Grinds before Shark Tank
Grinds are small pouches of flavored coffee that one would chew as an alternative to chewing tobacco. The idea was thought up by college students Matt Canepa and Pat Pezet from Cal Poly San Luis Obispo one night when they were doing a project for a class. Matt and Pat were seeking something to keep them awake and stumbled upon coffee grinds. They decided to chew on these to gain energy and although awkward at first, they could feel that it actually worked. Matt and Pat entered a contest after they saw a random flyer on campus with this idea and this led to a contest with a cash prize that they both won. Having played baseball, they knew there was a market for an alternative to chewing tobacco.
As Matt and Pat introduced the product to the market, many baseball players liked the idea including the San Francisco Giants manager the year they won the championship. The manager told Matt and Pat that he used Grinds during the season as an alternative to chewing tobacco. This motivated Matt and Pat to grow the idea into a business. With some help, they were able to find a manufacturer to start making their product and saw heavy promotion from media outlets such as Entrepreneur Magazine. They applied to be on Shark Tank hoping to grow the business and were invited for Season Four.
Grinds on Shark Tank
Pat and Matt entered the Tank seeking $75,000 for 10% of their company. They gave a brief background of their product Grinds, the benefits of the product with the energy kick it provides, and how it was an alternative to chewing tobacco. They also discussed how big the industry was for the product and how they had proven demand with 20 major baseball league teams using their product. Pat demonstrated how to use the product before handing out samples.
All the Sharks tried the product and Robert and Kevin immediately mentioned they could tell the product was working by getting the strong taste. Robert was also impressed when he heard one piece replaces a quarter cup of coffee. Mark was wondering how Matt and Pat came up with the idea and they gave their background story about the project night, competition, and the positive feedback from the San Francisco Giants manager. Robert was interested in the numbers and Matt mentioned last year they did $135,000 and were on track to do $300,000 by the end of this year. They also mentioned the product retails for $3.99, wholesales for $2.69, and it cost them about $1.25 to make.
Barbara was impressed with Matt and Pat, but couldn’t relate to the product so she went out. Kevin, like always, brought up the concern of bigger company’s “taking them out” if they became successful. Kevin felt they needed to grow the brand faster before bigger company’s do this so he made Matt and Pat an offer of $100,000 and he would receive $0.25 every time they sell a can. Daymond was wondering if they were looking for just capital or a strategic partner and they both mentioned they highly valued the partnership. Robert also saw merit in the product and made an offer $75,000 for 15% if Daymond would join because of his distribution connections and Daymond agreed to go in with Robert. Matt and Pat wanted to hear from Mark and he mentioned that he saw tobacco replacement product as a medium sized industry that was niche. Mark also felt this investment would take up too much of his time so he went out as well.
Matt and Pat countered Robert and Daymond with $100,000 for the 15%. Robert asked if they would give up more equity, but they declined. Robert declined their new offer because he felt the value he and Daymond brought would be worth much more in the long run than the additional $25,000. Kevin tried to sell the benefits of his deal of not giving up any equity. After a little hesitation, Matt and Pat accepted Daymond and Robert’s offer and left the Tank very happy.
What Happened To Grinds after Shark Tank – 2018 Update
Although Robert and Daymond seemed very interested during the pitch, it appears the deal between them and Grinds did not close as Robert does not have Grinds listed as one of his investments on his website and Daymond has not brought the company up in many of his interviews and posts. The likely reason for this would be because Grinds was still in its startup stage when Robert and Daymond invested with very little distribution. As shown with other investments that do not close, Robert is not a big fan of making deals with start-up company’s likely because of the high risk and Daymond doesn’t do many deals where he would get less than 10% equity likely because it would not be worth the time.
Despite the presence of a deal not closing, Grinds has continued to grow since airing on Shark Tank. The Shark Tank effect helped Grinds gain tons of exposure and customers after the show aired and they continue to get this exposure through constant reruns. Grinds sells their product through their website and other online outlets such as Amazon. Matt and Pat have introduced new flavors and have been given positive feedback from others as well such as MMQB. They are also heavily active on their media outlets with other over 23,000 likes on Facebook indicating that Matt and Pat are still committed to growing Grinds into a major brand.
Where can I buy Grinds From Shark Tank?
Grinds are currently available on Amazon, click here to visit the product page.
What entrepreneurs can learn
With heavy research, future entrepreneurs can take away numerous facts from deals that do not close that they can use to their advantage including what the Sharks like and do not like to invest in. Robert is someone who likes to invest in proven concepts with distribution even if he would get little equity in the deal while Daymond doesn’t mind what stage of growth the product is in although he always wants a high equity stake. As seen in the pitch, Mark likes investing a large amount of cash into businesses that he sees heavily expanding for a major return in the long-run, both of which lacked in Grinds. With this knowledge, entrepreneurs should know what stage their business is in and aim for specific Sharks that match what they offer and what they need. For example, a company in its startup stage would benefit from someone like Daymond, someone who is seeking tech help would benefit from Mark or Robert, and someone who is seeking heavy distribution would benefit from Lori. Six seasons of Shark Tank has shown that entrepreneurs have an idea of what questions they will be asked and what they need to know about their business, but looking into extra details like these will also be a major benefit and may be the deciding factor on whether they get a deal that will likely close.