Business

Why Robert Herjavec Preaches Against Taking Money for Granted: ‘I Remember the Days When I Worked My A– Off for $10'

ABC/Christopher Willard

The dollar amounts on "Shark Tank" can get large. Sometimes, they can even surpass $1 million.

On Friday's episode of the ABC show, investor Robert Herjavec cautioned a trio of business partners against taking those large investment figures for granted — while offering them $300,000 in exchange for a 35% stake in their Sand Springs, Oklahoma-based company Chill-N-Reel.

"I remember the days where I worked my a-- off for $10," Herjavec said. "We sit up here and [people] think, 'Oh, it's just money for you guys' ... I'm willing to risk the $300,000, and I've worked really hard for $300,000."

Chill-N-Reel, which makes insulated beer koozies that double as fishing lines, was founded in 2019 by a firefighter named Jake Rutledge. While on a family vacation in 2017, Rutledge tried wrapping a fishing line around the bottom of his beer can as a way to multitask — and started pulling in small fish almost immediately, he told the Sharks.

His son Chase Terrell and brother-in-law Chris Diede joined the business, which proceeded to make $1.3 million in revenue over the 12 months prior to filming, the trio told the Sharks. That number alone was enough to impress at least one of the show's investors.

"The thing is so ridiculous, but I can't help but respect the sales," Kevin O'Leary said.

Diede (left), Rutledge (middle) and Terrell each cracked open a beer with the Sharks before leaving the tank.
ABC/Christopher Willard
Diede (left), Rutledge (middle) and Terrell each cracked open a beer with the Sharks before leaving the tank.

The trio asked for $300,000 in exchange for 10% of their business. The problem: Over that same 12-month span, Chill-N-Reel had only made just over $70,000 in profits. A large chunk of the company's revenue was offset by roughly $400,000 in advertising costs. At the time of filming, the business partners said, their company was actually $25,000 in debt so far that year.

Diede insisted that those costs were one-time expenditures, and that they'd ultimately pay off — but four of the show's five investors quickly dropped out. Mark Cuban gave the Chill-N-Reel trio a parting shot as he left the deal: "If you can't hold your beer no matter what, you're doing it wrong."

Only Herjavec remained. On O'Leary's advice, Herjavec agreed to the business partners' request — as long as he could include a $2 royalty, in perpetuity. (It's unclear whether that royalty offer would have applied to every Chill-N-Reel product, or specific items. A "Shark Tank" representative did not immediately respond to CNBC Make It's request for comment.)

Rutledge declined that offer, saying he was willing to give up equity for a Shark — but he wasn't interested in a royalty deal. "Money's great, but we're here for a partner," he said.

After some back-and-forth, Rutledge proposed $300,000 for a 20% stake in the company. Herjavec said he wouldn't dip below 35% without the royalty agreement, arguing that without proof of high profit margins, he was risking his own hard-earned money.

Ultimately, the Chill-N-Reel trio left the show without a deal. "What are they thinking? Everybody thought [our product] was fun," Diede said. "Everybody in the U.S. is gonna think it is fun."

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

Correction: This article has been updated to reflect that it was Chris Diede who said, "What are they thinking? Everybody thought [our product] was fun. Everybody in the U.S. is gonna think it is fun." A previous version misidentified the speaker.

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