Dog Threads
DEAL
EPISODE SUMMARY
🕓 Air Date: November 10, 2019
Asking For:
$250,000 for 17%
Investor:
Mark Cuban
Deal:
$250,000 for 25%
PRODUCT SUMMARY
Dog Threads is a modern apparel brand offering matching clothing sets for dogs and their owners, emphasizing positive vibes and social media appeal.
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Background Story
Scott and Gina, a husband-and-wife team from Minneapolis, Minnesota, created Dog Threads out of a passion for animals and a desire for high-quality, fashionable pet clothing. The idea originated in 2014 when the couple, inspired by their Pomeranian poodle named Thomas, faced a lack of stylish and high-quality pet apparel. Thomas became their muse, leading them to design matching outfits for dogs and humans.
Unfortunately, Thomas passed away, but his legacy lives on through the brand. Gina, with a background in design, was already working on her women’s clothing line, providing the skills to create patterns for the initial dog shirts. The positive response from people who saw Thomas in the unique outfits sparked the idea to turn their hobby into a business that also supports animals in need.
The Product
Dog Threads offers a variety of matching clothing sets for dogs and their owners, including classic button-down shirts for dogs and coordinating sets for humans. The designs are modern, stylish, and aimed at creating a fun and positive vibe.
The matching sets cater to various occasions, from dog birthdays to holiday photos and casual gatherings. The company currently focuses on direct online sales, which constitute 80% of their business, and retail sales, with the majority being dog clothes. The human clothes are often ordered along with the matching dog outfits.
The classic button-down shirts for dogs are manufactured at a cost of $10.75 and sold at $40 retail, while the human matching sets cost $21.50 to make and retail at $68. Despite the success and positive sales growth, the founders acknowledge the challenge of slim margins and express a need for a cash infusion to expand their product offerings and explore licensing opportunities.
While Dog Threads hasn’t pursued licensing yet, they express openness to the idea, especially in collaboration with sports teams like the NBA.
How It Went
The company’s position before Shark Tank
Since its founding in November 2014, Dog Threads has achieved impressive sales, totaling $465,000. Initially a hobby alongside their full-time jobs, the company transitioned to a more serious venture a year and a half ago. Year-to-date sales are approximately $75,000, with a projection of $240,000 for the current year. With a frugal initial investment of $500, the founders have focused on profitability from day one, reinvesting profits to fuel growth.
The majority of sales (75%) come from dog clothes, with most direct sales including matching human outfits. The company has been thoughtful and deliberate in spending money, emphasizing profitability. In their Shark Tank pitch, the founders expressed the need for a cash infusion to further scale the business.
The Negotiations:
The Sharks had mixed reactions to Dog Threads. While Lori Greiner and Daymond John opted out early due to personal preferences or concerns about the market, Mark Cuban and Kevin O’Leary saw potential. Mark Cuban made an initial offer of $250,000 for 30% equity, expressing interest in connecting Dog Threads with the Mavs for potential licensing opportunities.
Kevin O’Leary initially decided to pass on the investment, citing his discomfort with dressing up dogs. The founders countered Mark Cuban’s offer, proposing $250,000 for 25% equity to maintain more control over their family’s future, especially considering they have a one-year-old at home. This turned the tide, and Mark Cuban accepted the counteroffer, securing a deal at 25%.
The founders appreciated the connection and expertise Mark Cuban could provide, particularly in potential licensing deals with the NBA. In the end, Dog Threads secured the deal with Mark Cuban, concluding their pitch with gratitude and excitement for the future.
