December 16, 2019 • 40 mins
Mark Rampolla has been at the forefront of not one, but two industry-making companies. The first was his own ZICO coconut water, which birthed an $8 billion alternative beverage industry. The next saw Mark as an investor in Beyond Meat, which has been leading the plant-based food revolution. In both cases, the pioneering companies were met head on with major challenges. Both companies had to change deeply held biases of their consumers. But then, the minute they started to win people over, competitors came on strong. Is there such a thing as first-mover advantage, and if so, how do you hang onto it? What happens when you literally create an industry, and then the industry tries to cannibalize you? Pun intended!
Learn more about your ad-choices at https://www.iheartpodcastnetwork.com
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I'm Bethany McLean. This is making a killing in this show.
I cut through the hype and handwringing to reframe the
stories you thought you understood and uncover the ones you
didn't know were important. I love industry makers. No one
(00:29):
sees a new industry coming and then seemingly overnight, it's
a way of life. The iPhone was an industry maker
for mobile smartphones. The Prius was an industry maker for
hybrid cars. You can argue Elon Musk's Tesla was an
industry maker for electric cars, and so on. It seems
to me that there's always a cycle. After a few
(00:49):
false starts from two early inventors, we get that one
company that blows us all away and makes a new industry. Then,
as fast as you can say knockoff, there are competitors,
fierce competitors. After this hunger game style elimination period, the
strong remains standing and make themselves part of our everyday existence.
I have with me today, Mark Rampola, who has been
(01:11):
at the forefront of not one, but two industry making companies.
The first was his own company, Zico Coconut Water, which
berthed in eight billion dollars alternative beverage coconut water industry.
His book High Hanging Fruit tells the whole dramatic story.
The next was Beyond Meat, where Mark has been involved
as an investor rather than as a founder or CEO.
(01:33):
Beyond Meat is the poster child for the plant based
food revolution. I knew we had reached peak alt meat.
Not when Beyond Meat had a monster IPO in May
of twenty nineteen, but when a few months later Duncan
Donuts rolled out the Beyond Sausage plant based breakfast sandwich
in partnership with Beyond Meat. Then came the Impossible Burger.
(01:54):
Even long established Tyson Tyson has come out with raised
and rooted plant based nugget. Oh, and then there's Kellogg's
morning Star Farms, which has announced a line called, wait
for it, incog Meato. I can't decide if that's clever
or just awful, but giggles aside, and let's say they're
serious money and plant based alternatives. Currently, the market is
(02:16):
fourteen billion dollars in the US, and Berkeley's estimates that
it could balloon to one hundred and forty billion in
the next decade. Mark has unique insight into what it
means to be the pioneering brand that then quickly gets copied.
Is there such a thing as first mover advantage? And
if so, how do you hang onto it? And our
meat alternatives really the way of the future. I'm recording
(02:39):
this here in the home of the In and Out Burger, California,
and I'm delighted to have Mark here with me. So
what's it like, Mark, to be at the vanguard of
a new industry for the second time. I really hadn't
thought about it that way, and it's pretty amazing to
be a part of that. When I first started launching Zico,
it was just a coconut water. I had no idea.
I had some dreams, some hope, some asspirations, but I
(03:00):
had no idea. When I look back and think that
it's now an eight, probably ten billion dollar global category,
it's absolutely amazing and beyond meat. Similarly, it's an amazing
story to be a part of this whole plant based revolution.
So did you see it this time because of your
experience with Zicco, did you see that beyond me it
was going to be creating this industry making revolution. Is
(03:21):
it different in that respect or was it just this
is a great product it is. It's a little different
I think experience during that period of having started Zco
and then invest in Beyond Meat through my fund power
Plant Ventures, I'd looked at a couple of thousand companies,
and so I think developed a couple of thousand. Wow. Yeah,
we look as a fund about one hundred a month
new upstart, early staged food and beverage, food service, food
(03:45):
tech companies. Okay, so you have to pause on that
without divulging any competitive information, can you give me a
feel for the weirdest idea you've heard, for the most
revolutionary Yeah, so some people are really fanatical about this,
but the whole insect side of things, right, I'm not
buying it yet. I'm not chewing on it yet. I'm not.
It's Look, it's interesting, right, there's a lot of parallels.
(04:06):
People do eat them all across the world, all sorts
of reasons. There's an environmental reason, there's a social impact reason.
But at this day and time, I don't think Americans
are ready for it. And so that's a little out there,
and we've seen some ones that are that are pretty
odd and that you have passed on. Okay, how did
Beyond Me it come to you and what made you
say yes? This so a couple of things. One my partners,
(04:30):
actually empower Plant, had known Ethan Brown, the founder, from
day one and had an opportunity to invest. They passed
because they owned a restaurant chain called Veggie Grill and
viewed it as sort of a conflict of interest. It's
one of the reasons we started the fund. I was
seeing a lot of deals that we thought were interesting,
and so Ethan was always on our radar. He was
an extraordinary founder, and that's paramount for us. We always
(04:51):
look for the individual. You know, great founders build great companies.
Rarely do great companies just happened, and so Ethan was
a winner from the beginning and his co founder. But
we didn't have a fund up in running. They went
out and raised money, and when we finally had our
fund up and reading and got a look at it,
we knew this was really interesting, particularly because they had
a number of products on the market that were good
(05:13):
but not great, and they were doing okay and whole
foods in other places, but not exceptional. But when they
rolled out what they called the Beyond Burger, we knew.
The way we knew was we have relationships at Whole
Foods were in the stores. We have people that we
know at the stores and through Veggie Grill. Veggie Grill
was the first place that they sold the Beyond Burger,
(05:34):
and we also literally saw the first week of sales
in Whole Foods. That first week it became the best
selling product in the whole store seriously and the whole
Tire store right and Veggie Grill. In the first month
that they rolled it out, it single handedly brought I
think double digits same store sales growth. You ever, and
(05:56):
why what made the Beyond Burger so beyond? I think
it's a couple of things, a couple of vectors that
came together to make this happen. Still, the statistics are,
you know, maybe two to three percent of the population
is true hardcore vegan. I think in general, there's moved
into the zeitgeist, this plant based plant forward understanding to
have more plants, you know, have meatless Monday. That sort
(06:17):
of has happened much more broadly than just Beyond meeting
that's probably been building for thirty years on three key areas.
One is, so I think there's this a general awareness
about health and wellness and how particularly unhealthy, highly processed
meets play a negative factor in that. The other is
environmental and certainly humanitarian reasons, right, So those three are
(06:41):
coming into more common thinking, particularly among millennials. And the
product was very different. Think what you want about it.
Relative to nine percent of all the veggie birds that
have ever been on the market. It's a very different experience.
And you know, they're never going to compete with a
Kobe beef burger, but relative to a lot of the
(07:02):
crap that's on the market in McDonald's burger King and
every college campus in high school around the country, those
hamburgers are crap. What's the breakthrough? What makes the burger
so different? What they did is they applied existing technology
something it's called extrusion technology. It's used in a lot
of food processes used in other arenas, but had never
(07:24):
been really applied to something like plant proteins. And so
they use very available plant proteins, predominantly p but they
can use other feedstocks, and they process it in a
way it sounds a little gross, but it's almost comes
out like a meat grinder. Would you know where you
get this this raw material that can then be formed
into burgers and so you know, there's some food signs
(07:46):
in there and engineering. A lot of chefs have been
involved in creating that, and they brought something that's really amazing.
And I think, for example, my wife has been plant
based for twenty years. You know, she had it and
she's like, yeah, I don't miss meat. I do. I've
only been plant based for a few years, and so
for me to get that sort of sensation and that
feeling and be able to have a burger is something
(08:08):
I miss. So that's the core thing, am I right?
That makes what's going on now different than what's come before,
and that what's come before veggie burgers catering to people
who are already vegetarian. This is a huge expanse of
the market because this is a burger that is aimed
at people who are meat eaters and want something that
is comparable. And so suddenly you're going from niche to
(08:30):
every day? Is that the right idea? And I'll tell
you specifically something that was fascinating when they first rolled
out that product. Ethan and Seth Goldman that became chairman
of the board, were adamant, we want this in the
meat section of the stores. Oh really, They went to
retailers and literally said, we will not sell it to
you unless he goes right next to meet Wow. What
(08:52):
was it like to try to convince retailers to do that?
Because I'm always interested in this gap if you will,
between great idea wow, But then the dirty work of execution,
right or the gritty work is a better word than
dirty work of execution. The first thing they did is
they built a team that was extraordinary. So they built
the sales team that had done this in the past
with other categories, understands the way retailers think, what metrics
(09:15):
they want to see, how to communicate with them. And
I don't recall the exact details of the story, and
I'm not sure I know all the details as an investor,
but what my recollection is the way typically a company
would do this is you sit down with Whole Foods,
maybe a target, maybe a safe way, and you say, look,
this is what we're trying to achieve, do you want
to get behind it. Whole Foods has a history of
(09:35):
sort of being a leading edge, so typically they'll take
a risk. And so the team went in and said
the Whole Foods, look, if we're going to do this,
we want to do it big. It's got to be
right next to meet it's disruptive, and Whole Foods took
that risk. And once Whole Foods took the risk and
you had data that you could share with other retailers,
then literally the conversation is, mister retailer, do you want
the product or not? Some retailers held back. There's some
(09:58):
major retailers in the country that were late to the
Beyond Burger because they didn't want to put it. They
wanted to put it in the frozen section or in
the veggie burger section. And what was fascinating is I
know that there were hardcore vegans, sort of the vegan
mafia people say that we're furious with Beyond Meat because
they said, I don't want to go near that section.
I don't want to shop in that area. And to
(10:20):
think that talk about like somebody that wants to change
the world yet is worried about their own uncomfort zone
versus the impact they can have to get meat eaters
to eat this. There's a hypocrisy and that isn't there.
That's interesting, but that was also brave on Beyond Meat's
part to take the risk of alienating what would have
been a very safe and secure core consumer in order
(10:42):
to say no, no, no, we're going after the world
and we're changing the world, right. I mean, there's real
bravery associated with nowed it. We infuriated a lot of
early Bickram yoga fanatics when we started to sell Zeco everywhere,
like sort of by definition with these early adopter there's
rid exceptions like perhaps the iPhone right right where by
and large, these products, these categories are built by early
(11:04):
adopters and sort of by definition, the early adopters onto
the next thing, right, and so often that's the trend
that happens. So is this a case of technological advancement?
Is that modern technology that enables something like the beyond
Burger to be produced? Or was the technology over always
there and nobody had just thought about doing it this
way or conceiving of it in this way the ladder.
(11:27):
There's no earth shattering crazy new technology there. What is unique,
and we're seeing this across a lot of the companies
we look at is applying a tech mindset to food.
And there's a lot of pluses of that, and there's
some negatives, but there is a general sense that anything's
possible if you put time and effort in good brain
(11:48):
power behind it that you can come up with innovative
solutions that you start with a consumer and sort of
work backwards on how to solve a problem. A lot
of those mindsets are really only in the last ten
years or so applying in the food and we're seeing that.
We're seeing One of our biggest fans or sort of
supporters is the director of alumni affairs for Stanford, who
(12:10):
came to us and said, something's going on here because
ten years ago, all my top students that wanted to
be entrepreneurs went in the tech. Now they all want
to go in the food and it's all plant based, Like,
what the hell's going on? Yeah, how long ago is that?
But that's fascinating, fascinating, So you have this whole new mindset.
So that's the mindset is. You know, Ethan's a wicked
smart guy. Ethan Brown born ten or twenty years earlier,
(12:32):
probably would have gone into tech, and he's going into
a version of tech he is he has or gone
into social impact. He's a radical, you know, animal rights
activist or not the nonprofit world. But in today's day
and age, there's an opportunity to sort of bridge those
gaps and make a real impact through business. Before we
move on, you mentioned the positives and the negatives of
(12:53):
this ability to process plants in a different way, and
that is one of the criticisms I've heard of this plan,
or one of the marks of skepticism I've heard about
this plant based industry, which is, wait, how does this
go with the notion of an unprocessed lifestyle if these
things are so heavily processed, and is that what you
mean by trade offs? And how do you think about that? Absolutely? So, Look,
(13:15):
what I'm very clear on and hope to work to
myself and for our world, is that we get as
close as we can to the plants, weed, that they
are in clean, healthy soil, that is in a regenerative format,
that the whole system is thoughtful about the soil, the forest,
the ocean, and we are consuming food that is as
(13:37):
nutrient dense and close to the source as possible. That's
the solution. That's the healthiest way to live. Barn One.
The reality is I don't eat that way. I have time, money, capability,
I have and tried to garden for my entire life.
And the reality is, how often do I do it
half my eating that way of a fast paced life.
(13:57):
I'm moving, and so the reality is we make those compromises.
And so you know, Ethan Brown actually talked about this recently,
I think it was I think it was Chipotle had
refused to bring them in at least this was as
a few months or a year ago or so. One
of the comments was, well, it's too highly processed, right,
And Ethan's retort was something like, yeah, have you been
in an industrialized meat facility lately? Go in one of
(14:19):
those if they even let you in the door, and
then come in my plant and let's talk, because the
reality is, yes, relative to a fresh picked squash and
grinding your own lentils into a homemade veggie burger, like,
of course, that's always going to be better relative to
probably make some enemies on this. I'm not going to
(14:41):
try to use specific names, but there's a few big
food service companies that sell these patties that are everywhere
right there, every college, high school, most fast food restaurants
use these frozen patties that are not food. The amount
of meat in them is questionable. The fillers the way
they do that. Then you start to work your way
(15:01):
down the meat supply chain. How are they treated, what
kind of antibiotics are they pumped with? Where they raised?
Then you talk economically, we're subsidizing the water, we're subsidizing land,
we subsidize the corn that is a disaster. So you're
talking about, in my mind, is a massive relative improvement.
It's massive. Now. My recommendation with people it is, have
(15:23):
it once a week, you know, have it occasionally, right,
Substitute a hamburger, occasionally, substitute some fish occasionally. For this,
it's a it's a delightful, healthy alternative relative to other
things on one's journey to a better way of eating.
That's so interesting. I think a lot about this of
relative versus absolutely does something need to be perfect and
(15:45):
solve every single problem out there? Or does it just
need to move us in the right direction? Progress not perfection,
Progress not perfection. I like that line on that note.
Is the product as good as it could be? Yet
is there room for more improvement? Can you make the
beyond burke or even better? Yeah? Absolutely. I Mean these
guys are tweaking day in and day out, and I
think making major improvement. I know they're looking at alternative
(16:08):
protein sources. We as a fund are working closely with
them to actually use credible data to measure and think
about their impact. Is you want to talk about things
like carbon emissions, water utilization, land utilizations, there's no comparison.
You're talking one hundred x improvement with something like that,
(16:29):
but they're going beyond that. What's interesting is that the
traditional meat industry has had a response to this that
is unlike what the dairy industry did in the sense
that the dairy industry didn't see this coming right and
they've lost share to these alternative milk products and been
caught flat footed, and the meat industry is responding differently.
Do you think they learned a lesson from dairy? I
(16:50):
have the good fortune to engage with a number of
very very very senior executives at many of the food
beverage companies, including some of the meat companies. They're rational,
smart people. Most of them want to do the right
thing and are trying to figure out how to navigate it.
You know, they have a shareholder base, they have self interest.
All those things are aligned, and I think they're rational.
They recognize and see these trends and are afraid of
(17:12):
getting caught flat footed, and so yeah, they've seen other
industries blow up, other companies blow up, and I think
they know it can happen to them too. Do you
ever get out there and taste competitors products, just in
knowing you're not an investor anymore? But I mean, if
you eat a beyond Burger, can you tell it's not
an impossible burger? Can you absolutely? And you can tell
it's not an incognito whatever? Whatever? Okay, those couple ones,
(17:34):
at least they're pretty distinct, and distinction is good. And
you know, one of the points, one of our thesis
in general is competition builds categories. Right, it's you know,
beyond meat. A loan would not be where it is
if there wasn't impossible. That's just how these things work,
because one spurs the other to be better, to do better,
and people talk about it. They compare retailers here about
a consumers reporters. Everybody's talking about it. It sort of
(17:57):
creates this hype in interest and they support each other's
funder compete, and it just sort of creates an ecosystem.
Back to this notion with Zico, you did eventually sell
to Coke Beyond me. It's took an investment from Tyson, right,
and so did you think and then Tyson ended up
selling and launching its own competitive product. How did you
think about that? Help them navigate that based on your experience,
(18:18):
What are the pros and cons of letting your monster
competitor into what you're doing, knowing that they can then
take that and go off and do their own thing.
It's a very delicate balance. And to be really clear,
our role, in my personal role and beyond me, it
has been relatively minor, you know, very very close with
Seth and Ethan, but they've got some great counsel on
our great advice. But I'll tell you the way we
(18:41):
generally approach this with a variety of companies and the
kind of conversations we had with them, which is, look,
ultimately it's about where you're going, what's your individual and
company mission and objective, and how do you define success.
So we encourage entrepreneurs to be comfortable with the fact that, look,
do you want to grow this and run this forever
and pass it down to your kids? Do you want
to scale across the world. Do you want to make
(19:03):
some money, retire and go start a nonprofit? Do you
know what do you want? What do you want to
get out of this? And I think Ethan had a
big vision for this from the beginning. He wanted to
change the world. And so given that and given the
industry and the way they were operating, it was going
to take a lot of capital. And so they raised
a lot of money from some big professional investors, and
(19:23):
we felt fortunate to be able to support multiple times
along the way. But this Tyson conversation, along with other strategics,
is a delicate one. Yes, Typically, if an entrepreneur is
expecting that relationship to solve all their problems, they're wrong.
So it's not their expertise. Rarely can they bring that,
(19:43):
And rarely do entrepreneurs have the capability or sophistication and
know how to manage that right. It takes a very
sophisticate entrepreneur to understand the way a corporation works and
how to garner resources and engage. So every major food
company on the planet right now is at this world
trying to decide if they're in it. Does it make sense?
Should they be in it? They have the right to
(20:04):
be in it. Can they pull it off? They're all
looking at it. It's a complicated set of issues and
nuance that you then have to decide sort of pick
your path forward. You tell me how unique this is.
But one fascinating dynamic to this industry to me is
you almost want your competitor's products to be really good.
Because if what you're trying to do is not go
after a niche, but you're trying to change the way
(20:26):
people think, mainstream consumers think about plant based alternatives, then
you want everyone who picks up a plant based alternative
to have a really good experience with it, because then
they're a potential, they're a new customer. Whereas if they
have a bad experience, even with a competitor's product, they
may say, yeah, not doing this again. You kind of
want your competitor's products to be good. Maybe not quite
(20:47):
as good as yours, but good, right am I right
about that? You, my friend, have the intuition of an entrepreneur,
and this is something very few people get. I run
into entrepreneurs that say, oh, our competitor's products are crap.
Ours is so much better, And the first thing goes
through my mind. Sometimes I tell them this, sometimes I
don't is first of all, don't disrespect anyone there's no
(21:08):
reason to do that, right, your mom teach you that, right.
And second of all, you want them to be good
because you want consumers experiences. It's all the reasons you're
saying that. So absolutely, competitions builds categories. And so when
you have a healthy competition and people are improving and innovating,
it's good for everyone. If you're a great executor, right,
If you're not a great executor, you don't deserve to
(21:30):
win anyway. And did you learn this? And Zeco as
hundreds of competitors maybe not hundreds, maybe I'm exaggerating, but
a lot of competitors popped up really quickly. What did
you wrestle with as that happened? What I wrestle with is,
first of all, we had one major competitor out of
the gate, which was vide Cooco and they launched literally
within weeks of us. It was amazing. And were they
already working on it or was it a quick cut?
Clearly they were working on it. Yeah, it's one of
(21:52):
these you know, when the timings right for a variety
of reasons. Rarely is any one innovation just standalone. So
I hated it, and my curb in the founder right
of cocoa has become a good friend of mine. But
I hated him. I'm sure he hated me out of
the gate. Yet I don't think we realized how dependent
we would wear on each other. What really frustrated me
was it didn't take long. Within i'd say six or
(22:13):
seven years, there were eighty five coconut waters on the
US alone. Oh man, that's a lot of coconut and
I can remember thinking, come on, people, can't you be innovative,
Go do something else? Right meg nut water? Yeah? Absolutely?
But the reality yeah exactly, But the reality is what
I knew was from I doesn't take a lot of
(22:34):
research to figure this out. One category that always fascinated
me was energy drinks. There's one hundred plus energy drinks
on the market, but Red Bull and Monster have captured
this data is outdated, but probably ten years ago this
data was legitimate. Eighty percent of the market of the
enterprise value of the category. Wow, So you don't have
(22:55):
to be first, but if you're not, and there's a
risk of being too early, sort of bleeding edges. But
typically the top two to three competitors capture the vast
majority of the value of consumers retailers, strategics, exits, whatever
it is. How do you stay tough If being first
doesn't guarantee that you're going to stay tough, how do
(23:16):
you stay at the top? Execution execution execution? There is
no substitute for great talent, great people that just are
obsessed every day with getting better and look, I plod
and love and it's one of the reasons I love
my job because you know, there's people that are way
(23:36):
better than me at running businesses for five, ten, twenty
years and thinking day in and day out about efficiencies
and operations and marketing, innovation and sales and people and
getting that whole orchestra aligned around continuing to be relevant
and never getting complacence, never getting which I suppose is
one good thing about competition, right, It certainly doesn't stop
(23:57):
you from complacency. So back to be on Meat's IPO,
it's obviously been just phenomenally successful. With that came short sellers,
people saying the stock was overvalued. How do you think
about managing that dynamic, especially for employees, where I would
think it would be hard not to have some and
founders not to have some sense of how you feel
(24:17):
about the world. Tied up and how your stock price
is doing, and if it goes down forty percent over
something or another, how do you process that emotionally? Yeah,
that's a great question. I mean we certainly lived through
that even as investors, let alone you know, as as
employees seeing the stock go up that you know, two
hundred and back down that I think eighty five. I
was giggling one headline the other day when the stock
fell on worries about increased competition. Was that beyond meat
(24:40):
stock up butchered? Yeah, there's some fun at least, there's
some good puns in this. But anyway, back to back
to your point, you'd have some fun with that category,
There's no question about it. Yeah. Look, I think that
one difference with Beyond Meat versus the tech industry has
lived through this, for fortune's made or lost on paper
all the time. One difference is a vast majority of
(25:01):
people that went to work or work at Beyond Me
are there in no small part because of the mission
Ethan just he lives and breathes it, he communicates it,
he lives this lifestyle and he created this ethos where
we are on a mission. And so I know a
ton of employees there and talk to them regularly during
(25:21):
this process, and of course they're excited, you know, their
motions are up. And now usiden the same thing. How
is this This must be tough, how's it going? And
they all had a mindset that this was all noise.
It was exciting, it was interesting, but nobody believed that
two hundred ars was going to hold forever. Right. Really
they were able to stay rational even in the face
of exuberance, to sort of mangle and a Faymoss Alan
(25:43):
Greenspana the phrase absolutely, I think again, it starts at
the top. Ethan's an amazing rational person. Seth Goldman, the
chairman of the board, is amazing irrational, have lived through
some up and downs. And I think, yeah. They were
communicating throughout this, Hey, we're building a company that's going
to laugh, asked and live forever. And you know, I
don't not privy to all the inside communication they had,
(26:05):
but stories I heard were about, look, they're building one
of the next great food brands, an iconic brand. It
might be the next Kellogg or Ticon or something like that.
Stocks go up, stocks go down, companies live forever. That's
really interesting that the mission can help you stay honest
and focused in the face of a stock price that
(26:25):
beyond meat has seen. As I thought, it's interesting because
I've often repeated over the years that a company is
not at stock price. They are two different things. And yet,
in a weird way, beyond meat, stock price has almost
been branding or furtherance of the mission in a really
interesting way, in the sense that what the stock did
made everybody say there's really something here and brought attention
(26:46):
to beyond meat in a way that I think has
accomplished a lot. Does that sound right? Absolutely, look, because
I do think I think about the accomplishments on a
couple level. One just building a new company that's amazing.
Building new company that's plant based burgers is extray, right,
But when it come the next Tyson Foods is amazing.
But what this did is showed us and I think
(27:07):
a lot of other investors and entrepreneurs that there's an
appetite in the public markets for what people generally called ESG.
We have the fortune, the deal and our fund with
some massive global investors. I can tell you it's on
eighty percent of them. They care about this. Many of
them care about it because the people that are running
(27:27):
the funds are forty forty five years old, right, They've
come of a new generation. They also know millennials have money,
are investing money in the funds. They care about these things.
And so I think there's a massive shift happening in
our capital markets, which is fascinating to see, and I
think it can unleash massive potential because when all of
(27:47):
a sudden you have these institutional investors that are at
least asking the question and thinking about it, that's amazing
and so beyond me. It was one of the first
public stocks that people could point to and both say, hey,
it's a cool company. It's a product that I can
touch and feel, and it's a mission I can believe in,
and I can invest behind it and look at the
money I can make it. As it goes back to
(28:09):
your broader point about practicality over purity and the sense
that you could say, well, these people should be doing
sustainability because that's the right thing to do, but yet
you have this interesting confluence between sustainability because it's the
right thing to do, because that's where the money is,
because it's the right thing to do. You can see
how the mixture of those two things can actually create
(28:29):
a virtuous circle and exactly what I believe. And it's
just I think I've come more and more to just
accept that to expect people to change too radically is unreasonable.
I believe we're at a point of crisis as a
species on this planet and that is in part our
food system, our energy system, and that the core of
(28:51):
that is capitalism. And if we're going to change that,
it's got to be aligned with the way people live.
And that's possible. That makes a ton of sense. So
when the CEO of Impossible Foods talks about a goal
of eliminating animal products from the global food supply by
twenty thirty five, does that fit into the category of
realistic or is that idealistic? Let's call that ambitious. It's
(29:14):
a bold you, it's a b hag right, Yeah, And
I love those I think they're great. I think for
his company, that's perfect. It's not gonna happen. There's always
going to be a place. And look, I have a
lot of friends that are will argue with me all
the all day long about this. And you know, the
reality is a small farm with well treated animals that
(29:35):
are fed on organic food and are harvested or used
in rational ways. I have a hard time arguing that
it's not my choice, and I can still have an
ethical question about that, but I can understand that as
a model. The reality is that's not a model for
the rest of the world, and if we move a
modest way towards some of these goals, it's a big deal.
(29:58):
I do think there's sometime, whether it's fifty years, one
hundred years, or a thousand years, well, we will look
at animals and look back and be amazed we ate them.
We amazed at the way we treated them. Were There
were a couple of words that have been invented to
describe I think what you're talking about, which I liked.
One is let's see if I can say them flexitarianism.
On the other, which I really liked, reduced tarianism right
(30:22):
just along the notion that progress is important rather than perfection.
Have you guys struggled, either with Beyond Meat or in
any of your other investments with some of the pushback
from the big meat interests in this country, in the
sense that they've gotten laws passed that you can't use
the word meat unless it comes from an animal, and
there's been pushback from other lobbying groups about the idea
(30:43):
that this is healthy in order to just preserve their
market share. And do you guys worry or get angry
about that corporate power, that degree of moneyed power. Look,
corporate interests in general in our country anger me and
annoy me. I accept them as a reality and as
a challenge. And I think most grange entrepreneurs and investors
(31:04):
do like these guys are you know, they're spitting in
the wind. It's just it's inevitable, and so time is
on our side. And the challenge really is building a
business in and around and twist and turn, so you
change the name, so you have fun with it. And
I'll give you one great example. There's a company. The
company has had some challenges, but fascinating an entrepreneur, an
interesting story. I just this was Hampton Creek. Yeah, so
(31:26):
when they rolled out this mayo product, they got sued
by a couple of the big mayonnaise companies. They took
the social media and kids in college kids across the
country adopted their cause and in a month, the big
mayonnaise companies were out of numerous college campuses across the country.
So it just it just bit them in the ass.
Oh my god. I love this story for another reason,
(31:47):
which is social media as a force for good instead
of social media as an engine of our mutual assured destruction. Right.
There are occasions, right, it's it's how it's used and
they but it's an exception to every rule. Right. So
have you seen anything over your career now you've come
to believe more strongly and this idea of mission and economics.
(32:08):
And I was struck by a speech you gave I
think it was a couple of years of ago about
doing good is good business. Are there things you've seen
that counter that that make it hard for you to
maintain your faith in this or have you become more
of a believer that these things are both possible. I
have this conflict every day, and I fight the battle,
and there's days where I feel like I'm kidding myself
(32:30):
that part of the problem flying around the world to
find businesses and try to change this, and every flight
I take is you know, more carbon emissions, right, investing
in these great companies, and most of our investors are
already very wealthy people. So I think the difference now
is I can recognize those and I choose my battles.
(32:53):
And so what I recognize is I have a choice,
right I can detach from the world and you know,
go on a farm somewhere and raise my own plants,
try to live as low impact absolutely and live as
low and impact life as possible. Or I can fight
within the system. And that fight, for me is is
a soft one. So what I feel is if I
(33:16):
can talk to a young entrepreneur and ask them about
their mission, ask them about their impact, ask them about
their supply chain, ask them about their employees. Do you
know where your food comes from? Tell me about the
employees of your copacker like that, they start thinking, oh
my god, and investors asking me these things, I better
(33:36):
go figure it out. That changes things, right. That's very
powerful to be the person with money asking the important questions. Yes.
And then when companies are scaling, what I can ask
them is, look, if you sell this company and that's
party goal, how do you make sure the mission is
so core to the DNA that the corporations aren't going
to be able to screw it up? Because corporations are
(33:58):
generals generally pretty small, pretty rational, filled with good people
that are trying to do the right thing. If the
core of the brand is so strong it will endure.
I'm amazed that Zico in the coke system, the brand's phenomenal.
The products are honestly, in some ways better than it
was in terms of quality and sustainability and social impact.
(34:18):
But it's because the core of the DNA, the DNA
the brand was strong enough. And so if you build
in checks and balances in your supply chain, most likely
a strategic is going to keep a lot of those
in places. It's not perfect, But so I can challenge
on that front, and the other front I can challenge
on is investors. I can sit in front of some
of the wealthiest, most successful investors in the world and
tell them why this matters, why our food system is disrupted,
(34:41):
why it needs to be rebuilt from the bottom up,
Why that creates an economic opportunity for you, and you
can also improve the planet health and wellness and have
some humanitarian impact all at the same time. You're giving
me faith that maybe the world really is moving to
a different place. Because I would have expected that Zico
and the Coke coal of system that they would have
(35:01):
started trying to save money by reducing some of the
costs in the supply chain in a way that would
have been problematic. Honestly, look, I'm not I'm not involved anymore,
but I hear plenty and I check in, and I'll
give you one one little example. I know, you know
the team in Thailand that manages the supply chain. There's
a woman owned farm that I developed a relationship and
(35:23):
began sourcing from her when there was nothing like it
was a teeny little shed. They were gathering some coconuts
and cracking them open. She's got like three hundred employees
now or something like that. And one thing I know
is that when you're clear about what is non negotiable,
a great strategic supply chain will look at those things
(35:43):
and do it right now. If they're throwing coconut water
into another into coke, you know, someday, you know who
knows how they'll do it. But thus far, at least,
the integrity of the brand is strong. And we see
that generally when brands get acquired. Whether it's you do
well with it or not is a totally different story.
Isn't that interesting? I guess to your point about working
(36:05):
within the system, maybe the key if you're going to
work within the system is to have certain things that
are non negotiable and to know what those are, and
to also have your consumers absolutely understand what's non negotiable,
so that if there's pressure on those points, your consumers
know to push back. That's exactly right. Identifying those non
negotiables are important for any entrepreneur. They're important in life, right.
(36:28):
I'm sure you have them in your business world, in
your career, and I think we all play our part.
I think what I've come to terms with is part
of me. Would have loved to do what you're doing.
I think what you did on en Ron was absolutely amazing,
and to highlight these issues in another life, I'd love
to do that sort of work, be sort of a
calling out from the outside, pointing out and bringing it
(36:48):
to light these real problems we have. That's not my
skill set. I can't do that. I thought maybe I
would run a global corporation someday and make a big
impact at that level. That's not my calling. This is
my well to take something that didn't exist and have
a farmer in Thailand, a woman farmer in Thailand with
three hundred employees, I'd say is a pretty enormous. Even
if that were it and you stopped there. That's a
(37:11):
pretty enormous thank you, thank you, And I do want
to just qualify I can't quit quote that fact that
Zach well the order of magnitude is okay. Before we close,
I just wanted you said this about building Zico. Be
ready to spend a decade of your life to dig
deeper than you ever knew was possible. To give until
it hurts, and then give some more and still you
may not succeed. If you are willing to go for it,
(37:31):
then you'll be amazed at the impact you can make.
Was there a moment with Zco that you felt like
maybe I should quit? And how do you know? To persevere?
Pretty much every day for the first five years, I
woke up in the morning and had a mantra which
was purely intended to keep me going, which was little
(37:53):
things like all I ever need is inside me now.
I used to I used to take runs and tell myself,
everyone loves Zeke, everyone loves Zico, Everyone loves Zico. When
no one in the world was drinking Zco right there
were ten yoga studios in New York. I wanted to
quit a lot. And one of the things I was afraid.
I was terrified. I didn't think I was up to it.
(38:15):
I had made all these excuses for myself, and and
fortunately I had to a certain extent boxed myself in.
I'd put every penny we had into the company. I'd
moved my family to New York. I'd quit my job,
I'd taken money from my sister, my mother in law, friends.
I'll never forget one day. I actually went to my
(38:36):
wife at some point and I'm like, look, if you're done,
I actually got a job offer to move back to
All Salvador with the corporations, run a big operation. It
would have been more money, you know, moving to the
same house, get our same life back. We got at
it all back in a month and I said, do
you want to Are you done? You want to do it?
And she said, let's give it another year. Life is
(38:58):
so much the people that surround yourself with, but also
that a certain amount of perseverance is just getting in
too deep to get out right, and also showing up
just something half the battle, show up every day. Well,
thank you so much for a great conversation, and I'm
going to go have a beyond burger. You're welcome. I
enjoyed it, Thank you, Bethany. I expected to talk about
(39:23):
well meat and not meat, as well as the promise
and peril of inventing a new industry. Mark and I
did that, but I was even more struck by the
bigger themes in this conversation, for instance, purity versus practicality.
The former is for sure more ideologically appealing, and Mark's
comments about how vegans were angry that Beyond Meat wanted
(39:43):
to be sold in the meat area were indicative of
the clarion call of purity. But by being practical, Beyond
Meat has more of a chance to change the world.
Nor is this the first time any of us have
encountered the idea of working within the system. That can
be code for selling out. But if you establish your
non negotiables, maybe there's no such thing as selling out,
(40:05):
even if you literally do sell out anyway, food for thought,
last fun I promise. Making a Killing is a co
production of Pushkin Industries and chalkin Blade. It's produced by
Ruth Barnes and Laura Hyde. My executive producers are Alison
mc clean. No relation in Making Casey. The executive producer
(40:26):
at Pushkin is Mia Loebell Engineering by Jason Rastkowski. Our
music is by Jed Flood. Special thanks to Jacob Weisberg
at Pushkin and every one on the show. I'm Bethany
mc clean. Thanks so much for listening. Find me on
Twitter at Bethany mac twelve and let me know which
episodes you've most enjoyed.
I'm Bethany McLean. This is making a killing in this show.
I cut through the hype and handwringing to reframe the
stories you thought you understood and uncover the ones you
didn't know were important. I love industry makers. No one
(00:29):
sees a new industry coming and then seemingly overnight, it's
a way of life. The iPhone was an industry maker
for mobile smartphones. The Prius was an industry maker for
hybrid cars. You can argue Elon Musk's Tesla was an
industry maker for electric cars, and so on. It seems
to me that there's always a cycle. After a few
(00:49):
false starts from two early inventors, we get that one
company that blows us all away and makes a new industry. Then,
as fast as you can say knockoff, there are competitors,
fierce competitors. After this hunger game style elimination period, the
strong remains standing and make themselves part of our everyday existence.
I have with me today, Mark Rampola, who has been
(01:11):
at the forefront of not one, but two industry making companies.
The first was his own company, Zico Coconut Water, which
berthed in eight billion dollars alternative beverage coconut water industry.
His book High Hanging Fruit tells the whole dramatic story.
The next was Beyond Meat, where Mark has been involved
as an investor rather than as a founder or CEO.
(01:33):
Beyond Meat is the poster child for the plant based
food revolution. I knew we had reached peak alt meat.
Not when Beyond Meat had a monster IPO in May
of twenty nineteen, but when a few months later Duncan
Donuts rolled out the Beyond Sausage plant based breakfast sandwich
in partnership with Beyond Meat. Then came the Impossible Burger.
(01:54):
Even long established Tyson Tyson has come out with raised
and rooted plant based nugget. Oh, and then there's Kellogg's
morning Star Farms, which has announced a line called, wait
for it, incog Meato. I can't decide if that's clever
or just awful, but giggles aside, and let's say they're
serious money and plant based alternatives. Currently, the market is
(02:16):
fourteen billion dollars in the US, and Berkeley's estimates that
it could balloon to one hundred and forty billion in
the next decade. Mark has unique insight into what it
means to be the pioneering brand that then quickly gets copied.
Is there such a thing as first mover advantage? And
if so, how do you hang onto it? And our
meat alternatives really the way of the future. I'm recording
(02:39):
this here in the home of the In and Out Burger, California,
and I'm delighted to have Mark here with me. So
what's it like, Mark, to be at the vanguard of
a new industry for the second time. I really hadn't
thought about it that way, and it's pretty amazing to
be a part of that. When I first started launching Zico,
it was just a coconut water. I had no idea.
I had some dreams, some hope, some asspirations, but I
(03:00):
had no idea. When I look back and think that
it's now an eight, probably ten billion dollar global category,
it's absolutely amazing and beyond meat. Similarly, it's an amazing
story to be a part of this whole plant based revolution.
So did you see it this time because of your
experience with Zicco, did you see that beyond me it
was going to be creating this industry making revolution. Is
(03:21):
it different in that respect or was it just this
is a great product it is. It's a little different
I think experience during that period of having started Zco
and then invest in Beyond Meat through my fund power
Plant Ventures, I'd looked at a couple of thousand companies,
and so I think developed a couple of thousand. Wow. Yeah,
we look as a fund about one hundred a month
new upstart, early staged food and beverage, food service, food
(03:45):
tech companies. Okay, so you have to pause on that
without divulging any competitive information, can you give me a
feel for the weirdest idea you've heard, for the most
revolutionary Yeah, so some people are really fanatical about this,
but the whole insect side of things, right, I'm not
buying it yet. I'm not chewing on it yet. I'm not.
It's Look, it's interesting, right, there's a lot of parallels.
(04:06):
People do eat them all across the world, all sorts
of reasons. There's an environmental reason, there's a social impact reason.
But at this day and time, I don't think Americans
are ready for it. And so that's a little out there,
and we've seen some ones that are that are pretty
odd and that you have passed on. Okay, how did
Beyond Me it come to you and what made you
say yes? This so a couple of things. One my partners,
(04:30):
actually empower Plant, had known Ethan Brown, the founder, from
day one and had an opportunity to invest. They passed
because they owned a restaurant chain called Veggie Grill and
viewed it as sort of a conflict of interest. It's
one of the reasons we started the fund. I was
seeing a lot of deals that we thought were interesting,
and so Ethan was always on our radar. He was
an extraordinary founder, and that's paramount for us. We always
(04:51):
look for the individual. You know, great founders build great companies.
Rarely do great companies just happened, and so Ethan was
a winner from the beginning and his co founder. But
we didn't have a fund up in running. They went
out and raised money, and when we finally had our
fund up and reading and got a look at it,
we knew this was really interesting, particularly because they had
a number of products on the market that were good
(05:13):
but not great, and they were doing okay and whole
foods in other places, but not exceptional. But when they
rolled out what they called the Beyond Burger, we knew.
The way we knew was we have relationships at Whole
Foods were in the stores. We have people that we
know at the stores and through Veggie Grill. Veggie Grill
was the first place that they sold the Beyond Burger,
(05:34):
and we also literally saw the first week of sales
in Whole Foods. That first week it became the best
selling product in the whole store seriously and the whole
Tire store right and Veggie Grill. In the first month
that they rolled it out, it single handedly brought I
think double digits same store sales growth. You ever, and
(05:56):
why what made the Beyond Burger so beyond? I think
it's a couple of things, a couple of vectors that
came together to make this happen. Still, the statistics are,
you know, maybe two to three percent of the population
is true hardcore vegan. I think in general, there's moved
into the zeitgeist, this plant based plant forward understanding to
have more plants, you know, have meatless Monday. That sort
(06:17):
of has happened much more broadly than just Beyond meeting
that's probably been building for thirty years on three key areas.
One is, so I think there's this a general awareness
about health and wellness and how particularly unhealthy, highly processed
meets play a negative factor in that. The other is
environmental and certainly humanitarian reasons, right, So those three are
(06:41):
coming into more common thinking, particularly among millennials. And the
product was very different. Think what you want about it.
Relative to nine percent of all the veggie birds that
have ever been on the market. It's a very different experience.
And you know, they're never going to compete with a
Kobe beef burger, but relative to a lot of the
(07:02):
crap that's on the market in McDonald's burger King and
every college campus in high school around the country, those
hamburgers are crap. What's the breakthrough? What makes the burger
so different? What they did is they applied existing technology
something it's called extrusion technology. It's used in a lot
of food processes used in other arenas, but had never
(07:24):
been really applied to something like plant proteins. And so
they use very available plant proteins, predominantly p but they
can use other feedstocks, and they process it in a
way it sounds a little gross, but it's almost comes
out like a meat grinder. Would you know where you
get this this raw material that can then be formed
into burgers and so you know, there's some food signs
(07:46):
in there and engineering. A lot of chefs have been
involved in creating that, and they brought something that's really amazing.
And I think, for example, my wife has been plant
based for twenty years. You know, she had it and
she's like, yeah, I don't miss meat. I do. I've
only been plant based for a few years, and so
for me to get that sort of sensation and that
feeling and be able to have a burger is something
(08:08):
I miss. So that's the core thing, am I right?
That makes what's going on now different than what's come before,
and that what's come before veggie burgers catering to people
who are already vegetarian. This is a huge expanse of
the market because this is a burger that is aimed
at people who are meat eaters and want something that
is comparable. And so suddenly you're going from niche to
(08:30):
every day? Is that the right idea? And I'll tell
you specifically something that was fascinating when they first rolled
out that product. Ethan and Seth Goldman that became chairman
of the board, were adamant, we want this in the
meat section of the stores. Oh really, They went to
retailers and literally said, we will not sell it to
you unless he goes right next to meet Wow. What
(08:52):
was it like to try to convince retailers to do that?
Because I'm always interested in this gap if you will,
between great idea wow, But then the dirty work of execution,
right or the gritty work is a better word than
dirty work of execution. The first thing they did is
they built a team that was extraordinary. So they built
the sales team that had done this in the past
with other categories, understands the way retailers think, what metrics
(09:15):
they want to see, how to communicate with them. And
I don't recall the exact details of the story, and
I'm not sure I know all the details as an investor,
but what my recollection is the way typically a company
would do this is you sit down with Whole Foods,
maybe a target, maybe a safe way, and you say, look,
this is what we're trying to achieve, do you want
to get behind it. Whole Foods has a history of
(09:35):
sort of being a leading edge, so typically they'll take
a risk. And so the team went in and said
the Whole Foods, look, if we're going to do this,
we want to do it big. It's got to be
right next to meet it's disruptive, and Whole Foods took
that risk. And once Whole Foods took the risk and
you had data that you could share with other retailers,
then literally the conversation is, mister retailer, do you want
the product or not? Some retailers held back. There's some
(09:58):
major retailers in the country that were late to the
Beyond Burger because they didn't want to put it. They
wanted to put it in the frozen section or in
the veggie burger section. And what was fascinating is I
know that there were hardcore vegans, sort of the vegan
mafia people say that we're furious with Beyond Meat because
they said, I don't want to go near that section.
I don't want to shop in that area. And to
(10:20):
think that talk about like somebody that wants to change
the world yet is worried about their own uncomfort zone
versus the impact they can have to get meat eaters
to eat this. There's a hypocrisy and that isn't there.
That's interesting, but that was also brave on Beyond Meat's
part to take the risk of alienating what would have
been a very safe and secure core consumer in order
(10:42):
to say no, no, no, we're going after the world
and we're changing the world, right. I mean, there's real
bravery associated with nowed it. We infuriated a lot of
early Bickram yoga fanatics when we started to sell Zeco everywhere,
like sort of by definition with these early adopter there's
rid exceptions like perhaps the iPhone right right where by
and large, these products, these categories are built by early
(11:04):
adopters and sort of by definition, the early adopters onto
the next thing, right, and so often that's the trend
that happens. So is this a case of technological advancement?
Is that modern technology that enables something like the beyond
Burger to be produced? Or was the technology over always
there and nobody had just thought about doing it this
way or conceiving of it in this way the ladder.
(11:27):
There's no earth shattering crazy new technology there. What is unique,
and we're seeing this across a lot of the companies
we look at is applying a tech mindset to food.
And there's a lot of pluses of that, and there's
some negatives, but there is a general sense that anything's
possible if you put time and effort in good brain
(11:48):
power behind it that you can come up with innovative
solutions that you start with a consumer and sort of
work backwards on how to solve a problem. A lot
of those mindsets are really only in the last ten
years or so applying in the food and we're seeing that.
We're seeing One of our biggest fans or sort of
supporters is the director of alumni affairs for Stanford, who
(12:10):
came to us and said, something's going on here because
ten years ago, all my top students that wanted to
be entrepreneurs went in the tech. Now they all want
to go in the food and it's all plant based, Like,
what the hell's going on? Yeah, how long ago is that?
But that's fascinating, fascinating, So you have this whole new mindset.
So that's the mindset is. You know, Ethan's a wicked
smart guy. Ethan Brown born ten or twenty years earlier,
(12:32):
probably would have gone into tech, and he's going into
a version of tech he is he has or gone
into social impact. He's a radical, you know, animal rights
activist or not the nonprofit world. But in today's day
and age, there's an opportunity to sort of bridge those
gaps and make a real impact through business. Before we
move on, you mentioned the positives and the negatives of
(12:53):
this ability to process plants in a different way, and
that is one of the criticisms I've heard of this plan,
or one of the marks of skepticism I've heard about
this plant based industry, which is, wait, how does this
go with the notion of an unprocessed lifestyle if these
things are so heavily processed, and is that what you
mean by trade offs? And how do you think about that? Absolutely? So, Look,
(13:15):
what I'm very clear on and hope to work to
myself and for our world, is that we get as
close as we can to the plants, weed, that they
are in clean, healthy soil, that is in a regenerative format,
that the whole system is thoughtful about the soil, the forest,
the ocean, and we are consuming food that is as
(13:37):
nutrient dense and close to the source as possible. That's
the solution. That's the healthiest way to live. Barn One.
The reality is I don't eat that way. I have time, money, capability,
I have and tried to garden for my entire life.
And the reality is, how often do I do it
half my eating that way of a fast paced life.
(13:57):
I'm moving, and so the reality is we make those compromises.
And so you know, Ethan Brown actually talked about this recently,
I think it was I think it was Chipotle had
refused to bring them in at least this was as
a few months or a year ago or so. One
of the comments was, well, it's too highly processed, right,
And Ethan's retort was something like, yeah, have you been
in an industrialized meat facility lately? Go in one of
(14:19):
those if they even let you in the door, and
then come in my plant and let's talk, because the
reality is, yes, relative to a fresh picked squash and
grinding your own lentils into a homemade veggie burger, like,
of course, that's always going to be better relative to
probably make some enemies on this. I'm not going to
(14:41):
try to use specific names, but there's a few big
food service companies that sell these patties that are everywhere
right there, every college, high school, most fast food restaurants
use these frozen patties that are not food. The amount
of meat in them is questionable. The fillers the way
they do that. Then you start to work your way
(15:01):
down the meat supply chain. How are they treated, what
kind of antibiotics are they pumped with? Where they raised?
Then you talk economically, we're subsidizing the water, we're subsidizing land,
we subsidize the corn that is a disaster. So you're
talking about, in my mind, is a massive relative improvement.
It's massive. Now. My recommendation with people it is, have
(15:23):
it once a week, you know, have it occasionally, right,
Substitute a hamburger, occasionally, substitute some fish occasionally. For this,
it's a it's a delightful, healthy alternative relative to other
things on one's journey to a better way of eating.
That's so interesting. I think a lot about this of
relative versus absolutely does something need to be perfect and
(15:45):
solve every single problem out there? Or does it just
need to move us in the right direction? Progress not perfection,
Progress not perfection. I like that line on that note.
Is the product as good as it could be? Yet
is there room for more improvement? Can you make the
beyond burke or even better? Yeah? Absolutely. I Mean these
guys are tweaking day in and day out, and I
think making major improvement. I know they're looking at alternative
(16:08):
protein sources. We as a fund are working closely with
them to actually use credible data to measure and think
about their impact. Is you want to talk about things
like carbon emissions, water utilization, land utilizations, there's no comparison.
You're talking one hundred x improvement with something like that,
(16:29):
but they're going beyond that. What's interesting is that the
traditional meat industry has had a response to this that
is unlike what the dairy industry did in the sense
that the dairy industry didn't see this coming right and
they've lost share to these alternative milk products and been
caught flat footed, and the meat industry is responding differently.
Do you think they learned a lesson from dairy? I
(16:50):
have the good fortune to engage with a number of
very very very senior executives at many of the food
beverage companies, including some of the meat companies. They're rational,
smart people. Most of them want to do the right
thing and are trying to figure out how to navigate it.
You know, they have a shareholder base, they have self interest.
All those things are aligned, and I think they're rational.
They recognize and see these trends and are afraid of
(17:12):
getting caught flat footed, and so yeah, they've seen other
industries blow up, other companies blow up, and I think
they know it can happen to them too. Do you
ever get out there and taste competitors products, just in
knowing you're not an investor anymore? But I mean, if
you eat a beyond Burger, can you tell it's not
an impossible burger? Can you absolutely? And you can tell
it's not an incognito whatever? Whatever? Okay, those couple ones,
(17:34):
at least they're pretty distinct, and distinction is good. And
you know, one of the points, one of our thesis
in general is competition builds categories. Right, it's you know,
beyond meat. A loan would not be where it is
if there wasn't impossible. That's just how these things work,
because one spurs the other to be better, to do better,
and people talk about it. They compare retailers here about
a consumers reporters. Everybody's talking about it. It sort of
(17:57):
creates this hype in interest and they support each other's
funder compete, and it just sort of creates an ecosystem.
Back to this notion with Zico, you did eventually sell
to Coke Beyond me. It's took an investment from Tyson, right,
and so did you think and then Tyson ended up
selling and launching its own competitive product. How did you
think about that? Help them navigate that based on your experience,
(18:18):
What are the pros and cons of letting your monster
competitor into what you're doing, knowing that they can then
take that and go off and do their own thing.
It's a very delicate balance. And to be really clear,
our role, in my personal role and beyond me, it
has been relatively minor, you know, very very close with
Seth and Ethan, but they've got some great counsel on
our great advice. But I'll tell you the way we
(18:41):
generally approach this with a variety of companies and the
kind of conversations we had with them, which is, look,
ultimately it's about where you're going, what's your individual and
company mission and objective, and how do you define success.
So we encourage entrepreneurs to be comfortable with the fact that, look,
do you want to grow this and run this forever
and pass it down to your kids? Do you want
to scale across the world. Do you want to make
(19:03):
some money, retire and go start a nonprofit? Do you
know what do you want? What do you want to
get out of this? And I think Ethan had a
big vision for this from the beginning. He wanted to
change the world. And so given that and given the
industry and the way they were operating, it was going
to take a lot of capital. And so they raised
a lot of money from some big professional investors, and
(19:23):
we felt fortunate to be able to support multiple times
along the way. But this Tyson conversation, along with other strategics,
is a delicate one. Yes, Typically, if an entrepreneur is
expecting that relationship to solve all their problems, they're wrong.
So it's not their expertise. Rarely can they bring that,
(19:43):
And rarely do entrepreneurs have the capability or sophistication and
know how to manage that right. It takes a very
sophisticate entrepreneur to understand the way a corporation works and
how to garner resources and engage. So every major food
company on the planet right now is at this world
trying to decide if they're in it. Does it make sense?
Should they be in it? They have the right to
(20:04):
be in it. Can they pull it off? They're all
looking at it. It's a complicated set of issues and
nuance that you then have to decide sort of pick
your path forward. You tell me how unique this is.
But one fascinating dynamic to this industry to me is
you almost want your competitor's products to be really good.
Because if what you're trying to do is not go
after a niche, but you're trying to change the way
(20:26):
people think, mainstream consumers think about plant based alternatives, then
you want everyone who picks up a plant based alternative
to have a really good experience with it, because then
they're a potential, they're a new customer. Whereas if they
have a bad experience, even with a competitor's product, they
may say, yeah, not doing this again. You kind of
want your competitor's products to be good. Maybe not quite
(20:47):
as good as yours, but good, right am I right
about that? You, my friend, have the intuition of an entrepreneur,
and this is something very few people get. I run
into entrepreneurs that say, oh, our competitor's products are crap.
Ours is so much better, And the first thing goes
through my mind. Sometimes I tell them this, sometimes I
don't is first of all, don't disrespect anyone there's no
(21:08):
reason to do that, right, your mom teach you that, right.
And second of all, you want them to be good
because you want consumers experiences. It's all the reasons you're
saying that. So absolutely, competitions builds categories. And so when
you have a healthy competition and people are improving and innovating,
it's good for everyone. If you're a great executor, right,
If you're not a great executor, you don't deserve to
(21:30):
win anyway. And did you learn this? And Zeco as
hundreds of competitors maybe not hundreds, maybe I'm exaggerating, but
a lot of competitors popped up really quickly. What did
you wrestle with as that happened? What I wrestle with is,
first of all, we had one major competitor out of
the gate, which was vide Cooco and they launched literally
within weeks of us. It was amazing. And were they
already working on it or was it a quick cut?
Clearly they were working on it. Yeah, it's one of
(21:52):
these you know, when the timings right for a variety
of reasons. Rarely is any one innovation just standalone. So
I hated it, and my curb in the founder right
of cocoa has become a good friend of mine. But
I hated him. I'm sure he hated me out of
the gate. Yet I don't think we realized how dependent
we would wear on each other. What really frustrated me
was it didn't take long. Within i'd say six or
(22:13):
seven years, there were eighty five coconut waters on the
US alone. Oh man, that's a lot of coconut and
I can remember thinking, come on, people, can't you be innovative,
Go do something else? Right meg nut water? Yeah? Absolutely?
But the reality yeah exactly, But the reality is what
I knew was from I doesn't take a lot of
(22:34):
research to figure this out. One category that always fascinated
me was energy drinks. There's one hundred plus energy drinks
on the market, but Red Bull and Monster have captured
this data is outdated, but probably ten years ago this
data was legitimate. Eighty percent of the market of the
enterprise value of the category. Wow, So you don't have
(22:55):
to be first, but if you're not, and there's a
risk of being too early, sort of bleeding edges. But
typically the top two to three competitors capture the vast
majority of the value of consumers retailers, strategics, exits, whatever
it is. How do you stay tough If being first
doesn't guarantee that you're going to stay tough, how do
(23:16):
you stay at the top? Execution execution execution? There is
no substitute for great talent, great people that just are
obsessed every day with getting better and look, I plod
and love and it's one of the reasons I love
my job because you know, there's people that are way
(23:36):
better than me at running businesses for five, ten, twenty
years and thinking day in and day out about efficiencies
and operations and marketing, innovation and sales and people and
getting that whole orchestra aligned around continuing to be relevant
and never getting complacence, never getting which I suppose is
one good thing about competition, right, It certainly doesn't stop
(23:57):
you from complacency. So back to be on Meat's IPO,
it's obviously been just phenomenally successful. With that came short sellers,
people saying the stock was overvalued. How do you think
about managing that dynamic, especially for employees, where I would
think it would be hard not to have some and
founders not to have some sense of how you feel
(24:17):
about the world. Tied up and how your stock price
is doing, and if it goes down forty percent over
something or another, how do you process that emotionally? Yeah,
that's a great question. I mean we certainly lived through
that even as investors, let alone you know, as as
employees seeing the stock go up that you know, two
hundred and back down that I think eighty five. I
was giggling one headline the other day when the stock
fell on worries about increased competition. Was that beyond meat
(24:40):
stock up butchered? Yeah, there's some fun at least, there's
some good puns in this. But anyway, back to back
to your point, you'd have some fun with that category,
There's no question about it. Yeah. Look, I think that
one difference with Beyond Meat versus the tech industry has
lived through this, for fortune's made or lost on paper
all the time. One difference is a vast majority of
(25:01):
people that went to work or work at Beyond Me
are there in no small part because of the mission
Ethan just he lives and breathes it, he communicates it,
he lives this lifestyle and he created this ethos where
we are on a mission. And so I know a
ton of employees there and talk to them regularly during
(25:21):
this process, and of course they're excited, you know, their
motions are up. And now usiden the same thing. How
is this This must be tough, how's it going? And
they all had a mindset that this was all noise.
It was exciting, it was interesting, but nobody believed that
two hundred ars was going to hold forever. Right. Really
they were able to stay rational even in the face
of exuberance, to sort of mangle and a Faymoss Alan
(25:43):
Greenspana the phrase absolutely, I think again, it starts at
the top. Ethan's an amazing rational person. Seth Goldman, the
chairman of the board, is amazing irrational, have lived through
some up and downs. And I think, yeah. They were
communicating throughout this, Hey, we're building a company that's going
to laugh, asked and live forever. And you know, I
don't not privy to all the inside communication they had,
(26:05):
but stories I heard were about, look, they're building one
of the next great food brands, an iconic brand. It
might be the next Kellogg or Ticon or something like that.
Stocks go up, stocks go down, companies live forever. That's
really interesting that the mission can help you stay honest
and focused in the face of a stock price that
(26:25):
beyond meat has seen. As I thought, it's interesting because
I've often repeated over the years that a company is
not at stock price. They are two different things. And yet,
in a weird way, beyond meat, stock price has almost
been branding or furtherance of the mission in a really
interesting way, in the sense that what the stock did
made everybody say there's really something here and brought attention
(26:46):
to beyond meat in a way that I think has
accomplished a lot. Does that sound right? Absolutely, look, because
I do think I think about the accomplishments on a
couple level. One just building a new company that's amazing.
Building new company that's plant based burgers is extray, right,
But when it come the next Tyson Foods is amazing.
But what this did is showed us and I think
(27:07):
a lot of other investors and entrepreneurs that there's an
appetite in the public markets for what people generally called ESG.
We have the fortune, the deal and our fund with
some massive global investors. I can tell you it's on
eighty percent of them. They care about this. Many of
them care about it because the people that are running
(27:27):
the funds are forty forty five years old, right, They've
come of a new generation. They also know millennials have money,
are investing money in the funds. They care about these things.
And so I think there's a massive shift happening in
our capital markets, which is fascinating to see, and I
think it can unleash massive potential because when all of
(27:47):
a sudden you have these institutional investors that are at
least asking the question and thinking about it, that's amazing
and so beyond me. It was one of the first
public stocks that people could point to and both say, hey,
it's a cool company. It's a product that I can
touch and feel, and it's a mission I can believe in,
and I can invest behind it and look at the
money I can make it. As it goes back to
(28:09):
your broader point about practicality over purity and the sense
that you could say, well, these people should be doing
sustainability because that's the right thing to do, but yet
you have this interesting confluence between sustainability because it's the
right thing to do, because that's where the money is,
because it's the right thing to do. You can see
how the mixture of those two things can actually create
(28:29):
a virtuous circle and exactly what I believe. And it's
just I think I've come more and more to just
accept that to expect people to change too radically is unreasonable.
I believe we're at a point of crisis as a
species on this planet and that is in part our
food system, our energy system, and that the core of
(28:51):
that is capitalism. And if we're going to change that,
it's got to be aligned with the way people live.
And that's possible. That makes a ton of sense. So
when the CEO of Impossible Foods talks about a goal
of eliminating animal products from the global food supply by
twenty thirty five, does that fit into the category of
realistic or is that idealistic? Let's call that ambitious. It's
(29:14):
a bold you, it's a b hag right, Yeah, And
I love those I think they're great. I think for
his company, that's perfect. It's not gonna happen. There's always
going to be a place. And look, I have a
lot of friends that are will argue with me all
the all day long about this. And you know, the
reality is a small farm with well treated animals that
(29:35):
are fed on organic food and are harvested or used
in rational ways. I have a hard time arguing that
it's not my choice, and I can still have an
ethical question about that, but I can understand that as
a model. The reality is that's not a model for
the rest of the world, and if we move a
modest way towards some of these goals, it's a big deal.
(29:58):
I do think there's sometime, whether it's fifty years, one
hundred years, or a thousand years, well, we will look
at animals and look back and be amazed we ate them.
We amazed at the way we treated them. Were There
were a couple of words that have been invented to
describe I think what you're talking about, which I liked.
One is let's see if I can say them flexitarianism.
On the other, which I really liked, reduced tarianism right
(30:22):
just along the notion that progress is important rather than perfection.
Have you guys struggled, either with Beyond Meat or in
any of your other investments with some of the pushback
from the big meat interests in this country, in the
sense that they've gotten laws passed that you can't use
the word meat unless it comes from an animal, and
there's been pushback from other lobbying groups about the idea
(30:43):
that this is healthy in order to just preserve their
market share. And do you guys worry or get angry
about that corporate power, that degree of moneyed power. Look,
corporate interests in general in our country anger me and
annoy me. I accept them as a reality and as
a challenge. And I think most grange entrepreneurs and investors
(31:04):
do like these guys are you know, they're spitting in
the wind. It's just it's inevitable, and so time is
on our side. And the challenge really is building a
business in and around and twist and turn, so you
change the name, so you have fun with it. And
I'll give you one great example. There's a company. The
company has had some challenges, but fascinating an entrepreneur, an
interesting story. I just this was Hampton Creek. Yeah, so
(31:26):
when they rolled out this mayo product, they got sued
by a couple of the big mayonnaise companies. They took
the social media and kids in college kids across the
country adopted their cause and in a month, the big
mayonnaise companies were out of numerous college campuses across the country.
So it just it just bit them in the ass.
Oh my god. I love this story for another reason,
(31:47):
which is social media as a force for good instead
of social media as an engine of our mutual assured destruction. Right.
There are occasions, right, it's it's how it's used and
they but it's an exception to every rule. Right. So
have you seen anything over your career now you've come
to believe more strongly and this idea of mission and economics.
(32:08):
And I was struck by a speech you gave I
think it was a couple of years of ago about
doing good is good business. Are there things you've seen
that counter that that make it hard for you to
maintain your faith in this or have you become more
of a believer that these things are both possible. I
have this conflict every day, and I fight the battle,
and there's days where I feel like I'm kidding myself
(32:30):
that part of the problem flying around the world to
find businesses and try to change this, and every flight
I take is you know, more carbon emissions, right, investing
in these great companies, and most of our investors are
already very wealthy people. So I think the difference now
is I can recognize those and I choose my battles.
(32:53):
And so what I recognize is I have a choice,
right I can detach from the world and you know,
go on a farm somewhere and raise my own plants,
try to live as low impact absolutely and live as
low and impact life as possible. Or I can fight
within the system. And that fight, for me is is
a soft one. So what I feel is if I
(33:16):
can talk to a young entrepreneur and ask them about
their mission, ask them about their impact, ask them about
their supply chain, ask them about their employees. Do you
know where your food comes from? Tell me about the
employees of your copacker like that, they start thinking, oh
my god, and investors asking me these things, I better
(33:36):
go figure it out. That changes things, right. That's very
powerful to be the person with money asking the important questions. Yes.
And then when companies are scaling, what I can ask
them is, look, if you sell this company and that's
party goal, how do you make sure the mission is
so core to the DNA that the corporations aren't going
to be able to screw it up? Because corporations are
(33:58):
generals generally pretty small, pretty rational, filled with good people
that are trying to do the right thing. If the
core of the brand is so strong it will endure.
I'm amazed that Zico in the coke system, the brand's phenomenal.
The products are honestly, in some ways better than it
was in terms of quality and sustainability and social impact.
(34:18):
But it's because the core of the DNA, the DNA
the brand was strong enough. And so if you build
in checks and balances in your supply chain, most likely
a strategic is going to keep a lot of those
in places. It's not perfect, But so I can challenge
on that front, and the other front I can challenge
on is investors. I can sit in front of some
of the wealthiest, most successful investors in the world and
tell them why this matters, why our food system is disrupted,
(34:41):
why it needs to be rebuilt from the bottom up,
Why that creates an economic opportunity for you, and you
can also improve the planet health and wellness and have
some humanitarian impact all at the same time. You're giving
me faith that maybe the world really is moving to
a different place. Because I would have expected that Zico
and the Coke coal of system that they would have
(35:01):
started trying to save money by reducing some of the
costs in the supply chain in a way that would
have been problematic. Honestly, look, I'm not I'm not involved anymore,
but I hear plenty and I check in, and I'll
give you one one little example. I know, you know
the team in Thailand that manages the supply chain. There's
a woman owned farm that I developed a relationship and
(35:23):
began sourcing from her when there was nothing like it
was a teeny little shed. They were gathering some coconuts
and cracking them open. She's got like three hundred employees
now or something like that. And one thing I know
is that when you're clear about what is non negotiable,
a great strategic supply chain will look at those things
(35:43):
and do it right now. If they're throwing coconut water
into another into coke, you know, someday, you know who
knows how they'll do it. But thus far, at least,
the integrity of the brand is strong. And we see
that generally when brands get acquired. Whether it's you do
well with it or not is a totally different story.
Isn't that interesting? I guess to your point about working
(36:05):
within the system, maybe the key if you're going to
work within the system is to have certain things that
are non negotiable and to know what those are, and
to also have your consumers absolutely understand what's non negotiable,
so that if there's pressure on those points, your consumers
know to push back. That's exactly right. Identifying those non
negotiables are important for any entrepreneur. They're important in life, right.
(36:28):
I'm sure you have them in your business world, in
your career, and I think we all play our part.
I think what I've come to terms with is part
of me. Would have loved to do what you're doing.
I think what you did on en Ron was absolutely amazing,
and to highlight these issues in another life, I'd love
to do that sort of work, be sort of a
calling out from the outside, pointing out and bringing it
(36:48):
to light these real problems we have. That's not my
skill set. I can't do that. I thought maybe I
would run a global corporation someday and make a big
impact at that level. That's not my calling. This is
my well to take something that didn't exist and have
a farmer in Thailand, a woman farmer in Thailand with
three hundred employees, I'd say is a pretty enormous. Even
if that were it and you stopped there. That's a
(37:11):
pretty enormous thank you, thank you, And I do want
to just qualify I can't quit quote that fact that
Zach well the order of magnitude is okay. Before we close,
I just wanted you said this about building Zico. Be
ready to spend a decade of your life to dig
deeper than you ever knew was possible. To give until
it hurts, and then give some more and still you
may not succeed. If you are willing to go for it,
(37:31):
then you'll be amazed at the impact you can make.
Was there a moment with Zco that you felt like
maybe I should quit? And how do you know? To persevere?
Pretty much every day for the first five years, I
woke up in the morning and had a mantra which
was purely intended to keep me going, which was little
(37:53):
things like all I ever need is inside me now.
I used to I used to take runs and tell myself,
everyone loves Zeke, everyone loves Zico, Everyone loves Zico. When
no one in the world was drinking Zco right there
were ten yoga studios in New York. I wanted to
quit a lot. And one of the things I was afraid.
I was terrified. I didn't think I was up to it.
(38:15):
I had made all these excuses for myself, and and
fortunately I had to a certain extent boxed myself in.
I'd put every penny we had into the company. I'd
moved my family to New York. I'd quit my job,
I'd taken money from my sister, my mother in law, friends.
I'll never forget one day. I actually went to my
(38:36):
wife at some point and I'm like, look, if you're done,
I actually got a job offer to move back to
All Salvador with the corporations, run a big operation. It
would have been more money, you know, moving to the
same house, get our same life back. We got at
it all back in a month and I said, do
you want to Are you done? You want to do it?
And she said, let's give it another year. Life is
(38:58):
so much the people that surround yourself with, but also
that a certain amount of perseverance is just getting in
too deep to get out right, and also showing up
just something half the battle, show up every day. Well,
thank you so much for a great conversation, and I'm
going to go have a beyond burger. You're welcome. I
enjoyed it, Thank you, Bethany. I expected to talk about
(39:23):
well meat and not meat, as well as the promise
and peril of inventing a new industry. Mark and I
did that, but I was even more struck by the
bigger themes in this conversation, for instance, purity versus practicality.
The former is for sure more ideologically appealing, and Mark's
comments about how vegans were angry that Beyond Meat wanted
(39:43):
to be sold in the meat area were indicative of
the clarion call of purity. But by being practical, Beyond
Meat has more of a chance to change the world.
Nor is this the first time any of us have
encountered the idea of working within the system. That can
be code for selling out. But if you establish your
non negotiables, maybe there's no such thing as selling out,
(40:05):
even if you literally do sell out anyway, food for thought,
last fun I promise. Making a Killing is a co
production of Pushkin Industries and chalkin Blade. It's produced by
Ruth Barnes and Laura Hyde. My executive producers are Alison
mc clean. No relation in Making Casey. The executive producer
(40:26):
at Pushkin is Mia Loebell Engineering by Jason Rastkowski. Our
music is by Jed Flood. Special thanks to Jacob Weisberg
at Pushkin and every one on the show. I'm Bethany
mc clean. Thanks so much for listening. Find me on
Twitter at Bethany mac twelve and let me know which
episodes you've most enjoyed.
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.