THE BASICS:
- Company: Pandaloon
- Product: Costumes for pets
- Asking Price: $60,000 for 20% equity
- Final Deal: $60,000 for 35% equity – with 10% going to animal charities
- Shark Who Took the Bait: Daymond John
- Shark Tank Season 9 Episode 16
Never Too Soon For Pandaloon
Well, here’s one the sharks haven’t heard before: a pet costume company that started as a viral video. Eugenia Chen made one of the more memorable entrances in Shark Tank history when she took the stage, announced her business partner was running late, and then called in a tiny, adorable puppy named Huxley, dressed in a panda suit. “This is Huxley, the panda puppy,” she said. The sharks – and millions of Americans watching at home – were dumbfounded.
Eugenia’s adorable presentation entertained the sharks and introduced us all to an entirely new way of launching a business. But was it enough to make a deal? Read on to find out.
Pandaloon: A Viral Sensation
Thirty seconds into Eugenia’s pitch, it’s clear we are in uncharted territory. Huxley the puppy comes bounding into the room wearing a panda costume and Eugenia scoops the dog up in her arms. “What is that?” Kevin says to the room at large. There’s a round of laughter and a few murmurs of adoration – the dog is undeniably cute – and then everyone settles in for what is sure to be a highly original pitch.
Eugenia Chen’s company is called Pandaloon. She’s seeking $60,000 for a 20% stake in her business. Her target demographic, apparently, is anyone interested in transforming their pets into walking teddy bears. “Your dog can be a turducken of cute,” she says. She then plays a video of Huxley running amok in his panda costume, much to the helpless amusement of everyone watching. The sharks howl with laughter. “That is sick,” says Kevin. “That is so sick.” Marc Cuban is seen burying his face in his hands.
She goes on to explain how the costume fits snugly and can be adjusted to your pet’s specific neck and chest measurements – a detail that separates it from most cheap velcro pet costumes on the market. Kevin laughs hysterically while Eugenia adjusts the dog’s costume, and Eugenia herself seems barely able to keep from laughing in the middle of her pitch. “That dog’s going to have issues,” says Mark.
With the costume demonstration done, Eugenia expounds on the viral currency of her product. Her little panda puppy video, she explains, has gotten more views than Beyonce’s last music video: more than 140 million (as of air-date). Lori’s mouth drops open in shock. With so much viral enthusiasm for her panda costume, Eugenia saw an opportunity to expand her product line. “Now we have panda puppy friends,” she says, and turns a display table to reveal an entire set of pint-sized puppy costumes, including a floppy-eared bunny, a unicorn, a lion and several teddy bears.
Eugenia hands out samples to the sharks while Lori gets the honor of holding Huxley the puppy. Guest-shark Sara Blakely (founder of Spanx) remarks on the product’s good quality. Daymond John seems to want to test the versatility of her costumes, and asks Eugenia to swap out Huxley’s panda costume for the bunny rabbit. While she’s doing a wardrobe change for Huxley, Kevin asks a hard-hitting question:
“So, do you need a small, rat-sized dog? Or can you have a larger dog?”
Mark Cuban dissolves in laughter.
But the most surprising thing about Pandaloon, we learn, isn’t the quality of the costumes or the thriving market for panda-themed apparel. It’s the stellar academic resume of its founder. The daughter of Taiwanese immigrants, Eugenia hails from San Clemente, CA. She has her Masters in computational science and her Bachelor’s in math and applied science. Before Shark Tank, she was pursuing research in computational neuroscience at the Salk institute. She teaches math as a side-hustle.
“And you do…this?” The Sharks are clearly stunned.
She graduated during the height of the recession, she says, and has been staying afloat with a string of part-time jobs ever since.
Running The Numbers
At the time the episode aired, Eugenia was still in the middle of production, about a month out from product launch. She had pre-orders and, if the viral success of her video was any indication, a broad base of interest in her business. Lori took the initiative and asked about Pandaloon’s production costs.
- Cost of production: $4 per costume (landed)
- Wholesale price: N/A
- Retail: $39.99 (proposed)
- Profit margin: 89%
- Patented: Yes
Daymond seems a bit taken aback by the retail price at first, but Eugenia assures him she’s done her market research. The largest costume company in the world, she says, sells their animal-themed costumes at about the same price point. Blakely chimes in at this point, earning a pointed look from Daymond: “I think that’s a perfect price.”
Pandaloon has been doing online business for about three years, bringing in about $100,000 in revenue every year. Her products are mostly apparel and gifts, most panda-themed and some not. She’s offering the entire company bundled together, she says, to compensate for her lack of impressive sales figures. She’s been profitable since her first year and has clearly done her homework.
When Blakely asks what she intends to do with the investment, Eugenia has an answer ready: She wants the money to expand her line and prepare her inventory for the following Halloween.
The Bidding
Uncomfortable with the whole idea of dogs in costumes, Kevin is quick to come to a decision. “I’ve never really understood people that dress up rat dogs in outfits. It’s just bizarre,” he says. Kevin is the first to drop out.
Mark is next up, with a compliment on Eugenia’s impressive academic career. “I was honestly more interested in the neural networks,” he says. “It’s just not a fit for me.” And with that, Mark drops out.
Lori apologizes up front – never a good sign – and says she just doesn’t see a market for the product. She’s out.
Daymond is next, and he throws Pandaloon a bone. “I think the fact that we were all curled up laughing and the joy this product brings is evident,” he says. Drawing a look from Kevin, Daymond offers Eugenia the full amount of her original asking price – $60,000 – but for three times the equity, with 10% of his equity going to animal charity.
Sara Blakely throws an offer on the table. “I like this, and I like you,” she says. Sara matches Daymond’s offer, straight across the board. She says she has a platform of mostly women who will love the product, and thinks she can market it better than Daymond.
Eugenia barely has to think about it, and goes with Daymond’s offer after only a moment’s hesitation.
Final Deal: $60,000 for 35% stake in Pandaloon – with 10% going to charity.
