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Rebooting the Food Industry

Carolyn Jung | August 1, 2016 | Story Tech World

Read more from the Best Restaurants Issue here.

In the stillness of morning, before her restaurant would kick into full throttle for dinner that evening, chef Traci Des Jardins of San Francisco’s Jardiniere stood at a blazing stove, furtively cooking a game-changing new product still so under wraps that she has served it to her diners only once before. In a saute pan, two small ground patties sizzled away, turning golden brown, as a delicious fatty, meaty aroma filled the air. Once medium-rare, each was snuggled inside a pretzel bun with lettuce, tomato, onions and a smear of guacamole. Des Jardins cut them in half, revealing their rosy centers as pink juices squirted out, making them look for all the world like perfect beef burgers. Only they weren’t.

They were vegan, made entirely from plants—without any hormones, antibiotics or slaughterhouse contaminants—but possessing the unmistakable texture and savoriness of real ground meat. Get ready to wrap your mind—and taste buds—around the Impossible Burger. Created by Impossible Foods, a Redwood City startup, it will debut this summer on menus at select restaurants in New York, followed by ones in Los Angeles and San Francisco, including one of Des Jardins’ establishments. “It blew my mind,” says the chef, who has tested the Impossible Burger “meat” in tartare, Thai-style larb and tacos, since becoming a consulting chef to Impossible Foods. “I don’t think a large number of people blind-tasting it would be able to tell it’s not beef. It represents a viable and exciting possibility to make large-scale change in our food system.”

Move over, smart phones. Make way for the era of smart foods. A slew of them. Impossible Foods is just one in a long line of food startups now attempting to make the impossible, well, possible. Food and tech have converged in a profound way, particularly in Silicon Valley, creating opportunities for companies that span the gamut with the premise and promise of helping us cook better, eat better and treat the planet better.

“When you think about the advent of canned 
foods, Nestle inventing powdered milk, and innovations 
by farms in growing crops, food has always been a
driver for change,” says Manuel Gonzalez Guzman,
 West Coast managing director of corporate banking
for Rabobank, a global financial services provider for
the food and agribusiness industry. “Innovation and disruption in food has always happened, but not at the pace we are seeing today.”

Just consider what only the past few years have brought forth: A myriad of cooking kits deliverable to your home with the mere touch of a button on your phone, an industry that’s expected to reach $1.5 billion in sales this year, according to market researcher Packaged Facts. A $1,500 personal tea steeping machine purported to make the perfect cup of tea (Mountain View’s Teforia), developed by Allen Han of Xbox 360 and Kindle Fire fame. A $699 cold-pressed, home juicing machine involving sophisticated hardware, software and special organic produce packets (San Francisco’s Juicero), an invention that founder Doug Evans touts as “one part Tesla, one part iPhone.” And technology-enabled kitchen appliances in development that someday may allow sensors to track weight, temperature and moisture levels in food without touching it, while allowing it to be cooked effortlessly to perfection (San Francisco’s Innit).

Then, there is CoffeeFlour. A Canadian company with a sales office in Redwood City, it turns waste material from the production of coffee into a type of gluten-free “flour” that has five times the fiber of whole wheat flour and more iron than any other grain. It’s now featured in artisan chocolate bars (like jcoco’s Arabica Cherry Espresso) and breakfast products on the market (Earnest Eats), and also used by Google chefs in waffles and bread served at the search-engine giant’s campus cafes.

There is the growing powerhouse of Hampton Creek, which has cornered the market with its plant-based, cholesterol-free products such as Just Mayo and Just Cookie Dough, now on the shelves at more than 21,000 stores globally, including Target, Costco, Walmart, Safeway and Whole Foods, as well as offered at corporate cafeterias managed by the Compass Group, the leading food service company in the world. In the coming months, the San Francisco company will introduce 43 new products, including pancakes and brownies. By the end of the year, it expects to release Just Scramble, its much-anticipated egg substitute.

Memphis Meats of San Leandro is going further still—attempting to manufacture lab-grown meat that would be free of dangerous bacteria. It’s already managed to develop a prototype 1-ounce meatball, albeit one that would cost $1,100. And, of course, there is Soylent, established in San Francisco before decamping to Southern California, which aims to do away with all the inconveniences of cooking and even chewing by creating a nutritionally complete drink that can replace all solid food, though one that has been described by many tasters as akin to quaffing raw pancake batter. In the past year and a half, the number of food-tech startups seeking expertise and access to financing has doubled, says Rabobank’s Gonzalez Guzman. That prompted Rabobank to start FoodBytes! last year in San Francisco; it is a conference that helps connect food industry leaders and investors with startups. Its popularity surprised even Gonzalez Guzman. The first conference, plus two subsequent ones, including one in Brooklyn, sold out quickly, with each growing larger in size than the last.

But all this excitement also has some feeling anxious. “I do think the food system needs to be disrupted,” says Danielle Nierenberg, president of Food Tank, a nonprofit that spotlights sustainable ways to alleviate hunger, obesity and poverty. “What concerns me is that a lot of this investment is going into the same sorts of things and a lot of reinventing the wheel. I’d be happier with these startups if they weren’t looking at developing the next app or cricket bar or delivery system. I don’t know if those innovations are really solving any real problems.”

Marion Nestle, an outspoken consumer activist and New York University professor of nutrition and public health, who specializes in the politics of food and dietary choice, puts it even more bluntly: “These are expensive solutions to the world food problem. The world has plenty of nutritious food at the moment and will for a very long time. The problem is inequitable distribution, not inadequacy. This is a boy thing.”

That has not deterred Patrick Brown, a biochemist who two years ago turned his back on a tenured professorship at Stanford University School of Medicine, where he managed his own genomics and cancer treatments lab, to focus instead on creating new plant-based foods good enough to replace animal-based ones. With 45 percent of the Earth’s land, and more than a quarter of its water already devoted to animal farming, which “accounts for as much or more greenhouse gas emissions than every car, bus, truck, train, ship and airplane in the world combined,” Brown, a vegan for 15 years, was spurred to action.

His first success came when he managed to solve a perplexing problem that had plagued others before him: a way to coagulate almond milk to turn it into vegan cheese with the actual consistency and richness of real dairy cheese. That led him to found Lyrical Foods in Hayward in 2011, which now produces cheeses, yogurt and ricotta-filled raviolis—all made of almond milk using a proprietary method. The products, sold under the Kite Hill brand, are available at Whole 
Foods Markets nationwide. He then founded Impossible 
Foods in 2013, backed by $183 million in venture capital
 by such titans as Khosla Ventures, Google Ventures,
 Microsoft co-founder Bill Gates and Hong Kong 
billionaire business magnate Li Ka-shing.

Its first product—the Impossible Burger—came 
about after Brown discovered that heme in plants, a
 compound found in hemoglobin, can be used to help
 replicate the metallic taste and bloody hue of actual
 meat. His engineering team then devised a way to mold
 plant tissue into the characteristic animal fat, muscle and
 connective tissue of ground beef. The Impossible Burger 
has at least as much protein and iron as a beef burger, and no cholesterol, Brown says. Made with coconut oil, the Impossible Burger is more than 20 percent lower in fat that an 80/20 beef burger. Still, its taste is much milder than a gourmet beef burger; it also tends to stick when grilled, so cooking in a pan or on a flat top is preferable. Fans are already forming, among them burger fanatic David Chang, who raved about it on social media after a sample was cooked at his Momofuku Ko restaurant in New York.

Brown is optimistic about what the future of food-tech may hold. “There are endless unexplored opportunities to make the food system more versatile, secure and sustainable,” he says. “Animal farming, which has been largely unchanged for centuries, is both a huge global problem and a huge business opportunity. And Silicon Valley is full of people who like to harness technology to solve huge problems.”

But solving such problems doesn’t come without its own set of challenges. Unlike other tech ventures, food is perishable, and often subject to seasonality and the whims of Mother Nature. Not to mention, most consumers are unwilling to go beyond a hard-and-fast price point to acquire it. “Investors who think they will get the same investment return as they get in other tech will be disappointed,” Gonzalez Guzman says. “You still need to grow it. It has to be at a certain standard so people don’t die from it. You can’t just put it on a shelf. It’s not like an app. But there are investors who get into it because they understand how important it is, and they are willing to be more patient.”

No one knows that better than Juicero’s Evans, a juicing aficionado with no tech background. When he pitched his juice machine to investors, for every one that said “yes,” 10 showed him the door. Even so, he managed to rack up $120 million from powerhouse investors such as Google Ventures and Kleiner Perkins. Launched first in California in June, the countertop machine provides an 8-ounce glass of fresh, pressed juice at the touch of a button. Demand for the machine already exceeds supply, Evans says, though he won’t divulge exact figures. When asked if the $699 price tag would drop once the company scaled, he declined to speculate.

The machine makes vibrant juice with a uniform consistency that doesn’t easily separate, but it needs specially designed produce packets ($4 to $7) to do so. All the packets—such as the “Sweet Greens,” containing spinach, kale, apple and pineapple, and providing 25 percent of Vitamin B6 and 110 percent of Vitamin K recommended daily—are assembled in Los Angeles. The perishable packets are then shipped out with cold packs to Juicero users. Although Evans says the packets are recyclable, he’s only found one recycler that will take the film packaging. So, consumers will either have to acquiesce to sending more packaging to landfills or take the effort to mail them back to Juicero, where they must be opened up and the pulp inside removed for composting before the bags can be taken to the recycler. Evans acknowledges the pushback about that. But he explains, “There are a lot of things that you can solve for as an entrepreneur. What we’re solving first and foremost is a way that people can get more fruits and vegetables into their diet easily.”

As food-tech entrepreneurs have discovered, anything that creates a stir by boldly pushing the envelope also can make for a target. After Hampton Creek launched Just Mayo, a veritable mayo melee ensued. The FDA ruled that the eggless spread couldn’t be called mayonnaise. Unilever, which owns the Hellmann’s brand, filed a lawsuit against Hampton Creek, before eventually dropping it. Reports surfaced that the American Egg Board had tried to stop Whole Foods from selling the popular product. In the end, Hampton Creek was allowed to keep its Just Mayo label, after agreeing to make the words “egg-free” larger.

Then came a scathing Business Insider story last year, accusing Hampton Creek of, among other things, exaggerating the number of plant samples it has analyzed in its database; touting Bill Gates as an investor, even though he was merely an indirect one through Khosla Ventures; allowing founder Josh Tetrick’s dog to roam its offices freely, including the food lab; and revealing that angel investor Ali Partovi had joined the company in September 2014 as chief strategy officer, only to leave nine days later. Insisting that those concerns and criticisms have been addressed, Tetrick declined to discuss them further. He would only add, “We have people from the best companies in the world who come to work with us. We have some of the most recognizable customers in the world. Our revenues are through the roof. Our impact is through the roof.”

Getting there might not have been without its pitfalls, but he of all people gets why food-tech is such a big deal now. It’s the hunger to leave an indelible mark on a necessity we all need every single day to survive. “There’s the opportunity to reorient a massive system that affects billions of people,” Tetrick says. “There’s market potential to commercialize things that matter. It’s not making a slightly better appliance for those making $200,000 a year. It’s building products from the beginning to create new categories and to solve real problems.” One batch of cookie dough at a time.

Originally published in the July issue of Silicon Valley

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