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
From NOTHING TO IDEA
I’m Aleh, and I’m a food developer.
In selling my meals, I've always seen 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 (it was fed to the cows!) but were still 35 percent protein. To better understand my fascination - compare that 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 oilcakes is insoluble fiber that is not palatable to humans. It’s hard like wood chips, and 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 steam explosion. This effect occurs when overheated liquid is exposed to the ambient environment. It expands very fast and crushes everything in its path.
But who can help us verify our assumption?
The cost of the equipment we needed starts from $150K. No wonder food incubators and commercial kitchens couldn't help us. Commercial manufacturers could, but as soon as they heard “food waste” - they hung up the phone. Not a single co-packer wanted to deal with us. Even if we collected the $150K, the 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. We were able to create a food-grade product. General Mills’ Medallion Lab verified our nutrition facts. Yes, we had our protein! Wow!
But if you've seen how big the graveyard of prominent technologies in Silicon Valley is, then you understand that tech is nothing without a good product to accompany it.
TECH TO PROTOTYPE
We had to get back to the University and make something that appeals not just to vegan or sustainability enthusiasts, but that everyone can enjoy. Something that will keep people coming back for more.
Initially, we thought, that we could grind the extruded snack into flour and then make pancake mix, baby puree, or a nutritionally complete drink. And we did. But the additional operations and associated costs did not allow for the creation of a viable business model.
I don’t remember who exactly said it, but someone said to us, "Guys, why do you grind it? It’s a perfect snack. All you need to do is give it a lighter texture and apply some seasoning."
We started pairing Sunflower oilcake with a variety of ingredients (flours, starches, etc.), in different proportions, as well as various seasonings. We ended up with 72 variations. We selected 6 of them, packaged them into cups, and released the variety pack on Amazon to see what customers would say.
While they were tasting, we needed to find the right model to scale.
MODEL FOR TECH
What is the best place for acceleration? For startups that consider themselves Tech, it's a dream to be accepted into 500 Startups, Techstars or Y-Combinator. For us, thinking of ourselves as closer to FoodTech / AgTech we also applied to IndieBio, AccelFoods, Thrive and several others.
Here was my pitch:
While the population is growing, the amount of land we can use to grow food stays the same, and researchers are 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 Sunflower oilcake. It's the dry matter that’s left after oil extraction from seeds. Because it's hard like wood chips (humans cannot chew the fiber in it) it’s fed to cows, yet it contains 35% protein.
We found a way to puff the fiber, making it palatable and protein available for human consumption. This method allows us to make puffed snacks, chips, and cereals that are higher in protein than their "regular" counterparts, at the same price. And if we find the right distribution format, we can offer absurdly low-cost healthy food products ($1 for a full day's worth of nutrients).
Given the fact that there is enough oilcake to feed at least another America, imagine how big a wave we could ride!
We have the potential to fight hunger. We want to team with FMCG companies to help them execute their socially responsible programs, and revolutionize how plant waste is processed, using steam explosion to make it edible, instead of feeding it to animals.
I hope, with your help, we can make make great products, raise an A-round, and feed the growing population on Earth.
We were accepted into Techstars Kansas City. Wow!
If you have experience building a business model in a startup, you know that no single mentor knows the future. Be prepared for tests.
We came to TechStars with our MVP (minimum viable product) of a 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. For the final result, we expected to summarize our findings into a business model (preferably building a movement, not just a CPG company) and raise a round of financing to help us scale.
What is more valuable, protein or fiber? Both.
What do we need to change? Make the color brighter, the texture lighter, and surprisingly, the sweet flavors turned out 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 showed that we can make a gluten-free flour mix for pancakes.
Assumption: the cheaper, the better. Wrong, customers are suspicious of low prices for healthy products. Our price should be ~$2 per serving in retail.
Successful sales on Amazon supported this conclusion. $9.99 for a 6-pack raised no questions.
Are customers ready to pay extra for donation-based purchasing? Yes. GET ONE, GIVE ONE was the most popular SKU.
Donation of free snacks in bulk allowed us to do cost-effective sampling in many communities, and get free press for ongoing sales.
Online: customers see ads, Google the product, then buy on Amazon. Since we were invited and accepted into the 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 a sample request from Whole Foods, showing interest in the product line. There has been no traction yet, but our next contact is planned with new samples.
Schools: customers submitted eight petitions to bring PLANETARIANS into Schools. Interest from food-service companies led to the hiring of a food service advisor for three months to find 2-5 schools where we can make tests and potentially scale them.
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, described our financial model, and planned to raise a round of financing. But safety problems destroyed our plans.
The plant, where we agreed to manufacture our chips canceled the run. The reason? We infringed upon the Food Safety Manufacturing Act. We use ingredients for animal feed to make food for humans. The FDA considers this a fraud, and the manufacturer didn't want to risk their FDA license…
Ahhhh… Ohhh… Well… this is the core of our technology! We turn animal feed into healthy, nutritious products. Our technology is designed in such a way, that the high temperature and high pressure process kills all possible contamination. Two laboratories certified that we’re food grade! We hear you, but according to the FDA, it’s not allowed.
Ingredients suppliers also refused to work with us, out of fear that the FDA or their customers might sue them.
We wrote the Food Safety Policy as the FDA requires. It didn't work.
We incorporated suppliers and manufacturers into our insurance and took the entirety of the risk upon ourselves. Still no progress.
Finally, manufacturers confessed what they were actually afraid of. Although our ingredients can be processed safely through the extruder, they might contaminate other ingredients not intended to go through extrusion, and therefore sterilization…
Ultimately, we found a way to sterilize the oilcake and make it food grade according to FDA rules. But by the time we figured out how to do it, our major investor had lost interest…At 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 food startups, and invited local entrepreneurs to join us. Here is the invitation letter:
Agriculture occupies 1/3 of the land on Earth. The population is growing rapidly. Where will we get enough food?
Luckily, we have a reserve: 1/3 of food is wasted. Let's give a second life to the many nutritious ingredients that we previously did not use.
Extrusion and steam explosion are technologies that we can use - this process kills all possible contamination with heat and pressure, and makes available for human consumption many nutrients, including protein and vitamins, at a fraction of the cost.
ARE YOU INTERESTED IN BEING PART OF THE SOLUTION? GET YOUR 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 a 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 no food entrepreneurs were interested. Oops…
NARROWING THE FOCUS
If I didn't already have somewhere to be after that event, I would have packed up my shit, and gone home. But I was CEO, and I had to be at our pre-production run in Minnesota that same day. I don’t fully remember how I got there - it’s a 12-hour drive. But I remember that a policeman somewhere in the middle of Nebraska was very generous…Thanks, Gerard!
I poured all my emotions into three-days of work, and before Thanksgiving, we got a final product. Based on the results I wrote the following 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.
We were written about by Treehugger, Sustainable Brands, and 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 a Registered Dietitian (a former Sodexo executive), we studied USDA requirements for breakfast and lunch in schools meals programs and updated PLANETARIANS formula to be accepted in public schools. The Registered Dietitian was 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 our scale-up run at the co-packer, we improved texture (lighter), color (brown-red) and coating (BBQ, Choco, Apple-Cinnamon). We got positive feedback from a focus group, as well as from our scientific advisors and industry professionals. We hope, you will like the product too. The full-scale run is scheduled for Jan-2018.
Throughout the Christmas season, I had mixed emotions. One the one hand, we had a product. On the other, the impact was much less than we had hoped. Were we revolutionaries or evolutionaries?
My reflections led me to rewind the tape to the beginning. We had forgotten who we are. Are we people who want to pursue personal gain? Is it that what we want to bring to this world? Are we just going to make money and kick our feet up?
Or do we want to build such an interesting business that everyone is excited to come in early?! Every day? For the rest of our lives?
I called my investor and advisor, Lisa Gansky, and she said exactly what I needed to hear:
“Aleh, you've forgotten, why you called our company PLANETARIANS…You told me that PLANETARIANS are people who think that using 100% of plants is planet friendly. That using 100% of plants is another way to make our meals wholesome. That using 100% of plants is a way to feed our growing population. Have you stopped 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?
The USDA reports that in 2017, the world supply of oilcakes was 334.82 M metric tons.
1 kg of sunflower meal contains 3410 calories of energy (the same as for other meals).
One person needs 2000 calories per day, 365 days a year.
Dividing the annual volume of meals into yearly caloric needs for one person, we find that we can feed 1.5 billion extra people using sunflower meal, without growing new crops.
Will they eat it?
More and more people join the Vegan movement every day to support alternatives to animal products. We can help them. PLANETARIANS snacks contain a comparable amount of protein to 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, at a 5.1% CAGR.”
Thus we created Something from Nothing.
Would you like to try?!
Founder and CEO,