Shark Tank judge storms off set
A BIDDING war over a "creepy" product during Tuesday's night's Shark Tank got so heated that Steve Baxter ended up storming off set in anger.
Photographers Sandra and Brendon Moffatt entered the episode seeking $200,000 for a 20 per cent stake in their product, Stand in Baby, a lifelike newborn baby mannequin originally designed to help photographers pose newborn babies during shoots.
"There are heaps of mannequins available, but surprisingly, there were none that required you to support the head, or allowed you to practice realistic handling and positioning of a newborn," Sandra told the Sharks.
"When you're taking a photo a baby, you need to take several photos. That means you have to move them. We had to learn to move and reposition babies to get the optimal amount of photos we could."
The couple said they invested $220,000 of their own money into the business but quickly recouped their money through strong sales to the baby photography industry, which they pointed out was second in size only to weddings.
But things got awkward when Brendan, the self-professed "numbers guy", struggled to answer the basic question of how much revenue the company was making.
"We need this mate, if you can't answer this you're in more trouble than Ned Kelly," Steve said.
After they revealed the business was expanding into the medical industry with sales to hospitals and universities for antenatal training, the Sharks realised the scale of the opportunity - despite the stumble over numbers.
"The possibility of this product is amazing," Steve said, offering to meet their initial request of $200,000 for 20 per cent. Lacking confidence in the pair, RedBalloon founder Naomi Simson pulled out.
But investor Andrew Banks immediately chipped in with an offer of $200,000 for 25 per cent, Greencross founder Glen Richards offered $200,000 for 33 per cent, and Boost Juice founder Janine Allis offered $200,000 for 30 per cent.
After discussing the offers, Sandra and Brendon shocked Steve by asking whether Andrew would be prepared to improve his offer by lowering his percentage stake, and partner with another Shark.
Andrew said he would be willing to partner with Glen to offer $200,000 for 20 per cent, chipping in $100,000 each. "Are you rejecting my offer?" Steve said.
"You've got them down to 20 per cent and you've ignored me. Interesting negotiation tactic. I do know that I am the most qualified with respect to my medical investments, especially in the US. I'm the one who came out and gave you what you asked for without having to come back and beg."
To Steve's disbelief, the couple went with Andrew and Glen's offer. After they left, the Sharks rubbed in the deal with a few barbs, prompting the fiery internet entrepreneur to declare, "F**k it", and walk off set.
"I think this is the maddest I've seen Steve all season," Naomi said. "I can't believe it," Andrew said. "Steve is pissed, get the beers out, we'll all calm down," Glen said.
Speaking to news.com.au the day after filming, Steve said he was "still a bit raw" about missing out on the "little Chucky dolls".
"We were all exceptionally sceptical, but then they told us about the market," he said. "They were very honest in the way they approached it - except for the way they took the deal in the end. I stormed off the stage."
Glen said "occasionally a product will turn up and you go, holy s**t, that's going to go".
"We all had a pretty big fight [over the dolls] yesterday," he said. "That was a good deal. So that's a high-risk investment with a high likelihood of success."
He said it was a "risk you accept".
"It's like going to a casino," he said. "Occasionally you get lucky and get 36 instead of just betting red.
"When you're investing in those more mature businesses with real traction, real customers, real revenue, real profit, then you're just using your business background to help them scale up in a disciplined way so it doesn't blow up."
Steve said the doll was an example of an early stage, high-risk product that could be dangerous. "It's a single product, it's also actually untested," he said.
"None of us actually knew that existed as a problem before we walked in and sat there, but the guys that have done the investment are going to take a real swing at that one."
This week, he told The Australian that many of the deals ultimately fell through in the due diligence phase as the businesses weren't up to scratch. He said many entrepreneurs who came on the show often just wanted exposure.
"We tell them, 'We're happy to stay mum, just tell us, so we stop wasting each other's time'," he said. "We'll maintain the secret for you, we'll do that. It saves both time both ways. It's nothing that unusual. I'm doing well from two deals out of nine that I've completed, so after three years I'm pretty happy with that."
Speaking to news.com.au on Tuesday, Ms Moffatt said their company was still going through due diligence.
"We were a bit behind, it took us almost a month to get the information they needed, speaking without accountants," she said.
She described the Shark Tank experience as "traumatic", but "awesome". "It was wonderful to meet them all in person, we have been watching the show for a very long time, so it was very exciting to be on the other side of it," she said.
Mr Moffatt said the company was on track to hit revenue of $450,000 this financial year with a goal of $1 million next year.
He said he had tried to memorise his numbers, but was overwhelmed on the show.
"Our strong suit is not the accounting side of the business, which is why we pay a very good accountant to do what they do," he said.
Shark Tank returns to Channel 10 on Tuesday 29 May at 8:30pm.