On a recent episode of “Shark Tank,” three sisters shocked the world by declining a $30 million offer from Mark Cuban to buy their under three-year-old online dating company Coffee Meets Bagel. They did it without even flinching.
The company’s founders, Arum, Dawoon and Soo Kang came into the tank asking $500,000 for 5% of their company, valuing it at $10 million.
Here’s how their company works: After signing up via Facebook, their service begins privately matching you up with mutual friends. At 12 p.m. every day, you get an email with a potential match. You then have 24 hours to choose whether to “like” or “pass” on the person. If you and the other party likes each other, you can talk via text through private messages for up to seven days before you’ll need to exchange personal information to proceed.
“Single women are tired of signing up for dating websites only to get hit on by creepy strangers bombarding them with disgusting messages.”
The core service is free, but the company makes money by offering additional services users can unlock using “coffee beans,” their virtual currency.
In the episode, the girls declined to give out their exact user-based numbers, which agitated Cuban and caused him to immediately drop out of bidding. He surprised everyone, however, by reentering at the end and offering $30 million to buy their company. Perhaps more surprisingly, the girls turned it down.
Their reasoning for refusing the offer, according to Dawoon:
“We see this business growing as a big as Match.com. They’re becoming a billion-dollar-revenue company, and we think this model and the product has potential to be as big as Match.”
By the end of the episode, all the Sharks went out and the girls left empty-handed.
We recently had the pleasure of interviewing Dawoon Kang, one of the co-founders of Coffee Meets Bagel. Here we discuss what it’s like doing business with family members, the difference between pitching the Sharks and other VCs, and, of course, what it’s like turning down $30 million.
How much influence did your parents have on your entrepreneurial ventures?
A ton! My dad is an entrepreneur himself. He actually started his own business with his brother. So it’s very similar to the steps they’re following. Growing up, we watched him putting so much passion and effort into his business, which is in a commodity space back in Korea. It was very inspiring to see that growing up. So we knew from very early on that we wanted to follow his footsteps and create something out of nothing. When that time came, we decided to take the punch in the entrepreneurial space, and he was always very, very supportive. Typically for parents, when they see their kids quitting their high-paying jobs and trying to do something risky, it’s not something that every parent would approve or support. But my dad was very supportive of our decision even though he knew it was risky. He told us, “This is something you should try and you should just go for it.” Having his support on our decision meant a lot to us.
As sisters, do you guys ever fight or have disagreements over company matters?
Oh yeah, we fight all the time! [laughs] In fact, one of the concerns my dad raised when we told him that we were going to start a business together was that we fight too much. I think siblings fight a lot, but particularly the three of us have always argued about a lot of different things — relatively a little bit more than other siblings, so that was one of his concerns. We are kind of worried about that also, but I think we have put in a lot of effort to professionalize our relationship, especially at work when it involves our employees and work-related matters. I went to Stanford Business School and I had a leadership coach who was very amazing, and I actually brought her in for a few sessions to coach us on how we give feedback to each other and how we resolve conflicts in a constructive manner. So to work on some of the skills, I think we’ve gotten a lot better at it.
You and your sisters are each taking $100,000 salaries. While this seems like a fairly large number to take from your startup at first glance, you mentioned during the show that it’s still a large paycut. Can you go into more detail on what you guys did before launching Coffee Meets Bagel?
My twin sister Aroom worked in a variety of capacities but was always in the consumer field. She started her career at Avon working in marketing analytics and worked on Avon.com. She also worked at Amazon as a product manager in the children’s category. So she has a lot of experience in a tech e-commerce space.
For me, I jumped around here and there. I also worked at Avon because I love the consumer space. I kinda changed careers after business school and worked at JP Morgan in their investing group. So I dabbled in finance for a couple of years before starting Coffee Meets Bagel. And my older sister been in graphic design for over 10 years and she’s always worked with luxury brands.”
It seems like you guys complement each other really well in terms of skills and talent. You all come together like a perfect recipe.
Yeah, you know it kinda reminds me of Steve Jobs’ graduation speech at Stanford back in 2004. He talks about how you should work on what you are passionate about and years later you will be able to connect dots even though you may not actually be able to see it right away where thing are going. I think that’s what happened to all of us. We kinda went off doing our own thing, doing whatever that was interesting to us, and then it kind of came together five, ten years later.
During your episode, Mark was really turned off because you guys didn’t want to reveal your actual user-base. Can you elaborate more on your reasons why?
In hindsight, I think we should’ve shared the number. Quite frankly, for investors, it is a critical number that you need to know in order to figure out if this is a good deal or not. So If I were to go back, I would just share it. “Shark Tank” is a little bit special because of the public nature of the pitch, but just in general, if you are working in a competitive space, it’s my belief that unless you have to, why bother sharing when you don’t know if it’s gonna do any good? I don’t know if it’s applicable to everyone but that’s just how I think.
“Shark Tank” is not the first time you’ve pitched investors. Aside from the obvious fact that you’re being filmed, are their any major differences you saw between pitching the sharks and the other investors you’ve pitched so far?
What I really appreciate about all the sharks is that they are very quick. Typically when you actually come in front of a VC, a lot of times these VCs are finance-oriented people — a professional financier, right? You rarely actually run into VCs or investors who were entrepreneurs before. What I really appreciate about the Sharks is that all of them are very, very successful entrepreneurs themselves and I think that is a huge plus because they understand where we are coming from and what we are trying to do. I think because of that experience, that’s why they’re very, very sharp. I was very amazed that the level of understanding and command in the business that they were able to garner in that short period of time. With the exception of Mark Cuban, I don’t think any other Sharks are tech investors but they were able to grasp whatever we were trying to do very quickly, and I think it comes from the fact that they get exposed to tons of companies through “Shark Tank” and other means and also they are entrepreneurs themselves.
When Mark offered you $30 million, was there any point at which you actually considered it?
No, not at all. There is no regret there because we know the true value of Coffee Meets Bagel. It’s a lot bigger than $30 million, and to sell now, I think that would be selling ourselves too short. I would have loved taken him as an investor, but not to sell.
As a female who has worked in industries dominated by white males, have you seen any extra challenges?
A lot of things are very, very subtle. For example, working at JP Morgan, they were pushing very towards diversity, gender but the fact of the matter is it’s still male-dominated industry. Especially my group, which was investing, it was very difficult to find a woman as a role model that I could talk to. When we walk in a room, mostly full of white men, you are constantly reminded of your own race and own gender. I think what’s great about starting my own company is that I never actually had to think about that anymore. I really do want to create a company that no matter what color your skin or gender, you never feel conscious because the company is so diverse.
How has life been since the episode aired?
It’s only been four days since the episode aired (at the time of this interview), but obviously “Shark Tank” is a very popular show and we’ve had a very big surge in sign-ups on the night of the airing, so we’re very, very pleased with the results.
What’s next for you guys?
We have very ambitious goals. We want to be the authority brand when it comes to anything involving romantic relationships. We have a very, very long way to go. We just launched our Android app which was a huge milestone and we’re going to continue to execute our expansion plan.
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