Mark Cuban rejected this 'Shark Tank' company—and said he'd take its ideas to one of its competitors
You don't often see an investor taking an entrepreneur's idea and giving it to a competitor, but that's exactly what Mark Cuban did on Friday's episode of ABC's "Shark Tank."
During the episode, Justin Crowe pitched his 3-year-old cremation alternative startup Parting Stone to investors, including Cuban. The company works with more than 600 funeral homes in the United States and Canada to provide mourners with polished stones containing the ashes of their loved ones — a sentimental, "comforting" way to remember them, Crowe said.
The idea came from a simple question, he said: What do you do with an "awkward and uncomfortable" small plastic bag of ashes?
Unsatisfied with the idea of scattering them in a special place or keeping them in an urn on the mantle, Crowe applied for and won a grant to collaborate with material scientists at Los Alamos National Laboratory to "invent a new form of human remains," he said in a YouTube video published by the company in 2020.
At the time of the "Shark Tank" episode's filming last year, Parting Stone was on track to bring in $1.3 million in annual revenue while managing $800,000 in annual expenses, Crowe said. He asked investors for $400,000 for 5% of his company's equity, saying the money would go toward automating his company's processes to "get to a place of [stronger] profitability."
But Cuban quickly threw a wrench into those works. "I invested in a company called Eterneva," Cuban told Crowe. "We're a direct competitor with you."
Cuban didn't just decline to offer a deal: He noted that Crowe had given him a great idea on a silver platter. Eterneva currently focuses on turning ashes into diamonds, and Cuban viewed Parting Stones' offerings as a great second product line.
"I like the idea so much, I'm going to take it to [Eterneva CEO Adelle Archer] and see if she can do the same thing," he said.
Fortunately for Crowe, a couple other investors showed interest in competing with Cuban. The cremation industry seemingly has plenty of room: It's worth $3 billion in the U.S. alone, according to market research firm IbisWorld.
Lori Greiner called Parting Stones "genius," and Kevin O'Leary said the category was right up his alley. "There are two areas I invest in: weddings and death," O'Leary said. "Recession proof."
Together, Greiner and O'Leary offered Crowe a total of $400,000 for 20% equity, which they'd split down the middle.
Then, Barbara Corcoran jumped in, offering $400,000 for 10% equity, along with a $20 royalty per sale until her investment was paid back. O'Leary and Greiner offered to match that deal.
Crowe rejected them all, saying that Parting Stone had both direct-to-consumer sales and business-to-business sales through funeral homes — and he'd only pay royalties from the consumer side.
Greiner and O'Leary gave Crowe a final offer: $400,000 cash for 10% equity, a $20 consumer royalty and a $12.50 business-to-business royalty. Crowe accepted.
"Now that we have Lori and Kevin on board, we're going to utilize their teams [and] expertise to blow this up and make sure everyone in the United States knows that when you choose cremation, you do not have to receive ashes," Crowe said. "There's a comforting alternative."
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
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