Paul Shapiro: [00:00:00] Jonathan, welcome to the business for good podcast. Hey, Paul, good to hear you. Good morning. You know, it's so funny. we see each other in passing at all these conferences, but we never get to have like an in depth conversation. So I'm really glad that we're getting together now to chat about the good work of the kitchen.

But I feel like we're like always ships in the night that are passing by each other. And I want to talk to you, but we never get a real chance. So I'm glad that we're making it happen.

Jonathan Berger: Same here. My pleasure. Actually, I was really waiting for this podcast recording, and I have so much to share with you.

And the timing is perfect today, Paul. So, let's

Paul Shapiro: get started. Okay, cool. Let us get started. So, I was really looking forward to being in Israel, for FoodTechIL, which you guys are a major sponsor of, and it's a huge conference for, anybody in the food tech world. I'd say like, you know, there are certain conferences that are like the marquee conferences and you guys have built that.

Unfortunately, this year, the massacre that Hamas perpetrated obviously caused it to [00:01:00] be delayed. And so I was really looking forward to being over there and being a speaker at the conference. My wife was going to be joining me, but let me ask you, is there any sense of when food tech IO may be rescheduled or is it still to our way to know?

Jonathan Berger: It is still too early to know. We penciled our calendars for November, 24, but it's too early to know and there are many moving parts, on this side of the ocean. Let's, let's have our fingers crossed.

Paul Shapiro: Okay, well, we'll be rooting for many reasons for the conference to be reorganized and I'll look forward to, being over there at the end of this year for sure.

And maybe even earlier than that. So the kitchen is a sponsor of food tech IL, but it's so much more than that. Like this is this investment arm of a major food company. If you're not from Israel, you might not have heard of a Strauss group, but it's a huge food company and this is their investment arm.

It's a very unique situation. It's almost as if, you know, like Kellogg had its own, startups. So tell us what is the [00:02:00] kitchen and how is it operating and generating all of these really cool startups out of Israel? it's exactly

Jonathan Berger: like you said, it's like the investment arm of the Strauss group, the second largest food company in Israel.

Strauss, is partnering with, PepsiCo in, in the U S owning together, Sabra, deep spreads, hummus. you may familiar with that.

Paul Shapiro: Well, we've had the CEO of Sabra on an episode earlier on this podcast. We'll link to that in the show notes at business for good podcast com. But I'm a huge Humus fan and, and certainly of Sabra too.

Joy.

Jonathan Berger: Yeah. Yeah. So, beside that, XOs is also partnering with, Danon, in the second largest, dairy in Israel. and with a few other partners like in China, in water companies. So it's, it's. Local and global company and, 10 years ago, they realized that, long term growth, would come from food tech, startups and they had the patient capital, to invest, luckily the state of Israel, thought that it's a good idea to start, a new [00:03:00] ecosystem.

Adjacent to these famous cyber security coming from Israel, SAS, FinTech, and they backed us up when we came to them and suggested to start like a seed stage, VC that, is unique. In the fact that we are also companies builders. So what that means, beside giving the startup the first check of about a million and a million and a half, we are also offering them an office space and lab space and support of, of a fairly large team that works with them on each thing that the startup may need.

Be their marketing, social, social media, also the technological milestone, how to develop an R and D plan. How to do the scale up regulation, IP, go to market, how to fundraise, even on corporate governance, how to, how to properly manage your board, how to have a proper insurance [00:04:00] on day one. So many, many things that save the startup a ton of time and a ton of mistakes.

So our slogan is that we are trying not to do the same mistakes twice. And and so far, we've, we've done that, with 25 companies that we incubated in our facilities. Some of them are famous, famous names like olive farms are my proteins. Imagine dairy. Some of them are less famous. out of the 25, we closed a shop for 2 companies.

So we also know how to do that. That's part of life. and, Basically, we, we are offering these two years program, as I said, with the support of the team, the support of Shroud's group, a executive free of charge, everything they need with the support of the partners. So we have on our advisory board, we have Dan on, we have PepsiCo, we have, Mondelez, we have Gia, and all those top executives are also assisting the startups.

And we have the backing of the Israeli innovation authority. The one thing that we are trying to do in those two years is help the startup to get to a [00:05:00] fundable milestone, meaning that they would be able to fundraise, full on investment. We might join, but we never lead the next round and we measure ourselves against the total amount of dollars that our portfolio companies raised.

And today it is close to 350 million. So for seed stage companies, even if you divide it by 25 companies, this is, this is kind of an okay, number as a

Paul Shapiro: target for sure. So I know you've been CEO for a decade now. Is that how long the kitchen has existed?

Jonathan Berger: Exactly. We started January 15. So this is like nine

Paul Shapiro: years.

Okay, cool. Congratulations. So basically in a decade, you've had 25 companies and in a decade, only two have gone under. That's really an incredible, an incredibly low mortality rate,

Jonathan Berger: right? Yeah. So 25 is after the two. So it was 27, two went under and 25 are actively.

Paul Shapiro: Working, I mean, I would say normally, you know, startups have generally like a 90 [00:06:00] percent mortality rate.

And of course, the infant mortality rate is the most precarious. And so maybe what you guys are doing is actually dramatically reducing the risk of infant mortality by giving them, you said a 7 figure investment. I presume that's us dollars and not in Israeli shekels. That's it. That's

Jonathan Berger: a 1, 000, 001. 5

Paul Shapiro: us.

Yeah. Right. Plus all these other services, whether it's, you know, advice or equipment and,

Jonathan Berger: and it's pure of charge. So we don't, we don't take a, like in kind and any sort, this is,

Paul Shapiro: you're not taking shares in the company for that million.

Jonathan Berger: No, no, we are taking shares of the company for the million and a million and a half based on firm market valuation.

Everything we do, contrary to accelerators, we don't charge for our time, extra equity or anything like that. This is part of our agreement with the Israel innovation authority. That we would support the startup in exchange for the Israel innovation authority, support in us

Paul Shapiro: in a way. And presumably the kitchen is only available for [00:07:00] Israeli companies, right?

Exactly. Right. Exactly. Right. Okay. so that's a really amazing track record. I mean, I think even if you were to look at, let's say like a Y combinator, which is among the most prestigious accelerators. You know, they don't have, you know, 25 out of 27 companies still in existence many, many years later. so what do you think it is that is creating such success for the NKBs of The kitchen, obviously they may still fail.

Who knows what's going to happen in the future, but, so far so good. So what do you think it is? a few

Jonathan Berger: things. I think the most important thing is, is that we are very passionate about what we do. You know, we, we enjoy so much building companies. This is what we love. This is what we good at. This is what we put our time and heart and soul and everything.

And, and we, we are in the ditches together with the entrepreneurs. Okay. So thanks to the fact that they are sitting in our premises, you know, we get to see them almost on a daily basis. And when start something happens, you can [00:08:00] immediately see it on the face of, of the, entrepreneur. So it's really important.

point number two, before making the investment, we work with the startup close to a year to prepare the startup or our IC very often. When the companies come to us, their, business model is not right. Sometimes their R and D plan is not, you know,ambitious enough or realistic enough, what have you.

And, and our average time of preparing a startup for our IC is about a year. On top of that, we have, a double layers IC. So the Israeli innovation authority also examined the startup. They appoint a special examiner that worked with the startup for a couple of weeks to validate the technology, to ask them tough questions, to send them back to the drawing board.

And only then he would provide a positive feedback and the IC of these renovation authority would, [00:09:00] approve the investment. So those that pass this, I would say, very tiny whole screen, are, are a beginning with relatively high chance of success. So so this is this is the thing. And the third thing is that we are trying to be very repetitive in everything we do.

So we have, like,standard operating procedure for everything we do, and everything is documented. So. When a startup enters our program, the time management is very efficient because we've done that so many times and we are just duplicating the same SOPs for every startup and the last but not least, you know, you need some luck and I guess that we are lucky.

Paul Shapiro: Yeah. So what is the percentage then? Like, you know, for example, we had on this show, Steve Jurvetson, who is a venture capitalist who has made really, really, big bets on companies like Tesla and Hotmail and Skype [00:10:00] and SpaceX, and has become phenomenally wealthy as a result of it. But I asked him what percentage of companies that pitch you do you ultimately end up actually making an investment in?

And he said it was far less than 1%. And so you're talking about this really rigorous screen. You call it the tiny hole, how many companies don't make it through. So if there's 27 that have made it through, how many didn't.

Jonathan Berger: So we've screened today, close to 1500 opportunities. So that's about one and a half percent, I would say.

So,

Paul Shapiro: yeah. So, so basically the chance of anybody applying to you is almost 99 percent chance they're not getting into the kitchen. Correct. Yeah, so I mean, that could, you know, very easily explain why there's such a high success rate then because you have such a rigorous selection process. Yeah, and

Jonathan Berger: you know, as a matter of fact, Paul, because we know that we are going to put so much passion and so much time and, you know, all our hearts.

It's not just the money that we are going to commit. It's a lot of [00:11:00] work. So we are very careful about those that are selected because we know we're going to spend with them two years and we want that to be fun.

Paul Shapiro: Yes, indeed. I, I do think that fun is like an underrated part of the process of doing startups.

So it's a lot of hard work, but also sometimes it is fun. let me ask you, you know, alternative proteins is a big deal for for the kitchen if it's funded by Strauss group Which is a big food company with a pretty heavy footprint in animal agriculture dairy and so on Why alternative proteins like why is Strauss so interested in animal free food technologies?

Jonathan Berger: So I I would quote, andy grove famous, quotation about you know, those that a If you're, if you're not destroying your own business, someone else destroy you. I, I apologize for not quoting exactly, but it, I mean, the idea is, is, is something like that. So, you know, the, the, the market forces and the changes in consumer demand are such [00:12:00] that if you're not coming with the right offering, someone else would come and would destroy your own business.

So I think Strauss. was looking at the kitchen is kind of a hedge with the alternative protein, technologies that if, if all stays the same, it is today. So be it, so we spend whatever X amount of millions of dollars, but if, the food system is going to change dramatically as we saw in, for example, dairy beverages with the plant based dairy or plant based non dairy, hitting 12 percent market share.

Dan Strauss is, is a very big dairy. You want to make sure that they are protected in a way, or they hedge the risk and to have a solution. So, a good example is Imagine Dairy that is going to do the next generation of cowless milk. Using precision fermentation, so basically, imagine dairy is growing whey protein without a cow in a big, big fermentor, and they just announced about a [00:13:00] week ago, that they own a facility at a significant scale that can sell products worth of millions of dollars this year.

so, so Strauss by partnering with the kitchen. Get access to such technologies that maybe would be utilized by Shrouds to the best of their consumers.

Paul Shapiro: That's a really fascinating way to look at it. And it reminds me about what happened in the film market. So if you think about, you know, like Kodak, you know, both of these companies knew about digital, right?

For decades, they had been, making their business based on analog, gelatin based film. And Kodak actually first invented digital, but they were afraid it was going to cannibalize its core business, you know, darkroom chemicals and the actual print film and so on. Whereas Canon thought, well, if this is the future, we should hedge our bet and actually pursue it.

And we all know what happened. Kodak went bankrupt and Canon is the largest manufacturer of [00:14:00] digital cameras on the planet. But they're still selling us the same thing, right? It's still a way to capture our memories. Like it's the same, like, you know, when you take a photo, you're still getting the same end, it's capturing the experience, the memory that you want to preserve.

Whereas when meat or milk, it's really like the same thing. Like we were trying to create the same experience that people want, which is, you know, to have the functionality of cow's milk or to have the satiating effect of eating beef, et cetera. but done in a way that is dramatically more efficient, more humane and healthier.

And so I actually think that there's a whole group of these companies, like Strauss, that are really forward thinking, and there are others that have their head in the sand, like Kodak, that don't want to, see any change, and say, look, we've been slaughtering animals for thousands of years, we're gonna keep slaughtering animals for thousands of years.

but some of them, whether it's like, Maple Leaf Foods in Canada, the largest meat company, which has acquired a number of plant based meat companies and tried launching its own brands of various alternative products as well, Strauss in Israel, [00:15:00] these companies seem more forward thinking. So do you think that that is for Strauss, something unique to them as an Israeli food company?

Do they just have the right leadership at play? Like, what is it that led them to think, okay, let's cannibalize our core business?

Jonathan Berger: So I think this is a, the combination of all the above, definitely forward looking, leadership and offer showers, the chairperson. This is what she does all day, you know, read and look 10 years ahead, et cetera.

so showers is traded company, but the majority of the stocks is owned by the showers family and offer showers is the third generation. So it's a lot of responsibility. So a leadership B, the, I would say financial capabilities to do that because not every time Shouse can afford, to invest in things that would materialize in a decade.

And, for example, right now, we are undergoing kind of a challenging time and the investments are kind of, [00:16:00] being on hold for, for, for a period of time, but generally, you want to have the resources to do that number 3. I think that when you tell the executive in the company that you're investing in something that would cannibalize the business, it's never going to fly.

But if, if, if the way is, to present that exactly, as you said, we are selling the experience. Some consumer would like to see that from regular milks. I would like to see that from cowless milk, but we are drawing, we are trying to, address. Everyone needs. So it's, it's a side by side and not cannibalizing.

And, and I think that Shao had, occasions in the past that, they were not prepared and there's others took, their market share. And you know, the funny story is that when you go to, those company that provide you, market share, let's say Nielsen data or things like that, [00:17:00] they show you just the category that you're playing in.

Okay. So if you're in yogurt company, they would, so they would show you your yogurts and sometimes you don't know that because you just didn't order this study that next to your category, there is another category, which is called plant based yogurt, and it takes time. Now everybody's looking at that, but in the past, it took time for, for managers to know that.

Next door, someone is growing a very successful business that they are not even aware of that. So I don't think that cannibalizing is the right term. It's, it's more like protecting your, your core by being active in the future competition. And this is, this is how we approach the, the management in Strauss.

Paul Shapiro: Interesting. Why is it, Jonathan, that Israel seems to generate so many startups, you know, like it's almost like it's on Silicon Valley over there. Like so often when you hear about startups, [00:18:00] if they're not coming from the United States, the chances are they're coming from Israel. Of course, there are startups all over the world.

But in terms of places that really seem to churn out a lot of entrepreneurial activity, Israel was right at the top of the list. Why? Yeah. Why is this tiny little country in the Middle East when, you know, so, so startup friendly, when we don't really see that many startups coming from any other neighboring countries.

Jonathan Berger: So, first of all, thank you for the compliment is the proud Israeli. I appreciate this observation. I think that these combination a few things. So obviously you're familiar with drip irrigation that was invented out of necessity. So I think that Israel being an island, practically speaking, surrounded by not so friendly neighbors, we have to protect ourselves ahead and have our food security.

And, and different sources of food, even if we are not able to produce it locally. so necessity is the mother for invention. This is part number one. [00:19:00] As, as we all know, the community feeling of, of Israel, thanks to serving in the army, thanks to, being a small country, thanks to our, roots as community, Jewish communities around the world.

So whatever it is, but the sense of community is, is really strong and, and in a meeting. in Israel, there was a meetup that was organized by GFI Israel and Bruce Friedrich, joined and, he was on stage and he was, asked the same question and his answer was. That, you just found out that all the entrepreneurs in Israel, the food, the can happen is in Israel are connected in a WhatsApp group and they're helping each other with everything one need.

So if you need a designer for your presentation, or if you need a, an exporter for a frozen product, whatever you just put it in the way when they WhatsApp group in a less than five minutes, you will get someone that will answer. [00:20:00] So everyone is helping each other. So that's, that's the second point. I think the third point is the resilience.

And unfortunately this resilience is being, proven these days, dramatically, but, we've been through so many challenges that we just don't take no for an answer. and that's, that's on, on many aspects. And I think that resilience is a key component when, when you're building a, your startup.

Paul Shapiro: So as an investor in some of these companies, Jonathan, does that bother you?

So, for example, you're invested in Allah Farms, right? And let's say Supermeat, which is another Israeli cultivated meat company, which theoretically could be a competitor of Allah Farms, says, Hey, we need help with this one thing. And let's say within five minutes, as you pointed out, Allah Farms says, Hey, here's, we learned this the hard way.

Don't make our mistakes here. Do this instead. And they give that to supermeat as an investor in our farms, but not in supermeat. Does that bother you? I

Jonathan Berger: trust the management of [00:21:00] other farms to be selective on the things that they are, giving. So if it is not, I would say, core IP, just something that is, you know, is not, hurting their competitive edge, then why not?

because two more super meat would give them back, but,I'm, I'm sure the dollar farms would not do that. If this is something that has to do with a unique supplier of something in the media that it took them ages to find out. So it's not that ideal. but, but in most cases, if the things are not there for competitive edge.

And people are sharing, even if they are competitors. And I think the best example is that following the kitchen, the sec, the, the, the largest food company in Israel, Tenuva, they started an own incubator and, and it's called,first start. And, they're like, if, if we are nine years old, I think they're four or five years old, and they are, located in the north of Israel in the Galilee, in a place called Cur Mona.

It was heavily bombed and they had to evacuate and, and the same day they were [00:22:00] evacuated. I called the CO and I said, listen, we have extra space and Ecra extra lab space. Why don't you come and work from our facility? So we are great, opponent in a way because we are trying, or let's say competing on deal flow.

But Hey, we can still compete on deal flow and they can operate from our facility. They end up not coming for various reasons, but just an example.

Paul Shapiro: Presumably Hezbollah is a greater opponent of, of the kitchen than Tanuva.

Jonathan Berger: Exactly. And you know what, Paul, this is, this is an amazing thing. So what, what we are telling all the entrepreneurs that the other company in Israel is not their competition, the company from, from Berlin or from.

The Valley of from London or from Singapore. This is the competition because once investor come to Israel, they would invest in one of the Israelis companies. So we are trying to compete against different hubs around the world. And attract investors to come to Israel and make [00:23:00] investments here. If this is in company a or company B, okay.

There are many reasons for, for why they choose, but as an ecosystem, we are trying to be competitive compared to other ecosystems. Got it.

Paul Shapiro: So we've talked about why Israel is so startup friendly. And in fact, there's a great book called the startup nation, which I'll link to in the show notes of this podcast episode at business for good podcast.

com, but also. It seems to be a particularly plant based or alternative protein friendly country. And when you look at per capita rates of vegetarianism, for example, Israel ranks really highly, more high than any other country aside from India, which obviously has a lot of religiously based vegetarianism.

So why do you think it is that Israel happens to be so veg friendly? There are so many vegetarians. Now, at the same time, it has a very high per capita rate of meat consumption too. So, Israel's per capita meat consumption is, not that far below the U. S., which is the, the world's leader in, in meat consumption per person, [00:24:00] despite having very high meat consumption, it also has a pretty, vegetarian friendly food scene and a lot of vegetarians.

Why?

Jonathan Berger: So basically what we are saying that we are eating a lot of meat and a lot of veg based diet and a lot of everything because we like to eat. That's a lot of eating. Exactly. Yeah. So, so, so the culinary scene in Israel has developed in the last 20 years dramatically and the food here, and, and, and I'm sure you can, you can testify for yourself.

The food here is really good. And, and people are, are, dedicated time and money into food. That this is, this is a lot of thing around food, culture, et cetera. but I think, that specifically to the, the high percentage of, of vegetarian and vegan people, I think this is just because Israelis are early adopters.

And we like to try new things and we like to, you know, all the new diets being, keto and, and, a intermediate testing or whatever. So many [00:25:00] Israelis adapt that because this is, this is our culture to, to try things, not necessarily we would stick to them, but, we, we like to try new things.

Paul Shapiro: You just got back from Northern California and saw that the investment landscape for alternative proteins is a far cry from what it was a few years ago.

Yeah. We're in 24. In 2021, the money was free flowing to alternative proteins. In 2024, it is not. It's not totally dried up, but it's a much drier capital landscape. one I'd love to know why you think that is. And two, is it the same in Israel? are there, is there a harder investment landscape, especially for alternative proteins than a few years ago?

Yes,

Jonathan Berger: there is a definitely harder for alternative protein. And I think among food tech, verticals, alternative protein is, is probably the most challenging. Yes, it is the same in Israel, exactly the same in Israel. And, and I think that there are various reasons. first of all, [00:26:00] I think that, at the end of the day, yes, it is food tech, but at the end of the day, it's food.

And some of us forgot that this is food and food needs to be, tasty, healthy, affordable, and, and the fact that there is tech behind food doesn't mean that the consumer would, you know, give up on the three things that I said, and it's now it's obvious and you're laughing. But there were startups that thought that, Hey, I have a cool technology.

it's not that tasty, but Hey, the technology is amazing. I was able to do blah, blah, blah, blah, blah. And I think what we are seeing right now is that we are taking aside the tech component in the food tech and enlarging the, the, the weight of the food in the food tech and the food has many, I would say, Must have, so everything I said was the consumer perspective from shareholder [00:27:00] perspective.

If you're not able to get to 40 percent gross margin, don't even start. If you're not being able to scale up your business and have enough capacity, don't even start. And those are the things that we are seeing right now. So I think that the, the situation right now, makes us be more efficient, closer to consumer, a better product market fit.

And better

Paul Shapiro: economics. Why then, if you go back to, let's say, 2021, when a company like beyond me, what's really wonderful revenue, you know, there were like 400 million us dollars in revenue. And the technology was identical to what it was, before now, right? And like, they didn't have different technologies.

Similarly, the food tasted the same. It was about the same price. And yet today, a few years later, their revenue has actually contracted. You [00:28:00] know, companies don't just want to see margin. They want to see also increased revenue and their revenue has actually declined. So why is it, you know, I don't want to say that beyond me, it is a proxy for everybody, but it's the only publicly traded company in the space for the most part, why do you think that demand for plant based meat is not what it once was?

Considering like, you know, maybe people were thinking more food, less tech, but. Why, like, why is it that plant based meat is doing worse? Not just from an investment perspective, but is actually selling less today than yesterday.

So,

Jonathan Berger: so this is really an area I, I don't want to get,too much details about that. I think that that was spoken, you know, a lot. I would just say that there was a great disappointment, and I think that the most. A important thing that consumers would be disappointed about is about the health claim. So people thought that if they give up on meat, it's healthier because of the [00:29:00] cholesterol, because of the antibiotics.

But then they found out that the label is like 30 ingredients label. And there are many more things, but again, beyond, beyond an impossible are facing so challenging times. And the only thing I can wish them is they would overcome, they would fix whatever needed to be fixed and it would, fly again. And I think this is for all of us.

I think that, the food tech, a space is now experiencing challenging times, and we all need to look at similar industries when they emerge. You know, even go to the. com in the 2000 and, you know, there was a great expectation and then the bubble burst and then slowly, but surely the good companies survived and we have.

com. And this did change our life. It just took longer than what we anticipated. The same thing for cleantech, the same thing for,automotive mobile.

Paul Shapiro: So in that vein, then what about cultivated meat? Because you're talking about plant based companies like impossible and [00:30:00] beyond and saying that they're facing really tough headwinds right now, clearly they are.

But the cultivated meat space is also not reached the level that many would have thought. So if take our farms, a company that you're invested in, you know, they were founded in 2017. So now we're seven years later and still pre revenue, but they are making real tangible progress. Like really amazing things are happening for them, including as, as you know, they, recently had the first ever, regulatory approval for any cultivated meat in Israel and the first of its kind for beef anywhere in the world.

So. Really, really, amazing progress on that front, but it's not just them. The entire cultivated meat space, you know, you had the first burger served in 2013 by Mark Post in London and the first company Memphis meats are now upside foods founded in 2015. And here we are in 2024. And basically you could count the number of kilograms of, cultivated meat that's been sold on the market, essentially.

So why hasn't this industry made a [00:31:00] bigger dent yet? And when do you think it will start making a dent?

Jonathan Berger: so like me, many pioneers, you know, you jump to the water without really understanding what entails. And I think that's, that's typical across all innovation. And I've spoken with many entrepreneurs that told me, had I known.

What was, waiting for me ahead, I would have not started that. So I'm sure you heard that as well. So, so the beauty of being entrepreneur is that, you know, you're, I would say a, a careless enough to start something without thinking about all the consequences. This is why you work for a startup and not for a big corporate.

And yes, I think that Aleph, like many other good companies did not foresee all the challenges. And, and all the difficulties and having a serum free media, you know, this is, this is a big one in scaling up for one liter to 10 liter to a hundred liters. So this acts differently and many, many challenges that they are facing, [00:32:00] but with the faith that we are going to change the world in a big time, in a big time, and the opportunity is huge because right now alternative meat, whatever type of protein is less than a percent, I think even less than a half percent.

Then the opportunity is huge. I think that when the product meets everything that I spoke about before, taste, texture, nutritional values, affordability, a, a, you know, look, a, and many other things that consumer care about. The numbers would would be really attractive. So it's time to stick to your original vision and fix the

Paul Shapiro: problems.

So, but just to be clear, Jonathan, nothing has happened that leads you to believe that they can't achieve that. You still think they can get there on affordability, for example, that they can eventually sell cultivated meat at the same price as conventional animal based meat? Yes,

Jonathan Berger: for sure. [00:33:00] On the contrary.

The thing that I saw, and I'm a board member at Aleph Farms, by the way, Aleph Farms is a company that we co founded, I didn't speak about it, but we have a venture studio in which we are licensing technologies from universities, we recruit the team, we put the first check, and we are basically building the companies, and we've done that several times, so probably 10 out of 25 companies are venture built.

And in our farms, I think that when, when I look backward at the problems that they solve and the progress that they've made in all aspects, okay, being the taste and the textures, but also being the scalability being the cost of cost affordness, a cost competitiveness. The trajectory is very

Paul Shapiro: promising.

Yeah, of course, I'm using olive farms as a proxy for the rest of the space just because you're most familiar with them. But there's dozens of these companies scattered around the world who are trying to make this happen from upside foods to [00:34:00] muscle meat and so on. So I share your enthusiasm. so I will say, you know, when I wrote the book Queen Meat, which came out now six years ago.

If you had told me that six years later that there would be a hundred companies in the space, billions of dollars of capital flowing in, I would have been really, really enthusiastic at the same time. If you had told me that they would barely be on the market anywhere. by six years later, I would have been disappointed.

And there's a new copy of the book. Simon and Schuster is putting out a paperback updated edition this April. So there'll be a new updated edition of queen meat, which has a little bit more on Israel in there actually than the original one did. And, you know, I addressed this issue in there of, you know, where is all of the cultivated meat, you know, where, where is it?

Right. and I think, I think of it as something maybe like a fusion energy, which is that. When fusion starts feeding into the grid, you know, it's going to be a really massive change, a big transformation in how we get energy, but it's probably still several years [00:35:00] away. In fact, even Upside Foods, which is the most well funded of these companies, says that they don't plan to have product on supermarket shelves until the year 2030.

and so, you know, that's a pretty long way away, for a company that was founded in 2015. but I hope that they're right. I really

Jonathan Berger: hope so. I look forward to reading your book. I enjoyed very much the previous one. I look forward to to read the updated one. but I have to to bring up a super important point that we've not addressed yet.

And probably with your assistance we can. And this is the government support and, and we, when, when, when we look at Davos, that, that ended last week, we, we have to realize that the, the task is so ambitious that successful entrepreneurs. You know, daring VCs are great, but they're not enough. And, and when we're, when we are talking about scale up, we [00:36:00] need to see government dollars assisting those companies, like in any other space that the government would want to encourage.

for the best of, of the people and, that, that has not happened yet. And hopefully, you know, people like yourself, like GFI, Bruce can, can make that happen because this is exactly what the industry needs.

Paul Shapiro: I totally agree. I think that it's absolutely imperative to have a government assistance like this.

In fact, if you look in the United States at the inflation reduction act or the IRA that was passed, it's got. Billions of dollars of incentives for companies to go toward clean energy. It's very, very heavy on carrots and very, very light on sticks. And I think we need something similar in the alternative protein space.

We need something that is going to incentivize the major food companies. The Strauss is of the world all over the, you know, whether it's in the United States or elsewhere to start investing more heavily in animal free food [00:37:00] technologies. It's imperative from a climate perspective. It's imperative from a food safety and food security perspective.

I mean, I look at my own home. You know, I live in Sacramento, California. We have solar panels on the roof. These solar panels were produced in China. And, you know, so many of the solar of the, solar technology that we use and the wind turbines and so on are not produced in the United States. And that's because China and other Asian countries really helped to incentivize their local industries to do this.

And so now the United States is largely dependent on Asia for our clean energy technology. Maybe this will change with the Inflation Reduction Act, but so far we are. And that's one thing to be dependent for clean energy on other countries. But you don't want that for food, especially, and we know that China is also incentivizing their own local industry to get more into the animal free food technologies.

And if we want to continue, you know, America always calls itself the breadbasket to the world. If we want to be the meat basket to the world, [00:38:00] we're going to have to embrace more of these alternative food technologies that will eventually not be alternative anymore. And so I've been impressed by some countries that seem to be doing more on this.

Denmark is now moving, toward government policies to try to have at least national aims of meat reduction. in the U. S., we're going in the wrong direction on this. Like, there have been some, government assistance, like, 5 million here, 10 million there, but these are very small numbers when you consider that, I mean, right now, the U.

S. is spending a billion dollars alone to increase the nation's animal slaughter capacity. All right. Not in loans. Just in grants. Just in grants, not in loans. So It's just like, we are really going in the wrong direction on that. So I echo your sentiment that is, is not the proper role just for the venture capital community to make this happen.

There's got to be some type of government incentivization, incentivization to, help toward a transition here.

Jonathan Berger: Yeah. So I, I do [00:39:00] hope that I, amen. That's the only thing I

Paul Shapiro: can say. Yeah, very good. Okay. So I do, you know, at the beginning of the, of this conversation, Jonathan, I mentioned that FoodTechIL had been Postponed because of the horrific atrocities that happened on October 7th, but that was just one setback for the entrepreneurial community.

Obviously, the victims of the actual violence and their families are primarily the most impacted, but surely. This has had a pretty dramatic impact on the entrepreneurial community in Israel, even beyond losing food tech IL for the year. So what other impacts have there been? Have you seen companies failing, not able to get investment, having employees or executives having to go serve?

What is the impact on entrepreneurialism in Israel from October

Jonathan Berger: 7th? So, there was an impact that was felt mainly on people called to reserve. So in Israel, you, obliged [00:40:00] to go to reserve duty until you're 40. And some, some of the people working in the startups were called, for example, olive farms.

About 15 percent of the workforce was called to reserve. and, in case that, you were not called to reserve, there were many, female that their husband was called to reserve. And with, two kids, small kids at home, at the beginning, we didn't have a daycare in schools. That was very, very tough.

so, you know, we. We are approximately 10 million people in, in this country and 350, 000 were called to our reserve. So this is like, almost 4 percent of the population called to reserve. So think about 12 million people in, in the States going to reserve and, and leaving wives, et cetera. So this is, this is a huge number.

And that was, failed, in all startups, [00:41:00] but, and this is a big, but, at the very beginning we, learned, and we were, persistent in sharing that in zoom calls and meetups, et cetera, we learned that. A partners slash investors slash customers would not give us a break for whatever we are undergoing and we got together and we decided that we are going to deliver no matter what and, and it was the hashtag.

It's called, Israel tech delivers no matter what. And this was conveyed to all the startups and the government through the Israel innovation authority also, joined forces and gave immediate funding to support companies. So nobody goes under. And, thank God today, I'm not aware of anyone that went under because of the situation.

Yes. The challenges was enormous, for [00:42:00] example, in one of our portfolio companies, Yeap. That does,functional protein from residual yeast from side stream of yeast from the brewing industry. So their CEO, is high rank in the reserve and he was called from day one till probably two weeks ago. So it was just released.

So he was there three months and we had to meet deadlines from customers for partners, et cetera. So what we did, we ask. Another CEO from another company to take care of Yip while the CEO of Yip was in reserve. So that other CEO was managing two companies for three months. And now,Jonathan Goshen is back home and he's running Yip.

So we were doing all kinds of things in order to deliver no matter what. And I don't think that, again, to the best of my knowledge at anyone, any company in the food tech in Israel. under. It is challenging that investors are not coming. [00:43:00] It is challenging with it. We don't have, you know, enough flights.

to bring people and it's not, safe yet, but that again, that requires us to act differently and to be a more outward facing and to spend time at customers at VCs, et cetera, rather than coming to see us here

Paul Shapiro: for sure. Yeah, and I presume that is why you were just in Northern California. That's correct, Karen.

Jonathan, I do want to ask you as somebody who has spent the last decade of your life in the startup community, you've seen a lot of success. You've seen some failure. What resources have you found most useful for you or for the companies that you're working with? That you would recommend to somebody else.

So not everybody's going to be as fortunate to be able to go through the kitchens incubation program, but there may be some resources that you would recommend no matter what to anybody who's seeking to start their own company.

Jonathan Berger: Yeah. So I think that, from, from experience and [00:44:00] I've been a CEO for startup myself for five years, you know, at the end of the day, it's like.

Elite sport at the end of the day, 95 percent is about mentality and, and, and mental ability and resilience and psychological power. And I think that, this is the most challenging thing and, and I, one thing that really helped me personally, and then I shared that with all the CEOs of, of the kitchen. Is a book that is called the hard thing about the hard things by Ben Hurwitz, and I see you're smiling.

So probably you also like that book.

Paul Shapiro: Yeah, I loved it. There's a great line in it that he uses where he says, and he says in the hard thing about hard things, he says, when you start your own company, you'll sleep like a baby because you're going to wake up every 2 hours and cry. And I remember just really laughing out loud when I saw that given it's a personal resonance with me as a startup founder

Jonathan Berger: myself exactly so so this is this is my recommendation to start up because this is [00:45:00] really helps you build inner resilience

Paul Shapiro: yeah for sure i'll show you i for listeners you're not gonna be able to see this but on my desk i have.

This, artwork that I had commissioned here. You can see it's Sisyphus finally victorious. So he's finally

Jonathan Berger: I love it.

Paul Shapiro: Wow. You know, for those who are less familiar with Greek mythology, you know, Sisyphus is sentenced for, to push this boulder up the hill, but in perpetuity, it always falls back down. He never gets it to the top. And so I have on my desk to inspire me, what I call Sisyphus finally victorious, which is how I view, much of my life, including, entrepreneurship.

So, hopefully, hopefully that will come true one day, hoping that this will visualize into something that is true. Sure. cool. So we'll link, Ben Horowitz's book, the hard thing about hard things in the show notes for this episode of business for good podcast. com. Finally, Jonathan, I do want to ask you as somebody who is, now looked at and screened 1500 [00:46:00] different companies.

accepted 27 of them into your incubator, surely there are companies or ideas that you wish existed that don't yet exist, or there aren't enough of them trying to solve a particular problem. So if you could speak to folks right now and tell them these are the type of companies that I want to see exist, you should go start it.

What are they?

Jonathan Berger: there are a few things. But a general theme that I'd like to see more is, how can AI, improve, production, and I think that the food industry is facing challenges like, safety, like productivity. And I don't know how exactly, but I would expect AI, to be a sourceful. Tool to improve that.

So for example, [00:47:00] we, we are just analyzing now, or we analyzed until last week, a, a, a potential company, a potential investment in a company that, improves procurement, using AI and reducing prices thanks to that. And, and I think that, like in many other verticals, AI is the next thing. I just don't know exactly how it's going to impact the food system.

So I'm welcome. Entrepreneurs that have the answer,to pitch to us. And this is something that, that is missing.

Paul Shapiro: Very nice. Well, we had recently on this show, Noah Weiss from Israel, who started green protein AI, which is a new non to try to help companies make better use of extrusion technology for alternative meat.

AI. So maybe that's one way that

Jonathan Berger: exactly that's, that's a good example. Correct.

Paul Shapiro: So Jonathan, I want to say thank you. Appreciate all that you have done to incubate a better food industry, especially [00:48:00] when it comes to trying to find ways to reduce humanity's reliance on animals for food. So I'm grateful to you.

I'm really looking forward to spending time with you at Food Tech IL when it happens again, if not before, but we'll be rooting for your success and hoping that the kitchen has the similar type of success 25 out of 27 that it's had in the past. So congratulations on all that.

Jonathan Berger: Paul. Really enjoyed the hour.