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News / Life / Entertainment

Mark Cuban’s ‘Shark Tank’ investments yield a mixed bag of winners, losers

By Irving Mejia-Hilario, The Dallas Morning News
Published: February 11, 2024, 5:32am

Mark Cuban’s 13-year tenure as an investor on ABC’s reality show “Shark Tank” is drawing to a close after the show’s 16th season.

Since joining the show during its second season in 2011, he’s invested over $19 million in startups ranging from standardized testing prep tools to boxed mixed drinks, according to Sharkalytics, a site that tracks “Shark Tank” deals and its celebrity investors. But the billionaire told The Dallas Morning News that his all-in is closer to $29 million and that he’s earned more than that on both a cash and market value basis.

Even after investing in a wide range of products, Cuban has always been known for his scathing critiques of unprepared entrepreneurs and his bold investment strategies. But to him, the fanfare of the show pales in comparison to the impact it’s had on young business people, Cuban said.

“I don’t have a favorite deal. I don’t look at it that way at all,” he said in response to emailed questions from The Dallas Morning News. “Look at the impact the show has had on entrepreneurs and letting the entire country know the American dream is alive and well. All my deals are like my family. No favorites.”

Over the years, Cuban has made 85 deals on “Shark Tank” and invested in 19% of the pitches he heard on the show, according to Sharkalytics. But in all that time, his investment approach hasn’t strayed far from where he first started. He said he still looks for the same traits in any companies wanting his money.

“Is it differentiated? Is it protectable? Do I believe in the entrepreneur? Do they love their products so much that they are amazing at selling them?” he said. “Every now and then, I’ll do a deal not because of the business, but to send a message to viewers that an entrepreneur can come from anywhere and get a deal.”

From spending $2 million for a 20% stake in horror attraction company Ten Thirty One Productions to $25,000 for a 33% stake in Steve Gadlin’s Dallas-based I Want to Draw a Cat For You, Cuban-backed companies run the entrepreneurial gamut from spectacular success to abject failure.

The winners

Cuban has 49 companies from “Shark Tank” listed on his personal website. When Shaan Patel went on the show in 2016 with SAT and ACT preparation tool Prep Expert, formerly known as 2400 Expert, he walked in thinking he would surely get a deal.

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“I was really cocky, to be honest. I thought I was gonna go into the tank, and I was gonna get multiple offers from different sharks. It went horribly for the first hour and 15 minutes that I was in the tank,” Patel said. “But at the last second, Mark Cuban came and saved the day.”

Cuban invested $200,000 for a 20% stake in Prep Expert. Though the business was already doing well with $1.2 million in revenue over its four-year existence, Patel said Cuban’s involvement was monumental for the company.

“The Mark Cuban deal was the single most impactful event for my business and my life,” he said. “He set up a lot of partnerships over the years and has helped with some really important licensing deal negotiations. It completely changed my life.”

Nowadays, the company has ballooned to over $5 million in annual revenue and Cuban still holds his 20% stake in the company. Patel said he emails Cuban on the first of every month to notify him of the company’s health.

Staying in touch with his biggest winners, like Prep Expert, is something Cuban’s known for. But to get to the point where Cuban invests in a business for years is trickier said than done, said Zech Francis, vice president of global marketing at Austin-based Beatbox Beverages.

“[‘Shark Tank’] was a double-edged sword. There was the positive side of tons of traffic coming to the website and emails flooding in from distributors and retailers wanting to carry the product,” he said. “But the other side is that even with the $1 million investment from Mark, there’s a reality to having to run a real business.”

Beatbox Beverages was Cuban’s fourth-largest investment, giving him a 33% stake. The company was initially thrilled by Cuban’s investment but was quickly overwhelmed by the amount of offers it received from retailers, Francis said.

In 2016, the ready-to-drink cocktail company landed a deal with retail giant Walmart to sell beverages at its stores. But founders Brad Schultz, Justin Fenchel and Aimy Steadman had a tough time working around differing alcohol regulations in every state, Francis said.

“The issue became that all of a sudden, we’re going out signing dozens of different supplier agreements and distributor agreements. It really was a cataclysmic failure, to put it bluntly,” he said. “There are tons of moments in this company’s history where we almost went bankrupt.”

Cuban’s investment helped stabilize the company during one of its first growth periods. Francis said Mark and his brother, Jeff Cuban, have served as advisers, with Jeff holding a seat on the company’s board today.

After some growing pains, the company evolved into a giant in its own right with $100 million in revenue in 2023 and last year became available in all 50 states. Cuban was also a speaker at the company’s 2023 summit and remains an adviser, Francis said.

Cuban also scored with other prominent investments like his $300,000 investment for a 25% stake in personal hygiene company Dude Products and $1.7 million for a 25% stake in Rugged Maniac Obstacle Race. Both companies are profitable today.

The losers

Though Cuban said he doesn’t have any favorite “Shark Tank” investments, he said on the Full Send Podcast in 2022 that spending $1 million for a 15% stake in Breathometer, a smartphone accessory that could detect blood alcohol levels, was his worst investment.

“It was a great product,” Cuban said on the podcast. “But, the guy — Charles — I’d look at his Instagram and he’d be in Bora Bora. Two weeks later, he’d been in [Las] Vegas partying, and then he’d be on Necker Island with Richard Branson. I’d text him, like, ‘What the f— are you doing? You’re supposed to be working.”

Charles Michael Yim was the first “Shark Tank” contestant to earn a joint investment from all five sharks with Breathometer. But the company ran into problems right away. The Federal Trade Commission filed a complaint alleging that the Breathometer could not accurately read blood alcohol levels. Yim later settled with the regulatory agency and had to issue refunds to everyone who purchased the product.

Afterward, Cuban said it was the “worst execution in the history of ‘Shark Tank.’ “ However, Breathometer lived on as the company transitioned to become an oral hygiene monitoring device. Yim did not respond to an interview request from The News.

Cuban invested $100,000 for a 20% stake in Toygaroo, a toy rental company that was billed as “Netflix for Toys.” But the company went under less than a year after Cuban’s investment as it was mired by the same issue Beatbox Beverages faced: too much growth too quickly.

“Like most ‘Shark Tank’ appearances, we got a spike when the show aired. Which was not what we needed, as a sudden influx into a business that depends on stock is not a good thing,” founder Phil Smy told Failory. “Because of our new partners, we were under close scrutiny and high pressure to ‘grow grow grow.’”

Other times, “Shark Tank” deals have also failed to close, putting companies in precarious positions. Jeff Stroope was supposed to sell his company, HyConn, to Cuban for $1.25 million. However, the deal ended up not closing as Stroope claimed that Cuban tried to alter the deal. Eventually, the company went out of business.

As did Emazing Lights, MisoMedia and several others. Cuban said he understands the risk.

“Not every business is going to work. That’s just the real world,” Cuban said.

Life after ‘Shark Tank’

A lot has changed since Cuban first joined “Shark Tank”. But even as attention spans have shifted from television to short-form content, Patel and Francis both encourage aspiring entrepreneurs to go on the show.

“I still think that it’s one of the best ways to get millions of dollars in free marketing for your business,” Patel said. “TikTok and Instagram show that it’s tough to hold someone’s attention for 15 minutes. So getting that time on a national platform is still huge.”

Cuban has also sold a majority stake in the Dallas Mavericks and has turned much of his focus to his online pharmacy, Dallas-based Mark Cuban Cost Plus Drugs. The company is expected to have a customer base of over 1.5 million, according to Forbes.

ABC has not yet revealed who will take over Cuban’s seat next year for the show’s 17th season. But Cuban has advice for would-be sharks.

“Have fun and remember to respect every entrepreneur that walks in the door. This is their entire life,” he said.

For Cuban, it’s time to turn his priorities elsewhere.

“I love the show. I love every minute I’ve spent on it. I’m so proud of what we have done,” he said. “My leaving has nothing to do with the show. It’s just about spending time with my kids. I only get one shot to do that.”