Jon Hayes, a Princeton graduate and former Wall Street investor, came to the Shark Tank seeking $200,000 for 5% of his company. Jon’s company, RewardStock was founded after Jon and his wife returned from their honeymoon. They were able to take a great trip but spend very little by being strategic with how they used their airline and hotel reward points. They soon realized that they could make a business out of planning vacations for others by maximizing and trading their reward points. Jon quit his job and taught himself how to write code so that he could start RewardStock.
RewardStock is a fully automated travel advisor that strategically helps users to redeem and trade their reward points, that would otherwise go unused, to claim great deals on travel. The service determines the best way to utilize the points so that they can get the maximum value for them. RewardStock accepts input from the user via a profile that assists in driving the algorithm to make travel decisions based on the user’s travel preferences.
The site launched two years ago and has made $50,000 on 10,000 users. This equates to $5 per user for referral revenue which is one of their primary sources of revenue. Aside from referrals, RewardStock also makes a profit on user membership fees and on excess profit that is gained during the exchange of points. The Sharks are admittedly very concerned about how small the companies revenue is in comparison with it’s $4 million valuation. Jon shares that RewardStock is in need of additional programmers so that the platform can continue to grow.
Power of the pitch, baby!! First and foremost, you've gotta know what you're talking about and have a compelling product – but when we're watching 10+ pitches a day, a little showbiz doesn't hurt when it comes to getting our attention! #sharktank #rewardstock pic.twitter.com/Al5mJLtwW4
— Kevin O'Leary aka Mr. Wonderful (@kevinolearytv) November 19, 2018
— Barbara Corcoran (@BarbaraCorcoran) November 19, 2018
The best ideas come when you aren’t trying to think of them. #SharkTank
— Daymond John (@TheSharkDaymond) November 19, 2018
— J. Seaberry (@JJSea) November 19, 2018
As the Sharks begin to evaluate RewardStock, guest shark Sara Blakely immediately declines to make a deal citing that this business is not a particular passion of hers and so she does not feel strongly about investing in this company. Lori Greiner is afraid that the company is too young and under-developed. She doesn’t feel confident in her investment also passes. Barbara Corcoran does not like the revenue of the company so far and also declines to offer.
Mr. Wonderful, Kevin O’Leary is interested in RewardStock because its business model fits in with the other companies that he is a part of. He offers $200,000 for 10% of the company citing that he does not believe the company is worth its current valuation right now. He tries to sell Jon on the fact that none of RewardStock’s current investors have as strong of a platform as he does which could make this a very popular service. Unsure, Jon asks Mark if he has an offer. Mark Cuban offers $320,000 plus 1% in advisory shares for 10% of the company. Jon quickly accepted Mark’s offer and declined Kevin O’Leary’s original deal.
We’re so excited to have @mcuban on the RewardStock team! Huge thank you to everyone for watching Shark Tank on Sunday night and for your continued support. We’re thankful to have all of you on this journey with us ✈️ pic.twitter.com/A6iMZEkVeh
— RewardStock (@RewardStock) November 24, 2018
What do you think about RewardStock’s business model and Mark’s offer? Would you utilize this service? Sound off in the comments below!
For a full summary of this episode, check out this article. Shark Tank airs on Sundays at 9:00 PM EST on ABC.