Why Mark Cuban Backed a Startup Founder Who Still Works a Day Job
Cuban invested $150,000 in an organic applesauce company with just $40,000 in sales. Here’s why.
PHOTO CREDIT: Getty Images
Mark Cuban wants to reinvent the applesauce industry.
On Sunday's episode of Shark Tank, Cuban agreed to invest $150,000 for 25 percent of applesauce startup Sanaia, which sells organic applesauce targeted at adults rather than children. The company offers exotic flavors like guava and ginger, and generated $40,000 in sales during a six-month test period. Founder Keisha Jeremie sells four-packs of Sanaia's applesauce in glass jars for $19.99, but plans to introduce a plastic container version for $1.70 each. While the Sharks were impressed with Jeremie's pitch, Kevin O'Leary took issue with the fact that she still works a full-time job as the head of human resources at News Corporation.
"You're not full-time, which really bothers me," O'Leary said. "If you believed in this, you'd quit your job and you'd be telling me you don't sleep on weekends."
Jeremie said that because she supports her parents and siblings financially, she can't afford to quit her day job--yet. She had, however, hired a chief operating officer and small team, investing $250,000 of her own money and setting aside another $250,000 for future growth. While the Sharks have in the past insisted that entrepreneurs looking for a deal should work full-time at their companies, Robert Herjavec defended Jeremie by noting that he couldn't quit his job while he was starting his IT-security firm.
"Not everyone can do that," Herjavec said. "I wanted to be all in. You know what? I had a mortgage. I had a child at home. I didn't have a choice."
Holding back tears, Jeremie reaffirmed her dedication to her company. "I would never squander the commitments I have to my family members if I didn't believe in it," she said. "I take care of so many people financially. This is the first thing I have ever done for myself."
While reinventing a classic product like applesauce might be a hard sell to an investor, Jeremie noted that Chobani grew the yogurt category from an $8 billion market to a $125 billion market by repositioning it as a premium snack for adults. Cuban seemed skeptical that $40,000 in sales were enough of a track record to put the business on a path to success, but he ultimately expressed his confidence in Jeremie--and Sanaia's potential.
"You're impressive," he said, "and even though I think you're missing a few things, I think my team could provide it."