For more than a decade on ABC’s “Shark Tank,” billionaire Mark Cuban has seen his share of good investments — and bad ones.
Last week, Cuban said on the “Full Send” podcast that after investing nearly $20 million in 85 startups on “Shark Tank,” he took a net loss on all those deals combined. He tells CNBC Make It that the loss has only been “on a cash basis” so far, and doesn’t account for the fact that he hasn’t gotten out of many of those investments yet: “I haven’t gotten out more than they put in. But that doesn’t account for all current, operating businesses and their valuations.”
On the podcast, Cuban shared the worst investment deal he ever made on the TV show: Breathometer.
In 2013, an entrepreneur named Charles Michael Yim appeared on “Shark Tank” to pitch his product, the Breathometer, as “the world’s first smartphone tracker.” Yim wowed Cuban and the other Sharks by showing off a smartphone attachment that he claimed could accurately measure blood alcohol content (BAC).
Yim’s gave the Sharks glasses of champagne and then had them blow into a small, plastic device that can be attached to a smartphone. Yim claims the device can send a BAC reading to your phone and lets you call a cab with the push of a button if your BAC is too high.
The initiative was a hit, and Yim became the first entrepreneur on “Shark Tank” to attract all five Sharks in a joint investment. Cuban, Kevin O’Leary, Daymond John, Laurie Greiner and Robert Herjavec pooled a $1 million investment for a 30% stake, valuing Yim’s company at $3.3 million.
“It was a great product,” Cuban said last week. “But the guy – Charles – I’d look at his Instagram and he’d be in Bora Bora… Two weeks later he was in [Las] Vegas is partying and then it’s Necker Island with Richard Branson.”
“I was texting him like, ‘What the hell are you doing? You have to work,” Cuban said. According to Cuban’s recollection, Yim replied that he was “networking” on behalf of the business.
Cuban said the apology didn’t quite hold up: “The next thing you know, all the money is gone.”
By 2016, Yim had ditched the Breathometer, partnering with health giant Philips for a product called Mint, which measures the levels of sulfur compounds in your mouth to determine whether or not you have bad breath.
In January 2017, the Federal Trade Commission filed a complaint against Yim and Breathometer, alleging that the company misled its customers about the product’s ability to accurately measure BAC. According to the Federal Trade Commission, Breathometer “lacks scientific evidence to support their advertising claims.”
That same month, Breathometer reached a settlement with the Federal Trade Commission on that complaint, forcing the company to notify and fully refund every customer who purchased the device. According to the Federal Trade Commission, the company never performed adequate testing, even though it claimed its products were backed by “government laboratory tests.”
“That was my biggest beating,” Cuban said.
In response to Cuban’s accusations, Yim tells CNBC Make It that “the comments were completely dismissed [base],” and that he didn’t blow his company’s money on personal trips. He also says it’s “not fair” that Cuban would base his assessment of Yim’s CEO abilities on a series of social media posts, noting, that his trip to Necker Island was to present the Breathometer to Richard Branson.The presentation was a success and Yim became a 2015 finalist in Branson’s Extreme Tech Challenge pitch competition.
“You can’t look at someone’s social media and take it at face value,” Yim says. “Social media doesn’t work like that.”
Yim admits he didn’t commit to properly testing some of his products, and says his lack of rigor did more to derail his company’s progress than his travel schedule. Today, neither the Breathometer nor the Mint products are available for purchase on the company’s website.
The founder notes that Cuban took the lion’s share of the investment, accounting for $500,000 of the $1 million total. He says the Sharks may finally get some value back on their investment because the company recently agreed to be acquired. Details of such a deal do not yet appear to be public.
Update: This article has been updated to include a comment from Mark Cuban about his “Shark Tank” investments.
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”
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