Drop Stop Car Seat Gap Filler
DEAL
EPISODE SUMMARY
🕓 Air Date: March 29, 2013
Asking For:
$300,000 for 15%
Investor:
Lori Greiner
Deal:
$300,000 for 20%
PRODUCT SUMMARY
Drop Stop is a patented safety device designed to prevent items from falling into the gap between a car seat and the center console, reducing driver distraction and potential accidents.
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Background Story
Jeffrey Simon and Marc Newburger, founders of Drop Stop, reside in Los Angeles. The idea for Drop Stop was born out of a harrowing experience Marc had while driving on Sunset Boulevard. His phone slipped into the gap between the car seat and the center console, leading to a near-miss accident.
This incident prompted Marc to wonder why there wasn’t a solution to block this gap, thus sparking the idea for Drop Stop. The founders realized the potential to not only solve a common problem but also enhance driver safety. With a mission to prevent accidents caused by driver distraction, they set out to develop a practical solution.
The Product
Drop Stop is a simple yet innovative device designed to prevent items from falling into the gap between a car seat and a center console. Made from stretchy and durable material, Drop Stop easily fits around the seat belt catch, anchoring it securely to the seat. Its patented design ensures it stays in place regardless of seat movement.
The device features a built-in slot that accommodates the seat belt catch, effectively blocking the gap and keeping items from slipping through. The benefits of Drop Stop are twofold: it reduces driver distraction by preventing the need to reach into the gap while driving, and it enhances overall safety by minimizing the risk of accidents caused by dropped items.
Its universal design makes it compatible with any car or truck, and its squishy center allows it to expand or contract to fit any size gap. Drop Stop can be purchased through various channels, including their website, catalogs, and television shopping networks like QVC.
The retail price for a set of two Drop Stop units is $19.99, offering consumers a practical and affordable solution to a common problem. With a markup of $5 per unit, Drop Stop presents an attractive proposition for investors and retailers alike.
How It Went
The company’s position before Shark Tank
Since its inception in 2009, Drop Stop has demonstrated steady growth and success. With gross sales totaling $1.3 million and 260,000 units sold, the company has established itself as a leader in the automotive safety market. In the current year, Drop Stop has generated $300,000 in gross sales, with a net income of $50,000. With commitments in place to gross $500,000 in the fourth quarter, the company anticipates a net income of $260,000.
Drop Stop’s success can be attributed to its diverse distribution channels, including online sales through their website, catalog sales, and appearances on television shopping networks like QVC. With 42 appearances on QVC and plans for further expansion into retail outlets, Drop Stop has positioned itself for continued growth and market penetration.
The company’s profitability and strong sales performance have attracted the attention of investors, leading to a successful deal with Lori Greiner on Shark Tank. By securing $300,000 in funding from Lori in exchange for a 20% stake in the company, Drop Stop has gained a strategic partner with the expertise and resources to drive further growth and expansion. With a robust product offering, a loyal customer base, and a commitment to innovation and safety, Drop Stop is poised for continued success in the automotive accessories market.
The Negotiations:
Initially, the sharks were intrigued by Drop Stop’s unique product and impressive sales figures. Kevin O’Leary offered $300,000 for a $2 royalty on each unit sold, effectively retaining ownership without equity. However, this offer didn’t sit well with the founders, who were hesitant to give up control over their company’s future profits.
Lori Greiner recognized the potential of Drop Stop and made a compelling offer of $300,000 for a 20% stake in the company. While this would involve a larger equity stake, Lori’s expertise in retail and distribution could significantly accelerate Drop Stop’s growth and market reach. Despite the steep equity demand, the founders saw the value in Lori’s offer and decided to accept.
However, Kevin, known for his shrewd negotiating tactics, intervened with a counteroffer. He proposed reducing the royalty fee to $1 after recouping his initial investment, presenting an alternative to the equity deal with Lori. This counteroffer added a layer of complexity to the negotiation process, forcing the founders to carefully weigh their options.
Ultimately, the founders expressed their desire to partner with Lori, emphasizing their belief in her ability to propel Drop Stop to new heights. Although Kevin’s offer presented a tempting alternative, the founders were swayed by Lori’s vision and enthusiasm for their product. With an agreement reached, Drop Stop secured a deal with Lori Greiner, marking a significant milestone in the company’s journey.
