Mark Cuban gave this start-up some valuable advice — here’s what happened when its leaders didn’t listen

Wealth

In 2015, Mark Cuban gave four entrepreneurs a valuable piece of advice for their start-up: “Don’t drown in opportunity.”

They listened — at first.

The four co-founders of Chicago-based Dude Wipes, a flushable toilet wipes company marketed towards men, met Cuban six years ago on Season 7 of ABC’s “Shark Tank.” After hearing their pitch, Cuban agreed to invest $300,000 in exchange for a 25% share of their company.

Cuban, who leaned on advice from his own mentors early in his career, offered the co-founders this simple advice: Don’t “do too much.” He told them to focus on their flagship product — flushable wipes for “dudes” — and strengthen their relationships with retailers already selling their products, like Kroger and Amazon, says co-founder and “Chief Executive Dude” Sean Riley.

For five years, that strategy worked. The business grew: The co-founders project their products will bring in a gross revenue of $67 million in 2021 alone, wiping approximately 1.1 million butts. But during the Covid-19 pandemic the executive team decided to press their luck and send Cuban’s advice down the drain.

It was a mistake.

‘A strategic mistake’

Last year, Riley says, the co-founders decided to try their hand at a new line of products: natural deodorant. They saw it as a growing men’s grooming market that didn’t have a “cool brand.”

Dude Wipes invested $30,000 in research and development, says Riley, and launched into the deodorant market in March 2020. They sold all 75,000 units they produced, resulting in $180,000 worth of deodorant sales.

The problem: The juice “wasn’t worth the squeeze,” Riley says. “The extension was a strategic mistake.”

Building out the deodorant business, it turned out, took away resources from their “war against toilet paper.” And that war escalated during the pandemic’s early days, amid a significant supply shortage for toilet paper.

Dude Wipes experienced a sales boost — its gross revenue jumped to $40 million in 2020, compared to $15.5 million in 2019, according to the co-founders — but according to Riley, it could’ve been much stronger. “We were like, ‘What are we even doing with this other stuff?'” he says.

“It’s a $10 billion toilet paper market in the U.S.,'” adds co-founder and chief marketing officer Ryan Meegan.

Meegan says the experience made them realize that Cuban had been right all along. So, they dropped out of the deodorant business and went back to their old strategy: focusing exclusively on a single product line. Or, as Cuban would say, “doubling down on what’s working.”

And it does seem to be working. According to “Shark Tank” producers, Dude Wipes is one of the show’s top 10 companies for all-time sales. The co-founders say they’re on track to pass Charmin in 2021 sales — which, they add, would make them the country’s second-biggest brand in the flushable wipes category, citing internal Nielsen data.

A Nielsen spokesperson declined to confirm any market share breakdown, but Dude Wipes co-founder Jeffrey Klimkowski says the category’s biggest brand is Cottonelle — by a significant margin.

“We always joke,” Klimkowski says. “We’re number two for number two.”

Sign up now: Get smarter about your money and career with our weekly newsletter

Don’t miss:

Mark Cuban says one mistake cost this entrepreneur a $300,000 ‘Shark Tank’ deal: ‘Read the room’

How the man behind Trader Joe’s turned extra-large eggs into a grocery store empire

This couple’s 8 income streams bring in over $3 million per year: ‘It all started with side hustles’

Articles You May Like

Here’s why unemployment claims hit their lowest level since 1969
9 money moves to make before becoming your own boss
Travel in 2022: Is it time to plan those big trips abroad?
With paid family leave still up for debate, here’s one way lawmakers could compromise
Top Stock Picks for Week of November 29, 2021