Transcription
Hi, my room. I'm Darwin, I'm Sue, and we're the King sisters from San Francisco, California. They smell really good; it's French lavender. Wow, that's amazing. The three of us were born and raised in Korea, and when we were teenagers, we immigrated to America. I went to Stanford Business School, and I went to Harvard Business School, and I went to Parsons, full of design. Our dad sacrificed so much to send three of us to school in the U.S. Financially, he had to work all the time, and the fact that he had to just let his daughters go at such a young age, I think that was really hard for him. How was your day? It takes me—but he's not asking me on a second date. Yeah.
One day at lunch, we were discussing a common problem and came up with a solution in the tech space that could really work. We quit our high-paid jobs and moved to San Francisco, and we just started our own business. Let's talk about our upcoming marketing initiative. We believe we have something very big on our hands, something that can potentially change lives. Without the money from the Sharks, we won't be able to execute on our growth plan, not to mention disappoint our family after all that they have sacrificed.
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Hello, my name is Arun, Taiwan, and Sue, and we're the King sisters from San Francisco. Today, we're raising five hundred thousand dollars in exchange for five percent equity in our company. Coffee Meets Bagel is here to profoundly change how people discover and fall in love. Sharks, I know what you're thinking: it's another dating site. We all know online dating sucks. Why? Because it treats people as a piece of information you search for from a huge database. People want to go back to a time of happenstance, where you just stumble upon someone special, maybe through a friend. That's why we created Coffee Meets Bagel. We took the proven concept of daily flash sale sites, immersed it with social networking elements, to create the highest quality dating service for singles. Here is how it works: every day at noon, we create one perfect match who is a friend of a friend. You have 24 hours to review their profile information and choose to like or pass on the match. Mutual like leads to a private chat line that expires in seven days. The secret to success in online dating is winning over women. Single women are tired of signing up for dating websites only to get hit on by creepy strangers bombarding them with disgusting messages, and that is why women love Coffee Meets Bagel. Since our national launch, we've been growing at double digits monthly, and now with your help and investment, we can help singles all around the world. So, sharks, who's going to be our perfect match?
So, it's very interesting. What does the bagel got to do with it? Let's just be honest: there's still a little bit of stigma with online dating, so our customers actually love the fact that our name doesn't seem to, you know, do anything to do with dating service. When they talk about it, nobody really knows what they're talking about. Hey, hey, everything bagel. Today, today I got a stale bagel. Today, it's like a code for them. Oh, that's cool. So, tell us about your business model. Our core service is free, but there's premium features that you can unlock using virtual currency in the form of coffee beans. Like what? One of the most popular items we have is called Open Sesame. We actually tell you how many mutual friends you have between you and your match. We don't tell you who they are. What good is that? Well, you buy it; it's a mystery. A lot of people want to know, "How am I connected to this person?" And how much do I pay for the coffee beans? Each bean is equivalent to about two cents, but Open Sesame, for example, it's 95 beans. Do both parties have to like each other to be a match? Exactly. So, this has to be a mutual consent. And how do you curate? So, we have a proprietary machine learning algorithm that takes into consideration all the users' data, and we require all users to sign up through Facebook, so instantly from day one we can learn a lot about the user, including their friends. But you only source from Facebook; you don't use a questionnaire; don't you do any of that right now? So, it literally takes like less than a minute to sign. The idea is you don't have to make someone go through the application process. Exactly.
The most important question: have you met the man of your dreams? So, um, I am—yours—married with the guy that she met long, long time ago. I met my current boyfriend on Coffee Meets Bagel. You see the picture of the two of us on the wall. I'm meeting a lot of, you know, interesting people through Coffee Meets Bagels, and I'm still looking. All right. How many users? So, right now we have several hundred thousand users. Our business really ramped up about 200,000 or 700,000. So, it's between one and five. Why just tell us what it is you want an investment; you can't not tell us. Yes, but I think that's a good range; it gives you a good idea. No, it doesn't. No, but why won't you give us the actual number? We're actually not sharing the exact user number right now. Okay, I'm out. Well, you gotta share that. Are you kidding? Okay. What were your sales? So, last year we made eighty-seven thousand dollars, but get this: this year, in the first five months, we made 270,000. Wow. So, it's growing very quickly. Forecast for this calendar year, all in, at this current rate, we will make a million. Next year, we aim to make 10 million dollars. All right, the million dollars in sales, what will you make? What's your profit? So, right now our profit is negative. Spend a lot of money, salaries to pay our developers. And do you guys take a salary today? Right now, we take a hundred thousand dollar salary each year. Sorry, you take a hundred—so three hundred thousand dollars you're drawing out of the business, right? A year. A year. A year. But that is still a significant pay cut for all of us, whatever we're making prior. We actually raised 2.8 million dollars in external funding so far. Wow. Our notable investor actually is one of the co-founders of Match.com, who absolutely love their idea, and he was our very first investor. On the million dollars, how much would you lose this year? We'll lose a million dollars. You'll lose a million dollars on a million dollars in sales? Yes, which is why we actually have to raise more money because we're trying to ramp up our growth. You're projecting 10 million dollars for the second year. Exactly how much money will you make on that 10 million? We will break even on 10 million. You'll break even. Let's go. Let it go. Let it go. And here's why: we plan to bring on about 4 million users next year, who's going to generate about 2.50 cents each, hence the 10 million. And what's your customer acquisition cost? 30 cents. Next year, we plan on spending about three to four million dollars on marketing spending and acquire 4 million users, so we are assuming a slight increase in customer acquisition costs. You know, you're an all-or-nothing play. What do you think for all or nothing? Because you're losing so much money, you're not really into building a business game; you're in the raising money and getting users game. I think you've got to hit a home run; not saying you're not going to, but it's risky. I know it is. Our decision to invest more and accelerate growth, but we can't just as well just grow this business. As a fascinating dilemma, because I hear where you're coming from. The baseline model works; you want to pour gasoline on that fire. Exactly. It's a pretty big bet, and—and while I'm doing it, I part with 500,000 and I get five percent. One of the problems for me now in Shark Tank in season six is I've come to realize I'm really valuable, big time, and it's made me very greedy. I don't do five percent deals; that's worthless to me. I wouldn't do this. I'm out. If we really thought this was all or nothing, we would have raised a lot more money from the beginning. Now we actually have a choice of just growing the business traditionally or raise more money to make this big. You've raised a lot of money; you're not making money, and you're each drawing a hundred thousand dollars; that's three hundred thousand dollars out of the business; that seems very high salary. I mean, most people don't make anywhere near that, and you're just growing. Big concern I have also is the fact that somebody else could do this; people are knocking off everybody on the internet all the time. So, for that reason, I'm out. I think one thing for sure is you're great at raising money. Thank you. I also think this is a site that's needed. I think the women I know that have been on the typical website feel like a piece of meat in a meat locker. Exactly. Looked over; they don't, you know, it's almost insulting. Yes. This is a site that gives women a little bit more control, and I like all of that, but I'll tell you what I don't like: the break even at 10 million; a break even and I'm only—only five percent of the stock; that's spooky. Doesn't seem like enough upside for the enormous risk I'd be taking. So, for those reasons, I'm out. Thank you. Let me ask you a question: if I offered you 30 million dollars for the company, would you take it?
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All five sharks are out, but Mark Cuban has just made the largest offer in Shark Tank history. Let me ask you a question: if I offered you 30 million dollars for the company, would you take it?
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Foreign. I would not be taking it because we see—we see this business going—growing as big as Match.com, and you know how much revenue they're generating: 800 million a year. They're becoming a billion-dollar revenue company, and we think this model and the product has potential to be as big as Match. He offered you 30 million dollars, and you didn't even flinch. She should feel confident. It's a newer, ephemeral version of Hot or Not, which is brilliant, but I don't know how protectable that is. Well, I give you total credit, and I think you guys have done some brilliant things. I don't think the risk reward is there for me, and for those reasons, I'm still out. Good luck. Thank you. Excellent presentation. What they say like in dating: never settle. While 30 million dollars may sound like a lot of money, you ain't Mr. Mark Cuban, because this baby is going to explode.