The Rest of The Story

For those of you who watched my national TV debut (and, likely, finale), you know that it didn't go so well for me in the Shark Tank. The irony of the "What's your customer acquisition cost?" question is simply that it can't possibly be answered for an early-stage company. The added irony is that the question could have been asked of ANY of the entrepreneurs who appeared on the show and NONE of them with early stage businesses could have answered it. It was truly frustrating to not be able to even get to the meat of my business because they got bogged down on the fact that I couldn't answer a question that simply had no answer prior to an investment in the business followed by time to test a variety of marketing methods and track results. Ugh.

It was clear to me in watching the entire Season 1 that the Sharks were truly doing nothing but looking for manna from heaven. They were only investing in businesses with proven history and stellar financials. I can't say I blame them for using these as the investment criteria, but that doesn't really make them "Angel" investors, which is how the show portrays them. That type of thinking really makes them something closer to Venture Capitalists, who have more of a mindset of putting money into proven business models to expedite growth rather than taking on the higher risks associates with true Angel investments.

Typically an Angel investor knows he or she is investing early without all of the answers and, as a result of the extra risk, gets rewarded with a larger % of ownership per dollar invested than a Venture Capitalist would expect in a later stage. The thing that really has made the Sharks, well, um, SHARKS, is the fact that they have evaluated investments like Venture Capitalists yet expected ownership like Angels. Cake. Eat. In this economy where entrepreneurs have had limited opportunities to raise money the phrase "Cash is King" is more true than ever and the Sharks have certainly taken advantage of that - not that I can blame them!

Having said all of that I'd also like to say that I went into the Shark Tank with several thoughts in mind - in this order:

1. Get on national TV and get the exposure for http://www.InkFlip.com - if America loves it what happens with the Sharks doesn't really matter.
2. Get an investment from the Sharks
3. If the Sharks pass, hope the exposure brings other investors to the table who have been following the show who want to fund or acquire the business.

Obviously #1 is done and now America gets to vote with the best voting tool they have - their wallets. At this point I'll either get a surge of business to validate the concept or I won't. Either way I've got a clear answer, something every entrepreneur wants so he or she can stay focused or move on. #2 clearly didn't happen. #3 is still on the table. Interested? I'm still looking for $ and, for the right price, the company is always for sale.

Stay tuned and I'll let you know what America thinks about InkFlip!

Best - Andy

26 comments:

  1. Ummmm.... Hello?? The opening credits say that the "Sharks" are a group of Venture Capitalists! Not Angels. lol

    Lots of people have said that it would be easy to figure out what it cost to aquire customers, but you have conveniently deleted their posts.

    Oh well, guess you can't handel the truth from real business owners. At least your friends are willing to come on your website and say fake positive remarks. Good Luck with that!

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  2. Andy, you should have done your homework. The Sharks made you look like the naive fool you are.

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  3. Andy looks wierd in his picture with his creepy Photoshop "enhanced" eyes. Eek!

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  4. While I understand your point of view, I'm afraid it's just dead wrong. You imply in your post that you cannot come up with a costumer acquisition amount prior to an investment. That isn't entirely true. Sure, you can't possibly get an "exact" amount, but there is nothing stopping you from deciding on at least one method to gain customers, and finding out how much that method would cost. You can get that information prior to any investment with simply phone calls. Then, once you know the cost of the method, calculate what percentage of people you marketed the product to would have to sign on in order for you to make a profit. Again, this can be done prior to an investment. At the very least you should have given them that information. That way, they can decide if the percentage of people that must respond favorably seems realistic or not. Any type of investor should at least be given this information, and it is completely free to get this information. All you need to do is price a marketing strategy and calculate how many people the marketing strategy reaches that must say yes to gain a profit. This is basic business strategy 101. So, while you may not have been able to give them an exact costumer acquisition amount, you could have given them the percentage of "sign-ons" needed from a specific strategy, which is 1,000 times better than saying "I don't know." And, if you were more prepared, you could have taken it a step further and come up with an estimated percentage of favorable responses, which then would have yielded an actual customer acquisition amount. While not exact, it's still better than "I don't know."

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  5. Why not just go to Offix Max 2 blocks away as opposed to having a cartridge sent to you; we all know people are stupid and are going to lose it and going to Office Max anyway. I also don't like the name "Ink Flip" nor the idea of receiving cartidges in the mail -- it's like having a service that sends you scotch tape in the mail before you run out; a need that I wouldn't say is dire.

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  6. I like the idea and just signed up for the service. I am a small business owner myself and this service is a great convenience and will save us a slight amount of $ throughout the year - an added bonus. I have been in the boat of running out of ink many many times when I am filling my customers orders late at night. Sure, Office Max might be 2 blocks away, but it sure is not open in the wee hours of the morning when many of us fighting to get to the top are working! And if it was open, I sure don't want to get myself and two small children in the car at 2am :) This business has a lot of potential and I am happy to support it!

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  7. I am a work-at-home mom. It doesn't matter if Office Max is two blocks or twenty minutes away, there's no comparison between running errands with a kid and having discounted ink shipped free to my home. Unfortunately, you don't list any cartridges for my printer (Canon Pixma Mp150).

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  8. I personally liked your insert and plan to use your service in the future once I can find a place to settle. Good Luck and I think that short TV exposure will be enough to help you get the jump start you need. Thanks Scott

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  9. I'm curious as to how your service compares to Carrot Ink, who has been around for a really long time and whose prices are cheaper.

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  10. Andy,
    I thought they passed on a good opportunity! Honestly, when I went to find the website after the show it was down, indicating that many other people in america had the same idea to check out your site - clearly the simple exposure of the show was worth it and I wish you luck - it's a good idea and something we might think about using ourselves - I'm sure you'll have no problem finding investors or customers now :)

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  11. Your assesment of mindest of Sharks is right in line with my obervations from the beginning. They value buwniess as late stage (VC/PE) multiples of revenue while the equity stake they claim is more like early stage (angel)
    Good job and good luck
    Shiva

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  12. as soon as i heard of your business ...i thought WHAT A GREAT IDEA...because the same has happened to me in the late hours ....or i have forgotten what number of cartridge i was supposed to buy and bought the wrong one .....and EXPENSIVE!!! If you could ship to canada...or if you had my type of cartridge i would definitely sign up!! :)
    There is a STAPLES not too far from my place but the traffic congestion/parking/time problem is too much to bother with if there is an option like this.... :)

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  13. I have seen a few comments where people say that running to the store at 2 AM is not an option (should they run out of ink.) If that is a concern of yours, then why not just buy an extra cartridge at the store and have it sit on a shelf in your office. That way it's always there for you. If you run out of ink, then just use the spare, and buy a new spare at your leisure? Am I missing something here?

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  14. Are these actual brand new cartridges like those sold in stores, or are they "refilled" used cartridges? The reason I ask is because many name brand printer companies will NOT honor the warranty if the user is using used refilled cartridges. That makes this idea quite a big risk to a business owner.

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  15. I think your idea is a perfect fit with those of us who are concerned with the environmental impact. Since you do not offer cartridges for my printer, what if I sent you a complete set of empties? Can we get started by refilling my manufacturers cartridges? Personally, I am less concerned with saving money than I am with saving the Planet. As long as the cost is not more than purchasing new cartridges and the quality is equivilent, it seems like a winner to me!

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  16. Get your affiliate network running. Sign up with Cj.com, LinkShare or Shareasale.com and offer around $2-$4 for new customer sign up. That would also answer their question. It will cost you $2-$4 plus any affiliate network fees to obtain new customer. How many you can obtain... That you will need to find out though. Good luck.

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  17. for those that say you should just go and buy an extra one and have it there, yeah thats fine and dandy when you have the time and aren't too busy to forget that you already used that one too, its just one less thing to remember on your to do's
    this is a gas saver just like netflix
    just because you don't see the need for it does not make it a crummy idea.
    i live in area with too much traffic for me to take the time to stop at stores plus the lines, they need to be as avoidable as possible. Great Idea.

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  18. Well I think the idea may be solid depending on what you actually charge. The problem is that you may be too naive just as they said on the show. Getting your cost per acquisition (CPA) is easy. You can figure it out with a few hundred dollars in a google ad-words account. Heck, most hosting companies give you a $50 trial credit in adwords to use! All you need to do is bid on some keywords and let google do all the analytics for you.

    To learn that all you would have to do is read a little bit about entrepreneurship. Maybe you should check out the 4 hour work week by Tim Ferriss.

    Good luck,
    -Andrew

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  19. Good luck to you and your company. Whoever "anonymous" is that is making stupid comments...come on! Be a big person and stop hiding behind "anonymous".
    Running out of ink is very different than running out of scotch tape. I've been a member of Netflix for a long time. I see this as the same type of service - making it cheaper and more convenient for the customer. Way to go!

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  20. Henry.. Phoenix, ArizonaJanuary 10, 2010 at 3:23 AM

    Excellent idea...im on board but dont see cartridges for a HP Photosmart D7560. Id too would spend a little more to know my cartridge is being re-used as opposed to ending up in a landfill! I believe Anonymous isnt working a job while going to school with a wife who works and kids in both grade and high school..whew! ANY time i save these days is priceless. Whats a customer cost? Whatever it cost you to go on that show divide by the wave of customers i think your gonna get...hope im right.

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  21. I think the sharks were a little bit harsh, but unfortunately they do have a valid point. You should have at least a vague idea of how much it costs to acquire a customer. Having said that, while I don't think Inkflip is a brilliant idea, it's not a bad idea, and I do think there is potential. I hope the exposure on the show will increase the traffic to your website and your revenues or potentially bring in another investor. I'm sure that that would be more valuable to you than any money that they would have put up. Good luck!

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  22. I think you have a solid model. Ignore the negative posts. Your ignorance is completely understandable/acceptable @ this stage in your business. Like banks, investors like guarantees. You're better off with a bank, or perhaps an expert who would invest sweat for equity. i'll reach out to you.

    Chris

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  23. Andrew is offering great advice. In fact you can check the AdWords bid tool through google and look at the cost per click for "ink cartriges" and look for other related suggested terms. Then, if you don't want to run your own test, just look for average roi on CPC campaings for ink refills. Not rocket science but gives a back of the envelope estimate of customer acquisition cost.

    Do not underestimate the value of a keyword domain. The roi can be much higher if customers find you through organic search results. Some domain owners will joint venture or lease their names with an option to purchase to
    companies such as yours.

    Good luck.

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  24. For those of us in rural areas, we do NOT have an Office Max 2 blocks away. We have to drive 60 miles (or more) to get to one. Wal-Mart carries ink, but not all brands and numbers (just the most popular ones)...and I don't have a lot of confidence in the product, since they tend to cut costs wherever they can to keep their margins. Bottom line...this is a great idea for those of us who run home-based businesses and need to put out professional-level products on a short turn-around. I'm just bummed that you don't carry my print cartridges.

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  25. I think this can be a good service. Plus, the ink that I buy is $35.00 at walmart, and it's going to be 12.00 through here.
    That's saving me money....and being that I go through ink at least 2 times a month, that's a lot of savings, as long as the ink that I get lasts as long as the real one...

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  26. I compare the price you have with the price I can get online, your price is 800% more than what I can get elsewhere. It's a good deal for anyone who doesn't shop, but is referred to your website by a friend or something. For someone like me, why should I pay 800% more to buy from you where I can pay a lot less for the same thing?! Doesn't make sense.

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