Haven Lock’s COO responds to Mark Cuban’s margin concerns from Stark Tank debut
Nashville-based electronic security hardware startup Haven Lock pitched their bluetooth smart lock to Shark Tank investors in an episode that aired last week on ABC.
In the unforgettable pitch, CEO Alex Bertelli and COO Clay Banks, cofounders, took to the stage to talk about neighborhood break-ins, school safety measures, and the ingenuity behind their smart lock technology.
Although the duo didn’t reach a deal on air, they did have investors laughing and cheering when Alex had a tough time kicking in a dead-bolted door, and his determination on stage impressed the sharks enough to give them encouragement and feedback about their product. Not to mention, Clay Banks said, an increase in sale and new partnership deals after the episode aired.
Mark Cuban, one of the sharks who seemed interested in making a deal, was concerned about Haven Lock’s profit margins, saying during the pitch “I think what you’ve done is brilliant, but the challenges to your economics (are) awful. Your margins are awful to support what you need to do.”
I emailed Clay to see if he had both a response to the comment and insights for other founders who are interested in how Haven Lock made it to the Shark Tank stage.
“That ‘brilliant’ comment was well received on air. We thought at one time during the pitch that Mark was going to make an offer. It’s important to know that what actually airs on the show is a fraction of what really happened during the pitch. That part about profit margins was after much more discussion and debate with Kevin, Mark and Lori. Mark, Lori and Daymond really seemed to get what we were doing and the problem we are solving. Mark’s review of our margins was accurate if you compare us to made in China electronics and throw out the ‘Made in America’ value. The margins at that point in time (September 2018) were about $16 per unit higher than they are today. Increased volume, better terms with our suppliers and process engineering has and will continue to improve driving down production costs. Plus we are taking a $7 per unit haircut right now on the tariff situations related to our printed circuit boards. Your first few production runs are always more expensive and we should have done a better job highlighting that before I went into the actual numbers. Oh well, my pitch is now stronger because of it.”
You can see Haven Lock’s pitch here.