Pips & Bounce – Ping Pong Place
NO DEAL
EPISODE SUMMARY
🕓 Air Date: February 28, 2020
Asking For:
$500,000 for 10%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
Pips & Bounce is a ping pong social club that aims to bring people together through a unique and nostalgic ping pong experience, offering a franchise model to expand its concept.
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Background Story
Pips & Bounce, founded by brothers Michael and Eugene from Portland, Oregon, is inspired by their childhood memories of playing ping pong in their basement rec room in Appalachian Kentucky. The idea emerged from a desire to reconnect people and create a social space centered around the joy of ping pong.
Michael, with a background in business development and marketing for an international law firm, joined forces with Eugene, who dedicates his nights and weekends to bringing people together through ping pong. The concept of Pips & Bounce was born out of a passion for the game and a vision to turn it into a social phenomenon.
The Product
Pips & Bounce is not just a ping pong venue; it’s a unique social club complete with authentic oak-paneled walls, great tunes, and throwback posters. The founders aim to franchise the concept, allowing others to recreate the Pips & Bounce experience. The initial pitch focused on the nostalgic atmosphere, signature “pong-tails,” and the idea of making Pips & Bounce a franchise.
The financials provided during the pitch outlined revenue for the last three fiscal years, starting at $974,000 and peaking at $1.33 million, with the latest year at $950,000. The profit margin was disclosed at 7%, showcasing the potential profitability of the model. However, concerns were raised about the readiness for franchising, given the early stage and limited multi-unit experience.
How It Went
The company’s position before Shark Tank
Pips & Bounce has demonstrated revenue growth over its three fiscal years, indicating market acceptance and demand for the unique ping pong social club concept. The founders revealed plans for expansion with a second location in Minneapolis, Minnesota, but it was noted that this was a corporate location, not a franchise. The profit margin of 7% raised concerns among the Sharks, as franchise models typically require higher profitability to entice potential investors.
The pitch also highlighted a $1 million budget for the second location, intended to serve as a showroom and flagship, showcasing the potential for franchisees. The founders emphasized their commitment to training franchisees but faced skepticism from the Sharks regarding the readiness of the franchise model. The valuation of $5 million was met with criticism, especially given the early stage and lack of proven success in multiple locations.
The Negotiations:
The Sharks expressed concerns about the readiness of Pips & Bounce for franchising, citing the lack of proven success in multiple units and the need for a more refined business model. Kevin O’Leary emphasized the importance of achieving higher profitability for both the business and potential franchisees. The founders faced criticism for their valuation of $5 million, with Mark Cuban and other Sharks suggesting that the business was not ready for franchising at its current stage.
Despite the founders’ passionate pitch and belief in the potential of their concept, all Sharks ultimately decided not to invest. The primary reasons included the early stage of the business, the unproven ability to run multiple units profitably, and the lack of a compelling franchise model. The negotiation ended with no deal, leaving the founders to reflect on the feedback and challenges ahead.
