FlexScreen Lands Deal on Shark TankJanuary 6th, 2020 by Tara Taffera
When Shark Tank aired last night on ABC, FlexScreen inventor Joe Altieri entered the tank asking for $800,000 for 6% of his company. He walked away with a similar deal for his “first and only flexible window screen” which he described as “an industry disruptor.” But it wasn’t until after three sharks (the show has a cast of five investors) made offers—then counter offers—that Altieri had to choose. He went with shark Lori Greiner, for her track record in the hardware space.
But it wasn’t all smooth sailing up to making that deal. The judges were immediately impressed when Altieri laid out his revenue numbers to date: $400,000 in year one; $2 million in year two, $3.5 million in year three and $5.1 million in year four (2018). When the sharks asked what he cleared they were shocked when Aliteri told them the number: $40,000.
When asked what happened he said “well we were reinvesting.” The sharks then asked for his gross margin, which he told them was $700,000.
Shark Robert Herjavec asked why the margins weren’t higher.
Altieri explained that he has four manufacturing plants that are licensed manufacturers for FlexScreen. He buys each screen for roughly $10, then sells them for $11.50.
“Ouch, ” was the collective response from the sharks.
Kevin O’Leary asked why he doesn’t license directly to window manufacturers, and the questions were lobbed one after another from there. Mark Cuban asked why window manufacturers can’t sell the product for a premium and convey the value of screens to their customers.
“They aren’t good marketers,” said Altieri.
“Then why haven’t you gotten the message out?” asked Cuban.
“You are spinning your wheels so hard and making no money,” added O’Leary.
The judges were also baffled when Altieri explained that most windows are custom made thus the screens are as well.
But still the offers began, with Barbara Corcoran’s being first. She offered $400,000 cash and $400,000 in credit so Altieri could start manufacturing standard sizes. “I am taking 50 percent of the rights to sell it online and in stores,” she said.
O’Leary was next with his offer of $800,000 up front and 20 percent of the business—but he had a catch. “I want to take this to the number one window manufacturer and have them use it in all their windows,” he said. “I only want to work with that one big manufacturer. I don’t want to do the rest of this crap.”
Greiner came in with the final offer of $400,000 up front and $400,000 for a line of credit for three years at 6% interest, and a 10% equity stake in the company.
“I have heavily been in the hardware space,” she said. “You need to go to the consumer and the window maker.”
O’Leary then counter offered and said he would give all of the $800,000 up front and charge 9%, while taking 6% equity, also offering to “guide your team.”
Greiner took another stab as well saying she would offer the same deal as Corcoran.
Altieri asked both women if they would be willing to up the cash offer, and neither was, so he made the deal with Greiner, to which Corcoran was none too pleased since she made that original pitch.
But all is fair when swimming in the Shark Tank.