Lumio – Lighting That Unfolds Like a Book
DEAL
EPISODE SUMMARY
🕓 Air Date: January 16, 2015
Asking For:
$250,000 for 8%
Investor:
Robert Herjavec
Deal:
$350,000 for 10%
PRODUCT SUMMARY
Lumio is an elegant lighting solution that offers versatile illumination, transforming from ambient light to directional task lighting with 360-degree flexibility, featuring a fixture with strong magnets for various configurations.
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Background Story
Founded by Max, Lumio is a unique lighting company that blends elegance and functionality. Max’s background and journey in creating Lumio reveal a story of passion and dedication. Max, the founder and creator of Lumio, embarked on this venture with a vision to provide a lighting solution that goes beyond mere functionality. The product itself is a testament to Max’s commitment to detail and innovation. Lumio’s origin can be traced back to Max’s experience living in a Chinese factory for four months, showcasing his hands-on approach to refining the product and understanding the manufacturing process intricately.
Max’s background, unfortunately, is not explicitly mentioned in the episode, leaving some aspects open to interpretation. However, his dedication to Lumio suggests a deep understanding of design, manufacturing, and the importance of user experience. The product’s development wasn’t merely about creating a beautiful light; it was about designing a functional and versatile solution that enhances the user’s experience with light. Lumio was launched just a year before the pitch, and in that short time, it achieved impressive sales of $1 million without resorting to advertising or marketing.
This success is attributed to a Kickstarter campaign that garnered close to $580,000, indicating strong support from the crowdfunding community. In essence, Lumio’s background story is one of innovation, resilience, and a commitment to creating a product that not only meets but exceeds expectations. Max’s hands-on approach, from factory living to meticulous design, reflects the dedication that has propelled Lumio into the market with significant success.
The Product
Lumio, an elegant lighting solution, stands out for its versatility and aesthetic appeal. The product unfolds like a book, revealing a fixture embedded with super-strong magnets. This unique design allows users to configure Lumio in various forms, creating ambient light or directional task lighting. The 360-degree flexibility makes it adaptable to different environments, serving both practical and aesthetic purposes.
Powered by a rechargeable battery, Lumio offers eight hours of illumination, addressing the need for both beauty and functionality. The recharge process is simple through a micro USB, taking three to four hours to reach full capacity. Its portable nature makes it a convenient lighting solution for various settings.
Priced at $190 per unit, Lumio positions itself as a premium lighting option, and its availability extends beyond traditional retail channels. The product is not only sold online through e-commerce, where it constitutes 40% of sales, but also has a presence in renowned institutions like the Museum of Modern Art. Lumio’s strategic partnerships with museums highlight its cultural and artistic value, enhancing its appeal to a discerning consumer base.
Lumio’s magnetic fixture and adaptable design, coupled with its aesthetic appeal and practical functionality, make it a unique and sought-after product. The premium pricing aligns with its quality and the artistic environments it caters to, contributing to its success in the market.
How It Went
The company’s position before Shark Tank
Lumio has exhibited robust performance, positioning itself as a notable player in the lighting industry. The company’s health and position are marked by impressive sales of $1 million within its first year, a testament to the product’s appeal and market demand. Lumio’s success is further underscored by its strategic partnerships with renowned institutions such as the Museum of Modern Art, MOCA in L.A., SFMOMA, and Cooper Hewitt. The partnerships with these cultural institutions not only validate Lumio’s artistic and design credentials but also expand its reach to a sophisticated customer base.
The product’s presence in such esteemed establishments enhances Lumio’s brand reputation and contributes to its premium positioning. Lumio’s distribution channels include e-commerce, constituting 40% of its sales, and partnerships with high-end retailers like the Museum of Modern Art. However, the company faces challenges in keeping up with demand due to limited distribution, indicating strong market interest and potential for expansion. The funding for Lumio primarily came from a successful Kickstarter campaign, where it raised close to $580,000, showcasing the support and enthusiasm of the crowdfunding community.
Max, the founder, also lived in a Chinese factory for four months, underscoring the hands-on approach to refining the product and reducing costs. Lumio’s successful Kickstarter campaign and subsequent $1 million in sales suggest a healthy financial position. The company’s structure and operations are geared towards strategic brand-building, with a focus on partnerships and limited distribution to maintain brand exclusivity. The commitment to reducing the cost of goods and exploring partnerships with renowned brands like Design Within Reach indicates a forward-looking strategy to sustain and enhance Lumio’s market position.
The Negotiations:
The negotiations for Lumio in the Shark Tank were intense and saw all five Sharks expressing interest in Max’s innovative lighting company. Max initially sought $250,000 in exchange for an 8% equity stake. Robert Herjavec was the first to make an offer, proposing $350,000 for a 10% equity share, valuing the company at $3.5 million. Kevin O’Leary surprised everyone with a unique royalty deal, valuing Lumio at $6.2 million. He offered $250,000 for 4% equity, with a condition that he would receive a $7 royalty per unit until he doubled his initial investment.
O’Leary also pledged to help finance Lumio’s purchase orders. Mark Cuban presented an offer of $500,000 for a 16% equity stake, while Lori Greiner proposed $250,000 for 12%, along with a $250,000 line of credit. Daymond John made the most substantial offer, proposing $750,000 for a 20% stake and introducing a $10 million line of credit, emphasizing his interest in licensing Lumio. In the end, Max opted for Robert Herjavec’s offer of $350,000 for 10% equity.
This deal not only provided Lumio with the desired funding but also secured the expertise and support of Herjavec, who expressed excitement about working with Max. The negotiation process showcased the high level of interest and confidence the Sharks had in Lumio’s potential, ultimately resulting in a successful deal that aligned with Max’s vision for the company.
