Start-ups

Mark Cuban says this is Shark Tank's 'No. 1 success story' after start-up sells for $22 million

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All Bruno Francois wanted to do was to make a viral app.

The Atlanta-based entrepreneur did exactly that, and then he sold the resulting start-up — backed by Mark Cuban — to online used car-seller Carvana for $22 million. Now, Cuban says Francois "may be the No. 1 success story" of all the start-ups to ever appear on ABC's "Shark Tank."

In April 2018, Carvana acquired Car360, the company Francois, 47, launched in 2015 that uses augmented reality technology and 3-D computer vision to allow people to take 360-degree photos of automobiles with a mobile phone. Car360's goal is to make it easier for online car sellers to showcase their vehicles on the internet, so Phoenix-based Carvana bought the start-up to improve its own 360-degree visuals of the used cars it sells online.

But long before Francois hit on Car360, he was an entrepreneur looking to create the next viral app — a goal that would take him through multiple products. Francois had been watching the success of early viral apps like Foursquare or Angry Birds in the first few years after Apple released the first iPhone in 2008.

"It was the, 'there is an app for that' period back then," Francois says. So, his goal was to prove that "no, there is not an app for [everything] yet."

Francois, who studied mechanical engineering as an undergraduate and later earned a Master's degree in computer science at the University of Central Florida, tells CNBC Make It that he left a safe, steady job at his family company, where he'd served as president for more than seven years, to scratch an entrepreneurial itch in the tech world and, specifically, to create the next viral app. Francois was 40 years old in 2011, when he took his first leap into the viral app market by founding Egos Ventures and leaving Francois & Co., an Atlanta-based company he ran with his brother that sells home products like stone flooring, countertops and fireplaces.

He gave himself a one-year deadline to achieve that goal with Egos Ventures, liquidating his 401(k) account and taking all of his savings (with everything adding up to about $150,000) to keep himself afloat personally and professionally for that year while he, along with two interns, tried to come up with a winning formula for a viral app.

Francois declined to share the exact salary he was leaving behind at Francois & Co., but he says it was "enough to know I was taking a significant financial risk by leaving."

But Francois was eager to put his computer science background, and his overall passion for technology, to use through his new business venture. In fact, he was so intent on taking the leap that he didn't even debate the move with his wife or two children.

Francois had "been wanting to follow my passion for a long time and I finally decided to do it," he says. "It was more 'pull the trigger' one day and 'deal with it' later. After that my family was very supportive as my passion has been in the tech."

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Francois spent nearly all of 2012 cycling through different app ideas — "it feels like hundreds," he says now —from a social networking play to apps matching users based on mutual interests. He got as far as actually creating only "three or four" of those ideas, though, and none of them gained much traction.

He also kicked around the idea of somehow using some of the iPhone's existing features in his app, including vibration, after he noticed his own vibrating iPhone moving across a flat table by itself.

Six months into the venture, Francois began renting some office space in Atlanta, which sent his costs spiking. He'd previously been working out of his basement. By December of 2012, he says he had less than $3,000 left from the $150,000 he'd saved for the year.

In the final months of the year, he still didn't have a definite app idea pinned down It was at that point that he realized that millions of iPhone owners would likely flock to a hands-free option for panoramic photos. He scrambled to develop the final product and then obtain approvals from the Apple App Store as the calendar pushed into December 2012.

What he came up with was Cycloramic, an app that could make any ordinary iPhone 5 slowly spin around on its own to take a 360-degree photo or video using the smartphone's own gyroscope and vibration function. You could simply stand the iPhone up on its flat edge, step away, and watch the smartphone spin around for a hands-free, 360-degree shot.

Once the phone is in motion, Cycloramic takes multiple images or videos and stitches them together in sequence to create the 360-degree effect, as the iPhone's own panoramic photo mode can only capture 240-degree shots.

Then "I Googled 'How to promote an app,'" Francois now tells CNBC Make It while laughing.

His search results told him that he needed to get the app in front of "influencers" in the tech industry, as well as writers covering startups. "I also created a quick video so I could send a link with my email," Francois says, detailing a sales pitch that he sent out to roughly 20 people in the week before Christmas 2012. (Today, that video has more than 1.1 million views on YouTube.)

Amazingly, the outreach worked, and a small group of people started downloading the app and spreading the word about Cycloramic.

One of those people was Apple co-founder Steve Wozniak, who was so taken with Cycloramic's vibration-induced spinning that he posted a 360-degree video of himself taken by the app on Facebook only a week after the app's release.

"This was definitely the greatest sense of achievement I got since I started," Francois says of receiving Wozniak's seal of approval. After Wozniak posted the video, he and Francois even connected over email, sharing messages on Christmas night of 2012, Francois says. In an email message to the entrepreneur, Wozniak wrote that Cycloramic was "'unexpected, fanciful, and useful all at the same time!'" Francois says, adding that the message "was extremely inspiring, especially coming from the amazing Woz."

The Woz's approval (and subsequent coverage from tech sites) briefly made Cycloramic one of the App Store's most-downloaded apps. And, at 99 cents per download, the sudden burst of users helped keep Francois and Egos Ventures afloat past his one-year deadline.

"That financed us for another year, basically," Francois says.

"We got enough money to keep going ... But, most importantly, I felt more confident that I could succeed after my first app on the App Store hit No. 1," he tells CNBC Make It.

Still, "I still didn't have a clear, long-term monetization plan to grow at that point," he says.

The next step in Cycloramic's growth would require another marketing boost. That's why Francois decided to pitch his smartphone app on "Shark Tank," applying to appear on the show in early 2013 and then filming an episode that summer.

When Francois demonstrated Cycloramic on a "Shark Tank" episode that aired in February 2014, the investors — including billionaire Dallas Mavericks owner Mark Cuban — were taken aback when they saw the app in action. Cycloramic sparked a bidding war, all five sharks making offers for a cut of the app.

In the end, Francois accepted Cuban's offer, with the Dallas Mavericks owner putting up an initial investment of $250,000 in Egos Ventures.

In the summer of 2013, when Francois filmed the episode of "Shark Tank," Cycloramic had been downloaded 600,000 times. After the episode aired, the "Shark Tank effect " kicked into high gear, as the show put Cycloramic in front of millions of TV viewers and the app saw more than 100,000 new downloads within an hour after the episode aired, Francois said at the time.

In the days after the episode, the app topped 8 million downloads and Cycloramic again jumped to the top spot for most-downloaded apps in the Apple App Store.

"It felt amazing," Francois says, but "it was hard to go beyond the viral consumer bar trick app and translate that to an actual business," he says.

Cycloramic's sales began steadily declining in the year after the "Shark Tank" appearance, and Francois decided that he needed to put the revenue from Cycloramic to work to build a product with more long-term value.

Both Francois and Cuban felt that aspects of Cycloramic's underlying technology could have other applications. "When Bruno came on ['Shark Tank'] five years ago with Cycloramic, I saw it was more than just a little iPhone app. I knew that he had some advanced technology and that it could go places from there," Cuban said during a special follow-up "Shark Tank" segment on Cycloramic that aired on ABC on Sunday.

Another problem for Cycloramic in 2014 was that Apple announced its iPhone 6 that September, and the phone had a rounded edge that meant it would no longer stand upright unassisted. Francois quickly came up with a solution (using the phone's own charging cube to balance it), but he knew he could not depend on another company's ever-evolving product. (Though Cycloramic still eventually topped more than 20 million downloads in total, according to Egos Ventures.)

Working with Cuban as a backer, Francois says the billionaire's best advice to him was: "'Move fast. Change fast. Try anything, but don't lose focus on validating and selling our product.'"

"Bruno is smart, dedicated, innovative and pragmatic," Cuban tells CNBC Make It. Cuban also touts Francois' ability to be "open-minded and very self-aware" when faced with the difficult task of reinventing his business.

"He went from having the number one app in the App Store to watching Apple change the iPhone, pushing him to create a completely new business ... That's hard to do," Cuban says.

"I realized that launching apps after apps and expecting each to be successful was just a fantasy," Francois says. "I decided to look for a way to offer technology with a recurrent revenue rather than that one-time download fee."

The "best option," he decided, was to create a business-to-business product that could earn revenue through licensing to other companies, rather than one-time purchases by smartphone customers.

Francois says he explored roughly 10 new consumer apps, many of which did not stray too far from Cycloramic, including Selfie360, an app that turns your panoramic selfie photos into animated gifs (he wanted all of his products' intellectual property to be related in order to have stronger patent protection and licensing ability).

In 2015, Francois pivoted to Car360 after noticing a hole in the market for online car sales, where auto-seller sites had been finding it "extremely difficult" to scan images of automobiles to create interactive 360-degree images to entice car buyers online.

Francois' technology quickly sparked major interest from companies serving the auto industry. "I was approached by multiple companies that were asking if the selfie technology could be used for cars." In 2016, the company locked in multi-year licensing contracts with multiple online auto marketplace companies, Francois says.

Car360 "caught on pretty quickly" in the auto industry, Francois says, and in June 2017, the company received $3.5 million in funding from a group of investors led by Atlanta-based venture capital firm BIP Capital, with Cuban's Radical Investments also contributing additional funds. (Cuban tells CNBC Make It that he ultimately invested a total of $700,000 in Francois' company.)

Meanwhile, in October 2017, Francois wowed Carvana CEO Ernie Garcia with an "impromptu demo" of Car360 at the Venture Atlanta tech conference, where Garcia was a keynote speaker. Francois had been hoping to meet Garcia at the conference in order to pitch him on Carvana licensing Car360 technology, but Garcia loved the product so much that Carvana opted to buy Francois' company altogether.

In the end, Francois certainly succeeded in creating a viral app, but it was ultimately his willingness to pivot away from his viral success to a new product and business model that ultimately netted a $22 million deal.

Now, Cuban is thrilled that one of his tech-based "Shark Tank" investments found success. "The geek in me is very, very happy," the billionaire said during the show's follow-up segment on Francois' app.

"Bruno just may be the number-one success story out of 'Shark Tank,'" Cuban added in the segment. "Not necessarily that $22 million is the biggest acquisition. But the company basically had to reinvent itself and go from zero to $22 million. That's the American dream; that's the 'Shark Tank' dream. Well done."

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

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