The Coolbox is not your dad’s toolbox and a far cry from grandpa’s wood case with handle. The toolbox of the new millennia — expected to hit the market in July 2016 but was delayed many times — comes equipped with Bluetooth connectivity, speakers, USB power outlets, cell phone and tablet holders, a whiteboard, wheels and detachable LED light fueled by a rechargeable battery. Most ingenius of all, the front features a bottle opener. The so-called “world’s smartest toolbox” double duties as a cooler. All of the electronic parts are water resistant.
Chris Stoikos and Jason Neubauer entered the Shark Tank in April 2016 in hopes of engineering a $500,000 deal for 10% of the Coolbox, valuing the invention at $5 million. The Newport Beach, Calif.-based company already has 10 equity partners with varying levels of involvement.
Coolbox launched an Indiegogo campaign on January 26, 2015 and made $400,000 in pre-sales.
The CoolBox presold for $190 and will retail at $249. It costs $110 to produce in China. It’s distributed through a third-party logistics partner, who is expected to get it into retailers across the country soon.
Cybersecurity king Robert Herjavec thought the company’s valuation needed fixing.
“I love the idea but your costs are very high. Your margins aren’t very good,” said Herjavec. “And you don’t even have retail yet or distribution and you’re saying the business is worth $5 million dollars today.”
Herjavec doubted that people want all the extra bells and whistles in a toolbox and found the price way too high.
Educational software mogul Kevin O’Leary thought the numbers were in disrepair.
“This is going to tie up a lot of cash. This is a very capital intensive,” said O’Leary.
Fashion guru Daymond John took an ax to the valuation, offering $500,000 for 25%.
The Coolbox has a provisional patent but it could be copied easily with minor modifications.
“There’s nothing that’s protectable,” said Dallas Mavericks owner Mark Cuban. “Somebody can knock you off and it’s gone.”
QVC queen Lori Greiner offered $500,000 for 30% of the business, contingent that Lowe’s (LOW) gives them a purchase. The Coolbox would fit perfectly into her portfolio. She has an array of home-goods products at Home Depot (HD), Lowe’s (LOW), True Value and other hardware stores.
Perhaps realizing that Greiner would make for a better partner, John recanted his offer.
Stoikos and Neubauer countered Greiner’s offer with $500,000 for 20%.
Greiner came back with a $500,000 line of credit at 5% interest plus 15% equity in the company.
Stoikos and Neubauer accepted. But the deal fell through in real life.
Stoikos and Neubauer share how they re-tooled an age-old product, the most effective way for businesses to get exposure — aside from going on Shark Tank — and much more.
Ky Trang Ho: Talk about your background. What were you doing before you started your business?
Chris Stoikos: I built and sold an electronics store and a restaurant, and then moved on to commercializing products. I have taken a couple of products like www.rangetogo.com from concept to market.
I also started an agency to help other people develop products and organize high-impact launch campaigns. I then decided to form the team around the idea of Coolbox and push out what became my largest launch campaign until I founded Dollar Beard Club.
Jason Neubauer: In 2009, I was a winning contestant on Wheel of Fortune. I used the prize money to pursue my first venture, YouBetMe.
My first startup sought to create a platform where friends could bet on anything, anytime, anywhere. Developed by all-star chief technology officer Nils Lahr, Youbetme is the easiest way to create and track wagers with friends. Youbetme ranked as high as No. 6 in sports and No. 500 overall in the appstore
I moved away from social betting towards social philanthropy. Challenged, my second application sought to bring awareness to various issues by leveraging the highly valuable social currency of “influencers.” Challenged ranked as high as No. 10 in lifestyle and No. 125 overall in the app store.
Retooling Existing Products
Ho: How did you come up with the idea for your business?
Stoikos: I do a lot of do-it-yourself projects with friends and around the house and got sick of carrying my light, extension cord, speakers and various other things. I realized that there wasn’t a product that incorporates all of these into one package. This is primarily intended to help contractors and DIY-ers get the job done by bringing less with them, and having everything they need in one place.
We also have sports teams, campers, photographers, make-up artists and many others who use the products for far more applications than as a toolbox.
Ho: What made you think it could be a successful product (especially when there are so many competing products)?
Neubauer: Actually, the complete lack of competition was the main reason we felt that this would be a successful product in the market. There is a serious lack of innovation in this market and products like this are new and exciting and can get people excited to go out and work.
Bringing a joyful aspect to doing work is a rare space for a product to occupy. We are really happy to be able to offer a product that helps to accomplish this.
Ho: How much did you personally invest in your business? How did you get the money to start your business initially?
Neubauer: This is an extremely expensive product to develop and manufacture. Crowdfunding was essential to actually being able to make and deliver Coolbox. We personally invested a large percentage of our “life savings” into this project, and additionally assembled an incredible team to develop and manage the product and the company.
None of us have taken a paycheck from the company to date, so our “sweat equity” has by far been the largest investment into the company.
Ho: How did you go about making a prototype, sourcing the materials and finding a manufacturer?
Stoikos and Neubauer: Through various product launches we actually had an incredible network of engineers, designers, business developers and rapid prototypers. I recruited some great co-founders, who could help bring this product from an idea to a crowdfunding campaign ready prototype in under two months.
Ho: What hardships did you encounter in developing and launching it?
Stoikos and Neubauer: We hit some production delays that set back our manufacturing schedule and delayed our shipments to our Indiegogo backers by a few months. Much of this was out of our control. It was extremely frustrating.
We stuck to our guns though and refused to compromise on quality in the interest of timing. Our philosophy was that it is better to deliver a high-quality product that is delayed as opposed to one that isn’t perfect. Fortunately these delays are now behind us and we are rolling ahead full steam with a flawless finished product.
Engineering A Shark Tank Deal
Ho: How did you prepare for your appearance?
Stoikos and Neubauer: We both perform well under pressure. So we didn’t really do much preparation other than going over all of our numbers and making sure we knew them inside and out.
Ho: What about being in the tank surprised you the most?
Stoikos and Neubauer: It was such a fast and intense series of events it literally took us two days to process everything.
Ho: What misconceptions do you think viewers have about the show?
Stoikos and Neubauer: The sharks know nothing about your business prior to you entering the tank. While your segment is cut down to seven to nine minutes we were in the tank for 90 minutes that felt like six hours.
Ho: What can you teach others about your Shark Tank experience? What are the secrets of a successful audition and appearance?
Neubauer: There are three critical factors I would focus on to have a great audition/experience.
- Market Validation: Running a Kickstarter or Indigogo campaign prior to applying is not only a great way to get early adopters, it proves there is a demand in the market for what you’ve invented.
By running a successful campaign you’ve generated revenue without giving up equity and will be able to defend a higher valuation prior to pitching on the show.
- Marketing: The marketing is a direct correlation to a successful crowdfunding campaign. You need an amazing video that explains the problem and solution in an engaging way that’s less than 90 seconds.
Passion: The founder’s personality and passion have to be a direct reflection of their product. At the end of the day, people invest in character. Skill can be taught.
Fabricating a High-Growth Business
Ho: What are you doing now to move your business forward and expand?
Stoikos and Neubauer: We are finalizing agreements with manufacturing and marketing partners who will allow us to reduce our costs and open up new sales channels for the product.
Ho: What are your goals for your business over the next year and five years?
Stoikos and Neubauer: In the next year, Coolbox will be on the shelves of all major big-box retailers and all major sporting and hardware retailers. Over the next five years, we plan to license the product out to one of the largest tool manufacturers in the world so that it can reduce costs even further and make Coolbox a household name.
Ho: What is your media and marketing strategy? How do you acquire new customers and what are your customer acquisition costs?
Stoikos and Neubauer: We have traditionally acquired customers through press exposure. But we are now moving toward in-store promotions for when we roll out the retail campaign for Coolbox.
We have also recruited team members who are creating a rock-solid Facebook (FB) marketing strategy that will allow us to acquire customers at a low cost per action, CPA.
Ho: What was the most effective thing you did to get more exposure for your business before going on Shark Tank?
Stoikos and Neubauer: The biggest thing that put us on the map was hitting our Indiegogo campaign goal within 12 hours, and then doubling it in 36. This started a chain reaction of media coverage by major media outlets and resulted in a very successful crowdfunding campaign.
Ho: What other products do you have in the works? When are they set to launch?
Stoikos and Neubauer: We plan on releasing a smaller and more compact Coolbox, which will be launched at a lower price point. We will also be selling Coolbox accessories and add-ons like extra batteries, custom inserts and extension handles.
Ho: What business books do you recommend people read and why?
Stoikos and Neubauer: by Jack Stack and Bo Burlingame: This book helps reinforce how to lead a dynamic team who all work together toward the common goal.
by Peter Thiel and Blake Masters: This is a great book for gathering your overall vision for a business and developing your ability to think of the bigger picture.
Ho: What is the best advice you’ve ever received?
Stoikos and Neubauer: Never assume that anything is a done deal. Always have a backup plan and redundancies for every situation. At any given point, anything in your business can fall through or falter. You need to be prepared to quickly pivot to Plan B if that happens.