Breathometer: Shut Down by the Federal Trade Commission

Abstract

Breathometer was the first Shark Tank pitch where all five sharks invested in one deal. This case examines how Charles Yim created a product that tests blood alcohol levels that is connected to an iPhone or Android smartphone. The product was reported to be innovative in its design and functionality. In the early stages of the company, Yim was able to raise over 2 million dollars from Silicon Valley VC’s, Shark Tank, and Indiegogo. Ultimately, the product’s advertising claims were found to be dubious by the Federal Trade Commission, and they were ordered to provide refunds to all customers. The case examines the processes of value proposition development and investor due diligence. In addition, the case explores the issues related to board composition and the value that board members with extensive industry experience bring to the success of the company. Ultimately, the company underwent a major pivot, transforming its product into one that measures bad breath and oral health. The case and instructor materials provide the vehicle for class discussion and analysis of the early-stage venture success and failure and how industry experience is essential to long-term survivability.