Pluto Personalized Pillow
NO DEAL
EPISODE SUMMARY
🕓 Air Date: May 14, 2021
Asking For:
$400,000 for 5%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
Pluto Pillow is a custom pillow company that uses a questionnaire and algorithm to create personalized pillows based on body stats, sleep positions, and preferences.
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Background Story
The founders, Susana and Kevin, aimed to solve the challenge of finding the perfect pillow by creating a customized solution. They gathered data from over 1.5 million customers to develop their algorithm and launched Pluto Pillow.
Their innovative approach involves using customer data, including body stats, sleep positions, and preferences, to craft pillows tailored to individual needs. They developed an algorithm that analyzes this data to produce over 35 possible pillow variations. With a utility patent pending and over 1.5 million data points collected, Pluto Pillow claims to have a unique advantage in the industry.
The Product
Pluto Pillow’s product stands out in the crowded pillow market due to its customization process. Customers start by visiting the company’s website and filling out a questionnaire that covers their body stats, current pillow likes and dislikes, sleep positions, and personal preferences.
The algorithm then processes this data to create the ideal pillow for each customer. The pillows themselves are designed with a modular structure, consisting of a foam core and a plush outer cover.
These two components can be combined in various ways to produce pillows that feel distinctly different from one another. Pluto Pillow offers standard sizes at a price of $95 each, with an additional $18 for shipping.
How It Went
The company’s position before Shark Tank
Pluto Pillow has experienced significant growth since its inception. In 2018, they started with sales of $197,000, and by 2019, they more than doubled their revenue to $473,000. In the current year, they have already reached $490,000 in sales, indicating a consistent upward trajectory. Their custom pillow model, with an emphasis on personalization, seems to have resonated with customers.
However, the company’s gross margins of approximately 50% raise concerns among the Sharks, as this leaves limited room for profitability and scalability. Pluto Pillow acknowledges that optimizing their supply chain and reducing manufacturing costs would be beneficial.
The founders shared that they initially operated the business as a two-person team, handling all aspects, from manufacturing to customer service. They have since expanded, hiring two pillow builders and a full-time customer service representative. Pluto Pillow did not disclose any specific partners or wholesalers during the pitch, and the transcript does not provide information on their funding sources or current company structure.
The Negotiations:
The negotiation process for Pluto Pillow began with a $400,000 investment request for a 5% equity stake. Robert Herjavec, intrigued by the potential of the business, made an offer of $400,000 for 20% equity. This offer surprised the founders, who initially countered with a request for 9% equity instead of 20%. However, Robert was not willing to reduce his equity stake to that extent.
While considering Robert’s offer, the other Sharks expressed concerns about the competitive nature of the pillow industry and the company’s valuation. None of the other Sharks felt comfortable with the valuation and business model, and they all declined to invest. Robert, despite showing genuine interest, stood firm on his 20% equity request.
The founders, Susana and Kevin, decided not to accept the offer, feeling that it was more equity than they were willing to give up. They expressed gratitude for the opportunity and declined Robert’s proposal. In the end, Pluto Pillow left the Tank without a deal but with their vision for personalized pillows still intact. They felt confident in their ability to continue growing the company independently.
