Under the Weather Pop-up Tents
DEAL
EPISODE SUMMARY
🕓 Air Date: April 7, 2017
Asking For:
$600,000 for 10%
Investor:
Mark Cuban
Deal:
$600,000 for 15%
PRODUCT SUMMARY
Under the Weather offers portable, water- and wind-proof sports pods designed to enhance the outdoor spectator experience in various weather conditions.
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Background Story
Under the Weather, headquartered in Cincinnati, Ohio, was founded by Rick Pescovitz, a visionary entrepreneur with a compelling background. Rick’s journey into entrepreneurship started with a prior venture specializing in embroidered apparel and promotional items, eventually reaching a pinnacle of success with revenues peaking at around $8 million. However, despite financial success, Rick found himself disenchanted with the business and decided to sell it in 2012 for a substantial sum of $3.5 million. The turning point in Rick’s life and the inception of Under the Weather was marked by a tragic event — the loss of his brother in a car accident.
The emotional impact of this loss, combined with Rick’s desire for financial independence, distaste for a conventional desk-bound routine, and a passion for financial success, fueled his entrepreneurial spirit. The idea for Under the Weather’s flagship product, the Sports Pod, arose from Rick’s personal experiences as a dedicated sports parent. After enduring 15 years of challenging weather conditions while cheering on his kids at outdoor sporting events, he decided it was time for a solution. The result was the innovative Sports Pod, a portable, water- and wind-proof shelter that revolutionized the outdoor spectator experience.
The transparent sides allow an unobstructed view of the event, and the pod’s design even includes connecting versions called MyPods, featuring windows and doors for enhanced comfort. Rick’s journey from a successful but unfulfilling business to the creation of Under the Weather is a testament to his resilience, creativity, and personal connection to the products he develops. The emotional weight of his brother’s tragic passing adds depth to the company’s narrative, making Under the Weather not just a business venture but a heartfelt endeavor driven by a desire to improve the outdoor experience for sports enthusiasts and parents alike.
The Product
The flagship product of Under the Weather, the Sports Pod, is a revolutionary solution designed to enhance the outdoor spectator experience in various weather conditions. Weighing less than seven pounds, this portable shelter is a game-changer for anyone who has ever braved the elements while supporting their loved ones at outdoor events.
The Sports Pod is not just a mere shelter; it’s a sophisticated piece of engineering. It pops open easily, providing instant protection against rain, wind, and even hail. Its water- and wind-proof design ensures that users stay dry and comfortable regardless of the weather conditions. The pod is also treated with a special coating that protects against harmful sun rays, making it suitable for use in all seasons.
Transparency is a key feature of the Sports Pod, with clear sides on three panels, ensuring an unobstructed view of the event. For added convenience, there are connecting versions called MyPods, which come equipped with windows and doors. The interior temperature increases by 35 degrees due to body heat, offering warmth in colder weather.
Priced at $99.99, the Sports Pod boasts a 75% profit margin, making it an affordable and lucrative investment for outdoor enthusiasts. It can be purchased online, with approximately 85% of sales occurring through this channel. The product’s success is evidenced by its popularity, with around 22,000 units sold in the previous year alone.
How It Went
The company’s position before Shark Tank
Under the Weather has demonstrated robust performance, positioning itself as a thriving player in the market of portable outdoor shelters. In the last year, the company achieved approximately $2 million in sales, with a commendable net profit of $1 million. The majority of these sales, around 85%, were generated through online channels, showcasing the brand’s strong digital presence and consumer appeal. The company’s financial health is further underlined by the impressive profit margin of 75%. This reflects a strategic pricing strategy that balances affordability for customers with substantial profitability for the company.
The product’s retail price of $99.99, with a production cost of $23, contributes to a healthy bottom line. Under the Weather’s success is not only evident in its financial performance but also in its market reach. Approximately 22,000 units were sold in the previous year alone, reflecting a substantial demand for their innovative Sports Pod. The company has strategically positioned itself to cater to the needs of outdoor enthusiasts, particularly parents attending sports events. As for partnerships and distribution channels, Under the Weather has predominantly focused on online sales, with plans to expand into retail markets.
Under the Weather has secured patent protection for its products, holding a utility patent pending on adjoining designs and the pod’s shape, along with nine design patents. This intellectual property portfolio safeguards the company against potential knock-offs and imitations in the market. Regarding funding, the company’s financial success has contributed to its self-sufficiency. Overall, Under the Weather stands as a financially sound and innovative company, poised for growth and potential expansion into retail markets, backed by its unique product offering and strategic market positioning.
The Negotiations:
The negotiation for Under the Weather’s Sports Pod on “Shark Tank” was a compelling journey that culminated in a successful deal with Mark Cuban. Rick Pescovitz, the founder, initially sought $600,000 for a 10% stake in his business. However, Mark Cuban, recognizing the potential of the product and the entrepreneur behind it, made a counteroffer. Cuban proposed investing $600,000 for a 15% equity stake, with an additional option to buy another $600,000 for an additional 10%, totaling a 25% stake in the company. Daymond John also expressed interest, offering the same terms as Mark Cuban – $600,000 for a 20% stake. Both offers were compelling, but Rick Pescovitz ultimately chose to partner with Mark Cuban.
The decision was influenced by Cuban’s expertise in worldwide distribution, a crucial aspect for Under the Weather’s plans to tap into the expansive market of 70 million soccer parents in the USA. The negotiation touched on various aspects of the business, including advertising strategies, with Pescovitz revealing a recent investment of $500 per month in the last four months. Mark Cuban’s offer not only provided the necessary capital but also emphasized his commitment to helping with accounting, inventory management, and software, showcasing a holistic approach to business development.
The emotional depth of Pescovitz’s personal story, combined with the potential for growth and Cuban’s strategic insights, swayed the entrepreneur to accept Cuban’s offer. The negotiation ended on a positive note, with Pescovitz expressing gratitude and excitement for the partnership. The outcome not only secured the funding needed for Under the Weather but also brought aboard a seasoned investor who could provide valuable expertise and support for the company’s future endeavors.
