Mark Cuban financed his studies with various part-time jobs.
On Friday’s episode of ABC’s “Shark Tank,” two founders who were starting a company from their dorm room that helps college students make extra money struck a chord with Cuban — prompting the billionaire investor to sign them an investment deal Offering $250,000.
Sam Chason and Matt Gronberg are two former Wake Forest University classmates who founded their company, Storage Scholars, in 2017. It started as a way to make extra money to pay off their college debt: requiring their classmates to pack their belongings and put them in storage between school years.
Storage Scholars is now a full-fledged company operating in 48 schools across the United States. At the time the “Shark Tank” episode was recorded, the company had already generated $1.86 million in 2022 revenue. All of Storage Scholars’ employees who pack and move the boxes are students themselves, meaning the company “creates high-paying jobs on campus,” Chason said.
“When two 18-year-olds were afraid of the thought of student debt, we started Storage Scholars in college, which allowed each of us to graduate debt-free,” Gronberg told the Sharks, then asked, “Who is willing to join us? “Our mission is to empower students across America to do the same?”
Chason, 24, and Gronberg, 23, demanded a $250,000 investment in exchange for a 5% stake in the company. Their pitch drew interest from several Sharks, but Chason and Gronberg clearly seemed most interested in partnering with Cuban.
“I know student debt is a big deal for you, you’ve been very outspoken about it,” Gronberg told Cuban. In fact, Cuban has advocated for plans to reduce student debt, including President Biden’s recent plan for partial loan forgiveness, to both help young borrowers and stimulate the U.S. economy.
Chason said he was worried about dealing with potential six-figure debt at Wake Forest, where tuition and housing cost more than $70,000 each year when he went to college. Early on, the duo went door to door in Wake Forest dorms looking for clients. Chason added that the company only generated $18,000 in sales in its first year, a fraction of current sales.
Today, the cost of Storage Scholars’ packing, moving and storage services averages about $559 per student, the founders said. This includes delivery of empty boxes, tape and other packaging materials, as well as pickup, summer storage and delivery of the boxes to students’ new residence halls for the following school year.
All of these services, including labor, cost Storage Scholars approximately $199 per move.
After passing on offers from Kevin O’Leary and Daymond John, who were each willing to invest $250,000 for a 20% stake in the company, Chason and Gronberg considered Robert Herjavec’s offer of $500,000 for a 20% stake. share before listening to Cuban’s offer.
The Dallas Mavericks owner countered with an offer of $250,000 for a 12% stake, which the founders of Storage Scholars negotiated down to a 10% stake. That meant Cuban offered the same $2.5 million valuation as Herjavec, but with half the investment capital.
Cuban argued that he could give the founders of Storage Scholars “something they couldn’t get elsewhere.”
“I have a platform. There are schools that I have connections with and if I get out there and start talking about it…the phone will ring and ask you to open new schools,” Cuban said. “That’s the value I can bring.”
Ultimately, Chason and Gronberg agreed with Cuban’s argument that “it’s not all about the money,” and they sided with the Shark, which they said was their company’s mission to build a successful business that can also help its employees best supported to pay off their student debt.
“We’re just overjoyed,” Chason said of the deal with Cuban.
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”
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