Hug Sleep Adult Sleeping Pod
DEAL
EPISODE SUMMARY
🕓 Air Date: October 23, 2020
Asking For:
$150,000 for 10%
Investor:
Mark Cuban, Lori Greiner (50/50)
Deal:
$300,000 for 20%
PRODUCT SUMMARY
Hug Sleep's Sleep Pod is a therapeutic adult swaddle designed to provide a gentle, calming pressure, simulating the feeling of being hugged or cuddled to improve sleep quality.
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Background Story
Hug Sleep is founded by husband-and-wife team Matt Mundt and Angie Kupper from Milwaukee, Wisconsin. They created Sleep Pod to address their own sleep problems, such as sleepwalking and restless legs. Angie, with a master’s degree in community psychology, specializes in treating anxiety disorders for kids and adolescents. Her understanding of deep touch pressure therapy, which helps with anxiety and sleep disorders, played a crucial role in developing Sleep Pod.
Matt, a mechanical engineer with experience in problem-solving, was inspired to create a solution that mimicked the calming effect of a hug after trying a weighted blanket but facing its limitations. Together, they combined their knowledge and passion to create Sleep Pod.
The Product
Sleep Pod is a sleep solution that utilizes a specialized 4-way stretch material designed to simulate the sensation of being hugged or cuddled. Users wear it like a garment, and as the fabric stretches, it applies gentle, calming pressure to the body, promoting relaxation and improved sleep quality.
The breathable and lightweight material ensures comfort, and it’s also machine-washable for easy maintenance. Sleep Pod offers a solution for people who struggle with sleep due to anxiety, restless legs, or simply want to experience the comfort of being hugged while sleeping.
It provides a sense of security and calmness, making it suitable for various individuals seeking better sleep.
How It Went
The company’s position before Shark Tank
Hug Sleep has achieved impressive growth within 16 months since its inception. At the time of the pitch, they reported lifetime sales of approximately $490,000, with $335,000 generated in the last 12 months. Grossing $215,000 and netting $140,000 from these sales, the company demonstrated strong profitability.
The company primarily sells its Sleep Pod directly to consumers through its website and on Amazon. With a cost of acquisition averaging $11.50, their marketing efforts have been successful, and they have scaled their customer base efficiently.
While bootstrapping the business with an initial investment of just $2,500, Hug Sleep had made a significant impact in the sleep solution market. Their innovative product had garnered attention, and they received offers from multiple Sharks during their pitch.
The Negotiations:
The Sharks were immediately captivated by Hug Sleep’s Sleep Pod and the potential for its stress-relieving and sleep-improving qualities. All five Sharks expressed their interest in making a deal, leading to a fierce bidding war. Mark Cuban was the first to make an offer, proposing $150,000 for 20% equity. Lori Greiner and Robert Herjavec followed suit with the same offer, each willing to invest $150,000 for 20%.
Kevin O’Leary then made a unique offer of $300,000 for 20%, emphasizing his intention to lower customer acquisition costs. Daymond John also joined the fray, offering $150,000 for 15% equity. However, the couple expressed their desire to keep the valuation higher. Lori Greiner and Mark Cuban decided to team up, offering the couple $300,000 for 20% equity.
Seeing the opportunity to work with three Sharks, Robert Herjavec and Kevin O’Leary also offered $300,000 for 20% equity, mirroring Lori and Mark’s terms. After deliberation, Matt and Angie decided to accept Mark Cuban and Lori Greiner’s joint offer of $300,000 for 20% equity, as they believed in the value the Sharks could bring to the company.
