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Hampton Creek is Disrupting the Food Industry With Vegan Mayo

Meghan French Dunbar October 4, 2015
 

“IF YOU CAN EXPRESS WHAT YOU WANT INSTEAD OF BEING A VICTIM TO WHAT CURRENTLY IS, WHAT WOULD THAT LOOK LIKE?”

HAMPTON CREEK AT A CLANCE

 Location: San Francisco, CA

 Founded: 2011

 Employees: 76

 Structure: Privately held

 Current Valuation: $900 million+

 Fun Fact: 13 billionaires have invested in the company to date

 In Short: Hampton Creek uses technology to create healthier food using plant proteins to substitute for animal products

Hampton Creek started with the question, “What would it look like if we started over with the food system?” With that question at the core of everything it does, the company took an entirely different approach to making food. Using technology to find plant proteins that can substitute for eggs, the company is designing healthier, less expensive food that reduces water and land use, CO2 emissions, cholesterol, and the degrading and often inhumane conditions associated with egg production. Within a year of launching, the company exploded in the marketplace. Its products have been picked up by the likes of Target, Walmart, Whole Foods, and the Dollar Tree – even 7-Eleven has pledged to use Hampton Creek’s signature product Just Mayo on all of its sandwiches moving forward. Their next line of products, Just Cookies, has recently been picked up by over 2,300 schools serving more than two-and-a-half million kids every year.

Following such tremendous growth, the company has recently become the most valuable food technology company in the world, valued at close to a billion dollars. However, growth on this scale doesn’t come without its fair share of controversy. The company has been criticized for everything from incorrect labeling to having the CEO’s dog in the lab (a practice that was abandoned over two years ago). The American Egg Board, a government-backed egg lobbying group, has launched a concerted attack on Hampton Creek (see sidebar). CEO Josh Tetrick’s personal life and character have come under scrutiny as well.

Nobody ever said it would be possible to change the world without a little controversy along the way. The fact remains that what the company is trying to do could be game changing, and the impact that it has had to date is astounding. While exploring what it would look like if we started over in the food system, Hampton Creek has created a bold new model for how to shift the paradigm within an entire industry that has caught the attention of some of the largest companies and most influential people in the world. We got the chance to speak with CEO Josh Tetrick about everything from systems thinking and finding the right investors to his concerns about taking the company public.

What do you believe is the most important component to driving change in the food system in the US and what is the biggest shift that you would like to see occur?

Josh Tetrick: We really think about systems change with this big question that obsesses us as a company, which is, “What would it look like if we just started over?” It’s easy to tweak the edges, but when we ask this question, it forces a different way of thinking. We call it first principle thinking. If you can express what you want instead of being a victim to what currently is, what would that look like? Asking that question forces us to clean out the cobwebs from our head and get rid of the habits and excuses and just say, “If we could just start from scratch, what would that really look like?” That question can be applied to lots of things, not just food. But if you apply it to food, the current food system really does need to be looked at in a way that prompts an entire start-over.

There’s tons of crappy food out there – it might taste all right, but it’s cheap, it’s degrading to the planet, and it’s really awful for our bodies. Then you have the “alternatives,” which can be too damn expensive and often don’t taste that good. Everything that we’re trying to do as a company is sort of a third way of doing it, which is to say that if we started over with food, it would be good for the body and the planet, it would always taste better, and it would always be less expensive.

If you could figure out a way to create that offering, you wouldn’t just have to rely on the conscience and goodwill of people. You would just make the good things so damn good that it would be silly not to choose it. Ultimately, I don’t know if that is a pessimistic or an optimistic way of looking at the world, but we think it’s an effective way of looking at it.

What other industries do you think are ripe for a paradigm shift?

JT: I think we could apply the question “what would it look like if we started over?” to energy. There’s 7.1 billion people on the planet right now. If we could start energy over from scratch, there’s no way we’d be building coal-fired power plants. We’d be thinking of clean, distributed energy that’s cheaper than coal.

If we were starting communications from scratch, we probably wouldn’t build landlines anymore. We’d probably just go straight to cellphones. If we could start the education system from scratch, we wouldn’t have to deal with all of the habits that we have in the educational system. We’d probably teach kids how to thrive in the world where you can Google something in a millisecond. We wouldn’t have to memorize facts. We’d have adaptive learning.

If we could start politics from scratch, we would probably have a world in which we wouldn’t have corporations and super-PACs funneling hundreds of millions of dollars into the candidates. We’d probably make the playing field a little bit more equal. I think at least most politicians might agree with that. You wouldn’t have a world where politicians spend 50 percent of their time raising money as opposed to thinking about how to be a better government.

It’s difficult because there’s so much capital and habits invested in the current way of doing things that it makes it difficult to say, “What the hell would it look like if we started over?” That’s why this question is so powerful for us and for systems thinkers because it means you’re not locked into this jail cell of the current reality – you can create something entirely different. That’s what gets us up in the morning more than anything.

Is your ultimate goal to scale as fast as possible? What do you believe has been the most critical element to your growth so far?

JT: The ultimate goal is to create more positive impact than any company ever has – period. We make decisions based upon being a permanent company that’s going to have an incredible impact on the planet, not based upon short-term gains. If a larger company wanted to acquire us for a big sum of money (and one has already suggested it), everyone in the company would riot if I said yes. The people that I’m working with could have any job that they want, but this is about something larger. We want to create a mechanism for a profound impact and food just happens to be the playing field that we play on. Ultimately, we want to be a public company that’s around for 300 years that fundamentally changes the system. We are lucky that investors don’t run the company – we do – and we have the ability to make decisions based upon permanent long-term impact.

There’s an opportunity here to be something much more extraordinary and have much more of an impact. We would rather risk it all doing something that is extraordinary and on the edge than be “sort of good.” We’d rather not be in business if we’re just “sort of good.”

Do you have any concerns about being able to maintain your mission and values if you go public?

JT: Definitely. We wouldn’t go public unless we felt like we could maintain our mission and that’s going to relate to how we think about the board structure, how we think about the articles of our company, and how it would affect our long-term investors, so it’s definitely a concern. We wouldn’t go public just because it feels nice to give investors their money back. We’d only go public if it felt like it would increase the probability that we could do more of why we started, and could have much more of an impact and do more of what we want to do. When we eventually do it, we’ve got to do it in a way that’s thoughtful and doesn’t put us in a situation that takes us farther away from what we’re trying to do, as so often happens.

What steps are you taking to ensure that you’re actually maintaining your core values in the face of such tremendous growth?

JT: There are two main things. One is the folks that we hire. It’s obviously been a process, but we’ve gotten a lot better about telling the difference between people who want to come here because they want to make a lot of money and people who care about the mission with their whole hearts. We found that when you bring in leaders – whether that leader is a 21-year-old student who has just graduated or a 63-year-old Chief Scientific Officer – if they truly believe in making impact, that’s one way to guard against losing your values.

Second is making sure that, when we’re making decisions on the products that we decide to develop, we have a set of filters. If the potential product is not – and we quantify this – better for water, better for reducing carbon emissions, better in terms of reducing land use, better for cholesterol, and if we’re finding ourselves in a situation where it’s actually hurting farmers instead of helping farmers, even if it’s incredibly profitable, we won’t release it. If a product doesn’t taste better according to a sensory evaluation, we won’t release it. If a product is more expensive than what the traditional product would be, we won’t release it. We have these guardrails in place that keep us focused on what we’re trying to do. Everyone is aware of these filters and we hire people who are really mission-oriented to maintain that focus.

How have you worked to find mission-aligned investors and what advice do you have on building out a board?

JT: One piece of advice I have on mission-aligned investors is that you have to be real about it. Every time I’m even considering accepting money from an investor, I tell them, “Please know the following: First, we have no interest in being acquired by another company, even if the check is large. If that scares you, it’s OK, but you’re probably not the right investor for us. Second, yes, we care about being profitable, but the things we’re doing are based around solving big problems. That’s who we are. That means that we’re not going to do certain things that other companies might do. If that’s going to frustrate you and you’re going to be bothered by that, I’m telling you now.”

Also, look at what the investors have done before. One of our investors is Li Ka-Shing, who has a firm called Horizons Ventures. If you look at Horizons’ investments, it has invested in a lot of mission-driven companies. Other investors we have include the Founders Fund. It has invested in incredible companies that are trying to find the solution to cancer or trying to help with distributed clean energy. Khosla Ventures is an investor – it invests a ton in sustainable agriculture and clean energy. Another one of our investors is Eagle Cliff, started by Tom Steyer, who’s an environmental activist, and his wife Kat Taylor. They live their lives in a mission-oriented way. If you look across our investors, almost all of them have a history of investing in socially and environmentally minded companies.

In terms of the board, I would say for any entrepreneur, especially if it’s a mission-driven company, you need to control the direction of your company, not your investors. It’s important that you have a board composition that supports that because the truth about life is that some days will be awesome and some days will be dark. That’s called life. When you’re having a dark day, you’ve got to stay focused on just getting the damn job done and not be distracted by a thousand different voices telling you to do it another way or people wanting to jump off the boat. The more that you can control the direction the better, and that directly relates to the people on your board and the votes on the board.

“Our ultimate goal is to create more positive impact than any company ever has – period.”

How have you handled a situation where you didn’t see eye to eye with some of your investors as far as the direction you wanted to take the company?

JT: Well, it starts with knowing and being real with them about the fact that the company is not run by them. You have to set that expectation right from the get-go so it’s not confusing, even before the investment.

And then you need to listen in a way that’s not bullshit. You need to know that you brought these people in because they have a particular perspective and that even if you’re not going in that direction, it is helpful to really understand what their perspective is. And you need to ask questions if you don’t feel like you fully understand where they’re coming from. Then, in the end, if it doesn’t feel like it’s the path that you feel is correct for the company, saying, “This is the path that we’re choosing and these are the rational reasons why,” and being totally open about it.

That’s why it’s so important to pick your investors because you can have investors that say, “OK, but we’ll still do it my way.” If you’re deliberate about choosing people who are aligned with you, who get that you’re not just going to be spinning around the advice train, who trust you to make smart, permanent, long-term-oriented decisions, you can try to mitigate some of that stuff up front.

What does the internal sustainability of Hampton Creek look like and how intentional are you guys about the culture that you’re building?

JT: It’s one of the most important things. We have an amazing Head of People, Allison Hopkins, who formerly led HR at Netflix. Her most important role in the company is working with me to ensure that we’re living our values every day. You’ve got to nurture it and Allison does a great job. A really smart person told me once, “Culture always beats strategy.” You can be as strategic as you want about all of these things, but if you don’t have a group of people who have the right habits of doing the right thing, then the strategy will be bullshit.

Is there anything that you wish someone had told you before starting Hampton Creek?

JT: I wish someone had told me that most of the ideas about what is possible have nothing to do with what’s actually possible but are based upon the current reality. We could have gone a lot faster right from the beginning. If you want to create something entirely different, you’ve got to seek out those people who are not always living within the current frame of things – the folks that are doing really extraordinary things. If you’re going to listen to people, listen to those people.

I also wish someone had sat me down and told me that you’ve got to hire phenomenal leaders right in the beginning stages of the company because I shouldn’t be running around doing everything. Get amazing people that can scale this thing sooner rather than later – that would have been a good lesson.

Thankfully though, we haven’t been around for that long and we’re pretty good about quickly seeing things that need to be fixed and amplifying the things that are awesome and doing it faster than most people can ever even imagine.

“If you can just make it a little bit easier for people to do the right thing, they’re going to do it.”

At this point, what is your definition of success?

JT: For me it is getting more of these awesome people, who I am looking at right now , to figure out how to use more of their strengths to align with making more and better products, selling more and better products, telling really compelling stories, and having an incredible impact.

Longer-term, the definition of success is creating more impact than any other company in the next ten years. That’s the measure that keeps me up and gets me excited more than anything. When we think about that, that’s less water use, less land use. It’s promoting entrepreneurship and bringing farmers around the world into a better global food economy. It’s taking out some of the crap from the food system and putting in things that are better in ways that we can really measure and being able to say in the next ten years, “We created more than any other company has.” That’s what the bigger purpose and drive is.

Food is the most profound platform to change, frankly, because it’s so screwed up. It is so degrading to our values in so many ways that we can flip that model on its head and hopefully make the future a little bit better.

What is giving you hope for the future?

JT: In a little more than a year of being out there, we’ve saved more than a billion gallons of water. In the lifespan of a company, that’s just a flash and it makes me optimistic. There are so many people out there who want to put their strengths toward something good, and just looking at the lab right now, I see chefs, I see biochemists, I see someone with a psychology degree on the phone – and all of these incredibly talented people want to do something good. And it’s working. It’s working in terms of its impact. Some of the largest companies in the world are buying into it in a short period of time.

Whether it’s the world’s largest retailer, Wal-Mart, or the world’s biggest food services company, Compass Group, or one of the largest convenience stores in the world , they’re not just saying they’re buying into it, they’re buying it. They’re actually having an impact, too. It’s hopeful for me that if you can just make it a little bit easier for people to do the right thing, they’re going to do it. It’s an exciting thing to know that if we build that world for them, we can do so much good.

HAMPTON CREEK’S 2015 IMPACT

1.5 BILLION gallons of water saved

 +

94 MILLION square feet of land preserved

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6.5 BILLION grams of CO2 emissions avoided

 +

2.8 BILLION milligrams of cholesterol avoided

 +

11 BILLION milligrams of sodium avoided

 

YOU KNOW YOU’RE DISRUPTING A SYSTEM WHEN…

Controversy with the American Egg Board

Shortly before CCM went to press, The Guardian uncovered evidence that the American Egg Board (AEB) – an egg lobbying group overseen by the USDA – had conspired with a member of the USDA and hired PR firm Edelman to try to take down Hampton Creek. More than 600 emails obtained through the Freedom of Information Act (FOIA) by Ryan Noah Shapiro, a public records expert at MIT, and his lawyer, Jeffrey Light, show AEB employees doing everything from orchestrating lawsuits to jokingly (we hope) making threats against Josh Tetrick’s life. The AEB has rules that govern how it can spend its funds and some believe the tactics it used in this concerted attack on Hampton Creek may have been illegal.

The AEB’s attack began in August 2013, when Joanne Ivy, president of the AEB, claimed that Hampton Creek represented “a crisis and major threat to the future of the egg product business.” From there, the AEB orchestrated the following:

 •Joanne Ivy and Roger Glasshoff of the USDA forwarded information to the FDA that challenged Hampton Creek’s labeling as “mayonnaise.” In August 2015, the FDA officially warned Hampton Creek that it can no longer call its Just Mayo product mayonnaise.

The AEB paid Edelman $43,000 to convince food bloggers to promote eggs in their posts.

The AEB worked behind closed doors with Unilever to help the company with its lawsuit against Hampton Creek in 2014 (the lawsuit was later dropped).

The AEB offered to pay Anthony Zolezzi, an external sustainability contractor, to call Whole Foods and encourage the company to take Hampton Creek products off shelves (Whole Foods still sells Hampton Creek products).

In two instances, joking comments were made threatening Josh Tetrick’s life. In December 2013, AEB executive Mitch Kanter proposed, “In the meantime, you want me to contact some of my old buddies in Brooklyn to pay Mr. Tetrick a visit?” And in October 2014, Mike Sencer of Hidden Villa Ranch asked, “Can we pool our money and put a hit on him?”

At the time of printing, it remained to be seen if disciplinary action will be taken against the AEB or those involved in the controversy.

 

TOP THREE LESSONS LEARNED SO FAR AS CEO

Break the Rules

All of the rules that people think are out there about how much impact you can have, how fast your company can grow, or the kind of people who you can hire, most of those rules are just made up by people who are not necessarily smarter than me or you. Instead of listening to the rules, focus on what you want, the impact you want, and the growth that you want. If you truly go after that, you can probably do a lot more than what someone who follows the rules thinks is possible.

Hire Mission-Driven Talent

If you can figure out a way to find talented people who are really mission-driven, who are annoyed by the current state of the world and want to make it a lot better, and get them to focus on their strengths in a workplace setting, you can do incredible things.

Get Back to Work There will always be things

that come up. In the three years we’ve been in business, there have been thousands of obstacles and thousands of good things that have happened. But whether something really awesome or not-so-awesome happens, if you just focus on getting back to work, it’s usually the best way to approach things. You can talk things to death or be extraordinarily happy or sad about something, but if you really believe in the thing you’re working on, just get back to work and keep moving in the right direction and life will end up responding pretty well to that.

 

EGGS BY THE NUMBERS

original

53 The number of gallons of water it takes to produce one egg

 7.6 BILLION The number of eggs produced in the US in July 2015

 93% The percentage of hens that are caged during egg production

 67 The number of square inches that most hens are confined to inside battery cages

 305 MILLION The number of hens in the US that are used for egg production

 17 The number of egg companies in the US that each have a flock of more than 5 million hens

 $337 MILLION The value of US egg exports in 2014

Climate Action / Stakeholder Capitalism
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