Audley Wilson is the co-founder of RoboBurger, which makes vending machines that dispense customized burgers. He started the venture with two others, Dan Braido and Andy Siegel.
RoboBurger brings in revenue by leasing the machines out for $3,000 per month or selling them outright. Also, it is the responsibility of the buyers and lessees to keep the machines stocked with ingredients.
The founders appeared on Shark Tank in April seeking investment in their startup. After their pitch, they were roundly criticized by the investor judges based on the company’s presentation and business model.
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The founders said RoboBurger had been in “beta testing” for 18 months, with more than 12,000 burgers sold. Also, they projected $1.4 million in annual revenue by the end of the calendar year but an overall annual loss of $700,000.
According to CNBC Make It, Kevin O’Leary called the presentation “chaotic” and initially refused to make an offer. Mark Cuban was also concerned about the competitive nature of the robotics industry, noting that its technology can quickly become outdated.
He reportedly called vending machines “hard capital assets that cost a lot of money” to produce and maintain, adding that RoboBurger would be in a better situation making “a licensing play.”
“Because you’re driven by the physical location and the physical leasing, I think that’s a huge mistake,” Cuban said and did not make an offer.
On his part, Fanatics CEO Michael Rubin, a guest judge, expressed worry over whether people would be willing to pay $3,000 per month, plus food costs.
“This is a big idea, and for that, I commend you guys. I just don’t think you have the business model right,” said Rubin. “But I think this could be very successful… If it actually works, it could be massive. It could be a multibillion-dollar business.”
RoboBurger’s founders wanted a $1.5 million investment in exchange for a 5% stake in the company. Rubin, however, suggested a loan instead of an equity investment, saying it is a high-risk project “with a low probability of work.” He offered $1.5 million, with “market rate” interest payments and a 10% stake in the company as conditions.
O’Leary offered to split the cost of the $1.5 million loan with Rubin. The founders negotiated O’Leary and Rubin down to a 9% stake before agreeing to work with them.
