S07.E06: Rent Like A Champion, HotShot, Windcatcher, Stem Center USA

[EtheltoTillie]

I think they're all variations of jewelry boxes or items that she's bought from other people in exchange for ownership of the patent. She's a massive self-promoter. I don't trust her as far as I can spit, and that's not very far.

I thought it was a little overblown the way Lori described herself as a fellow inventor . . .

[RemoteControlFreak]

If I go to Japan, I might be more comfortable eating in a Tokyo MacDonald's than sushi at a corner cookerie. By the same token, if Japanese tourists come here, or move here, they might be more comfortable grabbing a hot canned coffee than getting a styro cup, then pouring and mixing and putting a lid on it. It's what you are used to, or what you grew up with. In some countries, sheep brains are a standard food staple. So if they find sheep brains on an American menu, they'll be okay ordering it. While I, on the other hand, would not. 

Pjxf99, the poster to whom I was responding, said that HotShot might have a market in "cities with large Asian populations."  That's very different than saying that it might appeal to Japanese tourists or recent Japanese immigrants.  

 

As far as I can tell, this type of canned coffee is not popular in, say, China or India or Russia.

Edited November 2, 2015 by RemoteControlFreak

[marny]

Coffee guy would be better off licensing or selling his technology to Starbucks and letting them sell it in convenience stores, truck stops, etc. People will buy anything if it has Starbucks on it. No one drank all those ridiculous coffee drinks until Starbucks told them to. It's just a new thing for them to get people to buy.

[Jersey Guy 87]

The coffee guy having spent $6M is what scared the sharks. It appeared all 6 liked the product but got concerned about the huge amount of money already spent with no sales to back it up. I don't always understand this. In someways seems shortsighted since all the bugs are out and now all that is needed is marketing. The idea of canned coffee in theaters seemed smart.

I'm wondering about the tinny taste too.

 

What scared the sharks is he's spent 6 years developing a product that already exists in Japan.  There's doing your homework and there's taking far too long to get to market.  He's guilty of the latter.

 

 

All I have to say is I giggled throughout the Windcatcher presentation because the guy's voice sounded like he swallowed helium.  lol

 

I thought the same thing.

 

Well, given the price, I suspect most of their clientele are established people in their 30s or 40s. Ticket sales are also aimed at that demographic, I think.

 

To me, the thing to do with the college house rental thing is partner with the universities - that makes it easier to leverage their alumni networks to find potential house owners who want to rent and steer the alumni coming back for a game to those properties. That seems like a no-brainer to me, but the impression I got was the two guys were going after homeowners themselves rather than working with the schools.

 

I lived in Japan for a few years and I'm not a coffee drinker but you could also buy hot chocolate and hot tea in cans--green tea and "milk tea" which tastes like a chai latte. I loved it once I tried it but I avoided it for probably the first year because of the same concerns you all have--I thought it would taste bad. It's great--it doesn't taste funny or tinny. And walking around Tokyo on a cold day with a warm can in your hand....mmmmm....

 

Another reason it works so well in Japan is the prevalence of vending machines. People prefer using a vending machine to interacting with another human being. And they have vending machines that vend hot and cold drinks from the same machine. It's kind of mind boggling, the effort and technology they've put into vending machines.

 

Vending machines in Japan are completely out of control, you can get just about anything.  And I can see hot coffee in a can coming out of a vending machine being something that works well there.  But in the US there are far too many places you can quickly grab a cup of hot coffee.

[columbot]

The thing I liked the most from this episode was Cuban shutting down the Rent like a Champion guys at the end when they said they had to go tailgating or whatever. I'm tired of these guys making these cutesy "conditions" just before they make a deal. You know, when they say "OK, we have a deal, but on one condition (dramatic pause) you have to get us seats at a Mavs game! LOL!" It was clever at first but now every other person making a deal with Mark has to throw that in at the end. 

[RemoteControlFreak]

To me, the thing to do with the college house rental thing is partner with the universities - that makes it easier to leverage their alumni networks to find potential house owners who want to rent and steer the alumni coming back for a game to those properties. That seems like a no-brainer to me, but the impression I got was the two guys were going after homeowners themselves rather than working with the schools.

 

This won't happen. A university doesn't want to assume the risk of partnering with a short-term housing rental company. The amount of money they could get from this partnership is not worth it.  And most alumni are no longer in the college town so they don't houses  there to rent out. It's a lose-lose for a university.

Edited November 2, 2015 by RemoteControlFreak

[Tara Ariano]

In case you missed it, here's the Previously.TV post on the episode!

 

Lori Is The Worst Of All The Shark Tank Sharks
Look, Lori Grenier is probably a very nice person who pays her fair share of taxes and doesn't have a basement full of hobo bodies. That doesn't mean you should want to do a deal with her -- a lesson two Shark Tank participants fail to heed.

[slowpoked]

 

Maybe he should have bought their system or something, get the rights for the process for the states.  

As the hot drinks in cans are popular in Japan, I don't think he could have bought the rights as there are probably thousands of coffee/drink companies using the same technology. I don't think one Japanese company has it patented that he can work with them to buy the rights and operate in the US.

 

Unlike most, I don't find Lori that annoying, nor do I find her the most evil shark ;), but even I think she's the wrong partner for the two women. Sacca knew them prior to ST, and this is his space, they would have been better partnering with him even though for some more equity and his end game is to sell. I'm sure Lori does a lot of different ventures than just sell stuff on QVC, but I don't see how she adds real value to it, aside from probably knowing a lot of other rich investors to talk to. Sacca would have been more useful in operations and expanding the centers. And I usually don't mind the girlpower thing that both Barbara and Lori use when dealing with women entrepreneurs, but this is really the wrong time to use it. And I thought the two ladies would have been much smarter to see through all that. Sacca has been outspoken regarding his wife being actively involved in what he does and his desire for his two daughters to be in the tech industry, so I don't think he's going to go macho on the two of them and going to undermine them just because they're women.

 

 

The guest shark was pretty Meh to me. Seemed smart, but didn't really stand out (except for his "I'm so rich, I can wear a cowboy shirt instead of a sport coat" chic).

I think Sacca said in one interview that he wouldn't do ST if they require him to be in a suit and tie. 

[RemoteControlFreak]

I think Sacca said in one interview that he wouldn't do ST if they require him to be in a suit and tie. 

He's joined the crowd of tech executives (Steve Jobs (RIP), Mark Zuckerberg, Dean Kamen, etc.) in creating his own visual brand by wearing the same identifiable clothing every day.  Jobs was honest in saying that he did this create a brand for himself.  The others refuse to admit that as a motive.

[Jersey Guy 87]

This won't happen. A university doesn't want to assume the risk of partnering with a short-term housing rental company. The amount of money they could get from this partnership is not worth it.  And most alumni are no longer in the college town so they don't houses  there to rent out. It's a lose-lose for a university.

 

I don't know the university would assume that much risk.  Have Rent Like A Champion pay the university for them to promote company to alumni when they are looking for a place to stay when they come to the homecoming game.  My school (which is not a huge football school) sends out emails before every home and away game listing where parties are, where the "official" alumni tailgate is, etc.  Adding a line saying "if you're looking for housing contact these guys" in return for money from Rent Like a Champion doesn't expose them to liability.  And the university might have properties that they would be willing to rent out as well...

[nobodyyoucare]

The coffee guy having spent $6M is what scared the sharks. It appeared all 6 liked the product but got concerned about the huge amount of money already spent with no sales to back it up. I don't always understand this. In someways seems shortsighted since all the bugs are out and now all that is needed is marketing. The idea of canned coffee in theaters seemed smart.

I'm wondering about the tinny taste too.

The thing is he could have licensed a brand already sold in Japan. He got have gotten the distribution rights instead of coming out with his own flavors and building the fridges. For the amount of money he spent he could have done the same in a year or two and had the only rights to it in the US. 

 

He had spent $2 million and had been working on the product six years. No one seemed to care he had spent that time developing and TESTING the product so it was now all ready to launch. Then Kevin spouts his BS about the guy pushing the rock up the hill. Yeah, Kevin, so what happens when the guy gets to the top and pushed the rock over the peak? I totally think all the sharks missed the boat on that hot-coffee-in-a-can deal. It won't taste tinny, beer, soda, energy drinks, even vegetables for pete's sake, are in cans and taste fine. Kevin spouts some stupid imaginary story and all the rest jumped on it like it was the most clever ever.

 

This guy did all his homework and THEN came into the tank. I guess one is suppose to just bring an idea without patents or testing or having manufacturing lined up. Then he/she will get a deal.

 

It takes me a long time to pour and then mix in all the creamers and sugars I like in my coffee. I'd love to run in, grab a can and then take off again. Plus, being able to have a hot coffee in a movie theatre or at a game? Excellent. And regular old coffee in a styro cup gets cold. It wouldn't taste any worse than the COLD coffee in a case (ala Starbuck's) that's in convenience stores and grocery stores now.

 

I'd rather invest in that hot to-go coffee than the STEM thing, which I couldn't figure out. What was the big deal about that, anyone could set up a teaching room to demonstrate engineering marvels to girls.

 

Except as noted there were other ways to get the concept into america and not spend six years doing it. He also had no preorders, no actual sales in test markets. Hence he didn't seem serious at all. 

I lived in Japan for a few years and I'm not a coffee drinker but you could also buy hot chocolate and hot tea in cans--green tea and "milk tea" which tastes like a chai latte. I loved it once I tried it but I avoided it for probably the first year because of the same concerns you all have--I thought it would taste bad. It's great--it doesn't taste funny or tinny. And walking around Tokyo on a cold day with a warm can in your hand....mmmmm....

 

Another reason it works so well in Japan is the prevalence of vending machines. People prefer using a vending machine to interacting with another human being. And they have vending machines that vend hot and cold drinks from the same machine. It's kind of mind boggling, the effort and technology they've put into vending machines.

 

You can see them in this picture-- the red labels mean hot drinks, the blue are cold:

http://www.gettyimages.com/detail/photo/vending-machine-selling-hot-coffee-in-a-can-high-res-stock-photography/148923804

 

There are coffee shops in Tokyo (obviously, Robert!) that are always open--they have 24 hour Dennys! (just with more ramen and less pancakes) But in Japan, convenience stores are also targeted at providing real food 24/7--and the quality of the food is MUCH better than the food in convenience stores here. I wouldn't dream of touching a hot dog in a 7-11 here, but the 7-11's in Japan have the best rice balls that someone somewhere makes by hand (I'm not sure they're made in store but they aren't sitting around on a shelf packaged--although they have those too)

 

At the very least, even if you can't sell Americans on canned hot drinks, I'd think there would be a market in cities with large Asian populations.

Actually everything the Japanese vending machines do vending machines in the US and Europe did decades ago. In fact up to about 85 years ago vending machines did things like eggs, clocks, lightbulbs, pantyhose etc.

 

http://www.dailymail.co.uk/femail/article-2923545/Automatic-whisky-sodas-24-hour-POTATO-service-bizarre-vintage-vending-machines-never-knew-existed.html

 

Automats may be coming back btw. 

Edited November 3, 2015 by nobodyyoucare

[needschocolate]

I hate it when sharks make an offer and end with "but you need to decide right now."  At least when Lori did it this episode, she had made a better offer than the entrepreneur was asking for, but most of the other sharks have done this "now or never" threat too and often for offers that worse than what was asked for and/or before all the other sharks had made offers.  Just once, I would like the entrepreneur to reply, "Do you really want to go into business with someone who is so easily manipulated?  Wouldn't you rather invest in someone who considers all options?"

 

Just like I would like someone to tell Kevin, "Now really, I don't think you want to give your money to someone stupid enough to take your deal."

 

A few weeks back, Lori was talking about how technology-challenged women can be, and tonight she's selling herself as the best partner for the STEM project because she's a woman? This must be her version of the Hair Club for Men: "STEM: I'm not just a partner, I'm a customer!"

 

When Lori first started speaking to the STEM women, I fully expected her to say, "As a woman, I don't understand technology, and, for that reason, I'm out."  Maybe she invested in them because she was hoping they could teach her something.

 

The coffee guy having spent $6M is what scared the sharks. It appeared all 6 liked the product but got concerned about the huge amount of money already spent with no sales to back it up. I don't always understand this. In someways seems shortsighted since all the bugs are out and now all that is needed is marketing. The idea of canned coffee in theaters seemed smart.

 

When they first tasted the coffee and they all loved it, I thought he make get a lot of offers, but after he told them about the amount spent and the lack of actual performance, they all lost interest to the point that they didn't even ask him about how much each can costs or how much it costs to make the hotboxes or discussed calorie counts or adding cream and sugar, etc.  

 

When he walked out, he said something like, "Other people have told me I should get out, but I I am sticking with it."  Dude, people telling you that you have a bad idea doesn't make your idea a good one.  

 

He is like people that are in a bad relationship and say things like "I know my partner treats me badly and we fight all the time, but we have been together 8 years." When he mentioned having put so much time and money into it that he couldn't stop now, I was thinking, "How much money and time to do you need to spend to make it okay to stop? You can't stop after 6 years and 2 million, can you stop after 10 years and 4 million?"

 

I was happy to see Rent Like A Champion do well. I live in Ann Arbor, and was contacted by them a little over a year ago to see if I'd be interested in joining a town hall type discussion about renting my house for up to $5000 or some crazy number for game days. For me, it was an easy no. The football culture is my least favorite part about this town, and I don't want it on my property. My house is my sanctuary when hoards of drunk morons of all ages infiltrate this town in the fall. But it was a neat business, and they really worked hard to get local buy-in. So it's nice to see that they are growing.

 

Did they explain where you were supposed to live while your house was being rented/vandalized by a bunch of sports fans?  

 

I think they're all variations of jewelry boxes or items that she's bought from other people in exchange for ownership of the patent. She's a massive self-promoter. I don't trust her as far as I can spit, and that's not very far.

 

I don't trust her as far as I can drool.  

[zxy556575]

Just like I would like someone to tell Kevin, "Now really, I don't think you want to give your money to someone stupid enough to take your deal.

 

"Kevin, you're dead to me."

[NikSac]

The biggest market I could picture for that alumni rental business idea was those people who bought houses for their kid(s) to live in during college. I knew a number of them - the parents bought the house, and then their kids lived with a gazillion roommates - they (kids included mostly) all paid rent. Once the kids graduated/moved out the parents generally sold, but I can see them wanting to hang onto it as an investment or in a down market and be able to rent it out. I still didn't think it was a great idea, but I could see where it had some merit. I'm glad to hear a first-hand account that they were nice about asking!  I'm not that familiar with AirBnB but I've used VRBO (Vacation Rental By Owner) a few times and I think it's a pretty similar service. I have a hard time seeing a huge market for yet another one.

 

The thing that confused me about the coffee guy - other than the amount he had spent with NO return yet - was why he kept going on and on about how successful this was in Japan.  My very first question was "so why haven't the Japanese companies tried to market it in the US? or have they and it failed?"  As a potential consumer/home user I also couldn't get past how much counter space it would take to have this thing in your house, and I was really surprised the Sharks didn't ask more about how much it cost to run, or if there might be other uses for it. (i.e. could you throw a breakfast sandwich in there the night before and it'd be warm in the morning to go with your coffee but still at a safe food temp?).  I think the convenience store market, movie theaters, sports venues, maybe theme parks and such would be a decent market for it, but I had a very hard time picturing it as a product you'd use at home. I think there are about a half dozen coffee shops within a mile of me, too, so that'd make it even harder to justify.

[nobodyyoucare]

Found an article dated back from april on the hot shot coffee. http://www.eater.com/2015/4/2/8336609/hot-canned-coffee-future-beverage-kickstarterit has a link to the LA times article on the guy as well. the kickstarter failed to raise the 100k needed.

 

http://thisjapaneselife.org/2011/03/02/canned-coffee-in-japan-%E7%BC%B6%E3%82%B3%E3%83%BC%E3%83%92/ Coco-cola has a brand of coffee in a can sold

in Japan  .

[KaveDweller]

I don't like the name STEM Center...when I hear it I think it's some kind of stem cell research thing. Doesn't sound like...uh...whatever it actually is. I must have passed out because I'm still not sure what their business is. Something about girls and robotics? 

 

STEM is a pretty standard term in education though (I work in the industry). That's why I totally don't get their business. There's nothing unique about having an after school place that teaches kids. Anyone who makes textbooks or other products to use in schools already have STEM-related content. Or were they designing their own curriculum? 

 

I think they're all variations of jewelry boxes or items that she's bought from other people in exchange for ownership of the patent. She's a massive self-promoter. I don't trust her as far as I can spit, and that's not very far.

 

I agree, but I think many of the sharks are self-promoters and manipulative. I wouldn't trust any of them.

[nobodyyoucare]

STEM is a pretty standard term in education though (I work in the industry). That's why I totally don't get their business. There's nothing unique about having an after school place that teaches kids. Anyone who makes textbooks or other products to use in schools already have STEM-related content. Or were they designing their own curriculum? 

 

 

I agree, but I think many of the sharks are self-promoters and manipulative. I wouldn't trust any of them.

 http://stemcenterusa.com/its their own products and curriculum. One of those products was a programmable robot kit. http://news.berkeley.edu/2015/10/30/pi-bot-inventors-stem-proselytizers-dive-into-shark-tank/ 

[Pjxf99]

If it's true that there are coffee shops open 24 hours a day, then why did the HotShot guy say that he wandered Tokyo for hours trying to get a cup of hot coffee, until he stumbled upon the canned stuff?

 

And why do you think that the taste for canned coffee in Japan translates to a taste for canned coffee among Asians in America?  

 

What Saber5055 said--people look for familiar things.  Not that anyone  Asian would be genetically predisposed to like it.;-)

 

and I have no idea why he couldn't find an open place--could have been in the wrong part of town.  Tokyo is odd--some things close early and some are open longer than you would think. I lived for a while in a place with lots of businesses and not many homes--on the weekend it was dead to the world. 

Edited November 7, 2015 by Pjxf99

[RemoteControlFreak]

What Saber5055 said--people look for familiar things.  Not that anyone  Asian would be genetically predisposed to like it.;-)

Yes, people do look for familiar things. But there aren't that many people of Japanese descent in the United States and of those, how many have actually ever been to Japan and been there since this product was introduced in the mid-1970s?  I also believe, though I could be wrong, that the product is unknown anywhere else in Asia with larger immigrant populations in the US (India, China, the Philippines, etc.).  

Edited November 8, 2015 by RemoteControlFreak

[LeGrandElephant]

A few weeks back, Lori was talking about how technology-challenged women can be, and tonight she's selling herself as the best partner for the STEM project because she's a woman? This must be her version of the Hair Club for Men: "STEM: I'm not just a partner, I'm a customer!"

I wonder if they regretted choosing Lori when they saw the episode where she said women just aren't as tech savvy and would like a simple app even if it is less secure and reliable.

[LeGrandElephant]

I also thought the STEM girls would get an offer from Mark, since that building kit thing whose name escapes me (that just got an update recently) seems to be doing well. Okay.

 

Yeah, and in that episode didn't he make one condition of the deal be that they hang around with his daughter to be role models? (Hilariously saying something like "one thing I can't buy for my kids is role models" when he just had?) So I was also sort of expecting an offer from him.

 

The STEM presenters bothered me as they did not ever say what the STEM centers did. Is there a curriculum? Is it all hands on? Who develops the activities, etc. 

 

I felt like that pitch was really edited down, so maybe they did say it and it was cut.

 

I'm the kind of person who's too lazy to make a proper cup of coffee in the morning and doesn't really care about the taste. So, I make instant coffee every morning. (I also used to have one of those simple Mr. Coffee things with a timer so it would have coffee ready when I got up). Why would I want to buy this complicated cube that stays hot in my kitchen? Sounds like a waste of power, counter space, etc. I could maybe see it working for mini-mart type places, but most minimarts or gas stations  I see in the states already have one of those cheapo coffee machines where you press a button and mediocre coffee or latte comes out, and/or just an old fashioned coffee pot kept hot all day on the burner. 

 

So is the main idea that his canned coffee tastes better than those quick and cheap options we already have everywhere in the states?

Edited November 13, 2015 by LeGrandElephant

[theatremouse]

So is the main idea that his canned coffee tastes better than those quick and cheap options we already have everywhere in the states?

I think the idea was it tastes better than those, yes, but also that it's faster than waiting in line at a coffee shop because it's vending machine fast. So for someone who maybe doesn't want it every day (and thus might not keep stuff on hand at home) or even someone who doesn't want to have it/make it at home, say you're out and about, just grab it from the machine and go.

In Japan, you can get almost anything in a vending machine. So it totally makes sense that's already there and functional. I'm totally generalizing, but my impression in the US is we treat vending machines as more of a "when there's no other option and no space for any other option". They're not really viewed as a convenience; they're viewed as a last resort. (I exaggerate). But if you compare those two contexts, it makes sense why this product would be super popular in Japan, and probably not so much here. Now, if he were seeing the US vending machine revolution on the horizon and wanted to get in early, then one might see this dude as quite prescient. But I don't think that was on this guy's mind, at least not from what we saw. He seemed to just be honing in just this one specific coffee idea, and took a damn long time to get it done. If the Sharks thought this were a trend that were coming, I bet they'd have jumped on it. I know there is some of a push to move more things to vending machine territory. Best Buy has some now. So maybe the US will eventually lean more in that direction than they do now. But it didn't seem like this guy was even banking on that.

[LeGrandElephant]

I think it makes sense for vending machines in public places. I'm not sure there's a bug need for it in the states, but it makes sense and I could see using it under some circumstances.

But at home? I was mostly complaining about the idea that someone would buy his always-hot cube for their own home kitchen instead of just making instant coffee in the microwave. Even a regular coffee maker takes barely any time, and can be set on a timer to be ready and hot when you get up.

[Kel Varnsen]

Modern beverage cans have a plastic coating inside (which is it's own issue with concerns about BPA). As far as taste, the craft brewing industry, for example, is moving away from glass bottles to cans, precisely because the coating protects the flavor of the beer as well as glass, without a lot of the expense and hassle of handling and shipping glass bottles. These are people who worry a lot about taste, and they're sold on it.

As a beer nerd I can tell you that cans aren't a big deal because you are right they are lined inside which protects the flavour. The outside top of the can is not lined which is not a big deal because most of my fellow nerds would typically be pouring a beer into a glass. But if you are drinking beer or hot coffee right from the can your mouth is touching the unlined area which could result in some metallic flavours.

 

The new guy I found super annoying. The fact that he kept name dropping all the successful companies he has invested in made me actually miss the Gopro guy.

 

I did like the air bed guy and how he was able to do some pretty solid counter negotiating against the sharks. The fact that he got Lori down from 15% to 6.5% was very interesting and shows how much Sharks can squeeze certain pitchers.

 

He's joined the crowd of tech executives (Steve Jobs (RIP), Mark Zuckerberg, Dean Kamen, etc.) in creating his own visual brand by wearing the same identifiable clothing every day.  Jobs was honest in saying that he did this create a brand for himself.  The others refuse to admit that as a motive.

I thought I read somewhere Zuckerberg wore the same thing all the time because with all the decisions he has to make everyday if he wears the same thing everyday that is one less decision he has to worry about possibly stressing his brain.

[HawaiiTVGuy]

It seemed like the biggest money-making aspect of the STEM business were the toys. I am thinking that the STEM centers are a great way to improve brand recognition for the toys and allow them to increase the profit margin on their toys.

[HawaiiTVGuy]

The idea of marketing to Asian-Americans because it was a hit in Asia is actually sound, because so many Asian-Americans go back to Asia and stay for various periods of time (not only to visit relatives but with programs like JET) and become very enamored with the food and tech trends there that have not come to the US yet. Think about Boba drinks, they originated in Asia and now are a hit in the US, primarily in Asian-rich demographic areas. The smart idea would be to market something like this in Asian-heavy demographics first, and then let word-of-mouth expand the interest into other demographics. It probably will never be a nation-wide hit, but considering the population centers are along the coasts, even if it just stays along the west coast, north-east and Hawaii, there is enough of a market to provide a decent return on his investment.

[Kel Varnsen]

To be fair, STEM Center isn't really a tech company. It's a school. They don't need a guy who worked at Google and invested early in Twitter. The curriculum is already set, and while I'm sure solid it's still aimed at children.  So this isn't exactly cutting edge tech.  They need someone who understands education and franchising.

 

Which actually means they should have partnered with Kevin, really...

Even though i really dislike Lori i really agree. This isn't a program for graduate stuďents it's for elementary school kids. It's not like they are going to be researching cutting edge concepts and publishing papere. And Lori is going to be an investor not an instructor.