BottleKeeper Insulated Beer Bottle Holder
DEAL
EPISODE SUMMARY
🕓 Air Date: November 25, 2018
Asking For:
$1,000,000 for 5%
Investor:
Mark Cuban, Lori Greiner (50/50)
Deal:
$1,000,000 for 5% + $1.50 royalty
PRODUCT SUMMARY
BottleKeeper is an innovative stainless steel bottle insulated with neoprene, designed to keep beer bottles cold. It includes a built-in bottle opener and provides protection to the inner bottle, preventing glass breakage.
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Background Story
BottleKeeper, a brainchild of cousins Adam Callinan and Matt Campbell, originates from the sun-soaked beaches of El Segundo, California. The duo, not just business partners but best friends, embarked on the entrepreneurial journey driven by a shared passion for solving a universally recognized problem – warm beer. The genesis of BottleKeeper emerged on a scorching summer day when Adam attempted to savor a beer from a red party cup, only to be met with disappointment as it quickly turned warm. Frustrated by the perennial issue of warm beer and inspired by the idea of keeping water cold in stainless steel bottles, the innovative concept of BottleKeeper was born.
Their solution was not just a functional remedy but a stylish and practical accessory for beer enthusiasts. BottleKeeper, an insulated stainless steel bottle with neoprene lining, revolutionized the beer-drinking experience. The product not only kept beer bottles refreshingly cold but also featured a locking base, a built-in bottle opener, and crucially, protected the inner bottle from breakage. Located in the heart of California, Adam and Matt brought a blend of creativity, friendship, and entrepreneurial spirit to the table. Their foray into the “Shark Tank” den was fueled by a genuine desire to tackle the warm beer epidemic that has plagued gatherings for centuries.
The cousins, although first-time business builders, showcased resilience in bootstrapping their venture, facing challenges as they scaled BottleKeeper without external investment. The BottleKeeper founders’ background experiences, combined with their hands-on approach, demonstrated a commitment to building a durable brand. Their journey reflects the entrepreneurial spirit of identifying a common problem, devising a practical solution, and presenting it to the world with a touch of California cool.
The Product
BottleKeeper, a game-changer in the realm of beverage accessories, is an innovative stainless steel bottle designed to keep your beer colder for longer, eliminating the perennial woe of warm beer. The product boasts a sleek and practical design that transforms the beer-drinking experience.
Functionality is at the forefront of BottleKeeper’s design. The stainless steel shell, lined with insulating neoprene, ensures that your beer bottle stays refreshingly cold, maintaining its desired temperature even in the most scorching conditions. The locking base and integrated bottle opener add a layer of convenience, making it a comprehensive solution for beer enthusiasts.
The process is simple yet effective – slide your cold beer bottle into the BottleKeeper, lock the base, and enjoy the benefits of an insulated container that not only keeps your beverage chilled but also shields the inner bottle from potential breakage. This feature is particularly handy for outdoor activities like poolside gatherings, ensuring that dropped glass bottles won’t result in a messy and hazardous situation.
BottleKeeper, priced at $34.99, is available for purchase online, with a focus on direct-to-consumer sales. The product’s online presence includes a 15% share via Amazon, strategically employed to counter knock-off competitors. The cost-effectiveness of BottleKeeper, with a production cost of approximately $3.50, contributes to a gross margin of 90%, offering consumers a high-quality and stylish solution to the age-old problem of warm beer.
How It Went
The company’s position before Shark Tank
BottleKeeper has exhibited robust performance and a strong market position, fueled by impressive sales figures and a unique product offering. With over $20 million in sales within the last three years and a recent surge of $2 million in the past 30 days, the company has demonstrated a consistent upward trajectory. The founders, Adam Callinan and Matt Campbell, however, acknowledge a bottleneck in their growth due to a lack of external investment. The company’s primary sales channels include a significant direct-to-consumer approach and a 15% share through Amazon, strategically utilized to combat knock-off competitors in the online marketplace.
BottleKeeper’s challenge lies in transitioning from an online-focused model to retail, as evidenced by the 3,000 U.S. retail stores on a waitlist to carry their product. The company is currently based in El Segundo, California, and faces cash crunches, prompting their appearance on “Shark Tank” to seek strategic partnerships and capital infusion. Funding for BottleKeeper has been entirely self-generated through bootstrapping, highlighting the founders’ determination to maintain control of their venture. Their gross margin stands at an impressive 90%, indicating a healthy profitability margin. However, net income hovers around 10% due to substantial marketing expenditures, primarily on Facebook, totaling close to $4 million. A noteworthy portion of their expenses also went into IP enforcement, as the company holds multiple patents.
The founders’ decision to enter into a deal with Lori Greiner and Mark Cuban on “Shark Tank” signifies a strategic move to overcome their capital constraints. The deal involves a $1 million investment for a 5% equity stake, accompanied by a $1.50 per unit royalty until $1.5 million is returned, structured to provide the company with both capital infusion and the mentorship of experienced Sharks. This move aligns with BottleKeeper’s objective to build a durable brand and tackle the warm beer epidemic on a broader scale. The company’s success on the show reflects their commitment to growth, innovation, and strategic partnerships.
The Negotiations:
The negotiations for BottleKeeper on “Shark Tank” were a rollercoaster of offers, counteroffers, and strategic decision-making. The founders, Adam Callinan and Matt Campbell, initially sought a $1 million investment for a 5% equity stake, valuing their company at an ambitious $20 million. The Sharks, however, found the valuation aggressive, leading to a variety of counteroffers. Alex Rodriguez and Kevin O’Leary entered the negotiation arena with a proposal of $500,000 for a substantial 20% equity stake, accompanied by an additional $500,000 line of credit. While the offer provided significant capital, it meant relinquishing a larger portion of the company.
Lori Greiner and Mark Cuban took a different approach, offering $1 million for a 3% equity stake with a $1.50 per unit royalty until $1.5 million was returned. This deal structure aimed at mitigating the Sharks’ perceived risk while providing BottleKeeper with necessary capital. The negotiation process showcased the financial health of BottleKeeper, with impressive sales figures, high profit margins, and a strategic position in the market. In a surprising turn, the founders expressed initial hesitancy towards the higher equity offer from Lori and Mark. However, after careful consideration and further negotiation, a deal was eventually struck. Lori and Mark agreed to invest $1 million for a 5% equity stake, including a $1.50 per unit royalty until $1.5 million was repaid, offering a compromise that satisfied both parties.
The negotiation outcome reflected the delicate balance between capital infusion and equity dilution, showcasing the founders’ shrewd decision-making and the Sharks’ strategic perspectives. The deal with Lori and Mark not only provided the needed funding but also brought experienced mentors on board to guide BottleKeeper in navigating the challenges of scaling their business and entering the retail market. The negotiation process on “Shark Tank” underscored the intricacies of valuation, risk assessment, and the art of securing a mutually beneficial deal.
