I’m sure if we reviewed every person at the end of their life, we could identify multiple mistakes or missed opportunities, ranging from financial, romantic, personal, professional, etc. Hindsight as they say is 20/20. Looking at some of the biggest successes of Shark Tank companies, Ring ended up being a big winner. Ring was sold to amazon by Jamie Siminoff in 2018 for over $1.2 billion USD. It’s only product offering at the time was a doorbell camera that also offered an audio component in order to see who is knocking or ringing on the doorbell of a home. The crowdfunded company originally aired on Shark Tank in November 2013 as Doorbot. At the time, the company was offering 10% for $700,000, for a total valuation of $7 million. Imagine going from Shark Tank to billionaire in a matter of just 5 years! That’s a return of 171x your money in only 5 years. Granted, percentages of the company were sold along the way, and it’s estimated the net worth was instead around $300-$350 million more from it for the founder. Still unbelievable, better than winning the lottery in so many ways. It’s now hard to fathom how the five sharks managed to miss a company that even Amazon eventually jumped on. Let’s look at the qualities of the companies at that time in 2013 and see what happened.

Name

Doorbot name in terms of branding was very engineer like. To the point in describing technical capabilities, but not memorable or unique. A simple change to ring proved amazing. Appearing unique and being able to explain what the product could do or what it was for in one word makes for consumer brand relationships to be established easier. By not choosing a word that was too deviant from the product or attributes, this prevented consumers from outright rejecting.

Pitch

Making jokes at the expense of Kevin O’Leary perhaps also rubbed the shark’s the wrong way, given he’s trying to get an investment from the shark’s which includes Kevin to begin with. Had he not attempted to insult them in any manner, this might have helped increase the perception of Jamie as an entrepreneur. This may not have been indicative of his character and instead have been an ill-advised joke. Some entrepreneurs even come on the show and kiss up to various sharks, to mixed results.

Competition

Although existing products had already existed, no product existed that dominated the market for the average everyday home owner. Expensive security systems would not apply to the everyday person. The fear of too many competitors and no obvious advantages led to concern about the longevity of the product and the company. With no direct competitors at that time to the smartphone, the first mover advantage was present. The market would also exist in the long-run as existing homes and new builds would continue to have doorbells; that’s an estimated 140 million households in the US, a very large market, and not even including international.

Security

The sharks mentioned that having an additional component that could be hacked or stolen could present an additional security issue. Such a question proved to be non-existent problem, with the security setup being very difficult to remove and in addition a free replacement should theft occur. with many users buying the product; at that time of airing, $1 million in sales was done to date.

Capitalizing on one of a human’s core emotional drivers, fear, this tapped into a huge market with the majority of homeowners as the customer. With social trust in the US having dropped from 80% in the 1950s, to 50% in the 1980s, to just 20% in modern day, its clear people don’t trust each other. Many people don’t know their neighbors in any capacity, despite being neighbors for many years. Add to the fact that now often beef and drama occurs with neighbors, it could be conceivable that many people would want an extra camera just to see if there are any break-ins.

In the age of amazon delivery with 2/3 of US households actively paying for amazon prime, another unforeseen benefit is even being able to monitor package theft on the doorstep. Late night intruders could also potentially be dissuaded from further advances upon seeing the obvious camera. Being able to then potentially report a thief is another side benefit, and deterrence to robbery. If a camera can save 1 or more package thefts from taking place, those savings alone would already pay for the cost of the ring doorbell camera.

Limited technology

With 2-way audio, 1 way visual, this was not necessarily high-end technology. With the pace of technology, the risk of being wiped out was also a cause of concern. Like many technology companies, being nimble, fast, effective and getting to first mover advantage presence in the market leads still to a dominated niche market. The technology on the ring doorbell did improve, with improved motion detection, setup privacy zones, and even night vision. Combined with Alexa enabled devices, and even the option to go on subscription to record video, the product offering did improve over time. In this case, the fear of other technological improvements wiping out the product was mitigated with its own improvements done.

Concern on price

Retailing at $199 in then 2013, the sharks were concerned that like other technologies, prices would drop. One can take a look at the price of television sets as one example. Fearing this drop and a subsequent drop in margins, even with economies of scale, could have led to reduced profits. Certainly, the comment on the price point ended up being true as the price fast forward has now been reduced to an average of $85-$130, depending on the model. But with greater economies of scale, costs could also come down accordingly, and led to preserved margins, or in some cases, improved margins.

Conclusion

Ring did not necessarily fit the scope of what traditional venture capitalists were looking for, as a hardware company that did not have low or no COGS from software. However it targeted a large market, and an untapped need from changing behaviors and attitudes of the general population.

Disclaimer

This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.