In episode 17 of season 12 of Shark Tank, entrepreneurs Chase Mitchell and Brian Bloch introduced their innovative ice-free cooler system, seeking an investment of $150,000 in exchange for a 15% equity stake in their company, Chill Systems. However, their financial disclosure raised eyebrows, indicating they faced a challenging economic model. The production cost was $37 per unit, while they aimed to sell each for only $30, resulting in a loss for each sale. This financial strain was met with strong criticism from Kevin O’Leary:
“You like to talk about the values. Why would you do this? I mean this stuff is tchotchke. They give it away at beer companies. There’s a million coolers…Oh, it’s the same. So I want to rip you to pieces. I’m dying to rip you to pieces.”
O’Leary further expressed his doubts:
“There is no hope. This is a really bad idea. Coolers? Why? I don’t even buy the sustainability thing. There’s all kinds of plastic in this thing. I hate it. I’m out.”
The Disappointing Outcome on Shark Tank
Chill Systems, co-founded by former Google and Apple employees, had managed to generate $111,000 in total sales over two years. Yet, their unique product concept did not convince any of the Sharks to invest. Despite efforts to cut manufacturing expenses to $18, the venture sadly ceased operations in January 2022.
Chill Systems: The Concept and Challenges
The inception of Chill Systems came as Mitchell and Bloch pivoted from their tech careers to create a cooling solution capable of storing beverages without ice. This innovative design was not only aimed at maximizing cooling efficiency but also offered customized colors and designs tailored to various consumer segments.
Bloch illustrated the limitations of traditional coolers by bringing in a standard ice-filled container, juxtaposing it with their model that could hold three drinks simultaneously without ice. Their pitch emphasized a 24-hour cooling capability and portability, along with unique features designed for wine storage.
Sales Strategy and Launch
Mitchell and Bloch focused on a direct-to-consumer sales model bolstered by promotional collaborations. Their journey began in August 2018 with a successful Kickstarter campaign, accumulating $53,172 from backers to kick-start production.
However, manufacturing challenges quickly emerged, with production costs ballooning to $37 per unit. Attempting to address profitability, they set the retail price at $30, which created initial losses. Although they managed to reduce production costs to $18 through enhanced manufacturing techniques, profit margins remained razor-thin. They expanded distribution beyond their website to platforms like Amazon and sought out corporate promotional opportunities.
Pitch Reception and Critique
The Sharks were skeptical, questioning the fundamental market demand and the idea of requiring consumers to pre-freeze the coolers 24 hours in advance. Daniel Lubetzky challenged the preparation time aspect, while Mark Cuban advised the duo to refine their pitch to highlight key selling points. Robert Herjavec noted a lack of credibility in their sales forecasts, and Lori Greiner pushed for significant price reductions to ensure retail viability.
Ultimately, Kevin O’Leary highlighted concerns regarding production costs and market potential. Each Shark chose to opt out of investing, citing various reasons tied to the business model’s weaknesses.
The Aftermath of Chill Systems
Following their Shark Tank appearance, Chill Systems continued operations until mid-2021, as noted by Shark Tank Blog. Their Amazon listings demonstrated consistent sales until July 2021, and their official website remained operational with full product offerings until late 2021. The team maintained active social media engagement to connect with customers until July 9, 2021. By fall 2021, product availability began to dwindle across sales platforms.
In Q4 of 2021, the company withdrew its products from Amazon and halted new order processing on their website in December. Confirmations from Chase Mitchell indicated that Chill Systems officially ceased operations in January 2022, prompting the founders to pursue new entrepreneurial paths. Final shipments were delivered to corporate partners by late 2021, as outstanding orders were fulfilled.
From the initial Kickstarter launch to the eventual closure, Chill Systems operated for a total of three years and five months, with manufacturing wrapping up in late 2021. Customer service channels remained functional until the company’s final day to address pending orders.
In the meantime, fans can look forward to the upcoming season 16 of Shark Tank, which will air on ABC Network.