“The valuation is insane:” When Shark Tank investor Kevin O’Leary called out Long Wharf Supply Co founders

On Shark Tank season 13 episode 2, Lauren & Mike Lamagna were seeking $375k for 15% of Long Wharf Supply Co., a sweater business that promoted recycling. During the pitch, the founders shared that their products were made from 10% lambswool, 50% recycled material, and 40% plant-based viscose and nylon blend.

Their mission was to keep the ocean clean and recycle oyster shells. Every sweater was priced at $128 to $158 and cost $22.50 to $33.50 to make. Even though the company was established in 2016, the major sales started from 2020 onwards and were able to generate $495,000 within the past year.

The Shark Tank investor Kevin O'Leary was impressed by the cause and story behind the brand however he couldn't understand the reason behind the $2.5 million valuation. He said:

"Mike let me tell you, the valuation is insane, the company is not even worth $350,000 yet you ask for too much money. I'm out."

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All Shark Tank investors backed out from placing an offer for Long Wharf Supply Co

According to Shark Tank investor Kevin O'Leary the sales of the company weren't up to the mark and that the sweater business would be difficult to scale. O'Leary pointed out that the cause of the business was "really great" however the numbers weren't convincing enough. He said:

"Here $375,000, 15%, $2.5 million valuation, $495,000 in sales, I get the Oyster story it's really great but it's a sweater business okay? you're worth sort of one-time sales."

Then, Daymon John shared that there was a majority who cared about this issue but as the sweaters weren't too affordable, not everyone would be able to participate in supporting this cause. John stated that he was interested in investing for a good cause however it would be an "uneducated decision". The Shark Tank investor backed out by saying:

"This is something I want to do, this is something our kids need to understand but the number is so much to wrap our heads around and I would be making an uneducated decision and paying the most I could for it."

Cuban suggested that the founders should make t-shirts and focus on making their products more affordable rather than trying to establish a premium sweater brand. He asked if the founders were planning on scaling the business by producing affordable items, he questioned:

"Let me ask a question in a different way can you sell something that everyone can afford and buy so everybody can participate? A t-shirt that everybody can say hey I'm supporting conservation and reclamation of oysters and making the oceans better, there's gotta be a path to scale."

As the founders were unable to provide a satisfying answer and promising idea to scale their business, Cuban backed out. Lori chimed in stating that if they had responded with yes to Cuban's question he would have given them an offer and she would join him as well.

After all the sharks backed out, guest shark Peter offered $375,000 for 45% which Lauren & Mike Lamagna countered with 25% however Peter Jones declined. Hence the Long Wharf Supply Co. founders walked away without a deal.

Shark Tank episodes are available to stream on ABC.