Kevin O’Leary Explains Why Ring Did Not Get A ‘Shark Tank’ Deal
Amazon reportedly bought the company Ring, which produces a video-enabled doorbell, for $1 billion this week. As CNBC reported on Tuesday, the venture, then called Doorbot, had a less-than-successful appearance on Shark Tank in 2013. At that time, only one shark, Kevin O’Leary, offered to give the company’s founder, Jamie Siminoff, a deal. Siminoff turned it down, as O’Leary had balked at the CEO’s then $7 million valuation by offering a loan for the $700,000 he was seeking, in return for a royalty and equity.
Five years later, Siminoff now owns 10 percent of the rebranded Ring, which went through a series of funding rounds before the Amazon sale. According to Forbes, Richard Branson — himself an eventual guest shark on Shark Tank — invested in the company after Shark Tank and Shaquille O’Neal negotiated an equity stake in return for his promotional appearances for the product.
While interest in the product had peaked after Shark Tank, O’Leary told CNBC this week he did not feel like the failure to make a deal was a missed opportunity. He referred to other Shark Tank successes like Plated, which also had a rocky relationship with the show before landing a large exit. Plated originally made a deal with Mark Cuban, which fell through, only to make a deal with O’Leary long after the original pitch had aired. Last year, Albertsons bought Plated for $300 million.
As for Ring, O’Leary said back in 2013 the company just wasn’t worth the $7 million valuation and the sharks would have been hard-pressed to find a deal structure that would have seen Siminoff leave with the $700,000 he asked for. According to the rules of the show, although the entrepreneurs and sharks may negotiate on valuation and structure of the deal, they must somehow offer at least the amount of money in the original ask.
Despite the rough-and-tumble pitch, which lasted for more than an hour before being edited down to an eight-minute show segment, O’Leary had a positive view of the experience in retrospect.
“I liked him a lot. I thought he was a great sales guy, but at that time his valuation was insane. It wasn’t worth $7 million.”
“[H]e didn’t want to be $700,000 in debt, but it was the only way to structure it. We were both frustrated, which is what happens, because that pitch was actually over an hour long. And I was the only guy that offered anything.”
Ring’s ability to raise funds from others was evident in the fact that Siminoff’s stake was so diluted by the time of the Amazon deal. According to Forbes, Ring had $209 million in investment capital. Back in 2015, Branson wrote about his investment in Ring on his blog, describing how the product could deter crime by sending mobile alerts and starting a video recording when an individual approaches the doorbell, even if no one is home.
As for O’Leary, his attitude is to never look back and just keep focused on new deals that come on to Shark Tank. The show was recently renewed for another season on ABC.
“I never cry over spilled milk because I’ve learned on ‘Shark Tank,’ over 10 years, I’m going to see 10 great deals right after his, and I did. [Ring] won’t be the last to sell for $1 billion…. The deals are getting bigger every year.”
Shark Tank aired its season finale on February 25. Fans can expect the show will be back on ABC with new episodes in the fall.