Velocity Signs on Shark Tank
Scott Adams and Josh Faherty have just entered into the Shark Tank. The two have traveled from Sacramento, California, to seek a $225,000 investment in exchange for 15% equity in their business. One day, when Scott was working in Los Angeles and driving to a meeting with a client, it was 110 degrees outside. He looked over on the corner and saw a poor guy waving a sign around and he was dripping in sweat – he was resting in a shaded area with the sign pointed down. Scott felt bad for the guy and thought he was going to die of heat exhaustion, and his second thought was “there has to be a better way.” That was when the two of them launched Velocity Signs, which is a portable, rechargeable, and interchangeable self-standing sign device. The signs all wiggle back and forth like animatronics, calling for the attention of anyone passing by to look. With the help of the sharks, Scott and Josh are going to “shake their way” into business all over the world, and put some velocity back in the American economy.
Mark immediately mentions the fact that the signs are like an arcade, and asks for a BB gun – the signs wiggle back and forth, the gizmos audibly whirring as they bounce around. All of the Sharks are in love with the display, as each Shark has their own little display set up with one of the products that they have invested in through Shark Tank. Barbara asks about the weight of each unit, as there is just a stand; Josh says that surprisingly, they are 165 pounds so it can be really hard to tip over. Each unit starts from $1899 all the way to $2850. Robert asks about sales, and so far, the two have sold only 125 over the last 12 months. Every Shark seems surprised, and even Kevin audibly mulls over the low number of sales. However, this has grossed them $157,000 over 12 months – a typical sign will cost around $1,000 to produce. Lori asks how effective the signs are in attracting business, and Scott says there is around a 15% return on investment for those who purchase a Velocity Sign. So far, their clients include Little Caesar’s who has purchased a bulk of the orders, and a variety of smaller shops.
Robert then asks a decent question – how long would he have to pay a student to spin a sign before he could purchase one of the signs? Scott says that the best analogy is that the machines run non-stop, so they are getting full use out of the machines whereas human sign spinners require breaks and get tired and can be difficult to manage (Kevin jokes here that he “hates those humans.”) Lori does mention that she always feels sorry for the sign spinners, but Robert insists that the sign spinners have a job – they are actually out doing something with themselves. However, Scott says that they are creating jobs – the employee that would be waving the sign can come inside and do more productive work for the business, but the sign’s uniqueness will also increase sales by up to 15%. That can be up to $90,000 in new revenue that can be saved, which may cause the employee to be displaced, but Scott reaffirms that the employee can be hired into other positions that are more appropriate and demanding than simply spinning a sign. Robert mentions that Scott is a good salesman, and asks what does Velocity Signs intend to do with the money. Scott says with the investment, they will sell 1,200 units over the next 8 months, hire 8 sales reps, and 4 administrative staff; Robert says that while that is clever, he invested in a billboard company many years ago that deal with electronic signage, and it was a horrible, miserable failure. The one thing that Robert found is that the consumer gets very old very quickly with the movement, and the sign location needs to be changed daily. Robert says that he is not a big fan of this business, and Robert is out of the deal. In response, Scott looks to Josh, who then proceeds to shut down Robert’s Velocity Sign, causing Robert to cry out “Noo!” while all the other Sharks have a laugh.
Kevin mentions that the duo have never told the Sharks how much they think, of their own forecast, without the investment from the Sharks, they intend to make within the next operating fiscal year. Scott says that in conservative numbers, they should bring in $2.5 million dollars, and bring in $500,000 in sales. However, Kevin says that he is more interested in seeing what the sales are so he can see what the real number would be; his expectation is that it would be a lot less than the two of them think. Kevin says he does not know and isn’t sure, so he is not interested and exits the deal.
Mark says that while he likes the business, the largest problem is that once the customer has one, they don’t need a second one – there is no room for attaching additional units. Mark is also out, and Robert calls for Scott to immediately shut down Mark’s Velocity Sign.
Only Lori and Barb are left, and Barb says that she was thinking of the businesses and franchises she knows off the top of her head – she says that she finds it to be a natural audience for Velocity Signs. All they have to do is simply slap on an Open House sign and pull the Velocity Sign out of the back of a truck, and that’s it – the Velocity Sign saves itself money quickly. However, even with the real estate franchisees or individual brokers, a full 165 pounds is a lot to move – even the Velocity Sign, which is intended to eliminate work, is calling for more work to be created just by moving the sign.
A team of men would be required to properly move the Velocity Sign, and while Barb continues on, Scott mentions that they actually have a new product being developed which is a similar version of a Velocity Sign but more appropriate for a real-estate agent. Just like the signs they brought with them, the Velocity real estate agent would wiggle back and forth and attract attention – the real estate agent has a smaller battery and is smaller, and Mark mentions that the real estate agent portion is the better product. Had they brought it up earlier, they might not have exited the deal. However, Barbara says that while they have the research for the product in the works, they ultimately do not have a prototype of the product for her to look at, so Barb is out of the deal as well.
Lori is the last Shark remaining, and Barb pleads for Scott to instead turn off Lori since Lori’s Velocity Sign looks so much prettier than her own. Barb’s Velocity Sign is shut off while Lori’s is the last one to remain wiggling around, and Lori begins to speak. She likes the idea and thinks it is an extremely smart, new way to draw attention to brick-and-mortar retail stores that are hurting and need the attention. She also likes that Velocity Signs are helping the smaller businesses retain their jobs and the store, so she intends to make an offer. However, Lori offers $225,000 in exchange for 30% of their business, halving their evaluation. However, Lori believes that she can get the name out there and that every franchise needs that. Kevin mentions that if Scott and Josh take that deal, he will enter in the deal with Lori – he likes the valuation, if Lori will have him come in on that deal. In addition, Mark speaks up, saying that he even wants to come in as a third – this is nearly unprecedented for Shark Tank.
The show cuts away to a cliff-hanging commercial, and as we return, Scott and Josh clarify – each Shark would receive a 10% cut of the investment, dividing the investment into an even thirds. However, Lori says that although she made the offer and begins to protest, Mark says that if Lori doesn’t like the deal, him and Kevin would go in together without Lori and exclude her from the deal. At this point, Scott begins to turn on several of the Sharks as the Sharks begin to work out the details – Barbara and Lori end up going in together with a $225,000 investment at 25%. Kevin, Robert, and Mark jump back in and group up together, offering a $225,000 investment at a 30% equity rate, making it the males versus the females. Josh asks if the three guys want to haggle down to 25%, but Mark says that the difference between the guys and girls is that Mark actually owns businesses that he can place orders for – Lori complains, but Mark challenges her to name a business she owns that she can place an order with. She cannot. Barb speaks up, saying that she is one of the most influential real estate brokers in the country and one of the most influential – she can be a frontman and ensure that every real estate broker considers buying a Velocity Sign.
In the end, despite the chaotic scene of the bidding war, Josh and Scott accept Mark, Kevin, and Robert’s deal for $225,000 at an exchange of 30% equity, giving each Shark 10% equity at a $75,000 investment.
Velocity Signs Now in 2018 – Shark Tank Update
With the investment from the three male sharks and the simple appearance on Shark Tank, Velocity Signs is doing quite well for itself. Sales have been peaking month after month thanks to the appearance on Shark Tank, and Josh and Scott have moved forward with adopting the Mannequin Real Estate Model. Velocity signs can be custom ordered, and the new Mannequin Standard Model is available for the lower price of $1,449. Each Velocity Sign purchase comes with a Velocity Signs Machine, which moves in a circular motion, a custom-built motor, a 12-volt rechargeable battery with 14 hours of runtime (and a 1 year hardware warranty) all contained in a pad-locked lightweight (75 lbs) box. Velocity Signs seems to be doing quite well for itself thanks to the investment of Mark, Kevin, and Robert.