Third Wave Water Before Shark Tank
The founders of the Third Wave Water company, Charles Nick and Taylor Minor, had already created a ripple of controversy in the World of specialty coffee brewing, by the time they came to the Shark Tank in October 2017. The Cedarville, Ohio based entrepreneurs conceived the idea for Third Wave Water in July 2016, when Charles mentioned that he would love to create a concentrated version of Taylor’s improved water blend, and between them they invented the idea of dehydrated water.
Water makes up 98% of a cup of coffee, and it’s an accepted fact among coffee professionals that the quality, and type of water used, can drastically change the taste. Large coffee chains use expensive, and complex, filtration systems to achieve the right balance of minerals in their water, but what about the home-based customer who doesn’t have that kind of equipment? Charles owns The Wright Cup, a roaster subscription service based in Ohio, and Taylor owns Telemetry Coffee Roasters in Cedarville, and they wanted to give both their businesses a way to help customers stop ruining their premium coffee products with terrible water from home, and Third Wave Water concentrate was the answer.
By October 2016 the pair had launched their Third Wave Water concentrate, and by November they were selling it online. In December that year Third Wave Water made it to the finals of the Coffee Blog Sprudge’s New Product Awards, but the following month TheBlaze wrote a less than complimentary piece about their innovation entitled ‘Hipsters Manage to ruin coffee’.
The very next day Sprudge went on the offensive against TheBlaze with their rebuttal entitled ‘Why do food media elites hate Third Wave Water?’, in which they defended the product and took exception to the pejorative attitude to hipsters, which only goes to show, people in the specialty coffee industry really do take the whole thing seriously. This isn’t just a drink, this is a crusade for better coffee, and Sprudge were clearly of the opinion that Third Wave Water was an innovative product perfect for those who were into the highest quality of coffee possible.
It was a perfect storm in a coffee cup, but the publicity certainly got people talking about Third Wave Water. After a successful Kickstarter campaign in January 2017, followed by an appearance on the AMC Network’s Newswatch show a couple of months later, Third Wave Water won several brewing contests, including a fourth place at the World Brewers Cup in July, and in October they finally got to pitch Third Wave Water to an audience of sharks, with another 5 million viewers listening in.
Third Wave Water On Shark Tank
After entering the Shark Tank and introducing themselves, Charles and Taylor announced they were looking for a $100,000 investment in exchange for a 10% stake in the Third Wave Water company. They explained to the Sharks about the 98% of water in coffee, and how the wrong type of water could adversely affect the taste. They revealed the small tube of Third Wave Water, which could be mixed with a gallon of distilled water to make the perfect type of water for a really amazing cup of coffee. The pair finished off their pitch by proudly telling the Sharks that they had sold Third Wave Water in all 50 states and in over 50 countries.
When improved taste is the primary advantage of a product, talking never convinces the sharks, but a taste test of samples was soon arranged, with each shark given a cup of coffee made from ordinary Los Angeles tap water, and another made using only the perfected blend of Third Wave Water. After comparing the cups Lori looked impressed, declaring that the Third Wave coffee was far smoother, and Kevin O’Leary agreed, it was far better than the LA tap water coffee. All the sharks seemed in general agreement that The Third Wave Water was improving the taste, and Robert asked what the product was actually made from.
Taylor began explaining about how customers would spoil the taste of his great coffee with their own tap water, but the problem for the sharks was that one tiny packet of Third Wave Water had to be used on a gallon of water, and it had to be pure distilled water. Kevin remarked that he knew from his wine business that distilled water wasn’t that easy to buy anymore, and Mark Cuban asked why Third Wave couldn’t just be used with tap water. Taylor explained that tap water could contain all sorts of minerals, depending on rainfall and the type of rock an area was on. Third Wave Water mixed with pure distilled water was the only way to get a perfect blend of delicately balanced minerals,
The sharks were looking a little dubious about the complexity of it all, but Mark Cuban moved the subject on to the numbers. Taylor explained that the company had 1,200 customers across all 50 states. He revealed that sales had increased from $4,000 in the first year, to $66,000 the previous year. Sales for the current year were estimated to be $120,000, but for at least one of the sharks, Third Wave Water wasn’t creating any ripples of interest.
Lori Greiner had originally thought that the small packet of Third Wave Water was something she could just pour in her cup of coffee to make it taste great, but the complexity of using it with a gallon of distilled water made the whole idea seem overly complicated. She thought the overall concept was a complex solution to something that wasn’t really a problem, and with that Lori was out. Robert Herjavec was thinking along the same lines, he admitted the coffee tasted great, but his idea of fancy coffee was using bottled water to make it. The whole process was too convoluted, and Robert joined Lori in dropping out of the negotiations.
Kevin O’Leary really had loved the coffee, he was enthusiastic about that at least, and he also admitted there was a market for Third Wave Water, but he didn’t know how big it would be. He got back to the subject of wine, to complaints from Barbara, who interrupted him with ‘He’s always talking about wine, I need a cup of coffee to stay awake’. Kevin insisted that Barbara was about to learn something, following that up with ‘You’re about to learn how to listen from the master’, which resulted in a laugh from Mark Cuban, but by then Barbara had given up, and just urged Kevin to get on with it.
Having won the brief shark fight, and satisfied that Barbara wasn’t going to interrupt him again, Kevin explained to the Third Wave Water duo that 97% of wine sales were on bottles costing less than $12, and he believed that the 3% of sales for premium wine would be reflected in the sales for a product like Third Wave Water. And after once again complimenting Charles and Taylor on their excellent coffee, he explained that the product would be difficult to market to the other 97% of consumers who didn’t buy those premium items, and with that Kevin was out too.
With three sharks gone in quick succession, Taylor attempted some damage control, quickly pointing out that the profit margins on Third Wave Water were over 95%, but the problem wasn’t the profit margin, it was the size of the market, at least that’s how Mark Cuban saw it. The entrepreneurs had proved the product worked, but Mark thought developing a business based on such a niche product would be a huge amount of work, and for that reason he dropped out too, leaving only Barbara Corcoran involved in the negotiations.
Barbara believed that there was a lot wrong with the Third Wave Water concept. The complexity of using a gallon of distilled water was asking a lot of customers, but she also admitted that there was something about Taylor and Charles, and the product, that she liked. She surprised everyone by making an offer of the requested $100,000 investment, but in exchange for 33.3% of the business, with a royalty of $1 per unit sold until the investment had been repaid. Taylor asked Barbara what she could do to help the company, and she explained that she knew how to market Third Wave, she asserted there would be ‘Tons’ of repeat orders, and she would help with the online sales, where she believed the market for the product was.
After a brief consultation with his partner, Taylor made a counter-offer, offering Barbara 25% of the business, and the $1 royalty, in exchange for the $100,000 investment. Barbara quickly accepted the revised deal, and the Third Wave Water entrepreneurs left the Shark Tank ‘Super Happy’ at having picked up a new shark partner, but things didn’t work out in the long run.
Third Wave Water Now in 2018 – The After Shark Tank Update
A sizeable number of Shark Tank offers made during filming do not result in eventual business deals, and the deal between Barbara Corcoran and Third Wave Water was one of those that didn’t come to anything when negotiations behind closed doors finally took place. In an interview with Barista Magazine, on December 22nd 2017, Taylor and Charles revealed that the deal never materialized due to ‘Some roadblocks in negotiations’, with no further deals given about exactly what problems stopped the deal, but the Third Wave Water duo also revealed that the publicity from the show more than made up for the lack of a partnership with Barbara.
In the first year of business, Third Wave Water achieved sales of 1,600 units, but following their Shark Tank appearance, the company notched up over 10,000 orders in just two weeks, bringing in three times the investment that they had been hoping to gain from Barbara. Taylor admitted that the kind of publicity Shark Tank brought to the company would be impossible to achieve with traditional advertising, and the exposure also saw Third Wave team up with new partners such as the design-oriented brand, ‘Department of Brewology’, which is devoted to the ‘Art & Science of Specialty Coffee’.
There are many people who take specialty coffee extremely seriously, and if Kevin O’Leary’s estimation is correct, that only 3% of people are interested in the high-end products of the specialty coffee business, that would still result in a potential 150,000 new customers, from the 5 million viewers who saw Third Wave Water on Shark Tank. Charles Nick and Taylor Minor are not only enjoying greatly increased sales figures after their appearance on the show, they’re also full of other new ideas about ways to bring specialty coffee to new customers.
They are now working on a powder that modulates the pH value of coffee, thereby making it less acidic and easier on the stomach. In addition, they have teamed up with the University of Dayton, Ohio to design a commercial filtration system, an innovation that will be able to filter water differently for different types of coffee. For the Third Wave Water business they are working on developing more partnerships with wholesalers and subscription services, but the eventual aim is to make specialty coffee more successful generally, by developing equipment that helps those in the industry create better coffee.
Finally, when your only aim is to make the World a better place through the production of superior coffee, it’s nice to get some recognition for your efforts, and Charles and Taylor did, when the village council of Cedarville announced that October 8th, the date of their Shark Tank appearance, would from now on be known as ‘Third Wave Water Day’, and I’ll raise my cup of, admittedly slightly bitter, coffee to them for that.