How Honeyfund Survived the ‘Shark Tank’
After tucking their two kids into bed, Sara and Josh Margulis would settle into the couch of their Sebastopol, Calif., home each night and pepper one another with questions.
It was on this red microfiber sofa back in 2005 that they hatched the idea for their business, Honeyfund, a wedding-gift registry site that helps engaged couples raise money for their honeymoons. Some nine years later, they were prepping for an appearance on ABC’s entrepreneurial investment concept Shark Tank, the opportunity of a lifetime. On flash cards they had written every conceivable fact and figure the celebrity investors might ask about Honeyfund and the couple’s plans for its growth.
“That was one of the most intense periods of our life,” Sara says. “We ran numbers like crazy, analyzing our business upside and down.” The months of nightly quizzes paid off. In an episode that ran on Oct. 24, 2014, Sara and Josh entered the Tank seeking $400,000 in exchange for 10 percent of their company. They were playful: Dressed in Hawaiian garb, the Margulises presented each Shark with a lei and a Mai Tai in a coconut shell. And although Sara says “it’s quite intimidating to be standing in front of five very smart businesspeople who probably know more about your business in 15 minutes than you know about it yourself,” the couple had ready answers to every question the Sharks fired at them. And they were confident.
“We really dominate the crowd-gifting space,” Sara told the Sharks. The $400,000 would be used to start a Spanish-language version of Honeyfund and expand their Plumfund site, which raises money for anything from birthdays and anniversaries to medical expenses and charitable causes.
After Mark Cuban and Lori Greiner bowed out, the Margulises found themselves with three possible deals from other Sharks. First, Robert Herjavec offered $500,000 for a 50 percent interest in the company. Kevin O’Leary, in typical “Mr. Wonderful” style, proposed a more complex deal: He would give $400,000 with no equity interest in return for one-third of their transaction revenue until he recouped three times his investment. Barbara Corcoran jumped in to pony up $400,000 for a 30 percent stake, an offer that Herjavec quickly offered to match. But that was asking too much. “Our long-range goal is to one day sell the company for $10 million, $50 million—maybe $100 million,” says Sara, the CEO. “The 30 percent that Robert or Barbara wanted would amount to a lot more than the $1.2 million we’d be paying back to Kevin.” Mr. Wonderful had won.
On the night of their Shark Tank appearance, traffic on Honeyfund surged from a daily average of 150 visitors to more than 5,000. Josh, the chief technology officer, added servers, and all went smoothly. Traffic has stabilized, but Honeyfund still sees 43 percent more traffic than the pre-Shark days. Visitors to Plumfund have more than doubled. In February Sara and Josh launched Fondo de Miel—Honeyfund en español.
Honeyfund is now the No. 1 online-only wedding registry. O’Leary’s public relations savvy has been instrumental in propelling this growth. “One of the biggest challenges has been competing in a very crowded space,” Sara says, “and Kevin has helped us stand out.” When the Margulises decided to slash Plumfund’s platform fee to zero, O’Leary joined the couple on a media blitz in New York and helped them land coverage in numerous media outlets, including The Huffington Post and TheStreet.com.
That brand attention led the Margulises to get their feet in the door to partner with the likes of Sandals, Hotels.com, Macy’s, Target and Amazon. Today the registries at Honeyfund link to the websites of those companies, generating significant business development opportunities.
O’Leary says Sara Margulis is “an extremely effective CEO measured by all the metrics that matter to me. She sets and hits goals. She is an effective communicator and leader. And she returns capital.” He credits her as “one of the main architects” of Something Wonderful, a service offering cross-promotional opportunities among several of O’Leary’s lifestyle companies, including Wicked Good Cupcakes and Bottle Breacher, which sells handcrafted bottle openers that military veterans make from .50-caliber ammunition.
Within 10 months of closing their deal with O’Leary, the amount that engaged couples have raised on Honeyfund rose from $200 million to nearly $300 million. Sara and Josh increased their staff to 10, including themselves; built a new business development department; and began to focus on their goal of “offering the best value in crowdfunding for all of life’s occasions.”
“We’re excited to imagine all kinds of outcomes for the company,” Sara says. “Kevin is a great partner to have should it ever come time to sell!”