📚 $4 Million A Year Telling Stories

Happy Friday!

Growing up, I looked forward to storytime with my dad before bed. He would either pick up a book or make up a story and bring it to life with silly voices and sound effects.

I’m guessing you have similar memories!

So, today’s Shark Tank update is dedicated to all the great parents who made storytime come alive.

Get comfy, and let me tell you the story of how Novel Effect has grown to $4 million a year by bringing bedtime stories to life.

Matt and Melissa Hammersley had the idea for Novel Effect at their baby shower when a friend was bringing a children’s book to life with her silly sound effects and goofy character voices.

After hearing the story, Matt had the idea to create an app that played sound effects while a story was being read.

Months after the baby shower, Matt still couldn’t shake the idea and decided to create Novel Effect.

With an idea in hand, he and his wife sold their house to bootstrap the business and moved to Washington to be close to Amazon HQ.

They raised $620,000 from investors, which was enough to build the app and create a library of 75 stories.

To show the sharks how the app worked, Matt and Melissa read a silly story they wrote called Novel Effect Goes to Shark Tank.

The sharks loved the story and the sound effects that went along with it!

But once storytime was over, the sharks were ready to get down to business. They wanted to know how much money Novel Effect had made so far and what the plan was to grow it.

Matt shared that Novel Effect hadn’t made any money yet, because they wanted to build up their library first.

With 75 books so far, Matt and Melissa planned to launch a paid subscription for access to their books. Further, they hoped to place stickers on books that were in their story library in retail stores to help acquire customers.

Matt and Melissa also shared that they recently got an investment from the Alexa Fund and were excited about making Novel Effect compatible with Alexa.

Mark Cuban was the first shark to speak up, saying he didn’t think the business model would work and thought acquiring customers would be difficult.

Kevin O’Leary followed, saying he tried a similar business model 30 years ago with The Learning Company and found that it was very difficult to get parents to pay a recurring subscription.

Thankfully for Matt and Melissa, Lori Greiner loved the idea, and they were able to make a deal with her for $500,000 for 15% equity.

Unfortunately, after the episode aired, the deal with Lori didn’t work out. But that didn’t hold Matt and Melissa back.

In 2018, they raised over $4 million, which allowed them to develop an Android app and expand their library.

Then, in 2020, they partnered with the Jim Henson Company to add soundscapes to all of the Muppet-themed children’s books.

As you can imagine, these wins led to even more wins, and in February 2023, Novel Effect launched a Chromebook app, making it easier to expand into schools.

Today, Novel Effect has over $4 million in annual sales and a library of over 1,000 books.

If you’d like to try some of their stories at bedtime with your kids, their app offers a rotating catalog of free audiobooks every month.

I guess this just goes to show that sometimes the sharks get it wrong!

Thanks for taking the time to read this week’s newsletter! Please take a second to let me know what you thought of it!

Talk soon,
Andrew Smith