Investor: Daymond John
Shark Tank Appearance: Oct. 17, 2014
Deal: $300,000 for a 20 percent stake
Results: Sales increased from $5.7 million to more than $20 million.
Entrepreneurs who land a deal on Shark Tank typically feel elated when they exit the set. Not so for David Levich, Eric Liberman and Dan Gershon—three longtime friends who started the novelty sunglass company Sun-Staches together in 2011. Although they had a Shark on board as an eager investor, Levich wasn’t excited. “We got our butt kicked,” he says. Walking back to their trailer, the old friends were disconsolate. “We thought we had made a really bad deal,” Levich admits.
For one thing, they had been mostly interested in working with Mark Cuban but ended up with Daymond John instead. They had initially offered a 5 percent stake in their company for $300,000, but John negotiated a chunk of Sun-Staches four times as big for the same investment. “Did we just give away 20 percent of our company for peanuts?” Levich says they asked each other.
After a few minutes there was a knock on their trailer door. It was one of John’s team members, with a top executive for a large toy company in tow. “You’re in very good hands,” the exec said. “You should be celebrating.”
He was right. Within just a few months, Sun-Staches, which was already being sold online and in large retailers like Toys R Us and Party City, had secured what they had long been after: licensing agreements with Marvel, Nintendo and Warner Bros. Studios. “Daymond was really instrumental in getting those deals,” Levich says. “He opened doors for us, and he was able to negotiate favorable terms. He knows these people; his people know these people.”
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Some might view $20 million in sales for goofy sunglasses with attached mustaches one of Shark Tank’s more improbable successes. John is among those raising an eyebrow. “The world is often waiting for simple, stupid, things like Snuggies or Sun-Staches,” he says. “Things that are affordable, that make you feel good and take your mind off of everyday problems.”
For their sales pitch, the Sun-Staches partners had picked out samples for each of the Sharks to try on—a football helmet for John, a cowboy for Robert Herjavec, a black cat for Lori Greiner, a devil for Kevin O’Leary, and a leprechaun for Cuban. The moment everyone (save for Cuban, who passed on the frivolity) donned the Sun-Staches, John knew he wanted in. “It was instantly a party,” he says. “Right there was proof of concept.”
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Unlike many other Shark Tank entrepreneurs, Levich, Liberman and Gershon were well prepared for the flood of orders and interest after their episode ran. They had the inventory and infrastructure in place. What turned out to be more challenging was fending off imitators. “We did not anticipate the number of people who would start copying our products in countries all over the world,” Levich says. To deal with infringements on their intellectual property, the team hired people internally to monitor copycats. Levich says they were able to remove more than 1,000 imitators off of Amazon and eBay. They also stopped massive retailers selling counterfeit products, leading to arrests in Hong Kong.
“We argue constantly, but that’s because we make every decision by consensus, not by majority rules.”
“If we don’t protect ourselves internationally, we’re not going to have a business,” Levich says. They also won’t have a business, Levich points out, if they’re not continually introducing new products. Five in-house designers are constantly sketching ideas for new Sun-Staches. Levich says that they’ll make injection molds for some 20 to 30 percent of the designs that are drawn, at a cost of roughly $10,000 to $20,000 for each mold. Then, one in two of the molded face masks will be put into production. Sun-Staches currently has about 500 models, with Batman the perennial best-seller.
One thing you can’t mask is a weak team, and Levich says they work diligently to keep theirs strong. “It’s the hardest thing we do,” he says. “We argue constantly, but that’s because we make every decision by consensus, not by majority rules. We’re working on a new sunglass line now that requires creating a whole new distribution network. Eric, Dan and I sat at a sushi bar while I, sometimes loudly, tried to convince them that the line is worth what it will cost in money and in opportunity. If they both hadn’t come around, we wouldn’t have moved forward.”
The three try to treat all of their stakeholders with the same respect. “We want to chug along building a successful business while we’re fair to our customers, our suppliers and our employees,” Levich says. “Our goal is to be able to sleep at night, not to be billionaires.”
This article originally appeared in the November 2017 issue of SUCCESS magazine.