Coolbox Before Shark Tank
Before appearing on Shark Tank, CoolBox was able to get preorders worth almost $400,000. They were also in talks with large home improvement companies such as Lowe’s and Black & Decker. Would this be enough to impress the Sharks? Let’s take a look.
Coolbox on Shark Tank
Jason Neubauer and Chris Stoikos walked out into the Shark Tank and onto the stage. They gave each other a fist bump before introducing themselves to the Sharks. Jason told the sharks that they were seeking $500,000 in exchange for a 10% Equity stake in their company, CoolBox. Jason explained that the toolbox that’s been around for hundreds of years, but no one has been able to improve upon it in any significant way. Chris asked the Sharks why they wouldn’t want a smarter tool box since they already had a smartphone, smart TVs, as well as smarter computers. Jason explains that the CoolBox was the world’s first smart tool box. It had some features which including Accord which allows you to plug it into a socket. The launches were very rugged, and the CoolBox included a dry erase board on top where you could take notes. Jason explained that this was dead space on every other tool box.
The CoolBox also included a light that popped out and lets you put it wherever you’d like. The box also contained an iPad stand and an iPhone stand so that you had your technology available while you were working. The top of the Coolbox also had an iPad stand so that you could use it while the box was closed. Jason explained that the upper part of the toolbox was also magnetic, so you could put all of your small metal Parts on it while you are working so that you don’t lose them. The CoolBox also had two USB ports which allow you to charge your devices as well as a bottle opener. Jason said that their favorite part of the whole box was the wireless Bluetooth speakers that allowed you to listen to music while on the job site.
Robert seemed impressed. He told them that they appear to have everything in there. Chris ended their presentation by asking which one of the Sharks wanted to lock up and investment with the CoolBox, and make them a household name. Robert as the pair what they were selling the toolbox for, and what they paid to make it. Jason let him know that their cost to make it was $110, which they were looking to get down by mass-producing them. Jason said that the box was on pre-sale for $190, but they were planning on retailing them for $249. Daymond to ask how they did in the pre-sale, and Chris told him that they did a little over $370,000.03. Lori wants to know if they had shipped out any orders yet. Jason told her that they just got back from China 2 days ago where he was visiting the factories. Their Chinese factories were just starting to gather the materials to manufacture them.
Robert said that he loved the idea of the Coolbox, but their cost was very high, and their margins weren’t very good yet. His primary concern was that they were valuing the business at 5 million dollars today when they hadn’t even started selling in retail stores yet. Chris told him that they had an 8000 unit order from Lowe’s, but they wanted exclusivity period Laurie asked if it was a firm sale. Jason told her that they just had the intent to buy. Kevin ask them what that meant, and Jason said that they said that they would be able to ship to the store by the end of September. Louis stated that they wanted to do a Q4 exclusive with CoolBox Kevin asked them why they didn’t ask for a purchase order at that moment. Jason insisted that Lowes did not give purchase orders more than two months out.
Kevin wanted to know when exactly they were going to give him a purchase order. Chris said that they were about 30 days away from actually doing the purchase order with Lowes. Kevin Durant how long was one of exclusivity, and Jason told him that it was just in the fourth quarter of the year. Chris mentioned that they had extreme interest from Stanley Black & Decker. He told the sharks that the licensing opportunity would be huge for them. Daymond looked skeptical. Mark said that it was obviously a capital intensive business, and I asked how much money they had already put in for it. Jason stated that they hadn’t tried to raise funds at all, but they put in $50,000 of their money to bootstrap it. That’s why they were on the Shark Tank. They were no longer able to bootstrap it, but they need the original capital to start producing orders. They wanted to be able to go into Lowe’s, and other stores, and say that they would be able to deliver items within 60 days.
Lori asked them if they had a patent on the toolbox. Chris stated that they had a provisional license at the moment. Robert wants to know what exactly the patent was on. Jason explains that it was a Utility Patent on all of the different features available in the toolbox. Robert asked if other tool box makers were barred from putting Bluetooth speakers on tool boxes. Jason explained that it was the combination of all the features together. Robert asked how they were planning on licensing it to Black & Decker a large company like that would be able to rip it off very quickly. Jason was turning red. He explained that he was just in Israel visiting their head office. He said that since they were the first one to the smart tool box Market, they would be able to create and shift and move with newer Innovations.
Daymond had his head in his hands, and he looked exasperated. Lori asked how much money they sunk into making the CoolBox overseas. Jason let her know that the total would be $250,000. Mark asked how they were going to pay for the inventory to deliver the orders that they currently have. Jason explained that that’s why they didn’t give Lowes a definitive answer because they didn’t want to bite off more than they could chew. Mark demanded to know how many units they had to ship for the money that they already need. Jason said that they had to ship 2200 units. Mark asked how they were planning on paying for the inventory for the initial run. Jason finally admitted that they had a round of investors for 1 million dollars. Chris said that they were going to do the million dollar investment of 4 million dollar valuation. Kevin stated that they needed $250,000 just to fulfill their obligation for their initial orders. Jason said that that was correct.
Daymond to ask if they had contacts at Black & Decker because he was interested in doing the licensing with them. He continued, saying that although they believed they were worth 5 million dollars, Daymond didn’t think that that was the case. He would have to bring them down to a realistic number. Daymond was willing to do the $500,000 in exchange for 25% Equity, but he wanted to license it. Chris looked hesitant. He thanked Daymond for his offer but asked if any of the other sharks wanted to make one. Robert told them that he loved the idea of the goal box when they first started doing their presentation. Robert said that their price point was to have since standard tool boxes cost a maximum of $35. He wasn’t sure that people cared about having a smart toolbox, even if it did have extra functionality. Chris said that they weren’t competing with the conventional tool boxes. Robert asked him if Blue Collar working man would spend $250 on a toolbox when they could just pick one up at Home Depot for $35.
Jason said that people regularly spent $200 just on the speaker’s alone. He insisted that all of the items together cost upwards of $400 if you buy them separately. He insisted that all of the construction workers already had the items in their toolkit when they go to the job site. CoolBox was just rolling the features altogether. Robert said that his father had been a blue-collar worker, and he just wanted a regular toolbox without all the bells and whistles. Robert stated that he saw too many challenges to be able to invest. He went out.
Kevin said that he was worried that the pair thought that the CoolBox would be fruitful in retail when there are no actual retail sales to back that up. Kevin let them know that to be successful in Big Box retail; they would have to have at least four units available at all times. One of them would have to be a display model, while the other 2 to 3 were available to sell. He said that it would tie up a ton of cash. Daymond told Kevin that that’s why he would make an offer, but at a licensing deal. Kevin said that he didn’t think that the licensee would be willing to take that risk either. He thought it was too capital-intensive. Daymond stated that a licensee like Black & Decker would already have the space to do it. Mark pointed out that company like Black & Decker would want complete patent protection, and he didn’t see how it would be able to be patented.
Jason asks Kevin how many times that he had been told that what he was doing was downright risky, and he would just go on his own and do it anyway. Kevin said that he had experience with businesses that were capital-intensive. He has learned that the more successful the business was, the more Capital it tied up. He said that the risk was as you were growing, and getting more successful, the more Capital you were tying up. It was risky because another competitor could come out with the cheaper box with similar features, but would make the CoolBox inventory less valuable. Kevin Went Out.
Chris looked upset and said that they were looking for a partner. Robert pointed out the Daymond had already made them an offer. Jason stated that they hadn’t heard from everybody yet. Daymond noted that the more sharks that go out, the more valuable he becomes. That could increase the amount of equity that he was asking for. Mark spoke up, saying that he rarely discusses valuation. He stated that they were at a precarious point which concerned him. He said that the worst thing that could happen to a startup company would be to make a commitment that they could not fulfill. Mark recognize that they are going out to try and raise the money, but they were desperate. They were not valuing their business like they were desperate.
Chris said that this was the first place that they started trying to look for investors. Jason told Mark that he doesn’t always invest in the product, but also in the people. He said that the CoolBox was not the best invention in the entire world, but they did believe in it and they thought that it’s a product that would be able to sell. Jason continued, saying that they’d invested six months worth of Blood Sweat and Tears into the CoolBox. He believed that they could make any investor happy, and Jason asked Mark what it would take to get him involved. Mark said that he didn’t think that there is anything protectable about the toolbox, and he went out. Daymond asked them if they wanted to gamble on Lori going out, and Daymond’s equity going up. Jason asked Daymond to tighten up his offer. Lori said that she was all over the hardware space. She would give them the $500,000 in exchange for 30% Equity, but it wasn’t contingent on a licensing deal. She did want to be sure that Lowe’s was going to give them a purchase order. Daymond recanted and went out. Jason countered by saying that he would accept the offer for 20% equity. Lori offered them $500,000 as a line of credit at 5% interest, and she also wanted 15% stake in the company. They accepted. Let’s see how they do.
Coolbox Now in 2018 – The After Shark Tank Update
Since appearing on Shark Tank, Coolbox has gotten funded in a successful IndieGoGo campaign. They are planning to ship out their first orders in February 2017. It is possible that their deal with Lori did not go through as their social media pages have been suspiciously blank since the airing of their episode in April.