How To Win Shark Tank – Interview with Charles Michael Yim

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Episode Summary

Charles Michael Yim is a successful serial entrepreneur and has appeared on Shark Tank and other news outlets. Charles was the first one in the history of the Shark Tank show to get funding from all of the sharks. Charles also came in first place out of 10.000 startups after competing for Sir Richard Branson’s startup contest. Charles talks on his success with Breathometer, the differences between Sir Richard Branson and Mark Cuban’s business style, and his upcoming book.

How To Win Shark Tank – Interview with Charles Michael Yim

Hi and welcome to The Successful Pitch podcast. Today’s guest is Charles Michael Yim who is the CEO of Breathometer. You might know Charles from seeing him win on Shark Tank. Charles, welcome to the show.

Hey, how’s it going? Glad to be a part of it.

Thank you. We really appreciate you sharing your wisdom, your insights [on how to win Shark Tank]. One of the things that I really notice about someone like you is people see you on TV and they think, “Oh, overnight success,” and you’ve been doing this for quite a while and you had several successes before Breathometer. I think that’s really one of the keys that investors look for, is serial entrepreneurs, because you have a certain tenacity and you learned a lot and all that good stuff. Can you speak to your background a little bit? I know you were at some other companies and huge success there as well?

Sure. Like what you just said, you can’t just become an entrepreneur overnight. It’s more of a risk and reward scenario in that, it’s once you start, it’s really I’d like to think, is hacking away, you start hacking away at it. I think when you start, 50% is complete. But I think climbing up the mountain, addressing adversities, driving through a certain level of perseverance and tenacity and ambition. That’s what kind of gets you passed the line.

Breathometer, my current company, is technically my third founding company. I built and sold my last two and so I’ve had a couple of successful exits. I would say my first company is where I sharpened my teeth and that’s where I made several failures and many mistakes, but the important thing is that you get back up and you learn from them and you do better the next time. Ideally, you do it fast enough where you can still survive or your company can or your business can still survive.

What gave you the idea for Breathometer? Most entrepreneurs tell me, “We saw a problem and we wanted to solve it.” It was all about, at first, helping people not drink and drive, right? That was, before they get pulled over by the police they have to take a breath test.

In terms of inspiration, it really came from Jack Dorsey’s wear product. If you’re familiar with it, it’s a pin and processing product geared towards small to medium sized businesses. I saw a dongle and I kind of connected the dots. With the smartphone, I thought to myself, why couldn’t I just switch out the sensor inside for a bio-sensor instead and apply it towards essentially an alcohol breathalyzer kind of product, value proposition.

I used it back in college and I always erred on the side of safety. I put two and two together. Consulted with a few close, trusted friends. Next thing you know, I had a working, breathing prototype within about three months.

What I love about that story, Charles, is that you didn’t have to reinvent the wheel from scratch. You actually got inspired by someone else’s startup. What a great story that is, I love it, and say, how can I make this better? What’s also fascinating to me, please correct me if I’m wrong, but from what I understand is you’ve taken Breathometer to way more than just making sure of you’re alcohol level. It’s actually helping people make sure they don’t have bad breath. Who doesn’t need that, right?

Yeah, there’s quite a few applications that breath can apply to. I think about 6 months into it, I started collaborating and connecting and partnering up with Stanford university, my alma mater, as well Cleveland Clinic. Cleveland Clinic by far has basically the most advanced breath analysis lab that I would think, that I’ve seen at least. Breath analysis actually been a science for quite some time. A lot of consumers aren’t aware, but there’s breathalyzer-type machines in these Kaiser Permanentes in the world. They can cost as much as a quarter million up. You typically need a prescription and, I would say, extra added fees so you can have access to one.

It ranges in terms of applications. Everything from allergens, gastrointestinal issues, asthma. It really goes on and on. For us, we started with alcohol, but then we’re venturing into true medical or digital health applications like oral health, like health and fitness, being able to detect certain levels of fat burning through one’s body. But again, all through breath, because breath has roughly about 300 biomarkers whereby at least 25% are applicable towards human conditions.

All the people who are buying Fitbit and keeping track of their calories could also be buying your product to keep track of their fat burning through their breath analysis for ketosis and things?

Correct, and you don’t even have to worry about calorie counting anymore, or quite frankly, how many steps you are taking. Yeah, could you pair it with a Fitbit product or what have you or some type of step tracker? Sure, but if anyone really knows health and fitness, it really boils down to 80% of what you’re eating versus 20% in terms of your workout.

If you nailed down your diet and you’re not necessarily calorie counting but understanding how much fat you’re really burning and optimizing that, essentially that’s the holy grail. That’s how you really shedding pounds and staying at a certain optimal and healthy fitness range.

I think that’s what’s going to be partly responsible, if not a lot, of the incredible growth that you’ve already had. What I saw was that the growth for Breathometer was, 2014 you were at $4 million and then you project 2016 to be at $14 million, is that accurate?

Yeah. That’s right.

That’s phenomenal growth and obviously it’s not just from awareness from Shark Tank, although there’s a great story there. You were pre-revenue from the video I saw, right, before you went on Shark Tank?

Correct. We were pre-revenue. We’ve been revenue-generating for quite some time. Next year will be even a bigger year. Now we’re launching our third product and we’re already working on our forth and we already have our 5th in the R&D phase. All, again, geared towards different applications, not just alcohol.

What’s interesting about you on so many levels is you’ve broken history multiple times. You were the first person on Shark Tank to ever get all five sharks to invest with you. What’s interesting is they all said you checked off all the boxes.

You had a great product, you knew your numbers, you were a great business person, and you were doing something that was great for society, so everybody felt good about investing in that. Did you know before you went in [to win Shark Tank] there that you were checking off all those boxes or is that just who you are and the way you’ve done business in the past?

It’s the latter. I didn’t have necessarily a checklist going in there. I would say I definitely did my fair share of preparation. I definitely made sure I knew my numbers and I run a pretty tight ship so I knew my business inside out, so I was well prepared. I think as most people kind of define luck, there was a little part of luck in it where when the opportunity arises, you’re prepared and so you can take advantage of the opportunity. There was a lot of preparation that I think was key.

In terms of product, obviously there’s bias, but I definitely feel it’s compelling. Obviously, I have experienced and of course there’s a great cause behind it. I think, there’s a combination of factors, but a good portion of being prepared and the rest just being the right fit.

One of my favorite quotes is from Arthur Ashe, who said the key to success is confidence and the key to confidence is preparation. I’d love to have you share with our listeners what kind of preparation did you do before you went to pitch Shark Tank and what do you now before you pitch investors?

[Tweet “The key to success is confidence and the key to confidence is preparation.”]

I think with Shark Tank, which was very acute to Shark Tank, was I actually met with quite a few successful fellow Shark Tank entrepreneurs that have already been on the show and did well, started interviewing them. Understanding, are these investors are actually the real deal? Can they really add value to your business? Pro-tips, if you will, prior to being on the show.

In terms of just what I do in general, I’ve been in the board room several times. Again, it’s my third company. I’ve, overall, probably closed over $50-60 million dollars in funding, VC funding, single-handedly. I’ve been around the Valley. I think in terms of just being prepared being able to anticipate questions investors will ask, that’s extremely key [to win Shark Tank].

I have a pretty good head on my shoulders now and I think that just comes along with, as you say, preparation and that built confidence. In addition to that, just having the experience underneath your belt. When you’ve been around the block a few times, it gets easier. It gets easier, for sure.

[Tweet “When you’ve been around the block a few times, it gets easier.”]

Those questions include everything from what does it cost to acquire a customer to what’s your vision. There’s so many questions to be prepared for and anticipate. I want to brag about you. You closed $2 million in 2013 and now you’re going for $20 million. Is that accurate?

That’s right. Yeah, we already closed a good chunk of it already. More than 50-60% and we’re closing the rest of it now.

When you go from that kind of $2 million to $20 million, that’s such an incredible growth and obviously, based on huge success. Do you get different questions when you’re going for $20 million than you do when you’re going for $2 [million]?

Certainty, you do. Definitely, especially when you have a company that changes from, transitions from pre-revenue to revenue. Pre-revenue is more about product validation and ultimately product launch and assessing the risk points of the company in terms of being able to at least just ship the product.

When you’re in the second phase where we are, at series A, it’s user acquisition cost. How much does it cost to bring on a user? What’s the LTV, lifetime value of the customer? What’s the cohort analysis look like? How long are you retaining your customers and how long are they staying with you. Are they happy? Are they satisfied? If they’re not, you got to quickly address them.

Additionally [to help you win Shark Tank], what’s your roadmap and do you have the team that can support that? Do you have the engineering? Do you have the product? Do you have the financial assets or foundations to be able to support something like that? What are the markets you are targeting? Who is truly your demographic? Who is your customer at the end of the day?

You need to know quite a bit more about your product or products and your customers and then mechanics and foundation of your business, because at that point, you’re no longer an infant. You’re more like a toddler.

I would say we are in the transition and the interesting phase where we’re a toddler now, but we’re quickly transitioning to become a true teenager. There’s different certain level of expectations based on the growth stages that you’re in. There’s always good and bad with that. There’s going to be natural pain points, there’s going to be growing pains.

Scaling a business, hiring quick enough, but hiring quality individuals that can truly add value to the business, finding the right investors, support partners, and dealing with the distribution, international scaling, localization, regulatory. We’re a medical company at the end of the day, so we have to deal with the FDA. There’s complaint regulations we have to address, legalities.

There’s a ton of stipulations that we have to go through. It’s just a complete different set of questions from where we once were, first airing on Shark Tank. It’s a different ballgame. Just to mind you, we are truly a Silicon Valley company at heart.

When I say Silicon Valley, what I refer to and what that means to me is that we’re very much a technology company and we’re a culmination of both hardware and software. I think Shark Tank, if at all, gave us a considerable boost. We’re an atypical company in terms of how we’ve gotten to where we’ve gotten and the momentum we’ve built so far.

Can you speak a little bit about the team? I saw on your LinkedIn profile, you have some of the same people from your previous successful companies working with you again. Obviously there’s great synergy there when you have your team following you and you guys have a shortcut. They know what you expect from them and vice verse.

That’s so important for investors, is who is the team, and you mentioned it. Anything you can do about how you find your good team? How do you keep them from company to company?

That’s a great question. I think repetition is pretty key. You need to be able to treat your people and your team members well. I think if there’s a certain level of mutual respect there, I think naturally it’s going to lead to basically a, I would say, a clan, if you will. A group of you that go from one company to the other and creating success at one place and then hopefully repeating that, making that a recurring situation.

I think it’s a lot about that. It’s just great teamwork, team synergy and treating each other with an equal amount of respect. I think that naturally occurs. I there’s a second part of that, just team building. I think that’s probably one of the most important assets or talents that one founder can have when you’re building a company.

Because if you, for instance, don’t know a certain aspect or don’t have an in-house expertise on a particular topic for a business, maybe you don’t know, but you could hire someone that does. You can hire, believe it or not, a lot away out of your problems as a startup. If you don’t know it, bring someone in-house and they’ll figure it out for you.

[Tweet “Teamwork is respect and collaboration”]

I love that so much. The teamwork is built on respect and collaboration. Which is really what you’re saying is, collaborate with people who have skills that you maybe don’t have and then everything is stronger than it was before. It’s really fantastic insights. Do all five Sharks engage with you equally while you have that many investors?

No, I think it’s more on an as needed basis. When I first got funding and it was from all five at the very beginning, it was pretty much all five cylinders pumping at the same time. It’s pretty intense. Once you start scaling to a series A and when you establish a rapport and built up the relationship, it’s more on an as needed basis. We’re no longer that little tiny company that we once were. Now, it’s basically on demand basis more so than anything.

We have now institutional investors that are involved, that tends to be why we have a much larger round. In addition to that, we have a formal board now, which is very different. I’m not the only one just kind of calling the shots. I have a legitimate board that come from the institutional investor side that help mandate policy and make decisions with me.

We haven’t even gotten to your other big accomplishment, which is winning first place out of 10,000 other startups with Sir Richard Branson. Congratulations on that. You have Richard Branson and Mark Cuban backing you. I would think that’s quite a nice calling card for investors. Tell us a little bit about the Sir Richard Branson experience?

Richard Branson, it was more of his version of Shark Tank, if you will. It’s an opportunity for the community to basically, I would say, add fuel to the fire. If you already had something going, like Breathometer did at the very time we entered the competition, it basically acted as a catalyst and expedited our growth. We were exposed to a lot of investors. That’s what lead to our series A. and a lot of basically partnership opportunities as well. We had a lot of opportunity to interface with Richard Branson himself, his team, was able to go on his private island, Necker, so that was pretty cool. I’ve been twice since.

It’s just a phenomenal opportunity to meet great people, really expose the brand to a great community. There was just nothing but just give, give, give and take, take, take in terms of just a mutual exchange. Overall, it was a great experience and probably had equally as difficult, if not more difficult odds, in terms of coming through. But pleasantly surprised, we took first place. It was an amazing ride.

I bet. What advise did Mark Cuban and Sir Richard Branson give you? I would assume they have different points of view. Since you’re one of the few people who is fortunate enough to know them both, I would love to her your insights and how they compare.

I can tell you what I was able to take away from each so far. I think what I get from Mark Cuban, he’s a very much of an entrepreneur than an investor type that is all about building a business and doing the grind and just getting things done. I definitely got that from him. At the end of the day, he just wants to make sure that you’re doing your best and you’re building a real business.

[Tweet “Mark Cuban is all about getting it done.”]

I think what I get from Richard Branson is creating authentic genuine value. We have, for instance, a potential application for lung cancer. He was really just focused on that. He’s like, great, you can build businesses. A lot of people do build businesses, but if you really have a lung cancer application here, you talk about really saving lives.

[Tweet “Richard Branson wants authentic value.”]

I think what I got from him was just the bigger picture in that contributing back to the community, contributing back to the world. Doing something great while building something that you’re passionate about. That’s the winning formula there.

Building something great while making a difference in the world. That’s a great line. I love it. It’s really helpful. As if that’s not enough, you are also going to be an author. Tell us about your upcoming book.

[Tweet “Building something great while making a difference in the world.”]

I’m writing a book. It’s going to be three parts. My inspiration was from the show because after airing on the show, now I’ve been a part of five episodes and soon to be airing on the new spin-off show, Beyond The Tank, as well.

I’ve developed a public persona, if you will. I get approached quite a bit in public. I have parents coming up to me saying, “Hey, you inspired my kid to start his on business,” and blah, blah, blah or, “They want to learn from you.”

That got me thinking in that, maybe there’s something to here. That inspired me to write a book [about how to win Shark Tank]. The title may be something like Making of a Shark. Meaning that if you take some of the tips that I provide, perhaps you can build something of your own [and win Shark Tank too].

It’s three parts. It’s part one, my bio background. It’s a brief background of me and how I came to be as a lemonade stand kid to a full entrepreneur. Part two is my behind the scenes behind Shark Tank and then Richard Branson’s Xtreme Tech Challenge.

Part three, where I think the majority of value in the book is, my ten step guide, if you will, of how to come up with an idea, how to validate the idea, go to product discovery, whether it be product or service. Get investment for it, whether it be crowd funding or personal investors. Then taking it and releasing it to market, and then eventually scaling it. This is kind of a proven formula, if you will, that I’ve done personally with my last three companies, so I know it works.

I’ve broken it, I’ve distilled it down to very simple points where any average consumer, someone from middle America can pick it up and read it and go run with it. It’s my way to give back. I think it’s great if you’re successful, but if you can give back a little bit, that’s when the win is.

I’m being repped by one of the top agencies in Hollywood, they’re called APA. They’ve done Kim Kardashian, they’ve done Restaurant Impossible. They’ve done Gordon Ramsey and a bunch of stuff. They’re repping me at this point. I’ve already started writing the book, so we’ll probably launching in the next, I would say, 8-9-10 months.

How exciting. It sounds like a great content. It’s got enough celebrity hook of the behind the scenes with two major people, Mark Cuban and Sir Richard Branson, and then the actual meat and potatoes. One of the things that jumped out at me when you were describing the book, which I want to pre-order the minute it is available, is the idea.

So many people have so many ideas. How do you know or any tips you can give us in advance to your book, how do you know that this is the right idea to really pursue [so you can win Shark Tank]? Do you test it with crowd funding or do you test it with consumers or check out the competition? What’s your criteria for knowing that, in this case, Breathometer was going to be the right idea?

You hit a lot of the main points. Again, it’s essentially you need to one, validate the idea. That can be done through crowd funding. Secondarily, you need to do research. Figure out what the market size is like. Is there a predicate device, is there a market? The third part of it is, what truly is the potential penetration or traction of it? Those are kind of three of some of the primary characteristics or profile requirements. If you see and you recognize a potential, then at that point it’s a matter of execution.

[Tweet “If you see and you recognize a potential, then at that point it’s a matter of execution.”]

Great. I also know that you are involved with the Stanford StartX Accelerator program, which is another way of giving back, obviously. You must hear a lot of great pitches. Just to get into those accelerator programs is extremely competitive, almost like trying to get on Shark Tank. The number of people who apply and the number of people who get in.

I’ve recently been the pitch mentor at StartFast in New York, so I know that experience. I would love to hear your insights as what’s it like working with the Stanford Accelerator?

Like you said, it’s a tough accelerator. I entered, applied, being a Stanford alumni. That’s one of the main requirements. Aside from that, you need to have a legitimate idea or product or service. If you are selected, like you said, it’s tough, then you can go to the acceleration program. We did that and we did well. We gained a Chief Medical Officer. We got funding from Stanford University. That was nice. Now we’re working with them on the essentially respiratory side of things.

Moving forward, I now, like you said, give back. I’m actually now a mentor for the Stanford StartX Accelerator personally. I do get exposed to quite a few pitches. I think my two cents there is a lot of people get really caught in the, “Hey, I’ve got a cool idea and it sounds really cool, and what if it was this, what if it was that.”

I think my advice there is, and this is in my book again, that you should think about, when you create a company or product or service for that matter [to win Shark Tank or do something on your own], is always look through the lens of a problem-solution framework. What I mean by that is your target should be, are you solving a real problem? If you are and you have an innovative and a legitimate solution, you will have more than likely built a product or service that can provide real value.

[Tweet “See your idea thru the lens of what problem do you solve.”]

If you do, that’s when you have a basis for a company or a business. I find too often that, I would say, beginner entrepreneurs that just go out in the world wanting to create something but in actuality, they’re just creating something. That doesn’t mean that they’re generating or going to essentially create a business.

That’s incredibly valuable. Who do you help and what problem do you solve are two of the key questions that I think startups need to have in their head before they ever get to an accelerator, let alone an investor, and be able to say this isn’t just something that’s fun, it’s actually solving a problem. In addition to your upcoming book, are there any other books that you’d like to recommend to startups?

That’s a good question. I am a big fan of Guy Kawasaki. That’s actually how I broke into the startup world. He has a book called Art of The Start. That’s pretty big for me. Let’s see. I think Eric Ries has a pretty good book. It’s called Lean Startup. You get an idea of how to run lean and mean and the fundamentals of running a startup and surviving. There’s also Tim Ferriss, 4 Hour Work Week.

I’m a big firm believer in working smart and obviously working hard, but working smart goes a lot further than working hard. Believe it or not, I run this company and probably in the middle of launching another company.

It’s just juggling the two acts where if you can get your current company or the company you’re working on to a stable state, a manageable state where you have senior management and at that point it’s self-sufficient and you are really delegating responsibilities, then potentially you’re at a point where you can actually start something else and make the best use of your time. Staying active, it’s all about a juggle act and it really comes down to how good you are at multitasking. I think that’s pretty key [to win Shark Tank].

I love it. How can our listeners follow you, be sure that they know when your book comes out, Twitter, LinkedIn? What’s the best way to keep track of, you have a blog or anything that you want people to read?

I’m pretty active on social media. I have a pretty significant following, especially after airing on Shark Tank and what have you. I am quite often pretty active on Facebook. You can find me under Charles Michael Yim. I technically go with my middle name as well. On Instagram, Twitter, I’m always under @CharlesMYim. You can follow me on there.

Otherwise, I’m always on the news or on TV with Squawk Box on CNBC and then potentially CNN soon and what have you. Shark Tank and now Beyond the Tank. You can follow me on TV as well. I’m constantly involved in blogs, whether it be TechCrunch or Mashable or Venture Beat.

Fantastic. Charles, I can’t thank you enough for being on the podcast today and sharing your wisdom [on how to win Shark Tank]. Congratulations on all your success. We’re looking forward to your new book and watching you on Beyond the Tank and other shows as well.

Cool, awesome.

Thanks again.

Thank you.

Links Mentioned

The Art of The Start by Guy Kawasaki.
The Four Hour Work Week by Tim Ferriss
The Lean Startup by Eric Ries
Charles Michael Yim Twitter

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