The word "no" doesn't mean no forever. It doesn't even mean no for 20 minutes on "Shark Tank."
In the latest episode of ABC's reality pitch show, billionaire investor Mark Cuban called entrepreneur Chris Johnson "a fool," yet later decided to i nvest $300,000 in his business.
Johnson was after an investment of $300,000 for a 10% equity stake in his company, Rapid Ramen Cooker, which produces s quare-shaped bowls that give ramen noodles stove-top taste despite being cooked in the microwave.
Johnson said he would use the money to manufacture his cookers, which cost $0.75 each to make and sell for $5.99.
From the beginning, Cuban questioned the need for an actual cooker to make ramen noodles. "You're drunk [when eating them] — it doesn't matter," the investor argued.
In three months, Johnson was able to get his cooker in over 2,500 stores, including Safeway, H-E-B, Winco, and Raley's, and brought in over $164,000 in sales. He predicted sales would hit $2 million in the next year.
When Johnson said that he's so confident in the projected growth of his company that he wouldn't sell it for $3 million today, Cuban said what no business owner wants to hear: "You're a fool. I'm out."
Sharks Kevin O'Leary and Robert Herjavec decided to team up, offering the funding for a 25% stake plus $0.75 every time a Rapid Ramen is sold until the investment is repaid. The royalty would then drop to $0.25 per unit.
At this point, Cuban jumped in and said he would provide Johnson with the $300,000 for 20% equity, but $150,000 of it would be in the form of a loan.
Johnson counter-offered with 15% equity to a hesitant Cuban.
"You know I'm going to be the one grinding," Johnson said. "I'm going to be the one making it happen. I will outwork every single one of your entrepreneurs."
This was exactly what Cuban needed to hear. He accepted the offer.
The lesson here is to believe in your product, don't be afraid to negotiate, and even when someone says "no" to you, it doesn't mean you can't turn that "no" into a "yes."
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