Mark Cuban and Print Shop Owners Score with Shark Tank Investment – November 2014 M&A Activity
Digital Printing – Photobooks / Mobile Apps
Less than a year after swimming with the sharks on the popular TV show Shark Tank in January 2014, husband-and-wife team and printing company owners, Julie and Brian Whiteman, sold their digital photobook app, GrooveBook, to Shutterfly for $14.5 million.
When the Whiteman’s pitched their concept on the show, two of the “sharks” bowed out of the bidding because they were concerned that the GrooveBook deliverable is an old-fashioned printed product and also that the production was tied to the Whiteman’s printing operation. (I suspect that the two reticent sharks regret not taking the plunge and that they let this one get away.) The Whiteman’s wisely turned down an offer of $750,000 from another shark, electing instead to accept a much smaller investment from big fish investor Mark Cuban in return for certain rights to market the service to other photo sites.
The notoriety and exposure from the show created an instant and huge demand for GrooveBook’s Android and iOS compatible app that serves as the front-end for subscribers who upload photos from their smart phones and receive a printed and bound photobook each month. The number of paid subscribers jumped from 18,000 to over 500,000 after the show, with over 1 million downloads of the app.
The Whiteman’s intimate knowledge of printing and binding processes led to an “aha” moment when they realized that using a grooved spine made the finished books flexible. This in turn allows the books to be mailed bulk rate through the USPS, rather than delivered via much more expensive alternatives.
Combining the cost advantages of bulk mail delivery with the scalability and mobile-enabled user interface proved to be the winning combination for the sellers. If all the current subscribers stick with the service, the company is on-track to meet its projected run-rate of $18 million in revenues, and Shutterfly will have paid only 80% of projected annual current revenue for this rapidly growing service. As for the Whitemans, the price equates to more than 22 times the company’s revenue prior to their dip in the Shark Tank.
