Flashback: Mango Mango Mango

By: Michael Barbera
Strategy Consultant
@mbarberausa

The ladies of Mango Mango Mango entered the tank with a well-rehearsed pitch (full of dancing and synchronized jingles) and more importantly, a tasty product. All five Sharks loved the taste of the mango preserves - a sure bet that once tasted, a consumer will make a purchase. However, the only problem the product seemed to solve was a satisfaction of the taste bud. 

One of the key reasons for any company to be denied private equity funding is the lack of solving a problem in the consumer’s life. Yet although it's not a requirement, Mango’s handicap doesn't improve with their industry, as the food service industry is notorious for offering extremely low profit margins. And as any avid Shark Tank watcher can tell you, the higher the profit margins, the higher chance of getting an investment. But even though there were two serious handicaps at this point, all Sharks were still in and the business had a chance of receiving capital. Why? Because the product was that good!

The final remaining variable that could help secure an angel was the cash flow of the business. Mango’s COGS (cost of goods sold) were quite high, at nearly $3.00 per jar. With a sale price of $6.00, this leaves Mango with a 50% profit margin before operating expenses and distribution. The motivated ladies of Mango were not receptive to third-party manufacturing and distribution, which would eventually lead to less production, less sales, and exhaustion. This naturally caused Kevin O’Leary to utter his infamous words, “you made a hobby”, which is true for all businesses that don't generate profit. make any money.

In the end, Mango Mango Mango didn't receive any offers from the Sharks, which was ultimately for the best. They are better off using their own capital for growth, rather than seeking equity-based capital in the food service industry.