Twist It Up Combs
Twist It Up Combs is a company that manufacturers and sell combs intended for "afro-centric" hair.
The idea behind Twist It Up Combs is to work specifically with "afro-centric" hair that grows up rather than out and down. Unlike hair picks that pull at the hair when there's a tangle, the Twist It Up Comb compresses the hair keeping it neat and stylish at all times since it can be kept in a back-pocket just like a hair pick. It also means that people with this hair type need not resort to hair damaging chemicals to style their hair.
The Twist It Up Comb sells for $29.95 per unit, including shipping, and costs only $3.50 per item to manufacture. In the first year, the company sold $95,000 worth of product. From January to April of the year in which this deal aired, Twist It Up Combs has sold $101,000 thus far. In the last month, the company has made $41,000 in gross sales alone although the entrepreneur admitted that he could not cite a net number.
The entrepreneur admitted that the biggest growth issue is that the mess that makes up the active grooming aspect of the comb is manufactured and sold overseas and that there have been manufacturing issues with the supplier. However, even so, the entrepreneur projects that the business will see $500,000 in gross sales by the end of the year.
In terms of marketing, the company has spent $18,000 to acquire the majority of their online customers through Facebook advertising.
The entrepreneur is looking for an investor to help build a steady inventory. The entrepreneur claims that the company is experiencing inventory problems that are having an effect on sales and has sold through their inventory seven times.
This deal appeared in Episode 10.12.
Making a Deal
Robert exited the deal early, saying that he just did not understand the product.
The entrepreneur stated that the company was currently in conversation with both CVS and Sally's Beauty Supply to carry the product (though no indication of the current status of negotiations was given).
Daymond jumped in to make a deal. He offered $225,000 to take the product and license it out to other manufacturers in return for 25% equity in the business. However, his deal was specifically contingent on being able to make licensing deals otherwise he would back out.
Mark, perhaps seeing a large and underserved market in the Health and Beauty segment, offered to come in with Daymond. However, he stated that if a license could be arrange, he would do the deal with Daymond but that, even if Daymond backed out, he could do it on his own.
Daymond agreed to "partner" with Mark and the entrepreneurs agreed to take on both sharks as partners.
Analysis
This was an unusually great deal for a small entrepreneur. On one hand, they now have a shark out there actively marketing their product for them to manufacturers and potential licensees that will, if successful, hopefully reduce their workload and increase their profit substantially.
On the other hand, they also have Mark Cuban in their corner, no matter what! With Mark's money and back office infrastructure built to support his other companies, Twist It Up Combs will find growth much easier to achieve and Mark's buying power will no doubt smooth the company's current supply problems.
Yes, the entrepreneurs "gave away" 10% more of the company than they had intended (a value of $600,000 based on their initial value). However, this value will, likely, more than be made up by Mark's participation if not also Daymond's.