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James Altucher: Claudia, you and I love the show Shark Tank. I actually think the show Shark Tank is a great tool to teach kids about business and negotiation and so on. Today, rather than having one of the sharks on the show, we have one of the entrepreneurs who presented in front of Shark Tank – Bobby and Judy from Squatty Potty. Welcome to Ask Altucher. How are you guys doing?
Bobby: Good. Hi, James and Claudia.
Judy: Hi! We’re doing great.
James Altucher: Just a quick run through, what day were you on Shark Tank?
Bobby: Our episode aired in November of 2014.
Judy: It was November 14th of last year.
James Altucher: It was not so long ago. Has your life completely changed since it aired?
Bobby: It has, actually. Yes.
Claudia Altucher: It’s been 6-months.
James Altucher: I want to get into the details of that episode plus the details of your product – which, by the way, is incredible. We’ll talk about that. In general, you did do a deal. You did the deal with Laurie from QVC. People always wonder what happens afterwards. How did your life change afterwards?
Bobby: It really is a game changer when you get into the Shark Tank bubble. Not only is it a great platform, so many people watch it, and they’re pretty fanatical about it. I’ve come to find out. We had such a unique message and such a unique product and something that nobody had ever heard of before. We didn’t know that we’re pooping wrong.
James Altucher: So, let’s just explain the product really quickly. Basically, it’s like a bench that fits nicely under the toilet that forces the toilet to squat like humans have doing for millions of years, so essentially they poop better.
Claudia Altucher: By the way, Bobby and Judy were so kind that three weeks ago they shipped us one, which we’ve been using.
James Altucher: I’ve lost 10-pounds since then…. [laughter]
Claudia Altucher: I cannot believe the amazing effects. I will say this at the risk of sounding shocking, I found that it not only helped number two, but it also helped number one. I had no idea there was so much liquid in me.
James Altucher: How did it help number one?
Claudia Altucher: I’m a woman, so you would not notice that. From the woman’s perspective – right, Judy?
Judy: Yes. It does help to empty the bladder. It puts pressure on the bladder in the squatting position. That’s really the way we’re supposed to go for both.
James Altucher: Do you see how stupid I am at biology? I had to ask a woman like I’m 3-years-old. “What are we talking about?”
Judy: It helps to empty the bladder. The older you get, the bladder gets a little bit lazy. So, a lot of older women suffer from urinary tract infections because they’re not emptying their bladders well enough. The Squatty Potty helps put you in a position to help do that.
Claudia Altucher: Yeah. I needed to find a book. I was like, “How long is this going to take?”
James Altucher: All right. How did your life change after Shark Tank?
Bobby: So, when you get on the platform of Shark Tank, it can change everything. People responded to our product almost instantly.
Judy: It helped because it was Christmas time, as well. I think everybody got a Squatty Potty for Christmas.
Bobby: Within 48-hours of airing, we had already sold a million dollars in Squatty Potty’s.
James Altucher: In retrospect, do you think it’s just good to go on and not take a deal?
Bobby: Anyone who asks me if they should go on Shark Tank, I highly recommend that anyone does it because it’s not only a learning experience for you as an entrepreneur and business owner, but it’s a huge boost, and it’s a valuable asset. The exposure you get is invaluable from such a platform.
James Altucher: If nobody had offered you a deal, for instance, could that have been a negative?
Judy: I don’t think it would have been a negative.
Bobby: I don’t think so. I read an article the other day that said the value of going on Shark Tank is anywhere from $1-3-million dollars just to appear even if you don’t do a deal.
James Altucher: So, there’s not doing a deal, and there’s also not doing a deal. Bobby, you were at risk a little bit with Barbara there just not liking you.
Judy: I don’t think she didn’t like him. She just didn’t trust him.
James Altucher: Right – although she used the word like. I’ve never seen her quite like that.
Bobby: Right. It was a little painful and surprising to me because I had never had that happen before. You do put yourself at risk, and that’s what’s so scary about going on the show. You don’t know how they’re going to respond to your product, and especially a product like ours. It takes a little bit of education. Who is going to respond to your product? We got a lot of negative response in the very beginning, especially. We had a difficult time getting the product started because of the topic and what it was. Some advertising platforms wouldn’t allow us to advertise because they didn’t want this content on their site.
James Altucher: Who wouldn’t let you advertise? Every platform advertises pornography, but they wouldn’t let you advertise something that has a health benefit.
Judy: It’s mainly mainstream TV.
Bobby: Yeah. We had several television networks turn us down for some television advertising that we were doing. It wasn’t an easy topic to breach let’s say.
Judy: They weren’t sure how it was going to be presented or if it was going to be tactful or not. You can cross the line really quickly.
Bobby: It also took some time to make it more palatable and something that was easier to receive.
James Altucher: Let’s start from the beginning. How did you get on the show?
Bobby: We were initially given a producer’s name and number. We reached out to them, and they reached right back and said, “Great! We’d love to have you go through the process. This is the process. It’s an arduous process. It’s pages and pages of due diligence work and background checks and video submissions and audition submissions.” We went through that process the first year. We had an audition tape made.
James Altucher: Wow! I didn’t know that.
Bobby: Yeah. We got to the very end, and they turned us down. The producer called and said, “We really wanted to have you.”
Judy: They were unsure of the topic.
Bobby: One producer in particular stopped it because he didn’t like our topic.
James Altucher: Wow! He obviously didn’t try it. So, you were rejected. How did you get back into the mix?
Bobby: We were rejected the first year. The next year, we got an e-mail from the same producer.
Judy: She had been using it and absolutely loved it. She knew it would be a hit. She wanted us on the show. So, she was right there for us the whole way of that second year.
Bobby: She reached back that second year and held our hand through the audition process. She helped us refine our message so that it would be more palatable to the producers so that they could see exactly what it is. You hear “Squatty Potty” and you think, “This is a novelty. This is a kid’s thing. This is snake oil. There’s not much to this.” So, we refined our message. We had a lot more medical backing the next year. We said, “Look, this is a serious health tool. This is a serious problem, and this is a solution. The solution is Squatty Potty. For many people, diet and nutrition is very important, but also posture, as well.” We went with that message to the producers and said, “We have a problem that is huge in America and the Western world, and it’s because we’re sitting on our toilets. We have a simple product that will help you to assume a natural squat posture while still having the benefits of your toilet.” They got it. We got all the way through the next year and got on the show.
Claudia Altucher: I love how you said to them, “We help you do your business.” That was a good way to put it. Let me ask you, how much of the world’s population squats?
Bobby: We think 2/3’s of the world’s population squats.
Judy: That’s slimming, though. A lot of countries are bringing in Western toilets because of the convenience and the sanitation. A lot of them are regretting it. They’re starting to get the colon problems that we’ve suffered from for years.
James Altucher: That’s fascinating. I also want to recommend that for a lot more details on the product, you can see the “Shark Tank: Squatty Potty” episode on YouTube. I want to get into more of the background stuff that was happening. Once you got onto Shark Tank, what exactly happens? Do the producers and sharks automatically take a percentage of your company at that point?
Bobby: That used to be the case. The season that we went on – Season 6 – was the first season that they stopped taking the 5%. I know in the previous seasons, there was a mandatory 5% equity that went to the producer, Finnmax, which is the producer of Shark Tank.
James Altucher: Okay. You didn’t have to give up anything?
Bobby: We did not – no. The negotiations that you saw on the show were the negotiations that we were held to.
Claudia Altucher: 10% for $350,000.
James Altucher: You went in there, and you also had the benefit. Not in every kind of investment situation, but in Shark Tank specifically it seems overwhelmingly they require you to validate yourself by having revenues. You had solved that problem.
Bobby: Right. The first few years were a little slim, but then we got picked up by Dr. Oz.
Judy: And Howard Stern.
Bobby: And Howard Stern, so we had some revenue. Going into Shark Tank, we had done almost $7-million in revenue.
James Altucher: Cumulatively. How many did you have the prior 12-months to going on?
Bobby: About $5-million.
James Altucher: You were essentially asking for $350,000 for 5% of the company. So, at a $7-million valuation, that doesn’t seem outrageous to me basically a little over 1 times sales.
Judy: We felt like it was a very good deal. When it’s a new concept and it’s a toilet stool, it’s kind of like, “Really?”
James Altucher: You can still always point to the revenues. Pointing to those revenues is the answer to, “Really?”
Bobby: That was a fair valuation on our end. They’re looking for a deal. They’re in it for a deal.
James Altucher: Which is reasonable on their part.
Bobby: Yes. They realize that there’s some value to being on the show. Honestly, between you and I, I would go back and give 5% for a dollar.
James Altucher: I thought Laurie was the ideal person for you because she’s the QVC person. I don’t know if you’ve been on QVC since it’s aired, but my guess is that there are plans for that at some point.
Bobby: We’re planning on it. We’re on QVC.com selling very well. We’re just trying to get an airdate.
James Altucher: Once that happens, what happens after that? That’s going to be enormous, right?
Bobby: I don’t know what the QVC effect will be. She says that it’s very positive both to help drive retail sales off of QVC, but also that it’s a good moneymaker. They have millions of viewers. If it’s a hit, it’s a hit. There is a chance for some great revenue there. It’s yet to be seen because, again, the producers at QVC are pushing back against the topic. They don’t know about having a poop product on the show.
James Altucher: So, even with Laurie’s involvement, and she’s so high up in QVC, she can’t push it through, so to speak?
Judy: She’s having a bit of a hard time.
Bobby: She’s a little perplexed, as well, as to why they’re pushing back.
James Altucher: How do those deals work? She makes a deal with you. What happens next? You go off the show and lawyers get involved and put together paperwork?
Bobby: Essentially. It’s a handshake deal. You do the oral agreement there on the show – the handshake. When you get off the air with the months following, there’s a due diligence period. That can last for as long as it lasts until you come to an agreement.
Judy: Luckily we have an in-house accountant that does all of our book keeping, so our records were pretty accurate. We were able to get that process through very quickly. We knew exactly where we were at and how much we were spending on everything. She really liked the fact that we were so organized. We were able to prove to her that the things we said were true. She was very excited about becoming a partner.
James Altucher: Does she become the shareholder, or does QVC become the shareholder.
Bobby: It’s her. It’s her own entity. She’s her own entity. She’s just known as the Queen of QVC, but she’s her own entity. She’s brought more than 400 products to market – not just through QVC. I think that’s why she was a good partner for us because her retail relationships are unmatched in that Shark Tank world. She has partnerships with Bed, Bath, and Beyond and other major retailers that have been beneficial for us.
Judy: She just becomes more and more powerful. Being on Shark Tank has made her known, and it goes from there. Anybody who partners with her is already going to have those automatic connections.
James Altucher: It’s good for Bed, Bath, and Beyond because what will happen is they’ll do an update video on you, and they’ll see you and her going into Bed, Bath, and Beyond meeting the CEO or whatever. It’s good for them. It’s free advertising for them.
Bobby: Bed, Bath, and Beyond is very happy with Squatty Potty. It’s doing very well on the shelves at Bed, Bath, and Beyond.
James Altucher: She made that intro?
Judy: Not really.
Bobby: We were in Bed, Bath, and Beyond, but we were in a dark corner. After being on Shark Tank and seeing the power of that, they brought us out to the center isle.
James Altucher: Have you had offers for more investment coming in?
Bobby: There are. We get offers daily.
James Altucher: Really? Does anybody want to buy you out already?
Bobby: No – not yet.
James Altucher: It’ll happen. Do you want it to happen, or do you want it to grow to $100-million in revenues first?
Bobby: There are some mixed feelings about that here. I need a job. I enjoy my job.
Judy: -and I want to retire.
James Altucher: So, you got on the show. Were you scared to death? You were on Dr. Oz before, but this was the first time that you were on with a potentially hostile group.
Judy: We were not on Dr. Oz. Our Squatty Potty was on Dr. Oz.
James Altucher: I see.
Judy: I think it was the scariest thing that both of us have ever done in our lives. I’ve done public speaking and taught classes. I’ve never been this frightened.
Bobby: It’s funny. The producers have an in-house psychiatrist, and they have you do a psychiatric evaluation both before and after.
James Altucher: Wow! You do have some people who break down on the show.
Bobby: For so many people, it’s a make or break moment for them. To get rejected like that on a national platform can be pretty devastating, I’m sure.
James Altucher: How did you feel? At least the way it was edited, it almost looked to me like you weren’t going to get a deal. How were you feeling in the middle?
Bobby: When Kevin came out right away with an offer, it was for half of what we were asking. I felt really good about that because he’s usually the negative one. I knew we had a deal right away, so I was pretty comfortable with that. I didn’t like the deal because I knew the $7-million valuation was accurate.
Judy: I was actually really relieved to get past Kevin because I thought he was actually the one that was going to give us grief. To be totally accepted by him was like, “Okay. Phew!”
Bobby: Barbara was strange because she was honestly on our side during the whole taping. She got down off her stool and got down on the Squatty Potty. She was laughing. We were talking. She actually had me pull a Tarot card. I must have pulled the wrong card, because that’s when she switched. I pulled the Queen of Coin, which is a very abundant card. I don’t know why it turned, but it did turn quickly. That’s why both of our jaws just dropped when she came out with that and said, “I don’t trust you. I don’t like you.”
James Altucher: It’s not Mark Cuban’s type of investment, but he did give balanced advice. When Laurie was negotiating with you, he did remind you that there was value to having Laurie on your side.
Bobby: Right. We knew that. It’s difficult because you’re damned if you do, and you’re damned if you don’t.
Judy: They want you to fight for your product, and if you don’t fight then-
Bobby: If you fight, they’ll fight back. If you don’t fight, they’ll pin you for that, too.
James Altucher: So, did you study Shark Tank before to know exactly with each person how much negotiating you could do? Did someone advise you? Did you hire an advisor who was an expert on Shark Tank?
Judy: Me and my husband had been watching Shark Tank for years, so I was more familiar with it than Bobby. I made him start watching a few before we went on. I said, “You’ve got to watch this because you’ve got to see what we’re going into.”
Bobby: Right. We did research that way. I didn’t want my presentation to be tainted or following any other presentation, so I kind of wanted to keep it our own.
James Altucher: As soon as Laurie had given her offer, I would have said, “Done!” Are you not allowed to do that, or do you have to push back?
Bobby: We are allowed to do that. We could do whatever we want, but I really wanted more money. I thought it was more valuable than what they were offering, and it really was more valuable. It’s proven to be way more valuable. It’s a television show. It’s kind of a crybaby investment on their part. They win no matter what. There’s no losing with whatever investments they make because they can write everything into the contract so that they don’t lose. That’s okay.
James Altucher: Do you mean with a liquidation preference or something like that?
Bobby: Exactly. There’s a lot of negotiation done on the back end. The value, James, is really getting in that Shark Tank bubble. Every retail buyer in the country watches that show because they’re looking for the next product. They’ve got to be on the pulse of what’s happening in the retail world and what’s new and what’s coming up. When we’ve gone to these presentations with Lowe’s and Home Depot and other retailers that we’re presenting to, they saw our episode, and it changes the whole tone of the conversation.
Claudia Altucher: I want to go back to the actual product – the Squatty Potty. I already told you one thing that surprised me from a female perspective. The other two things are how easy it was to feed under the toilet. It doesn’t get in the way of other things. We have a small bathroom, so that was a good thing. The other fear I had was that I was going to have to actually squat and hold by strengthening the muscles, but there’s no need for that. You actually just sit on the toilet in the squatting position. There’s no exercise, so to speak, involved. It’s pretty relaxed. I didn’t know that, and I liked it.
Judy: Yes. It’s very easy to use for most people. There are a few people that have knee or hip problems that don’t have that flexibility. Really, the Squatty Potty let’s you use your existing toilet that we all love, and it’s convenient, but yet it puts you in a squatting position to help the rectal angle. It’s great for both worlds. When people think of squatting, they think, “I can’t do that.” You can’t squat. You don’t have the muscles. We don’t grow up in a society that squats. So, it seems like it’s going to be painful, but it really isn’t. It does take a little bit of getting used to.
James Altucher: How much back and forth on the industrial design did you do?
Judy: We made several prototypes.
Bobby: It started out with paint cans. It took a while to come up with that shape and design. We are coming out with new designs.
James Altucher: Maybe one with an iPad on it so that you can sit there and surf the web and take your time.
Judy: Well, we tell people that it’s going to cut down on your toilet time, so we’re not going to add anything.
Bobby: There’s a lot less posting going on with the Squatty Potty because it’s so quick.
Judy: That’s one of the complaints we have.
James Altucher: Now, it’s been 6-months. What do you project as the revenues for 2015?
Bobby: We think we’re going to do conservatively $12-million this year.
James Altucher: Wow! So, more than double what you did last year.
Bobby: We ended up reaching $7-million last year, which is what we projected.
Claudia Altucher: From the value added to the person that gets it – me, for example – what does it help with?
Bobby: The easy one is constipation, which is what so many people are suffering from – the inability to evacuate the bowels completely. The changing of the posture opens up the angle of the colon and allows for easier, more effective elimination. So, it’s like the kinked garden hose. When you squat, it relaxes that puborectalis muscle. It increases the angle, and elimination is done more effectively. So, constipation – the side effects of constipation for so many people are hemorrhoids and painful elimination. If you’re suffering from hemorrhoids, it’s likely because you’re constipated, and you’re straining to go. Those are two of the main ones that we talk about that are very easily fixed with the Squatty Potty. There are other digestive issues that happen, too, because we’re not eliminating daily such as IBS, Crohn’s disease, and pelvic floor issues in women with the prolapse of the organs on the pelvic floor. A lot of them are due to damage from childbirth, but a lot of it is done because of straining to eliminate.
Claudia Altucher: Right. We know that most problems start with the stomach, so I find it to be a Godsend kind of product.
Bobby: There’s so much of our overall health that begins in the bowels. If you’re not eliminating daily and you don’t have a healthy bowel, it’s a ripple effect from there.
James Altucher: Most people don’t know this, but 95% of the serotonin – which is the neurotransmitter related to happiness and depression and so on – 95% of these neurotransmitters are in your guy.
Bobby: Right. There are more neurotransmitters in your gut or as many than are in your brain. So, we’re discovering more about how important the bowel and the gut are to your overall health and well being both emotionally and physically. Daily elimination is a big part of that. It’s just a tool. It’s not going to fix everything. It’s not the cure-all.
Judy: I do want to mention something on constipation. Constipation can be caused by several different reasons other than your posture. I just want to let people know that if they get a Squatty Potty and it doesn’t fix their constipation, it’s not just necessarily their posture. They need to work on other things. Maybe they’re taking medication that’s causing them to be constipated. There are other reasons. Most people really benefit from the Squatty Potty. It does help with constipation problems. For some people, it’s absolutely the answer.
Bobby: We finished a clinical trial with 300 participants, and 80% of them found a significant help from constipation – meaning that their constipation decreased. That’s a pretty good chunk of people that are benefiting from the Squatty Potty.
James Altucher: I want to ask two or more questions about Shark Tank just because I’m fascinated by the experience there. What most surprised you when you were there in the shark’s den?
Bobby: How real it was. It’s not scripted. You have a minute pitch that’s scripted, obviously.
Judy: When you walk in that door, they know nothing about you.
Bobby: They’re not prepped on who’s coming that day. They have no idea.
Judy: They keep it extremely quiet.
Bobby: In fact, all of our product was under wraps until we did the reveal. It really is real. They either like you or they don’t. They see nine pitches a day. You’re one of nine people that day that pitches in front of the sharks. It takes about an hour or up to an hour in the tank.
James Altucher: It only has about 10-minutes, so it’s heavily edited.
Bobby: Yes. It’s edited.
James Altucher: Were you disappointed at how they edited it?
Bobby: No. Everything you say can be used against you or for you. You go in there knowing that. I was surprised at Barbara’s response because I hadn’t said anything negative or dishonest. I knew my numbers. I knew my product. I felt maybe it was a New York/Western type of thing. We’re from Utah. A lot of people from New York have told me, “She’s just a New Yorker, and she doesn’t trust… you kind of look like a Slick Willy out there,” which I’m not, but I kind of dressed the part that day. I don’t know.
Claudia Altucher: I personally find you adorable. I think in New York what she did would be called “good television” just to do something weird because that promotes ratings. That’s all. It had nothing to do with you. With anyone watching the show, there was nothing. I was like, “What the hell?”
Bobby: At the moment, it hurt a little bit. Afterwards I realized, “Don’t take anything personally. I really did the best I could. I wasn’t dishonest at all.” Everything we said was true. As Laurie found out when she did her due diligence on us, we had clean books and palpable numbers. We really are a serious product. We really have a mission to help people and to change their lives. We’re helping so many people with a serious problem. That’s what Squatty Potty is. We stick to that every day. That’s our mission.
James Altucher: It’s such a great example that when you add value, you get value back. When you solve a problem for a million people, you can make millions of dollars. Right after you left Shark Tank and you had that deal in the week after it aired, did people recognize you on the street?
Judy: We live in a small town. If they do, they might say something behind your back.
Bobby: I’ve had a couple of people say something. It hasn’t changed our lives like that.
James Altucher: I see. Well, Bobby and Judy, it was great having you on the show. We love the product, and we loved your appearance on Shark Tank. I highly recommend that if you use iTunes or YouTube to watch the episode, because I think you gave a great demonstration of what the product was on the video. I’m glad you got a deal. Congratulations!
Claudia Altucher: Yes! Congratulations!
Bobby: Thanks Claudia and James! We’re so glad you like the product, too.
Claudia Altucher: We love it!
James Altucher: Thank you. We’re going to order 50 more for all of our family and friends.
Bobby: It makes a great gift.
Judy: It’s a great Christmas gift. It’s not only a novelty, but it really works. So, it makes it an all-around great gift.
Claudia Altucher: And a topic of conversation.
James Altucher: Even better. Thanks you guys.
Bobby: Take care
Judy: Thank you. Bye-bye
James Altucher: Bye.