Sand Cloud Beach Towels
DEAL
EPISODE SUMMARY
🕓 Air Date: February 24, 2017
Asking For:
$200,000 for 8%
Investor:
Robert Herjavec
Deal:
$200,000 for 15%
PRODUCT SUMMARY
Sand Cloud offers unique, handcrafted towels made from the finest Turkish cotton with vibrant patterns, aiming to revolutionize beach towels and connect customers to a cause by donating 10% of profits to marine life conservation.
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Background Story
Sand Cloud, based in the picturesque locale of San Diego, was founded by Brandon, Steven, and Bruno – three beach enthusiasts driven by a passion for creating a product that would redefine the beach experience. The trio’s connection to the beach runs deep, with their initial idea sparked by the discomfort they experienced during a beach outing. Waking up on the beach one day, they found themselves yearning for a more comfortable experience, leading to the inception of their million-dollar idea – the pillow towel. Having encountered setbacks with their first product, the founders exhibited resilience and a keen entrepreneurial spirit.
Undeterred by the initial failure, they seized the opportunity to engage with beachgoers, conducting extensive market research to understand exactly what people wanted in a beach towel. This commitment to understanding their target audience laid the foundation for the birth of Sand Cloud. As millennials, the founders were driven not only by a desire for business success but also by a strong commitment to social impact. The trio decided to integrate a charitable element into their business model, pledging to donate 10% of their profits to the noble cause of marine life conservation. This ethos reflects their belief that business should not only be about financial gain but should also contribute positively to the environment.
The founders, epitomizing the spirit of risk-taking entrepreneurs, made significant personal sacrifices to propel Sand Cloud forward. They moved in together, sold their cars, and invested everything they had into the venture. This bold decision underscored their unwavering dedication to turning their vision into reality. Sand Cloud’s founders, through their journey from initial setback to the creation of a thriving brand, embody the resilience, adaptability, and commitment to social responsibility that defines their entrepreneurial spirit.
The Product
Sand Cloud’s product, the result of innovation and a commitment to a better beach experience, is a line of unique and vibrant towels that transcend the conventional. Crafted from the finest Turkish cotton, these towels boast a lightweight and multi-functional design, revolutionizing the traditional concept of beach towels.
The towels are not merely beach accessories; they are versatile lifestyle products. Their vibrant patterns and high-quality material make them eye-catching, ensuring that users turn heads wherever they go. Beyond the beach, these towels can serve as decorative tapestries, stylish scarves in winter, or even unique wraps. The possibilities are truly endless, catering to the diverse needs and preferences of a modern, active lifestyle.
Priced at $47, the towels command a premium for their quality and unique features. With an 80% profit margin, the cost of $10 underscores the commitment to delivering a high-quality product. The founders, as part of their dedication to social impact, donate 10% of the profits from each Sand Cloud purchase to marine life conservation.
To acquire these distinctive towels, customers can purchase them directly from the Sand Cloud website. The founders, having honed their digital marketing strategy, have invested significantly in rebuilding and optimizing their online platform to provide a seamless and engaging purchasing experience. The $200,000 sought from the Sharks is earmarked for further enhancing their digital presence and maintaining a competitive edge in the online marketplace.
How It Went
The company’s position before Shark Tank
Sand Cloud has exhibited robust and impressive performance, positioning itself as a thriving player in the market. The company’s financial health is robust, with a trajectory of consistent growth. In their initial year, they achieved $30,000 in sales, a figure that skyrocketed to $430,000 in the second year. The current year is projected to close at an impressive $3 million in sales, showcasing the company’s exponential growth. The company’s profitability is notable, boasting an impressive 80% profit margin. This solid financial foundation is further reinforced by their strategic approach to advertising, where they allocate significant budgets primarily on Facebook campaigns.
Their savvy marketing efforts during the summer, spending a quarter million dollars in advertising over 90 days, yielded over $1 million in sales and a quarter million in profit.Partnerships play a crucial role in Sand Cloud’s success. While the founders maintain 100% ownership, indicating a self-reliant approach, the company does engage with partners and wholesalers. The primary source of funding for Sand Cloud is not explicitly mentioned, but the founders have demonstrated a willingness to reinvest their profits back into the brand. This commitment to reinvestment, coupled with their ability to accumulate substantial capital, is evident in the company’s financial position, boasting over $300,000 in the bank and $160,000 in inventory.
The customer base for Sand Cloud is broad, appealing to a demographic that values both product quality and the social impact associated with their purchases. Millennials, in particular, are drawn to the brand’s commitment to donating 10% of profits to marine life conservation. This aligns with the founders’ vision of creating a business with a social impact.The company’s structure is characterized by the trio of founders, Brandon, Steven, and Bruno, who collectively own 100% of the company. Their decision-making autonomy is reflected in their strategic choices, such as declining an initial offer from Kevin due to misalignment on product use.
The Negotiations:
The negotiations in the “Shark Tank” episode featuring Sand Cloud were dynamic and resulted in a successful deal with Shark Robert Herjavec. The founders, seeking $200,000 for 8% of their company, initially received an offer from Robert for $200,000 but at a higher equity stake of 15%. This offer was accepted by the Sand Cloud team. The negotiation process involved the consideration of multiple offers and counteroffers from different Sharks.
Lori and Kevin opted out early, expressing concerns about the product’s utility and market positioning. Robert, acknowledging the company’s success despite his initial skepticism about the product, made the winning offer. The founders strategically countered Kevin’s initial offer of $400,000 for 25% by seeking offers from other Sharks. However, when the subsequent offers were not aligned with their expectations, they returned to Robert and accepted his deal of $200,000 for 15%. In the end, the negotiation showcased the founders’ determination and ability to navigate the Shark Tank, securing a deal that aligned with their vision for the company.
The acceptance of Robert’s offer marked a pivotal moment for Sand Cloud, as they not only gained the necessary capital but also secured a valuable partnership with a Shark who could provide mentorship and guidance for the company’s growth. The negotiation underscored the founders’ belief in their brand and their willingness to collaborate with a Shark who shared their vision for Sand Cloud’s future success.
