Business Review Weekly - July 2015Monday, June 22 2015 12:00:00 AM
Life after a Shark Tank deal: Fly Babee founder and Janine Allis tell
Fly Babee folds up small, but opens out into a black-out dome that fits airline bassinets and prams.
Photo: Daniel Munoz.
Emma Lovell, the founder of Fly Babee, describes her life since November last year as “a rollercoaster ride”.
In April, viewers of Channel Ten’s Shark Tank saw Boost Juice founder Janine Allis agree to invest $80,000 in Fly Babee, a fledgling business that makes covers for prams and airline bassinets.
But the episode was actually filmed last November and there have been plenty of highs and lows in the intervening months.
As this was the first series of Shark Tank in Australia, Lovell prepared for her TV appearance by watching lots of episodes of the American series. She recalls how her nervousness increased in the lead-up to filming, culminating in a “nerve-racking” wait in the studio. Her product shipment had arrived only that day and she had driven to Sydney Airport to pick up a sample before heading to Fox Studios.
“I remember thinking [I should] walk in there with as much attitude and confidence as I can, because inside I felt like a scared little girl,” Lovell says. “They make you stand on these markers when you walk in, for one whole minute – it doesn’t sound like a lot, but it was a real long minute while I was standing there.”
Midway through the pitch, Lovell thought she had got good feedback but was not going to secure a deal – then she got talking with Allis and her fortune turned.
“That night my husband and I couldn’t stop talking about it; we felt like children, we were on this intense high,” Lovell says. “For 3½ years in our house, it had been on our minds, and we finally got to share – not with customers, but other investors. It felt like total validation.”
By 10.30pm that night, Lovell had received an email from Allis – a practical “where do we go from here” email – and another from John McGrath offering his congratulations on “the first day of the rest of her business life”.
Janine Allis (left) and Emma Lovell ‘excited’ during the official Channel Ten photoshoot after the episode was filmed.
But the very next week, Lovell realised that 80 per cent of her shipment from China was faulty and could not be sold, and she had no recourse because it had passed quality control.
She had told Allis and the other Sharks on air that she was “retail ready” and now that was not true.
“I had to call Janine and say my first order was a load of rubbish, I couldn’t sell it,” Lovell recalls. “All the packaging had been damaged in shipment, the canopies were the wrong shape, the frames were bent, they just weren’t made to retail quality. I’d had internal quality control, which was my greenness – I now have independent quality control.”
Lovell thought Allis might pull out, but she was supportive.
“The thing with Emma was she was honest, she cut to the chase, she didn’t pretend it was all good,” Allis told BRW. “For me, that was a telling sign of the type of business person she is. If someone tried to hide it and I found out later, it would be all over for me. I said, ‘that’s OK, that’s what business is about’, and the other thing I loved about Emma was she was all about solutions.”
Lovell put in a second order – increasing it from 1000 to 5000 on Allis’s suggestion – and had to go to Channel Ten and ask for a late episode to give her time.
She was moved to episode 11, on April 26, and couldn’t tell her friends the outcome until it had gone to air.
“We had a massive party in Manly at one of the pubs and watched it with all of my friends,” she says. “It’s not often something like this happens, it’s a pretty unique experience, and of course I knew the outcome. We had a couple of TV screens, a helium [balloon] shark floating around, and a friend who is a cake maker made a replica of Fly Babee, pizza and drinks. It was a bit like a football game because any time the Sharks would say something positive, they’d all cheer, and if they said something negative, they would all boo. It felt like the launch of my product.”
The faulty stock sat in her garage from November to May until a big truck could take it away for secure destruction.
“Watching them driving up the hill was a tough day for me, though my husband practically danced up the hill because it felt good to put it behind him,” she says.
By the time her episode aired, her new stock “was bobbing around in the ocean” due to the Sydney storms, but it finally arrived three weeks later, in time for her debut at the Pregnancy, Babies & Children’s Expo in Sydney in May.
Fly Babee sold enough stock to recoup the expo costs and Lovell found it very useful to get questions and feedback from real customers, though she is planning a trade fair next.
The product packs flat into a case but folds out into a dome made from black-out material, designed to cover airline bassinets. She has realised that a $99 product for the travel market might be too niche, but it also doubles as an effective pram cover. She is now marketing it as a pram cover that also works for flights.
Fly Babee is also marketing online, including with a blog on travel tips and a sleep coach who answers readers’ questions. As well as content marketing, she has built 3,778 fans on Facebook and has 1,000 people subscribed to her newsletter.
She has been selling from her garage, but is now moving the stock to a “pick and pack” fulfilment centre called Shipwire at Eastern Creek, a global company that charges by the cubic metre to anywhere in the world. Currently she is selling online through a Shopify-enabled website at FlyBabee.com.au for $99, but she is investigating getting it listed in retailers.
Two deals done
Emma Lovell (left) and Janine Allis at Boost headquarters in Melbourne.
Allis and Lovell have met in person three times – once in Melbourne, where Allis is based, and twice in Sydney, where Lovell lives – and talk at least fortnightly by phone.
After the on-air agreement, the deal had to pass through due diligence and contract negotiation and was finally signed at the end of March.
The only change was that Allis had negotiated a 38 per cent stake, dropping to 35 per cent if Lovell didn’t take a salary for two years. That clause was dropped, with Allis coming in at 35 per cent.
“I’m not having a salary; we just decided not to say that I couldn’t if things took off,” Lovell says. “I was a stay-at-home mum, so we knew we could cope with no salary for me, and we used our savings to fund the business. We were both happy to take it out because Janine had a better feeling for who I was beyond the show.”
But while the Fly Babee deal went through in real life, that is not the case for every business that gets funded on air. Some deals don’t pass due diligence, and in at least one case, the founder realised it was not right for them.
Allis says she has signed two of her deals so far, including Fly Babee, while two more have fallen through and the rest are still in the pipeline.
Allis benefited in her early days from investment and mentoring from Flight Centre co-founder and BRW Rich 200 member Geoff Harris. She is now is on the BRW Rich Women list for her stake in Retail Zoo, a stable of franchise businesses that includes Boost Juice.
Allis is trying to mentor Lovell and her other investee, Ash Newland of Scrubba, in the same way Harris did for her.
“Where I’m helping is creating a foundation for the business – we’re planning a marketing strategy meeting, a business strategy meeting, I’ve sent her templates and we speak every two weeks,” Allis says.
“The key thing Geoff did for me was he gave advice, but never assumed to know the business intimately. He gave advice and gave his opinion strongly, but still left it to me to make that final call. He would send me on a daily basis, ‘here are 10 tips on leadership’, and open doors where he could. He was a good early partner because he had these diamonds of experience and diamonds of advice but I could pick and choose and he was very supportive.”
Allis found the Shark Tank production a far closer representation of the reality of business than she had anticipated.
“I questioned how it was going to unfold, because none of us are actors,” Allis says. “It’s real in the sense that the questions we ask are genuine questions based on the information they give us. What people don’t see is that the pitches go for more than two hours and it’s cut down to 15 minutes. But they don’t tell us to stop or to repeat ourselves; I thought it was fantastic. It would be genuinely boring to sit through 2½ hours.”
While there has been commentary about the Sharks demanding too much equity, Allis says the valuations she and her fellow Sharks gave were realistic and fair, given that four out of five new businesses fail and the founders would have a higher success rate with a Shark on board than without.
Channel Ten has confirmed Shark Tank is returning for a second season in 2016.