The start-up’s co-founders, Ryan Frankel, 29, and Kunal Sarda, 31, promote their company as the world’s only instant, 24-7 “human-powered” translation service. Inspired by a harrowing episode when Mr. Frankel could not communicate the symptoms of a virulent stomach bug to a pharmacist in Beijing, the service takes just 15 seconds to put mobile users in touch with a human translator fluent in both English and any of 11 other languages. In other words, it combines the speed of Google Translate with the precision of a traditional translation service — at least that was the pitch Mr. Frankel and Mr. Sarda made to the sharks.
Within 72 hours of the segment being shown, 20,000 new customers had downloaded the VerbalizeIt app, according to Mr. Frankel. Daily revenue, he said, more than tripled. The company charges about $1.50 a minute from individual consumers and as much as 27 cents a word from businesses that use the same network of 10,100 freelance translators to translate documents and videos.
The segment became one of the most debated of the show’s fourth season. Many “Shark Tank” followers discussed on chat rooms, blogs and Twitter how Mr. Frankel and Mr. Sarda erred when they turned down an offer of $250,000 for 25 percent of their company from Mark Cuban, a shark who owns the Dallas Mavericks and has previously invested in translation companies.
Their thinking was that while Kevin O’Leary, a shark and a Canadian financier, topped Mr. Cuban’s offer with a bid of $250,000 for 20 percent of VerbalizeIt, Mr. Cuban would have brought superior experience and connections. But what most of the show’s followers did not realize was that what seemed to be happening on TV that night was not exactly how things unfolded after the cameras stopped rolling. (Shocking, right?)
In reality, the VerbalizeIt founders turned down Mr. O’Leary, too. Last July, a week after they were taped shaking hands with him, Mr. Frankel and Mr. Sarda called Mr. O’Leary to tell him they had decided to pursue a different set of investors.
“A lot can happen between the time we finish shooting and a segment airs,” said Mark Burnett, the British-born creator of “Survivor” and “The Apprentice” whose company is a co-executive producer of “Shark Tank.”
Inevitably, some deals fall apart when the sharks’ advisers get a closer look at the entrepreneurs’ claims. In other cases, it appears that entrepreneurs come on the show with no real intention of closing a deal.
“They say ‘yes’ on the show because it makes for a better story,” said Rob Merlino, author of SharkTankBlog, who said he has interviewed more than 70 of the show’s participants. “But they were always in it strictly for the exposure.”
Mr. Burnett insisted these cases represented a small fraction of the 253 entrepreneurs who have appeared on the show. Even so, the producers are well aware of the value that seven million viewers, and potential customers, can bring to an early-stage business. It is the reason participants are willing to sign over a small equity share just to appear on the show. The standard appearance contract entitles the show’s producers and ABC to 5 percent of the company or 2 percent of future royalties, regardless of whether a deal materializes with a shark. The show’s producers declined to comment on the contract.
As for Mr. O’Leary, he said he has learned to factor the exposure “Shark Tank” generates into his own calculations. “I’m always looking for that company with a great concept that just needs the platform we provide to really take off,” he said.
A perfect example, he said, was Wicked Good Cupcakes, a cupcake shop on the South Shore of Massachusetts that hit on the idea of shipping its fresh-baked confections in single-serve Mason jars and sending them anywhere in the country. In an episode shown in April, Mr. O’Leary struck a deal with the mother-daughter team that runs the company, agreeing to give them $75,000 to finance their move into a full-scale commercial kitchen in exchange for $1 from every cupcake sold until he gets his money back and then 45 cents a cupcake in perpetuity. In the eight days after the segment aired, he said, the company sold $250,000 worth of cupcakes.
“I thought VerbalizeIt could be another Wicked Good Cupcakes,” Mr. O’Leary said.
Mr. Frankel and Mr. Sarda, however, had other plans. At the time of the taping last July, they were enrolled in Tech Stars, a start-up accelerator program. Three months after returning to Boulder, Colo., to finish the program, they accepted a deal offered by several mentors. It staked them to $1.5 million at a significantly higher valuation than Mr. O’Leary had placed on the company.
For Mr. Frankel and Mr. Sarda, former classmates at the University of Pennsylvania’s Wharton School, appearing on the show has been a win-win-win. While not all of the feedback they received from the sharks was positive, Mr. Frankel said the critique helped them rethink several aspects of the business.
“The segment was only eight minutes, but we were in there shooting for 50 minutes,” he explained. “It was just like any intense investor meeting.”
For example, Mr. Cuban hammered away at whether they had the infrastructure in place to serve businesses. Mr. O’Leary encouraged them to license their back-end technology to large translation companies that occupy the higher end of the market.
“You look at where we were then and where we are now, and we’re almost an entirely different company,” Mr. Frankel said. “And a lot of that has to do with the feedback we got on ‘Shark Tank.’ ”
On the Friday night the episode appeared last month, VerbalizeIt held a viewing party for friends and employees at its Manhattan offices. Earlier in the week, the company had posted ads on career forums offering multilingual residents $10 an hour to attend the party and bolster their ranks of translators for an expected wave of post-show calls.
After the episode ended, a group of translators sat a table as cellphones went off around them. One call came to Austin Jacobson, a 22-year-old part-time drummer and French speaker, who had relocated from Washington just two weeks earlier. “Hello, VerbalizeIt, ready to translate,” he said.
“I need to know how to say, ‘I’m sorry, I love you,’ ” said a man on the other end of the line.
“Well, there are a couple of ways you can say it,” Mr. Jacobson responded. “You can say, ‘Je suis désolé, je t’aime.’ Or you can say … “
“Just say it one way,” said the man, more urgently. “She’s standing right here.”
“Je suis désolé, je t’aime.”
“Thank you,” said the man softly.
A moment later, an update flashed on Mr. Jacobson’s work history account. Thanks to VerbalizeIt and “Shark Tank,” the aspiring jazz musician had helped a young couple find love and made 20 cents.
It could not have been scripted any better.
Article source: http://www.nytimes.com/2013/06/13/business/smallbusiness/tech-start-up-benefits-from-abcs-shark-tank.html?partner=rss&emc=rss