SVC | | Strategic Vision Conference
We are kicking off the 10-part blog series with 54 Thrones. Before you begin reading; can you guess which of the sharks said, “you have to let us wet our beaks in the butter.”
Entrepreneur: Christina Funke Tegbe
Mission: Promote “trade not aid” by partnering directly with cooperatives to create clean beauty products.
Christina’s pitch is crafted to transport you into her world of beauty, even if there’s no perceived or genuine alignment. Using words such as glow body oil, Moroccan body mask and award-winning African beauty butter; all of which appeal to, and arouse the feminine senses; she did an excellent job of winning over two male sharks. As she eloquently states; her products “celebrate the beauty, the luxury and the romance which the motherland has to offer.” As applauded and lauded by all the sharks; Christina’s pitch was delivered flawlessly. The usage of descriptive words and sentences such as, “our products are decadent and divine” are indicative of passion for her business.
Christina’s business turned 5 years in 2022. As a first generation Nigerian American, her hardworking father taught her about the importance of being proud of her heritage and culture. Christina graduated with an MBA and a Masters in Health Care Administration. She worked as a consultant for a few years, and like most people inclined to solve problems; she caught the entrepreneurial bug. Christina realized she had a higher calling to make a difference by impacting lives. Hence, the quest to learn more about her heritage, language and culture. She started travelling all over the continent, and she identified that she was drawn to the makers and artisans. Makers and artisans in this context refer to those who work on the fields without exposure, connections or access to the international market. These are the people who work on farms or mills, producing the finished products from raw materials.
Marketing. Sales. Promotional Budget. Operations.
> In 2021; 54 Thrones spent $8,000 for 12 months and racked in, half a million dollars ($500,000 revenue).
> Traction came from word of mouth.
> In 2022; 54 Thrones was on track to generate $1 million
> 2021: 54 Thrones was selling 75% Direct to Customer (DTC) distributed and executed on 54 Thrones’ website.
> 2022: Christina said, there will be a flip in this ratio [ 75% retail sales and 25% DTC ]. That is a good thing because retailers provide rocket fuel from purchase orders (extremely large quantity). Distribution via retail partners will reduce 54 Thrones’ margin, because of the discount on large volume order(s). However, the company’s profit will skyrocket because of the upfront payment from retailers for the large orders. Distribution at Sephora and Nordstrom enhances brand recognition = more purchase orders = global distribution = more sales = higher revenue.
How is 54 Thrones able to ask for $250,000 for 10%? A different way to ask the question is, how is 54 Thrones able to justify a $2.5 million valuation? Before appearing on Shark Tank, 54 Thrones had already generated $500,000 in sales in 2021. Projected sales; 54 Thrones was on track to generate $1 million in 2022 sales. They were about to, or had already received purchase orders, or a deal to be listed on Nordstrom and Sephora shelves. 54 Thrones had already been featured on Oprah’s Favorite Things (OFT). Those are the intangibles which justify the tangible. What is the tangible part? Christina is simply asking for a quarter of her 2022, $1 million in sales which is $250,000. She is willing to give away 10 percent in exchange. 54 Thrones doubled its sales from $500,000 to $1 million in 12 months. As a small but growing company, the likelihood of repeating that hat trick (doubling sales) for the next 3 to 5 years is feasible, especially with the distribution deal from Sephora and Nordstrom. Hence, Nirav Tolia and Kevin O’Leary will make their money back multiple times over.
Christina was willing to cash out her 401k to kickstart her business. That is a tough call for most, but some entrepreneurs have done much worse. We are not condoning, neither are we condemning the act. Everyone has different monthly obligations and circumstances. Some have family support, no family support, rich uncle or rich aunt, or not; you never know. Do what works for you.
Response from other Sharks
Nirav Tolia was Christina’s main Angel. Immediately Christina said we are on track to make a million this year, in the video at 4:33; Nirav responded with wow! As an entrepreneur, you have to listen, as well as observe the mood swings and mood changes. Just because you receive a great response and get good vibes does not mean a VC will invest. Nonetheless, it is a sign of interest. However, do not make the mistake of focusing on that VC or Angel exclusively, most especially when others are around. If you focus on one investor, the rest will feel disrespected, and could pull the plug on you. However, if other VCs or investors are disinterested then capitalize solely on the Angel or VC who shows interest. When Christina said we’re going to be launching in Sephora, you heard the joint wow. The first wow, came from Mr. Wonderful at 4:36 followed immediately by Mark Cuban at 4:37. Immediately Christina said, we’ll be launching at Sephora U.S., and Canada, Robert Herjavec jumped in with another wow, obviously because he is Canadian. Research your audience, and tailor your content if appropriate. It is easier to win investors over to your side, if there is an emotional connection or resonance to your pitch.
In comes Christina’s main Angel Nirav, with all the compliments to save the day. “You are so backable as an entrepreneur.” “You are so impressive.” “Your story is so compelling.” “I am completely in on the offer, because I think what you are building here is not just a company, I think it’s a movement.” “I am willing to give you half the money, if one of my fellow sharks will come in with me.” Nirav’s intervention was the pivotal moment which smoothen the waves to swimming out of the tank unscathed. Nirav’s act helped Christina reel in two heavyweight sharks.
After you have cast your net (and caught some sharks) or (attracted some angels) that’s when your business side comes out and you stick to your guns. However, this is more of an art than a skill. Your rebuttal must be firm, respectful, mindful and elastic. In order to choose the best option; entrepreneurs must be steadfast, flexible, think fast and be creative on their feet. Most especially with Mr. Wonderful’s sometimes, complex licensing deals (you have to think fast on your feet under pressure).
In the video at 7:42 Christina countered with, can we do $250,000 for 15 percent? Everyone knows Mr. Wonderful is not a 7 and half percent guy. However, this is an impressive move from Christina. It is classic stick to guns, being assertive while also being flexible, in order to win.
At 8:30 while it seems as if Christina wanted more by going from 15 to 10 percent; she was simply reiterating the offer she came into the tank with. It only appears so because Kevin O’Leary came back with a counter offer of $250,000 for 20 percent. Kevin’s counter offer automatically cuts Christina’s $2.5 million valuation by half to $1,250,000.
Albeit, we saw ample evidence indicating Kevin O’Leary was willing to do the deal on his own, Nirav Tolia’s presence solidified the investment. Nirav was willing to see this deal happen, even at a few percentage points reduced from his stake to appease Kevin O’Leary.
P.S. If you haven’t guessed by now; Mr. wonderful was the Shark who said, “you have to let us wet our beaks in the butter”
Did they just value my company at $1,428,571 instead of $2.5 million? A few seconds later.. Yeah, I still won! I got the money and two big sharks on my side.
Congratulations Christina Funke Tegbe. Thanks for leading the way, and showing other entrepreneurs how to make their dreams come true.