Mary Beth Lugo runs a business selling balance bikes for children. Will she ride away with a deal on
Shark Tank KaZAM Update
- Entrepreneur: Mary Beth Lugo
- Business: Balance bikes
- Ask: $300,000 for 20% equity
- Result: $300,000 for 32% equity
- Sharks: Mark Cuban and Barbara Corcoran
Mary Beth introduced her product and company, KaZAM, as a better alternative for children learning to ride a bike. A skill difficult for most kids to learn, a balance bike offers a nice option for mastering the art of bike riding.
The ONLY balance bike with an easy step-in patented FOOTREST design. KaZAM's Footrest is in the natural place, where feet would be if coasting on a pedaled bike, helping to find their center of gravity.
Daymond John asked how much a KaZAM bicycle cost to make, and how much they were selling for. Mary Beth shared that they cost $28.25 to make, wholesaled for $45, and retailed for $99.95.
Kevin O’Leary was skeptical, telling Mary Beth that a set of training wheels only cost $19.99. Why should parents pay a premium to teach their kids how to ride a bike, when the old way has worked for generations. He argued that it’s cheaper too! Mary Beth countered that it was a safer and more effective way of teaching children to ride.
Barbara Corcoran asked how she came up with the idea. Mary Beth shared that it was a popular idea and product in Europe. She had a European neighbor who introduced the concept to her and, unable to find a good one in America, Mary Beth decided to make her own.
Daymond asked why the European manufacturers, if it’s such a big hit, aren’t selling the product in America. Mary Beth said that there were European companies in the space already. KaZAM stood out however, as it used a patented frame design to make it unique and better than the competitors.
Mark Cuban asked about sales. MaryBeth shared that she had sold $1.4 million in just under three years. It grossed $611,000 in 2011, and $384,000 in 2010. At this rate, Mary Beth was projecting to finish the year at $1.5 million gross sales. Robert Herjavec asked how much of that would be profit. Mary Beth said 36% to 37%.
Kevin wasn’t pleased. He asked what it might take to get that figure higher, perhaps in the 45% to 47% range. Mary Beth said she would need to place bigger orders to drive the cost down. In response to her answer, Kevin went out.
Mary Beth urged the sharks to think bigger than KaZAM being just a toy for home use. She reminded them it could be used at preschools, daycares, and for occupational therapy too.
Mark wanted to know what Mary Beth would use the investment for. She said there was another product in the pipeline- two-wheel step-up bike called the KaZAM Graduate. In addition to this, they had considered coming out with a pedaled bike as well.
At this point, Robert chimed in. He said he wouldn’t personally buy a KaZAM, so for that reason he was out. Daymond wasn’t sure how soon he’d see a return on his investment, so he too was out.
Barbara had her issues as well. She was worried that the competition was not only tricycles, but the training wheel market as well. More importantly, Barbara felt Mary Beth was too mild-mannered to get the job done.
Mark said he would offer $300,000 for 40% equity, and he would contribute half of the investment. This would be contingent however on Mary Beth convincing Barbara to come in on the deal. To make it more interesting, he gave her only twenty-four seconds to make her pitch.
Mary Beth assured Barbara that her life was KaZAM, and she wouldn’t quit until they were the industry leader. Barbara was sold, and Mark asked if they had a deal. Mary Beth wasn’t ready to accept though, and said 40% equity was too high.
Mark told her it would be worth it, but Mary Beth insisted that the valuation she came with was a fair one. Mark asked if she had a counter in mind, and Mary Beth asked if they would accept 32% equity. Barbara said she was okay with that, and Mark agreed. He asked one more time just to confirm, and Mary Beth happily accepted the deal for $300,000 in exchange for 32% equity.
Did Mary Beth’s vision come to light? Did KaZAM become the best-selling balance bike of all time? Keep reading our KaZAM update to find out!
Research for our KaZAM update revealed great news! An update segment during Season 5 of
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Andrew Smith is the founder and owner of Shark Tank Recap. He is a longtime Shark Tank fan that has been watching it for years and has seen every episode multiple times. His friends know him as the Shark Tank expert, because he can answer any question about the show! His favorite Shark Tank products are Bertello's pizza oven and Bug Bite Thing!