Brian Crouch

Watched the Jan 29 episode of the Shark Tank a few day ago (ABC) via Hulu.  Very interesting invention by entrepreneur Jill Quillin: LipStix Remix. I love product ideas like this, that thwart consumption waste (apparently almost a third of every lipstick tube goes unused), and help individuals economize. It even offers users a chance for creativity: they can blend their own unique colors.

One thing bugged me during the show, though. Two of the investors openly discussed freezing out Barbara Corcoran, and made an offer for 40% of the company for $105,000 stake, which was a pretty good offer. Mrs. Quillin then left to confer with her husband; it’s a big decision and obviously she want to share the news with her partner. Well, while she was gone Daymond John asked  Barbara to get back in on it, so he could snag another 10% equity.

Now, it’s the Shark Tank, not the clownfish tank, so that’s just the way they feed, but still…

Mrs. Quillin returned, and upon hearing the offer of $105,000 for 50% instead of 40%, said: “That’s the quickest ten percent I ever lost.” She took the offer.

I do not know for sure how I would have reacted: I wasn’t there under the bright studio lights, across from investors/ potential partners who were making a solid offer. The pressure must have been immense: these people can open doors in weeks that would take years of effort to open, for most of us. 
Yet, I did wake up with one formulation of a response to the equity-grab that might have worked:  “Thank you for being so interested in this profitable idea that you’re willing to add a third partner. And I really admired your offer of 40% stake between the two of you (Kevin Harrington and John). What does make me wonder is the logic behind the equity stake change: you’ve added a partner. Your cash outlay has thereby been reduced to $35,000: your risk is that much lower. So… could you help me see how your reduction of risk translates to my losing of a higher percentage stake in my business?”

Ah, who am I kidding? I probably would have said, perhaps regretting it later: “Excuse me, you’re reducing your capital risk but you want me to sacrifice more ownership? Last time I looked, the less you risk, the less I give up. I’d be willing to give 50% for $132,000.”

Still, I think Mrs. Quillin stands to make quite a lot from this idea for the rest of her life once she gets her patents. Her presentation was top-notch and clearly impressed the whole group. If she ever pursues an exit from Lipstick Remix (I am betting a cosmetics firm could buy her patent for a princely sum) there should be a lot of company board positions waiting for her.

I hope the investment she got on the show creates a lot of jobs.