Yellow Leaf Hammocks
DEAL
EPISODE SUMMARY
🕓 Air Date: May 15, 2020
Asking For:
$400,000 for 7%
Investor:
Daniel Lubetzky
Deal:
$1,000,000 for 25%
PRODUCT SUMMARY
Yellow Leaf Hammocks offers the world's most comfortable hammocks, including their new invention, the indoor-outdoor hammock chair known as the "hammock throne."
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Background Story
Yellow Leaf Hammocks was founded by Rachel Connors and Joe Demin. The inspiration struck Joe during a backpacking trip in Southeast Asia, where he discovered a hammock woven by a hill tribe community in Thailand. The hammocks were part of an economic development program to lift the community out of poverty.
Struck by the quality and the potential to create jobs, Joe returned to Boston, and with Rachel’s support, they decided to start a hammock company. Yellow Leaf Hammocks works with moms in rural Thailand, providing high-wage jobs as part of their social enterprise. Their mission is to end poverty in vulnerable communities while offering a premium, comfortable product to consumers.
The Product
Yellow Leaf Hammocks has perfected the traditional hammock, ensuring a cocoon-like, no-wobble design and using shockingly soft yarn to prevent rope burns during relaxation.
Their hammock throne, a new invention, is an indoor-outdoor hammock chair that can be placed in various settings, from living rooms to tiny balconies or offices. The throne extends to create a full-length hammock large enough for a 7-foot person, swiveling 360 degrees for customizable comfort.
Each hammock is weather-safe and signed by the women who crafted it as part of Yellow Leaf Hammocks’ commitment to social impact. The hammocks retail between $149 and $299, with the hammock throne priced at approximately $2,200.
How It Went
The company’s position before Shark Tank
Yellow Leaf Hammocks has demonstrated strong performance, with projected sales reaching $1.3 million in the current year, following $860,000 in the previous year. Their sales are evenly split between direct-to-consumer sales through their website and strategic partnerships. Notable partnerships include Virgin Voyages, where Yellow Leaf Hammocks will be featured in every cabin of the cruise line’s new venture.
The retail aspect within Virgin Voyages is expected to more than double the company’s current business. In terms of profitability, the company reported a net income of $110,000 on $860,000 in revenue last year. Their current net income for the ongoing year is projected to be $360,000. The founders have strategically shifted from scattershot patio stores to focus on strategic partnerships.
The Negotiations:
The negotiation started with Rachel and Joe seeking $400,000 for a 7% stake. Daniel Herjavec made a bold offer of $1 million for a 33% stake, emphasizing his credentials in building socially impactful businesses. Lori Greiner, expressing her passion for helping women and the environment, offered $400,000 for a 20% stake. Robert Herjavec also expressed interest and offered $400,000 for 15%.
After some back-and-forth, Lori adjusted her offer to $200,000 flat, a $200,000 loan at 7%, funding purchase orders, and a 17% stake. Lori’s offer was later countered by Daniel’s offer of $1 million for 25%, which was eventually accepted by Rachel and Joe, marking an unprecedented deal in “Shark Tank” history.
