Supply Razor
DEAL
EPISODE SUMMARY
🕓 Air Date: November 3, 2019
Asking For:
$300,000 for 10%
Investor:
Robert Herjavec
Deal:
$300,000 for 15%
PRODUCT SUMMARY
Supply offers the Single Edge 2.0, a high-end, single-blade razor designed for a supremely close and comfortable shave.
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Background Story
Patrick and Jennifer Coddou, founders of Supply, hail from Fort Worth, Texas. Patrick, with a background in aerospace engineering, started the internet’s top website for razor reviews and shaving research. Jennifer, a former high-school math teacher, and Patrick, both dissatisfied with their corporate lives, decided to take a leap and change their paths.
Patrick’s passion for shaving and the couple’s dissatisfaction with multi-blade razors, which cause irritation and environmental concerns, led them to create the Single Edge 2.0. Their journey involved quitting their jobs, investing $125,000 of their own money, and putting their entire life savings into the business.
The Product
The Single Edge 2.0 is a premium razor made with aerospace-grade engineering, featuring a single American-made blade. Unlike multi-blade razors that can cause irritation, ingrown hairs, and environmental issues, Supply’s razor provides a supremely close and comfortable shave.
The razor’s design brings the luxury of a barber-style shave to the home, ensuring safety by eliminating direct blade contact during use. The product’s safety and injection method for the blade set it apart from other single-blade razors.
The razor is made of solid stainless steel, providing durability and a sleek design. As demonstrated with an illustration, multi-blade razors cut beneath the skin’s surface, leading to potential issues like ingrown hairs. In contrast, Supply’s single-blade razor cuts at the surface, providing an equally close shave without the associated risks.
The product is sold primarily online, with a Starter Set priced at $129, offering the razor and necessary accessories. The founders emphasize that the average order value is around $110, positioning them in a different league than disposable razors.
How It Went
The company’s position before Shark Tank
As of the pitch, Supply was experiencing significant growth. They anticipated reaching $2.5 million in sales for the current year, a remarkable increase from the previous year’s $1 million. The founders attributed their success to quitting their jobs, investing their own money, and focusing on direct-to-consumer online sales. The company’s gross margins stood at an impressive 50%, covering product, shipping, and packaging costs.
The Starter Set, priced at $129, had a cost of goods sold landed at $28, expected to decrease to below $10 in the coming months. The founders detailed their commitment by investing their life savings into the business. Their sales strategy primarily targeted online consumers, reflecting a direct-to-consumer model. The product’s average order value of $110 indicated a strong market position compared to disposable razors.
The Negotiations:
The pitch garnered interest from Robert Herjavec, who offered $300,000 for 15% equity. Kevin O’Leary proposed a different approach, suggesting a $1.50 royalty per unit sold and taking 5% equity. While appreciative, Patrick and Jennifer expressed concerns about a royalty deal, emphasizing the critical need to reinvest every dollar during their growth phase.
Negotiations continued, with Robert holding firm at 15% equity. Kevin did not budge from his royalty proposal. After some back-and-forth, the founders accepted Robert’s offer of $300,000 for 15%, securing a deal. The negotiation highlighted the founders’ commitment to maintaining equity and avoiding royalty structures that could hamper their reinvestment strategy.
