Snacks company owner made $220 million mistake that earned him $5 billion
| Last updated
Featured Image Credit: @daniellubetzky/@sharktanknbc/Instagram
A snacks company owner made a mistake that would cost him an eye-watering $220 million – but his big risk paid off as he saw a $5 billion return.
This is the incredible story of Daniel Lubetzky, the man behind Kind Snacks.
The company is now a household name – go to any supermarket and you'll see Kind's healthy snack bars, known for being both tasty and featuring recognisable ingredients such as nuts and whole grains.
But back in 2008, it wasn't anywhere near as well known as it is today.
As explored in CNBC Make It’s The Moment series, at the time, its foundations lay in a $16 million fund from private equity firm VMG Partners.
A significant clause in the contract was that in return for the investment, Lubetzky had to sell his company within five years.
While it seemed like a great idea back then, after four years he witnessed Kind's growth and believed he was still very much the man for the job.
"Four years into the deal, I was realizing that Kind could become so much bigger," he told the outlet.
"My investors were pushing me to sell the company, and were very eager.
"My vision was to continue growing the company for many years to come. And their vision was to exit and get a return on their investment."
Lubetzky faced a big decision ahead of him: give up the company and risk losing out on one of the biggest projects of his life or find a way to buy the company back off VMG.
Though the latter option seems like the ideal choice, in order to make it happen he'd have to find $220 million for the deal – and risk losing everything.
He decided to take a leap of faith, but the decision wasn't made lightly.
Lubetzky continued: "I had a very strong feeling, informed by our momentum, that this was not the end — nor the beginning of the end — but the beginning of the beginning. And I wanted to keep going.
"But that was a scary moment. What if something goes wrong? Then, all of a sudden, you have so much debt, and you could maybe even lose your company.
"I had sleepless nights. We probably had a loan of, like, $200 million."
Though he'd done his research and knew Kind had a bright future ahead, there are always things that could go wrong.
It wasn't a simple process either. Negotiations took years, running until 2014.
As noted by CNBC, his decision certainly paid off – in that year alone, sales doubled. And when Lubetzky went to sell off Kind six years later to Mars, it was reportedly worth a whopping $5 billion.
"I am still a meaningful stakeholder in Kind today, and I still guide them," Lubetzky explained.
"We’ve agreed with our partners at Mars that Kind will be a separate standalone platform, and Kind is still growing by double digits.
"It’s not just about me having achieved more financial success with this path. There is a possibility that Kind would have not reached the tens of millions of consumers that it reaches every day now."