- Insomnia Cookies founder and CEO Seth Berkowitz started his business as a junior in college, delivering 89-cent cookies across campus at 2 a.m. It didn’t take long for dessert-craving night owls at school to take notice: before he even graduated, Berkowitz had secured angel investors. Fast forward two decades later, Insomnia has taken over the U.S. with 350 stores serving up late-night sweet treats, with donut titan Krispy Kreme acquiring a majority stake in the company for $140 million in 2018.
College campuses are a breeding ground for innovation—including successes like Facebook, Snapchat, and Gatorade. Another prime example is Insomnia Cookies, which was created at an Ivy League campus house and has since turned into a cult staple for legions of students looking for their late-night sweet treat fix.
Insomnia Cookies is now a fixture at U.S. colleges, with many of its 350 international stores (and counting) housed on or near university campuses. Delivering warm cookies into the wee hours of the morning, with some locations open until 3 a.m., it’s an easy pick for students coming back from rowdy parties or binge-watching TV past midnight. And its founder and CEO, Seth Berkowitz, truly knows his audience, as he launched his business as a University of Pennsylvania junior back in 2003.
Berkowitz was an economics major living with eight other college roommates under one roof, which he describes to Fortune as “a bit of a frat house.” Together, they’d often stay up late playing video games or tuning into baseball and football games—with Papa John’s as their go-to snack. But he got sick of his housemates constantly ordering pizzas every night, craving something sweet instead. Then, Berkowitz had a light-bulb moment: There were no late-night dessert delivery options around him. He knew he could fix that.
“I walked into the common house and I was like, ‘Guys, I cannot believe we keep ordering from these over and over again. Let’s get something sweet—how great would that be?’ Well, no one delivers anything sweet,” Berkowitz tells Fortune. “And so it’s like, all right, somebody needs to change this.”
From hand-delivering 89-cent cookies at 2 a.m. to raising angel investments as a college senior
Recognizing a gap in the market, Berkowitz wasted no time getting his hobby off the ground. For the first four weeks, he would only get a maximum of five orders per night. He’d sell each cookie for 89 cents, delivering cookies as late as 2 a.m. to hungry customers around campus. But his home operation finally took off when the school newspaper ran a profile on his cookie-peddling scheme, plastering the story on the front page. That evening, he got 85 orders.
“That night was a big spike. It then settled into the 30, 40 delivery range,” Berkowitz recalls. “I was like, ‘Okay, this really does work. If I can scale this up, there’s a business to be had.’”
Fervor over his cookies soon attracted investors before he even graduated college in 2004. The young up-and-coming entrepreneur wanted to take his brand to collegiate locations across the U.S., and the dominos fell. Hype over the late-night dessert chain gained enough traction for Insomnia to spread to campuses all over, including the University of Maryland and the University of Illinois.
The 44-year-old entrepreneur says those early stages between the years of 2004 and 2008 were incredibly exciting. Insomnia Cookies was growing fast and adding units—but everything took a turn when the Great Recession hit. The business hadn’t reached profitability yet, and on top of their customers being financially strained, it was difficult to raise capital. Berkowitz says his angel investors weren’t sure how the world was going to be after the financial crash, and couldn’t put their money into “hobby investments” like they once did. It was a dark time for Insomnia, but it also pushed Berkowitz to keep the brand’s then-14 locations alive.
“All of those things forge discipline in the brand. It pushed us to be much more methodical, much more focused,” Berkowitz explains. “I hunkered down, I reduced my team, I took a lot more on my own shoulders…It was all about persistence, perseverance, and just a belief in the opportunity.”
Selling a majority stake to Krisy Kreme for nearly $140 million
Insomnia Cookies has thrived since the bumpy years following the 2008 financial crash—and beloved donut titan Krispy Kreme shelled out millions to acquire the company. In 2018, Krispy Kreme purchased a majority stake in the business, paying around $139.5 million for 74.5% of the company, according to a 2021 SEC filing. Krispy Kreme has since sold off its stake, a transaction that valued Insomnia at $350 million in total enterprise value—roughly double what it was since the acquisition.
Berkowitz was able to turn his college passion project into a household name among college students across the country. It took more than two decades of hard work, navigating economic crises and ownership changes, to build the brand into a dessert-chain staple. But the CEO says 22 years of sustained dedication is what makes the business so successful today.
“We always [say] Insomnia has played the long game, while everyone else has played the hype game,” Berkowitz says. “Businesses that don’t innovate typically don’t last very long…The question always becomes, ‘Can you keep doing it right? Can you reinvent yourself, remake yourself consistently and persistently?’ It continues to drive us.”