a16z Podcast - a16z Podcast: Reinventing Food

Episode Date: January 13, 2018

It's surprising that how (and what) we eat has actually changed very little over the ages, despite how much we’ve advanced as a species. Now, however -- driven by globalization, environmental factors, and other considerations -- the way we move, taste, and make our food is moving forward too. From countering the limits of seasonality and global transport to re-thinking our species’ dependence on meat to optimizing nutrition to distilling the essence of taste, this discussion with Bryan Crowley, President of Soylent; 
Ooshma Garg, founder and CEO of Gobble; 
David Lee, COO and CFO of Impossible Foods
; and James Rogers, cofounder and CEO of Apeel Sciences -- and moderated by a16z Partner Kim Milosevich -- is all about the future of food... including how we define what “food”really is. ––– The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi, and welcome to the A16Z podcast. This conversation is all about the future of food, from countering the limits of seasonality and global transport, to rethinking about our species dependence on meat, to optimizing nutrition, including redefining what we think food really is. Recorded at our 2017 summit event, the conversation includes Brian Crowley, President of Soylent, Ushmagarg, founder, and CEO of Gobble, David Lee, C.O. and CFO of Impossible Foods,

and James Rogers, co-founder and CEO of Appeal Sciences, and was moderated by A16Z partner Kim Velosevic. We all have strong opinions about food, and food has taken. taken a long journey over time. It's gone from coming straight from the farm, industrial error, more packaged and processed foods, to a trend back towards organic. And now we're seeing a new food revolution. Why are we all of a sudden starting to see like this new kind of revolution in food starting? I think it's information. That's what is driving at just the availability and the massive quantities of information out there.

I say that's one. And I think, too, the sustainability, movement has drove quite a bit of what we've seen in terms of the impact of the food ecosystem on the planet had been the other. And I think just our quest for longer, healthier lives, which I don't think is any different than it was a hundred years ago. When we're building companies, you could have an incredible idea, but timing is everything. And so I think the timing here is overwhelmingly now, and we're riding, you know, multiple big waves. One of them is just food TV, you know, the burst of food shows, chef shows, competitions, et cetera, in our industry is bar none and people are taking an interest and they want to be hobbyist

cooks. Then there's just access to information, like you said, of in every industry, kind of the democratization of knowledge and information, allowing people to question CPG and ask what's in this food. And lastly, I think that Whole Foods talks about how when they tried to market in favor of the farmer, it didn't work, or sustainability, or local and only when they said, organic is healthy for you. Food is about you is when people started caring. So this society getting more individualistic and food being aligned with identity and you is also causing this moment. Well, why didn't happen before versus why is happening now? It's because there wasn't any innovation. The consumer demand for healthier products

for products that they can feel good about is persistent. That is not new. What's new is the ability to serve them well. The truth is the way food trends are set now in the U.S. are set by a different generation. The millennial is the largest consumer in my business of ground beef, but they're also the ones that are setting trends. And the way they're sending them is not the way many of us mass marketers serve them. So for the first time, I'm seeing across the board technology in food, not just in the delivery of it, but also in the food itself. And I think that's what's prompting the change now. There are now solutions. I think the answer is that now we must.

You know, we're going to add a couple billion more people to this planet in the next 30 years. And along with that, we're not going to get another rocket load of more arable land and more fresh water. And, you know, if we look at the amount of food production that's going to be required to feed this population, we're simply need to address this issue. And now's the time. and we look at this and look at the amount of produce that we're growing on this planet that ultimately ends up in a landfill. There's been so much increase in farming efficiency from an increase in yields, but because of that increase in farming yields,

we have not been addressing this issue of food waste and food loss. And so we believe that the way forward for us is to better utilize the natural resources that we're already using to produce food. So you talk about natural resources, but in fact we're actually innovating quite a bit on the actual ingredients of food. And James, you know, you came from not a food background, actually, but material sciences. Yeah, when I called my mom to tell her about the company that I was considering starting, she said, you know, sweetie, that sounds really nice, but you don't know anything about fresh fruits and vegetables.

And that was totally correct, but I was aware that there was a problem. And we've developed a way to use food to preserve other food. And so we use natural plant materials to create an invisible peel that we apply to the outside of fresh produce. And by constructing this peel in the appropriate way from these food materials, we're able to develop an optimal living environment inside of each individual piece of produce. And the result is that we're able to dramatically extend the shelf life of that produce without relying on the traditional forms of chemical techniques and refrigeration that are used today. And the core of this is really going down to the fundamental building blocks which compose all food

and relying on those materials rather than chemicals that we've derived in some laboratory and relying on those building blocks which nature has provided to reconstruct this edible and invisible peel. At Soylent, you guys have also experimented quite a bit with all kinds of new ingredients. I think one of the big things is plant-based. I mean, we're very, very focused on plant-based. Soi is one of the more sustainable crops. there is, but we think there's actually better out there. The next big thing is fungi is actually mushroom. We're putting a lot of research and investment dollars into, and partnerships in terms of

how do we actually find that next sustainable protein source so that we can actually, again, have less impact on the environment. Soylent is ambient, 12 months, shelf life. When you're in the food business, if it doesn't taste good and it's not convenient, like we're just talking to ourselves. So I think we're going to keep pushing the envelope. I came from, kombucha probiotic company prior, the technology that's happening on the fermentation side is pretty amazing. Technology is really enabling us to actually get the ingredients that we need in the most sustainable way that we can get them. So talking about new ingredients, I know at appeal, what you guys are trying to do is have this imperceptible layer that we're not even going to detect,

but David, in Impossible Foods, you guys have actually created like a whole new type of burger. And Ushma, all of this is impacting how we consume food and just the taste of food. David, are you just trying to essentially replicate exactly that burger experience in a new way? Animal farming produces more greenhouse gases than almost any sector, the same as all forms of transportation combined, period. Our approach is to introduce the same things that people crave today. It turns out that there's this thing in a burger from a cow that is the only thing that's going to make a meat eater like a burger. We found it naturally occurring in a plant that no one had seen before. we discover that's actually natural curing in everything.

It's the only thing that acts as a catalyst to create these thousands of aromas and molecules, period. So we don't color our food. Our food is the same color and the same taste for the same molecule that's in a burger from a cow. Our focus is on making that ingredient in a far more efficient way. And in the same way that Belgian beers made

or most industrial cheeses are made, we use fermentation. Three quarters of the people eat our product are meat eaters. Every time a meat eater picks our burger versus a burger from a cow, they save 95% of the land. They save 74% of the water. They produce an eighth of the greenhouse gases for the alternative. We know empirically tested blind versus a cow whereas delicious to a meat eater. Our approach is just to produce the same cravability and in some cases the same very molecule and ingredient in a much more efficient way.

So, Ushma, you've talked about sort of distilling these different flavors. Yes. Tell us a little bit about what your approach is there. So gobble attacks two distinct areas kind of in this big food space. One of them is diet. So here we're talking about folks that make ingredients and, you know, food that's sustainable or affordable for the world. But our thesis is that it's not a one-size-fits-all.

And even for each individual person, there are many different ways that you consume food and many different kinds of food that you want to consume. Some of them might be on the go. And an attendee here was saying two-thirds of, of their diet is Andresen funded and that they use Soylent for breakfast and lunch and gobble for dinner every day. And that was really neat to hear because you might want to put people in buckets and say, well, either someone is doing this or they're doing that. But actually, you find that,

you know, people eat Doritos or feed their kids, you know, the dino nuggets. And then they also really care about organic lunches or other dinners and so on. Long term, we think about what is best for you to eat based on your genetics, your age, your background, your taste preferences, and we try to personalize food in the same way that Spotify has developed a fingerprint for music. We want to own that fingerprint or that kind of taste map for every meal in your entire life. And then we work on the experience. We focus on the experience at home in a world where people are so individual most of the day, every day. So you're talking about more just like bringing the food that we all know and love, like, to our table. And then, you know, some of the

rest of you guys are talking about kind of reinventing what food is exactly. I mean, there seems to be this divide between these kind of science-based approach and these more traditional kind of organic approaches. How do we really, like, solve for that divide? Again, because of the $9.7 billion number that we all know is out there by 2050, there are multiple ways to get at it, but we do need to actually attack it in a big way. The GMO debate is one that's really interesting and really important, and we've got to have more of it, because organic and non-GMO is just not sustainable. It's not sustainable globally. It's not even sustainable in the richest country and the world. When you think about the masses and what they're going through living check to check, the science is going to actually

help us get there. We've got to follow the science, and we have to follow the data. And if we do that, then that'll help us get there. But it's going to be a tough challenge. We've been genetically engineering foods for the last 10,000 years. It's just not through the approaches that people consider it to be, well, that's GMO. If it's done in a laboratory, but if we're just doing crossbreeding experiments in the field, then that's not genetic engineering that we just consider that crossbreeding. But we've been doing that for the last 10,000 years.

Food is an emotional experience. This is not like enterprise software. And so the reality is, I absolutely agree. 40% of the ice free land today is used in the production of animal farming, population growth is massive. So we have no choice but to be innovative. But we also have no choice but to meet the consumer where they are. The consumer doesn't know what GMO is. There is massive confusion.

And arguably those of us who have been in large food companies contributed to it. The way I think all of us are trying to do it, though, starts with something consumers haven't seen. Radical transparency. You know, the millennial actually deeply cares much more what's in their food, where it comes from, what it says about When I'm asked about GMO, I like to say to those millennials, being anti-GMO is a bit like being anti-science. Are you anti-the-GMO that contributed to the round-up, you know, pesticide-resistant or friendly crop? Is that the same thing with the Belgian beer you're drinking? But we also shouldn't say that GMO is the end-all-be-all. It's an intermediate solution, right?

It's not the optimal solution. There are some negative consequences from GMOs to the environment because of methods of farming that they allow us to utilize. And so there are alternative solutions to this. To go back to your point, let's not try to deliver customers something that they've never seen before. Let's deliver them something that they already want. Let's just get it to them in a better, safer, more cost-effective way. And we see this in the industry all the time. You know, people complain about their, you know, their poor-tasting tomatoes.

And the reason that this is so ubiquitous that, you know, no one's had a great tomato unless they picked it out of their backyard is that, industrially, in order to make it to you for consumption, those tomatoes are harvested prematurely. They're harvested at a color stage three or when they're green. And then they're shipped to where they're going to be consumed or processed in many situations. And the result is you get the physiological characteristics of a ripen piece of fruit, but because it's been disconnected from the factory, which are the leaves of the plant, and it's just the storage vesicle, you end up with flavor profiles and nutrient densities

that are a third or a half in some situations where they could be otherwise. What we're doing is by reducing the perishability of that produce, we're allowing the growers to optimize their harvest decisions for quality and freshness of that produce, apply our products, and then put into the same supply chain. So the result for the consumer is a better tasting, more nutritious, longer lasting piece of fresh produce. The problem in like, just in our society broadly, even outside of food and especially in food, is that everyone wants a one word or a one label answer. and they just want to know that, you know, organic is good, GMO is bad, paleo is good, keto is good, or whatever it is, using, you know, all of the content platforms that are so easy for us now to use and to reach our constituents to help them understand some of the nuance here is mission critical to achieving anything. And so not only do we have to educate, but we also have to combat this somewhat uniquely American and growing mentality that everything is in either this or a that. I wanted to kind of shift gears a little bit. So as we talk about innovation across the board, especially as it affects physical things like food, what is the regulatory environment like? Listen, when you're trying to change, should have known about it, and we should have been

having these conversations. So shame on us, and we're fixing that. But we're planning to launch in the UK next year. And you can imagine the product development we have to do for a pro-GMO, pro-Science company to get into the UK where it all started. So I think, think the regulatory, it's as important that you're working that angle because we have to partner with them, right? They can't be the enemy. You know, I have to partner with them to figure this out because we're all trying to do the right thing. They want to. They're well intentioned, right? Yeah. But it's their job to be the laggard in the tail because their job is to protect consumers for the same reasons that we're discussing. We need to help educate consumers about what the new

alternatives are. At the same time, we need to be helping to educate the regulatory side and what's coming, why this is so important, but that's a challenge. And so really it's very difficult, I believe, for companies to get into the food space because of the massive amount of overhead that's required in order to install things like current good manufacturing practices, you know, food regulatory programs within the company, all of these things that prevent people from actually getting products into the market. But once you do understand that space, then it can be very productive because you're provided almost a framework in which to work and how to have those conversations with those regulators.

I really like regulatory forces at work in food. And let me tell you why. When you look at it globally, when you look at China, when you look at Singapore and the impact of how China's assurgence in Southeast Asia, like it is a dynamic potential force for great good. We tend to view those of us here in the U.S. and those of us who spend time in tech in particular as viewing a lot of people with the hubris of disrupting a new industry tend to view the regulators as the foe. Listen, animal farming in my case is arguably the most well-funded lobbying organization in the United States, much bigger than the NRA by far. You have to partner with industry. You have to have the best lobbying group on your payroll as a young pre-revenue startup if you want to

compete. And once you build those allies and you speak their language and you, you You fight their fights with the same kind of armament. To the point, raise, once you cross over, there is a world of benefit. You know, people talk about heavy cap X, but heavy cap X, once you're fully amortizing, the fixed costs become, you just print money. And there's a similar analogy to getting through and partnering. You know, we've been generally recognized as safe as 2014. We just filed an over 1,000-page FDA, you know, filing that we are now publishing to the world.

It's been years of effort. But I'd like to think we're very close now to having the gold standard that many food companies don't seek because I know we're going to be attacked by a very large lobbying organization. Maybe you guys could just give one sentence each on kind of where you think the future of food is going. So in 10 years, kind of where you hope it's going to go, or maybe where you fear it might go, either way. Can I just say drink, soilent? No, I'm just kidding. Listen, I think it's going to be a long journey. I do think science and technology are going to lead the way.

That's what brought me here. And I think we're going to actually start steering our focus to the masses versus the one percenters. And that's what I'm most worried about. Most of the investment in private equity and the food and beverage space is going to initiatives that only benefit the one percenters. And that's what I'm hoping for for the next 10 years that that shift happens. Cool. Usher. Yeah, I think, so on the one hand, we're seeing a shift to direct a consumer.

So people are expecting things at home. And everyone's used to subscriptions and Amazon and so on and so forth. So that's affecting convenience, retail, corner takeout, et cetera. So down the line, I see experiences, let's say, like a movie theater outside, and then things like renting movies or, you know, commodities inside. So we're bringing food into your home, but we think that people will still go out for fine dining. I also think that now people are taking IVs or, you know, pills and all different kinds of things. I think someone mentioned body hacking a bit earlier.

So I see all of that happening and growing, but at the same time, I also think that people's desire to connect over food and have a family and a sense of family at the dinner table won't change. People still have to eat food and they will still want to eat broccoli, for example. So it's a really neat industry because it has tons of innovation as well as a ton of tradition at the same time. Pat Brown, my founder, said one day little kids will look at their parents. shocked and horrified and say, I cannot believe you all used to eat meat, meat of dead animals. My greatest fear is that we saw the math of the food issue, which is immense, and the emotional connection that people have to food is lost because we started too late. We didn't apply technology earlier enough. And, you know, a future draconian world where we're all just eating supplements to

stay alive is my fear. I think we're going to see the evolution and development deployment of an entirely new food supply chain, which unlocks trillions of dollars in value, improves the quality of the produce that we're growing, reduces or eliminates this whole idea of seasonality of produce, eliminates this whole idea of shrink on retail shelves, and results in a consumer experience with fresh produce that we haven't had since we were growing it in the backyards.

Thanks, everybody. Thank you.