Frends – Designer Headphones
NO DEAL
EPISODE SUMMARY
🕓 Air Date: April 15, 2016
Asking For:
$1,000,000 for 7.6%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
Frends offers headphones designed as fashionable accessories with interchangeable caps, allowing users to update their look and reflect personal style.
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Background Story
Frends, presented by Keir Dillon and Sheen Moaleman, addresses the evolving role of headphones as not just electronic devices but also fashion accessories. Recognizing the lack of fashionable design in the headphone market, the founders aimed to create a product that appeals to the female consumer’s sense of style. The idea was to offer headphones that go beyond functionality, providing users with a way to personalize their look through interchangeable caps inspired by runway fashion.
Launched in 2012, Frends garnered attention from major retailers like Apple and Best Buy, achieving $2.9 million in sales in its first year. However, a consignment deal with Apple resulted in a substantial loss of $1.3 million, leading the company to rely on convertible notes for funding.
The Product
Frends headphones stand out as a fusion of technology and fashion. Priced at $150 for smaller versions and $200 for larger ones, the headphones feature a unique selling point—interchangeable caps. These caps allow users to customize their headphones, ensuring they align with personal style and mood.
The founders emphasize the fashion-forward aspect by releasing new collections of caps each season, ensuring that Frends remains on trend. The headphones are distributed through reputable channels such as Nordstrom, Bloomingdales online, and Anthropologie Online. In addition to traditional headphones, Frends introduces a new product—a Bluetooth necklace with earbuds.
Priced between $300 and $500, this necklace functions as a stylish accessory that also plays music. The product aims to further expand Frends’ market reach and boost sales. Despite facing challenges in the past, such as the consignment deal with Apple, Frends claims to be constantly selling out through retailers and their e-commerce sites due to high demand.
How It Went
The company’s position before Shark Tank
Frends reports $2.9 million in sales in the previous year, falling short of the $6 million target. Distribution channels include Nordstrom, Bloomingdales online, and Anthropologie online. The company faced a setback with the consignment deal, leading to a loss of $1.3 million. Frends managed to stay afloat by relying on convertible notes for funding, accumulating $1.5 million.
The founders claim strong demand and sales, with $850,000 year-to-date, projecting $8.7 million for the current year. Frends asserts they are on track to do $34 million in the next year, attributing the optimism to a new product launch and continued growth in existing distributions.
The Negotiations:
Despite the optimistic projections, the sharks express concerns about Frends’ financial history, losses, and the ambitious $34 million projection. The founders ask for $1 million in exchange for 7.6% equity. However, none of the sharks are willing to invest. Mark Cuban points out the risk of Frends running out of cash, while Ashton Kutcher feels there’s a lack of confidence in the way the business is run. Other sharks cite doubts about the market size, financial stability, and valuation. Ultimately, all sharks decline to invest, and Frends leaves the tank without securing a deal.
