Beloved Shirts
NO DEAL
EPISODE SUMMARY
🕓 Air Date: March 11, 2016
Asking For:
$175,000 for 5%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
Beloved Shirts creates unique and expressive apparel, aiming to combat the seriousness of the world with colorful and quirky designs.
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Background Story
Founded by Jeremiah Robison in Provo, Utah, Beloved Shirts was born out of a desire to break free from the mundane and bring more color to life. Jeremiah, a self-professed introvert, realized the world was too serious and decided to create a brand that allowed people to express their true, quirky selves. The idea sparked from Jeremiah’s own need to reflect his eccentric personality through his clothing.
Beloved Shirts gained unexpected visibility when pop icon Katy Perry wore one of their designs, a pizza-themed outfit, without any prior outreach from the company. The brand, existing for two and a half years, had a remarkable journey, achieving $2.3 million in sales the previous year with a net profit of 10%.
The Product
Beloved Shirts offers a diverse range of products, including onesies and t-shirts, with their most expensive item being a $129 retail onesie. With a focus on creating an experience rather than just a product, the company boasts a vast catalog of 22,000 SKUs, all made in the USA.
The challenge lies in their made-to-order model, which eliminates the need for substantial initial inventory but leads to a 30-day turnaround time. The product line reflects eccentric and unique designs, with a notable mention of the pizza-themed onesie worn by Katy Perry.
Beloved Shirts aims to scale the company further by addressing the challenge of turnaround times and exploring mass distribution while maintaining selectivity in retail partnerships.
How It Went
The company’s position before Shark Tank
Beloved Shirts achieved $2.3 million in sales the previous year with a net profit of 10%, showcasing robust growth in its two-and-a-half years of existence. Despite the success, the company faces challenges related to its made-to-order model and a high SKU count. Jeremiah expressed a valuation of $3.5 million, justifying it with plans to scale the company by improving automation in the back-end system.
The company’s current structure relies on a direct-to-consumer model, but Jeremiah envisions entering mass distribution. Partnerships and additional manufacturing relationships are sought to facilitate high-volume runs and overcome the bottleneck of the made-to-order system.
The Negotiations:
The negotiations involved a critical evaluation of Beloved Shirts’ valuation and growth potential. Jeremiah sought $175,000 for 5%, valuing the company at $3.5 million. The Sharks expressed concerns about the valuation, with Kevin O’Leary stating that the company is not worth more than five times cash flow, suggesting a value of $1 million. The challenges with turnaround times and the need for additional manufacturing relationships were discussed.
Lori Greiner suggested warehousing top-selling items to improve conversion rates and reduce turnaround times, a strategy that Beloved Shirts was already implementing. Ultimately, none of the Sharks made an offer, with Mark Cuban and Robert Herjavec citing similarities to a previous investment and SKU-heavy inventory as reasons for their exits. Kevin O’Leary did not find the investment justifiable at the proposed valuation, and Daymond John, although interested, required a higher equity stake. Jeremiah declined the offer from Daymond John, and the pitch concluded without securing a deal.
