The Future of Food: Reducing Our Reliance on Animal Products with Arturo Elizondo, Chief Executive Officer, Clara Foods. Dr. Jasmin Hume, Founder & Chief Executive Officer, Shiru.
Moderated by Sean O’Sullivan, Managing General Partner, SOSV.
SPEAKERS
Arturo Elizondo
Founder & Chief Executive Officer
Clara Foods
Dr. Jasmin Hume
Founder & Chief Executive Officer
Shiru
MODERATOR
Sean O’Sullivan
Managing Partner
SOSV
TIMESTAMPS
EPISODE TRANSCRIPT
Sean O'Sullivan: (00:07)
And this is Arturo Elizondo from Clara Foods and Jasmin Hume from Shiru and Ben Berman from NoMoo. So thanks all for coming today. And we're going to sit down and have a little bit of a chat about, what does it say? The future of food. So even before we get started and with the speakers introducing themselves, I'd like to find out if anyone understands what we're going to be talking about. Because we're actually taking a really new approach to how food is grown and how food is made. So first I'm going to ask, has anyone had alternative meats, like Beyond Burger or, yeah. Almost everyone's had that. Has anyone had an Impossible Burger? Okay. It's a different version of that. Has anyone tried and, that's basically plant-based meat. Sometimes with a little bit of specialty protein.
Sean O'Sullivan: (01:14)
That's fermented protein. That makes it more meat like. Then there's a next level down, which is precision fermentation. Has anyone tried any things like the Perfect Day ice creams? There's one, two, three, four, five. Wow. Okay. That's very good. You guys are very advanced. And that actually takes the animal out of the agriculture completely, but still has the same proteins and we'll describe a little bit what that is. So you're still having cow milk, it's just, no cow was involved in the making of the milk or the ice cream. And then, has anyone ever tried, really this is not even commercially available yet, but cellular agriculture and things like Memphis Meats or Upsight Foods as they're called right now where the meat itself is grown in filets, but no brain is attached to the meat. So it's like cow meat or chicken. Oh, got one there.
Sean O'Sullivan: (02:15)
So there's a couple of people here who were going really into the future. Well, we are redefining what a sustainable planet looks like. And the pink panelists that we have today with us here are people who are making that redefinition of how we grow food, how we make it without having over-reliance on industrial animal farming, which is, as people are probably aware of this, you've probably maybe seen some movies or heard some reports, but it's one of the great causes of global warming. The methane is being produced by the cows and the other animals and all of the other agriculture that's used to feed animals, which we then feed, which is just very, sometimes 30 times worse for the environment than actually just growing the food directly in bio-reactors.
Sean O'Sullivan: (03:18)
So we're going to find out about that future by talking to some of the leaders in the industry. But I first like to just, because it's such an unusual thing, I'm just going to set a little bit more context. SOSV, I'm an investor. We invest in a lot of these companies that are in this space. Like some of the companies we've mentioned there, but one of the things that I had growing up is I had a mom who was a diabetic. And I don't know if anyone knows anybody who's a diabetic, you inject insulin into your arms. Well, it used to be the only way that you could get insulin was to slaughter pigs and cows, take the pancreas out and then drain it out of the insulin. But then Genentech came along for pharmaceutical purposes and they figured out, "Hey, we can actually take the human gene, which produces human insulin, which is better than cow insulin or pig insulin, anyway. And we can grow it as a pharmaceutical and sell it in the little bottle."
Sean O'Sullivan: (04:23)
And guess what, fewer people died of all the contamination problems. It's a much better fit for human beings and life was improved, but only for pharmaceuticals and really, really high value proteins like insulin. What's happened in the intervening years is this incredible technological revolution these guys are leading that takes that process, which was once used only for pharmaceutical products. And there's other pharmaceutical products like human growth hormone or Viagra, or all the things that are grown that way. High expensive. But they're making it now available by growing it in vats and fermentation, just like beer is fermented, but where the output instead of beer or the output instead of human insulin is now commodity food products.
Sean O'Sullivan: (05:16)
That's a lot of what these teams here today are doing, is precision fermentation and getting the direct output, those hero proteins that we rely on for our ice creams or that used to require animals. And with that background, I'm sure I've confused many of you, but hopefully enlighten some. We're going to talk to some of the leaders in this industry. Arturo, do you want to tell us a brief rundown on what you do at Clara Foods?
Arturo Elizondo: (05:48)
Hi everyone. So I run Clara Foods, founded of the company almost seven years ago. We've been in R and D for the last six and a half years. And what we do is we make real animal protein without using a single animal. And we focus that specifically around in the B2B world in large part, because there's this massive gap in the industry around companies like the Kellogg's, General Mills, Walmarts of the world, trying to ride this transition of animal free alternate protein products, in large part because of companies like Beyond and like Impossible. [inaudible 00:06:23] who've really helped educate the market.. And so there's this massive gap in the infrastructure to help enable the world's largest food companies to transition. So that's really where we at Clara operate. So we're a B2B alternative animal protein platform, and we produce different kinds of animal proteins using yeast and fermenters.
Arturo Elizondo: (06:44)
So in the same way that brewers use yeast to convert sugar into alcohol, to make beer and wine, the yeast that we work with naturally converts that same sugar into protein. So we can engineer the yeast itself to produce different kinds of animal proteins, to make insulin or other kinds. And we specialize in egg proteins because they're super functional and over a trillion eggs are consumed every single year worldwide. Massive market that's been completely in many ways under penetrated. 99.8% of the egg market is still dominated by eggs. Only less than 0.2% isn't penetrated by anything that's not a egg. And so we see a huge opportunity there for us to help enable the broader food industry to transition into animal free future.
Sean O'Sullivan: (07:34)
Thank you, Arturo. And Jasmine, tell me what you guys do at Shiru.
Jasmin Hume : (07:38)
Yeah, absolutely. So building on the opportunity that Arturo just spoke about, and we'll probably talk more about this in the coming minutes, a huge opportunity in fueling the future of food by enabling better ingredients. So what we do at Shiru is actually look to the natural world, specifically non-animal proteins. So proteins that come from plants, fungi, cyanobacteria to increase the options, the diversity of the protein ingredients that food formulators have at their fingertips. There are 400,000 known plant species. We currently get 90% of our calories from 13 staple crops. And within each plant, there are 40,000 different proteins that are expressed. So the search space is huge. At Shiru we use tools like machine learning coupled with precision fermentation to create a wide variety of different functional protein ingredients that can ultimately replace things like dairy proteins, egg proteins, gelatin, a wide number of different functional ingredients that we currently derive from animals in far less sustainable ways.
Sean O'Sullivan: (08:53)
And on our left or your right, on the far right, Ben Berman from NoMoo. Now, NoMoo is the name and here's the joke behind NoMoo. It is milk proteins and milk products without the cows. That's why NoMoo, no moo. That is probably the way I should have been introduced to it.
Ben Berman: (09:12)
Thank you. And for the chuckles, I appreciate it.
Sean O'Sullivan: (09:18)
Go ahead.
Ben Berman: (09:18)
We're building a company called NoMoo that did a joint venture with Perfect Day. And Perfect Day, similar to the companies that you already heard about are doing precision fermentation on animal free whey protein. The way I explain it is we feed the DNA sequence of cows milk to yeast proteins. And with them ferment like you would a beer or a loaf of bread. At the end, we got a whey protein that is dairy identical, but it is animal free, lactose free. It is up to 97% fewer carbon emissions. And we are using that protein that Perfect Day has created to build out a beverage portfolio, an e-commerce company focused specifically on childhood nutrition. My background actually isn't in science. My background is in food. Quite literally, my background is in cheeseburgers, ice cream sandwiches and pizza, which are all three stories from other times.
Sean O'Sullivan: (10:06)
Really healthy.
Ben Berman: (10:07)
Very healthy, and also very heavy in dairy.
Ben Berman: (10:11)
And I approached this problem by saying, if I believe that the climate is the most urgent crisis that we were facing as a species, which I do, but I'm not sure that life is worth living without cheeseburgers, ice cream sandwiches and pizza. How can we reinvent those foods by putting less strain on the planet, but not compromising on the foods that we get to enjoy. And so along with Perfect Day, we are trying to reinvent those first few products. Milk, childhood nutritional shakes, animal free lactose, free yogurt, products that we love and enjoy every day. But we want to try to put far less strain on the environment. We want to treat our bodies better. We want to rethink the ingredients that we're putting into our food to create a healthier, more sustainable food system.
Sean O'Sullivan: (10:56)
Now, I think you guys here in the audience may be like, okay, milk without cows, eggs without chickens, hero proteins without plants even, growing these things and you're thinking, is this really going to ever happen? Or is this just a whole bunch of pipe dream? Well, I'm here to tell you one thing. Seven years ago, back to Perfect Day through our indie bio programs, we thought to the expression that Bill Gibson has, which is "The future is already here. It's just not evenly distributed." And even if you see in this room, the future was not evenly distributed in this room. Like there were only two people that knew about cellular agriculture who had ever had a meat that was grown, completely the same meat without a brain attached to it, like the Upside Foods technology.
Sean O'Sullivan: (11:57)
And a few of you had The Perfect Day sell milk products. So it's only seven years later that hundreds of thousands of people, since our first investment in Perfect Day, we're now hundreds of thousands of people have used it and tasted that product. But in another seven years, it will actually be billions of people. It's like the iPhone, in 2008 it didn't exist and people didn't think they even needed it, but it didn't take even seven years for people to know that they needed it. And what's happening with the food industry as these unstoppable trends continue where you can produce milk for four times cheaper than a cow can produce milk. It pretty much undercuts the industry and it makes it possible for everything to change in a way that we haven't seen in the food industry yet.
Sean O'Sullivan: (12:56)
It's only starting to happen now. It's like when the computers spreadsheets that people did by hand. And this is going to happen, it's an unstoppable force. And why don't you guys tell us a little bit about what are the things that are, you all have raised different amounts of money. Actually, this is very interesting because we have a pre-seed company at the end that's just raised $2 million. Shiru has just raised, Jasmine remind me.
Jasmin Hume : (13:27)
Our series I'd say, $17 million.
Sean O'Sullivan: (13:29)
$17 million. And on top of a couple of three or 4 million before that. And Arturo, what's your financing history? I'm not sure what you can say.
Arturo Elizondo: (13:38)
We've raised $64 million and then we're closing on a 120 in a couple weeks.
Sean O'Sullivan: (13:44)
So the different lengths of time that these companies have been out there and yet the products aren't yet in the market yet. And it may seem like nothing's happening, but in fact, it's happening at lightning speed. We're basically taking advantage of millions of years of evolution to produce natural products. Why don't you talk about what's happening next at your stage Arturo?
Arturo Elizondo: (14:15)
Yeah. Yeah. It's such a great question because to your point, it's almost like, it seems like nothing's happening. And then it happens all at once. And for context, it takes on average around seven years to bring a product from synthetic biology to the market. We did ours in five, which we launched it last year, it was a world's first animal free pepsin, which is a pig protein made now using fermentation. But normally it used to come from hog stomachs. That was really a nice proof point for us. But what we've been really focusing on for the last six years is developing the core technology to enable the broader infrastructure and a huge part of that is getting the technology, right, but two is, laying the groundwork for scale. And that's truly where, if we we're a penny cheaper than many of these multi billion dollar commodity markets, you start owning these markets.
Arturo Elizondo: (15:10)
And for us, the egg is a very affordable source of protein. So we need scale in addition to amazing technology to make that happen. And so over the last two years, we've been really working to lay the groundwork for scale. And what that means is that we partnered up with Ingredion, which is one of the world's largest ingredient distributor, ingredient companies in the world. They're in 120 countries. And that allows us to penetrate global markets far faster on the front end. And on the back end, we just closed a partnership with AB inBev, Bio Brew, which is the world's largest fermentation company. And that allows us instead of using-
Sean O'Sullivan: (15:49)
You may or may not know their beers are like a Budweiser and what's inBev is Heineken and all those beers over in Europe as well. So it's big, big fermentor, the world's largest fermentation company.
Arturo Elizondo: (16:03)
And so instead of using their, in addition to using the fermentors to use yeast and brew alcohol, why not use fermentation to also have the yeast convert that sugar into protein and produce it at the lowest possible costs on a global level and make them accessible to everyone. And so we work with very large food companies, like Groupo Bimbo, which is the world's largest bakery. They own SaraLee, Entenmann's, Oroweat. And part of what these companies are doing is trying to transition away from eggs. They reach people all over the world, especially in developing countries where they need very, very affordable products. And that's really where then scale comes in to then penetrate these markets.
Sean O'Sullivan: (16:50)
And I think scale is really a challenge for every company in this space, because initially the product start out being much more expensive than the ones that are made by animals. And then it just goes like from $8,000 a pound for a hamburger to like 800 to 80 to eight, but it's happening at that level, that speed as well, over two or three years, you get that 10 X cheaper.
Sean O'Sullivan: (17:20)
Jasmine talk about what types of proteins that you're looking to bring to market and what scale you're looking to achieve.
Jasmin Hume : (17:26)
Sure. Yeah. So on the panel, I think you have companies at different parts of the value chain also, which is really interesting. We are very early up in the value chain. So Shiru has a differentiated technology platform where we do protein discovery, essentially. And what that means is we can leverage our database, which currently contains 16.5 million natural protein sequences, interrogate it, using tools like machine learning and bioinformatics, and say, we're looking for proteins that have a gelation capability or emulsification or foaming, these textural properties that really define how we as consumers experience food, but also thinking about allergenicity, toxicity, amino acid profile, and basically predict the proteins that are going to perform those jobs in the best ways.
Sean O'Sullivan: (18:18)
And those functional proteins, those functional capabilities really matter when you take, for example, you take a soy milk or something and you try to put it in with eggs, or you try to use it to cook something. It actually, that's why the cakes don't turn out when you're using stuff that doesn't have those functional properties. And you're trying to substitute milk for those things, because they don't have the whey proteins or the casein proteins that are necessary for all of those different functional properties. So you're going specifically after those functional properties to either replace existing or to add product new capabilities.
Jasmin Hume : (19:00)
Yeah, exactly, exactly. Yep. And I would add to that, the other element here as Arturo commented on, scalability. And not all proteins are equally as able to be expressed or produced in high quantities and efficient manners. So we also prioritize for ingredients that actually have the best potential to be scaled at the lowest cost point essentially.
Sean O'Sullivan: (19:24)
Right. Right. And Ben, your area, actually, the other thing I just realized is that you're selling direct to ingredients companies using your products directly for all of their products. Ben, you're going direct to consumer and in the middle Jasmine you're going to the, more towards the ingredient side, or are you going to have any consumer paid packaged goods?
Jasmin Hume : (19:54)
No consumer paid packaged goods. We will provide to food CPG companies as well as ingredients companies.
Sean O'Sullivan: (20:00)
Right. Right. So, inside of the industry, there's a number of companies that go direct to consumer. And Ben, you're one of them. Tell us about the challenges involved there.
Ben Berman: (20:09)
Yes. We deal at the opposite end of what Jasmine is thinking about. And so what I'm thinking about every day is, if every time someone entered a grocery store, I went to check out of their groceries online, I could have them listen to 30 minutes with Jasmine and Arturo and Sean, that would be really excellent. Because my job would be a lot easier. We don't have that ability. So a lot of my job these days is thinking about how we can get folks to understand what animal free dairy really means, how they can understand that oxymoron of a product that they're hopefully going to put into their bodies. And I need consumers to understand that this is urgent and that this is delicious.
Ben Berman: (20:46)
And that's what think about every day. Is we want to rethink those products and understand how those products can be branded. We think a lot about the fulfillment work behind those products, I'm trying to get to scale so that it's not just folks who were at the SALT conference who have access to these products. We want these to be everyday things, that are in every person's refrigerator, that are in every children's lunchbox, because we believe that's important for our planet and for our children.
Sean O'Sullivan: (21:12)
I think one of the things that confuses people a lot is, oh, is this like a GMO, right? Is this something that we're going to try as an experiment? But in fact, all of these products are already, a lot of them at least, I know we're doing some things which are more advanced, but grasp products generally regarded as safe products by an FDA clarification. So once you get it out there, it's exactly the same as a cow makes, it is exactly and it's not a special thing. It's what humans have been consuming for hundreds of thousands of years. So it's just a different means of production without requiring the animal to produce it. And it's a natural means of production. It's using nature, the incredible forces of nature, cellular agriculture as the machines that are actually producing these outputs.
Arturo Elizondo: (22:09)
Yeah. So one question that I always get is like, why? why are you even using this kind of very deep technology to make milk proteins, plant proteins and egg proteins and animal proteins more broadly, instead of eating more fruits and vegetables? Or aren't the veggie burgers of today good enough? and ultimately, the way that I talk about it is, the plant-based companies of today, I think have done such a great job educating the market, getting people excited about these kinds of products and sharing that it is possible to get a really tasty, sustainable product. And that you don't have to compromise any more as a consumer, but ultimately, cost and taste still dictate them with the vast majority of consumer purchasing, not just in the US, but globally.
Arturo Elizondo: (23:08)
And so ultimately, how do we get people who don't care about climate change, who don't care about animal rights, who don't care about a bottle or don't don't make purchasing decisions based off of that to transition? And ultimately for us, the big question is how do we deliver products that deliver on that promise of taste and price? And for us, this technology really is critical to enabling that transition, like to get a cake to rise and give you the same mouthfeel as a consumer. The angel food cake that you get every Christmas with your family, how do we recreate those experiences in a way that doesn't require animal products and that ultimately can enable a more delicious and affordable future for people? And really this technology, at least the way that I see it from the research that we've done in the space is, it's really the only way to make this transition possible.
Sean O'Sullivan: (24:07)
What do you guys think? And I'll start with you, Jasmine. My belief is that there will always be some luxury market that want to buy animal based protein products, the steak directly from a slaughtered cow but, at some point it's going to vastly be these new food technologies, not just for the global warming reasons, but just for economic reasons, it's just going to be so incredibly compelling. When do you think we're going to actually change, let's say 90% of the protein that people eat instead of coming from animals is coming from these new methods?
Jasmin Hume : (24:57)
Yeah. I think that there are predictions out there that say as early as 2035, that those balances will tip in favor of proteins that are produced more sustainably and without animals. Of course, if you are looking to have a steak and to go out to celebrate something, that's an experience, right? If you're reaching for a bag of Doritos, that's probably not because you really particularly want to consume dairy protein. It's just eat some Doritos. But if you think about the quantities that global food manufacturers use these functional ingredients, because they perform a job, that is so easy for us to replace, that is low hanging fruit and the scale and the volume of that opportunity is tremendous-
Sean O'Sullivan: (25:44)
Trillions of dollars every year. And that re-invention of the entire food processing industry. Then I'll throw this to you. You're saying NoMoo, for you saying NoMoo. What about all the farmers? What about all the fact that these industries are going to be completely, I look back, I live in Princeton, New Jersey, and there's a canal that runs along the town and that canal only lasted like 20 or 30 years before the trains overtook it. And then the trains were overtaken by the interstate highways. And there's so much money that's been poured into these massive animal agriculture industrial, these miles big plans. What do you think about what happens with the jobs and what happens with the ethical issues there? Do you have any thoughts on that?
Ben Berman: (26:35)
I do. Is something I've been thinking about a lot. And one thing that I had the opportunity to do over the last few months was talk to consumers who were showing purchasing intent for our product. And one thing that I very much learned from that is that the enemy for us is actually not farmers. It is big dairy in general, and it is the things that have happened to our food system in order to feed the number of people with the demand that we have. And so we're oversimplifying here, but we think about this. We say, if you are going down the road to your local farmer to get your milk, we actually love that. And we would like you to continue doing that because we think that's awesome. Where we want to play is big dairy, that's the enemy here. Is the unsustainable ways that we have grown our food systems in order to feed everyone.
Sean O'Sullivan: (27:20)
And all the repercussions of the biotic resistance and everything else is endangering our lives. Well, I think we may have time for one question. If anyone has anything you want to shout out, I can, yes. Go ahead. Front row.
Speaker 4: (27:37)
[inaudible 00:27:37] as useful [foreign language 00:27:40] economic opportunities that's [inaudible 00:27:45] space. I think that maybe [inaudible 00:27:50].
Sean O'Sullivan: (27:51)
Business model in terms of what your cost is and what you're looking. Yeah. In terms of what, next three to five years, wow. That's a lot. We'll go as quickly as we can. So the timeframes for each of these different industries, whether it's plant based foods like Beyond Meat or these hero proteins, which I call protein farming, like these functional ingredients, we were talking about with eggs and milk and whatnot, those are different timeframes. It's like the explosive investment and growth, but you'll see more like the Beyond Meat, Impossible Burger sort of stuff in the market quicker, but they will eventually be supplanted and replaced with the next generations of these hybrid products. And then the cellular agriculture will come next in waves. But there's different timeframes on each.
Sean O'Sullivan: (28:51)
And these companies, if you're interested in the very earliest stages, then you'd go to a program like in IndieBio, which is what we run. And there's a lot of great companies that are coming through that to try to get into the early, early stages. Or you could get in at series A, series B, series C right here on stage. Just find these investors. There's a lot of people talking about this market. I'm not sure if that really answered your question, but go ahead.
Arturo Elizondo: (29:22)
Yeah. For us specifically, eggs hover around two to three bucks a pound, in terms of the liquid eggs. With our technology, without any improvement in our technology today and dropped into large-scale for ventures, our cost is between one to two bucks a pound. So we now have proven that at scale, the technology works. And ultimately now the series that we're raising is to really drive adoption across the portfolio for our customers.
Sean O'Sullivan: (29:58)
You wan to...
Jasmin Hume : (29:58)
Yeah, sure. I'll comment on the business model side of things. For our company, our north star, our business is going to be in commercializing and selling ingredients to food CPG companies, large and small all over the world. That's obviously a long timeframe. And to get there, you need to raise a lot of capital to be able to reach those markets. Given the technology platform that we have at our core, we're also going to take advantage of opportunities to license technologies or ingredients to ingredients companies as we reached that, that north star of selling our own ingredients.
Sean O'Sullivan: (30:29)
I think we've run out of time. Ben, do you want to...
Ben Berman: (30:32)
I can go super short.
Sean O'Sullivan: (30:33)
Yeah, go super short.
Ben Berman: (30:34)
I believe you'll be able to buy our first product, which is animal free milk by Q2 of next year. And I believe we'll get to pretty close to price parity with milk alternatives that you're familiar with.
Sean O'Sullivan: (30:44)
Yeah. Well, if anyone has any direct questions, I think you guys will hang around or maybe go out, I guess. I don't know if you have to go outside or if there's something directly after, but we'll go outside and be available for your questions. Thanks so much for your time today.