Back in 2013, Jamie Siminoff was the founder and chief inventor of a struggling video doorbell company who was pinning all the startup’s hopes on his appearance on Shark Tank. He walked out empty handed, unable to land an investment. Five years later, he sold the company, now a broader smart-home security tech company known as Ring, to Amazon for a reported $1 billion.
As “Shark Tank” investor Kevin O’Leary said at the time of the Amazon deal, it was “probably the biggest miss” in the show’s history.
On this episode of the Numbers Geek podcast, we continue our look at the numbers behind Shark Tank with the story of Ring — from garage invention to TV rejection to billion-dollar acquisition. We get the behind-the-scenes details from Jamie Siminoff, the CEO, founder and chief inventor of the company.
This is the second of two Numbers Geek episodes featuring the numbers from Shark Tank. Check out our earlier conversation with Arum Kang, of Coffee Meets Bagel, who turned down an apparent $30 million buyout offer from Mark Cuban on the show.
Listen above, and continue reading for an edited transcript.
Q: When you went on Shark Tank, it was aired in November, 2013. You were seeking a valuation of $7 million dollars. You walked away empty handed. You did not get a deal. If you were to go back again to Shark Tank, would you do anything different in terms of the numbers that you presented to the panel there?
Jamie Siminoff: It’s one of those things, I’ve definitely been asked it a lot. It was a very public failure. I’ve had many private failures, but they’re not I guess on ABC for twelve minutes on primetime TV. You know, I think I probably would have done the same thing. The company, it turned out, was worth that or more.
So it wasn’t that I was that wrong. I think the problem was we were on that show right before we had any real customer sort of wins or feedback or product-market fit. So, I was really pitching a dream that was out there, and you could see the dream was starting to build, but I think for an investor … and it wasn’t just the sharks, I mean, we had hundreds of investors say no. It wasn’t my only failure, and so it was very hard to get people to believe in not only a product, but this mission of reducing crime in neighborhoods, because I looked like a crazy man, in my garage in Los Angeles, with this sort of doorbell that I had built called DoorBot at the time, saying, “I’m going to reduce crime in neighborhoods.” I mean, I’m just lucky I wasn’t committed to a home somewhere.
Well, it’s interesting though, because it sounds like from the beginning, that overarching mission was driving you, in terms of seeing the market. I think a lot of people who would have invented the technology would have said, “Hey, I can see who’s at the door, isn’t this great? People should buy it.”
Yeah, to be fair, I kind of did that. I was in my garage, and I was working on something else, a couple of other things, and I couldn’t hear the doorbell, and I thought, why wouldn’t it go to my phone? It just seemed to like make total sense, and my wife was the one who said it makes her feel safer. It’s like I have gates on the house, like rich people gates. For me, that was the ah-ha moment of wow, this is the worst thing I’ve ever put on the house, and she usually gets so mad when I do this, and she felt safer at home. We had a 3-year-old at the time who is now 10. So that was really the ah-ha moment.
When you went on Shark Tank, how much money was left in the company’s bank account at that point?
Because you had spent how much on the set that you built for that show?
It was like ten or twenty thousand dollars. It was just horrible times. Now, looking back it was the best time ever, because oh my god, how great is it to work in your garage and do all of that stuff, but at the time, it was a guy working in the garage, failing miserably, going on Shark Tank, spending our last money on a set to go to film this thing to try to get money, and then walking away with just absolutely nothing.
I was convinced going on that I was going to get Mark Cuban to invest, and he literally, within … it was so quick that he was just like, “Jamie, it’s great, but I’m out.” And I was like, “Oh.” And then it kind of went down the line and everyone went out, and I went back to my garage broke and broken. It was a tough day.
It was funny, because one of the Shark Tank producers, Kate, who I’m still friends with, said, “I have this vision that we’re going to have thing,” and I’m like, “That’s amazing. I love it. Absolutely.” I’m like, “Do you have any color?” And she’s like, “Wait, you’re building this, not us.” I’m like, “Are you serious? Really?” So, we had to build this … today, they actually do the sets for the companies. But, back then you literally had to build your own set. We’re in Los Angeles, so like what do you do? You look in the yellow pages and you call a set builder. And so, Doctor Wood came over, who was just this crazy guy, and in my backyard he built a full set. That thing is still in the entrance to our lobby today.
So, you walk away empty handed. What’s that drive home like? And then walk us through that psychological process.
The drive home sucked. When your office is in your garage, failure is like a double hit, because you drive home to get away from the thing, and you have your three puppy dog employees sitting in the garage looking at you being like, “What happened?” I’m like, “Leave me alone.” So, we just didn’t have it. The good news was, I was so over my skis, I was so over-invested in this thing. I had everything in it, that all I could do was keep going. Stopping, at this point, was just literally … stopping was death. And so, you just at least did the one thing that might not be death, which was going forward.
And so, it wasn’t that I was like a motivational person, or had a real positive attitude, I just didn’t want to actually die, and so I kept pushing it forward.
Later though, a key number was 5 percent, right? Because that’s the stake in the company that Richard Branson later took. Am I right on that?
It’s never been disclosed what he took, but he did take a nice stake in the company, and I think he’s very happy with the outcome.
Right, because another thing that’s never been disclosed publicly … it’s been reported but never confirmed, is that the valuation at that time was more than a billion dollars, which is also the purchase price that Amazon eventually ended up buying Ring for. And I bet you probably can’t talk about that number either, am I right?
We can’t confirm those numbers, but they sound pretty close.
What does it mean to you that this company you first thought was worth $7 million, and you walked away empty handed, rose to very significant valuations?
I mean, obviously, I am a human being, so it is amazing to look back and to see those numbers, numbers I honestly never in my life, in my wildest dreams, ever thought I would achieve, but what really drove me was, I am an inventor, and I think the impact of the product, seeing it no matter where I drive around, what neighborhood it is. No matter where I travel, seeing the product, having people come up to me and say, “I use it,” that really is the impact that has most affected me in sort of the “wow” moments.
The money is a great scorecard or scoreboard and it’s obviously great on other things, but it really doesn’t drive you as a human to like what you want to do and that’s why the impact is what really got me.
So, from that seven million to the theoretical billion, what was the difference? What made the difference?
There’s a lot of hardware companies that were in the same timeframe that did not work out. We focused on true customer need. We call our customers neighbors, and we really focused on how do we make our neighbors’ lives better? And I think business is very simple. I think when you focus on your customer … and I mean crazy focus on your customer, success comes from delivering benefit to your customer.
And I believe with Ring we were really able to deliver that benefit, and that’s why we rose above not only potential competitors at the time, but really the overall peer group of hardware companies.
I’m looking at stats from the government, collected by USAFacts, our partner on this podcast, and it shows a pretty dramatic decrease in property crime, larceny and theft from 1980 to 2016, going from roughly 3,167 incidents per 100,000 people down to 1,745. What potential does technology have to reduce that even further, and what happens in that trend?
I think it will. I think we will continue to reduce and make neighborhoods safer with the technologies that are coming out, because if you look at these crimes, and especially … we focus on burglaries, sort of car vandalism, package theft, the things that are sort of neighborhood crime. Those things, I believe, with very simple, affordable, and effective technology, you can actually … never zero out, because I think that’s probably not realistic, but get very close in neighborhoods, zeroing them out.
Our KPI, our success, has always been around how much can we reduce crime? What is our effectiveness of actually reducing crime? And so we keep looking at that, keep doing studies. We just did one recently in Newark where we took two neighborhoods, with a little bit over 10 percent of Rings in those neighborhoods, and with that, we were able to reduce crime by over 50% of burglaries.
Plot twist in your entire story, is that you have gone back on Shark Tank as a guest shark. What advice would you give to future entrepreneurs in terms of the numbers they present to the sharks when they come on the show? Sharks including you, now.
— Shark Tank (@ABCSharkTank) March 6, 2019
Yeah, and it’s a funny thing, because I am now a shark on Shark Tank, and I was on both sides, and so I feel the empathy for peoples’ businesses, but at the same time, I’m also a real investor there, and it’s my money, so from the numbers side, if I’m going to invest $800,000, or whatever, in a business, that’s real money, and so I need to see what is really going on with the business. I try not to give advice to people, but I think the one thing is, tell me why you’re doing a business, because a lot of the time we’re talking about numbers and all these things, but businesses take a long time, seven to ten years to become successful.
The numbers will go up, they’ll go down. Products will come in, they’ll go out, but why? Why are you in business, to do what for who? And I think that’s missed a lot. We get maybe too quickly to the numbers, and not what’s going to sustain it for a long time.
But what about valuation? Should they overstate or understate? What’s the best psychological trick on that show?
I think with valuation, the best thing is … a lot of times you ask someone, “Okay, it’s ten million dollars. Why?” And they just fall apart. Whatever the reason is behind the valuation, have something that’s very clear, that builds it up to allow that to exist. And definitely, numbers are a good part of that. The “why” is a good part of that, because that will tell you where it’s going, but a lot of times people just say, “Because. Because this other company is worth this in this space.” And it’s like, that is not a reason to have a valuation for anyone. You are your own person.
PREVIOUSLY: Numbers Geek meets ‘Shark Tank’: Why this startup founder turned down Mark Cuban’s $30M deal
Clare McGrane provided research and production assistance for this episode.