The Sweet Side of Starting a Dairy-Free Ice Cream (and more!) Company: Aylon Steinhart & Eclipse Foods

Aylon Steinhart: [00:00:00] I think the shortage is taking action and really deciding on a massive idea that can truly change the world, and, and figuring out if you can do it or if you wanna partner with someone that that can help you do it and, and really just going for it.

Paul Shapiro: Welcome to The Business for Good podcast to show where we spotlight companies making money by making the world a better.

I'm your host, Paul Shapiro, and if you share a passion for using commerce to

solve

Paul Shapiro: many of the world's most pressing problems, then this is the show for you. Well friends, you are listening to episode number 75 of the Business for Good Podcast. It has been quite the experience researching each of these 75 episodes, and I have learned an immense amount from the inspirational figures who've been guests on the show.

We actually had one listener recently right in through the website business for good podcast.com to say that he had only recently found the podcast and has since binge listened to every single episode over a two week period and. He feels like he has earned an mba, but of course for free, [00:01:00] Well, I doubt that those who sell MBA degrees would agree that any podcast can substitute for an actual master's degree, but I'm glad that the show was useful for a good number of people.

I know it is certainly useful for me and this episode I can assure you is no exception. Two friends who were both working in the alt protein sector, one of the Good Food Institute and the other at eat, just both left their safe jobs to team up and start a risky endeavor. A new company that would put cows out to pasture and mimic dairy, but with plants a couple of years later and 15 million of investment later equips foods is expanding and pushing the boundaries of what counts as currently great dairy free ice cream.

They're pushing so hard in fact that as you'll hear, a recent blind taste test of more than a dozen people at my own company, the Better Meco found that a plurality preferred equips ice cream over two other leading brands, Olie and Forager. It is a compelling tale of how two friends banded [00:02:00] together to create something out of nothing in their effort to build a more humane and sustainable food industry that is just as sweet without relying on the exploitation of animals.

I hope that you'll enjoy the episode. I know I certainly had fun doing it, and let us know what you think. Feel free to write in via, again, the website business for good podcast.com. We'd love to know what you're hearing and any suggestions that you may have, but for. Enjoy this episode with Equips Foods co-founder and CEO Alon Stein.

Alan, welcome to the Business for Good Podcast.

Aylon Steinhart: Hey Paul, thanks for having me. It's great to be on.

Paul Shapiro: I am psyched to be talking with you. This will be a sweet episode, pun certainly intended. And I am a big fan of both Equips and the people behind Equips. So, uh, shame on me for not having had you on the show earlier, but I'm glad that we're rectifying the injustice and, and getting you on here.

I really

Aylon Steinhart: appreciate it. No hard feelings at all. .

Paul Shapiro: Okay. Very good. Very good. All right, [00:03:00] well there might be hard feelings after my first question here cause I wanna ask you a hard ball. So Aon. There must be more than a hundred brands of dairy free ice cream at this point, right? I, There's just so many of them.

It's like you can't even count 'em all. I remember when I first became vegan in 1993, there was like virtually nothing. And you, you know, it was like, there was one, a brand called Dreamy Tofu that we had on the East coast, which was a private label brand for a local supermarket. And we ate the heck out of that dreamy tofu.

But today it's an explosion. So why does the world need another dairy free ice cream company?

Aylon Steinhart: Very good question. And yeah, we're starting off with Hardballs. It's great. All right, let, let me take a few steps back. Let's just look at the market first. So you have credit Swiss Large Investment Bank. Put out a report earlier this year saying that plant-based is gonna be a 1.4 trillion industry, plant-based alternatives, 1.4 trillion by 2050.

Now today, that's basically we're less than 1% of. [00:04:00] So there's gonna be massive, massive growth in this category. Now let's zoom in a little bit more and look at plant-based dairy. So plant-based dairy today makes up about 2.5% of the entire global dairy market is plant-based, so a minuscule percentage. So that leaves about 856 billion of market share to move basically from plant based or from dairy over to plant.

So there's still like a massive, massive opportunity in there. And then if we zoom in even more, ice cream is about 3% of the US ice cream market, so plant-based ice cream, 3% of the US ice cream market. And

Paul Shapiro: okay, so just to be clear, what you, you're saying that Alta Dairy is a tiny fraction of the alt protein sector, and you're saying plant based ice cream is about 3% of the total ice cream sector, right?

That's right. Yeah. Okay. Got it. Thank.

Aylon Steinhart: So plant based dairy is [00:05:00] 2.5% of the entire dairy sector, and ice cream is about 3%. So there is room for a lot of players in this market. Food is not a winner take all market, and when we see these exciting IPOs like Oatley with a 12 billion IPO beyond meat with a $9 billion ipo, that's really just the, typically the iceberg.

Like we are at the beginning of a huge movement here Now. Let's address your question right away, a that you asked at the beginning, and that is, is there room for another player? The question is, what are they doing? Because I agree with you, there's a ton of ice cream out there. In fact, in plant-based dairy, there are a ton of products out there.

There's a lot of milks and cashew ice creams and soy cheeses, and a lot of the same of that over and over and over again. And all of those are fantastic and and I enjoy them. But they missed the mark on what mainstream consumers are looking for. And when you look at the data, it shows that the number one [00:06:00] reason that mainstream consumers avoid plant-based dairy is taste.

And what people want as impossible and beyond have proven, is that we want products, the mainstream consumers that are similar to their animal counterpart. And so that doesn't mean like another oat ice cream or oat milk or whatever it means something d. And that's exactly what Eclipse Foods is doing, is we make plant-based dairy products that are indistinguishable from their animal counterparts.

And so we actually appeal to that mainstream consumer. We overcome that number one objection of plant-based dairy, which is that it doesn't taste like dairy and therefore we address that a hundred billion dollar dairy market here in the US close to a trillion dollar globally, And we bring over people into this category.

And I would say if there are other companies that are doing that, then by all means we can use more help.

Paul Shapiro: Okay. Well there, there's so much to unpack there. So first and foremost, you know it's interesting you mentioned [00:07:00] two and a half or 3% of the ice cream market is now plant based. Which is, uh, dramatically more than the meat market being plant based.

So that's a pretty fascinating thing cuz you know, on a volume basis the meat market is still well under 1% plant based, whereas even on a dollar basis it's about 1% or so. So it's interesting that alt dairy and, or excuse me, alt ice cream has actually gone a lot further than alt meat in this respect Has, in terms of taking market share away from the incumbent.

Do you have any theories as to why that might be?

Aylon Steinhart: Yeah, absolutely. And I will say that it's all a spectrum, right? So plant-based meat still has a lot of room to grow to where plant-based ice cream is. But plant-based ice cream has a lot of room to grow to where plant-based milk is, which is 18% market share,

Paul Shapiro: right?

By dollars, I don't know

Aylon Steinhart: by volume, but yeah, by dollars, correct. And the reason that we're seeing this, there's a lot of reasons overall, and we can go into the history of plant-based dairy and how it became [00:08:00] more mainstream with the milk. But a big part of this is that 70% of the world's population is lactose intolerant.

So 70% of of people out there are eating products that make them feel bad, right? And so when you think about a need state that is pretty immediate. We immediately have a very large percentage of the population that is looking for something that is an alternative, or what they're really looking for is a replacement.

And so when we think about, all right, well we're at 3%. That's pretty good. But if you have 3% market share, but 70% of people. Are actually intolerant to the current products that are the 97%. Then we see there's just a ton of people waiting to be converted into plant-based dairy. Yeah, I'm sure you're

Paul Shapiro: right about that.

Aon, It must be, uh, in part too, to the fact that so many people have dairy allergies, and that may be why plant-based ice cream is taken a greater market share than plant-based media, at least. So, [00:09:00] But we'll see. But anyway, moving on. I've gotta hand it to Elon because when we were talking about doing this episode together, we discussed the idea of actually eating some of your ice cream live during the interview, which would've been quite sweet.

Uh, literally. Uh, but you had a better idea. You suggested doing an actual blind taste testing. With better meat co employees to have them try equips compared to other plant-based brands. And we would just then announce the results of this blind taste test during our actual interview. So you were so confident that Equips would outperform other brands that you even sent us both equips and other ice creams to test against yours.

So we did it. We had more than a dozen. Blind taste testers from the Better Meat Co staff do a blind taste testing trying chocolate equips chocolate oly and chocolate forger ice creams. So three dairy free ice creams with this small focus group. And at the Better Meat Co. We gave these ice creams to folks in identical tiny cups, so they had no idea which brands was which.

In fact, they didn't even know what brands are [00:10:00] being tested at all. And now for the big reveal, while none of the three ice creams tested was preferred by a majority of testers, Equips was the most popular one there with a large plurality preferring it, even over Oly, which has of course, a little bit more money than Equips

So this was surprising since the Equips is not only so new, but also because it had the lowest saturated fat content of the three ice creams that we tested. Yet it still ranked number one in this admittedly small test. So first, Aon respect on winning the better meat coat taste test, but second. Why is it that you can have the lowest saturated fat content and still be preferred

Aylon Steinhart: over these other brands?

Well, first thank you. It is really, really fun to put our product against competitor products, and I'll tell you why I was really confident. It's because not so long ago we worked with a professor at uc, Berkeley to run a blind taste test with over a hundred people. And we actually pinned eclipse against the best selling dairy ice [00:11:00] cream in the us.

And 73%. Wait, wait a minute. You, you

Paul Shapiro: can't just put it out there. What is it? What is the best selling dairy ice cream? Briars, Briers.

Aylon Steinhart: Okay, thank you. We went head to head and 73% of respondents actually said that Eclipse was creamier than B. Briers, the best selling dairy ice cream in the us. And a majority of the people liked it the same or preferred it.

So the product is incredible. And how are we able to do it? In the end, it comes down to the very, very beginning of what we set out to create. And Oley is an amazing company, obviously, and they're an oat company, and Forger is an awesome company and they're a cashew based. Company and what Eclipse is.

Eclipse is a dairy replacement, right? You think about the burger world and you have. Black bean burgers and quinoa burgers, and those are kind of equivalent to other plant-based competitors of ours. And then you have [00:12:00] the Beyond Burger or The Impossible Burger, and that's a true replacement. And so Eclipse is doing exactly that.

We're creating a true replacement for ice cream. And we really looked at the molecular composition of milk and dairy, and we figured out what makes it magical. Turns out it's these myel formations found in the. Casing protein in milk, and we recreated that from plants. Non GMO was all created in a kitchen by my co-founder, who's actually a Michelin star chef.

Total genius by the way. And we were able to recreate these my cells to then create a product with the taste, texture, and functionality of dairy. But without a lot of the baggage that we all are trying to avoid. And so that's really how we, we did it.

Paul Shapiro: So for those who weren't initiated into the ice cream ward, we're talking about my cell, which is M i C E L L E, right?

Aylon Steinhart: Correct. Yeah. And what's a, My cell? So a My cell is a microscopic structure that is found, again, like I said, in the casing protein [00:13:00] of milk and that structure, if we wanna get a little bit more scientific, It has these hydrophilic heads and hydrophobic tails. It's like a sphere, and what that means is that it captures fat.

It basically is a fat ator in emulsion and dairy in the end is an emulsion and. It's these really stable, spherical my cells that allow milk to have its incredible creamy mouth feel to have the delicious taste of dairy. But it also allows it to do that magical thing where it turns from a milk to a cream, to a cheese, all these different forms, right?

And eclipse while we have ice cream in the market. And it's our first proof of concept for our technology. We really are a dairy. And we rely on the My Cell technology to allow us to create from kind of our secret sauce, which is literally just our milk base, to create all of these different products, including ice cream, cheese, [00:14:00] yogurt, and the like.

Paul Shapiro: So when people ask you, Elon, what's in this ice cream? Right? What do you tell 'em? Like what's made out of it? You know, people you were mentioning, Okay. One of them is made from cashew milk and another is made from oat milk. Or what's eclipse made out?

Aylon Steinhart: I tell them first and foremost that it's similar to how beyond impossible.

You don't think of it as like a core hero ingredient because it really is a blend of plants that comes together to replicate the animal version of that product. And Eclipse is the same way. It's a hundred percent non gmo, like clean product. We use a blend of potato, cassava and corn. To come together to create a lot of that creaminess.

And then we have our nutrients and minerals that you would find in conventional dairy as well. We use sugar. We have a fat source, so it's kind of what you would expect, basically like the animal version, but just broken down using plants.

Paul Shapiro: I really like it a lot. I'm like, um, an ice cream [00:15:00] lover. Like I, I, in terms of when people think of themselves of having like a weakness for specific foods, like I actually a lot of so called the West Healthy Foods.

I can have an easy time avoiding, but if there's ice cream around like in my house, I will eat it. Or anywhere. So that's like the one thing I'm always like, , if I have it around, like there's, I don't even try to resist it. And Equips is phenomenal. And a, as somebody who, you know, would like to minimize the saturated fat that I was, that I eat, I was glad to see, uh, that it was lower in sat fat than than other ones.

So, uh, I presume there is something in the processing that you're doing to replicate that type of a mouth feel. I was looking at the pattern that you all have filed, which talks about what appears to be a very complex process of mixing and altering the pH and heating and using potato peels and all this.

And I'm wondering, you know, you, you mentioned Thomas Bowman, who is your co-founder here, who not only, as you said, is a M Michelin star chef, but also worked for EAT just for a long time and made many of their great products like Just Egg and so, But how long did it take from [00:16:00] inception of the company to figuring out this pathway to replicating dairy in the way that you all are successfully doing?

Right.

Aylon Steinhart: I can tell you the kind of the story behind it. I will say on the, on the saturated fat piece, one of the big reasons that we don't have the saturated fat that you just comment on is cuz we don't use coconut oil. And so in addition to the fact that we have virtually no saturated fat and no cholesterol, unlike the folks who use coconut oil or conventional dairy, we're also free from all top Aller.

So our base doesn't actually contain coconut or nuts or soy or wheat or anything like that. So that's been really, really fun because a lot of people who say, Oh, well, you know, I can't have dairy, or I can't have wheat, or I can't have soy. It's like, No, well, you can have the clips and that's really nice.

So that's just a, a bonus that I wanted to add there. But the story of how we really discovered this sort of innovation, I would say, to answer your question, it took us about a. And the story is that we were, we always had set out to [00:17:00] create this functional milk that we could use as a dairy platform, and we were working on a sour cream at the time.

I don't know, Did you get to try it, Paul? I don't think I've tried your sour cream. Yeah, it was really early days, so we were working as on a sour cream at the time, and it was January 24th at 11:39 PM But who was count? And Thomas was working in the lab and he was running like the thousandth iteration of our sour cream, and he was basically putting all the ingredients in the mixer and he changed one ingredient and one processing parameter than he usually did, and he just anticipated it to turn out a little different.

But what happened was that all of a sudden the mixer went from having this really steady hum. So kind of having like a strange noise like this up and down, like woo. And he didn't understand what was going on. And he looked, and what he saw was kind of that eureka moment for Eclipse. [00:18:00] He saw this liquid that had strained to the bottom, and then on the side these chunks.

And really what it was, it was, we had gotten f fluctuation in the product and, and we had gotten like curds in way right, like dairy. And it was this, I, I

Paul Shapiro: imagine this is, you know, I, I've thought many times about after humans domesticated cows and were drinking cows milk for some time, but before anybody had figured out how to make milk, so nobody had cheese yet.

Like nobody had ever fantasized about brie or gudo or Swiss or cheddar or anything. And then you normally use REIT to make milk cur. And I imagine it must have been like somebody was transporting milk in a calfs intestinal, you know, as a calfs intestine, as like a vessel to hold it in or something. And they figured.

What this was. Right? And then they figured out how to make cheese. I imagine that this moment that Thomas had, there must have been similar, like realizing that you've gone from one type of a product to another type of a [00:19:00] product. I mean,

Aylon Steinhart: I can't comment on the prehistoric, but this for sure was a really, really special moment.

And he actually, he called me cuz I wasn't in the lab at 1139. I was, I think sleeping and he called me and I asked him like, what happened? And he's like, Hey hon, you don't understand. We have curds in way . The next day we really celebrated. And that was a moment where we kind of, Thomas went a little into the deep of it and he said, I can make anything.

And he's this creative genius. And so he started making everything like he made cheeses and creams and whipped creams and ice cream and, and at one point we basically said, Well, just because we can make everything. Doesn't mean we should. We're still a small team. And so we decided let's win the hearts and minds people.

Let's show them that plant-based does not require sacrifice. Let's make the best damn ice [00:20:00] cream they've ever tasted. And then from there, they'll trust us to make any other dairy product. And that's really where we're at today. That's

Paul Shapiro: really so. Yeah, it's really something. So let, let's just go back then.

Uh, maybe not to back to prehistoric times, but let's say to Pree Equips times, cuz the, the company is pretty young, right? I think What year were you founded? 2019. So, you know, you're only a couple years in, you spent the first year just doing r and d. Now you're just starting to get it in the market. I don't believe that Equips ice cream is available nationally just yet.

Is that right?

Aylon Steinhart: Were available in most of the major US markets. But it's in select locations, so kind of the really high end leading natural grocery stores in most US markets. You can find

Paul Shapiro: us. So let's go back then, not to 2019, but to 2018 when you were working for the Good Food Institute. And Thomas was working at, just, what was it that led you to together to say, Hey, let's leave our jobs and you know, you have, you both have these secure, cool jobs in the alternative protein space, [00:21:00] do both doing good things in the world already, and then you think, ah, we should start a new company.

What

Aylon Steinhart: happened? Yeah, I mean, it really came down to sort of what I was seeing and what Thomas was seeing. So I was at the Good Food Institute, I, I joined there to help start the innovation depart. And what the innovation department did was one, we were running an incubator for the plant-based, cell-based, fermentation based space, and so I got to see pretty high level view of what was happening in the market, what wasn't, and where were the opportunities.

Thomas at that time was working really deeply in developing products. They actually developed over 50 products from Labbe to commercial scale. So he had a ton of experience in knowing what he could do and what kind of products he could bring to the world. And we got together and we really talked about the market and we said, Well, let's look at alternative proteins.

We have meat [00:22:00] and impossible and beyond. We're doing a pretty good job at creating a replacement as opposed to a substitute. So we said meat's doing pretty well, so let's look at eggs. And the Just Egg 2.0 had just come out and it, it's a great product. It really replicates eggs in a pretty impressive way.

I hate to

Paul Shapiro: interrupt you. I just gotta give a plug for it because it. My favorite of all of the protein products, like it is the only one that I regularly buy and eat. Actually. That's how good I think

Aylon Steinhart: it is. That's awesome. It's a fe of science. It really is an impressive product.

Paul Shapiro: And Tony, my wife, absolutely loves it.

She'll eat it for dinner, lunch, breakfast. She doesn't care. She's like, Oh, just egg. I'll eat

Aylon Steinhart: it whenever. . That's awesome.

Paul Shapiro: All right, so he's created this awesome product. So we

Aylon Steinhart: looked at, right, we looked at meat. We said, there's companies doing meat pretty well. We looked at egg. We said, There's actually a really good egg there.

And then we looked at dairy and we said, You know what? Ironically, there's so many dairy substitutes. Like there were already tons and tons of almond milks [00:23:00] or like, you know, soy cheeses or cashew ice creams, but there were really no replacements. No one was doing what impossible and beyond, or just were doing in their categories in dairy.

So we said, Well, this is obvious. Like Thomas is one of the world's experts in Emulsions cuz he's been working in plant protein, functional plant proteins and emulsions for basically, as long as those things have been even cool or relevant. And so we said, let's just create these dairy products that actually replace conventional dairy and therefore win over mainstream consumers.

And make a huge impact, not just from the dairy perspective, but I think once you get consumers to accept this concept of, Oh yeah, I'm gonna replace one thing for plants, then it makes them a lot more open minded to doing it across the entire category of like all food. Wow.

Paul Shapiro: And so was it a difficult decision for you all though to leave your stable [00:24:00] jobs where you had good careers and potential pathways for advancement within your own organizations?

Go out on a whim and start something brand new that is far more unstable and un unlikely to succeed.

Aylon Steinhart: Yes, I think the same person would say yes. I think that Thomas and I are both pretty optimistic people. So when we set out to create Eclipse, we weren't too worried about failing. I mean, we felt pretty confident that we could create something.

And more than anything, we cared about the mission so deeply, and our mission is to create a more sustainable, healthy, and ethical food system. And. I knew that if we were to be successful at growing Eclipse to be the Beyond Meat or impossible food equivalent for dairy and beyond that, then we would make such an immense mission impact that the personal risk that it took to, you know, leave a job to me, didn't seem like a big part of the calculus.[00:25:00]

I don't know. I think Thomas and I are both confident and I think, by the way, I say this to candidates that we interview all the time, like you will always be able to go back and be at the level that you are doing something similar to what you're doing, but you are almost never gonna have the opportunity to.

For me, it was to start a company in this space, in this time, and for candidates, it's like to join a company in our space that's literally like the rocket ship is taking off, so jump on board. It's almost like. Very low risk considering that you could always bounce back. And that's a thing of privilege, but it's also a thing that, that propels us to do.

Good work,

Paul Shapiro: man. You're, you're making me wanna apply Elon. Well, we'll talk. Okay. So listen, so think about it then. You're just thinking to yourself, I'm gonna quit my job. Thomas is gonna quit his job. You both are really known in this space. Like your personal identities in this space were really associated with your jobs like his, with each just, and yours with g.

Now you want [00:26:00] to go start this new chapter? So you guys quit. Did you have any idea of where you might get funding? Were you thinking, Oh, we're gonna apply to Y Combinator? Like what was the first step that you took? I was

Aylon Steinhart: fairly connected in the investor space, specifically around alternative proteins. So we didn't think about it initially.

Initially we were just tinkering, but we always kind of thought like, Oh, you know, probably turn to some of the folks that I had met while I was at the A Food Institute. And pitch them on. On this concept. What was interesting is it didn't go that way. So I happened to go on Y Combinator's website, White Combinator being the world's leading tech accelerator.

They funded folks like Dropbox and Reddit, Coin Base. Who else? Instacart, like some really big folks. And I went on their website and I saw that it was the last day for late submissions. And so I said to Thomas, Thomas, Should we apply? Like, why not? And we [00:27:00] decided to apply because we thought maybe at least this will be good feedback for us on what is attractive and what is not attractive about our story.

And so we applied and we heard back and they invited us to do an interview with them. It was in person an interview of why they should accept us into the batch. And this story is pretty fun because in the application we had said that we had already created a sour cream that was indistinguishable from conventional sour cream.

And was that true? It was. I mean, we had created a prototype that was pretty compelling.

Paul Shapiro: Did you also tell them that you could measure a hundred diseases from one drop of blood? ? Absolutely not. Ok. Okay. All right. So you tell him you have this phenomenal sour cream,

Aylon Steinhart: Then what? And then they were like, All right, well we wanna talk to you in two weeks.

And so I turned to Thomas and I said, Well, what's the chance of us making this sour cream actually indistinguishable in the next two weeks? And he said, Well, let, let's see [00:28:00] what I can do. And we walked in there. And again, like Thomas being a chef, and he is actually a Japanese trained chef. So we had these like beautiful bento boxes with like the most beautiful crue of vegetables and rainbow radishes and all these awesome things.

And we had three globs of white stuff and one glob was Eclipse and the other was Daisy, which is the best selling sour cream in the us, and the other was tofu sour cream. And we did a blind taste test, . So you can tell Paul that the blind taste test overconfidence is like, there's a history of it. Eclipse living life on the edge here always.

And we did a blind taste test and out of the five judges, or I guess interviewers, three out of the five really couldn't tell the difference. They didn't know between ours and Daisy, which was which. They knew that tofu was the vegan. One of them was convinced that ours was [00:29:00] the dairy one, and the last person was just pretty confused about the whole thing.

I don't think she was very used to sensory panels, but after that they said, Okay, well we want you guys in, and kind of the rest is history from there, because then we got plugged into this incredible YC ecosystem. From there, we raised our seed round. At the end of of yc, we raised the seed round with Alexa Sohan fund Initialized Capital.

Alexis is the founder of Reddit. Initialized has, has funded also some incredible businesses. I

Paul Shapiro: was with you the night that you closed that. We were at our mutual friend's house and uh, I remember, I think it was, what was it, 3 million?

Aylon Steinhart: It was a total of, of three point something, but around that, Yeah. Who, who's

Paul Shapiro: counting.

I think to put it mildly, you were enthusiastic about it, but I know you've gone on to raise a lot more since then. So a, after that initial seed, was it a seed round that you called a 3 million seed round?

Aylon Steinhart: It was. It was a seed round, yeah. And

Paul Shapiro: then what, how much has the company gone on to raise since then?

Aylon Steinhart: So [00:30:00] since then, we raised, basically after we launched a product, So we launched a product initially in food service, and it was this liquid ice cream mix. We launched it into really high end ice cream shops. And from there, It just got a ton of press and attention and front page of cnn and then the SF Chronicle and uh, Wall Street Journal, Washington Post, and we had hundreds of businesses reaching out saying, Hey, we want this product.

So there was a ton of momentum there. Like we were in Google, we closed a small national chain, like the rocket ship was taking off. And so during that time we closed around pretty quickly, a Series A, it was $12 million series A from four runner ventures. And 4runner, they're incredible. They've done a lot of the top consumer brands like Orbi Parker, Outdoor Voices, Dollar Shape Club.

So they were amazing. And then we also were lucky to get investment from Seth Goldman, who's the chairman of Beyond Meat, and also an advisor to meet, which is, uh, really, really [00:31:00] cool. And a previous guest on this show. That's right. And a previous guest. And then we've also raised a bit more capital like from debt.

So it's been a, a good ride from a capital perspective. Absolutely. That's really exciting. So how many folks are working there now, Elon? Honestly, we're like hiring new people every day. I think right now we're 26 or 27.

Paul Shapiro: So if you could go back to the very beginning in 2019 and think, well, you know, within two years we'll have raised, you know, maybe around 15 million or so and have a couple dozen people working, or would that have been in accord with what you thought would happen?

Or would it exceed your dreams about it, or would

Aylon Steinhart: it fall short? That's a good question. I'm gonna answer you genuinely. I,

Paul Shapiro: I'm glad the other ones I thought were, they might be lies. I'm glad that I'm gonna get finally an honest answer here.

Aylon Steinhart: No, but I feel like this is kind of like the, how I built this question of like, people can, can kind of answer in a way that frames up their image of themselves.

I kind of like to take things sort of step by step. So when we set out in 2019 to, to start this company, I don't think, I was thinking [00:32:00] two years down the line of, oh, you know, like this is how many people I would want and this is how much I wanted to raise. I think I very much was like, All right, the next goal post is demo day, and we need to make sure that we do a really good job at demo day.

And then at demo day, it was like the next goal post now that we've raised our seed round is launching with these amazing partners, which is gonna get us X, Y, and Z. And. I think it's important with startups to keep that flexibility and not set, at least for me, not set my mind on like, these are the numbers.

So, I mean, if you would've told me that, I think I would've said like, that is in line with the, the growth trajectory that, that we envision. I will say if Covid wouldn't hit, we would probably be like two times bigger because of the, just the sheer amount of demand that there was from food service. Going into it.

So there is expectations and then there is the reality and then there is what you do with it. And I think pretty proud of, of what we've [00:33:00] done. That's

Paul Shapiro: great. And certainly to be proud of. So what's the price, uh, differential right now between you and, let's say a briar's or another mainstream type?

Conventional popular ice cream? Yeah. So

Aylon Steinhart: we're right at the sort of premium dairy pricing, so somewhere between conventional and organic.

Paul Shapiro: If I go to Whole Foods and I'm gonna buy one Pint of Equips, what am I likely to pay? Like what's the suggested retail?

Aylon Steinhart: It would be between 5 99 and 6 99. It depends on the retailers, whereas,

Paul Shapiro: So like a higher end, I think.

What would that be like a hoggin does type ice cream, would that be around there? Or no?

Aylon Steinhart: Maybe just a hair more, like a dollar more or something like that. What's Briers? Briers? They don't sell in pints. Like is

Paul Shapiro: it price

Aylon Steinhart: as much? Yeah. They don't sell in pints. So I'm trying to make the conversion, but let's say that we need to be at like 2 99 a pint to undercut, like even the cheapest dairy.

Got it. So

Paul Shapiro: yeah, like I guess, uh, you know, Ben and [00:34:00] Jerry's like, what is their. If you know what is, like if I go to the store and I buy a pint of Ben and Jerry's, either vegan or non-vegan ice cream, like what is, Do you know what

Aylon Steinhart: they're selling for? They're at about 4 99. 5 99. 4 99 is like the kind of the typical conventional retailer price point for your sort of slightly premium dairy ice.

Paul Shapiro: So what, what's the plan then? Like you wanna cut two thirds of your cost out, right? In order to get down to where you wanna undercut on price. So do you have a pathway? I mean, is it, can that all be accomplished through scale or is there formulation changes or other types of modifications that you need to make in order to cut out those, uh, two thirds to get down to there?

Well,

Aylon Steinhart: first, I'll validate your assumption, right, is like, that's absolutely where we are going, right? Like the whole point of this business. Is to create a moment where people can walk into the grocery store and pick up any dairy product, whether that's ice cream or milk or cheese, or [00:35:00] yogurt. And one of them is Eclipse and one of them is the conventional.

And you look down and you say, Okay, like these are the same taste and same flavor and same price to this point. And really the only difference is that one makes me feel better. And is better for the planet, is better for animals and is better for my kids and their future, and is also better for me feeling that I'm eating in line with my values.

And that's really like the mission. And so when you ask about how do we get to that price point, that is like quintessential part of the mission of this company is to get to that price point so that the ethical and sustainable and healthy choice is the default choice. Now to answer your question comes down to scale and it comes down to reformulation when we're talking about less premium product.

Though quality is always going to be super key to Eclipse because again, like our [00:36:00] roots are culinary. Like Thomas says, Chef ort a total of 16 Michelin stars twice nominated James Bearding, Star, Chef Zigas 30 under 30. So really always making sure that the product is amazing. But yeah, as we scale, as the industry scales as well, the types of ingredients that we're buying are no longer gonna be used by just a handful of manufacturers, but they're gonna be larger scale reformulation.

And then, let's see what happens. Maybe there's some sort of unexpected shift in the horizon where the whole world is realizing that industrial and agriculture is destroying the planet. And the whole world also wants to avert climate change. And so maybe we stop subsidizing some industrial agriculture such as dairy and the artificially depressed dairy prices actually start rising a little bit, and so we're not banking on that.

But it's not out of the question that there will be some changes structurally that will make plant. [00:37:00] Be able to compete even faster than we expect, right? I mean, this is

Paul Shapiro: actually what happened with the, uh, replacement of REIT with fermentation produced essin and cheese. So, you know, it's interesting if you look at why, uh, nearly, you're actually more than 90% of the cheese that sold in America no longer contains REIT from a calfs intestinal lining.

It is not because companies like Pfizer figured out how to cut the. Of their fermentation produced essin essin is the enzyme, uh, renet that makes milk turtle, but you know, the only way people had to make milk hurdle was with calin intestinal linings before. But in the, uh, 1980s when veal consumption started plummeting for animal welfare reasons.

There weren't that many calf intestines left around anymore to use for this industry. And so the price of rent it actually shot up, which led to companies like Pfizer actually being able to market their alternative to rent. It produced through fermentation in a more cost competitive way. And so it's interesting, if you go back and you look around [00:38:00] 1990, when these products first came on the market, it really was enabled, not necessarily by cost cutting, although part of it, but really by cost increases in the animal based version of.

Aylon Steinhart: There's a compelling reason why we should have handle based products be their true price. I think everyone is seeing it. It couldn't come sooner. It certainly could not.

Paul Shapiro: No, I. So, Alright, Aon, well first congratulations on the advancements that you've made in, in the product creation innovation. It, it's certainly making a lot of people, myself and my coworkers here at the better Miko happy.

So I'm very happy about everything that you're doing. Let me ask you like, there's lots of things that you could have done. And so I presume that, uh, you know, a dairy alternative company was one idea among the ideas that you had back in 2019. But are there any other ideas for companies that you hope that somebody else will start since you're busy doing equips?

Is there something else that would make the world better that you hope that somebody is listening might take up and say, Hey, you know, I wanna have the same success that Aon is having, but I don't want to compete against him [00:39:00] on ice cream. What should that person do?

Aylon Steinhart: I have this thought a lot, as you can imagine.

Pretty clear thing that two and a half years ago when we started EC clip, Or I guess it's even more now, but when we started Eclipse, Thomas and I kind of looked at that landscape and we said, Meat, okay, we get it like eggs, looks like it's happening, dairy needs love. But seafood was another thing that we were extremely close to working on.

The truth is that seafood as a concept is that is such an absurdly large category. And the percent of the market share of marine based food that is plant-based is minuscule. Like it is so, so early days. Yeah. It's like a, it's like a

Paul Shapiro: rounding error in the plant-based meat market.

Aylon Steinhart: Yeah. Complete rounding error and, and really has very, very little.

Acceptance in terms of like distribution, right? [00:40:00] You don't see it very often. Like certainly you see it in Whole Foods and and places that people are looking for it, but a lot less in restaurants compared to your burgers and in other food service establishments and in grocery stores and things like that.

There's just so much work to be done there, and in the end it's the exact same challenge. Is, can you make something that truly tastes and gives that experience that can replace the animal counterpart? And I think from a mission perspective and from a market perspective, it is absolutely like super critical and also just extremely exciting.

Paul Shapiro: All right. Well, you might say there's a notion of opportunity out there for people in the, uh, alt seafood space, but yeah, I actually, um, in Sacramento, uh, long John Silvers the like, uh, fast food seafood chain is currently testing some of the good catch [00:41:00] crab free crab cakes. I went there with my wife Tony, and our friend Michelle, and we got 'em, and it was quite a surreal experience to walk into a long John Silvers and get these plant based crab cakes.

It was pretty, it was pretty fun. That's the only time that I'm aware of that there's been. Something like that that happened on like a, a QSR menu where there was some type of all seafood on there. That was really cool. That's incredibly

Aylon Steinhart: exciting.

Paul Shapiro: Yeah, it was fun. It was really fun. So people should start some alternative seafood.

I'll put it on my own recommendation. There's already a little bit of stuff that's happening, right? Like on fish and crab, there's a lot of octopuses and squid who are being killed. There's nobody who's like, got the impossible foods of squid or octopus yet, right? And like calamari is something that is like battered and deep fried and you put lemon juice on it.

So there's a lot of ways to kind of conceal it. So you don't need to be like perfect at right from the get go. So anyway, I, I hope that somebody will do, will do something like that because I actually think there's just like this great [00:42:00] opportunity, you know, people like eating that food all over the world, but especially in Asia and there's a.

Big sustainability problem with it as as an animal, animal welfare and so on. So anyway, hopefully somebody do that. Final question for you here, Aon. You have been a real expert in innovation and entrepreneurship for a long time, even before the Good Food Institute, you were somebody who was extremely knowledgeable about the entrepreneurial world and have engaged in other entrepreneurial pursuits.

So were there any books or other things, resources that were useful for you, that you would recommend to other people that are listening who might benefit from some of the things that have helped?

Aylon Steinhart: I can share the, um, pieces of media that have had the most impact on me. I think one is conspiracy. Actually, it's the film that I watched before I even joined the Good Food Institute, and it really opened my eyes to the impacts of industrial animal agriculture on the planet.[00:43:00]

And I had not realized that before. Things like that, just around agriculture is responsible for more climate change than all of transportation combined. Or that 90% of the deforestation of the Amazon rainforest comes from Des around agriculture. Just really big things that they're just real and we have to address them.

So I think those were pretty key.

Paul Shapiro: And for those who want to watch it, it's a conspiracy is available on Netflix.

Aylon Steinhart: That's right. From an entrepreneur noal perspective, I do think why Combinator and Paul Graham have put out just incredible materials that are available to the public. They are so, so valuable.

And honestly, there's, there are so many founder libraries and things like that out there that I think that from an advice perspective, I don't think there's a shortage. I think the shortage is taking action and really deciding on a massive idea that can truly change the world and, [00:44:00] and figuring out if you can do it or if you wanna partner with someone that that can help you do it.

And, and really. Going for it because in the end you learn the best when, when you're out in the trenches.

Paul Shapiro: Yeah. You know, people ask me this all the time and I always tell 'em, you know, like if you want to learn how to play soccer, the best thing to do is not to get a book about how to play soccer. It's to get out on the field and start practicing.

And I feel the same way about so many other things in life, including this very field that we're talking about. Best way to learn about companies is to either join or star one yourself. It's hard to do, like people joke that when you start your own company you will sleep like a baby because you will wake up every two hours and cry.

You know? I'm sure that there are, there are some times when you feel like that you certainly, as the cliche goes, will miss the shot if you don't take it. And I can't tell you how glad I am to see so many more people. Garnering the, the, uh, will to start some new endeavors and hopefully they can turn around the crisis [00:45:00] that we are causing as a species right now.

So I'm grateful to you, Aon, for all that you're doing to try to help humanity reverse course on the destruction that we're waging right now, and I'm looking forward to. Seeing equips not only ice cream, but all types of other animal free dairy products on the market very soon. So thanks so much and I'll look forward to enjoying some more of the equips that you're gonna send to our office here,

Aylon Steinhart: All right, sounds great. Thank you, Paul. I had a great time. Thanks

Paul Shapiro: for listening. We hope you found use in this episode. If so, don't keep it to yourself. Please leave us a five star rating on iTunes or wherever you get your podcast. And as always, we hope you will be in the business of doing good.