'Shark Tank' investor Lori Greiner explains why she still invests in 'one-hit wonder' companies
A phrase you'll commonly hear on "Shark Tank" is, "You're a product, not a company," and the investor most likely saying it is either Kevin O'Leary or Mark Cuban.
O'Leary said it in the fourth season, for example, about the car accessory Drop Stop. He offered its cofounders Marc Newburger and Jeffrey Simon $300,000 in exchange for a royalty deal but suggested he didn't have faith that relying on a single product was profitable at scale.
"Right now what it does is it uses capital [and] the bigger it grows," he said. "It just sucks cash. The bigger you get, the more distribution you get, the more money you're gonna need."
Greiner, who made a deal with Drop Stop for $300,000 in exchange for 20% equity, says this is an instance where she fundamentally disagrees with some of her fellow Sharks.
"Just a product, like Drop Stop," Greiner said at a recent Staples event for its small business initiative, "has done $12 million in three years."
Greiner has helped bring Drop Stop's sole product, a rubber accessory that keeps items from slipping into the gap between a front car seat and center console, into Staples, Bed Bath & Beyond, and Walmart and has boosted its QVC presence.
It's one of her most successful investments over the three-and-a-half seasons she's been on the show.
"I think [that if] you have one genius product and good entrepreneurs, you can then turn that one product into a huge success," Greiner said at the event. "And then of course continue to grow your business by creating other products, because you don't have to stop and be a one-hit wonder."
If O'Leary or Cuban sees a business as more of a single product than a company, they are seeing entrepreneurs who may have a great invention but haven't proven themselves yet. With a single product, they are on a hunt for specialized market share, and profits sustain just one item. When a company introduces new products, they are better able to meet a variety of customer demands.
Greiner, however, considers driven entrepreneurs with a successful flagship product to be enough reassurance to join them and establish the foundation for something huge.
"It's so much easier once you've taken one product and made that successful, to then start to think of other products that can then follow along in the same product line," Greiner said.
While Drop Stop has yet to expand its offerings, Greiner's biggest success, Scrub Daddy, has reached $50 million in sales by expanding from its hugely popular flagship offering into a successful variety of cleaning tools suited for different needs.
"So," Greiner said, "I love one great product."
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