ZinePak – Music Fan Memorabilia
DEAL
EPISODE SUMMARY
🕓 Air Date: April 24, 2015
Asking For:
$725,000 for 10%
Investor:
Robert Herjavec, Lori Greiner (50/50)
Deal:
$725,000 for 17.50%
PRODUCT SUMMARY
ZinePak creates ultimate fan collectibles, including exclusive merchandise, magazines, and music, catering to super fans of various genres beyond music.
Background Story:
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Background Story
ZinePak, founded by Brittany Hodack and Kim Kaupe, is an innovative company born out of the bustling city of New York, New York. The dynamic duo, both ardent entertainment super fans, embarked on this entrepreneurial journey 3 1/2 years ago with a shared vision of bridging the gap between physical and digital music experiences. Brittany, with a background deeply rooted in the music industry, had the initial spark for ZinePak during her college days. While interning for a major record company, she recognized a prevailing issue: the declining interest in physical music.
Industry executives often asserted that nobody was buying physical music anymore. Undeterred by skepticism, Brittany believed that the key lay in creating physical music that surpassed the allure of digital alternatives. Kim, having faced similar frustrations in the publishing industry, joined forces with Brittany in late 2010. Their collaboration brought together Brittany’s music expertise and Kim’s publishing background, creating a synergistic partnership that laid the foundation for ZinePak. Rejecting conventional industry norms that dismissed the idea, the duo envisioned a company that would redefine the tangible music experience.
ZinePak’s genesis was rooted in solving the challenge of making physical music not just relevant but superior to digital counterparts. The founders understood that the product needed to offer an engaging and exclusive experience for super fans. Over the years, ZinePak evolved beyond its initial focus on music, expanding into diverse verticals such as movies, video games, and sports. This journey reflects the founders’ determination to defy industry norms and create a niche for themselves in the competitive world of entertainment collectibles.
The Product
ZinePak offers an unparalleled fan experience by creating exclusive, deluxe collectibles that go beyond traditional music merchandise. The core product, exemplified by the Brad Paisley sample showcased during the pitch, features deluxe packaging for albums, tours, and events. The ZinePak is not just a container; it’s an immersive experience for super fans.
Each ZinePak is meticulously crafted to include exclusive content such as magazines, merchandise, and even surprises like collectible trading cards. The product is designed to provide a tangible and cherished connection between artists and their dedicated fan base. It serves as a physical manifestation of the artist’s work, offering fans something unique to hold and cherish.
ZinePak’s versatility extends beyond music, with plans to cater to fans of movies, video games, and sports. The product is strategically positioned to resonate with individuals who are deeply passionate about their favorite artists, movies, teams, or games.
ZinePak is available for purchase through various channels, including exclusive partnerships with retail giants like Walmart. The pricing structure may vary based on the specific configuration and content of each ZinePak, aligning with the exclusivity and value it brings to fans. The company’s commitment to delivering a premium and personalized experience makes ZinePak a sought-after collectible for super fans across diverse entertainment genres.
How It Went
The company’s position before Shark Tank
ZinePak boasts a robust and thriving position in the market, reflecting its success in redefining the fan collectibles industry. The company has strategically positioned itself through exclusive partnerships, most notably with retail giant Walmart, where ZinePak products have seen considerable success. With a history of 3 1/2 years, ZinePak has demonstrated its prowess in engaging super fans beyond the realm of music, expanding into diverse verticals such as movies, video games, and sports.
ZinePak’s success is further underscored by its impressive clientele, including major stars like Katy Perry, Brad Paisley, KISS, and Florida Georgia Line. These collaborations have not only validated the product’s appeal but also positioned ZinePak as a sought-after collectible for industry giants. The company’s business model involves artists approaching ZinePak to connect with their super fans in an engaging and personalized manner. The success of this model is evident in ZinePak’s sales performance, with year-to-date figures exceeding $3 million and cumulative sales of over $30 million in Walmart stores since its inception.
ZinePak’s financial health is underscored by its strategic approach to growth, turning down approximately 50% of business inquiries to maintain exclusivity and focus on the super fan demographic. While the company initially concentrated on solving the challenge of making music relevant at Walmart, it has since expanded its offerings, including customized ticketing for events like Mumford & Sons’ tour. In terms of funding, ZinePak secured a significant deal in the Shark Tank episode, accepting a joint offer from Lori Greiner and Robert Herjavec for $725,000 in exchange for a 17.5% equity stake. This strategic partnership not only injects capital into the company but also aligns ZinePak with experienced investors who bring valuable insights and networks to fuel further expansion.
The Negotiations:
The negotiations for ZinePak in the Shark Tank episode were dynamic and resulted in a successful deal. The founders, Brittany Hodack and Kim Kaupe, entered the Tank seeking $725,000 for a 10% equity stake in their company. The Sharks were intrigued by the unique business model and the company’s success in engaging super fans beyond the music industry. Multiple Sharks expressed interest, with Lori Greiner and Robert Herjavec making a joint offer of $725,000 for a 20% equity stake. Daymond John and Kevin O’Leary also presented offers, with Daymond proposing $725,000 for a 30% stake, and Kevin suggesting $725,000 for 35%.
After some deliberation, Brittany and Kim negotiated with Lori and Robert. The founders were concerned about giving up more equity than planned and countered with a proposal of 14%. Lori and Robert, not willing to go that low, maintained their position. The founders then decided to explore other options, leading to additional offers from Daymond and Kevin. Ultimately, Brittany and Kim accepted Lori and Robert’s joint offer, but not without a compromise. They settled at a 17.5% equity stake, finding a middle ground that balanced the founders’ initial valuation with the Sharks’ expectations.
This deal marked a strategic partnership that injected much-needed capital into ZinePak while aligning the company with experienced investors who could contribute valuable insights and guidance for future growth. The negotiation process showcased the founders’ ability to navigate the challenging terrain of the Tank, secure multiple offers, and ultimately strike a deal that benefited both parties. The episode highlighted ZinePak’s potential for expansion into new verticals and solidified its position as a rising star in the world of fan collectibles.
