The a16z Show - The Future of Cheese

Episode Date: June 2, 2023

Today’s episode is with Magi Richani, founder and CEO of Nobell Foods. She is joined by a16z Bio + Health general partner Vijay Pande.Together, they talk about the details of engineering plants to create the future of food, why Nobell started with soybeans to produce their cheese, and her dream of finding a cheese pizza—with Nobell cheese—at any pizza shop across the country. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that 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. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

If you want to really upset people, try to take away pizza. What are the things that make it melt and stretch? What are the things that make it delicious? Looking at the cow as a system, it made no sense. For milk, you impregnate a cow. It gives birth, it produces milk, and that's literally the state-of-the-art technology. It's really hard to convince the world to change the way they're eating. We have to give people equally, if not better, options.

Look, if that intro did not hive you up enough, today I'd like to introduce you to our subject, something that I love very dearly. So dearly, in fact, that I asked Chat-GPT to write a riddle about it. And boy, did it not disappoint. All right, here we go. What can be Swiss without a passport? Be blue without feeling down. And gets sharper with age.

All right, if you haven't guessed it, we're going to do two more. What has culture but isn't a society? be smoked but isn't a cigarette and be moldy yet still desirable and finally what can be a brick, a wheel, or a slice but is never used in construction that's right people we are talking about cheese

honestly one of the top things that I think humans have invented and we'll be talking about how technology can potentially give us the ability to engineer cheese with soybeans yielding not just a better product for the environment but one that Maggie Roshani, founder and CEO of Nobel Foods, says can be just as good as normal cheese at a lower cost. All right, I'll let the team from BioEats World where this episode comes from, take it away.

I really hope you enjoy this episode. Hello, and welcome to BioEats World, a podcast at the intersection of bio, health care, and tech. I'm Olivia Webb. Today's episode is with Maggie Roshani, founder and CEO of Nobel Foods. She is joined by A16Z Bio and Health General Partner, VJ Pande. Together, they talk about the details of engineering plants to create a future of food, why Nobel started with soybeans to produce their cheese, and Maggie's dream of finding a cheese pizza pizza pizza with Nobel cheese

at any pizza shop across the country. Let's get started. Hey, Maggie, thank you so much for joining us on Viwede's role. Thank you, Vij. I'm excited to be here. I would love for the listeners to hear about your founder's story, especially, you know, how did you get started? As you mentioned, at Nobel, our mission has been for the last few years to make the most delicious cheese without animals. And one might ask like, why the hell would anyone make cheese

in a different way because it's so perfect and delicious, right? So I was one of those people. And what led me to start this company is just my personal journey through discovering how we actually make dairy and how it gets to our plate. And that's, happened when I discovered that I was highly lactose intolerant, and I thought I was so unlucky that I can not eat cheese, and I wanted to understand why. And the more I dug into it, the more I understood that dairy comes from animals that have really, for the last 3,000 years, have been used in the same way, which is for milk, you impregnate a cow. It gives birth, it produces milk and that's literally the state of the art technology that we have to produce milk and then turn

that into cheese and other dairy products. I do not have a biology background, but I do have a technical engineering background. And as an engineer looking at the cow as a system, it made no sense. So it's really like a model that hasn't evolved in such a long time. And it's not just the fact that you have to impregnate the cow so it produces the milk, but it's, it's really like a model that hasn't evolved in such a long time. And it's not just the fact that you have to impregnate the cows, it produces the milk, but it's also the fact that it takes so much resources to just make one gallon of milk. You're talking about six pounds of food, food that could have been grown to feed people, for example, whether it's corn, soy, grass, whatever it is, but we have six pounds of food and then over 100 gallons of water that go into making just one gallon of milk.

So as an engineer by training, you're trained to think of systems and efficient. and you look at the cow and you're thinking, we can do better. So that's what really motivated me, the fact that I did not want to accept life without cheese. And I also did not want to accept that this is the state of the art technology that we have. So it's really through wanting to solve that problem for myself and wanting to solve that problem at a larger scale beyond just me as an individual that led me to start Nobel. We're just getting started. And it's so exciting because when you're starting from scratch, you can pick the things you want and then you can choose the things you don't want.

For example, when we are making our cheese, cheese is a high source of cholesterol, for example, and it also has a lot of hormones and other things that are not necessarily favorable, including lactose. So for people like me that are lactose intolerant, when we go back and we design the cheese, we look at what are the things that make it so unique? What are the things that make it delicious? what are the things that make it melt and stretch and give it kind of like that mouth feel that it has. And we design these things, but we also have the opportunity to not put the things that are not as good like the lactals and the cholesterol and the hormones. So that's such a powerful tool.

And using kind of a first principles thinking, which is when you build a system from scratch as an engineer, like I always think of systems and how you build them from scratch. And there are opportunities to apply that thinking to biology. and make products that are not just better for the climate, but eventually as well better for us as people from a health perspective, which is super exciting. I think the audience would love to hear how this works. It's really powerful that you could put in the parts you want and not the parts you don't want. So what are the parts you want and how do you get plants to make them?

So if you look at milk, the majority of milk is water. Actually, milk is majority water with a little bit of fat, protein, and sugars. We know that, you know, the fats we can get from other sources from plants. The sugar, which is the lactose and milk, we can actually get sugar from plants without creating an issue from a health perspective because a lot of people are lactose intolerant. And the hard part, the one piece that is impossible to replace is the protein. So dairy proteins, in particular, it's a family of protein called Kaysen. Kaysen is a very unique protein because it has.

has a unique structure. It's actually unstructured. And because it's unstructured, it has these very unique properties that allow it to make cheese melt and stretch and be warm and gooey and melt it, but then go back to being a hard cheese after it's not warm. So all these unique properties are driven by the structure of Kaysen, which is a lack of structure. And what is really interesting about it is there is a biological reason for that. So actually, Kaysen is the product of lactation. So it's designed by nature to be highly nutritious and to be digested by the offspring. And because of that, producing this protein outside of an animal requires some design and engineering around it. And we've spent a lot of years thinking about how do we produce this

protein in a way that makes it stable and it accumulates so we have commercial levels of it, but where we don't have to raise an animal. And the beauty of plants is that plants naturally produce proteins. And that's a beauty of bioengineering. You're taking things that work in different ways and you're combining them in new ways. And so we work with soybeans and soybeans are actually very efficient at producing protein. We have designed ways to instruct the plant to make any protein we want. We're starting with Kaysen. There are so many proteins that are very interesting that we can make as well. But like focusing on cheese and dairy for now, we instruct these plants to instead of making just, you know, soy proteins, they're also making Kaysen.

What's different about what you're talking about versus what people can buy in the supermarket today. Yeah, so when I discovered that I was lactose intolerant and I did not want to give up cheese, I went and bought every single cheese alternative product on the market that you can think of. And actually, that's what drove me to start a company and to dig into the molecular composition of milk to figure out why it's so special. A lot of the products that are formulated today, they're trying their best, but the reality is that they're working with a limited toolkit that doesn't allow for the functionality and the flavor that is needed to really compete on taste with an animal-based cheese. It's really hard to convince the world to change the way they're

eating. It hasn't been successful. We've tried a lot of environmental animal welfare groups have tried over the years. Changing human behavior is very, very challenging. lunging and will take a lot of time and effort. Instead of relying on that, we really need to come up with products that can compete on taste and create kind of this experience of eating the cheese that you love. And food is, it's such a nostalgic thing. It's memories, it's culture. It's kind of these experiences like when you travel somewhere, you know, I grew up in a different country and a lot of my memories are around food. We have such a strong psychological. connection to it. And we cannot expect people to kind of give up not just the food,

but also the memories and the experiences that come with it for something that cannot compete on taste. Well, and you made a good point. I mean, it's not just modifying behavior of cheese. It's all the products associated with cheese, right? It's pizza is not the same if it doesn't melt right. It always feels like as a former physicist, it feels like the pizza cheese goes through some these transition, you know, from regular mozzarella, it gets a little brownish stuff on it, and it's stretchy and all of stuff, and it's just not pizza anymore, right?

It's just something else. Absolutely. And I think that if you want to really upset people, try to take away pizza. Try to take away pizza. And I think that's what's so challenging this food. I think when you think of like the issues we have with

climate, it's so much easier to fight gasoline engines and make that the enemy, versus making a cheeseburger, your enemy. It's so much harder. So we cannot focus on appealing to, we need to change. It's better for the environment. It's better for the animals because it's not enough.

We have to give people equally, if not better, options. That's the only way to really drive change. And to get there, we need biology. We need better tools to compete with animal-based products. But how does this really work? So how do you take like to get an animal protein made in a plant? Really, all we're doing is we are taking the genetic code that we know codes for the production of KSems. And we're kind of like copy-pacing that code into plants.

And that's the beauty of biology is because you have these codes that are kind of, once you know what they're coding for, you can transfer them between different species. and then you can unlock the potential of plants to even get a lot more out of the fact that soybeans are so efficient at making proteins. Now they're so efficient and not just making proteins, but also making proteins that you care about that are functional, that are much more valuable. The reason why I do believe that engineering plants in particular is so critical is because

we need affordable ways. to produce food. And in general, animal products are commoditized. They're very cheap. They're cheap because, one, they're produced at massive scale. Two, because they're heavily subsidized by the U.S. government. And then three, because every single component of the animal is monetized. So you want to compete with something that is very cheap, artificially cheap,

and we are using technology. So we need to figure out how to do that in a way that's going to be scalable and affordable. And that's why we've chosen to focus on engineering plants, specifically soybeans. Soybeans are the cheapest form of protein on the planet. If you have an acre and you want to make the most protein per acre, you grow soy. Up to 40% of their profile, their content is protein. So you found like this optimal protein factory and look at the better plants. And the key thing about it is I guess,

Plants just grow, right? You plant the seeds. Exactly. Exactly. They just grow. And they suck up CO2 and, you know, they need light, water, and air. And that's pretty much it. It's not that complicated.

And they are, I mean, I really believe that plants are such a powerful tool that we've underutilized. We really have underutilized them. And we can do so much more. Well, so how far can it go? Like, one of the limits to what you could do? Could you put insulin in soybeans? Yes, you can.

I think that's part of the challenging thing with our platform is we can do anything, right? You can make any protein you want. We're starting with the hardest thing, which is making commodity proteins for food, but absolutely. So there's two ways to think about it. One is on the protein side, you can design any protein you want and go after that. And once you know the mechanisms to produce. foreign proteins and plants, it's very transferable. So you can do it with Kaysen, you can do it with any other protein, whether it's for food or other applications. As well, looking at the other

side of the equation, you also have the fat. So you can also optimize for fat. It's not just the protein, and you can change the fat. And eventually, as you think of the future of food, you need both. And you're going to have to innovate on both ends. And the beauty of soybeans is that They're high in protein, high in fat, and there's things that you can do to optimize and eventually make a soybean that competes with a cow in all sorts of way, on both fat protein cost functionality, flavor, which is very exciting. So you got the protein in the soy. Sore likes making protein or maybe even some fat.

How do you do with the bean? Like how does the bean become cheese? how we make the protein and the front end of our process is very unique. How we make cheese is not that different from cheese making. So once we have our beans, the first step is to turn them into a milk. So similar to how you start with dairy, you have a milk product, we take these beans, we crush them and we make a milk. And then what we do is we change the composition of that milk. So we are concentrating proteins, adding additional fats that are a little more saturated. The reason why people love cheese is because it's high in fat, right? Like, that's what makes it

delicious. And if we're going to compete to with an animal product, we have to be equally delicious. So we do some adjustments on the fat profile and we add a little bit more of the saturated fats that give cheese its fatteness. And then we curd that milk. So you are concentrating, your proteins and your fat, you're removing the water, and then you end up with a cheese. And depending on the type of cheese you're making, you can age it, you can have it fresh, you can add different cultures, different flavors to it. There are thousands of varieties of cheese of today. And we can, in theory, make any variety that we want. Well, because once you're at the milk stage, you're basically kind of like dairy. I mean,

you don't have all the parts, but you have the parts. But you have the parts. need. Absolutely. You have the parts that you need. And once you have that milk, it's the foundation of all dairy products, not just cheese. You can think of yogurts. You can think of ice cream, right? Like, you have that foundation and then you could go from there. Yeah. So in principle, any of the dairy products could follow? Absolutely. Yes. Yeah. Now that you're doing this in such a designer way, could you make something better than cheese? Where does this go? That is the dream. That's the goal, right? So obviously, kind of like the first generation of product are always going to be hitting that target, hitting, competing with the animal base. When we do our R&D, we're tasting animal products.

That's our benchmark. That's what we're targeting. But as you mentioned, the beauty of this is that it doesn't stop there. Like the cow is a cow. It's not going to magically turn into something different overnight. But because we are building things from scratch, we have the opportunity to keep. making it better to keep improving on the flavor, to create new flavors, right, that potentially that are very exciting. So there is really no limit to what you can do, which is interesting

because it also makes it harder because then you have to focus at the same time as a startup and you really need to do one thing really well. But the reality is that there are so many exciting opportunities once you start designing things from kind of with a blank piece of paper. How will the market view this? Because it's kind of category creation in some ways, but then also there's like 20 different types of veganish cheese, right? Yes. We specifically want to go after people who have no interest in eating vegan cheese. And that's by design because the majority of the market, the majority of people do not seek vegan cheese.

You said 99% or something like that. Exactly. 99% are not looking for being in cheese. So our entire go-to-market strategy is built around building credibility with the cheese lovers and the cheese eaters, which is the majority of the population. And in order to do that, we have to target places, chefs, people that would never settle on quality. Because at the end of the day, your product has to stand.

it has to be delicious. People will need to want it, not because of the environmental benefits, not because of the animal welfare. They need to want it because it's delicious. They feel good about eating it. So when you look at cheese, the majority of cheese sales are driven by two categories, mozzarella and chether. 60% of the entire cheese category, the market, is driven by these two products, which is from in terms of like a company that's developing cheese, it's nice because then you can focus and target these two categories. Moderella is driven by pizza and cheddar is driven by fast food, burgers, sandwiches. So our GoTo Market strategy is really aligning these categories and nailing the products in these categories and working with chef that would never

settle on their menus and would never put subpar products that they don't believe in because that's how we're going to gain the credibility. When you think about the cost of a pizza, how does it break down? Like, how much of the ingredients, like how much is, it's basically cheese flour and water? From what I understand,

the largest cost for chains like dominoes and pizza is the cheese. So the majority of the cost of a pizza, I would say is driven by cheese. It depends on the pizza and how high end it is, of course. It depends where you get your flowers and your other ingredients. But I would say that as you start getting into large volumes, the biggest driver is the cheese. And that's why cost is really critical for us,

because even though at the beginning when we go to market, we want to target more of kind of the build the credibility type of partnerships, at the end of the day, we cannot just be, you know, a premium cheese. We have to be a cheese that can scale and that can be in as many high volume places as possible. And that's where cost becomes very critical. Well, and I can see that from the plant perspective and the efficiency perspective, I would think this could be pretty cheap. But from the, I don't know if there's added complexities from the bio perspective that make

it expensive, how does that all net out in terms of, like, will you be cheaper than regular cheese? I guess there's also subsidies and all these other things to come in. The cost evolves over time and with scale, right? So as you scale, you naturally have efficient use of scale on your processing and farming that drives your costs down. The biotech component for us is just R&D overhead, which is at the beginning of the process and really doesn't transfer into the operational cost. of the product, which is really nice. That's by design because we chose to work with plants and we chose to work with a plant that is easy to grow and cheap to grow like a soybean. So we do offset that

piece and it's just the initial part of the R&D. As we scale, we at the beginning will be, you know, not at cost parity with commodity cheese. We will be at prosperity with the premium cheeses because we don't have the scale. And then not too far from there, we will go down the cost curves and hit cost parity. But our models show that if there are certain scale limits that we need to reach, but if we reach those limits and there's assumptions that we have to hit, but if we hit those assumptions and they're very reachable, we have an opportunity to not just compete with the animal product. We have an opportunity to beat it on cost. The subsidized cost of the animal product. You have an opportunity to beat it, which is very, very exciting.

And that's ultimately, to me, that's how you win. You win by nailing taste, and then if you can make it better, you make it better, and then nailing the cost. And if you can make it cheaper, if you can make it as delicious and cheaper, then you have to beg the question of why, with anyone, you know, buy a product that comes from a factory-farmed animal. So the first few years, we've been heavily focused on building a science. And then right now, the last, you know, 18 months, we've kind of shifted the focus from being a purely R&D, developing the science, overcoming technical challenges, to building out our supply chain and starting to scale.

So we are planning to launch a product soon, which is the goal. And the focus right now is building out all the components of our supply chain that will allow us to increase our production volumes, that will allow us to scale in a way that aligns with hitting certain cost targets to get us closer to that cost parity that we're targeting. Imagine we're sort of in the year 2030, almost like 10ish years. Where do you think Nobel is? What are you making? What are you doing? My personal dream is to be driving in the middle of nowhere on a road trip and stop by a major pizza chain and walk in and order any pizza with our cheese on it without paying a premium.

So that to say that I really would like to see us in every major place where cheese is sold without the premiums that usually weigh down plan-based or alternative proteins and alternative products. That's the way to reach maximum impact because that's where the volumes are. And that's how we're going to actually move the needle on creating real solutions to climate. So that's my hope. You're driving through the middle of country to get your pizza. What else does the world look like in 2030 with all your peers that are trying to engineer

your biology and to really create this new future. What do you expect is going to happen? What's the future that I really believe that right now, we're raising the first generation of people that don't believe that cheese and meat have to come from animals. And to me, that is so exciting because it's not just one company or one product. It is a mind shift. It's a complete shift of mindset of what we perceive as reality. I think we're at the cusp of applying biology to food to make it better. And I really believe that the innovation happening in the space, whether it's us or other technologies that are being developed,

are going to take alternative products to the next level, to the point where we will start wondering why we ever relied on animals to make food. That's how I don't know if it's going to take five years or 10 years or 15 years, but I know it's coming. A lot of our speakers, you know, are in areas of health and sustainability and so on. And so it's always been interesting to ask them what they do for their health. To whatever extent you're willing to share, like, what do you do for your health? I tried meditation.

That was a complete failure. Meditation part. It's pretty hard. So I switched to boxing. You can say I went the other way a little bit. I actually boxed several times a week. And I find that meditative because it's such a great stress relief. So I've kind of turned to that.

I've been doing it for a year and a half now. And I would tell you the weeks that I do not box, you can tell the difference. You can tell the frustration. It really helps me stay grounded. Obviously, in terms of a diet, I am on 100% and plan-based diet, and I feel great. I understand that it's challenging for some people, but I personally feel great.

So the combination of that and having my boxing sessions keeps me sane while I run the company. Well, now I'm intrigued, like, are you, like, hitting a bag or are you, like, hitting a person? You might have to edit this out. I mostly hit a bag. Okay, yeah, yeah, yeah. I'm almost saving a bag. And it's, you know what's interesting is I was talking someone about it.

And I said, you know, I love boxing because it calms me down. And it makes me feel centered. And this person has a psychology degree. And they're like, actually, Maggie, it doesn't do that. What it does is that it builds like this kind of fighter mentality. And it gives you more resilience, but not in the way that you think. It gives you more energy and you're like more ready to fight. I'm like, well, you know, I need that too.

So I'll take it. Yeah, well, so I do martial arts quite a bit too, like four, sometimes more, four more times a week. I find the same thing that it's this mentality. There's a fighting mentality, but then also there's a lot of fighting is like relaxing, right? Like when you're hitting the bag, you can't be tense. Other than like when you really come on at that moment where you hit make impact, but a lot of it is forcing yourself to learn how to relax while you're doing this massive cardio

workout because like it's like four minutes on the bat. It's like sprinting. Absolutely. Like you have to know how to relax and focus at the same time, right? Which is very, there's technique to it. It's not intuitive. It doesn't just come to you. But yeah, I love it.

I love it. I never want to stop. Maggie, thank you so much for being on BioEeds World. Thank you for having me. Thank you for joining BioEeds World. BioEats World is hosted and produced by me, Olivia Webb, with the help of the bio and health team at A16Z. and edited by Phil Hegesa. BioWeets World is part of the A16Z podcast network.

If you have questions about the episode or want to suggest topics for a future episode, please email BioWeetsworld at A16Z.com. Last but not least, if you're enjoying BioWeets World, please leave us a rating and review wherever you listen to podcasts. 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 A16

Z fund. Please note that A16Z and its affiliates may maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com slash disclosures.