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During their appearance on Shark Tank season 12 episode 4, Liz Charm and Jordan Long pitched their business, Surprise Cake, where an element of surprise is introduced into the cake business. Their product was going to allow gifts to pop out of cakes for an experience that would never be forgotten by those cutting it.
While the entrepreneurs were trying to raise $200,000 for 8% equity, their pitch became infamous for Mark Cuban's negative comment about customer feedback. Cuban said:
"Let me just tell you something. Listening to your customers is way overrated. The job of a customer is just to enjoy, not to predict, not to understand your business, not to give you guidelines on where to go, just to enjoy your product or service."
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Mark Cuban’s take on customer feedback in Surprise Cake's Shark Tank pitch
Surprise Cake's core product was a popping cake stand that allowed customers to hide gifts inside cakes, creating a surprise when the cake was cut. The idea for this product originated when Liz Charm decided to surprise her daughter with a birthday gift hidden inside a cake.
Charm explained that she rang her daughter's new cellphone since the candles blew out, where the surprise gift hidden inside the cake was discovered. From this innovative idea, Surprise Cake was born as a business aimed at sharing this experience with others.
However, before the cake could be brought to the marketplace, Charm and Long found themselves up against their largest obstacle: U.S. food safety regulations, that prohibited embedding non-edible objects in edible products. This spurred the two to design the fix of placing the surprise within a tube within the stand of the cake as opposed to inside the cake.
During their pitch on Shark Tank, Charm and Long sought $200,000 in exchange for 8% equity in their company. They emphasized their goal of expanding the product offerings, including delivering complete cakes with hidden surprises, based on customer feedback. However, Mark Cuban disagreed with the notion that customer feedback should drive business decisions.
He highlighted that listening to customers was “way overrated.” Cuban underscored that customers’ roles are simply to enjoy the product and that businesses should not rely on them for guidance on the direction of the business.
This perspective was reflected in his response to the duo's idea of delivering whole cakes with surprises.
He explained that turning Surprise Cake into a perishable cake delivery business could create logistical challenges, referencing his own experience with Wicked Good Cupcakes, a business that faced similar complications.
Profitability concerns
In addition to the customer feedback issue, the Sharks expressed concern about the profitability of Surprise Cake. Despite being on track for $900,000 in revenue, the company was only projected to make $50,000 in net profit for the year. The Sharks pointed out that Charm and Long were focusing more on generating revenue than ensuring profitability.
They noted that while the business model seemed promising in terms of revenue generation, it lacked a clear path to profitability. Kevin O’Leary, also known as Mr. Wonderful, emphasized that entrepreneurs should avoid expanding into a perishable cake delivery business, pointing to the logistical challenges and potential issues with shelf life.
Cuban further noted that the entrepreneurs had not yet figured out how to make money from their ideas, which led him to ultimately decline investing.
Post-Shark Tank developments
Although Surprise Cake did not secure a deal on Shark Tank, the entrepreneurs continued to build on the visibility the show provided. Following their appearance, Charm and Long reflected on the opportunity to showcase their product to a national audience.
Jordan Long, a USC Viterbi School of Engineering graduate, explained that being selected to appear on the show was a significant achievement, as only 100 companies out of 40,000 applicants were chosen. He added that their primary goal was to demonstrate how fun Surprise Cake could be, which they believed they accomplished.
The exposure from Shark Tank allowed Surprise Cake to reach a broader audience. While it is unclear whether the business experienced an immediate spike in profits, the entrepreneurs projected that their sales would surpass $1 million in 2020.
Their website continued to offer popping cake stands and also introduced new variations, such as a musical cake stand that plays a tune when the surprise is revealed. The entrepreneurs expanded their offerings to include popping cupcake stands, which can hold up to 18 cupcakes and hidden surprises.
Current status and future plans
Despite the setbacks on Shark Tank, Surprise Cake remains operational and continues to develop new products. The company now offers various themed products for different holidays and occasions, including fall-themed cakes and Valentine's Day cupcake stands.
The entrepreneurs have also introduced a cake carrier designed to help customers transport their cakes easily.
Surprise Cake's success is further evidenced by its positive reviews. The company has been featured in prominent outlets, such as Good Morning America and Today, and its musical cake stand has received a 4.5-star rating on Amazon from nearly 1,000 reviews.
The business continues to thrive, and the entrepreneurs remain optimistic about their future growth, with plans to further expand their product line and offer curated gift pods.
Don't miss out on the new episodes of Shark Tank on ABC on Fridays at 8 pm ET which are available to stream on Hulu. Tune in and see which innovative ideas get the Sharks' approval on Shark Tank!
