TekDry Before Shark Tank
Promising the idea of “first-aid for tech devices,” two entrepreneurs step into the Shark Tank room to present their idea. Adam Kochson and Craig Bineckie are from Denver Colroado, their company is TekDry, and they are seeking a $500,000 investment in exchange for 5% of their company. Next to Adam and Craig sits a toilet, which Andy says is guilty of a crime – murder. The porcelain perpretrator is the number one reason that people lose phones to water damage. It doesn’t stop there – toilets, swimming pools, and washing machines all add up to kill 22.3 million phones each year.
Craig and Adam have invented a machine that can bring phones, tablets, laptops, watches, basically anything that fits in the chamber, back to life. It’s not magic – it’s SCIENCE! The two pull up a sample video, which turns liquid into gas and can restore a phone in 30 minutes. There’s no need to disassemble or even dry anything! To put his money where his mouth is, Craig pulls his own phone out. It has no special protection, but he isn’t worried. He drops the phone in the toilet, and all the Sharks cry out in exasperation.
This is one opportunity that the sharks don’t want to flush away, they conclude. Craig slips on a glove and retrieves his phone, and explains that this is a gut wrenching moment for customers. Bring your device in as quick as you can, as your device starts rusting as soon as it gets wet. Inside the chamber are special metallic beads, which surround any device inside with a warm gentle heat. The device goes inside, then the machine then removes all the air from the chamber. The combination of that and the gentle heat turns the liquid into gas, and the phone works again.
TekDry On Shark Tank
The Sharks all seem impressed with the demonstration of the product, but Lori is not. She mentions that if you can make it to the machine, the phone may have already died. It’s like a heart attack – you have to get CPR fast. However, you want to come as quickly as possible, and the best results are from the same day that it got wet. However, TekDry has managed to save devices that have remained wet for a few days. Technically, someone could ship their phone to them. Currently, TekDry is in 82 big-box stores as well as a mail-in service.
Robert asks about the sales, and Craig explains that last year, with just a few stores, they sold only $29,000 in units with just a few stores. They focused on making the economics on a per-store basis profitable, instead of going after consumers. Then, they launched to 82 stores and only two months later, they’ve been asked to launch to 600 stores. After the balance of the stores, they are projected to hit $650,000.
The idea is that they go into a store, and the customer will not pay unless it works. The price of a phone rescue is $69, and techie Shark Mark Cuban shows disbelief. That truly is a high price to pay for recovering your phone. Barb then asks how much each unit costs to make; each unit costs $8,000 to make with each production rate. However, now they are making units for less than $3,000.
On average, the TekDry comes out to an $800 fee to rent monthly; however, Craig and Adam do receive a revenue share of every TekDry use. On average, they make about 60% of the revenue share, which is about $40 every use. In order to do this, Mark Cuban interrupts, they must have had to raise a bunch of capital. They have raised $2.2 million so far, and all of the Sharks cannot hide their growing disinterest. Before the investment round, they had a cap of $4.8 million estimated. The evaluation is so high because with an $800 monthly fee (across the new 600 stores), over a year, they are looking at $6 million in revenue, and $3.5 million in profit. But they are not doing this today.
However, if they discount everything that is being done today, their total revenue is more than $10 million for the end of the year. There is some risk on that, just in case they do not execute, and Craig and Adam are speechless. Lori then says that she sees the business as more of an online one, since devices have a three day lifespan before they truly die. Craig then explains that they do not have the ability to scale to an international market for the online market. However, Robert then says that he cannot understand why they want to stick to brick-and-mortar retail. There just is not a big market, and Robert is the first Shark out of the deal.
Lori then sums up their $10 million evaluation. She does not see how they can make it back that fast for her to be interested, so she’s the second Shark out of the deal. Barb then says that technology is the enemy – she was reading the other day that the new Apple phone is almost totally water resistant. She thinks the technology improvements can put them out of business before they can figure out the model, so she cannot put her money there now. She is the third Shark to exit the negotiations.
Mark Cuban then speaks up – he likes the idea and the concept, but they’re going to need to keep raising capital. Unless he gave them the capital, he’s going to be continually diluted (in shares). So, how does he get his money back? Craig thinks that one of the reasons they will succeed is because of both their good plan and awesome team. However, Mark says that no company ever has started a company and said that they have a horrible team. Mark is the fourth Shark out of the deal.
Kevin, Mister Wonderful himself, is the sole remaining Shark. He does seem slightly interested, as he likes the product but not the model, and does not want to argue about the evaluation. It’s too high for him, but he extends a proposal. He will loan them the $500,000 at 13% interest in exchange for 5% of the company, as an equity warrant. That’s the value he can bring as a Shark to TekDry, and he wants to be paid back in 36 months.
Craig and Adam offer Kevin a deal for more than $500,000. Kevin, however, says that they asked for $500,000 and he is the only Shark willing to give them an offer. Craig and Adam look at each other and think about it, and they accept the deal with Kevin. Craig and Adam have found themselves a partner with Kevin, and Mark stands up to go throw Kevin’s phone in the toilet. He must have confidence in the product, and Robert and Lori join Mark in teasing Kevin about his phone and his new acquisition.
TekDry after Shark Tank – Where is the business now?
TekDry is an unusual case of solely offering a service instead of a product. TekDrys are still very rare (and difficult) to find, and seem to be more of a west coast thing. However, the company is headquartered out of Denver, Colorado. Pricing for a TekDry save is priced at $39.99 for small devices (like a USB drive or car keys), $69.99 for medium devices (like a phone), and $99.99 for large devices (like laptops, tablets, or other items). This is all backed by the guarantee that your product will be shown to you, working, before any payment is necessary.
As a resident of Ohio, the only TekDrys I was able to find near me are in far away Pennsylvania, or the northern peninsula of Michigan. This seems like a harsh oversight in gaps of coverage. Typically, TekDry devices will only be found at Staples (this is all I was able to find with a 500 mile radius on the TekDry website). If you have no TekDry available near you, you can send your phone in for the price of $70. If your phone isn’t working, they will refund you the $70 and priority ship the phone back.
I was unable to find any information on if Kevin was still a controlling entity in TekDry, but my instincts point to him not being involved. Only shipping products out to Staples seems like a huge oversight, and someone like Kevin would have been able to ramp up production and awareness for the product. However, it is also entirely possible that Kevin could be playing a more conservative role as an investor, and plans to slowly scale out the TekDry to determine at what point he cannot grow the existing model any further. Either way, TekDry will likely be around for awhile to come, although Lori has a point – phone technology advancements could very well put Craig and Adam out of business.