected it's ready to turn the water on the other side we're still trying to screw it on okay now he's got it tight

okay now let's disconnect to show the speed on that okay begin you can see the speed it takes to disconnect the hon versus your standard hose that's being used across the United States today at a fire scam every second

matters your standard connection can sometimes take 30 seconds or more hon be done in less than 3 seconds and disconnected in a second now there's over 33,000 fire departments across the United States now there's Millions to be made at this Market

alone who's ready to make millions with me where you from Jeff I'm from Arkansas what about your base department where you worked what are they customers they love it they they want to use them the only reason we're not using them yet is

because me working there they can't buy them straight from me how are you going to sell this so let's say it was what 20 seconds difference it was an 8sec difference on my account can I go to a fire department

and say you're going to save 8 seconds by this do you think that there's budget for this I do basically the last month is when I started making my sales calls and out of 11 departments that I visited

I've had four that's give me hard POS the other six are working on getting the paperwork together to give me the PO what did you sell them for this size here the smaller one is sold for uh $215

the larger that goes on the steamer valve is $385 Jeff the only negative to your story is you're selling to the government your sector is under stress for budget cuts they don't have any money assuming they liked it how much

money would that particular Firehouse have to put out to buy enough of them to equip their typical equipment most fire departments where I've got it figured out are going to average about 35 units it's $7,000 roughly is your typical sale

if you said you sold typically 35 that's a lot of money going along that line nobody has budget isn't the real play here if you could get fire departments to mandate this product if you could get municipalities to say you have to have

this hose because it saves lives have you been able to get fire departments to approve it that way we're working toward that we have not got that approval yet are there Distribution Systems that provide Direct products to fire stations

like that jacket is there a company that distributes that directly yes there is have you talked to them about this product yes I have and what have they said to you I went into them trying to make a deal for them to buy the patent

after they looked at it they said that at present time they wasn't ready to buy it so they wanted to help me distribute them they want to put it in their product line and how much Capital do you

need to get it into distribution 500,000 I can't get over the fact that the Distributors want you to take on the financial challenge of making the products so they don't believe in it to that extent so I'm out I keep weighing that 8C savings

pitching a municipality against spending $7,000 and I don't think they're going to do it I'm out Jeff I love the design why can't you use it for oil pipelines or why can't you even use it for the the hose I have

at home cuz I can never screw in that stupid hose at home like that one why'd you wait so long to show us that yeah no kidding now that will be made out of plastic this is part of the same deal

part of the same thing do you have a patent on that that patent falls under the same thing have you tried to sell this no I haven't the main reason why is because I've been focusing on the fire

side wait wait wait let's stop there's nothing wrong with the fire thing but you're realizing how difficult it is to change the entire industry now on the other hand there are two or three hose makers in the US that supply all

the big boxes they're huge why wouldn't you go to them and say I have a better way to attach your garden hose to every home in America and you can pay me 20 cents and you can manufacture this

yourself that's only one call to them I haven't worked on like I said I haven't worked on the household side of it at all other than making a sample to see if that would function like that let me

just tell you don't listen to him 20 cents is way too low Jeff do you have anything else in your pockets no sir no this is a big deal you know what Jeff I like this so much what if I offered you $1.25

million for your company plus a three-year employment agreement at 100K per year to run the show and and I'll pay you a percentage of the profits once we hit certain hurdles that we agree to wait a second before you even consider that

Madness Jee I find this kind of thing distasteful watching a great entrepreneur be taken advantage of wait a second I think you're passionate about this fire element of your business that's where you came from I just want the garden hose piece all right I'm

going to pay you $500,000 for 100% of that and I'll pay you back a royalty of 3% in perpetuity if we become Partners which is what this would be you're selling out from underneath us an important part of the

company and so we don't want to give that away we what are you talking about we my partner he's my partner I'm not taking everything his whole life from him like you are I'm not either I'm paying him a salary in

Arkansas $100,000 is going to go a long way you're sucking the life out of him Jeff what do you think about Mark's offer I would want to know what the percentage is long-term percentage okay uh I would want at least 7 and a half%

royalties long term I was going to make an offer along the line of Mr cubin but that's more generous than I was going to be at 1.25 million I was not at 1.25 I'm out I'm going to leave my offer exactly

the way it is because I don't have to change it if you go to the dark side what is this with this dark side stuff you're this is the enlightened side it it disturbs me immensely to watch you

suck the life out of this man he's worked hard to get to where he is and you're just taking it all away from it's such pooy right and that's the most polite word I can come up with come

up my offer is very simple I give you $500,000 for everything except the fire hose for 5% it gives you the cash you need for everything else it leaves you free from the tyranny of Mr Cuban and you know that's what it's going to be

like let me put it on the table Jeff $1.25 million for 100% of your company I've never seen greed like that that's unbelievable employment agreement so you're making $100,000 per year for 3 years minimum and I think we're going to work together

forever plus plus 75% royalty on everything sold if you accept that Jeff I want a moment of silence for what died in here today that is ridiculous 100% you don't do 100% deals that's crazy but between the two

offers Mark I like your offer a lot better I'll accept it yes this is one smart man one smart man good move all right partner let's go and save supplies and make some money Absolut congratulations good job guys

really appreciate it job thanks for being fine appreciate it all right it's offensive Market over between us you went right to the top of that offer range immediately you know what you don't think twice when this company's worth 5060 million we're not

going to look back and say boy I gave him 1.25 million I should have given him a million you don't really want to negotiate any of it I don't need to save $50 when I'm going to I'm looking at

making 50 million when can we have a mean cuz I have a lot of companies I can sell you if if they're like that I'll buy them next into the tank are entrepreneurs with a business profiting from competitive Thrill Seekers

[Music] greetings sharks my name is Brad Scutter and I'm Rob Dickens we're from Boston Massachusetts our company is rugged races and we're seeking $1 million for 10% of our company so what is rugged races we operate a popular 5K obstacle course

race series in 20 cities across the country called Rugged Maniac at our events participants of all ages all genders all shapes and sizes will complete a challenging running course featuring 25 epic obstacles but these aren't the pop-up Kitty obstacles you'll

see at our competitor's events at rug and Maniac participants will climb over towers of shipping containers rocket down in 100ft water slides crawl through tunnels of mud and even jump over fire all while running through a combination of forest Fields ski slopes and even

Motocross tracks in short Rugged Maniac strikes the perfect balance between fun and physicality with our award-winning courses and our dayong Festival so which one of you sharks is ready to get rugged with us and just to show you what we're

all about we've got this video clip right [Music] here wow I didn't even know you existed but I know about your competitor mean like tough mutter how are you different than that we're we're different in this sense basically

tough motor is a 12 M course right with about 20 obstacles we have 25 obstacles over 3 m so it's more about the obstacles and less about the running and being a 3 m course it's much more accessible to the general public than

something like a 12m course are you saying this is a Tamer version of that something that Barbara would do oh I could handle the 12 miles this this a little short guy over here that wouldn't have a shot at we get people of all

shapes and sizes at our events truly from 77y old guys to uh you know mother daughter teams 14-year-old up is it more workout or more party we think we strike an excellent balance between the workout in the party because it's a shorter race

it takes you know on average an hour a little bit more to finish people are are exhausted but they're still exhilarated do people bring alcohol would you sell no yes we sell alcohol it's a big outo alcohol big outdoor Festival pump pound

puke right exactly it's I mean it's fun it's a fun event so what are sales going to be this year this year 4.2 million wow how many 20 cities Nationwide how much out of the 4.2 did you profit a

million dollar but next year without investment we're projecting 6.5 million in Revenue 2.2 million in profits talk about the industry there's some monsters out there you know what's the difference so basically you've got you got two kind of at the top the war- 5K TP motor 12

Mile and why have they gotten so much bigger than you guys first movers in the market and how big are they rob how big are they they have like 40 events but in terms of Revenue take a guess how big

would they be I think they're about 30 million so would you guys say this industry is about 100 million a year much larger more than that Rob what what are you going to do with the 1 million we've uh we've taken that money and

invested it in other brands that we own um what so waitand wait wait no no what are we going to do with the $1 million that we would get from you what million were you talking about BR I thought you

want to know what we did with our profits yeah well we want to know all right great what did you do with the 1 million in profit let me show you exactly what we've done with that other money okay let's see let's see here it

[Music] is oh you guys are doing these things it's so stupid that's a great idea Rob explain to me what I saw you saw running with the bulls okay here in the US anybody get hurt we had some minor injuries

couple concussions of broken arm the injury rate people paid for this oh yeah about the same prices as Rugged Maniac about $50 but is that part of this deal a separate company have you never seen the show grey greedy Pig I give you a million

dollars I don't I don't get to wet my beak on the bull deal no of course we get the B kidding not going work can't be serious they're full of bll I give you a chance to change your mind okay we would want

more money if you get involved in the B so the Bull Run is is a separate entity all right why don't we entertain it how much more would it be to $2 million for 10% of the bow Run 2 million for the

Bull and 1 million for the rugg so 3 million bucks gets 10% of both Brad what are the sales in the second company 280,000 at the first event do you realize that your expertise is not Rugged Maniac your expertise isn't

putting on adventure events the bull run is just another variant of this same thing that's exactly right and so the growth potential with this company is not just within Rugged Maniac guys what's the cash flow going to be next

under your optimistic scenario for both companies we think there can be a $20 million event this year guys I like the business but if I come in and give you money and all of a sudden it's like where's Brian and Rob oh they're chasing

the Bulls right what am I going to say to you as an investor when I'm not getting your full attention I want a piece of the Bulls no kidding no that's not what I'm going to say I'm going to

say they can die right I want to return on my investments or I'm suing your ass because you have a conflict of interest no investor says oh the existing business is dying sell me a piece of the new one well you don't do

that to investors you align your interest with them 100% when you start talking about a million dollars you don't screw around right that's a real investment Rob the other the element for me I love the idea I also really love

the fact that you're building a customer base for the other events that you can hold later on for me they're together here's an offer for you sure both businesses combin I'll give you 1.5 million for 25% of the entire thing

okay is that the only offer that we have Mark you said you were interested no I'm very I I love the one business if if I didn't know about this other business I'd probably make an offer right now sure right but I want to hear

what you say to Rob I think I'm giving you a f offer I think the business is worth what six times eida 1.5 times Revenue roughly and I'm pricing in I think that's generous I'm pricing it in because I see the upside in the other

business okay asking for $1 million for this business was already challenging having another agenda and another business on the other side my gut feeling is my instinct is that no matter what I would be screwed working with you

I wouldn't trust you I'm out okay thank you for your consideration you know a funny thing happened to me watching you here today uh you came out here I thought what good-looking guys man they looked part what a great video but then

somewhere along the way there Sur prise of the bulls and oh yeah we'll wrap that into the deal and I don't think maybe you intended it that way but for some reason you lost my trust but either way I'm not sorry to

hear that but we thank you for your consideration well guys you have you have a you have an offer on the table yes we do uh what are you going to do an offer that's lower than what we had wanted but

no let me make you an offer higher than what you want well yeah of course I anyone else want to throw an offer in the ring I'm still listening well Mark your concern is that you want us to

focus all our energies on no no no it's not that you came in and you tried to sell us one business and you separated the two you're overvaluing the other business in my opinion and if you have such an a high opinion of that business

that's probably where a lot of your attention is going to be and as an investor I don't think it's worth the the value that you're you're signed into it because you've had one event for $200,000 Mark are you saying my value is

too high yes wow now Mark's making me nervous about am I overpaying 1.5 million 25% that gives you about a $6 million value for the combined businesses the longer we wait the the less comfortable I'm starting to feel let me cloudy the waters a little

bit here and maybe give you a hang on Robert you may want to hear this I think your offer should be for 33 a third you become the third partner with these guys and then I'd go in 5050 with

you H I'm good with that I like going up to 1/3 1.5 million for 1/3 of the combined businesses I'm with you Uncle Kevin yeah I thought you might be because I think you did overpay Rob isn't that

interesting what's happened you we had an offer at here now we're here the longer we stay [Music] here so what I would be willing to do is 1.5 million but it's for 25% of the two companies combined okay we're going to go discuss this

consider both offers and and come back I think there's a lot of benefit here to partner with these guys I'm not sure what there is to discuss Mark you made a better offer than we did yeahia Mark made the same as your initial the

challenge is when they come back do you drop this dead weight right here and go back to your initial offer then you're over pay I don't think they're going to take either offer oh I think they will okay Gentlemen let's summarize what's

happened here you have two distinct offers the first from Mr cubin is for 1.5 million to 25% of your company which by the way was the exact same offer I made and then he spent half an hour telling you how bad your business is I

know I know the other offer is for the same amount of money but 33 and A3 of your business what are you going to do we went out there and discussed it we' we'd like to eventually strike a

deal with you we wanted to come back in and say listen we do 2 million for for the 25% instead of doing that we'd like to split it in the middle and go 1.75 deal deal all right going to work

baby looking forward to it for looking forward to it absolutely we'll make some money you lose out but Robert why do you do that thank you for your consideration thanks guys thank you fired up we are very excited we took that offer from

Mark because we realized that Mark offers more than just money Mark offers his experience he offers his connection you know only great things can come from well done 1.75 for 25% I'm actually surprised that they came down in the

[Music] valuation next into the tank is an entrepreneur who believes there's big money to be made from Big scares [Music] everywhere I go there's zombies hi sharks I'm Melissa Carbone from Los Angeles my company is 1031 Productions and I'm seeking $2 million in exchange

for 10% of my [Music] company wow 1031 Productions is an entertainment company that creates owns and produces live attractive in the horror space our most popular attraction is the Los Angeles haunted hay ride and it is not for the faint of

heart sharks when you take our hay ride you are entering the pitch black woods where demonic forces lost souls Psychopathic fun are waiting around every [Music] turn bites and just when you think the terror is over think again oh

God he likes you don't eyeball me I will kick your tush back to Texas Mark get him okay Melissa you know what's really scaring the crap out of me is your valuation so $2 million for 10% imputes a $20 million value on this scary hair

ride business tell us why you're worth $20 million we do attractions all year long we have the Los Angeles haunted hay ride which is our seasonal attraction here in La 17 nights we sell out every single night we do about $1.8 million

doar right now per October 1.8 was really good in 17 days 1 days have another attraction called the Great Horror camp out that we just launched which is the summer attraction the Great Horror camp out is our way of

not being a seasonal company that is an overnight completely immersive camping experience horror theme oh no so it's 12 hours we B we we take 2,000 campers we put them in tents and we have an incredibly interactive experience that

includes everything from a h basically summer camp from hell yeah 1.8 million in at the end of the 17 days what's left it cost us $1.2 million to produce the Los Angeles haunted hay ride so so I'm left with 600,000 free cash afterwards

yeah I mean it varies year to year because right now we're in a launching new attractions mode we're launching a New York haunted hay ride which is what we're seeking some of this money for the Great Horror camp out we're launching it

next year in 10 cities up the west coast and there in lies the rub right because they're very very very expensive to to produce and create right well C the camp outs are cheap to produce how much advertising or promotion do you do we

spent about $300,000 we do a ton of radio my background is I I ran Clear Channel Los Angeles for 10 years so my um advertising marketing and one of and my other business partner is actually still with Clear Channel so we

know how to make a dollar go really far from a marke how how many Unique Individuals come through the hay ride we have we have 50,000 people we sell out every single night so this year is our first year we increase our Max Capacity

to ,800 we actually are doubling our Max Capacity this year you sell out every night for 7 days every night that's amazing so can I extrapolate and say that the it's going to be 3.6 million in Revenue this year yes if we sell out so

that means this thing will generate just over a million bucks if everything works right mhm okay now you're an intelligent woman I'm trying to make the leap now we have to get back to reality on your $20 million ask yeah let's give you a fair

chance of making a million bucks before tax okay yep that's about 700,000 after tax if I gave you a 10 multiple you're worth 7 million bucks how is it that I am going to pay 20 for a $7 million

business if everything goes right mm that's the horror story you've brought here you've overvalued your business we've had major entertainment companies in La who have already given us offers to buy our company and this is about what they're valuing it why are

you such a greedy Pig I not greedy I have lots of lots of high hopes for the company and I want to grow just because a Hollywood boo offered you a $20 million valuation you know what the horror show is listen you argue

about valuation all the time well then why don't you just give her $2 million for 10% I am projecting for the New York HED heroid which hasn't happened yet cuz it's the same model in La we're just plopping it there haven't done it yet go

let go let her go geographically it's a different model because it never rains in La listen I I I I don't agree that your risk analysis is correct it never happens that everything you roll out successful day want that's

ridiculous for me it is not hard to get lots of people to come to the attractions the hard part is to make it a great experience so they want to come back look this is all fun and games but

we're talking about money here I can't I can't get there I'm out Melissa for you to come close to your projections for next year everything has to work perfectly all the time I don't see you getting to those

numbers next year I'm out for me right now to give you $2 million I feel you would take a really long time for me to see that back so for that reason I'm out the risk is not as great as you

probably would think I mean we will launch these attractions no matter what I know that we can launch them Faster by having this money we can launch them now I'm an expert in high octane scare you are yes I can tell you a way to do this

much cheaper wear a piece of jewelry and walk around where I grew up yeah that will give you a high octane fair enough uh I would just have to insult you with my offer um go ahead insult her that's

about what it's worth it's a the offer yeah okay well then I'll give you $2 million for 40% [Music] okay Mark come on Mark is that a yes or no to him um can I counter of course you

can counter um 2 million for 20% I'll take that offer done really yep awesome all right we have a deal wow easy breezy I love it thank you I'm so