Functional mushrooms are transforming the wellness industry, and at the forefront of this movement is Four Sigmatic, founded by Tero Isokauppila. A 13th-generation farmer from Finland, Isokauppila has pioneered mushroom-based products that blend tradition with modern wellness needs, building Four Sigmatic into the number one mushroom coffee and protein brand on the market. I sat down with Tero to discuss the challenges and insights behind building a new category, the importance of resilience and focus in scaling a sustainable business, and his vision for Four Sigmatic’s future.
Dave Knox: To start, can you give us an overview of Four Sigmatic? What was your original vision?
Tero Isokauppila: Four Sigmatic is a health and wellness company specializing in functional mushrooms—mushrooms that provide tangible physical benefits, from energy and focus to stress relief and immunity support. I’m originally from Finland, where the company began 13 years ago. A little over 10 years back, I brought it to the U.S. Today, we’re headquartered in Los Angeles, and we’ve sold a few hundred million dollars’ worth of mushrooms to date.
Knox: You mentioned starting in Europe and then expanding to the U.S. What were some of the key challenges in introducing the concept of functional mushrooms here?
Isokauppila: There were definitely plenty of challenges. Over 10 years ago, there was no real mushroom category in the U.S.—just a few mushroom supplements for immunity, but nothing else. We pioneered mushroom coffee, and today, functional mushrooms have grown into a multi-billion-dollar global category.
One of our biggest obstacles was raising awareness. In the U.S., there’s a cultural fear of fungi, known as mycophobia, rooted in historical factors. Many people were skeptical or even fearful of mushrooms, and retailers didn’t know how to categorize our products. Educating both consumers and retailers was essential to overcome these initial barriers.
Knox: In those early days, you were building not just your brand but also an entire category. There wasn’t existing shelf space for what you were introducing. How did you manage the challenge of selling both the category and the brand?
Isokauppila: Creating a new category has its pros and cons, and one of the major cons is figuring out how to position it in the market. We initially started with mushroom tea, which is traditionally how these mushrooms are used. But in the U.S., there wasn’t a strong tea culture or understanding of quality tea. So, we shifted to positioning our products as a coffee replacement or upgrade, asking consumers, “Do you drink coffee but experience jitters or heartburn? Would you be interested in a healthier way to drink coffee?” That became our entry point. When launching a new category, aligning with an existing habit or ritual helps consumers grasp it faster, rather than introducing something unfamiliar.
Knox: Using coffee as your initial focus helped educate consumers, but as the category grew, so did competition. How did you continue to differentiate Four Sigmatic with both reputable and less-than-reputable competitors joining the space?
Isokauppila: Right, we were the original mushroom coffee, and now it’s a multi-billion-dollar category. According to a Nature study from a couple of years ago, around 74% of reishi mushroom supplements on the market didn’t contain any actual reishi mushrooms—a huge quality issue. As the market grew, competitors often undercut both price and quality. Our focus remained on quality sourcing and maintaining high standards. Flavor was also essential, especially as we expanded to coffee and tea products. Quality and taste are what set us apart. That’s likely why we’re one of the few mushroom coffee brands sold in retail, while many others remain primarily online.
Knox: You started with coffee but had roots in the broader mushroom category. When did you decide to expand beyond coffee, and how did you help consumers see that Four Sigmatic was more than just a coffee brand?
Isokauppila: Very early on, and in hindsight, that might have been a mistake. We should have had stronger conviction in focusing on coffee and tea. Revenue was small, and we weren’t sure where to go, so we tried many different things to see what would stick. In consumer products, the best practice is usually to stick with one category, or two if they’re closely related, like coffee and tea. But we spread out too quickly, which created operational challenges for finance and sales. We learned the hard way about the value of focus.
Knox: Reflecting on the various product areas you’ve explored, what adjacencies have emerged as the strongest after coffee for Four Sigmatic?
Isokauppila: For us, coffee, tea, and cocoa have proven to work well together. They’re similar in the consumer’s mind—used in similar contexts—and they often share shelf space in retail. Protein powders and supplements are also large categories, but they’re merchandised differently and require a distinct sales approach. So while protein and capsules might be bigger markets, coffee, tea, and cocoa have created more synergy for our brand.
Knox: How have you seen consumer attitudes—and more broadly, the market—evolve around mushrooms since you started Four Sigmatic?
Isokauppila: Tremendously. We went from people laughing at the idea of mushroom coffee to now seeing widespread acceptance—not just for mushroom coffee but for mushrooms overall, partly due to environmental awareness. There’s a significant movement around using mushrooms for tasks like breaking down plastics. Mushrooms are also gaining attention for psychedelic applications, with research at major universities, though we don’t operate in that area. Documentaries on mushrooms have done well on platforms like Netflix. Culturally, attitudes have shifted a lot, and that’s reflected in the category’s growth.
Knox: With that shift, how do you see the future of food and medicine incorporating mushrooms?
Isokauppila: It’s huge. Fungi, the kingdom that includes mushrooms, is as fundamental as bacteria, plants, and animals. Nearly half of all pharmaceuticals already involve fungi. In biotech, too, fungi are everywhere—our guts, skin, you name it. Generally, wherever there’s bacteria, there’s fungi too. We’re just scratching the surface of what fungi can offer in food and medicine, but it’s already a massive area, thanks to its established role in pharmaceuticals. People don’t often realize that something like penicillin is actually derived from fungi.
Knox: With all that potential, what’s next for you and Four Sigmatic?
Isokauppila: Learning from past mistakes and refining our approach. At heart, I’m a 13th-generation family farmer from Finland. My dad taught me that in nature, a quarter cycle is 25 years, not 3 months like in Wall Street thinking. I want to build a brand that lasts 100 years, something my grandkids can be proud of. To do that in the consumer packaged goods space, we need focus—going an inch wide but a mile deep, really mastering what we do. It’s about sticking with what works and not chasing every new trend. We’ve found our “gold,” and now it’s about refining that.
Knox: You come from a family of farmers—arguably the original entrepreneurs and the backbone of communities. How did that upbringing influence your journey in the fast-paced world of CPG entrepreneurship?
Isokauppila: Like anything, there are pros and cons. If you’re an immigrant or a farmer, like I am, you’re likely used to hard work, adversity, and a focus on profitability. Margins in agriculture are tight, so you have to be bottom-line focused. These qualities—grit, resilience, financial discipline—are helpful in today’s economy, especially as an entrepreneur.
On the flip side, coming to the U.S. as an immigrant and being from a farming background, I lacked certain business knowledge. I had to teach myself a lot about entrepreneurship. I didn’t have the network or capital many others do, and I didn’t initially have the “growth mindset” that some entrepreneurs have, which might have kept me from aiming as high as others early on.
Knox: Without a business background or network to rely on, where did you turn for inspiration, learning, and resources in those early days?
Isokauppila: Much of my inspiration came from nature and my experience growing up on a farm. My passion for mushrooms and love for the natural world was an authentic entry point, giving me domain expertise that many others didn’t have. As for business knowledge, a few years in, I decided to get an MBA, thinking it would help. In hindsight, I don’t think I learned much there that was directly useful.
Instead, immersing myself in the U.S. food and beverage industry, attending conferences, and connecting with people were what really helped. Ultimately, the most valuable learning came from mentorship. Meeting knowledgeable people in the industry and learning from their mistakes and insights made a huge impact.
Knox: One concept I love in business is “motion”—putting yourself in new environments to gain fresh perspectives. You’ve lived in multiple countries and different U.S. cities, including recently moving to Austin. How have these varied experiences influenced your growth as an entrepreneur in a new category?
Isokauppila: It’s fascinating—you can get as “woo-woo” or logical as you want, but I’ve thought a lot about how major, life-changing relationships and career moments unfolded. Often, there’s an element of serendipity, things that can’t be predicted. But I’m a big believer in creating opportunities for these moments to emerge. Living in different places, experiencing different cultures—it all creates unexpected connections. I might meet someone and we click instantly because I’ve been to their hometown or speak their language. You can’t plan for those moments, but putting yourself out there makes them more likely.
Knox: When you talk about putting yourself in different environments, how do you guide the next generation of entrepreneurs to do the same? They can’t replicate your exact path, so how can they create opportunities for serendipity?
Isokauppila: I have three kids, so I think a lot about the lessons I want to pass down. One big message is not to “grow up” too quickly. There’s so much pressure now, through platforms like Instagram and TikTok, to achieve success or fame early. But in doing that, you can skip essential stages of self-discovery. Sometimes, people end up chasing others’ dreams, not their own. What I want to instill in my kids is curiosity, hard work, and a willingness to try new things—but without the pressure to achieve external success too early. Let them find themselves first.
Knox: Let’s talk about how that philosophy translates to Four Sigmatic’s culture. How have you structured the company? Are you remote, hybrid, or in-office?
Isokauppila: We started as a fully remote company because our founding team was in different countries. This was over a decade ago, so I was an early advocate of remote work and built systems to support a distributed team. Then, when COVID hit, I almost did the opposite—I signed a lease in LA and encouraged in-office work, which came with its own challenges. Today, I strongly support a hybrid model because I see value in both sides. Extremes can lead to problems, so for the sake of work-life balance and company success, I find hybrid best. Of course, it varies by industry and company stage, but that’s what works for us right now.
Knox: Work-life balance sounds ideal in principle, but with a high-growth company, retailer demands, and customer needs, it’s tough to achieve. How do you stay true to that balance while meeting the business’s needs?
Isokauppila: It’s definitely challenging, but a lot of it comes down to solid planning, systems, and processes that allow flexibility when surprises arise. I believe companies benefit from a strong focus on KPIs, role clarity, and values as their North Star. You can be flexible in how you approach things as long as you’re clear on what matters most for each role or team. In remote work especially, clear priorities are crucial. If the focus is on customer needs, for instance, you have to recognize that not everything is urgent. Blocking out time for focused work rather than constant meetings can help create a healthier, more productive balance.
Knox: Earlier, you mentioned wanting to create a legacy business that your grandchildren will know. How does that vision shape your strategy for the next five years of Four Sigmatic?
Isokauppila: It’s an exciting time, particularly with many consumer product brands either struggling or closing. From around 2015 to 2022, we saw a boom in the health and wellness space, but now some companies are dropping out. That’s often when the best companies emerge and scale. I don’t think the demand for better, nutrient-dense food is declining—if anything, it’s stronger. People are more willing to pay for quality in their food and supplements. So I feel optimistic, though there are definite headwinds in the industry over the next three to five years. But I believe these challenges will ultimately strengthen the companies that can navigate them.
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