Forbes India 15th Anniversary Special

Hampton Creek Foods: Making the Egg Obsolete

Some of the world’s most influential investors are betting Hampton Creek Foods can make the humble egg obsolete. Billions are at stake

Published: Jan 13, 2014 06:20:01 AM IST
Updated: Jan 9, 2014 12:27:19 PM IST
Hampton Creek Foods: Making the Egg Obsolete
Image: Martin Klimek / Getty Images for Forbes
Founder and CEO Josh Tetrick pondering a dish of scrambled ‘eggs’ made from plants

It’s 8 am on opening day at a new Whole Foods in San Francisco’s Castro neighbourhood, and Josh Tetrick is a just a little too excited for a guy hawking mankind’s blandest condiment.

With fingers fidgeting, he paces in front of an open-air fridge stocked with ready-made quinoa and kale salads and verbally pushes people toward his company’s sample booth. The sell? Hampton Creek Foods’s plant-based mayonnaise, which has been mixed into an Italian antipasto salad turned breakfast sampler.

“Come try our breakfast bruschetta,” the blue-eyed, square-jawed Tetrick shouts at a millennial. She turns and speed walks toward the checkout line.

While Tetrick, Hampton Creek’s CEO, hasn’t been able to persuade everyone, it’s the number of people he has convinced that has the San Francisco food startup turning heads. Bill Gates is a backer, handpicking the company as one that could change future food production. Tetrick has raised $6 million to date from Peter Thiel’s Founders Fund, Vinod Khosla’s Khosla Ventures and environment-friendly billionaire Tom Steyer. Newly turned vegan Al Gore is also circling.

To Gates and the others, Hampton Creek’s value is in its multibillion-dollar opportunity to make the egg obsolete, replacing it with a plant-based formula that is cheaper, cholesterol-free and more humane. It’s Silicon Valley solutionism at its finest, focusing entrepreneurial flair and science on an industry not known for innovation.

“Food to me is broken for a lot of reasons, but the best sort of manifestation of that is the world of intensive animal agriculture,” says the 33-year-old Tetrick. With a slight southern drawl, he speaks with a particular distaste for the egg industry, notorious for caging and force-feeding beakless chickens and burning through resources.

But the company sells itself on economics as much as on environmental stewardship. The ratio of energy input to food energy output for chicken-laid eggs is about 39-to-1, behind only beef and lamb farming. Hampton Creek’s plant products maintain a ratio of 2-to-1. That translates into direct cost savings: Its egg equivalents cost 39 cents a pound—almost half of its chicken-begat counterpart. As for the mayonnaise, the final product, mixed with lemon juice, vinegar and other ingredients, costs Whole Foods 10 percent less than regular mayo. “Hampton Creek is taking on an entrenched industry that has been doing business the same way for years. [The company has] a core technology that is fundamentally more affordable,” says Khosla.

For now the company has only the mayo but will begin selling egg-free cookie dough in February. Forbes estimates Hampton Creek has garnered less than $1 million in revenue in about a month of selling goods to consumers.

Tetrick’s progress isn’t bad for someone who graduated third from the bottom of his high school class. Hailing from Birmingham, Alabama, Tetrick grew up on a steady diet of chicken wings and buttered biscuits with the hopes of playing professional football. The son of a hairdresser, he walked on to West Virginia University’s football team, playing linebacker for a year and a half before realising that academics was a better way to climb above the poverty line. He transferred to Cornell, where he graduated top of his class. After getting a law degree from the University of Michigan in 2008, he worked on climate-change strategy and started a now defunct site called 33needs, which raised money for social ventures.

Tetrick had often engaged his childhood friend Joshua Balk on the ethics of food production. Balk, director of corporate policy at the Humane Society, would often tell Tetrick how food companies wanted to be animal-friendly but were more eager for a cheaper egg product that didn’t compromise on taste. That was all Tetrick needed to hear before he dropped $37,000 of his own money into a startup he named after Balk’s dog in 2011.

“The odds that this guy would be working on an animal-friendly, environmentally friendly project are probably pretty interesting,” says Khosla Ventures partner Samir Kaul, who seeded Hampton Creek with $500,000.

Fast-forward two years and Hampton Creek Foods is one of the many startups nestled in the former warehouses south of San Francisco’s Market Street. Instead of a space filled with software developers working on Macs, Hampton Creek has biochemists poached from Unilever and Otis Spunkmeyer rubbing elbows with chefs cooking up French toast and cookies from the vials of yellow pea and sorghum solutions. Hampton Creek has examined the molecular properties of 1,500 types of plants to find species with the best characteristics for emulsifying into mayo or congealing in a hot pan like scrambled eggs.

Those results have traditional egg producers on the defensive. The American Egg Board began an educational campaign in October with the attempt to persuade consumers to ‘Accept No Substitutes’. President Joanne Ivy maintains that the campaign was not directed at Hampton Creek, and indeed, egg substitutes such as ConAgra’s Egg Beaters have been around for years. But those are often composed of fillers such as xanthan and guar gums. “Consumers want natural ingredients and a clean label,” she says. “And there’s nothing more natural than an egg.”

Tetrick begs to differ, reading ingredients like organic sugar and canola oil off a label on his company’s Just Mayo to prove a point. “Putting a female bird in a cage in a space so small that a female bird can’t flap her wings for two years, I find that the antithesis of natural,” he responds.

Validated originally by certain regional Whole Foods locations, Just Mayo is now in 120 stores and will be available nationally by year’s end. If talks go according to plan, the mayo may find its way onto the shelves of another major supermarket by early next year. Tetrick is in negotiations with a giant fast-food chain to use its mayo as a condiment, but success there is contingent on Hampton Creek’s mayonnaise coming in cheaper than the incumbent. Similarly, a joint research venture with General Mills is exploring if Hampton Creek’s concoctions are up to snuff for a corporation that oversees brands like Betty Crocker and Pillsbury.

Mayonnaise, an $11.3 billion global market, could be just the beginning. A shelf-stable cookie dough is due out in February, with another formula in the works that is meant to mimic scrambled eggs when cooked. That’s a $42.5 billion market dominated by corporate farmers and their hens. With billionaires watching his work carefully, Tetrick and Hampton Creek are just hoping to avoid laying an egg on their way to saving the planet.

(This story appears in the 24 January, 2014 issue of Forbes India. To visit our Archives, click here.)