- Company: Goumikids
- Product: Boutique baby apparel
- Owner: Linsey Fuller and Lili Yeo
- Asking Price: $1 million for 8% equity
- Final Deal: $1 million for 10% equity (see conditions)
- Shark Who Took The Bait: Kevin O’Leary
- Season/Episode: Season 11, Episode 17
Fearless Mamas With A Flawless Product
Linsey Fuller and Lili Yeo, the founders of high-end organic baby apparel line Goumikids, are anything but shy. When they take the stage to make their pitch toward the end of Season 11, they launch fearlessly into one of the gutsiest valuations in the show’s history. Less than a minute into their pitch, they’ve drawn gasps and looks of stunned shock from every single shark in the room. They’re seeking a whopping $1 million for a mere 8% equity in their Portland-based company. Did you do the math in your head just now? Us, too. Linsey and Lili are valuing their company at more than $12 million, asking for one of the biggest investments in Shark Tank history.
The founders are “obsessed with the power of small,” and they’ve created a product that addresses limited motor control and heat loss in the extremities of newborn infants. Their product line is comprised of “essential baby products” that are “functional, comfortable, breathable, sustainable and beautiful.” Their flagship product, goumi mitts, stays on and protects baby’s tiny hands through the use of an original 2-part snap closure. Their Goumi Boots do the same thing, using elastic to tighten and Velcro to secure, ensuring that baby’s feet stay snug and secure in their booties. Their patented Goumi Jams, meanwhile, go from pajamas to sleep sock in one snap.
It’s clear from the beautiful product display and crisp, professional presentation that this product is top-of-the-line and that these women came prepared. Their pitch is impressive and their business is bound to start a serious bidding war between the sharks. First, though, it’s time to hand out some super-soft, super-snuggleable samples.
Running the Numbers
The pair hands out two sample sets: one, the “welcome home” set, is for newborns just arriving home from the hospital. The packaging is nearly as beautiful as the clothes themselves, and the sharks are quick to comment on the smartness of the brand. Lili’s background is in apparel and footwear – she spent the first seven years of her career climbing the corporate ladder at Nike – while Linsey’s background is supply-side, selling buttons and zippers to the apparel industry.
“Is that how y’all met?” jokes Cuban.
“No, no!” They laugh. “We met at the Chinese preschool where we sent our little bon-bons.”
“And I live in China, currently,” says Linsey, to the surprise of absolutely everyone on screen. She flew in from China to make the pitch.
- Cost of production: Whole bundle: $17-18, landed; Booties: $2.20; Mittens: $4.50;
- Retail price (whole bundle): Whole bundle: $102; Booties: $18; Mittens: $24;
- Sales over eight years: 1 million units
- Main revenue streams: direct-to-consumer online sales
- Year-to-date total sales: $5.2 million
- Projected annual sales: $2.5 million, with 15% profitability
Kevin is quick to point out that they’ve evaluated their company at a staggering $12.5 million. “That’s a little rich,” he says, to which Cuban adds, “That’s a lot rich.” The women counter, however, pointing out that they did their first fundraising round in early 2018, with $1 million in total sales – and they were at a $5 million valuation even back then.
They’re growing strong, though, and they have a clear line of sight to a $5 million sales year after the current one. Why aren’t they selling more? Because it’s a wholesale business, largely, and they’ve only recently gotten into direct sales, which are much more profitable.
The pair estimates that around 15-20% of their total sales are now direct-to-consumer sales.
Mark digs deeper. Is it their distribution? Is it their price point? Their sales should be much higher.
“Therein lies the challenge in being small,” says Lili. “Our clients come back to us and say they want more sizes, they want more variety.”
“Clients always say that,” says Barbara, wise beyond her years. “Don’t listen to them.”
The sharks seem to agree that their price point is too high, and is hampering their sales growth. They only tested their price point online, they say, Mark zeroes in another problem, though: their retail product display. Their display doesn’t include a quick, easily digestible description of the product. They’re not telling a story. It doesn’t pitch the uniqueness of the product or tell new parents really what their product’s purpose is: that their kid’s going to scratch themselves unless they wear these protective little mittens and booties.
“We’re under-telling our story,” they offer.
“No, you’re not telling your story at all. Your marketing sucks.”
Mark is sketched out by their atrocious branding strategy and drops out almost immediately.
Daymond John is next up, and he’s questioning their sky-high valuation. “Is it simply the need for that much capital? Or is that you think you’re going to be that good?” They’ve had a lot of time – eight years, to be exact – to figure themselves out. Lili explains that their original fundraising round coupled with their transition from wholesale to direct-to-consumer boutique products is what accounts for most of their valuation. It’s not a satisfactory answer for Barb Shark.
Barb Shark rightly points out that another sock business and Shark Tank venture of hers – Grace and Lace – has been in business for just five years but has three times the annual revenue. “I believe the problem that you have that they don’t have is that they have 70% returning customers. You’re in the new baby business. It’s very, very expensive for your customers to keep coming back to your product. And it’s grossly overpriced,” she concludes and drops out with classic, stone-cold Barb Shark ruthlessness.
Lori thinks the product is beautiful, high-end, and premium. But she’s personally spent her career creating a high-quality product at an affordable price, ensuring that her products can be enjoyed by all. While she loves what Goumikids is doing, it’s not the right model for her. She’s the third shark to drop out.
Daymond also thinks the product is excellent, but the valuation is crazy-steep.
“Well let’s talk about a proper valuation, then,” says Lili, opening the table for negotiation.
Almost immediately, Daymond makes an offer: $1 million for 30%.
Kevin jumps next, offering $1 million as a line of credit at 9% interest, in exchange for 10% equity.
“Remember, you can always counter these offers,” says Lori.
“Would you consider $1 million for 15%?”
Daymond rejects Lili’s counter-offer outright. It’s going to be a cold day in hell before Daymond John goes down to 15%. The pair ask Kevin to clarify his offer for them, saying they’re not really sure they need a line of credit. As it turns out, they already have one – a $250,000 credit line at 5% interest. Much better than Kevin’s proposed deal.
The sharks return fire by saying that when they grow, and if they reach Grace and Lace levels of revenue, they will eventually need to expand their credit line, and they will need help from investors on a Shark Tank level. If not now, then eventually.
At this point, the two founders of Goumikids turn away from the sharks for an on-the-spot, high-stakes, baby-clothes-decision-making-huddle. They whisper quickly to each other – in Chinese. (Easily the coolest, most international espionage plot point this reporter has ever seen on Shark Tank.)
After a moment’s hushed and intriguing deliberation, the two settle on a deal: they’re accepting Kevin’s deal.
Final Deal: $1 million as a line of credit at 9% interest, in exchange for 10% equity.
Where Are They Now?
If you take a gander at Goumi’s website, you’ll see a sleek, high-end boutique aesthetic full of clean white space, soft color palettes, symmetrical design, and bold block lettering. Their brand aesthetic is very much in the same category as other high-end boutique retail spaces such as Anthropologie and Stitch Fix.
Everything about their image is carefully curated and designed – from the cute, playful copy on their website to the photos on their social media – to capture and soothe the attention of a vast, profitable and notoriously picky market of new moms. Their entire brand screams “Hip Young Portland Mamas With Money,” overflowing with earthy, neutral tones and soft lines, displaying soothing product colors like “moss,” “soybean,” “many moons,” and “succulent.”
Their full product line has expanded since the show, and their site now lists a dizzying array of beautiful, boutique luxury items and collections, including:
- Nursery linens: Fitted crib sheets, nursery blankets, and padded crib covers made from 100% organic cotton, muslin, and bamboo fabrics ($24-$68)
- The original Goumikids Mitts: From sizes preemie to 0-3 months old, available in a staggering array of subdued colors ($14)
- The original Goumikids Boots: Available for preemie and babies aged 6 to 12 months, with a special “gripper” bootie design for super mobile babies ($18)
- Gowns: Organic sleepers and gowns for preemies and babies aged 3 to 6 months, with built-in mitts and one-snap foot pockets ($32)
- Footies: Soft, cozy rompers with bum flaps and convertible foot pockets, for little ones aged 18-24 months ($36)
- Loungewear: Top & bottom two-piece sets for toddlers and bigger kiddos, aged 2-5 years ($40)
Goumi’s Instagram page boasts nearly 100,000 followers.
This reporter is proud to report that Goumi is flourishing in the high-end baby apparel market, and shows no signs of slowing down any time soon.
Disclaimer: The information provided in this article is strictly informational; INSIGNIA SEO is not affiliated with Goumikids, SharkTank, or any of its subsidiaries.