The Past and Future of Food Systems Innovation

Where are we coming from in food system innovation, and where are we going?

This is a question that I am asked almost every day by very well meaning entrepreneurs and investors who are attempting to create a mental model for understanding the innovations happening in food. 

Food is one of the biggest markets, and also one where innovation happens in very slow cycles.  This is true for 3 reasons- 

  1. the market is so big that change takes time to permeate.
  2. farms and farmers have traditionally been hard to reach geographically, which creates latency in information transfer and learning.
  3. Food is special to consumers- it transmits culture, so we don't want it to change, and it transmits sickness, and we don't want innovation that kills.

Mostly, when we think about food innovation, we think about laboratories and GMOs and the word synthetic.  

Some of us think thats cool, some of us think thats totally horrific, but we ignore the fact that the Slow Food movement is as much an innovation in food systems as eggless mayo.

 

After thinking on the subject for some time, I propose the following 2x2 as a simple, rational way of understanding where ideas and changes fall inside of food systems.

 

Quick History-

For an absurdly long time, food was slow and diverse because thats how you made sure you didn't starve.  Diversity meant that if climate was particularly brutal in one direction or another, you didn't lose all of your growing crops, just a subset of the total calories available to you.   Slow was a necessity because the industrial revolution was very late to food.

From 1945 or so onwards, two guys really pushed agriculture out of the lower left corner- Norman Borlaug and Earl Butz.  Driving science and policy respectively, they drove us towards a modernized, commoditized, mechanized food system.  

Starting in about 2000, America started to get suddenly suspicious of the food coming out of that top right hand corner.  Highly commoditized, frictionlessly delivered calories started to look like a good way to get sick and die young.  We started to panic, and to reassess.

by 2006, we had The Omnivore's Dilemma and Slow Food USA.   Slow Food arose as a reaction against the impossibly quick calorie delivery systems we were eating, and Michael Pollan effectively questioned the role of the big commodities in our food system (corn, specifically).  Suddenly, there were two camps- the mainstream food system eating commoditized, frictionless food, and the Pollan camp eating "slow", diverse foods that were the antithesis of this movement.  

If you had the label this axis with actual food, it would look like this-

Filling in around the two camps-

From 2006 onwards, innovation in either of the two camps was becoming more and more difficult- creating "slow food" that was better than what was being served in high-end restaurants was impossible, and creating "fast food" that was cheaper than what you could get at McDonald's was impossible.  

From 2006 to 2016, our food innovation has mostly been in the two other camps-

  1. fast, frictionless foods that are also diverse, and
  2. highly commoditized foods that were connected to the values of "slow".

 Some amazing businesses have been built in the top left corner and bottom right, respectively.  

Chipotle proved you could make food values-oriented and "slow" while selling commodities- their menu is still basically corn-based, but better corn.  Corn fed to animals outside.  Corn rolled into healthier shapes.  

Sweetgreen and others have proved that diversity can be bundled and delivered at high-speed and low-friction through innovations around the supply chain and a focus on selection over price.

Innovation is now breaking all 4 quadrants-

Coming into 2016, we're innovating again in all 4 quadrants- 

Soylent shattered what we believed to be the upper limits of calorie-delivery systems.  There has been much ink spilled over the evils of soylent, but I think its amazing to see this quadrant fully played-out; we have arrived at Peak Fast Food.  You don't call your business Soylent unless you understand the sweet irony of creating the perfect commodity.  

Hampton Creek shattered what we believed to be the remix potential of commodities.  The ability of Hampton Creek to be "slow" in value while also create a product made of commodities with no "slow" credibility a feat of both technology and marketing.  They have expanded what is possible in the commoditized food space, while also proving that moral high ground in food, and an association with the "slow' is a critical part of making a powerhouse CPG.

Blue Apron shattered what we believed to be the limits on diversity in a convenient form.  The food eaten by the Michael Pollans of the world is unquestionably more delicious- it is also much more time, much more money, and much more of a pain in the ass than eating a big mac while driving down the highway.  

Meal kit startups (don't hate me for using Blue Apron here, if you're a fan of another version) have helped to crack the code in how to bring the values of diverse, sustainable food systems into the bright light of modernity.  Strip away the cumbersome food pickup from a well-meaning hippy farmer.  Strip away the peeling, washing, soaking, fermenting.  Strip away the waste, the traditional recipes that feed a family 5 times larger than the norm, strip away the anxiety of the recipe.  

You are left with a frictionless meal that delivers you the satisfaction of the "slow".

Good Eggs Proved that "slow" is hard, and really, really worth it.  The rise and fall of B2C "slow" food delivery companies is a familiar tune in SF and NYC, but GoodEggs really exemplified what is possible in the space.  As they continue to grow out of a rocky end-of-year, the dream of "slow" food continues.  

 

10 Predictions for this year in Food

You’re caught up in innovation in food over the last 50 years. So what happens this year?

  1. More ways of delivering “slow” values in frictionless ways. We’ve got one heck of a model in meal kits, but the game is not yet played out. Startups with great ideas in this space will rise this year to prominence. As these new ideas start to come forward, the dominance of the meal kit model will start to fade. The winners will be the companies who embrace not just frictionless, but habit-forming.
  2. Soylent will be unstoppable. This is one of those classic “first they laugh at you…” stories- Soylent will be worth a billion dollars by December 2016. A major CPG brand will launch a clone of Soylent with a ton more sugar and fat in the recipe.
  3. The Great Chipotle Illness Scare of 2015 will drive innovation around how to grow more diverse foods in a commoditized ways. Freight Farms is a great example of a company poised to win like crazy on this theme. Positive public sentiment around “slow” and diverse food will weaken as the spectre of unsafe food starts to assert itself.
  4. Supply constraints in “slow” food will get weirder and weirder. This is the year that consumer preferences will start breaking supply models for stable purchasing. In layman’s terms- we’ll hear more stories about shortages of foods that no one grew or cared about in 2012.
  5. New Ingredient creation will be a thing. Creating new foods, not just new recipes, will be a big focus of early R&D innovation. Recipe innovation will get more and more quantified in the next 5 years, so the logical next step is pushing up into creating new foodstuffs. New ingredients.
  6. McDonald’s will become more like Chez Panisse, and Chez Panisse will become more like McDonald’s. As the year draws to a close, we’ll have seen the launch of initiatives in fast food to become more like the hyper-local, diverse and sustainable restaurants of the world, and we’ll see those values start becoming more and more interested in commoditization and frictionless experience design.
  7. The Biggest companies in food will start to question when they’re buying “slow” food rivals. The Annie’s acquisition for General Mills for approaching a billion dollars shows just how hard it is for “fast” food companies to innovate in other quadrants. You can bet they’ll start finding ways to buy into these competitors before they become this expensive.
  8. Kitchen hardware companies in food will prove to be too early.Current kitchen gadgetry is not going anywhere, because consumers are questioning the very value proposition of cooking at home. Selling new kitchen hardware to consumers will be a deadly vertical until these companies start to build friction-reducing services around their products.
  9. The MIT Open Agriculture initiative will get a for-profit, closed-source copycat in Silicon Valley. If someone does not do this by December, I will, like Werner Herzog, eat my shoe.
  10. Venture funds investing in all 4 quadrants of the food system will close this year. They’ll be small (20–100m) and they’ll blend elements of private equity into their composition so they can accelerate CPG brands, but they will close funds this year and they will find great deals. Existing software-based venture funds will slow the pace of funding in the space because the majority of VCs see “food stuff” as one category, not four.

Bringing it all back home

The Sistine Chapel of internet-enabled commerce is going to be food & food systems. Those that have a firm hold on this are going to have a great 2016.

I am collecting opinions on this subject- hit me up at caithrin@caithrin.com if you have ideas on food in 2016.

Caithrin Rintoul, CEO, Provender

 

An open letter to those who are about to start a technology accelerator.

 

 

The accelerator business is about hastening the arrival of the future.

 

The goal of accelerators is not to make money, to increase survival rates for technology businesses, or to build communities.  Those are outcomes of successful accelerators.  The goal is to hasten the arrival of the future.

 

Before you start an accelerator, you need two things-

1.     a concrete, deterministic, optimistic view of what the future will be.

2.      assembled resources you will deploy to help hasten the arrival of that future.  Those can be people, products, knowledge and money, but a great accelerator will have all these. 


Few accelerators ever bother with the first step of this process- and if you were to ask them why they don’t have this vision, the answer will be one of two things- either they “leave the future up to their founders” or “they are looking for the best possible outcomes for LPs”.  Both of these answers have profound flaws in logic.

 

World-class technology companies have a deterministic view of the future- we as founders have dedicated our lives to creating a specific outcome in the future that we believe will arrive, and nothing can stop us.  The accelerator model so often takes the opposite approach- we don’t know which one of these visions of the future will come true, so we’re going to minimize risk by diversification, and in some heinous examples, hedging. 

 

You are hastening founders into the future, but first you must select which founders to hasten.  This part of the job is a playbook borrowed from the VC world, as most accelerators want to be able to then hand off the companies into the arms of waiting VCs, so there is a strong incentive to use the same process.  The problem here, however, is that a great VC might do 5 deals a year- you are doing 25, maybe more.  At 25 deals a year, the degree of insights you can draw from founders, coupled with the fact that you must do 10 or more of these deals simultaneously, means that you cannot take the time to understand the future of every founder.  You must have a point of view on what the future will be, and then you must select for people and companies who you can hasten to that future.

 

Being focused solely on returning value to your LPs is not a good reason for acceleration, because we’ve already spent 80 years attempting to create a model that works well for that exact purpose in the venture world, and things are not looking great. Those that have figured it out don’t spend a whole lot of time talking about value back to their LPs, they spend their time talking about the future.  Furthermore, lacking funds for pro-rata is a rotten place to be working from if you believe that venture is really based on a power-law of returns.

 

 

Why do you, poor misinformed person, THINK you are starting an accelerator?

 

If your goal is to create more startups you are playing a numbers game in an indeterminate world.  This is the approach of post-secondary accelerators, accelerators based entirely on government funding for innovation, and the “farmteam” type of accelerator whose job is really focused on deal-flow within a supply-constrained market for companies.  If this is your goal, then stop charging people.

 

If your goal is to educate then you should be publishing!  Paul Graham’s blog, I would argue, will create more value in the world than Paul Graham’s accelerator has.  Those essays are the Hammurabic Code of startups (which explains why the website looks like archeologists dug it from the ground). If this is your goal, then stop charging people.

 

If you goals is to get companies funded then your model should put your money where your mouth is.  From here on in, you take no equity- all you have is an option on 25% of the next round of financing at a capped valuation.  Success-based pricing and a firm structure!

 

If your goal is to make money for yourself and buy a vineyard then you cannot start here.  You will fail because you are not fundamentally aligned with your founders, and because the model is not proven to return.

 

If your goal is to hasten the arrival of the future, then read on, I have some ideas for you.

 

One of the most profound experiences of my life was the first time I heard Peter Thiel speak concerning his theory of Determinant Optimism. Watch this talk.

 

The deterministic nature of your bet on the future needs to be the central tenant of your accelerator.  You must know what the future will be, and invest your time and money in a group of individuals who are building companies that will make that future arrive.   You must also be able to say no, to scream no, at things that are just going to make money.  This makes me sound like a jaded, hippie I know, but the success of the community, and the success of the program that that community is built on, is reliant on creating a group of people who have a common vision of what the future will be.  THAT is the genius of YC, because in many cases, the idea that is accepted does not find its anchor in the vision for the future, but in time, the company comes to understand why their product, their business, fits into a larger vision for what 2020, 2050 will be.

 

Go get ‘em. 

 

C

 

(to Ian, Zoe, Semyon, Ty, Eveline, thank you.  You made me who I am.)

The Spectre of Webvan, the promise of the Interface Layer

This month, one of the greatest success stories of the food+tech movement laid off 50% of their workforce and shuttered operations in several major cities.

This change is a blow to the local food movement, to our mutual aspirations to create a more delicious and diverse food system through connecting farmers and buyers together.  

At Provender, we began our journey into creating a better food system with a whiteboard and a simple vision-

No Trucks, no Fridges. 

Democratic tools that empower every farmer.

At Provender, we believe that history in technology disappears too quickly- we can forget things that have failed before us because the nature of technology defaults to optimistic amnesia.  

Farmers however, celebrate experience.  Agrarians have a vastly different default- that of using the past as a tool for shaping the future- be that weather, soil, or crops- farms know the past is important for knowing where to go next.

At Provender we feel all too profoundly the spectre of Webvan.  When we think like farmers, we see that infrastructure- trucks and fridges- is hard.  We believe that the great companies of this decade add value to old systems through Interface Layers, not through infrastructure- and we built a business that creates better food systems by empowering farmers, first and foremost.  

At Provender, we believe that the creation of a robust, diverse and sustainable food system is predicated on empowering farmers to leverage the power of technology to build great businesses.  We believe that no superstructure needs to be built on top of a great farm for it to succeed as a business; instead, we believe that farmers deserve tools that transform them into startups.

Above all, we feel the promise of Interface Layers. We believe this is not only possible, but inevitable, that the future of food+tech is not in trucks and fridges and buying and selling, but by building an interface layer for agriculture.  An API for dirt.  A tool that democratizes the technology we build for inventory, for logistics, for commerce, for community, and gives that tool to the people who need it most- farmers. 

 

Every startup thinks they have it figured out- we're no exception.

That said- if you have felt the spectre of Webvan, and you see the promise of Interface Layers, I'd like to talk.  We're hiring on the East Coast now, West soon.

cai@provender.com