Hampton Creek makes headlines more often than most other CPG companies its size — and for good reason.
Since the company’s start in 2011, Hampton Creek has been wildly successful and is worth more than $1 billion today. The San Francisco-based company has an array of innovative on-trend products, with its plant protein-based Just Mayo, Just Dressings, Just Cookies and Just Cookie Dough. The company employs a unique hybrid of biological engineers, food scientists and Michelin-star chefs who find useful plant proteins and turn them into functional ingredients to create a tasty end product. It is also working on lab-grown clean meat, with a pledge to have products to market by the end of 2018.
But the company has also faced — and persevered through — several very public challenges, any one of which might have doomed another startup. Hampton Creek survived a 2014 lawsuit from Unilever, which claimed the company engaged in false advertising because mayonnaise contains eggs — but Just Mayo does not. Hampton Creek remained steadfast when lawsuit was dropped months later — and also when the Food and Drug Administration issued a warning to the company in 2015 about branding its product as mayo despite the lack of eggs. Hampton Creek ultimately prevailed with its name. It also prevailed after news came out that the FDA’s warning had been spurred by complaints from the American Egg Board and the Association for Dressings and Sauces. Last year, the U.S. Department of Agriculture found that the American Egg Board had acted inappropriately by buying targeted ads for egg products that would appear when consumers did online searches for Hampton Creek and its products.
More recently, the inner workings of Hampton Creek have been the subject of industry intrigue. Following a Bloomberg report that company employees were sent to purchase Just Mayo to build demand, the Securities and Exchanges Commission and Justice Department opened inquiries into its practices last year. The probes closed early this year with no recommendation for further action. But since then, other dramatic stories have emerged over executive firings, board resignations and a mass halting of all product sales at Target due to vague safety concerns, for which the FDA found no basis.
Through it all, Hampton Creek has continued to grow its customer base and develop new products and techniques to change the food system. Last month, company founder and CEO Josh Tetrick spoke at length to Food Dive about the lessons learned from Hampton Creek’s history and mission, its plans for clean meat and plant proteins, and how he built a food company with so much science and R&D at its core.
The first part of the interview is transcribed below and has been lightly edited for continuity. Continue reading part two to hear more from Tetrick on Hampton Creek's challenges, M&A strategy and future outlook.
Food Dive: When many people first became aware of your company, they thought of Hampton Creek as a company that makes vegan condiments, vegan snacks. It seems that you are putting yourself out there now as a company that is going to literally change the world and the way that people get food. What was the cause for kind of changing the message that you're putting forth and how has that been going?
Tetrick: … From the very opening bell of starting this company, it's really been about the same thing. We have a degrading food system. How do we make it sustainable? Most people are not eating well. How do we work our asses off like our hair is on fire, throw everything at [the problem] and try to build a world here where everyone's eating well?
… I think it's a natural consequence of being a young company and getting out there. Even with [Just] Mayo, I never thought … it'll be really great to sell a vegan condiment. In fact, it's never even crossed my brain even for a millisecond that we would be really excited to sell vegan condiments. … We got a random call from Whole Foods way back in the day. They were looking for products and we had something called Mayo and we put it out there and there it was. That's really how it happened.
… Then a handful of weeks later, [the person from Whole Foods] said, “Congratulations, you're launching nationally.”
… There are a handful of truths that we've believed since we started the company and we'll believe forever. One of those is people are good, all things being equal. And that's really an important point, that … intrinsically people actually do want to do the right thing. Unfortunately, the world creates all sorts of reasons why they should do the wrong thing. Because they don't have enough money, because they're too busy. Because the right thing actually tastes like crap. All these barriers in the way of doing the right thing.
"[Our mission is] trying to figure out a way ... to reach people who are intrinsically good but are too busy, too poor, don't care, whatever it is — which is to say 99.99% of the world — to figure out a way to get them to eat well."
Founder and CEO, Hampton Creek
But if you just figure out a way to make that right thing the path that's the obvious one to go down, they'll do it. … We're not betting it all on the conscious consumer. We're not betting it all on the vegan consumer. We think if every conscious consumer and every vegan and vegetarian in the world decides to immediately this millisecond switch their buying habits and purchase nothing but us for the rest of their life, we would have done very little to achieve our mission.
So it's trying to figure out a way through our technology platform, through the talent that we have, through the products we sell, to reach people who are intrinsically good but are too busy, too poor, don't care, whatever it is — which is to say 99.99% of the world — to figure out a way to get them to eat well. That's the challenge, and that's hard, and that's the point.
Food Dive: You said that way back when the mayo first got launched by Whole Foods, you were working on several things. What were some of the others, and are they things that you are still developing?
Tetrick: Some things. We had a replacement for eggs in baked goods. We actually sell that ingredient to General Mills today. … There's cakes, cookies, let's see. And we were doing the very, very early work on the scrambled eggs [which are currently in development].
Pretty much the only thing we weren't thinking of back then was clean meat. Behind clean meat, pretty much the idea was we have a world out there of 357,000 plant tissues. Why aren't we looking through them? Why are we so fixated on soy and corn? If we acknowledge it, there's nutrient density in the plants. There are better fats in the plants. There are good, healthy, sustainable proteins in these plants. Is there a way to lower the amount of sodium in foods using plants? Why the hell aren't we looking through them?
"If we really want to transition the food system, we have to figure out a way to solve particularly the processed meat issue."
Founder and CEO, Hampton Creek
We started doing that in a very manual way, and then we built an automated system to do that. … It allows us to screen through these plants in an automated way as opposed to going one by one. We can do a number at a time, and actually have robots screen through it.
But that idea that we can look at the natural world out there. We don't need to manipulate the natural world. We can just explore and explore faster, and apply those findings to make food better; that's always been the foundation. Then in the last year and a half, I've had this realization that plants are extraordinary but they're not sufficient. If we really want to transition the food system, we have to figure out a way to solve particularly the processed meat issue. … We need a culturally relevant way, an identity connective way to be able to solve that. That's why we eventually started getting into clean meat.
Food Dive: Was there anything in particular that made you think, “Hey, maybe we could try to do this, too”?
Tetrick: … There's a couple things that stood out for me along the journey. One was we always knew that … the purpose of the company has never been to do really well for a few years, reach $250 million to $300 million in net revenue and then sell ourselves to a big conglomerate. It's never been our intention. We'll never do that. …Our task is to build this and hope it will be around for maybe hundreds of years and eventually be a public company. We think we can make an impact that way.
… Around the time Just Mayo came out, we received a letter from Unilever indicating that they wanted to file a lawsuit because we were using the name “mayo.” We were using plants in the product but using the name “mayo.” And many people who I know who are a lot smarter than me in food called me up and said, “You better change the name. You've got to change it. Unilever filed a lawsuit. You should call it ‘Just Vegan Mayo.’ Why does it even matter, because most people who will buy this will be vegan anyways. Change the damn name, Josh. Save your company some money.” … Eventually they dropped the lawsuit and eventually we had the chance to sit down with the FDA and talk with them.
"When you call something vegan, in a way, automatically, because of the culture and identity, you're eliminating 95%+ of the population. And what the hell's the point if you eliminate 95%+ of the population?"
Founder and CEO, Hampton Creek
It was through that experience that I think I learned a really important lesson — and that lesson was I thought names, what you call something, mattered before. But after this experience, I realized it mattered even more than I thought. … When you call something vegan, in a way, automatically, because of the culture and identity, you're eliminating 95%+ of the population. And what the hell's the point if you eliminate 95%+ of the population?
I learned a lot about culture and identity of food through that mayo experience. That was one thing that got me thinking more about clean meat because, the reality is, no matter how good a plant-based butter or a plant-based piece of chicken or a plant-based seafood is, you can never actually call it shrimp, steak or chicken. Because it's made from plants. And that's a massive cultural barrier.
Then the second thing was more technical in nature. I think ultimately to have fatty blue fin tuna — and have chicken breasts that taste like the chicken breasts that our grandmas might have made — that you increase the chances of really nailing that in the way that you need to when you're actually making it from animal as opposed to making it from plants.
Food Dive: Looking at the companies that are working on clean meat, it really seems like you are moving faster and deeper into it than some of the competitors. What is it about Hampton Creek that allows you to move faster, and also move to where things are less expensive than some of the competitors?
Tetrick: … There are more people eating meat today than yesterday. There are going to be more people eating meat tomorrow than today. Meat consumption is going up by 100% between now and 2050. And I think sometimes folks in the food space — honestly I think it's easy to forget that because you think of the rise in plant-based eating and we see it all around us. We see the emergence of vegan and vegetarian options.
… But as we feel that all around us, titanic shifts are happening beneath the surface. Those shifts are called urbanization and rising income. They are very, very compelling forces. That is prompting more and more meat consumption. But I say that just to say I sure do hope more people get into [clean meat]. I'm encouraged to see that some of the biggest meat companies … are getting into it. I want more companies to get into it.
"I'm encouraged to see that some of the biggest meat companies … are getting into it. I want more companies to get into it."
Founder and CEO, Hampton Creek
I think we're fortunate to do this. To do this well, you need a handful of disciplines. You need process engineering, you need biochemistry, you need a pretty capable analytical lab. You need the facility to work in, you need distribution channels. You need capital. You need some of the best product developers in the world because at the end of the day, you have to develop some sort of product.
We're really lucky that we have that. I think … giving us … maybe a more stable platform than if I had just started it without anything at all is we have 60 members of our R&D team who specialize in different areas necessary to make clean meat a reality. We didn't have to hire them, they just work here. We didn't have to build an analytical lab. It's been built. We didn't have to build a screening platform to look at components of plants that could solve the very challenging ... serum problem. It's already been built. We don't have to activate a distribution channel. We already have 100,000 points of distribution. We didn't need to raise capital.
Food Dive: Tell me a little bit about what you have on premises in San Francisco. From what I've heard and what I've seen, you've got a lot of equipment for R&D, but it's atypical for a food company — and what you do is somewhat atypical for a food company.
Tetrick: … I think to really solve the problem that we're trying to solve we need to be a unique combination. We have to have biochemists, so that's critical. We need to have automation engineers that help to set up this automated platform that I'm speaking of that are screening through the plants. We have a room dedicated to them. We need process engineers and a pilot plant, so once we identify plants, we have to figure out a way to not only know them, we have a[n] … engineer that does that, but also a protein processing pilot plant to be able to turn those proteins into protein that we can actually work with. We have a pilot plant downstairs.
To do the clean meat work successfully, we need folks that are experts in tissue engineering and cellular biology. So we have a room dedicated to that with elements of the clean room in it. At the same time, we're making food and we can't ever forget that. So we have product researchers, product development teams made up of some of the best food scientists and food chemists in the world — and we match them with about eight Michelin star chefs.
"If you walked [into our facilities], you would see a whole bunch of things you normally wouldn't see together."
Founder and CEO, Hampton Creek
… If you walked in, you would see a whole bunch of things you normally wouldn't see together. Try to imagine if we were flying around the world and I took you to Merck pharmaceutical company, and I looked at their screening platform, and I grabbed elements of the screening platform out … and you went to a large protein processor somewhere that's doing potato protein, and then we got some of their equipment. … Then we went to Genentech into their analytical chemistry lab and I said, “All right, let's bring that over here.” Then we went to a Michelin star restaurant, let's bring some of that equipment and some of those benches over here. Then we went to Nestle and took some of the food scientists and the food scientists’ equipment and we put it in there. Then we went to the Carnegie Institute at Stanford, the home of some of our computational biologists that work for us. They look at all this data and find meaningful relationships in it.
... As we're screening through plants, we're gathering a lot of data and getting some really interesting relationships in that data that help us source more effectively. So imagine grabbing some of these computational biologists out of Carnegie Institute, setting them up. …Then we need someone to source all this material. We have a guy … who has a background in farming who does a lot of the sourcing.
It's certainly like [a] cornucopia of people, processes, unit operations, ancillary equipment that are all a part of making this happen — all in a 93,000 square feet facility that used to be a chocolate factory.
Food Dive: It sounds to me like you put together a lot of aspects of a lot of different businesses. How did you get to the model that you have now, pulling all those different things together?
Tetrick: ... Probably the thing that's not obvious at all. … It starts five and a half, six years ago. How do we fix this thing? We need better protein in the food system. We need to figure out a way to do that. How about plants? That was idea one. OK, so there are a lot of plants, so who do we need to look through these plants? Well, we figured it would be helpful to have biochemists really looking deep into the molecular nature of plants. OK, well, who else do we need? Well, biochemists can find the best plants in the world, but if we can't figure out a way to make food out of them, then let's hire a chef.
… I met this guy who founded a company called Counsyl at this retreat that I was at. Counsyl is a company that screens for genetic birth defects. They have a lot of computational biologists working for them, and they're one of the leading experts in looking at large reams of data and finding relationships in the data. I was talking to the cofounder about what we're doing. … He more or less called me stupid — in a good way. He said, “You're screening all of these plants manually. What if you automated it? What if you could find all of these relationships in the data?”
… A handful of people are like, “Well, that doesn't make sense.” And a handful of people are like, “It does make sense.” I took a bet on it. Then we started hiring computational biologists initially from … the Carnegie Institute at Stanford. Then from that, we started building this automated platform so we literally started building and designing robots to screen through the plants.
Then we started realizing, “OK, we're finding more things. There's more stuff here.” We hired even more food scientists because we realized that food systems are infinitely complex, and we usually do our best when we have both chefs and food scientists on the job. … Then [as] we're screening some of these materials, we realized we need a deeper look into … some of these kinds of foundational molecular properties, and the best way to do that would be to build an analytical lab. So we hired a guy that used to work at Genentech to build an analytical lab for us.
"This is how we built the company. It was really a series of questions, like, 'How do we increase the probability that we get this done? How do we go five times faster? How do we go 10 times faster? How do we do this 25% better? How do we do this 100 times better? What would it look like if we only had five years to do this? What would we do?'”
Founder and CEO, Hampton Creek
… Then we realized now we're finding things. We have to figure out a way to process them efficiently so we can test them. We used to process things in a Vitamix in my old apartment. … We thought, “Well, how do we do that better?” So then we built a pilot plant downstairs, which enables us to take something that we've found and then very quickly turn it into something that we can use in a food product.
… This is how we built the company. It was really a series of questions, like, “How do we increase the probability that we get this done? How do we go five times faster? How do we go 10 times faster? How do we do this 25% better? How do we do this 100 times better? What would it look like if we only had five years to do this? What would we do?” We always questioned, and then [we were] trying to look out beyond the world of food, looking through the world of machine learning and the world of computational biology and the world of biochemistry into the world of automation and see what elements in these different disciplines out there that are not traditionally used in food can help us. While at the same time having our feet planted firmly on the ground, aware of the fact that we're making food so we have to have really talented, experienced people in food that are a part of this process — because Merck couldn't do this. Genentech couldn't do this.
You have to have people who know food systems to conform your products to be able to match up with all this non-food stuff that you've got going.
Food Dive: Is there anything that you can tell us about what you have coming up or what will be launching soon?
Tetrick: … All [Food Dive readers] need to do is look at the categories out there of foods that are really failing us. It's meat and seafood. It’s a number of the other categories that have too much sugar, have degrading proteins that are causing a lot of issues for our society — and we're going to be going after them. They include everything from butter to ice cream to shortening to a full array of condiments to products like chicken and blue fin tuna and turkey and beef [and] pork. A number of different dairy products.
"[L]ook at the categories out there of foods that are really failing us. It's meat and seafood. It’s a number of the other categories that have too much sugar, have degrading proteins that are causing a lot of issues for our society — and we're going to be going after them."
Founder and CEO, Hampton Creek
We're investing in building platforms that can tackle all of that. And importantly, in doing it too, we're also talking [to] and are currently partnering with some of the largest food companies in the world. … Currently, we sell an ingredient to General Mills. We're in the process of finalizing agreements with two larger food manufacturers to enable and utilize some of our discoveries to make their products better. And we're also involved with upwards of 10 global meat and seafood companies about licensing our technology. So we really see it as we want to use the plant discoveries we have to make products better. We want to use our clean meat technology to make these clean products. And at the same time, we want to figure out a way to partner with other companies so they can do it also.
I mentioned meat consumption's going up by 100%. Food consumption is going up by 70%. So a lot more people are eating food today than they were yesterday and a lot more people will eat food next week than will eat this week. No single company can possibly do this entire thing alone. We have to figure out a way to let the stuff out there and help other people.
… Before the end of the first part of next year we're coming out with a scrambled egg. That's probably the newest thing that we're coming out with. Then before the end of 2018, we're coming out with the first of our clean meat products that will be within 30% of the incumbent that we're going after.
The second part of our interview with Josh Tetrick is here. He talks about Hampton Creek's latest controversies and challenges, its plans for acquisitions and whether the company will ultimately go public.