Claude Jellicot and Luke Severn-Jenkins knew each other at Arizona State, where the two agronomy majors worked on a fascinating project. They developed a hybrid species of corn and chili pepper, which they further engineered into a naturally spicy popcorn they dubbed Cornpeppers. Big hit in Tempe.
Sensing a phenomenon, they patented the seed and quit school halfway through their junior year to start up Global Cornpeppers with a novel food product and even more novel business model.
They gave Cornpeppers away.
“The idea,” Severn-Jenkins told The Wall Street Journal in 2003, “was to get consumer trial and rapidly scale our consumer base. If Cornpeppers were a fixture at every bar, at every home game-watching get-together, in every dorm room, then we could think about monetizing.”
The scheme worked. Going rapidly from a $1.2 million seed round, spent mainly to harvest, package and ship Cornpeppers free to test markets throughout the Southwest, Jellicot and Severn-Jenkins quickly gravitated to an A Round investment from Shackley Bernard Friersson Ventures, San Francisco, and Taminy Capital, New York. By the time the C Round closed in 2006, Global Cornpepper’s valuation was $16 billion and it was shipping 340 metric tons of product per year to 50 states and 90 countries. It quickly became the most popular snack food in California, Ohio, Arizona, New Mexico, Louisiana, Switzerland, Bangladesh, Czech Republic and South Africa.
As a 26-year-old Zurich auto repairman, Horst Bachmann told the Financial Times of London: ”I am enjoying this chili corn. It is zesty, and it is free.” Jellicot, in the same 2007 article, was quoted as claiming success with his strategy. “We have created one of the most popular food products in history. Demand for Cornpeppers continues to grow every quarter. In Q4, we will ship 50 million cases domestically alone. I don’t believe I am overstating the case to say we have influenced global consumer behavior on a grand scale.”
The article was headlined: “This Popcorn Burns, and So Does the Cash.”
It was a salient question. Having established not only consumer acceptance but historically rapid growth, Global Cornpeppers was struggling with its early forays into monetization. Forty puffed kernels in every bag had narrow strips of thin paper implanted within, such as in a Hershey Kiss. On each was imprinted an advertising message.
Several advertisers signed on early to PepperGrams, generating strong publicity just in time for the largest Initial Public Offering in grocery-product history. When all was said and done, at 4 p.m. Oct. 3, 2011, Global Cornpeppers had a market capitalization of $96 billion. Shackley Bernard and Taminy, the venture firms, enjoyed what Forbes called “a cornpopping, eyepopping exit.” Meantime, by the end of 2011, the now public company had run up a loss of $2.5 billion.
Since then, revenues -- mainly on PepperGram sales -- have increased to $900,000, but as shipments have grown so have the losses: $855 million in Q2 alone.
Recently, the board of Global Cornpeppers announced that it has engaged Goldman Sachs to explore a “strategic partnership.”
Salesforce and Google are expected to bid.