@ Velocity Signs: Sometimes Quality Trumps Quantity

By: Pete Troshak
Twitter: @Shak74
Website: www.Shak74.com

Have you ever seen one of those guys standing on the side of the road holding an ad for a business and felt sorry for them? It's a miserable job, and frankly the sight of a disheveled, sweaty employee tiredly waving a sign in the heat is neither professional nor likely to draw a lot of customers. Scott Adams and Josh Faherty came into the Shark Tank with a solution for this advertising dilemma. Their company is Velocity Signs, and their products are large rechargeable waving signs that are placed in the ground or on sidewalks outside of businesses. The signs have a heavy base that sits on the lawn, and consist of a directional arrow front-piece that bobs and weaves creating a dynamic and eye-catching 3D form of advertising that points customers in the direction of the business. Scott and Josh were asking for $225,000 for 15% of their company. The company made a quarter of a million dollars last year, and is projecting to grow to $2.5 million next year.


The signs cost roughly $2,000-$3,000 each, and their customers have averaged a 15% increase in business after installing the signs. Scott and Josh have a definite plan for the money they were asking for, and a new smaller item they are working on that is aimed mostly at real estate salespeople who want a dynamic ad for their services or open houses. Despite being knowledgeable and giving an informative and energetic pitch, the investors didn't receive a lot of interest from the Sharks initially. However, this pitch led to one of the most heated and cutthroat Shark battles of the season!

Here's what happened:

Kevin dropped out first, reasoning that he wants to see another year of sales from the company to judge if it was investment worthy or not. Robert went out next, reluctant to invest because he had lost money in another sign business already. Mark went out citing that he didn't think they would be able to sell more than one sign to each client, which would put a ceiling on the company's upward growth. Barbara voiced how she loved the real estate sign concept, and said that she would probably invest if she could see that product. But because it was not yet in the picture, she went out. Lori was now the only Shark left, and unlike the other Sharks, she immediately saw the potential in this business. She said it is an "extremely smart new way to draw attention to brick and mortar stores" and praised the inventors for making an item that will help keep small businesses alive. She then made her offer of $225,000 for 30% of the company. But before the entrepreneurs could even think about accepting it, Kevin and Mark jumped back in eager to join her deal, giving each of them a 10% stake in the company. The problem was, Lori didn't like this too much as 10 seconds earlier she was the only one interested in investing.

So instead of coming to some sort of agreement with her fellow Sharks, Lori went on to make a speech about how she was the one Shark who believed in the product, and how she should be the one they partner with. This was a big mistake though, because once Mark and Kevin gained interest, they didn't need Lori in their deal. So, Mark simply said that they can cut Lori out and team up with Robert for the same terms. Robert liked this idea. Seeing that she was now going to lose this battle, Lori dragged Barbara back in and made a slightly better offer at $225,000 for 25%, claiming that her offer was so much better because of her and Barbara's connections. This got Mr. Wonderful worked up as he argued that he and the other two men have the same connections that Lori does, and can offer more value with three Sharks as opposed to two. Once they were trying to sell themselves, Mark lands the biggest blow of the fight, stating that unlike the women on the panel he owns physical businesses that can feature this product. Mark also dangles the biggest carrot in describing how he would put a Velocity Sign outside the NBA's Dallas Maverick stadium that would become a viral photographic landmark representation of the sign business. Although Lori claimed that she and Barbara own plenty of business that could use these signs as well, at this point Scott and Josh seemed more interested in working with the men. And after trying to lower the percentage by 5% and being rejected, the entrepreneurs ultimately chose to partner with Kevin, Mark, and Robert, giving up 30% of their company in exchange for $225,000.

In the post-pitch interview, Scott and Josh explained that their decision was ultimately made because they saw the value in three Sharks versus two. The inclusion of Mark offering them promotion outside of an NBA arena also undoubtedly helped tilt the decision towards the male Sharks. But they still showed appreciation for Lori sparking the interest which got them a deal.

In hindsight, it seems like the two inventors might have missed out by choosing quantity over quality, and not making a deal with someone who is as passionate about their business as they are. They could have made a deal with Lori who seemed to understand and believe in their business, even when all other Sharks dropped out right away. Along with Lori they would've gotten Barbara, who also saw the positive of the product and who could really target the signs to the real estate market. But instead, they chose to partner with the three male Sharks, all of whom had just moments earlier evaluated the business and only noticed the flaws.

Although in this particular case this decision might not make it or break it, it is important to think about what you would have done in such a scenario.Would you rather have three people working with you who are only looking at the bottom line, or two people working with you who believe in your product and your mission? It’s one thing to find people to invest in your business who just collect checks, but it’s a lot harder to find someone to partner with that is as passionate about your company and who will champion it as hard as you will. Sometimes quality trumps quantity.