Bits and Pieces: Riches Found In Shark Tank
At the time the episode aired, GrooveBook had yet to become profitable. The company picked up 18,000 subscribers in the previous eight months, but needed 30,000 subscribers in order to break even and then reap the 69 cents per book profit. Brian Whiteman, who has invested $400,000 in GrooveBook, admitted to shark Robert Herjovec that costs would be higher if the book was printed and bound by another commercial printer.
One of the concerns expressed by several sharks was the ongoing viability of GrooveBook being tied to the survival of the commercial printing business (Dot Graphics). Because of that, sharks Herjovec (at first) and Daymond John passed on GrooveBook.
However, the Whitemans reaped a pair of offers from two sets of sharks. In one offer, sharks Lori Greiner (of QVC home shopping fame) and Herjovec (now back in) offered the Whitemans $750,000 to buy GrooveBook outright, but Brian Whiteman said he wanted some “skin in the game.” So Greiner/Herjovec countered with $375,000/50 percent stake.
In the other offer, Cuban and venture capitalist Kevin O’Leary proposed $150,000 for an 80 percent share for the ability to license GrooveBook and offer it as a service, with the Whitemans maintaining their subscription-based holdings. That way, it could be offered to other online photo book companies that cannot provide it as cheaply to their own clients due to mailing costs—companies that would sell them as one-off products.
Although Herjovec argued that end users buying their pictures in one-off fashion from licensees could cannibalize the Whitemans’ subscription-based model, Brian Whiteman opted to go with Cuban and O’Leary. Whiteman called the opportunity to double dip a “win-win situation.”
It would be interesting to check back with Whiteman in a year’s time to see how GrooveBook is faring. PI