Oat-to-Market Strategy: Mike Messersmith and the Oatly Story

Paul Shapiro: [00:00:00] Welcome to the business for good podcast to show where we spotlight companies, making money by making the world a better place. I'm your host, Paul Shapiro. And if you share a passion for using commerce to solve many of the world's most pressing problems, then this is the show for you. Hello friends, you are listening to the 87th episode of the business for good podcast.

If this is your first time joining us welcome, the 86 back episodes are all pretty much evergreen and also all riveting. So go check 'em out. We've got tons of great content with startup founders, business Titans, authors, politicians, and more. Also, I want to give a quick shout out here to one. Listen. Alex in Oakwood who not only has been enjoying the show since its inception four years ago, but also writes me pretty much every single episode to let me know what he thought of it, Alex, I really appreciate your support and your feedback.

So thank you buddy. Now, if you've been listening to the show for some time, like Alex, you probably know that replacing animals in the food system is a topic very close to my. While the meat and [00:01:00] egg industries and the grand picture have still pretty much been largely unaffected by plant-based competitors.

That's definitely not the case in the milk industry where the explosion of plant-based milks has very tangibly cut into demand for cows milk gone are the days when almond milk and soy milk were for vegans. Now they are for everyone, but just a few years ago, a new entrant into the plant-based milk world emerged in 2015.

Oat milk was far less than 1% of the plant-based milk world. In fact, people hearing the term oat milk were probably far more likely to think they had heard somebody talking about goat milk rather than actual oat milk. Not anymore. Thanks largely to one company. Olie oat milk is now the bell of the alt milk ball.

After three decades of toiling away, far out of mainstream consci. Oley has boomed leading to its mega successful 20, 21 IPO. But wherever there is success, others are sure to follow while Oley had the oat milk sector primarily to itself back in 2017, when it [00:02:00] started out in the us market today, there are numerous competitors, including oat milk lines offered by major dairy companies.

No longer is oat milk synonymous with O. And Oley has faced real challenges, trying to scale up their stock price has even fallen by 80% in recent months. So how is Olie going to stand out? Fight off competitors, build new production facilities and expand into product categories beyond just liquid O milk.

We've got their north American president Mike Messersmith here to tell us all. Mike actually came from the conventional dairy industry himself and is now all in on the Cal free milk world. He's got a very interesting story to tell both about his life and Oatley trajectory, which I will let him tell you all about right now.

Mike, welcome to the business for good podcast.

Mike Messersmith: Thanks so much, Paul, my my pleasure to be here, excited to chat.

Paul Shapiro: Well, I'm an Oley consumer, so I am excited. I want to just get that disclosure out of the way before anybody accuses me of, of hiding [00:03:00] that. So I I'm excited to be chatting. And before we get to Oley, though, Mike, you yourself have had a pretty interesting ride to get to where you are right now.

I mean, you're a guy who was supervising nuclear reactors for a while and then got. Yeah, food industry marketing for companies like Frier lay and even, even Chovan. And now you've gone from the dairy industry to the plant-based milk industry where you've been running Lee north America for the last five years.

So what happened? How'd you go from, from nuclear reactors to plant-based

Mike Messersmith: milk. That is that classic career path, you know, it's, it's been done so many times at this point. It's almost cliche. I, I nuclear engineering to milk. I mean, it's hard, it's hard to even really cover it too much. You know, I

Paul Shapiro: hate to, I hate to even ask the question because it's just so overplayed.

You've heard it once.

Mike Messersmith: You've heard it a thousand times. No, I mean, I was I had the privilege of being an officer in the United States Navy. After I graduated from college. That's how I paid for college. My undergrad was with a Navy scholarship and then worked [00:04:00] on ships and great teams and traveled all over the world on when I was in the Navy and the, the kind of, you know, ultimate experience of that was serving on an aircraft carrier that was stationed out of Virginia that have two big nuclear Raptors on board.

And I was one of the officers that you know, operated the reactor, led a division of folks that, that took care of it and maintenance. It, it was very. You know, a, a very significant blend of, you know, highly technical plus, you know, results driven leadership. And I think, you know, I knew I didn't want to be a, a ship captain for my whole career.

So I got out and I went to business school, but really like the, the appeal, you know, that brought me into marketing and sales were the things that I loved most about my job in the Navy. You know, being able to take information from different sources, some of it. You know, data, some of it is more like qualitative relational pieces, just like we were doing when we were operating the reactor and then you have to make decisions and you have to drive things forward and you have to lead teams through you know, high pressure environments.

And I actually do [00:05:00] feel like that that experience. As an officer in the Navy early in my career has helped me a ton, particularly as you get into the more entrepreneurial journeys where there's just so much ambiguity and unknown the ability to lead, you know, do our best to connect and lead with lead teams and you know, deliver results has always kind of stood me in good stead.

So it was a great experience to be honest. And I, I just really you don't, you don't appreciate all those things sometimes when you're in it or see the, the future application, you can't even imagine. Like, I, I never would've even imagined the word Oak milk. You know, 15, 15 years ago when I was floating around on a boat in the Atlantic ocean.

But it, it really did kind of serve as a foundation for me in my career.

Paul Shapiro: It it's, it's definitely an interesting start obviously, but why then food? So you, you go to har you go to Harvard business school and you're thinking, all right, I'm, I'm gonna leave from I'm. I'm gonna stop being you know, a service person in the military.

And instead I'm going to food like. Why food, right?

Mike Messersmith: Yeah. I mean, I, so I think [00:06:00] that I liked, I really love accessible mass brands that, I mean, I grew up in a small town in Northeast Pennsylvania. I really liked the idea, you know, a, I, you know, working in a business and the actual. Ownership operator nature.

Like I, I, wasn't gonna be cut out for a more advisory type role consulting banking. I mean, lots of people are incredibly successful in that. That's just not me. And so then if you're gonna be an operator, you know, I love products that are broadly accessible and that regular folks can you know, purchase and afford.

And and so food. It touches everybody's lives. Like, I, I love food. I love eating. I, you know, I, I love, you know, ZUI, I love going to the grocery store and walking around. And so that felt like how the business of food and beverage was always just a huge draw to me. But, but I will say like making that transition, I know there's lots of folks that consider career switching and you're in a technical field and you want to go to something different.

It was very, very [00:07:00] challenging, even. The the, I mean, that's the reason why I went to business school, but I applied for probably 15, 20 different internships my first year at business school. And I didn't even get an interview. At any of them, except for one, I got one interview in Mar in a, for a marketing role in a consumer package goods firm.

And that was at FritoLay and I am totally grateful for . Some of those people that saw the potential of some you know, Navy engineering weirdo that he might be able to do that job and, and could imagine that it would work and kind of took it from.

Paul Shapiro: You know, Mike, it's funny that you mention that you enjoy going to supermarkets.

It's one of it's actually one of it's actually one of the things that my wife and I love doing most together. So for like a, a date night, we will go to the supermarket and just walk the aisles and just look at things. Yeah. She's especially interested in like prices of products. I'm more interested in looking.

At the, you know, just the [00:08:00] breadth, especially the plant-based products that are out there. And so it it's funny like that for us, it is definitely like a form of recreation to go there. And we, we particularly like doing it, like on like a Friday night, it's like a nice thing to go out and do together.

Mike Messersmith: It's also really nice and like travel. Like, I mean, I, I like when you're you know, when I'm spending time, Of state New York and going to a small, gross, a smaller like local grocery store, then you go to a massive, you know, like more urban, suburban grocery store, you you're in a different part of the country.

Or when you travel internationally it sounds like such a weird thing to do that. Like, oh, you know, back, you know, obviously Preco, I haven't gone on any of these trips recently, but. You know, the you're in Paris or you're in Rome and you're like, can we go to a grocery store for like half an hour? I just wanna walk around and see kind of what the categories are like and some of these products.

And I mean, I don't know you, I, you just have that natural curiosity for things, and I love your, I mean, You're right. Like the breadth of [00:09:00] assortment, you know, packaging, you know, looking at the way, you know, different shelves are organized the way people shop. I even think pricing says a lot about strategies as well.

When you think sort of think about accessibility or premiumness like, there's so much I mean, I can just wander the aisles for hours, which is really annoying, I think to my wife as, but it's a, it's a great. That's funny.

Paul Shapiro: No, it would not be annoying to my wife. She would really love it if I would consent to do that for hours.

But, so yeah, one of the things that we now see if you were to walk through a supermarket, is this exploded plant based milk section, right? There's just so many options is a major player in that market. Obviously. But the company seemed to have come from almost like out of nowhere, you know, five years ago, I think is when O Lee north America even began.

Isn't that correct? Is that right? Correct. 2017. Right. And, and now it's this like dominant player in the plant-based milk market in, in the United States. And so I, I know that there was a big sales boom from the pandemic that, you know, mm-hmm, led [00:10:00] to you guys having this very successful IPO in may of 2021.

You. 10 billion valuation at the time. You know, now I think you guys had like close to 650 million in revenue in 2021. Mm-hmm , you've basically created this entire, like whole new sector of the plant based smoke market, you know, before it was like, Almond milk and soy milk kind of vying for supremacy. And then op milk comes along and is like, no, actually this is where it's going to be.

you know, even Oprah invested. So my point is that, you know, a lot of people see this as this overnight success story, but you and I know that it's not an overnight success story. The company's actually existed since, since the nineties, it's hardly a newcomer to this space. So. For how long has Olie been around him?

What was it doing prior to all of that time? Like now it's this big brand that everybody knows, but what's it been doing for the last 30 years?

Mike Messersmith: I mean that, I think that was a great summary and kind of trip through time. I mean, we, we are a Swedish based company. You know, so our [00:11:00] founder and, and the early team members, you know, as early as the, the mid nineties you know, were looking for you.

Really kind of founded that, that motivation for how can you create a delicious tasting product that was also good for people's health, their digestibility, and was less taxing on the plant's resources in the process of manufacturing. And so that was the core idea, but for many, many years, I mean, we were just a, you know, a relatively.

Modestly sized Nordic's based company, you know, perfecting manufacturing, processes, evolving the brand. And I think really you started to see, you know, sometimes, you know, companies need time to grow and mature and then, and it kind of meets the moment and the opportunity and really. In, you know, about a decade ago you know, early 2010s, the, we had our very entrepreneurial CEO, Tony Peterson joined the company they rebranded and we really like that was a moment also where the, the growing nascent demand.

[00:12:00] Broadly in, in society for more plant-based options was really starting to explode in Europe. And since then it's been kind of a, a growth acceleration. And so the company, if you, you can't really have that that goal around, you know, creating a delicious, nutritious nutritionally, balanced product.

You know, it was an alternative to cows milk and then just stay in your Nordic markets. I mean, they started expanding into other parts of Europe, the United Kingdom Germany and Austria. And in 20 15, 16, the company made the choice to expand it, even bigger opportunity markets with this core idea you know, both in the United States and, and in Asia.

And so. You're right. Like it, when we, when we started in, in the United States, when we were getting just even like the basic infrastructure to get things going, like where, and how are we gonna make this product like who who's gonna be on this team? Do we even have an office or a place to go to organize things?

Like none of those things existed. As the beginning 2017, I was [00:13:00] the. Second or third full-time employee that we had on the team here. And, you know, but we knew what we wanted to do. The mission and purpose of the company's been the same fundamentally since we, we started the journey it's still the same today.

And what, what would

Paul Shapiro: you say? What would you say, Mike? That is, what is the, what would you say is the purpose and the mission of.

Mike Messersmith: Yeah. So I mean, what we want to do is make it easy for people to have something that's Del you know, both a plant based option as an alternative to cows milk that is delicious.

It is great nutritionally balanced, and the environmental impact of that product is less taxing on the Earth's resources. Mm-hmm . And so we looked at the food system. We looked at the impact on, within that food system on global greenhouse gas emissions, we looked within that about the animal based sector and the contribution of animal based food products, both in dairy.

You know, you look in the meat segment in, in about half of the. Food sector emissions come from this livestock sector. [00:14:00] And so if we end furthermore the digestibility of lactose and cows milk for human populations of, you know, more than I think it's more than half the world's population, can't digest.

Cows milk. And so if we can give something that is more acceptable and less taxing on earth, three sources, that is both really important as an idea for the planet, but also we can create a great business out of it, which is what we've been trying to do. And so we kind of form this manufacturing process to turn whole Oak kernels into liquid food that we can then turn into, you know, Milks and note drinks, so we can turn it into frozen products and, and all those sorts of things.

But that's, that's the core idea across the business, regardless of market. And yeah, I mean, the United States, when we started, we were, you know, Oak milk was rounding here. It was less than 0.1% of the entire category. No one had ever really even said that word before. I certainly never had, I mean, I talked to friends and family, they're like, what are you doing?

I like oatmeal, goat milk. Like, what are you [00:15:00] talking about? And you know, we just kind of built it. You know, try to be thoughtful, try to move fast, step by step and, and, and just try to create an

Paul Shapiro: impact. Yeah, it it's interesting to me because most of the companies in this space, both the plant-based milk and, and even the plant-based meat space, many of them are reluctant.

They are reluctant to talk about like the, the problems of animal agriculture in their marketing mm-hmm and. Has not only gone after this, but it's one of these pretty provocative ads, like saying, you know, it's like milk, but intended for humans. Right? So point pointing out that, you know, cows make milk for their babies, not for humans.

Yes. As a reason why mammals produce milk after they give birth? That's. That's not, it's not to give to another species. And, you know, it's it's interesting to me that has gone down this path with these provocative ads. And I'm wondering how you coming from the dairy industry and yourself feel about that aspect of the company that you've been working for for the past five years.[00:16:00]

Mike Messersmith: Yeah. I mean, it's, I think that both for me and for our employees, both the United States and globally that alignment of your own mission and values with the work and the product that you do is very important. You know, the company in Sweden here in the United States and other markets, you know, we feel like we want to try to provoke those important conversations.

People need. To think differently about, you know, where their food comes from, what the impact of their food is the same way. They need to think about that for all many choices in their lives, from their automobile to their apparel that, that they purchase. And so where we try to take a more, you know, it it's a balance of, you know, a provocative tone, but also something that is very plain spoken, I think and that really connects to people with just really.

Simple statements that, you know, really resonates with people and it, and it provokes the conversation and it makes people think, and it challenges some of their assumptions about the way that they grew up. And, and [00:17:00] the choices that you kind of take for granted. That doesn't mean everybody agrees with us, and it doesn't mean that we don't, you know, have opportunity to continue to grow in how we reach people with that.

But I think that, you know, as a brand and company. That you know, both for your internal audiences of your, of your, you know, stakeholders, your employees, but also how you connect with consumers that kind of more open Provo provocation of, of the dialogue is really important. And it's helped us to stand out in every market, Europe, United States, Asia, and, and we wanna keep doing that.

Yeah. Yeah. It's also, and so for me, I mean, I'm sorry. I was just gonna say like, for me personally, like I. Have worked. I've had the privilege of working lot like incredible world class, you know, you know, massively resonant brands, FritoLay Giani, nature's bounty company. But the intersection of both of topic that is really important to me personally, about the intersection of food and climate, and [00:18:00] then the ability to put my gifts and talents and effort into building a company that is.

In service of that, like you, you strive in your career. I think to find jobs where you can have that alignment. I think I've tricked myself, honestly, at times in my career. I know I have lots of friends who feel this way too, of, you know, that you like, well, As long as the money's right. Or as long as I like the people, we could be selling widgets and it doesn't really, you know, matter to me, but like, it's just not true.

Like all jobs are gonna be really hard. You're gonna have a ton of adversity. You're gonna struggles for things. And when you have that alignment of your personal belief and values with the work that you do, it makes it so much easier to grind through that adversity. And I think that that part is something that.

When you, when you finally see that align in your career, it can be an incredibly empowering moment professionally.

Paul Shapiro: That's cool. Yeah, it's actually an irony to what you're doing here because oats are now in some ways displacing [00:19:00] animal agriculture, because the irony is that oats were actually the big feed stock for labor animals on, on farms and, and for horses who were used for transportation as well.

In fact, the us used to be a humongous oat producer and even an oat exporter. It was a big part of the agricultural economy. And then in the first half of the 20th century, basically oat production. Completely plummeted down to almost nothing. Not because people weren't eating oats, but because tractors and cars were replacing horses right in farms and cities.

And so now oats are a tiny portion of the crops that are grown in the us. But many of those oats that are, are now being used to actually displace animals. Once again, it's, it's quite the irony to see how things come full circle here. Hm.

Mike Messersmith: Yeah. I mean, I think, I mean, we, the oats can be an incredible part of an agricultural foundation and we see, you know, they're easy to grow globally.

They can be grown in Europe, Asia, north America, both United States and Canada. They can be grown as [00:20:00] a incredible rotation crop with other agricultural input. So it doesn't force those farmers to, you know, kind of say this or that. So they can grow with corn and soy in a complimentary status.

And so we do a ton of work, both in the United States and in Europe around thinking, you know, this is, you know, part of your procurement strategy, but it intersects directly into our sustainability ambitions about how are we working with. Are O suppliers on, you know, both. Yeah. We need availability, abundant availability of high quality food grade oats that aren't treated with glyphosate that you know, in the United States we have a fully gluten free supply chain, you know, so there there's pieces there that we really work.

Closely with them on, and you know, that we can U seek to use that position to both increase the penetration of food grade oats in the agricultural market. But also shape the way that, that occurs to be in line with our sustainability ambitions over the longer haul. So it, that part is you know, [00:21:00] definitely.

A core passion of the business and you know, it fits really well within the broader agricultural footprint

Paul Shapiro: here in north America. Sure. Well, I'm eager to get into that, cuz I know O harvests have been suffering from drought lately, but I do just wanna comment on one thing, because I was confused about this.

You mentioned O gluten-free supply chain, just, just to be clear for the listener O oats don't have gluten in them. However. Sometimes they touch manufacturing equipment that had also previously touched something that had gluten in it. And so, yeah. You know, the percentage of people who that would actually affect is infant.

Decimally small. It's important for it's important for those people don't get be wrong. Yeah. But yeah, you know, but we're not talk, I mean, you know, despite whatever the realities of, of gluten being a fine food, are I just wanna be queer. Like this is not something

Mike Messersmith: oh, true. Sell. Right. Oats themselves are inherently gluten free.

It is the go to market sourcing. So whether that's the distribution network of taking those oats from the [00:22:00] farm to the mill, the milling efforts, then, then the transportation footprint to, to get it to manufacturers like Oatley. You know, we go to extra steps To ensure and, and, and in north America, thankfully there is the infrastructure exists within the, you know, raw material, supply chain to be able to source those.

We think about, I mean, we think about that very broadly of, you know, over time, you know, can we achieve the abundance that we want? I mean, we're always striking that balance. We felt that the gluten-free certification was really important to the company as we are launching, because for those that it really does matter, you know, that, that have high degree of gluten sensitivities or allergi.

It is a table state mm-hmm and we want we, if, if you want om milk to be for everybody, you know, we think, we think you know, very deeply about those topics of allergens and accessibility. And so you're right. The oat itself very accurately said is it does not have any O it, but it's all of the supply chain infrastructure, get it to market that you have to really focus on.

Yeah.

Paul Shapiro: [00:23:00] So speaking of focus. Mike let's chat just for a moment here, because about this issue about market dominance, cuz you all were mm-hmm the oat milk market for some time. I mean, there really was not a big difference between saying oat milk and Olie. They were basically one in the same. Mm-hmm . And obviously as with any time that there is a company that's creating a new space and that's having a lot of success, there's gonna be other people who want to come in and, and try to compete in that space as well.

And so now people who want oat milk don't have just Oatley. They can get planet oat or silk or Shani actually, I think Shani where used to work has their own oat milk. They do so, so, you know, first, you know, this is obviously I would say good for the oat milk market in general, right? Like you want to see an expansion and you don't wanna see one company controlling everything.

At the same time, how does Oatley maintain its dominance there? So, you know, if I'm a skeptic and I say, Hey, listen, it must not be that hard to make O oatmeal quick. What leads you know, what [00:24:00] leads a customer to say, Hey, I'm gonna stick with Olie over something else. Like, how do you guys intend to remain the market leader?

Mike Messersmith: Yeah. I mean, I think, I mean, you're right about that proliferation of brands. We've definitely seen that since we launched in retail in 2018. About a year later in 2019, you started seeing these other brands you know, launched their own milk. In addition to other offerings they had, that was one of those moments, I think, as an entrepreneur and a builder where you're like.

Both it is you're right. You like, it's good. It's good for the category. It's good for consumers. There's more options. There is a tremendous amount of validation in the fact that these massive global incumbents are now choosing to make an Oak melt when you know, they weren't rushing into, I mean, while we, it's nice to say that O is a dominant format now.

I mean, that. Very much up for grabs when we started, it's not like they had never heard of a note milk before we had a market leading position in Europe. They could have done that well in [00:25:00] advance of us launching in the market, they chose not to, they kind of fast follow on our success and they weren't doing that with other crop formats like flax or P or other sorts of things that were out there.

So it is in the, when, when you see that happen, It is a, I, we believe, you know, that's a great thing for category creation. It is also scary when you're a small company trying to grow and scale from scratch. And you're like, oh my gosh, these companies are massive. They have massive incumbent you know, manufacturing advantages and supply chain advantages and sales team advantages.

And so you just have to, it, it really is one of those cases of you. What can I control? Right. I'm gonna try to work my hardest. My team's gonna try to work the hardest in the things that we can control. And there's parts that I can't control in the market in terms of what competition would do and things like that.

So, so, so

Paul Shapiro: let me ask you then from individual consumer, let's say myself, like, why should I buy Oley as opposed to any other O book brand. Yeah.

Mike Messersmith: So I, I do think, I mean, you could say [00:26:00] like, well, it must not be that hard to make this product. I do think that from my experience that I'm obviously quite biased at this, it's very, it is very difficult to make great Oak milk and we, with the, the process and the craft that we've built over the past, you know, decades of doing just this you know, we.

Or again, you know, I, I work for the company, so of course I would say this, but we, we have a great product and we hear that from consumers that they like, they connect with the taste texture, they connect with the brand. And the resonance of that and the the, the kind of positioning they connect with our our, our kind of stated values in that, and that this is the only thing we do.

And we have a reason for why we do it. They also really gravitate. I mean, a big part of our strategy has not just been the grocery store shelves, although that's a big part of it, but you know, that first kind of taste experience that people get in a coffee shop. Or, you know, at their local, you know, when they're traveling for work at a hotel or something like that, the, the ability to build [00:27:00] that taste standard you know, where people's like, kind of then judge, I mean, people are still figuring out their approach on plant-based foods, plant-based milks.

And so when someone has that grace first experience, it really sets the, the standard that they come back to mm-hmm . And so we've tried to have a really balanced. Go to market strategy with a mix of on premise focus and kind of traditional retail. And that creates this kind of trial cycle where people discover it establishes their pre a preference.

And then they're rewarded when they come to a grocery store. And yeah, of course, like sometimes people are gonna try, you know, you're gonna shop around different brands. You know, we feel like the way we set that up of the things, you know, waiver on product quality brand characteristics, and where people start and the standard that's established it puts us in a really good spot for that for continued growth, cuz it's still very early, as far as we've come O is much smaller than almond milk as a segment, but growing quite significantly you know, we [00:28:00] have.

You know, relatively much lower household penetration relative to plant-based milk as a whole. And so, and, and, you know, the majority of our consumers. Even, you know, though, we've been working at this for five years, you know, the majority of our consumers have just tried it for the first time in the last 12 months.

And so we, we still feel like we have a long, long way to go. Even as much as we've done to, to continue to bring people into this. Kind of corner of the plant-based milk universe. And that's what we, that's what we focus on all the time.

Paul Shapiro: Yeah. It, well, it, it is definitely impressive. And one of the things that I have been impressed by about your strategy is this idea of building your own plant.

So I know that. Oley is, is building a plethora. I think I read building nine new plants right now for yeah. Globally. And so that's obviously betting really big that Oso the future here. And so, you know, some companies just rely on co manufacturers. They don't want to set up all of the headaches that are entailed with yeah.[00:29:00]

Trying to, you know, spend tens or even hundreds of millions of dollars to create your own factory. So why is that? Why go the. Of building your own plants, as opposed to just using co-manufacturers like so many others.

Mike Messersmith: Yeah. I mean, and, and, and our strategy will continue to be a blend of, and we're certainly in the United States.

I mean, we got started with partner manufacturers who helped us and I didn't continue to help us. And so over time, what, you know, as our business grows, you know, we, we have to start to integrate. Other options and, and the reason you do that, and, and you mentioned a few of them in, in the question, you know, one, just from a capacity standpoint there, you know, the, these incredible partners that we have on the manufacturing side, they have other businesses and clients and things like that too.

And, you know, we feel very, very strongly about the future of. The of our brand and the, and the O milk segment. And so we need access to that capacity and the flexibility that we have by controlling the systems there we can, furthermore, I mean, [00:30:00] again, I, I do firmly believe that it is quite difficult to make great O milk, and we have a specialized manufacturing process for how we process the oats, where the control and ownership over that puts us in a really advantaged position.

The last piece, you know, we, it, again, capacity, flexibility, the ownership over the Oak process. And, and, and we do take the allergen piece really seriously. We have great quality systems that we implement with our partners. Thankfully, you know, we have never had a, a product recall here in the United States.

We, we test everything dairy nuts. Gluten rigorously, because that is a big part of consumer trust. One way that we can you know, even seek to alleviate that concern even further is by having a dedicated facility that, you know, there's never any cows milk in the pipes at all. They just never even entered the facility.

You know, that there's never been. You know, a nut that, you know, has entered the, the door on the, on the manufacturing side. And so [00:31:00] that can give us even more peace of mind for some of those bigger riskier topics as the business scales, to, to, you know, seek, to have the majority of our products United States and, and, and internationally start to go through these like allergen free facilities.

That's a big help.

Paul Shapiro: So let me ask you then about peace of mind because the oat markets lately I'm sure is everybody listening is keenly following the oat markets. So you probably already know this, but of course you know, oats have declined. So it pretty dramatically, there's a big drought.

It caused the us oat harvest to decline. 39% Canada had similar numbers. Mm-hmm oat prices are at an all time high. So the last time they were at a high was in 2012 when they were 3 89, a bushel $3 and 80. Per bushel, U S D a is now forecasting 2022 pricing to be even higher than that all time high looking at about four hours and 20 cents a bushel.

So this is obviously a major problem to have your, your star ingredient, just skyrocketing in price and not much that you are [00:32:00] able to do about it. You can't control the weather, you can't control what happens with the O markets at all. So would you ever consider. Exploring alternative lines. So if you look at a company like silk, it's a plant-based milk brand that has almond milk, coconut milk, soy milk, oat milk, and so on.

Has Oly considered diversifying so that it would be inoculated against some of these crops that are, you know, going in the wrong direction right now. Yeah.

Mike Messersmith: I mean, well, it's a, it's a great question. You know, it, it is the, I mean, we chose oats for the reason, not, I mean, yes, abundance in that they're not just able to be grown in a very small, you know, portion of a particular climate geography.

You can grow them in Finland and Canada and Poland and Australia. You can grow them everywhere. So, you know, abundance, you know, globally, and you you're you're spot on, on the, the north American market, but also because. The other components around their nutritional content [00:33:00] the environmental impact in the sourcing of them.

And so it, it, it does really, I mean, we, we focus only on notes. We do. We go way even further than what we've even shown in terms of looking at you know, O genomes and other varietals of oats that over time can I think help us to even make the product even better. We think the product's great and it can also get better.

So, you know, we, we kind of scan the market all the time, looking at other crops, not necessarily because we're gonna launch a subbrand which would be very hard to launch Oly, branded soy belt. So I'm not even just thinking purely of the consumer like. The consumer challenge might be difficult.

No, but it, but,

Paul Shapiro: but in fairness it could be a blend. I mean, you know, right now you can buy blends of soy and almond milk. I mean, it could be oats that let's say an oat milk that happens to also have as an ingredient, some other product, whether it's some, you know, I don't know what it would be, but, but

Mike Messersmith: we also, I mean, it's a, again, when you put the values at the center of what we're trying to [00:34:00] do I would say that that's not something we.

Are exploring at the moment. Sure. You know, and mainly because there is a, an tremendous amount of power and clarity in just that simple adherence to the, the, the values that we have. Yeah. Now you mentioned the, the, the, it is. An irony that you have you know, the impact of climate change, creating, you know, kind of 20 year drought conditions that lead to a a challenging food grade Oak market in a year.

So this is where the, the shift towards plant-based foods. Like we think this is really important and, you know, there are, you know, drought cycles and you know, commodity scarcities that occur in markets from time to time, we we've kind of discussed those. I worked at a, you. We've seen that within the dairy industry at times where the market is constrained and prices go up because they don't have enough raw material input.

And, and then, you know, the supply demand curve kind of re levels. And so we have very, very integrated, deep relationships with our agricultural [00:35:00] suppliers that we lean on. And, you know, we, the there's new crops obviously that are in the ground right now. And we feel like that market is both expanding.

With the just sheer acreage of food grade oats there's increased milling investment that's going on. And so we feel very good about the long term horizon on that even while we work through you're right. A very challenging 20,

Paul Shapiro: 21 crop cycle. Yeah. Yeah. It was definitely challenging. Not just for OS, but for a lot of crops, even, even the folks who are relying on, on P protein are really suffering because of that drought and definitely P you know, P P prices of skyrocketed as well.

So, let me ask you then. So if you're not actively exploring oats plus other types of milks or other or even non oat products, I know that you all have expanded though way beyond just milk. So you all are doing right. You know, you've got oats milk, you've got oat ice cream, O yogurt. What other products are we gonna see?

And are they all gonna be dairy replacements? I ask, for example, there's a, a company in Finland that is doing what they call. Pulled oats and it [00:36:00] is their answer to plant-based meat. They're making a, an oat based alt meat right now. And so might we see Oly get into other uses of oats that aren't even dairy replacements?

Mike Messersmith: Yeah, so we the, the name of the game for us in, you know, again, delivering on the mission is, is around conversion from cow's milk dairy. And so you know, that kind of sets the field of play that we focus the majority of our time on, I will say we have an incredibly you know, impactful innovation team, some of whom have been here.

20 years know more about oats than I could ever possibly learn in my entire lifetime and the application of them and, and how to. Create these products. And so, you know, the, the European market being more advanced, further along has always been a really good roadmap for what we look at in the United States, where we look at some of those core ideas, and then we always seek to adapt them to, to win, you know, whether that's taste preference, you know, product format to win in the us.

I think our frozen portfolio is a. Example of it, [00:37:00] where they had good products in Sweden that I always liked when I went over there to visit, but we took that and we looked at well, what can we do here? And so we have soft serve mix that is you know, the official soft serve of the Chicago Cubs and the Texas Rangers and the New York Yankees.

You know, we have ice cream bars that we just launched this spring that are like delicious. Decade it and indulge him. And then we have really tasty pint flavors too. So we're building the, you know, applications in this market. And then we look at, you know, things around fermentation, what other items can we do, where it, it is helpful to not boil the ocean of all the things it could be.

But if we were a cows milk dairy company, what are the types of items that we would make? And, and can we, can we get people a credible option to make that switch? That's good for themselves. Good for the planet. And they think tastes good and like, oh wow, this is, this is good. I don't miss the alternative.

That's, that's the goal, right? So, I mean, if you

think

Paul Shapiro: about it, you know, there are some products of which there are a [00:38:00] lot, so milk is one example in the plant based space, but on cream cheese, it's so way, way smaller, smaller universe of options out there. And it's something definitely that, you know, maybe there's a, a Oley cream cheese in the making or, or we've had

Mike Messersmith: Oley spreads in your, in Europe for years, we've had Oley.

In like little containers that you had spread on, you know, toast or bread. And those products are delicious. Yeah. And so for us, you know, within the us business, you know, there's a balance of you have, we have all of those ambitions. We, we have an incredibly talented team. You also have to balance that with.

You know where the business, you know, the team is at the executional risk in the scale journey that we're on. So we, we feel like, again, we've done an awful lot. We've been really busy over the past five years, but we have so much more to go in terms of where that opportunity is and the global expertise.

And other markets, whether it's, you know, the pace of innovation in China is incredible. They're, they're developing and launching new items at a rate that within our [00:39:00] team there that I I'm just so impressed by and we can learn from all of that and then apply it for, to win here in the us. Yeah. So

Paul Shapiro: I, and I'm going to just presume that the answer is no based on your silence to the O based meat question.

It's not something that you all are exploring.

Mike Messersmith: Yeah. I mean, I, the other piece that's really key to us and we talked, it was kind of what I alluded to when we asked about the building of the factories, the Oak processing of taking the whole Oak kernels and turning them into this liquified base. That is kind of the, the core you know, foundation for the, the majority of our products today.

That's not that we don't look at other things and I. We have the, we have the brand and we have the technical expertise to apply them for other future things. So it's like, we wouldn't ever say never on any of those things, but I think the core mandate for the company is around that conversion versus dairy using the op base expertise that we have.

And then as we grow. Certainly we, we, you know, lots of different doors could present themselves, but, you know, I don't know that I see that in the, in the near term.

Paul Shapiro: Okay. All right. [00:40:00] Well there are a lot of things that you can do with oats. You guys could be like the George Washington con, but not for peanuts, but for oats and, and yeah.

right, right. So. You mentioned, there's just a lot of room for growth. And so I, I do want to ask you about the stock price and, and its growth because as anybody watching knows that you all had this tremendously successful IPO, but have since dropped about 80% in your value. Now you're not the only one who has done this.

Two thirds of the companies that iPod in the last couple years are trading beneath their IPO offering price. And especially in the plant. Market other companies like beyond has gone on a somewhat similar, similar trajectory with the spectacular IPO and growth, and then has, has really fallen in the last half year or so E even much smaller, but the very good food company, which is a Canadian, publicly traded plant-based meat company is also really taken a hit on its stock price.

So first let, let ask you why, like, what do you think are the reasons to see 80% of the stock price drop? I, I know you all were attacked by these short sellers is how [00:41:00] much of it was. Is there something else that is happening. And then I want to ask, you know, what do you think it will take to bring this back up, you know, to go to where the IPO was?

Mike Messersmith: I mean, I think, you know, it, as you mentioned, it's a incredibly challenging market environment right now, but for us, I mean, we, we try to not, I mean, again, I mentioned before, when we were talking about new pro you know, competitors, launching products in the United States, there's pieces that you can control and there's pieces that you can't, you know, we try not to let any of the stock price fluctuations distract us as a management team and an organization.

The fundamentals of the business, our strategy for growth has been very consistent. With what we shared when we IPOed and we continue to you know, grow, we've see demand for our products you know, continue to grow across markets, United States, Asia, Europe. And we feel like we're, we're continuing to lay the foundation to capture that opportunity, create a great business.

That also creates a large impact. So, you know, [00:42:00] again, it's, it's something that it's certainly a, a, a challenging market. You, you obviously prefer not to see that sort of volatility, but, you know, we try to, you know, stay focused, I'd say on the task at hand of. What are we doing here? What's the point of the product and, and really work every day on strengthening the fundamentals of the business and continue to drive that growth strategy.

And you think that the

Paul Shapiro: CapEx spending on the plants is basically the investment in that future growth, essentially, that that will be like a way to help compete

Mike Messersmith: competitors. There. Yeah. I, I think that it's, it's a piece that is core to allowing us to capture that demand. We need the, we need the capacity.

We need the flexibility to be able to build for that future demand for this, you know, continue to expand pie of. People looking for great plant-based options. Mm-hmm

Paul Shapiro: yeah, well, you all do make some great plant-based options and I I've really enjoyed them as of my wife. So we both thank you for that, Mike.

I, I, I do want to also [00:43:00] ask you here that you have gone through quite a journey from the Navy to the food industry, to now being in an executive at one of the, you know, hottest brands in the food space and assured. There are a lot of things that have benefited you, whether you learned about them during business school, or maybe afterwards, that you think would be useful for anybody else.

So is there any resource out there that has you have personally benefited from Mike that you think, Hey, maybe somebody who's listened to this podcast might also get some use out of this.

Mike Messersmith: Yeah. So I, I tried to put some, I know that that's a, an area of kind of paying it forward that you, you do with, with many of your guests.

And so I tried to put some thought into that ahead of time. I think on the it's interesting on the, the reading side because I used to consume tons of non-fiction and biographies and. Business books. And I've, I've basically fully gotten out of those in the last, like two to three years. Not just because it was hard to find like the relevancy, but I feel like you need to have something [00:44:00] that really, I I've shifted honestly, to like paperback, murder mysteries.

Like I need something that's a release. It sounds crazy like stuff you see at, I mean you know, not that I, yeah, didn't enjoy reading those other ones, but like stuff you see at the airport when you're walking by, it's like, yeah, that's, that's a nice little recharging thing. I will say that the book that and it was grounded in a class and a speech that he gave one of my Harvard business school professors Clayton Christensen who's well known in entrepreneurship.

He wrote a book called how will you measure your life? Back in 2012 it's available on Amazon that I've read. A few times over the years. And I was certainly familiar with the content from a speech that he had given while I was there at HBS and the, the fundamental premise of that is, you know, thinking.

And it, it's interesting also in the context of businesses that sometimes the things that are easiest to measure. You know, numerically, it's like a, a salary or a bank account or a stock price are not the most important personally to your health, your [00:45:00] satisfaction. And so it's, you have a tendency sometimes to discount the elements that are less easily measured.

And I think that when you really, you know, you have to take time to take stock of not, are you over. Leverage over balanced on those that's, that was one of the piece I really took away from that because I find myself in that trap all the time of, you know, things that are easily measured. You tend to overweight in terms of their importance at times.

And so you have to be really disciplined of thinking that through in, in more depth. And so that was a great read. It's a pretty small, you know, short, short book, but that when you're on this entrepreneurial journey and you're pouring yourself into these companies and you're building, and you're thinking about the future you know, to really take stock of that measurement question it was really impactful for me.

Cool.

Paul Shapiro: Well, I, I, I do like to read non-fiction, but like you, I also enjoy reading a good amount of fiction, which I, I think actually has like a, a [00:46:00] utilitarian benefit. We can talk about that some other time. Yes. But, you know, interestingly. Yeah. It does seem like most of the books that have had the biggest impact in the world, like the biggest impact on the readers do often tend to be fiction.

So, you know, if you look amazing, if you look at even like the jungle by Upton, sin, queer, which led, which is a novel from the early 19 hundreds that led to federal legislation, To books like 1984 and Fahrenheit 4 51 or, or books on the right, like Atlas shrugged and fountain head and others. Like these are all novels that seem to have a bigger impact.

And I say this as somebody who has written a nonfiction book myself that I, I think that's great fiction probably often has a more transformative effect in the world. And so for that reason, I'm gonna recommend to you, Mike, that you check out a novel that I read about, I don't know, maybe a year or so ago that I absolutely.

Loved. I thought it was so good. It's called tender is the flesh by a Augustina buzz Tarka and this book reviewed in the New York times. It has [00:47:00] thousands of ratings on Amazon and it is, it's not just like some, you know, esoteric book that I found it is a popular book and it is stellar. And the basic, I love it.

The basic premise of it is get ready to to have some gut churn here. You know, everyone eats humans. Nobody calls them humans, but everybody is eating humans. And one guy who works at this slaughter house for humans decides that he's gonna take one of them home. And I, I won't ruin anything else, but it is in my view, a 10 outta 10 book.

So definitely check out. Tender is amazing. Tender is a flesh by August and a buzz RCA. I will do it. Good. Good. Let me know how it goes. And we'll include in a a link to that book, as well as to qu Christensen's book that you mentioned Mike, in the show notes for this episode@businessforgoodpodcast.com.

So finally, let me ask you then something that I ask every guest on this show, which is what other company ideas might you have? So you're busy working on oat milk right now, but surely somebody who has gone to Harvard business school. Done a lot in [00:48:00] his life has some ideas for what else the world needs.

So what company doesn't exist right now that you wish existed?

Mike Messersmith: Oh man. Well, first off I would say that again, like these are the ones where you're a little bit nervous about saying like, oh, I read like fiction paperback in this like bus, like business high profile podcast. It's like, I appreciate that validation that you need to the fiction pieces too.

I, I think, you know, there's I have well, I don't know the, on the, on the ideas that don't exist the first off, I would say in the journey that we've had with Oley the number of times. Where, you know, there's such a PR you know, sometimes a pull to be the branded item, the ones, you know, making items that show up on shelves.

I would always encourage people to think about can you fund fund a business that enables other companies to go mine for gold. Or, you know, seek that gold rush. So how are you a platform enabler, whether it's on raw material, sourcing, contract, manufacturing, quality systems to help [00:49:00] companies achieve that next level.

I think there's so much value that can be created from that level of expertise. It's sometimes a little bit under appreciated because you're not the one that has the name on the product that goes out there into the world. But I always feel like that there's there's so there's such great business, relationally driven successes that can come from those kind of support businesses.

And so that is my honest advice. My less boring advice on this and this, I, I came up with an idea. And if somebody, you know, somebody can send me an email if they want to do this with me you know, years ago I came up with a business for like a reinvented drive-in movie theater. Hmm. Idea.

Okay. Which has like, I've seen a rise of that in like COVID post the pandemic stuff where yeah, I've seen it moving drive-ins are coming back like the, but it was basically an intersection of like urban urban, like real estate, U utilization. [00:50:00] With a like social movie experience because I love the movies.

I like one of my best indulgences is going to the movies here in New York city on like a Saturday morning by myself to like sit there and like in the dark and enjoy it. Those social experiences are. Cool.

Paul Shapiro: When, when I think of somebody going, no, go ahead. When I think of somebody going to the movies by themselves on a Saturday morning, I just think of them like crying themselves to sleep in the movie.

Yeah. So I realize that's not what you're

Mike Messersmith: doing it, unless, unless you're watching, unless you're watching fast and furious nine. Okay. In which case you're having a good delightful time. Yes. When it's like 90 degrees outside in New York and hot as heck, and you just wanna go sit. It like the cool dark and just like take it a summer blockbuster.

I have gotten over the idea that that is a weird thing to do. Okay. It is a, like a delightful form of self care sometimes. Great. And so my idea was how could you reinvent the movie going experience to be more of like interactive and social. In and potentially take advantage of underutilized and unused urban real [00:51:00] estate options.

Very good. So and, and that's specific enough that, and weird enough that I don't know anybody wants to do that. They can have that one. well, that's very

Paul Shapiro: cool. Well, you generously invited people, Mike, to email you. So what is the email address? If somebody wants to email you for any reason, how can they get in touch with you?

Mike Messersmith: Yeah. I mean, they could send me a note on LinkedIn. I'll try to get back to them on that. Okay. You know, if you, if, if you, if anybody wants to go figure out the future of drive in movie theater experiences I'm down to brainstorm on that. They could send me a note on LinkedIn and, and I'll, I'll hit 'em up.

Paul Shapiro: Very cool. Well, I hope that Tinder is the flesh gets made into a movie and we can go to a drive fruit together here. Mike we'll have a good time. I love it. I'll go Saturday morning. I Don. I'll do it. Alright. Amazing. Well, thanks so much for all your good work, Mike. I, I definitely appreciate it. And I am.

I'm hoping for a great 20, 22 for Olie here, and I am grateful to you for chatting and for all that you're doing to help build a more sustainable food supply. So we appreciate it and hope you have a rest of a great year here.

Mike Messersmith: Thanks, Paul. Appreciate it.

Paul Shapiro: Thanks for [00:52:00] listening. We hope you found use in this episode.

Mike Messersmith: If so, don't

Paul Shapiro: 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.