2400 Expert – SAT/ACT Prep Course
DEAL
EPISODE SUMMARY
🕓 Air Date: January 29, 2016
Asking For:
$250,000 for 10%
Investor:
Mark Cuban
Deal:
$250,000 for 20%
PRODUCT SUMMARY
2400 Expert offers a comprehensive S.A.T. preparation program, aiming to help students achieve high scores and secure admissions and scholarships.
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Background Story
Shaan Patel, originally from a humble background in Gujarat, India, grew up in a budget motel in Las Vegas. Inspired by his parents’ emphasis on education, Patel earned a full-ride scholarship to the University of Southern California, where he is pursuing a medical degree and an MBA at Yale. Despite an initial average S.A.T. score, Patel’s self-study techniques led him to improve by 640 points, achieving a perfect 2400. This success inspired him to create 2400 Expert to share his test-prep secrets and help other students achieve their academic goals.
The Product
2400 Expert provides a six-week S.A.T. preparation course, traditionally conducted in-person in Las Vegas and, more recently, offered online. The course, taught by Shaan Patel, focuses on self-study techniques that led him to raise his S.A.T. score by 640 points.
The in-person course costs $999 for a 60-hour program, while the online version, available for the past six months, is priced at $599 for the same duration. Patel highlights the success of the program, with an average score improvement of 376 points in six weeks, far exceeding competitors.
The company has generated $1.2 million in sales over four years, with a significant revenue increase in the past year, primarily from in-person courses in Las Vegas.
How It Went
The company’s position before Shark Tank
2400 Expert has achieved $1.2 million in total sales over four years, experiencing consistent revenue doubling annually. While the majority of sales initially came from in-person courses in Las Vegas, the recent introduction of online courses has become a significant revenue source. The company lacks detailed analytics on customer acquisition costs but relies heavily on word-of-mouth marketing.
The founder, Shaan Patel, currently teaches one online course per week and plans to use the $300,000 investment to expand the company by opening a dozen new locations in major cities like New York, Los Angeles, San Francisco, Washington D.C., Philadelphia, and Boston. Patel, an MD/MBA student, expresses a commitment to scaling the business despite his academic pursuits. The company’s scalability is a potential concern, especially regarding the live online teaching model.
The Negotiations:
The negotiations started with Shaan Patel seeking $250,000 for 10% equity in 2400 Expert. Mark Cuban, a seasoned investor in the test-prep market, expressed interest but questioned Patel’s commitment to the business given his concurrent medical studies. Daymond John and Kevin O’Leary opted out due to concerns about Patel’s dedication and the scalability of the business.
Lori Greiner and Robert Herjavec echoed concerns about Patel’s commitment, with Herjavec specifically emphasizing the necessity of unwavering dedication in entrepreneurship. Cuban made an offer of $250,000 for 20%, emphasizing the need for infrastructure and administrative support. Patel attempted to negotiate for a 15% equity share with the original $250,000, but Cuban stood firm on his initial offer. Ultimately, Patel accepted Cuban’s offer of $250,000 for 20%, securing Mark Cuban as a partner in 2400 Expert.
