On Friday night’s “Shark Tank,” many worthy companies will come in hoping for an investment to further along their business, but we’re not sure any of them are going to have the impact that Ice Age Meals does with Mr. Wonderful Kevin O’Leary.
In the sneak peek below, you can see a situation that is on the verge of an epic collapse, one where paleo frozen-food company Ice Age Meals seems to frustrate him immensely thanks to the entrepreneur’s claim that this can be a billion-dollar business. Also, apparently he’s valuing his company right now at $10 million. Kevin takes neither of these claims altogether well, and that’s putting it lightly.
Let’s backtrack for a minute here and talk solely about this company: Is it really worthy of an investment at any reasonable valuation? We’re pretty familiar with the paleo diet, and with that what we like is that most of their frozen meals do fit that criteria: They are all made of simple ingredients, and while they are fairly expensive, we don’t necessarily think it’s ridiculous to pay $10-$11 for something like this when you’d pay $6 or $7 for something with all sorts of bad stuff in it at the grocery store. Here are the issues that could plague them somewhat:
1. There is something to be said for this needing to get into grocery stores, but that’s a really hard thing to invest in just because the category is so challenging and the Sharks know that at this point. He probably needed to come into the Tank with some substantial testing done to show that it can work there. Paleo’s gaining some traction, but we do think there are certain parts of the country where the perception is that this is still some sort of weird / foreign thing that only hippies or health nuts are doing.
2. The business model at present is difficult when it comes to customer acquisition. If you only want to try a meal or two in order to see if you like it, you’re shelling out a ton of cash to cover the shipping. You only get free shipping if you order a whopping 14 meals — it’s understandable given the cost of shipping frozen goods, but at the same time it’s hard to ask a customer to pay close to $150 to give you a try if they’re not sure they will like you.
Now that we’ve said all of this, we do like that the entrepreneur is looking at Amy’s as a model for what he wants to do, and while we don’t agree with all of his answers to Kevin, at least he’s being direct. You don’t get the sense that he’s beating around the bush or trying to sell this company as something that it’s not.
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