Tadewaldt says Sandbox owns a large percentage of the companies initially because it's proving all of the resources, salaries, and equity to the "founders-in-residence."
"Meanwhile as they work on businesses that start to succeed they receive equity grants to acknowledge the incentive that entrepreneurs need to stay up all night with a business and make it their own," she says. "So it's like a straddle between being an entrepreneur on your own where you get no salary but you get more equity versus being an employee at a company where you get a salary and probably very little equity, if any at all," she says.
It's an interesting idea and one that Tadewaldt says takes pressure off entrepreneurs and allows them to be more objective while at the same time giving them incentives for getting traction.
Killer questions purge the bad ideas
The notion behind Sandbox is that there are a number of things that can get in the way of building a business and by reducing mistakes and the time founders spend making them, entrepreneurs can spend more of their resources actually building out an idea.
One way Sandbox does that is by asking early on what it calls "killer questions."
For instance, one company born in the Sandbox foundry is the women's fashion company CakeStyle, which once a season sends a box of high-end clothing to customers along with a video that explains how to wear the items and why each was picked.
Sandbox mentors asked the company's founders two key questions: Would women want someone else shopping for them? And would brands sell to CakeStyle wholesale? As it turned out, answers were affirmative on both counts.
"Tackling these big questions early on rather than ignoring them allowed us to vet the idea more quickly rather than going to the trouble of building out all this inventory and a technology platform before we even knew if women wanted to buy what we were offering," Tadewaldt says.
A couple of other companies Sandbox says have benefitted from the foundry concept are Marbles: the Brain Store and DoggyLoot, both of which have experienced impressive growth of late.
Tadewaldt says the Sandbox foundry, which is located at 444 Townsend St. in San Francisco, will have nine to 10 entrepreneurs on staff by the middle of the summer.