NY Launch Pod: Welcome to the New York Launch Pod the New York Press Club award winning podcast highlighting the most interesting new startups, businesses and openings in the New York City area. I’m your host and New York attorney Hal Coopersmith and last episode we talked about what’s going on with COVID-19 and I want to continue to encourage everyone to keep fighting and thinking about new solutions on the other side of this thing. But in the good news section one of our past guests, Fur, appeared on Shark Tank and got a deal from Lori Greiner. Immediately after the episode aired we called up Lillian Tung and Laura Schubert to talk about their experience on Shark Tank and recorded this episode before the outbreak. So with everything going on we thought it would be a great opportunity to air the episode now.
NY Launch Pod: So we’re back with Fur and this is an urgent podcast because they were just on Shark Tank. So rather than get them in the studio in person we had to get them on the line. So welcome back to the New York Launch Pod, Laura Schubert and Lillian Tung. So it is very exciting that you guys were on Shark Tank. I have so many questions about it. First question is, is there anything that’s confidential still about Shark Tank?
Lillian Tung: Absolutely. It’s definitely, it’s quite a process to be involved and there’s definitely things that we are more than happy to disclose and certain things that we definitely are not allowed to. Just production secrets.
NY Launch Pod: Okay. So challenge accepted. We’ll try to get the most information as possible. But the first question is why did you guys decide to go on Shark Tank in the first place? And really what inspired that decision?
Laura Schubert: You know, a big part of what we’re trying to do at Fur is bring our mission, which is to de-stigmatize pubic hair and encourage all body hair expressions to everyone we possibly can. And so we thought, you know what, what an accomplishment would it be if we could be on network television. We were on [8:00] PM on ABC on a Friday night to scream the words pubic hair and also to again have the endorsement and recognition of a shark.
NY Launch Pod: Where did the idea come from?
Lillian Tung: Laura and that crazy brain of hers who really understood that yeah, you know, network TV is such a huge opportunity. But on top of that, also, every time we’d ever really talked to people about our company from before we launched to the day we launched, even, you know, up until a couple months ago, inevitably someone would say, your product and your brand is perfect for Shark Tank. You guys need to go on. And of course that percolated in Laura’s mind and the opportunity presented itself.
NY Launch Pod: She had the crazy idea, it percolated. What was the process like? How did you even take the first step?
Laura Schubert: Well, I mean they have an application process, so really, I mean if you just follow the steps, I mean, I guess in that way it was pretty straightforward.
Lillian Tung: Shark Tank website, there’s a thing, you fill out papers, send in a couple of pictures of yourself I think or whatever. Talk to an iPhone.
NY Launch Pod: Well you have the application, but I know the two of you, I’m sure you did a lot of preparation and filling out the application and going into detail, what did you do?
Lillian Tung: Actually for that application part, I don’t think that there was that much preparation needed, but what was interesting was I was more reticent and hesitant about going into this. And so Laura did a ton of prep work in order to make me feel comfortable that it was really the right move. So we were already sometime viewers of Shark Tank, but Laura really, really doubled down on that effort, made sure that we understood, you know, the other types of companies that have participated. Really what value add each of the sharks had, who we liked, obviously, actually we liked all of them. And yeah, and of course, you know, what are the types of questions, what are the business metrics they really are interested in? Because at the end of the day, yeah, we’re business people and we’re going into a meeting with sharks. We’ve gotta be prepared for your meeting.
Laura Schubert: Yeah, we really prepared for it. I mean, as Lillian says, this was a real pitch meeting. I mean it is. So for the record it is, it is a real pitch meeting. You go in and meet with people. So of course you need to do your due diligence beforehand.
NY Launch Pod: As part of your due diligence, did you watch every single episode of Shark Tank?
Laura Schubert: No. I mean there were 10 seasons to watch. So I did not get that far, but definitely, definitely a few seasons.
NY Launch Pod: A few seasons. I’ve never been down the rabbit hole of Shark Tank. I imagined that there are a lot of resources out there. Was there anything that you found helpful?
Laura Schubert: I mean, honestly, mostly it was just watching the show a lot. And again, so just like you know, and again, knowing the Sharks investment portfolios or what did they, what were they interested in, just again, just like any other investor meeting, you want to do your homework and sort of figure out how can you make your company compelling to these particular investors.
NY Launch Pod: So let’s talk a little bit about the episode itself. When you made the pitch, your initial proposal was $500,000 for 2.5%. How did you come up with those figures? Because we’ll dive into that a little bit more in this interview.
Laura Schubert: I think we explained also on the show that our projected 2019 revenue was $5 million. And so it was, you know, four to six times valuation.
Lillian Tung: Which is a very commonly available valuation metric. If you look at, you know, recent M and A activity in the indie beauty space.
NY Launch Pod: So you’re revealing your revenues on Shark Tank and I want to play this clip, which was also pretty revealing for you guys.
Lillian Tung: We’re on track to do $5 million this year.
Shark: Good for you guys. And what is most of your sales? Is it the oil or the other?
Laura Schubert: No, it’s actually around the whole product line.
Shark: Walk us through your margins.
Laura Schubert: Yeah, sure. Oil is $46 and it costs us $5 and 34 cents to make it.
Shark: Wow. And other products?
Laura Schubert: On average, our line is $37 and it’s $7.63 as our average fully absorbed costs.
Shark: Have I told you how much I love it? Those margins are obscene.
NY Launch Pod: So what was it like revealing your margins on national TV?
Lillian Tung: Well, I mean again, this is a real business meeting and investors need to know that information. We were honest. Again, that’s the margin information we shared. Our is very in line with a CPG company, especially a small one like ours. We don’t benefit from the economies of scale. Larger ones do, who have even better margins. And of course that’s only for the product. We did not even get into paying salaries and benefits from anywhere to the person who’s filling our boxes to our headquarters to of course all the sales and marketing and advertising and paying all of our content creators, all the additional overhead. We didn’t even get into that on the margin discussion. But of course, yes, we felt like you have to share that information if you’re having a real business meeting.
NY Launch Pod: And how did you come up with the idea to walk in with sheep?
Lillian Tung: That was a real brainstorm between sort of our company, our brand and the Shark Tank team.
Laura Schubert: Because of course it does have to get cleared to take live animals on the set.
Lillian Tung: And again, we are in a, what we don’t think is a taboo space. But a lot of people, I think network TV still thinks, you know, pubic hair discussion is a taboo topic. So we can’t really straight up go in talking and showing pubic hair. So you have to be creative.
NY Launch Pod: Were you surprised by the Shark’s reaction to your product initially?
Laura Schubert: I guess I was really pleasantly surprised by the response. Again, I think it shows how far we’ve come in the past, you know, five years of driving this mission forward that we were allowed to go on the program and they definitely, I mean they definitely took it seriously. I don’t feel like the reactions were too defensive I guess or sort of too knee jerk at all. I don’t know if you felt differently.
Lillian Tung: No, I was actually, yeah, I really loved seeing the progression of their reaction because when you go on in the beginning saying it’s $500,000 for 2.5% of a pubic hair care company, I mean they were shocked and I don’t know if it’s because of the valuation or of our space, but I think as it progressed you can see that both they see it’s a real business with real numbers and I think they were quite impressed with our revenue numbers and also understanding where we were coming from as a care brand who seeks to de-stigmatize the taboo.
NY Launch Pod: So that’s a wonderful segue. As soon as you started talking about it, you got an offer. Let’s play this from Damon John.
Shark: Listen, I would give you the $500,000 for 15%.
NY Launch Pod: So what did you think when you got that first offer?
Lillian Tung: I mean, that was fast. He gave us an offer really fast and that was really exciting and really heartening again because it’s like, wow, okay. He gets it. He’s great with brands, he totally understands the value of brands and branding. And so, you know, we really, really thanked him and felt really appreciative that he kicked it off like that. That being said, it was so far away from what we thought was the value of our company and what we were asking for. So that was also a straightforward decision that we couldn’t take it at that point.
NY Launch Pod: All right. And then Kevin O’Leary gave an offer, $1 per bottle per skew for up to $1 million what were you thinking there?
Lillian Tung: That that is a very hefty margin on a product that already has you know, again, talking about margin and having to pay all the other fees on top of it, that that would really hurt our business. And it was, if you looked at it for up to a million dollars, it’s also a very hefty interest rate on a million dollar loan essentially. So we felt that that was not compelling.
NY Launch Pod: And were you prepared for, you know, that sort of offer from Kevin?
Laura Schubert: Well, I mean, you know, again, having done the research, I mean Kevin often does a royalty, so, you know, I definitely think we were definitely, we had done some scenario play like this is what we’re going to say, what might they say, what might the offers be that we get? It’s definitely a different thing when you’re under the lights and actually having the meeting to sort of process what they’re saying. And also, you know, it’s a lot, it’s a big meeting.
Lillian Tung: And I’d love to say you can see it on the footage that of course they get to have notebooks in front of them with pens to do a lot of math. And the entrepreneurs are not that they’re not allowed, but you just, it doesn’t have the same opportunities. So there’s a lot more mental math under bright lights. So that is definitely something, I’m happy we talked about it in advance.
Laura Schubert: Yes, for sure. But it’s still daunting and in the moment I hope we made it look, I hope we made it look more, made it look more effortless than it felt. So it was definitely you know, a challenge.
NY Launch Pod: Oh wow. Well you both did phenomenal. And it seems like these offers come fast and furious and the whole segment I think was about 14 minutes. Was the whole presentation to them that amount of time or like how much time was in between what actually happens on air versus the entire meeting itself?
Laura Schubert: We’re not actually allowed to talk about that, but it is a real business meeting. So business meetings in general are usually longer than 14 minutes.
Lillian Tung: Yeah. And it felt like a very real business meeting.
NY Launch Pod: Okay. So we’ve hit the wall. That’s okay. So how much time did you actually spend preparing for these? Because you definitely did have the numbers down cold.
Lillian Tung: You should know your numbers cold all the time, whether you’re going on Shark Tank or not. So I don’t think the numbers portion was too challenging or required a lot of prep. But of course all the other things you do like making sure Laura and I are aligned on what we want to say, what the pitch is going to be, what the other questions could be about the company and who’s going to answer them, et cetera.
NY Launch Pod: And the maximum that you would accept. Did you have any people mock as Sharks or roleplay?
Laura Schubert: Not, no, not really because you’re under a, you’re really not allowed to talk about it.
Lillian Tung: Not allowed to talk about it, that you’re going to be on Shark Tank.
Laura Schubert: Yeah. The process is very, very closed.
NY Launch Pod: Right. So, so how do you do that when it’s super closed?
Lillian Tung: We would practice in front of a mirror together a lot. So we talked into the mirror or I would mock as a Shark or Laura would mock as a Shark and then each other would have to answer the question. But again, it is a lot like a real business meeting. So any other previous business meeting we’ve ever had did help us practice.
NY Launch Pod: While we’re on that point. You were just on How You Doin’? I can’t believe that you didn’t even mention that. Did you have any issues in terms of keeping this a secret?
Lillian Tung: You’re right. We wanted to tell you. We totally wanted to tell you, it’s hard. I don’t know what else to say. I mean, I definitely think Laura and I probably talked to at least one person who said, oh, you guys should go on Shark Tank when we already knew we were going to be on Shark Tank. But I don’t know if Laura, you faced any other situations in which you were like, yes, I want to tell people.
Laura Schubert: Yes. I mean look, there was definitely, but until it airs you can’t say a word. So, you know, there were definitely, there was a long period when we couldn’t talk about this experience we had done. I mean it is what it is.
NY Launch Pod: Was there any situation that popped up that was particularly harder than anything else?
Lillian Tung: Yes. Being away from our kids was really hard at that point. I had a four month old, this was Laura’s first time away from her daughter. And so we definitely called each other on the way to the airport. I was crying and I was like, Laura, I’m so sad you promised me that this is going to be worth it because we were away from our kids for like five days and it was like my newborn. So that part I think was the hardest actually for me. I don’t know about you, Laura.
Laura Schubert: I think going away it was just a very intense experience. The whole thing I’d say. I mean we were together a lot, which was great. But it was, yeah, it was a definitely this sort of little weird journey that Lillian and I embarked on together.
Lillian Tung: You’re so focused on the Shark Tank stuff, but there is a real business to run. So we are then like remote trying to run a business but also really, really focused on the task at hand. Tthere’s also like a real business that’s going on in the background.
Laura Schubert: Yeah. Real family and real business is all happening and you know, and you have to focus on this other very unique experience.
NY Launch Pod: So back to the episode, Damon is offered $500,000 for 15%. Kevin O’Leary has that $1 per bottle and then Laurie comes in, she offers $500,000 for a 12% stake plus a charity component. What were you thinking there?
Laura Schubert: We were extremely excited. Well, first of all, I mean like, well, we love all the Sharks for different reasons, but you know, Laurie with her ties to QVC, and just sort of retail expertise. So we knew it was a really great strategic fit for us. And then the charity component just made the deal even better to us because of course, you know, we were very aligned on body positivity and you know, really, really making a difference, which again, as a mission based company we felt like that was a really great mesh for what we were looking to do.
NY Launch Pod: Right. But she’s offering 12% and you came in at two and a half percent. This is kind of that drama moment. You have three offers on the table. Were you thinking that you needed to come up to at least maybe a double digit percentage at that point?
Laura Schubert: You know, it’s a negotiation, so it’s, you know, people come in where they come in. I think at that point we just sort of wanted to hear. I mean, we wanted to hear her out and you know, I know we don’t have to tell you that, there’s always a starting point.
NY Launch Pod: There’s always a starting point. So then you counter $500,000 for 5% did you think that that was going to go through? It seemed like that was something in your head at that time, maybe you strategized about it?
Lillian Tung: We definitely felt that would be a very fair offer and deal. But when we strategized prior to even going on the show, we hadn’t anticipated a charitable angle and that part was so enticing and intriguing and in line with what we were thinking that not to give it away. At the end of the day we felt like we could move away and wiggle away from what we had gone in thinking was the deal we wanted.
Laura Schubert: And again, we had done scenario play, but we also knew that, you know, everything is different when you’re actually in the tank. And so, you know, we had definitely parameters that we were working with, but you can’t plan for everything.
NY Launch Pod: So what was different when you were inside the tank? What didn’t you expect?
Laura Schubert: They were really nice and that we were pleasantly surprised by that, that they were, you know, their questions were good and they were engaged. I mean, so yeah, you never know how it’s going to be when you’re actually standing there. And we thought it was actually a very good meeting.
Lillian Tung: Correct. They were very nice. Agreed.
NY Launch Pod: And you talked about your parameters heading into the meeting. One question that I wanted to know was, was the offer you accepted above or below the outside that you anticipated walking in?
Lillian Tung: It was in line, in line plus a charitable angle, which made it even better.
NY Launch Pod: And now you have a Shark as an investor. What’s that like? How has the involvement been?
Lillian Tung: We’re still in sort of the initial stages of discussing, they have to do their due diligence because it’s really all out of one meeting. So we’re still in the process of everything so far. I mean they seem really nice and we’ll just have to see where it goes.
NY Launch Pod: And you mentioned the exposure from national TV. What happened in the immediate aftermath of the airing, let’s call it the aftermath immediately after the episode aired?
Laura Schubert: There were, I mean look, there was definitely increased sales and traffic to our website for sure. And again, we just think that having the opportunity to get in front of that many people seeing the comments, oh I’ve never heard of this, you know, this is so great. Like that was, you know that that was really powerful thing for us.
Lillian Tung: Yeah. And also just seeing when Shark Tank, like I’ve been following their Instagram people, some of them being like this is amazing. And other people being like this is horrible. And then people being no, why would you think it’s horrible? And just seeing this conversation on an even larger platform than we’ve ever had before, but the sort of the same messaging where people were like, no, of course you’re talking about body hair that is like totally fine to talk about and engaging in this discourse is just great.
NY Launch Pod: Can you provide a metric in terms of how much website activity increased or sales increased?
Lillian Tung: Not really. It’s still too early to tell what the full number is. But it’s good. It’s good, but not so crazy like where our website crashed or anything.
Laura Schubert: But that’s also cause we, we planned for that, you know.
Lillian Tung: Yes, you’re right. That was one of my to do list items. Do not let website crash.
NY Launch Pod: So anything else someone should know if they’re thinking about Shark Tank or going into the tank and the whole process?
Lillian Tung: I mean, I would say make sure, treat it like a real meeting. So you gotta know your numbers, you gotta know your business, your environment that you’re operating in. Just every, all of those questions will be asked.
NY Launch Pod: Well, congratulations for a successful offer on Shark Tank and you’re actually the second guest to get a successful deal on shark tank. So, congratulations once again.
Laura Schubert: Thank you.
Lillian Tung: Thanks.
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