Tough Apparel
DEAL
EPISODE SUMMARY
🕓 Air Date: May 8, 2020
Asking For:
$100,000 for 15%
Investor:
Robert Herjavec
Deal:
$100,000 for 35%
PRODUCT SUMMARY
Tough Tie offers durable and stylish ties designed for real-life situations, featuring a unique design, iron-lock stitch, and stain- and liquid-repellent properties.
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Background Story
Skylar Bennett and Kevin Shoemaker, the creators of Tough Tie, hail from Mesa, Arizona. Both young working professionals and fathers, Skylar and Kevin had backgrounds in commercial real estate. The idea for Tough Tie was born out of their personal experiences, realizing that traditional ties were vulnerable to damage from spills, spit-up, and other everyday mishaps, especially with kids around. This led them to develop a tie that could endure real-life situations, thus creating Tough Tie.
Leaving their full-time jobs in commercial real estate over two years ago, Skylar and Kevin dedicated themselves entirely to Tough Tie. Despite the challenges of balancing family life (both have three kids each) and running the business, they were determined to provide a solution to a common problem faced by professionals and parents.
The Product
Tough Tie’s key features include a 100% unique design, an iron-lock stitch providing five times the stitching of a normal tie, and 100% stain- and liquid-repellent properties. The ties are designed to be machine-washed regularly, ensuring easy maintenance. Additionally, each tie has microfiber tipping for cleaning phone screens or glasses.
During the pitch, Skylar and Kevin showcased the customizable aspect of their ties, utilizing an in-house printing process called dye sublimation. This allows for the creation of personalized ties with various images. The product lineup extends beyond ties to include belts and socks, all adhering to the brand’s durable and stylish philosophy.
The high-end tie, known as the Hustle Collection, is priced at $45 retail, with a production cost of $15. Tough Tie primarily sells online through its website, and to date, they have achieved lifetime sales of $450,000, with projections of over $400,000 in sales for the current year. The founders shared that the business is profitable, with supportive wives who also work full-time to supplement the family income.
How It Went
The company’s position before Shark Tank
Tough Tie has experienced steady growth, with lifetime sales reaching $450,000. In the current year, they anticipated sales exceeding $400,000, building on the $208,000 achieved in the previous year. The business is profitable, though Skylar and Kevin acknowledged that they haven’t paid themselves as much as they could due to ongoing investments in customer acquisition through online paid advertising.
The founders started Tough Tie with a combined investment of $43,000, and the company currently has $150,000 in debt, which they incurred by selling their homes to fund the business. Sales are primarily generated through online channels, and Tough Tie aims to expand beyond being solely a tie company, with a broader vision for Tough Apparel.
The Negotiations:
Skylar and Kevin entered the Tank seeking $100,000 for a 15% stake in Tough Tie. They garnered interest from Robert Herjavec, who made a deal offering $100,000 for a 35% equity stake. Despite concerns about the tie industry’s viability, Robert believed in the entrepreneurs’ vision and the potential for building a successful brand.
The negotiation took an unexpected turn when Skylar and Kevin counteroffered $100,000 for a 25% stake, pushing for a slightly more favorable deal. This prompted a humorous reaction from the Sharks, but Robert held firm on his initial terms, sealing the deal at $100,000 for a 35% equity stake.
While other Sharks expressed concerns about the tie industry’s challenges and trends, Robert saw potential in Tough Tie and recognized Skylar and Kevin’s ability to execute their vision. The founders, excited and surprised by the offer, accepted Robert’s deal, marking a successful pitch on “Shark Tank.”
