The worst shark tank investment of all time was the breath gauge

In more than a decade at ABC’s Shark Tank, billionaire Mark Cuban has seen his share of good investments — and bad.

Last week, Cuban told the Full Send podcast that after investing nearly $20 million in 85 startups for Shark Tank, he had a net loss on all those deals combined. He tells CNBC Make It that the loss so far is only “on a cash basis” and doesn’t take into account the fact that he hasn’t exited many of those investments yet: “I didn’t get out more than I put in. But that does not take into account all ongoing, operational business and their evaluations.”

On the podcast, Cuban shared the worst investment deal he’s ever made on the TV show: the Breathometer.

In 2013, an entrepreneur named Charles Michael Yim went to Shark Tank to pitch his product, the Breathometer, as “the world’s first smartphone breathalyzer.” Yim wowed Cuban and the other sharks by showing off a smartphone attachment that he claimed could accurately measure blood alcohol content (BAC).

Yim’s gave the sharks champagne and then had them blow into a small plastic device that plugged into a smartphone. Yim claimed the device could send BAC readings to your phone and gave you the ability to hail a taxi with the press of a button if your BAC reading was too high.

Charles Michael Yim introduces the breathometer in ABC’s “Shark Tank” in 2013.

Kelsey McNeal | General entertainment content from Disney | Getty Images

The pitch was compelling, and Yim became the first Shark Tank entrepreneur to include all five sharks in a joint investment. Cuban, Kevin O’Leary, Daymond John, Lori Greiner and Robert Herjavec pooled a $1 million investment for a 30% stake, valuing Yim’s company at $3.3 million.

“It was a great product,” Cuban said last week. “But the guy – Charles – I would look at his Instagram and he would be in Bora Bora… Two weeks later he was in [Las] Party in Vegas, and then he’d be on Necker Island with Richard Branson.”

“I texted him like, ‘What the hell are you doing? You should work,’” Cuban said. According to Cuban, Yim replied that he was “networking” on behalf of the company.

Cuban said the apology wasn’t entirely tenable: “Next, all the money is gone.”

By 2016, Yim switched away from the breathometer and was working with healthcare giant Philips on a product called Mint, which measures the levels of sulfur compounds in your mouth to determine if you had bad breath or not.

In January 2017, the Federal Trade Commission filed a complaint against Yim and Breathometer, alleging that the company misled its customers about the product’s ability to accurately measure BAC. According to the FTC, Breathometers “lacked scientific evidence to support their advertising claims.”

That same month, Breathometer reached a settlement with the FTC over this complaint, forcing the company to notify every customer who purchased a device and receive a full refund. According to the FTC, the company has never conducted adequate testing, although it claimed its products were backed by “government lab-quality testing.”

“That was my biggest beating,” Cuban said.

In response to Cuban’s allegations, Yim told CNBC Make It that the “comments were completely outlandish [base],” and that he hadn’t wasted his company’s money on private travel. He also says it’s “not fair” for Cuban to base his assessment of Yim’s CEO abilities on a number of social media posts, noting that his trip to Necker Island was to introduce the Breathometer to Richard Branson . The pitch was successful, and Yim became a finalist in Branson’s Extreme Tech Challenge pitch competition in 2015.

“You can’t look at someone’s social media and take it at face value,” says Yim. “That’s not how social media works.”

Yim acknowledges that he has not committed to properly testing some of his products and says a lack of rigor has done more to derail his company’s progress than his travel plan. Today, neither the Breathometer nor the Mint products are available for purchase on the company’s website.

The founder notes that Cuban took the lion’s share of the investment, making up $500,000 of the $1 million total. He says the Sharks may finally be able to recoup some value from their investment since the company recently agreed to an acquisition. Details for such a deal do not appear to be public yet.

Update: This article has been updated to include a comment from Mark Cuban on his Shark Tank investments.

Disclosure: CNBC owns exclusive off-network cable rights to Shark Tank.

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