Start-ups

'Shark Tank': Mark Cuban invested $300,000 into kits that turn sneakers into golf shoes

ABC

According to Mark Cuban's verified Quora profile, he doesn't like golf.

"I'm ultra competitive and golf takes too long to get good at and when I started my first company, MicroSolutions, I just didn't have the time. I felt like every hour on the golf course was an hour I couldn't get ahead in my business," he said in 2018 on the question-and-answer platform.

Plus, he's not good at it. "I have golfed once in my life. It was with a customer. I was so mad at my game the entire time I hurt the relationship more than helped," he said on Quora. "I haven't golfed since."

But that didn't stop Cuban from investing six figures in a golf accessories company on Sunday's episode of "Shark Tank."

Golfkicks, a company that sells cleat kits to turn sneakers into golf shoes, caught the attention of a few Sharks. The company was seeking $300,000 for an 8% stake and aimed to disrupt the golf shoe industry.

"The problem we tackle is that people are tired of golf shoes. They're ugly, uncomfortable, expensive," Golfkicks co-founder Tyler Stuart said during the episode. "We turn ordinary sneakers into extraordinary golf shoes."

Stuart's business partner and Golfkicks co-founder John Krosky added, "we've had people put Golfkicks into thousand-dollar sneakers, flip-flops, and even cowboy boots."

As a golfer, Shark Lori Greiner said "this is very interesting." But she had a concern that about how the screw-in cleats are attached.

The kit, which currently sells for $32 on the Golfkicks website, includes a screw, mounting tools and the cleats. A customer would use the screw and tools to attach the cleats to their sneakers or desired pair of shoes.

Cuban seemed impressed: People "want fashion," he said. "They want to look cool when they're out there golfing."

Shark Kevin O'Leary was concerned with distribution, and Daymond John was concerned about the company's valuation, which was $3.7 million based on the co-founders' offer to the investors.

The co-founders said on the show that in three months of selling the product, they had done $120,000 in sales. "We sold out really quickly, and we'll do $1 million [in sales for 2019]," said Stuart.

The Sharks were impressed by the sales numbers, but not sold on the 2019 projection. John and guest Shark Matt Higgins, vice chairman of the Miami Dolphins, declined, saying they have no interest in golf.

In response, the co-founders brought up other opportunities for their cleat kits.

"There is crossover into other sports, too. The future version it can take a pivot, like soccer, or kids. Ever notice how fast kids shoes wear out?"

Greiner was sold, and offered the co-founders $300,000 as a loan with 8% interest for a 5% stake in the company, plus a royalty fee of $2 per unit sold until the loan is repaid.

"Royalty is ridiculous," said Cuban. "When you have that much margin, it's easy for us to think 'pay us a royalty,' but you're gonna do distributions. And if business is good, there is going to be so much cash flow, you'll do distributions, which is better than royalties." (As the company earns more profit, it can use portions of those funds to pay investors, shareholders or reinvest into the business.)

Cuban offered $300,000 for 15% of the business, and after a counter-offer from the co-founders, Cuban agreed on a $300,000 investment for a 13% stake.

"To get Cuban at this point, it's gonna be great," co-founder Stuart said.

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

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