Simple Habit Before Shark Tank
Yuhna, the creator behind the meditation app Simple Habit, came from a line of hard workers. Her parents had immigrated from Korea. Her father worked in engineering while her mother works at Dunkin’ Donuts to support the whole family. Eventually, her father moved back to South Korea for a job.
Yuhna loved America so much that she decided to move back by herself at the age of 14. She studied at a boarding school in Portland Oregon. After going to college and majoring in Chinese and economics, she got a job in investment banking. Eventually, she got restless and quit her job to pursue a business venture called Locket. She sold the business a few years before starting her second company. When she sold the business, she attended Stanford business school and developed Simple Habit. Who knew that this simple meditation app would inspire a billionaire to throw water in a Shark’s face. Let’s take a look at the episode.
Simple Habit on Shark Tank
Yuhna directed all of the Sharks to open their eyes. Mark asked where his wallet was. Yuhna ignored them and told him that they just meditated. She explained that her simple habit app was designed for people with busy lifestyles that didn’t think that they had time to meditate. It took just five minutes. She explains that the user would just download and open the app, tell the app what they were up to, and then choose a mood. A five-minute meditation would start. She said that they create thousands of different meditations from all over the world. They were all done by mindfulness experts and executive coaches. Yuhna ended her presentation by asking the Sharks to help the world improve focus, reduce stress, and sleep better.
The first question that was asked was from Lori. She wanted to know whether the voice that they heard in the sample was actually in the app. Yuhna explained that it was one of the many teachers that they featured on the app. Robert wanted to know if they pay people for their voice acting, and unite admitted that they give out 20% of their net revenue to the teachers. Richard Branson, the famous guest Shark, asked her how long she had been in business. Yuhna told him that it had been less than a year.
Richard wanted to know how it’s gone so far in the first 12 months. Yuhna told him that since the launch, they had over half 1 million users for the product. She said that they’ve grown from zero dollars to $750,000 in annual recurring revenue.
Richard asked her what their sales projections were for the next year. Eunice said that they’ve been growing at 50% each quarter. They did $75,000 in sales last month. Daymond wanted to know what the cost of the app was. Yuhna told him it was free to download, but many people decided to subscribe to unlimited access to the premium content. The cost was $11.99 per month or $99 per year for the premium content. Lori wants to know how many people were doing the subscription service. Yuhna told her that there were over 5000 subscribers that use the premium content as of the filming of the episode.
Richard wanted to know if she had a competitor. Yuhna admitted that there were other meditation apps out there. She actually started the business because most of the apps out there only have one voice. Daymond asked her if the collection of teachers that she was creating was her distinction in the marketplace. Yuhna agreed that it was.
Richard asked if she was losing money, or if the company was comfortable. Yuhna admitted that they’d been losing money even now because profitability was not their main component. While the other Sharks mumbled under their breath, Richard asked when they expected to be profitable. Yuhna told him that they were expecting to make over $5 million next year. Daymond wanted to know how much money she had already raised from other investors. Yuhna let him know that they’d raised almost $2.8 million. The Sharks were shocked.
Yuhna continued, stating that the 2.8 million had been raised at a valuation of $10 million. They’d used convertible notes. Robert asked how much of the $2.8 million was left, and Yuhna told him that it was mostly in the bank. They’d only used about $500,000. Lori and Daymond have the same question. They want to know why Yuhna was on the Shark Tank asking for $600,000 when she already had the money she needed. Yuhna said that they could all add so much value.
Mark Cuban took exception to this. He wanted to know why Yuhna was valuing them the same as the other investors if she thought that they could bring more to the table. Yuhna explained that that note was from many months before when they weren’t valued as much. She said that they didn’t even have half of the team that they did now at that time. She said that the risk of Simple Habit was much lower than it had been when they had gotten the initial investments.
Mark wanted to know what exactly she thought that the Sharks could contribute. Yuhna said that Richard could help them a lot because his company embodied coolness, and that’s what she wanted for Simple Habit. Richard smiled at her but Daymond seemed less than impressed. He asked her just what she expected them to do for a meager 5% equity stake. It is well known on the Shark Tank that most of them won’t get out of bed for less than at least 10%. Yuhna explained that they plan to scale user acquisition, as well as get celebrities and influencers involved.
While Lori looked curious about the prospect, Mark told her to hold up and said that he was out. Daymond seemed to be on Mark’s side. He said that they were going to go out and pay a bunch of people for the same thing that she wanted them to do for an equity stake. Mark was worried that she didn’t need the money, so she was being a gold digger. Richard disagreed. Yuhna looked offended. Mark was not backing down.
Daymond told her that he felt like she was taking the opportunity of being on Shark Tank away from someone who wasn’t as lucky as her to have several million dollars in the bank. He found it insulting to the people that had sold their car and their home so their business before finally getting on Shark Tank. Robert told him that he was being unfair. Richard agreed, stating that if he made money off of people like Yuhna, then he had more money to give to other people in need. Daymond said that Shark Tank was for people who had no place else to go for investments.
Daymond finished, commenting that he would rather spend his time and effort with someone who actually needed it. He went out. Lori was up next. She said that she loved meditation, but she didn’t think that Simple Habit needed to be raising more money. She said that she didn’t think it was responsible for the other investors. Lori also went out. Mark explained that Lori’s comment was why he called her a gold digger. He thought that it was more about coming on the show, not really wanting a deal, but looking to get the commercial and the Shark Tank effect.
Robert said that sounded pretty personal to him. Richard Branson said that he thought Shark Tank was for all sorts of businesses. Richard said that he was speaking to his son recently, who tried meditation. He himself was unable to meditate and had actually fallen asleep while attempting it. He said that he would love to be converted into meditation because those people who do seem a lot happier. He would be reluctant to get involved at $600,000. Richard asked if he could get in at $300,000 for 10%. Mark started mocking him, stating that it wasn’t possible. Richard looked fed up and threw a full glass of water in Mark Cuban’s face.
The other Sharks laughed as water dripped from Mark Cuban’s head. He appeared to consider a moment before picking up his water and throwing it Richard Branson. Richard laughed. Things threatened to get out of control, but Robert was able to get things back on track. He said that he thought it was very disrespectful to say that she didn’t deserve to be there because she was good at raising money. He said that he would match Richard’s offer for 300,000 at 10%. That would mean she would get her full $600,000 in exchange for 20% equity.
Yuhna looked shellshocked. She said that she appreciated the offer, but she had an obligation to stay fair to the investors that gambled on her, to begin with. Richard said that she should see the value in having a shark even if it meant giving up a bit more equity. He said that he didn’t feel compelled to offer the entire $600,000, or the same value as the other investors. Yuhna asked them if they would be willing to do $10 million of valuation.
Yuhna said that they could change a lot of people’s lives, such as people going through divorce or cancer. She started crying. Lori asked her what was wrong, and Yuhna said that she was just thinking about the letters that she got from peoples whose lives were changed because of her business. She said that she understood that it was an investment opportunity but thought that they could also change people’s lives in a meaningful way. Robert said that he understood the impact, but couldn’t get into it for only 6%. He said that the two would go down to 15%.
Both Richard and Robert said that they would love to be involved with that, but Yuhna said that she couldn’t go down to 15%. Robert called her shortsighted and said that he was out. Richard said that he didn’t see her as being shortsighted. She was doing what was right for her company and her investors. He congratulated her on created an incredible company that he went out. Everyone wished her good luck and congratulations. Yuhna was emotional in her after -interview. She saw herself as being able to change a lot of people’s lives and she didn’t like that her company was just being viewed as a financial opportunity. She was hurt by the assertion that she was a gold digger.
Simple Habit Now in 2016 – The After Shark Tank Update
