Daniel Lubetzky, the founder of KIND Snacks, joins the panel of regular sharks on “Shark Tank,” replacing Mark Cuban. But before he became a business magnate, Lubetzky made a risky $220 million move that nearly cost him his company. It turned out to be the best decision he ever made.
In 2008, KIND was still a small player in the snack industry. Lubetzky had just received a $16 million investment from a private equity firm, VMG Partners. The agreement was that he had to sell the company within five years. It seemed like a solid plan at the time, but things took an unexpected turn.
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“Four years after the deal, I realized Kind could get so much bigger,” he recalled to CNBC. Sales increased and Lubetzky felt the company had much more potential. But his investors were eager to make money, putting pressure on him to sell. Instead of giving in, Lubetzky decided to buy back their shares. The problem was that he needed $220 million to do that.
This was no small feat. Lubetzky had to scrape together the company’s cash and take out millions in bank loans to make this possible. “Because I had not negotiated the terms for buying it out in advance, it turned out to be very expensive – and very risky. They were very painful negotiations,” he said.
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He could have lost everything if KIND’s sales had dropped even a little. He had sleepless nights knowing that any misstep could result in the loss of the business he had built from scratch.
But Lubetzky believed in KIND and decided to take the plunge. “I felt like we were just getting started,” he says. He was right. The company’s annual revenue nearly doubled that year, paving the way for what would come next.
Lubetzky turned his $220 million gamble into a huge win. By the time he decided to sell KIND to Mars in 2020, the company had amassed an astonishing $5 billion valuation. He attributes KIND’s success to his decision to buy back his company.
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