The plant-based egg and biotech meat company’s history of unethical practices, endless pivots, and lack of financial viability all call into question this decision.
On September 1, Bloomberg’s Deena Shanker reported that Eat Just, the company formerly known as Hampton Creek, received a cash influx of $16 million from the nonprofit Ahimsa Foundation. Satish Karandikar, who heads Ahimsa, told Bloomberg that the company “needed this short-term boost”.
This is not the first time the Foundation has supported Eat Just. Karandikar has been well known for decades in animal rights / vegan philanthropy circles as one of the field’s largest and most influential donors.
While numerous large donors in the vegan world have turned towards investment as a “solution” to the problems caused by factory farming, this example is a head-scratcher for numerous reasons related to Eat Just’s history of unethical practices, along with its lack of financial success after 12 years of being in business.
A brief history of Eat Just aka Hampton Creek
Josh Tetrick and Josh Balk co-founded Hampton Creek back in 2011. Tetrick had no prior food industry experience nor any scientific or business background. Neither did his best friend Balk, who at the time worked in farm animal protection at the Humane Society of the United States. The story goes that Balk talked his childhood buddy into starting Hampton Creek to make an alternative to eggs. The original idea was to sell an egg substitute to large food companies that were sourcing eggs from factory farmed hens.
But impatient investors tend to like splashy brands, not quiet ingredient suppliers.
Enter Just Mayo, the vegan mayonnaise, which launched in 2014. Never mind that several other companies were already selling vegan mayonnaise (at least one for decades). Hampton Creek claimed it was doing something new and innovative. CEO Josh Tetrick soon became a media darling, with numerous appearances on CNBC’s Mad Money with Jim Cramer, for example.
Rocked with scandals
Within a few short years, the company’s positive media attention took a dark turn. Tetrick has been accused of numerous troubling allegations, including:
- In 2015, Business Insider published a story called “Sex, lies, and eggless mayonnaise: Something is rotten at food startup Hampton Creek, former employees say”. Allegations of exaggerated science had one former employee calling Hampton Creek a “food company masquerading as a tech company” and another referring to the science as a “cult of delusion”. The reporter also cited evidence of inappropriate sexual relationships: “Tetrick’s relationships with female employees also created an uncomfortable environment for employees — and a risk to the company.”
Tetrick then published his own response denying most these allegations on Medium.
- In 2016, the company was accused of buying back its own product in retail stores. According to Bloomberg, the company was expensing costs for Just Mayo buybacks, with one expense totaling $1.4 million over a five month period in 2014; a subsequent investigation by the U.S. Department of Justice and SEC was dropped, the company reported.
- In 2017, Tetrick sacked several top executives according to Bloomberg. Buzz Feed reported that the company’s chief technology officer, research and development chief, and vice-president of business development were all fired after the company uncovered what it described as an “unsuccessful attempt to derail our mission.” (The link to the company’s statement is now dead.)
In the wake of all this turmoil, the entire board resigned in 2017 (with the exception of Tetrick), according to Bloomberg.
That same year, the company pulled a “Philip Morris”, a corporate tactic honed by the tobacco giant, which changed its name to Altria, hoping no one would remember its sordid history. BuzzFeed reported the rebrand to “Just” in 2017, and in yet another pivot, a new division called “Good Meat” was formed to focus on biotech meat.
Bad economic investment
But even if you think all of this turmoil is in the past and that Tetrick has learned from his early mistakes, let’s take a look at the company’s performance. Because Eat Just is still privately held (insane predictions of a $3 billion valuation IPO notwithstanding), we cannot know all the financial details, but what is publicly available isn’t exactly positive.
In its early days, in addition to mayo, the company started selling other products such as cookie dough, and promised a full line of food products that would otherwise be made with chicken eggs. According to Food Business News, in 2016, “the company was slated to introduce 43 new products during the year spanning a broad range of categories”.
Fast forward, none of those products are on the market, and even the company’s flagship product, Just Mayo, was quietly discontinued, as the company explained last year, to focus solely on its egg product and newish biotech meat division.
To summarize, what started out as an egg ingredient replacement business model became a redundant vegan mayo brand, with a slate of promised but never realized random food products; then a rebrand to become a plant-based egg company with a single product line that is still not profitable after six years on the market.
And don’t forget the biotech meat subsidiary called Good Meat, which only recently started selling its approved cell-cultured chicken once a week, “limited to groups of 2 or 4” at one restaurant in the U.S., where reservations are currently “paused” according to the website. Relatedly, the technology has been sharply criticized as a pipe dream that science cannot solve and thus will likely never scale.
While “pivoting” has became a common business refrain, at some point, we simply cannot take all of Eat Just’s changes seriously, with so little to show for the effort.
The company says sales for the Just Egg product is growing in both retail and food service. But in March, the company cut 15 percent of its staff on the egg division.
And as Bloomberg reported, neither the plant-based nor biotech side of the company is turning a profit; this, after being in business for over a decade in plant-based food and since 2017 with biotech meat.
And by the way, where has all the massive previous investment money gone?
According to CrunchBase, Eat Just has had no fewer than 14 rounds of investments with a total of 45 investors. Prior to the current $16 million donation, the company had already raised an eye-popping $850 million, including $270 million for its biotech meat subsidiary.
With all this capital, after 12 years, this company is still in the red?
Making matters worse, Eat Just has been hit with several lawsuits over its alleged failure to pay its debts:
- According to the Guardian, the company’s San Francisco landlord sued them in 2020 over $349,000 in unpaid rent and then in 2021 sued again, this time claiming Eat Just was $2.6 million behind in its rent. The company claimed pandemic policies allowed for rent relief, but the Guardian countered that Eat Just received over $4 million in pandemic relief loans, as well as hundreds of millions in new investments.
- More recently, not one but two contractors are suing Eat Just. According to AgFunderNews, a bioreactor company is suing for breach of contract, over Good Meat’s failure “to live up to their financial obligations, including failing to make payment on more than $30 million of invoices.”
- In a second lawsuit, also reported by AgFundernews (just two days later) an engineering firm is suing because “Good Meat agreed to pay $2.26 million for initial chartering work, but only paid $718,000. Of the $2.79 million owed for additional services agreed upon in a written contract, Good Meat paid $50,000.” If you’re counting, that’s over $4 million owed, and the aggrieved firm is also seeking costs, interest, and expenses.
Bloomberg reports that the new influx of $16 million is meant to “help the company out of a tight financial situation”. Sounds more than tight, sounds impossible.
What other food company with such an abysmal track record (whether your measure is integrity or sound judgment or simply profit) could still attract any new cash investment, let alone $16 million?
I asked Daniel Evans what he makes of all this; he is a financial advisor to entrepreneurs who has made over 20 exits in the food, beverage, beauty, and media industries. (Evans’ firm has clients invested in Eat Just that predate this recent development.)
He told me:
“One cannot help but wonder about the wisdom behind such a significant investment. Even if this donation accounts for only 1-5% of the company’s total liquid assets, it is undeniably a considerable amount of money to place in a single company.”
Reinforcing the status quo
Meanwhile, numerous other more worthy causes could use that $16 million. The farmed animal protection field is already suffering from an epidemic of inequity, with white male-led organizations getting a disproportionate amount of funding, as was well documented in this 2022 report. This problem is now being exacerbated by the transfer of funding from philanthropy over to investments in white male led companies that profess to be “saving animals” through capitalism. This, despite there being zero evidence that any animals are being saved or that capitalism is even an effective path to doing so.
(It’s still not clear if the $16 million is an investment or a donation, and inquiries to both Eat Just and Karandikar to clarify, along with several other questions, have thus far gone ignored.)
Evans also questioned the ethics behind donating to a private company, noting that:
“If it’s a donation to the Company, it could potentially serve as a significant write-off against his income. I cannot help but wonder if there may be ulterior motives at play behind such a significant investment. In addition, how that arrangement was structured should be made clear to investors; with clients invested in Eat Just, I want to know how that money is being invested.”
How indeed. To pay off the company’s mounting legal bills and debt perhaps? Whatever it’s for, one thing is clear: the money won’t be saving a single animal from harm, despite the Ahimsa Foundation’s stated mission to “transition our food system away from animal proteins to healthier and more sustainable options”.
Throwing good money after bad is never a sustainable option.
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