Overview
Toygaroo was a toy subscription service that allowed parents to rent toys for their children until they got bored of them.
The company was founded in 2010 by Nikki Pope and several co-founders, including Rony Mirzaians, Hutch Postik, Phil Smy, and Young Chu.
After appearing on Shark Tank in season two, Toygaroo secured a deal with Mark Cuban and Kevin O’Leary for $200,000 for 40% equity.
However, the company went bankrupt in 2013 and is now worth $0 as of 2024.
Shark Tank Appearance
Six months after launching Toygaroo, Nikki Pope appeared on season two of Shark Tank, asking for $100,000 for 10% equity. The idea captured the attention of the Sharks, and Mark Cuban and Kevin O’Leary offered $200,000 for 40% equity.
However, Mr. Wonderful later teamed up with Mark and closed a deal of $200,000 for 35%.
The rapid increase in customers caused problems with inventory and shipping costs. To keep up with demand, employees purchased individual toys in nearby stores instead of setting up wholesale deals.
Toy companies didn’t like Toygaroo because they viewed them as a competitor that depleted their sales by offering rentals.
After Shark Tank
After Toygaroo’s Shark Tank episode aired, the company’s website traffic skyrocketed. However, the rapid increase in customers caused problems with inventory and shipping costs.
Employees purchased individual toys in nearby stores instead of setting up wholesale deals. Toy companies didn’t like Toygaroo because they viewed them as a competitor that depleted their sales by offering rentals.
As costs continued to spike, Toygaroo approached Mark Cuban and Kevin O’Leary looking for money to save the company. They refused but offered to take over the company.
Ultimately, the founders let it fail and moved on to other opportunities.
Toygaroo filed for bankruptcy and was officially out of business in 2013.
Phil Smy, one of the co-founders, is the only active entrepreneur. He is running two websites: Zonmaster and LotteryCanada. Not much information is available on Nikki Pope, and it appears that her PR firm, The Prime Effect, is out of business.
The Founder
Nikki Pope, a businesswoman from Los Angeles, was the face of Toygaroo on Shark Tank, but she wasn’t the only founder.
Pope studied psychology at Sam Houston State University and got the idea for Toygaroo from her own experience with her relations. She had 11 siblings and 13 nephews and nieces, and she knew that kids love new toys but can quickly get bored of playing with them.
This gave her the idea of making a subscription service where people can rent toys until their kids get tired of them.
Founding Toygaroo
With the help of her co-founders, Nikki Pope established Toygaroo in 2010 with a soft launch that involved 500 subscribers paying $42 per month.
Most of the early users loved it, and word of mouth attracted over a thousand more customers. The company’s focus was on growth over toy sourcing, and they didn’t have a structure in place to scale.
Lessons From Toygaroo’s Success
Based on the subtitle from the Shark Tank episode about Toygaroo, here are three practical tips for aspiring young entrepreneurs:
1. Validate your business model with a soft launch
Before fully committing to a business idea, conduct a test launch with a smaller group of customers. This allows you to gather feedback, make necessary adjustments, and validate your business model with minimal risk. For example, Toygaroo started with a soft launch of 500 members to test their monthly subscription service.
2. Understand your financial metrics
Be clear about your costs, pricing, and how long it takes to break even. This understanding helps in making informed decisions about pricing strategies and scaling up. Toygaroo knew their cost per toy box, the monthly membership fee, and the time to break even, which was crucial for their financial planning and discussions with investors.
3. Leverage word of mouth and effective marketing
Initial success can be achieved through word-of-mouth marketing, but scaling up requires more aggressive marketing and exposure. Toygaroo generated a waiting list of over a thousand people through word of mouth, indicating the importance of customer satisfaction and referral. However, they also recognized the need for increased marketing efforts to grow the business further.
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