Coffee Joulies
DEAL
EPISODE SUMMARY
🕓 Air Date: January 11, 2013
Asking For:
$150,000 for 5%
Investor:
Kevin O'Leary, Lori Greiner, Robert Herjavec, Daymond John
Deal:
$150,000 for $6 royalty (retail), $3 royalty (wholesale), and $1 in perpetuity after investment is recouped
PRODUCT SUMMARY
Coffee Joulies are stainless steel coffee beans filled with a proprietary phase change material that absorbs excess heat from hot beverages, rapidly cooling them to a drinkable temperature, and then releases the stored heat to keep the beverage at an optimal temperature for longer periods.
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Background Story
Coffee Joulies was founded by Dave Petrillo and Dave Jackson, both mechanical engineers. Frustrated by constantly waiting for their coffee to cool down to a drinkable temperature, they decided to invent a solution. Drawing on their engineering backgrounds, they developed Coffee Joulies, leveraging a proprietary phase change material that efficiently regulates the temperature of hot beverages. Their initial sales as a gift item garnered attention, leading to further growth opportunities.
The Product
Coffee Joulies are stainless steel beans filled with a phase change material derived from plant sources. When placed in hot coffee, they absorb excess heat, rapidly cooling the beverage to a drinkable temperature.
Once the coffee reaches the optimal temperature, the Joulies release the stored heat, keeping the beverage warm for an extended period. One Joulie is recommended for every 4 ounces of coffee.
They can be purchased as a set of five for $50. The product has gained popularity not only for coffee but also for other hot beverages like tea and hot chocolate.
How It Went
The company’s position before Shark Tank
Coffee Joulies had sales of $575,000 in the previous year, with a profit of approximately $50,000. They have secured patents and trademarks for their product and are looking to expand into wholesale accounts, with partnerships with retailers like Bed Bath & Beyond and OfficeMax in the pipeline. They have a positive cash flow and are focused on growth.
The Negotiations:
The founders initially sought $150,000 for a 5% equity stake. The sharks countered with an offer of a $150,000 investment with $6 from every retail order and $3 from every wholesale order until the initial investment was recouped, then $1 in perpetuity, without taking any equity stake. Mark Cuban offered $250,000 for a 12% equity stake but with concerns about the long-term implications of royalty agreements. Ultimately, the founders accepted the offer from the four sharks, valuing their company at $3 million.
