Foot Cardigan Sock Subscription
DEAL
EPISODE SUMMARY
🕓 Air Date: October 9, 2015
Asking For:
$250,000 for 10%
Investor:
Mark Cuban, Troy Carter (50/50)
Deal:
$250,000 for 20%
PRODUCT SUMMARY
Foot Cardigan is a sock-subscription company that delivers unique and fun socks for men, women, and kids worldwide every month.
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Background Story
Bryan Deluca and Matt McLard, hailing from Dallas, Texas, founded Foot Cardigan with the mission to transform the mundane task of buying socks into an exciting and convenient experience. Bryan’s background lies in conversion optimization, having worked at a marketing agency in Dallas.
The idea sprouted from their desire to bring joy to people’s lives by delivering random pairs of socks to subscribers’ mailboxes every month. After three years of juggling the business part-time while maintaining full-time jobs and raising eight kids between the four co-founders, they decided to seek a $250,000 investment on Shark Tank to propel Foot Cardigan to new heights.
The Product
Foot Cardigan offers a subscription model where subscribers receive a surprise pair of creatively designed socks each month, carefully chosen by the “sock fairy.” The company produces its own socks, manufactured in various locations, including Turkey, China, and occasionally the U.S.
The model ensures that inventory management is flexible due to the element of randomness in each monthly delivery. The cost for a subscription is $9 per month, with an additional $2 shipping fee domestically and $3 for international shipments. Subscription options range from month-to-month to prepaid plans for 3, 6, 9, and 12 months, making it suitable for gifts.
How It Went
The company’s position before Shark Tank
Foot Cardigan boasts over $1.36 million in overall sales since its inception, with approximately 6,000 current subscribers. The company faced seasonality challenges, with fluctuations in subscriber numbers during holidays, but it maintained a steady revenue stream. The founders disclosed a cost per sock of $1.32, inclusive of delivery to the customer.
Their strategic overseas manufacturing allows them to maintain high margins, distinguishing them from competitors who rely on third-party wholesalers. With a 7% conversion rate on their website, the founders expressed confidence in their ability to attract and retain customers.
The Negotiations:
The negotiation phase saw offers from Mark Cuban and Troy Carter, who eventually partnered to offer $250,000 for a total of 20% equity, with Troy and Mark each taking a 10% stake. The founders initially faced scrutiny regarding their decision to manufacture overseas, with Mark suggesting the potential benefits of domestic production for quick turnarounds.
Lori Greiner opted out early, expressing concerns about the crowded market and the challenge of differentiation. Ultimately, the founders accepted the joint offer from Mark and Troy, highlighting the value they brought beyond the capital, such as back-office support and promotional opportunities. The negotiation showcased the founders’ dedication, having bootstrapped the company with only $6,000 of their own capital and their commitment to further growing the subscription model.
