'Shark Tank': Harvard grad gets an education in hard knocks with her kids learning program
A Harvard graduate got some education in the "Shark Tank" school of hard knocks, learning a tough lesson about the world of business from shark Robert Herjavec.
In the first of two back-to-back episodes Sunday, Zahra Kassam entered the tank hoping to challenge the way children learn early in life, but her pitch for $200,000 for just 2.5 percent of the company – an $8 million valuation – raised several eyebrows and made shark Daymond John wonder if he heard correctly.
Kassam is the creator of Monti Kids, a subscription-based program that brings the Montessori method of learning to children under 3. Montessori is a 100-year-old practice that promotes learning through hands-on, self-directed activity. For $297 every three months, Monti ships parents toys and videos to help their children learn concepts like object permanence.
“With all due respect, there are things like this. It’s just really telling us why yours is better,” shark Lori Greiner said. Kassam insisted the real value was in educating parents on how to use the toys to teach their children, but for Greiner, the cost was too high. “Where I have a problem is, I do feel that for most people, it would be very difficult to pay $1,200 a year to go into toys.”
Shark Mark Cuban had a problem with some of the management decisions Kassam made. With $550,000 in sales in the 14 months (at the time of taping) it had been in business, the company had raised $2.8 million. But it had only $200,000 left in the bank, and was losing $20,000 a month.
Kassam was all smiles, playing it cool when other entrepreneurs might have been panicking. It was a feat that impressed Herjavec enough to offer a deal and a little bit of tough love: “Harvard sounds really fancy, but you missed one school, you didn’t go to the school of hard knocks. Someone like you that burns through $2.6 million like that tells me you missed a reality in life of how hard it is to get that kind of money. You know what you’re missing? You’re missing discipline.”
Herjavec proposed joining the board and help Kassam run the company, offering $200,000 for a 10 percent stake.
Shark Kevin O’Leary had a bit of guidance for Kassam as well, but in typical O’Leary fashion, it came with a few stipulations. He would take the 2.5 percent original stake, but he added a $10 royalty until he made back his $200,000, which would then become a $2.50 royalty until he made another $600,000.
When Kassam couldn’t convince O’Leary to take more equity instead, she countered Herjavec’s deal with 5 percent equity and 5 percent advisory shares, and he agreed. But, just when it seemed a done deal, she asked if both would consider working together, leaving everyone shaking their heads.
Reconsidering, she stuck out her hand: “Robert, let’s do it.”
“I don’t want to do it,” an offended Herjavec said as Kassam tried to apologize. “You’re treating money like it’s some hypothetical Harvard project. I gave you an offer. You tried to give me founder shares. I said yes. I said yes once. I said yes twice. I said yes three times, and what do you do? You want to work with Kevin? I work really hard for my money. If I was you after I lost all that money, I wouldn’t play around. When it’s real money, it’s really important to me.”
A shaken Kassam rebounded taking the only deal left – O’Leary’s. Afterwards, outside the tank, she regained her composure: ”A royalty works well when a company is really successful, and I think we’re going to be really successful.”