On last night's season finale of ABC's Shark Tank, two guys walked in the door with empty pockets and walked out with $600,000. Just who out-sharked whom here?
Brian Duggan and Adam McCombs were willing to give the Sharks 10% of their company, JumpForward, in exchange for "only" $150,000. Their subscription-based website is designed to make it easy for colleges to recruit high school athletes by giving them a place to post profiles of their achievements. So far, 30 colleges have signed up, and 60,000 students were represented, which helps universities live by the strict and complicated rules that govern contact between college recruiters and students. Using their proprietary system, colleges can relax, knowing they're not likely to run afoul of violations, and therefore incur steep fines, if they go about recruiting athletes in the wrong way.
In three months, they've made $150,000 in contracts, and they see it going to $35 million. Instantly, Barbara Corcoran didn't trust that the costs wouldn't inflate, and so did Harrington, and they went out. "You guys are way too smart for me," Daymond John admitted, and he left the table, too.
And they are, too. As part of our popular AfterShark video series, WalletPop's Jason Cochran caught up with them in the wake of the show to find out what was going through their minds during the big moment. It turns out there was plenty of action that network TV audiences didn't get to see.
Here's how their appearance wound up:
It was a familiar scenario, with only Kevin O'Leary and Robert Herjavec left at bat.
Since Duggan and McCombs clearly knew their stuff, that left only the deals, and it got ugly fast. O'Leary didn't even bother with the original offer, instead coming in at $200,000 for 20%. Duggans' face didn't twitch. "We'll take that under consideration," he said. Before Robert Herjavec could complicate things with his own offer, O'Leary, for the second time this episode, sent the entrepreneurs back down the long hallway, out of earshot, to try to cut a deal with his fellow Shark. "We don't want to do what we're about to do to each other. This is about to get very expensive," he told Herjavec. "It's a big mistake to f--- me on this one."
Herjavec: "Are you threatening me?"
No, O'Leary said, and instead, he openly said they ought to "collude." Herjavec declined, saying he'd rather stick with an offer of $300,000 for 35%.
O'Leary: "Why not go $400,000 for 50%?" he said, tempting a union, and a collusion was born.
Duggan produced a calculator and, although he thanked them for the offer, invited them to "back off the 50%" so he and McCombs could have more control, even if it meant going back down to $200,000. O'Leary: "Whoa! You're saying no to the cash? I love you even more now!"
Duggan was convinced that even if they needed more cash, their pitch was so strong, they could get it elsewhere. Herjavec heard truth in that, and knew these guys could get away and still thrive without him, because he suddenly went to $500,000 for 50%. Duggan: "Again, I appreciate the offer..." Herjavec: "$600,000 for 50%." Cut to commercial.
When we came back, we were facing the biggest monetary offer a Shark had ever made for a company. Duggan, still cool as a robot, said that if Herjavec's goal was to have half the business, they were prepared to allow it, provided O'Leary joined and the dollar offer was $750,000. Otherwise, he'd take $300,000 for (calculator out, button pressing) 25%. "I think you need my money. I'm going to stick to the $600,000 for 50%." He reminded the guys, as O'Leary joined that, that they had experience in building companies from nothing, and instead of that extra $150,000, they'd be getting their wisdom. If Duggan's wheels were turning, his expression didn't betray it. He looked like he was spending the day at the spa.
Finally, the verdict: "Done." The guys shook hands with O'Leary and Herjavec, their new partners, and walked out with $450,000 more than they asked for. All it took was a product that was proprietary, lucrative, and proven, backed by two guys who were obviously on top of their game, planning ahead, and dedicated. It doesn't happen every day.
Catch up with more of the entrepreneurs from the show, plus all five of the Sharks, at our AfterShark home page.
AfterShark: How the guys from JumpForward made $600,000 in 10 minutes