From Nothing to Something within one year
Something from Nothing, or How to Feed 1.5B Extra People Without the Need to Grow More Crops
NOTHING TO IDEA
I’m Aleh, and I’m a food developer.
In selling my meals, I always see that the more protein there is in the meal, the more desirable it is for the customer. So I’m continually thinking about protein cost reduction.
Imagine my fascination when I stumbled upon ingredients disregarded by the food industry (they fed it to the cows!) but were still 35 percent protein. To better understand my fascination - compare it with the 26 percent protein we get from beef.
What was the ingredient? Sunflower Oilcake —the dry matter left after oil extraction from crops such as sunflower seeds, cotton seeds, canola, etc.
And why is it wasted? The primary nutrient in these oil cakes is insoluble fiber that is not palatable to humans. It’s hard like wood chips, while the protein isolation is not cost effective.
I thought, what if instead of protein isolation, we could break the fiber down?
IDEA TO TECH
Theoretically, we can use a steam explosion. This effect occurs when the overheated liquid exposed to the ambient environment. It expands very fast and crushes everything in its path.
But who can help us to verify our assumption?
The cost of equipment we needed starts from $150K. No wonder that any food incubator or commercial kitchen could not help us. Commercial manufacturers could, but as soon as they hear the “food waste” - they hung the phone. No one co-packer wanted to deal with us. Even if we collect the $150K - equipment could be delivered not earlier than in 4-6 months.
Thanks to Kris Kluge, our advisor from Klug Enterprise, we found the Food Science and Nutrition Pilot Plant at the University of Minnesota.
To verify our assumption, we successfully completed tests at the University of Minnesota in April 2017. Now we know that we have a food-grade product. General Mills’ Medallion Lab verified our nutrition facts. Yes, we have our protein! Wow!
But if you saw how big the cemetery of the prominent technologies in the Silicon Valley, then you understand - that tech is nothing without a good product.
TECH TO PROTOTYPE
We had to get back to the University and make something that not just a enthusiasts, but an actual human can eat and demand more.
Initially, we thought, that we can grind the extruded snack into flour and then make a pancake mix, baby puree or nutritionally complete drink. And we did it. But the additional operations and associated costs did not allow us to make the viable model.
I don’t remember who exactly was it, but he said - guys, why do you grind it? It’s a perfect snack. All you need to do is to make the lighter texture and apply some seasoning.
We started pairing Sunflower oilcake with a variety of ingredients (flours, starches, etc.), different proportions, as well as various seasonings. Finally, we ended with 72 variations. We selected 6 of them, packaged into cups and released the variety pack on Amazon. Let’s see what will the customers say.
While they’re tasting - we need to find the right model to scale.
MODEL FOR TECH
What is the best place for acceleration? Considering yourself as a Tech, for sure we dreamed about 500 Startups, Techstars or Y-Combinator. Being more close to FoodTech / AgTech we also applied to IndieBio, AccelFoods, Thrive and several others.
Here is my pitch:
While the population is growing, the land stays the same, and researchers looking for more efficient ways to make food. Some of them genetically modify crops, some grow meat in a lab, we focus on underused resources.
One of the promising ingredients we found is the Sunflower oil cake. It's a dry matter that’s left after oil extraction. Being hard like wood chips (humans cannot chew high fiber in it) it’s fed to cows, still having 35% protein.
We found the way to puff the fiber, make it palatable and protein available for human consumption. This method allows us to make puffed snacks, chips, and cereals higher in protein at the price of regular. And if we find the right distribution format - offer absurdly low-cost healthy food products ($1 for daily stock of nutrients).
Given the fact that we have enough oilcake to feed another America- imagine how big wave we ride!
We have a ground to fight hunger. We want to team with FMCG companies to help them execute their socially responsible programs and revolutionize the waste processing using steam explosion instead of animals.
I hope, with your help, we can make it with fewer mistakes, raise A-round and feed the next population on the earth.
We were accepted into Techstars Kansas City. Wow!
Do you guys want to find the right model?- No one mentor knows the future. Be prepared for the tests.
We came to acceleration with the MVP of low-cost, high fiber protein snack, described in this Fact Sheet. We planned to get suggestions from mentors and verify them through a series of experiments. As the final result, we expected to summarize findings into a business model (preferably movement, not a CPG company) and raise round to scale.
What is more valuable: protein or fiber?- Both.
Assumption: Our product is a Month of Fiber to prevent diet-related diseases. Wrong. Customers prefer to buy snacks & cereal separately.
What do we need to change? Make color brighter, texture lighter, sweet flavors turned to be more popular than savory.
What claims on a package are most relevant? Vegan, Gluten FREE, Low Calorie, Low Fat, Low Sugar.
Product line extension tests: we can make a gluten-free flour mix for pancakes.
Assumption: the cheaper, the better. Wrong, customers look suspicious on low price for healthy products. Price should be ~$2 per serving in retail.
Successful sales on Amazon supported this conclusion - price $9.99 for 6 pack raises no questions.
Are customers ready to pay extra for donation? Yes. GET ONE, GIVE ONE is the most popular SKU.
Donation of free snacks in bulk allows us to make cost-effective samplings in many communities and get free press for ongoing sales.
Online: customers see ads, Google it, then buy on Amazon. Since we're invited and accepted into Subscribe and Save program on Amazon, customers buy repeatedly.
Gyms, yes - they’re interested if the price allows owners to earn meaningful money. With $1.99 MSRP for retail, it works well.
Gas stations, yes we can sell through them if we set up proper distribution and facilitate with brokers.
We received the sample request from Whole Foods, showing interest in the product line. No traction yet. Next contact planned with new samples.
Schools - customers submitted eight petitions to bring PLANETARIANS into Schools. Interest from food-service companies let to hire of food service advisor for three months to find 2-5 schools to make tests and scale it.
Tests on Facebook revealed the following most resonating taglines:
How Snacks Defeat Obesity: 5.77%
Snacks vs. Obesity 4.12%
Gluten-Free Alternative to Bread 2.15%
Stop Worrying About Having a Lot of Snacks. 2.08%
Chips with more fiber than any fruit or veggie? 2.04%
High carb low-fat vegan snack 1.51%
Snacks Against Blood Pressure 1.48%
Snacks Against Childhood Obesity 1.15%
Can you eat 2 pounds of Broccoli in one day? 1.03%
Introducing Month of Fiber! 0.81%
Having trouble getting your kids to eat their veggies? 0.75%
We summarized results in the “PLANETARIANS - Snacks Against Obesity” Executive summary, Deck and described in a financial model and planned to raise the round. But the safety problems destroyed our plans.
The plant, where we agreed to manufacture our chips canceled the run. Reason?- We infringe the Food Safety Manufacturing Act. We use ingredients for animals to make a meal for humans. FDA considers it a fraud. They don’t want to risk their FDA license…
Ahhhh… Ohhh… Well… it’s the core of our technology. We turn the feed that goes to animals as the waste into nutritious products. Our technology is designed such a way, that the high temperature and high pressure kills all the possible contamination. Two laboratories certified that we’re food grade! We hear you, but according to FDA, it’s a fraud.
Ingredients suppliers also rejected to work with us, being afraid that FDA and customers sue them.
We wrote the Food Safety Policy as FDA requires. Doesn't work.
We included suppliers and manufacturers into our insurance and took all risk on yourself. No move.
Finally, manufacturers confessed, what they are actually afraid. Although our ingredients can be processed safely, they can contaminate other ingredients, not intended to go through extrusion…
We found the way how to sterilize the oilcake and make it food grade according to FDA rules. But by the time we made it - our major investor lost the interest… At the Demo day, we raised less than we expected. We needed to start from the beginning.
No funds?- Look for friends. We headed to Boulder - the capital of the food startups and invited local entrepreneurs to join. Here is the invitation letter:
Agriculture occupies 1/3 of the Earth land. The population is growing, where will we get enough food?...
Luckily, we have a reserve: 1/3 of the food is wasted. Let's give a second life to many nutritious ingredients, that we previously lost.
Extrusion and steam explosion technology that we may use - kill all possible contamination with heat and pressure, and make available for human consumption many nutrients such as protein and vitamins at a fraction of the cost.
INTERESTED?- GET OUR HAND IN:
Recipe development and prototyping
Branding, advertising and pre-orders collection
Finding a co-packer, distribution, and fundraising
Come to Startup Weekend Food + Tech Boulder November 17-19, 2017, let’s make your prototype together (details are under the hood).
We brought a compact version of our extruder. We bought basic ingredients. We invited everyone to bring the waste they have at home (Coffee grounds, Orange peels, Fruit pulp) and do experiments. But nobody from food entrepreneurs was interested. Ups…
NARROWING THE FOCUS
If I were in my place then, I would wrap my shit and go back to our homes. But I was CEO and had to be at the pre-production run in Minnesota same day. I don’t remember how did get there. It’s a 12-hour drive. But I remember that the policeman somewhere in the middle of Nebraska was very generous… Thanks, Gerard!
All my emotions I invested into three-day work, and before Thanksgiving, we got a final product. Based on the results I wrote the report to mentors and investors:
We tested new ways to engage media against paid advertising and started to get free press. We plan to pursue this direction and collect pre-orders for a new formula.
Treehugger, Sustainable Brands, An uncomplicated life blog
We met with Alliance, Presence, Organic Food Brokers in Boulder and discussed the branding, packaging and promotion needs for grocery and convenient stores. Based on the feedback we hired MetaBrand to prepare the products for market, move into proof of concept tests and acquire and manage broker representation.
With the help of Registered Dietitian (former Sodexo executive), we studied USDA requirements for breakfast and lunch in schools meals programs and updated PLANETARIANAS formula to be accepted in public schools. Registered Dietitian is hired to select schools, facilitate tests to measure sales velocity and conclude first contracts.
During Food+Tech Startup Weekend we offered food entrepreneurs in Boulder, CO an opportunity to use our technology as a platform, bring their waste and build products on top of it. We got tremendous interest from waste owners, support from laboratories (UofM & Russian Biotechnology Institutes are ready to host events), and a strong recommendation from mentors to focus on our core business until the competition is not so hot.
During scale-up run at co-packer, we improved texture (lighter), color (brown-red) and coating (BBQ, Choco, Apple-Cinnamon). Got positive feedback as from focus group, so from our scientific advisors and industry professionals. Hope, you will like it too. The full-scale run scheduled on Jan-2018.
Christmas season I spent in the mixed emotions. From one side we have a product. From another - the impact is much less than we expected. Are we revolutionaries or evolutionaries?
My reflections led to rewind the tape to the beginning. We forgot who we are. Are we people who want to gain? Is it that we bring to this world? Are we going to earn money and lay down on the sofa all the rest of our life?
Or we want to make such an interesting business, that everyone is excited to come early in the morning?! Every day? Till the rest of the life?
I called to my investor and advisor Lisa Gansky, and she reminded me:
- “You forgot, why you called our company PLANETARIANS…” - She replied. “You told me that Planetarians are people who think that using 100% of plants is planet friendly. Using 100% of plants is another way to make our meals wholesome. Using 100% of plants is a way to feed the growing population. Did you stop thinking, that using 100% of plants is a Win-Win for People and the Planet?!”
CALCULATIONS FOR THE PLANET
I started to calculate the efficiency of animal agriculture. Animal agriculture wastes 93% of nutrients. Much of what we feed to animals is high-quality nutrients that can be eaten by humans instead. We can feed 10x more people if we stop feeding animals and start processing plants directly.
How big is the market?
USDA reports that the in 2017 the world supply of Oilcakes is 334.82 M metric tons.
1 kg of Sunflower Meal contains 3410 cal energy (same right for other meals).
One person needs 2000 cal per day, 365 days a year.
Dividing the annual volume of meals to yearly caloric needs for one person we that we can feed 1.5B extra people without growing new crops.
Will they eat it?
More and more people join the Vegan movement to support alternatives to animal products. We can help them. PLANETARIANS snacks contain a comparable amount of protein as animal products.
“For Generation Z snacking is a way of eating,” said Debbi Wildrick, Metabrand’s Chief Strategy Officer. “Healthy snacks growth outpaces overall food and beverage market, 5.1% CAGR.”
Thus we created Something from Nothing,
would you like to try?!
Founder and CEO,