Voyage Air Guitar Update: Shark Tank Season 1, Episode 3
Did the Deal Go Through?
Jeff and Josh Cohen came up with a really cool idea: a guitar that can be folded in half (the neck stacks on top of the body), and very easily reassembled (just unfolded) in order to facilitate travel and transportation. The guitar can just sort of sit on your back like a backpack, instead of being a near-human-sized accessory, as has been the case for centuries. While the deal the duo sought was 5% of their company for $500,000, this valuation seemed (rightly so, at least upon first consideration) incredibly rich to the sharks, and Mr. Wonderful countered by offering $500,000 for 51% of the patent. The pair turned this offer down, and walked away without making a deal on the show in the first place.
How Did the Business Do After the Show?
Voyage Air Guitars might be one of the ones that got away, although still maybe not at their initial valuation. Jeff Cohen made a deal to create guitars for Fender, an absolute titan in the industry, and the company is thriving today. Their official website looks slick, and has been well maintained, and has a great, diverse line of what appears to be high-quality products. Amazon also offers quite a few , and there are dozens of different fold-able guitars for sale, with generally good reviews. All in all, the company seems to be doing fantastically well, at least in terms of sales, and they seem to have focused on diversifying product designs, building important partnerships (especially with Fender and Amazon), and reinvesting in a great website and brand. Voyage Air Guitar products
What Do I Think?
It's quite understandable why the Cohens would come in asking for a $10 million valuation, and even more understandable as to why the sharks would balk at this. For a company to be worth $10 million, you'd like to have seen a few years of sales data at a minimum, and above all else, the company should be cash-flow positive. Jeff and his son Josh Cohen were actually going in the wrong direction, but this is also understandable, given that getting started can be tough. In a nutshell, the concept was really, really cool, but not entirely proven just yet. Going back to the example of a company with positive cash flow that might be worth $10 million, I'd insist on paying the owners and any employees, and then having profits in the neighborhood of $2 million per year while the company was still pretty small (EBITDA = 5) before making an offer like that (assuming I could poop money out). On the other extreme, the 51% royalty deal Kevin O'Leary offered was wisely turned down, as the father and son duo has very likely built a company that is worth many, many times a million dollars now.