UnbuckleMe
UnbuckleMe is a company from Houston, TX, that wants to help people with bad hands unbuckle children from their safety harness. Apparently (and this is being written without snark), older people and people with arthritis have a hard time mustering the nine pounds of hand strength necessary to release a car harness from a child. UnbuckleMe, however, has come to the rescue with with a novel little lever people can use that, like all levers, magnifies the strength of the user to pop that latch.
Fortunately, this product is not attached to the actual child seat because the entrepreneurs do not want kids to be able to free themselves.
Unfortunately, as the three generations of women pitched the product, they really went to town violating the First Rule of Shark Tank again and again. Apparently, there seventy million grandparents in the United States! A third of all women in their 50's and 60's suffer from arthritis! There are twelve million car sears sold every year! How can you not see the market potential!
Fotunately, the entrepreneurs had other things going for them because, while the youngest generation was only two years old, the mother of the toddler was a child-passenger safety technition for her day job.
Kevin, being Kevin, asked about why they saw UnbuckleMe as being worth one million dollars. The entrepreneurs explained that in the twenty-two months they had been on the market, they had sold more than 35,000 units worth $400,000 in sales. Additionally, the UnbuckleMe... lever... is made for $1.80 per unit and sells for $14.99 which... yeah... is quite the markup. Lastly, and most unbelievably, somehow they received two patents on the lever (please see the Analysis section below). In the year so far, they have booked $200,000 in sales and expect to reach $300,000 by the end of the year.
Making A Deal
Mark is first out of the gate, complimenting the entrepreneurs and stating the UnbuckleMe is a perfect Shark Tank company. But Kevin is the first to make an offer, stating that he believes that the product will need a lot of good attention on social media to succeed. He also makes a rare admission of being wrong with his initial impression of the business. As such, he offers $100,000 in exchange for a $1 per unit royalty into perpetuity with an additional 7% in equity. He says that his marketing team will go crazy with the product and drop UnbuckleMe's cost of customer acquisition.
Guest shark Anne Wojcicki states that her son desperately wants her to make a royalty deal but the entrepreneurs state that they're leary of doing one because they're worried about losing profit should scaling eat into their margin.[1] Still, Anne teams up with Kevin and modifies his deal to drop to just $0.50 into perpetuity once they've earned back the $100,000.
The entrepreneurs still don't seem super happy with the idea and retort that their sales are up 85% over the previous year and that they're cashflow positive. Anne responds by dropping the deal to a $0.50 per unit royalty until it earns back $250,000, going away for good after, but ups the equity ask to 10%.
During this negotiation, Mark and Lori are shown to be scheming. Finally, Lori offers a straight $100,000 for 10% equity deal.
Daymond tries to get in there quickly with a $100,000 for 15% equity offer but the entrepreneurs go with Mark and Lori despite the bigger bite, no doubt reasoning that having two sharks as investors is worth the additional hit to the company value and (hopefully) that they'll earn it back through increased sales.
For what amounts to be a lever, UnbuckleMe received a surprise Shark Tank feeding frenzy!
Analysis
In case it wasn't ubundently clear by the constant use of the word "lever", UnbuckleMe is yet more proof that the patent system in the United States is just broken, perhaps beyond all repair. These entrepreneurs, good people though they seem to be, patented a lever. Not a lever on a device, mind you, a lever. This lever, as all levers do, applies leverage to exert more pressure in the output than was put into it, in this case enabling nine pounds of pressure to release a seat belt buckle.
It literally does nothing new. There is nothing novel about it that deserves a patent and yet they have both a utility and design patent. Which is not to say that it's not useful and may even be a great product. It just doesn't deserve a patent.
This patent is also undefendable, which has its own problems. Firstly, hiring a parent attorney and going through the process of getting a patent isn't free. But the idea is that it should provide some kind of protection. But, if someone else were to go out and make the exact same thing, how could this patent protect them from being copied? What novel claims will they say have been violated? What court won't laugh them out on their asses and make their "investment" in this patent worthless?
Or... a worse option exists from the other side. Imagine some patent troll gets their hands on this patent. Patents grant the holder exclusive sale of their "invention" for twenty years. What happens when a patent troll gets their hands on this and begins suing anyone and everyone who uses leverage to do anything? This will effectively function as a tax passed on to customers for those unwilling to go through the costly process of fighting this and having it declared invalid.
There are real and likely negative consequences that come from a bad patent system and that these entrepreneurs were able to get patents on one of the oldest inventions of civilization shows that they're not even trying to do the most basic screening of ideas.
Notes
- ↑ It's not hard to see an entrepreneur being worried about their margin should the cost of manufacturing be $1.50 and their wholesale price is just $6 and the royalty being asked for is $1 per unit. But, in this case, it's a bit silly. They stated their cost per unit is $1.80 and that their price direct to consumer is $14.99! There feels like a lot of room left for a $1 per unit royalty there, even if their margins might slim a bit.