You washed that wool sweater grannie made you for Christmas. Now it looks like mid-drift from the 1980s. Before you altruistically throw it into the Goodwill donation pile, try restoring your sweater to its former glory with Unshrinkit, a laundry solution.
Harvard Business School classmates Nate Barbera and Desiree Davis Stolar developed Unshrinkit ago after Stolar accidentally shrank a sweater her sister gave her. During a November 2015 Shark Tank appearance, they showed the sharks how shrunken sweaters can regain their former brilliance in four easy steps. First, pour a bottle of Unshrinkit into a gallon of water and soak your sweaters for only 30 minutes. Second, you rinse the sweater in cold running water. Third, reshape the sweater to its former size. And finally lay it flat to dry.
Barbera and Stolar offered 10% of their company for $150,000, valuing it at $1.5 million. O’Leary Ventures founder Kevin O’Leary offered $150,000 for 33%. FUBU founder Daymond John offered the same amount for 25% contingent upon them getting a licensing deal. They took Dallas Mavericks owner Mark Cuban’s offer of $150,000 for 15%.
You can buy Unshrinkit via The Grommet, eBay (EBAY), Amazon (AMZN) and a handful of retailers including Bed Bath & Beyond (BBBY) for $8.99 to $39.99. As students, Barbera and Stolar did not want to expand to retail until after graduation. Before their Shark Tank pitch, they had sold 5,100 bottles, totaling $35,000 in revenue with no employees. Orders for 21,000 bottles poured in afterward. Sales blasted about 350% this year. Stolar declined to give more details about sales because the company is trying to raise money to expand. They aim to double or triple revenue each year.
Harrison Specialty Co. in Canton, Mass. produces the product while SourCentra, headquartered in Framingham, Mass. distributes it to retailers. They are expanding distribution to specialty big box retailers and overseas to Scandinavian countries.
Stolar explains how she came up with the idea, found a way to develop it and nabbed a Shark Tank deal.
Ky Trang Ho: Tell us about your background. What were you doing before you started your business?
Desirée Davis Stolar: Behavior patterns have always fascinated me. I gravitated toward industries that would allow me to observe others’ behavior and act on changes or discoveries. For more than five years, I consulted for companies’ market research, consumer insights, brand strategy and product marketing groups. I love the moments when consumers reveal something about what they want and a team has created an environment to recognize and act upon it.
A Big Problem With Sweaters Going Small
Ho: How did you come up with the idea for your business?
Stolar: Ah, Boston. It is a smart, vibrant city but a very cold city. I was not prepared for frigid temperatures coming from Los Angeles, Tampa, Richmond, and Arlington. Of course, I had the requisite wool sweaters, down coats and boots. However, owning the garments is the first step. Taking care of them is as important.
Alas, one evening I shrank a cashmere sweater my sister had just given me for the holidays. Frankly, I was embarrassed and annoyed. She was my younger sister. I did not want to tell her I had not mastered the basics of laundering clothes. It perturbed me that no commercial solution existed in 2014 to unshrink wool clothing.
I searched Google (GOOGL), Amazon (AMZN) and eBay (EBAY) for more than an hour looking for anything – even a bottled home remedy. The only “solutions” were suggestions to soak the garment with baby shampoo.
Not one to be easily defeated, I tried the suggestion. The next day I went to class at Harvard Business School wearing the supposedly unshrunk sweater. As the day progressed, it slowly began to shrink back into something akin to a crop top. Needless to say, even with the school’s relatively casual attire policy, I was not appropriately dressed by mid-afternoon. I had to borrow a jacket from a friend.
By the time I returned home that evening, it occurred to me that the millions of YouTube views and the hundreds of thousands of webpages showing others unshrinking sweaters with baby shampoo represented more than frustrated clothing owners. It represented a business opportunity. All I needed to do was figure out the chemistry.
Ho: What made you think it could be a successful product?
Stolar: There was not a single competing product. There were dubious home remedies as a substitute for a real product, but nothing that would not have you re-stretching your garment all day.
Ho: How much did you invest in your business? How did you get the money to start your business initially?
Stolar: I was tremendously fortuitous with my timing. In my entrepreneurship class at Harvard Business School, we were given $5,000 to begin a micro-business. With five other classmates contributing on product development, logistics, Web design and legal needs, the initial seed funding from the school carried us through the first four months of the business.
Ho: When did you first roll out the product?
Stolar: We rolled out Unshrinkit officially in September 2014 with The Grommet – an innovative product launch platform. We loved how they featured a daily video of a new product in tandem with the founders and introduced you to a very wide network of early adopters and retail partners. We expected to sell about 200 bottles in the first few weeks.
Instead, we sold those 200 bottles in the first hour of the launch. We frequently point to our launch on the Grommet as the real start to the company because it showed us we had legitimate market traction.
Ho: How did you go about making a prototype, sourcing the materials and finding a manufacturer?
Stolar: The solution’s brain trust, led by Nate Barbera, leveraged their background in science, engineering and product development. They created a rigorous methodology to test, review and enhance the selected active ingredient, its concentration level and methodology of use.
We sourced the materials from major online suppliers for chemical ingredients, bottle components, etc. As for our contract manufacturer, we were limited by the small initial order we wanted to request. However, we eventually found our main manufacturing partners (SourCentra and Harrison Specialty Co.) by asking for recommendations from classmates who had already created a consumer-goods product.
Ho: What hardships did you encounter in developing and launching it?
Stolar: Unshrinkit is a brand new product. For most people, the reaction upon hearing about it is disbelief. How is it that a small group of business students did what chemical engineers, wool manufacturers and fabric scientists could not do for decades?
Also, there are many permutations to how a wool or cashmere sweater is manufactured. Garments do not shrink uniformly. Depending on the water temperature, the length of time in the dryer, and a number of shrinkage instances, a garment can fall on a spectrum from being easily unshrunk or to not budging at all.
Helping customers understand this and working through their individual questions and garments requires time, patience and a willingness to accept negative reviews even though most people have a positive outcome.
A Shrunken Valuation in the Shark Tank
Ho: How long between when you taped the show and when it aired? What was that time in between like?
Stolar: We had a five-month waiting period in between taping and airing. There is a great deal of uncertainty because a team is (potentially) negotiating with a shark, ramping up to serve Shark Tank customers, and praying the producers found their segment entertaining. In the end, one has to stay focused on the business and the tasks at hand.
Only about half of taped segments ever see an air date, so you cannot get too caught up in stalking your email each day hoping to see a response from the producers.
Ho: What did the sharks like most about you, the company and product?
Stolar: They each loved our founding team, the uniqueness of our product, our patent-pending status, and our initial market traction. Plus, we were recent graduates from Harvard Business School, so that gave us credibility as well. The sharks see a few wacky ideas during filming. I believe our product came across as a more solid bet. It is not every day Kevin does not immediately throw out a royalty offer.
Ho: How did you prepare for your appearance? What made it a success?
Stolar: We prepared for every possible component of our appearance. We tested different outfits, stances, intros, and tones at different competitions leading up to our filming. I was most confident in white pants, and Nate loved a good navy collared shirt. We were ourselves on stage.
We watched more than 100 segments of Shark Tank and created a database of facts related to the founders, the products, the business details, the questions received, the shark responses, the sharks themselves and outcomes. We had a good sense of what range of questions to expect and what answers would yield a more positive conversation.
We played and re-played others’ segments and pretended to be there ourselves as extra practice answering questions “ at the moment.” And finally, we set up a fake Shark Tank simulation with venture capitalists and angel investors in the Boston area. They knew nothing about us at the outset and they grilled us for two hours. It was the best preparation we had for the actual filming and it paid off in dividends.
Ho: What about being in the Tank (or whatever happened before or after) surprised you the most?
Stolar: The producers care about you as people. They assign you a couple of people to help navigate you through the process. They review everything you plan to do to ensure it represents you as best possible. And they are transparent about the process in full.
I never felt misled or mistreated at any point. Contrary to popular belief, they are rooting for founders to do well. But once you are on stage, it is all up to you and the product in hand.
Ho: If you could do the show over, what would you do differently?
Stolar: Other than relish the moment a bit more, I would not change a thing. Of course one can wonder what would have happened if we had countered Daymond’s proposal or brought Kevin back into the conversation. But we made strong decisions given the information in front of us and would likely change nothing.
Ho: What misconceptions do you think viewers have about the show?
Stolar: Most founders care about their products and hope Shark Tank can be a platform for greater success. Very few people go on there just to be your Friday night entertainment. These are businesses that have required countless hours and sacrifices. They are not comedy acts.
Ho: What can you teach others about your Shark Tank experience? What are the secrets of a successful audition and appearance?
Stolar: There are few secrets left for a successful audition and appearance heading into season 8. Check out YouTube for well-done auditions, re-watch segments for themes on what helped founders secure a deal, call founders in your particular category area for guidance.
There is no longer an excuse for going into Shark Tank unprepared. And frankly, I think it is more interesting now because both sides are coming to the table ready to engage fully.
Post Shark Tank
Ho: What are the next steps in working with the Sharks after getting a deal?
Stolar: You collaborate with their business team on terms and due diligence. Sometimes the deal is modified to the individual founding group or to address the Shark’s concerns. In our case, the deal was not closed.
Ho: How much did your sales and profits to increase after the Shark Tank appearance?
Stolar: We aired the night of the Paris terrorist attacks, so I never put a lot of stock in the immediate sales after our Shark Tank appearance. We also were working on a deal with Bed Bath & Beyond (BBBY) when we aired. That relationship took off separate from the TV show altogether.
I believe Shark Tank had the biggest impact on our awareness of this specific use case. Months later, I still have people who reach out because they just saw our segment on a recording. But for the quants out there, we hit our goal to sell 20,000 units this “sweater season.” Shark Tank played a significant role in making that goal a reality.
Ho: What kinds of distribution deals/sales channels did you score after being on Shark Tank?
Stolar: We were already pursuing international distribution and retail deals before airing. If there were one deal, in particular, I could assign to Shark Tank, it would probably be our retail expansion into Canada with Showcase stores. There was such a swell of Canadian demand after the show aired that we quickly moved to place the product in most of the provinces.
Ho: What is your media and marketing strategy? How do you acquire new customers and what are your customer acquisition costs?
Stolar: We acquire new customers via “word of text and word of picture.” In other words, saving one shrunken sweater usually leads to three to four other purchases, as well as a repeat buyer. We have spent very little on media and marketing. Many media outlets find the before/after story visualization of a saved sweater to be very appealing.
Ho: What was the most effective thing you did to get more exposure for your business before going on Shark Tank?
Stolar: We reached out to people via Facebook (FB), Twitter (TWTR) and Instagram when they expressed frustration with a shrunken sweater. It was immediate and relevant to our potential customers.
Ho: How do you find business partners, instructors, salespeople, etc.? What qualities do you look for?
Stolar: We primarily source our partners via recommendations from friends or organizations. We look for strong collaborative tendencies, good communication methods, and solid business history. That is how we found our manufacturing team (SourCentra), our patent lawyers (Lando & Anastasi), our business lawyers (MBBP) and our first sales partner (The Grommet).
Ho: What business books do you recommend people read and why?
Stolar: I don’t recommend people read business books. I have nothing against them. But I find a combination of business newspapers, journals, and articles to work well for me. They capture a range of opinions, industries and desired outcomes.
Although I do have a few go-to media entities, I am brand agnostic. If there is something notable to read, I will read it. And usually, I will share it with others.
Ho: What’s the worst mistake you’ve ever made in business and how can others learn from it?
Stolar: The worst mistake I ever made in business was to not jump into a problem earlier because I was not familiar with the space. Just because you have never done product development or logistics before an issue occurs, does not mean you do not have the capability and the drive to make progress.
Do not hesitate to get involved in areas that are not your traditional points of expertise if you are willing to do a bit more homework and ask good questions.
Ho: What is the best advice you’ve ever received?
Stolar: Pursue something that is at the nexus of:
1) what you are good at doing
2) what other people value you doing
3) what you feel passionate about doing
If not, someone else will invariably eclipse you. The third facet is the most difficult to accomplish but the most important to facilitating your long-term success and sense of accomplishment.