'Shark Tank': Why multiple Sharks wanted a piece of this hammock company—that walked away with a $1 million deal
For entrepreneurs on ABC's "Shark Tank," a million-dollar investment is difficult to get.
But on Friday's episode, co-founders Joe Demin and Rachel Connors left the Tank with a $1 million deal, even though they only asked for $400,000 in return for a 7% stake in their company.
"It's never happened before in 'Shark Tank' history where someone came in here for $400,000 and walked out with a million," Shark Kevin O'Leary said during the episode.
And it was all for a hammock company.
Demin and Connors, co-founders of Yellow Leaf Hammocks, pitched their line of hammocks and hanging chairs to the Sharks.
"At Yellow Leaf Hammocks, we perfected the hammock for the modern consumer," Connors said.
"We conquered every obstacle, from creating a cocoon-like, no wobble design, to a shockingly soft yarn, so you won't get a rope burn when you're trying to relax," Demin said. "And, they are completely weather safe."
In addition to selling hammocks, which range from $179 to $299, the company sells a standalone piece of furniture called "The Throne," which now costs $1,499, according to its website.
"The Hammock Throne is an indoor-outdoor hammock chair ... that you could put out in your living room, on your tiny balcony or even in your office," Demin said, adding that the hammock extends back, so that it can fit someone as tall as 7 feet. It has a diameter of three-and-a-half feet.
The company is a social enterprise and employs moms in rural Thailand to create high-wage jobs, with each hammock signed by the woman who made it, Connors said.
"I like that," Mark Cuban said.
The idea behind Yellow Leaf Hammocks came after Demin went on a backpacking trip across southeast Asia, he said.
"I stumbled across a hammock on a remote island and was immediately struck by how soft it was. I was really impressed with the quality, and I started asking some questions," he told the Sharks.
"I learned that it was woven by this hill tribe community. It was part of this economic development program to help this hill tribe group out of poverty in Thailand."
Demin met with some of the weavers and learned that the community was previously in debt slavery.
"The thing that really struck me was that a lot of people kept coming to this community, asking to join the program, but they were being turned away because there weren't enough sales. And I thought, 'Well, we could start a little hammock company and [bring in] jobs in this region.'"
Demin decided to quit his job in finance and start Yellow Leaf Hammocks with his wife, Connors.
"Our inspiration to start this was to literally end poverty in really vulnerable communities in the developing world," Demin said.
In 2018, the company generated $860,000 in sales, Demin said during the episode, and projected to make $1.3 million at the end of 2019. The co-founders said as of 2018, Yellow Leaf Hammocks is profitable.
Immediately, guest Shark and Kind Snacks founder Daniel Lubetzky made an offer.
"Out of the five Sharks here, I probably have the most credentials about building socially impactful businesses," he said, referring to his "not just for profit" companies, like PeaceWorks, which sold tapenades, spreads, and sauces made by people who live in conflict regions in the Middle East.
"So, I understand the challenges you're facing. I really love a lot of what you stand for, but you have a crazy $5.7 million valuation," Lubetzky said.
"So, my offer is as follows: I want 33% of the company and I will give you $1 million."
Sharks Robert Herjavec and Lori Greiner also jumped in with offers, but the co-founders decided to negotiate with Lubetzky instead.
"If you take the million dollars from me, you won't have to dilute yourselves again.
'You know how much money Kind has raised in its entire lifetime in business? The total we ever raised in our entire history was $5.2 million, and we sell over a billion dollars in sales," Lubetzky told Demin and Connors.
"I'll teach you and help you to run the business in an efficient way."
Demin countered Lubetzky, asking for $1 million for a 25% stake, and the Kind founder accepted.
"We're gonna make a huge difference," Lubetzky said.
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
Correction: This article has been corrected to reflect that Daniel Lubetzky is the executive chairman of Kind snacks.
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