Entrepreneurs and neighbors Robbie Friedman and Allison Zofan went to Shark Tank season 13 stage to pitch for their temporary and transportable tool shed box, ootBox. The duo demonstrated their business model using a miniature version of their product and made Sharks wonder about the real-life use of the product post-pandemic.
They asked for a $300,000 investment for 5% equity stakes in the business. Let’s see how the Sharks reacted to their ask!
What Is ootBox
ootBox is a soundproof, temperature control, temporary and transportable tool shed box that can be leased and bought for extra space. The box is made out of an upcycled shipping container and eco-friendly materials and can be used as a pop-up store, conference room, workspace, and for just about everything else. The box is delivered to the customers, and all they need is a plugin outlet to use the many perks of the box.
Neighbors Robbie Friedman and Allison Zofan appeared on Shark Tank season 13 to pitch for their business, ootBox. They opened their pitch by highlighting the need of the hour, i.e., more space, and announced that their product solves the problem. ootBox is that extra space people need without commitment and permanent changes to their house’s structure. The duo was swamped with customer demands and needed a Shark to help them out of the bind.
Guest Shark Daniel Lubetzky broke the ice and asked the owners if their product had any use in the market since he couldn’t fathom why anyone would need something like that. Mark intervened, saying he could give a thousand reasons but wanted to know about the cost. Robbie said they would get to the price, but first, he wanted to talk about their business model, to which Mark replied that’s a scary response, making Barbara chuckle.
Robbie explained that they sell and lease their ootBox, Mark asked how much they sold it for, and his response turned them off. Kevin inquired about the sales, and Robbie replied they made $950,000 in sales in one year and have been in business since June 2020. Barbara asked if there were any “zoning ordinances” that would forbid the box placement in certain towns. Robbie supplied that since they are considered a tool shed, the boxes can be used anywhere by anyone. Robbie further emphasized that the box is made for people working from their toilets to avoid disturbance.
Kevin was curious about their funds, and Robbie replied that they had raised $870,000 for 30% of their company. Mark inquired about the profit margins, and Robbie said they have 40% in margins on sales and added that most people lease the boxes instead of buying them. Barbara asked about their conversion rates, and Allison supplied that the average lease period for their box is 8 months, and 60% of their leasing customers either request to buy their existing box or renew their lease for another month.
Barbara commented that raising more money didn’t make sense when they already had $870,000. She wanted to know why they needed the additional $300,000. Robbie provided that they were limited to 5 boxes per month and were struggling to meet the growing demands. Allison continued that they see the potential to grow but need more money to achieve that.
Mark jumped in and told them that’s part of the challenge; they are constrained by capital, time, and availability. He didn’t think their business model was self-sustained, whereas he had always invested in businesses that feed on their profits and grow. Mark pulled out of the deal because he didn’t want to invest in a business constrained by time and capital.
Lori praised the duo for keeping up with the changing market as she thought a temporary made perfect sense in the current pandemic, yet she wasn’t excited about the business; she was out.
Daniel thought their business model depended on the pandemic to continue, and without it, their valuation didn’t make sense, so he was out.
Kevin commented that the problem with their business was its capital requirements; the more capital they feed it, the more money they will make, and that’s not something he was looking forward to. He wanted to invest in a business that could at least return his original investment. He told the duo that he was creative, so he’ll give them $300,000 for 5% equity stakes, $1000 royalty on every sale, and take an amortized payment on every leased box. He explained that the royalty would go to zero after he had recouped his investment twice.
Robbie revealed that he wasn’t looking for a royalty deal, and Barbara interjected that she could make an offer without royalty. She offered them $300,000 for 20% equity stakes, and Kevin changed his offer immediately. He told them he would do the deal for the same amount and take 15%. As the other Sharks pressured them to make a decision, the duo hesitated to give into Kevin. Barbara countered that if they say yes to her immediately, she’ll bring her stakes down to 10%. Kevin whispered that he would do it for 9% then, but the duo had already decided.
They closed the deal with Barbara for a $300,000 investment for 10% equity stakes.
After the episode aired, ootBox became popular in the corporate world, especially for pop-up stores and temporary outlets. The business has been featured in business heralds like The Wall Street Journal, The New York Times, and Business Insider. The company can maintain good rapport among its clients because of their on-hand after-sale and accessible installation services.
Our Review of ootBox
We disagree with Daniel that ootBox has no value out of pandemic as it provides many promotional and marketing opportunities. Brands can loan it as a pop-up outlet and put ads on it to attract the target audience. Furthermore, corporates love a quick solution to their extra space needs. If the duo takes up Barbara on her offer to expand to the trailer business, ootBox can be more than it set out to do.
Pros of ootBox
Cons of ootBox
- Lease doesn’t lead to eventual ownership
Who Is ootBox for?
ootBox is for people working from their cupboards and toilets, hiding from their kids and other disturbances to work peacefully. It is for corporates who want to advertise and market their products without making long-term investments. In a way, this transportable outer space caters to various corporate needs and can be the future of outdoor marketing.
Are There Any Alternatives?
ootBox has many alternatives in the market offering the same or a variation of their services, namely TalkBox, CubiCall and Room. TalkBox works on the principle of privacy and provides space within the building. Room and CubiCall offer similar services and mostly provide solutions for indoor space problems.
Our Final Thoughts
We think ootBox is a modern solution to a modern problem and has no environmental and long-term consequences on the housing market. In fact, if the owners play their cards right, they can be the next housing solution for many.