The Exchanges

Q When you start to ask questions about burning season, I'm assuming they weren't burning things in Singapore. What was going on?

A That's right. So my colleagues in Singapore started educating me and said, oh, you know, our, our neighbors in Indonesia and Malaysia, essentially they're burning forest, they're clearing tropical rainforest to convert that land into oil palm plantations to make this vegetable oil called palm oil. And the way that the winds were blowing that year were blowing the smoke heavily into Singapore. And they were sort of bearing the brunt of the consequences. So it's one of these things where you see this action, which generally, you know, the cost of emitting carbon dioxide emissions, those frequently go, you know, unaccounted for. But here they were having this very, very tangible cost on the health of people in Singapore. Hmm.

AI assessment note: “our neighbors in Indonesia and Malaysia, essentially they're burning forest”

Q to, you start there thinking, okay, let's see how we can tackle this problem. You explore alternative oils, but you keep coming back to the reality that palm oil is superior. It's a great product. Um, then the next question is, well, can you grow more sustainably? And, and the reality is you, you can't for the reasons you laid out. So what did, what, where did you go next?

A So next we, we realized, you know, if it's not agriculture, you've got to think sort of radically different. And, and remembering that the pro palm oil itself is great. So getting a product which can look and function like palm oil, that's great. But how could we produce it differently? And watching what was happening with the Impossible Burger was an inspiration for us. And so we sort of said, okay, if If fats and oils today come from animals and plants, what about the fungal kingdom? What about microorganisms like yeast and algae and bacteria? Could we use those to make an oil which looks and functions like palm oil, but with a supply chain that's more scalable, more sustainable, more predictable, that uses the sort of concept of biomanufacturing instead of agriculture? And that's where we got started.

AI assessment note: “Could we use those to make an oil which looks and functions like palm oil”

Q Like, you know, most people who encounter this, um, and a couple years later, you, you decided to go to Harvard Business School, and you, I guess you, while you were there, not intending to do anything around palm oil, this idea came Back into your brain. What, what, what happened?

A Yes, that is, that is absolutely right, and, um, I think like many people, I sort of saw this shocking thing happen. I was surprised, I was confused, but then I just went on with my life, and so a few years later, I was, I was getting my MBA because I was interested in this sort of little sliver of why there's so much innovation in academic research labs, Particularly in biology that doesn't get commercialized, and what levers could we pull to improve it? And I became friends with two people. Harry McNamara, who was getting his PhD at Harvard in physics, and really sort of studying this field called synthetic biology, and David Heller, who was an undergrad at MIT studying bioengineering. And we became fast friends Over the launch of the Impossible Burger. So the month that we met, which was in the fall of 2016, the very first Impossible Burger had just launched at Momofuku in New York.

AI assessment note: “I became friends with two people. Harry McNamara... and David Heller”

Q Today it's seventy million tons. By the end of this decade, it's gonna be a hundred billion dollar business. So I guess it's been more efficient to, to extract palm oil from palm trees rather than, you know, extracting similar oils like soybean or, or, or, or rapeseed oil from From their plants, right? I mean, what, what explains this huge increase in palm oil use around the world?

A It's efficient, it's productive, so we can make a lot of it, but the reason that it has grown so explosively and will continue to grow over the next 30 years really comes down to the performance of palm oil as compared to other vegetable oils. And, you know, without getting into chemistry class, essentially it's got this profile, which is this profile of fatty acids, which gives it A melting profile, which enables things like chocolate to melt in your mouth and not in your hands, and so the fatty acid profile of palm oil is broader than any other vegetable oil, and it's unique because it's sort of half saturated and half unsaturated fats, and you just can't replicate that with any other fat and oil, and over the last few years, demand for a product like that has really, really grown, especially in food products, Because it's just so good at what it does. If, if you tried to stop using palm oil, you couldn't, because if you used soybean, for example, the product performance would be totally different, and, and no company wants to do that, and no customer wants that.

AI assessment note: “really comes down to the performance of palm oil as compared to other vegetable oils.”

Q start by pursuing the personal care market, not food, even though palm oils and ice cream and, you know, and a lot of other delicious chocolate, you thought, let's tackle, let's make a product that can be used in the personal care market first. Is that just because that's a bigger opportunity, or it was more realistic to make oil It was hard to make food grade oil or what?

A It's actually, the personal care sort of applications for palm oil is actually a smaller market opportunity. Food is the bigger market. Right. And so conventional logic would tell you, go chase the big market. But I think there were a few holes in that, that we saw. And, and again, I think fundamentally we were looking at what we're doing and recognizing that what we're doing is, is Pretty radical. It's pretty ambitious, and it's, it's pretty hard. We've created a new technology. We're competing against these massive global players, and we have a lot to prove, and so we really wanted to pursue a strategy of bringing this technology to market that was going to set the company up to succeed. How do we, what is our best chance at making this business successful at scale? And when we looked at food, there were a bunch of Roadblocks, hurdles. There's a long regulatory pipeline for getting your product approved for use in the food system or, or green, green-lighted to get in the food system. The customers in the food industry are highly risk-averse and slow, and the cost and the margin of products are, are quite low. And then when we looked at the beauty and personal care industry, and also the home care industry, it's still massive. It's a massive opportunity.

AI assessment note: “personal care sort of applications for palm oil is actually a smaller market opportunity.”

Q Um, you've raised, as I mentioned, twenty four million, which actually is not that much. I mean, it's, I mean, for, for what you're doing. Um, and, and I mean, with that, will you, will you eventually need to raise more or do you think that that can take you to profitability?

A I think there's a, there's a big question here. So historically, companies like ours, and when I first started the business, I was looking at the companies that had sort of grown up ahead of us, and they raise a lot of money, and they take a lot of time. Most of the time, over a billion dollars, right? 1,000,000,002 billion dollars. And they take over 10 years to get revenue in the, in a way that feels meaningful, much less profitable. And, you know, I think we, we, Chose to solve this problem by building a business. And, you know, I think we look at, we look at climate change as a market failure. We look at the palm oil problem as a market failure. And yet we chose to solve the problem through the lens of a for-profit company based on innovation. And fundamentally, it's because we actually believe the best way to solve this problem is to make a better alternative and And you demonstrate that by making money. But I think the big question is, as is true with most businesses, profitability or growth, right? I think we could run to profitability actually pretty quickly here with not a lot of additional capital. If we want to really think about, you know, the global vegetable oil industry is going to be almost a trillion dollars by twenty-fifty. So if we want to really try to chase the big market, it will take a lot more. Capital and time. And we're at an interesting sort of fork i…

AI assessment note: “we could run to profitability actually pretty quickly here with not a lot of additional capital”