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Ray Phillips and Alvin Uy pitched SoapSox on Shark Tank season 6 episode 3, seeking $260,000 for 10% equity. Their stuffed animal washcloths with antimicrobial properties and soap pockets had generated $300,000 in sales in six months, with a Nordstrom partnership secured. Each unit cost $3.66 to manufacture and retailed at $19.95.
The founders presented their growth projections and defended their $2.6 million valuation. However, all the sharks started expressing various concerns. When it came to Kevin O'Leary, he stated:
"Guys, the price is too high. I can't even see this ever long term more than $12.99 ever. It should be $9.99, and you're not worth 2.6 million. I'm out," he stated.
Despite later receiving a $1 million buyout offer from Lori Greiner and Robert Herjavec, the entrepreneurs left Shark Tank without a deal.
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Shark Tank star Kevin O'Leary rejects SoapSox over price and valuation
The SoapSox’s Shark Tank presentation opened with Phillips sharing his inspiration from working at a children's treatment facility. A young resident refused baths because his stuffed animal would get wet.
Phillips created the first prototype by modifying a stuffed animal with soap storage. After two years of development and a successful Kickstarter campaign raising $51,930, SoapSox launched its product line.
The founders backed their pitch with solid data. Their first six months showed $300,000 in revenue, with projections targeting $576,000 by year-end. A partnership with Nordstrom demonstrated early retail success. The specialized manufacturing process resulted in a $3.66 unit cost, allowing for strong margins at the $19.95 retail price point.
O'Leary zeroed in on the market dynamics of children's bath products. He stated the $19.95 price tag would limit mass-market adoption. Based on his retail experience, O'Leary suggested $12.99 as the maximum sustainable price point. His assessment included consumer purchasing patterns in the bath accessories category.
The manufacturing costs at $3.66 per unit meant limited flexibility for price adjustments while maintaining profitable margins. O'Leary concluded his analysis by exiting the deal, marking the first of several dramatic turns in the pitch.
After O'Leary's exit, Daymond John stepped forward with an offer. He proposed $260,000 for 33% equity, citing his retail expertise and distribution connections. This would have made him an equal partner with Phillips and Uy. The founders responded with a counteroffer, suggesting $350,000 for 15% equity.
During the negotiations, Lori Greiner and Robert Herjavec made a surprising move. Shark Tank investors combined forces to offer $1 million to purchase the entire company outright. The room's energy shifted as the entrepreneurs faced a decision between Daymond's partnership offer and the complete buyout option.
Phillips and Uy took time to discuss their options. They expressed concerns about giving up too much control of their company. Daymond maintained his original equity ask of 33%, refusing to accept their 15% counteroffer.
After careful consideration, the founders made an unexpected choice. They declined both Daymond's partnership offer and the million-dollar buyout from Lori and Robert, walking away without a deal.
Post tank performance
As Shark Tank Blog reported, SoapSox's growth following its appearance proved significant. In 2016, the company secured a licensing agreement with Disney Baby, allowing them to create washable characters from popular Disney properties. A partnership with Paw Patrol followed, expanding their character lineup.
The company earned recognition from the juvenile products industry, winning the JPMA innovation award in Las Vegas. They adapted their business strategy based on market feedback, adjusting their manufacturing processes to improve cost efficiency.
By 2024, SoapSox established a presence in over 400 specialty stores and hospital gift shops across the country. The company's focus on strategic partnerships and targeted distribution channels resulted in annual revenue reaching $8 million.
New episodes of Shark Tank season 16 are airing on the ABC network.
