The WimLex Show #9
Spryker & Dept present you the Hottest International Podcast Series about all Things E-Commerce
Spryker & Dept present you the Hottest International Podcast Series about all Things E-Commerce
Willem: I’d like to start today by asking: why? The global meat industry has a turnover in the trillions and meat consumption has gone up and up over the last 50 years. Can you explain to our listeners why you want to disrupt this market?
Daan: Large-scale meat production has some fundamental issues. The resources required to make meat are so immense and so environmentally damaging that humanity cannot sustain the status quo for much longer: it takes 50,000 litres of water to produce one kilogram of beef; 33% of all arable land is used to grow crops as animal feed; and the methane produced by livestock make up almost 15% of all global greenhouse gas emissions. As the global population goes up and people get wealthier, meat consumption increases; but there is no way we can sustain this trajectory. That is why we have to do everything possible to reduce this: besides eating less meat and more plant-based alternatives cultured meat is just one part of the effort, although we think it will have the biggest impact. We have to make sure we don’t destroy ourselves just to eat meat.
Where cultured meat has an advantage is that it is the same thing, so it can reduce the resources needed to produce meat many times over without anyone needing to be convinced to change their behaviour. Rather than telling people “No, you can’t eat meat because it’s bad for the environment!”, you’re replacing it with something which is as good as the real thing – because it is the real thing! Once we can put two hamburgers in front of people and they can’t tell the difference between the standard and the cultured meat, I think people will find it very easy to adapt to the new technology.
Willem: So is beef the first market in the meat industry you are going after?
Daan: Yes, we are starting with beef because we have a beef expert in the team, but we are looking into ways of replicating chicken as well as pork and meat from other mammals; potentially, we could later move onto fish, but that’s much harder and there are already companies doing that. Another reason to focus on beef is because it is the most resource-intensive meat and contributes the most to methane emissions; having said that, chicken is more popular and pork is somewhere in between, so we are looking to diversify in the longer term.
(Willem asks Daan to elaborate on the scientific process behind cultured meat. Daan talks him through how they isolate pluripotent cells from residual blood found in the umbilical cord after the birth of a cow: these cells replicate quickly and can differentiate into muscle, fat, or organs. Following a question from Alex about the price tag of the first lab-grown hamburger, Daan explains the difference between the muscle stem-cell method used in that famous experiment and the Meatable approach: using pluripotent cells is both quicker and more efficient.)
Willem: How fast do these cells grow into real meat?
Daan: Basing the calculations on exponential growth – i.e. two becomes four becomes eight and so on – we think the entire process can be done from cell batch to meat within three weeks. If you compare that to what it takes to grow an animal (more like three years), it tunes in very nicely to supply and demand. When there is a period of nice weather, production has to have started three years previously on the hamburgers people want to put on their barbecues. Now, planning three years ahead is quite difficult, but you can produce a forecast for a period of three weeks, though. This would cut overproduction – currently, some meat spoils and needs to be discarded – and also allow things to happen locally: this technology can be used to produce meat in a facility right in the middle of a major city; there’s no need for meadows and hillsides. In other words, you can call it “locally-farmed meat” – without any transportation and tailored to supply and demand locally
Willem: Is your laboratory based in a city?
Daan: Yes, we are close to Leiden in the Bio Science Park. Currently, our technology resides in the laboratory, but in the long run, you’ll be able to think of us just another food production company: after all, people don’t talk about ‘lab-made yoghurt’, either, because it’s made in a factory.
Alex: How much meat can you produce from a single cohort of stem-cells?
Daan: Our slogan is “One cell can change everything” – and we really mean that. Using pluripotent cells rather than muscle satellite cells makes the difference, because pluripotent cells have unlimited reproduction capacity, so you can really feed the whole world with a single cell just be multiplying it over and over again. Of course you need to check the cell every now and then to see if it’s still performing well, but essentially, you keep a master batch from which you take samples which expand; once a sample starts to deteriorate, you go back to the master batch and just take a very small amount to create another sample. That keeps production constant – and consistent.
Alex: Currently, there are few who can afford a €200,000 burger… How long will it take the industry to establish a process in which a cultured hamburger can be sold on the mass-market?
Daan: There are multiple tiers to your question. Large-scale production can be cut up into three distinct stages: number one is what were are doing right now, the demo stage – i.e. proof of concept. So we’re talking about very small volumes for tasting purposes to get the product right. The next stage is piloting: quantity is slightly higher and the focus is on optimising the processes; at this stage, we might be supplying restaurants as pilot partners. Once we then installed capacity (building buildings takes time), we can scale up to large volumes: that is stage three, and that’s when the price would drop. We’d be talking about supplying McDonald’s, major supermarkets, etc.
While it’s hard to talk numbers at this stage, we’d hope to be at €20-€30 per burger at the demo stage – and we hope to be there within three years. We won’t be looking to turn a profit early because it will be more about spreading the product and getting people used to it; with scale, the price will drop.
Willem: You’ve raised a lot of capital – $3.5 million in the first round – from well-known VCs. Where are you spending the money? Does most of it go into the lab?
Daan: Yes, mostly on people, equipment, processes. We’re also looking ahead at regulatory issues, too, and marketing; but obviously R&D takes precedent because we really want to have the proof of concept first so that we can show people what the product will look and taste like.
Willem: You’re raising capital now and your press release got coverage in Forbes, Business Insider, and many other well-known publications. What kind of response did you receive?
Daan: Overwhelmingly positive! I haven’t had a single person saying: “What a terrible idea! You shouldn’t be doing this!” Sure, there are some people who aren’t particularly fond of the idea, but there are so few of them. And of course no-one will be forced to eat it. But my hunch is that we’ll have queues longer than for the iPhone!
Willem: Don’t you expect some consumers to be hesitant, though? I mean, they’re used to seeing cows in the fields and have learned that from there, they go to the slaughterhouse to be turned into beefsteaks or hamburgers… There’s an idyllic image of agriculture that is stuck in a lot of people’s minds, and you’re trying to change it.
Daan: Actually, I don’t think many people actually have that idea in their minds anymore. More and more people are starting to realise that while in Europe we have some quite high animal-welfare standards, in large parts of the world, they aren’t adhered to. We’re talking about mega-farms – and they are what we want to replace. We’re not looking to compete with small or organic farms, because they treat their animals well; in our view, we think we can compete against cheap meat from factory farming. That’s also where we can have the greatest environmental impact. I mean, I eat meat. I love organic farming and it’s a great option for people who want to be environmentally friendly, so what we need to tackle is bulk-produced meat.
(Alex wants to understand more about the timeframe as well as the technical status and asks Daan to compare his innovation to the development of the Haber process in terms of its importance for agriculture. The greatest sticking point from the current perspective, says Daan, is not the basic cell biology, but creating solid tissue. Overall, he is optimistic despite this and various other potential challenges. Next, Alex enquires about the competition: only around 10 other comparable teams are working full-time on lab-meat projects worldwide, replies Daan.)
Alex: Meat – especially beef – is a very subjective thing. One man’s “best steak ever” is another’s average; some like T-Bone, others like filet. Will there be a design solution to that?
Daan: Definitely! And that is one of the things that is so beautiful about this technology: you have an amazing degree of control over it, much more than with an animal. Sure, you can make sure an animal eats certain things, you can massage it and give it beer, but you can’t precisely steer the nutrient content, for instance. What we can do is to adjust the feed medium we give to the cells – e.g. with specific nutrients to increase the percentage of unsaturated fats, or to promote vitamin D when the EU gets rid of daylight saving time. You can really optimise this kind of thing, as well as experimenting with the texture of the meat. More than anything, that’s an engineering issue: there’s just so much you can do if you’re using cells and not the entire animal! We’re getting into unchartered territory, really.
Willem: So it will be like butter: one has vitamin D, one has sea salt… There’s one for everyone: personalised meat?
Daan: Exactly: I can see meat for athletes with enhanced protein content, or meat for the elderly with less salt. And speaking of salt: iodide is already being added to it to decrease the incidence of swelling in the thymus. That shows that there are already ideas about modifying food to affect public health, and I think we can make a massive contribution to that.
Willem: When do you see Meatable going mass-market?
Daan: The current plan is to be at demo in three years and then at pilot stage another two-to-three years after that before going into mass production. So we’re looking at having a factory in six-to-eight years.
Alex: And are your – few – competitors using a similar process, or does every team have a unique view of how to go about it?
Daan: I don’t know: I can’t see into their labs! I certainly think that we have a unique perspective on this in terms of using pluripotent cells and differentiation: after all, the technology has just been developed and we have an exclusive patent and licence on it. I don’t think anyone else is doing that – or can do it!
Alex: I’m asking because my father-in-law has a herd of cattle and sells meat. That’s more like a small-scale organic thing, but other companies are so big – and the markets are so enormous (just think of China!) – that I’m surprised there aren’t hordes of people working on this already. And what is more, while I believe you, the idea of just growing meat still just sounds far-fetched: when do you think the moment will come when people realise it’s actually happening? Demo-day when you produce a synthetic burger for, say, $30? It still seems very far away and somewhat hard to believe.
Daan: Established companies are moving into the field: Tyson has invested in Memphis Meats, a German poultry company has taken a stake in Mosa Meats. So they see the potential – and were are not labouring under the delusion that we will have a majority market share in eight years’ time. Building up capacity takes time, after all, and then there are regulatory issues. So we’re aiming to do things one step at a time. Overall, though, people are getting more and more used to the idea of reducing the amount of animals we keep for meat. So I’m confident.
(Alex asks why fish is so much harder to lab-grow. Daan says that, quite simply, there has been a lack of research into how fish cells behave.)
Alex: Here’s a question we often ask: could you accelerate the process with more money? €3.5 million sounds like a lot for a series A round, but measured against the size of the industry, it’s nothing: in just the time we record this podcast, there’s probably €3.5 million being spent on meat in the Amsterdam region alone. Would €10-20 million bring your demo day forward by a couple of years?
Daan: Yes and no. First off: no. Cells don’t eat money. You can’t wave a $100 bill at them to get them to work faster: they have a biological clock and divide at a certain speed. What you can do with more money, however, is run things in parallel to test parameters, different scaling methodologies, etc. At the end of the day, however, the cells themselves place a limit on how much speed you can introduce into the process. With more money, we could do more things: different species, different bioreactors, or different nutrient analysis, for example, all of which would give us more data with which to go to investors.
Alex: And how will you prove success to them? All of the other businesses we interview in this podcast series already have products which they are selling to the market and so can use KPIs: cost per order, earnings, customer lifetime value, etc. The argument is: “Look, please give us more money because, as you can see, we will return you much more money as we scale!” What’s your pitch? I mean, currently – if I’ve understood correctly – there’s no business model for the next five or six years. It’s very research-driven, i.e. it costs money!
Daan: Well, we hope to have the demo and be selling it within three years, but that will be very limited, of course – some revenue, no profits. Apart from that, in food, the timeline for reaping revenues is just longer. If it’s an app, you put 10 programmers in a room and it’ll get made: software moves faster and takes less investment. For food, you need to find investors with a long-term mind-set who are really willing to go through the developmental process and see revenues building up over time; you need people helping and supporting you through that phase – and I think we have found the perfect investors who really share our vision!
(Alex explains that, from his point of view, investors usually insist on KPIs – and asks what kind of metrics they would see in Meatable’s case. Daan replies that, in science, measurements are not the issue: proliferation rates, nutrient content, etc. will all be available to show investors improvements. Willem moves the discussion onto recruitment and asks whether Daan finds it easy to recruit in Leiden. Daan replies that the city – large science park, near to Amsterdam and Schiphol airport – has plenty of excellent scientists, but that Meatable is always interested in meeting good cell molecular biologists: e-mails to firstname.lastname@example.org.)
Willem: I can imagine that medicines are created in a similar way to your product. Are there any characteristics of cultured meat production which are similar to pharmaceutical production?
Daan: The only thing I can think of is using cell cultures to make a product at scale; having said that, even this is vastly different. Generally, pharmaceuticals have a specific molecule, e.g. protein, that they want to use, whereas we’re looking to use the whole cell. So that’s where the analogies stop. As such, the only technology crossover is bioreactors and we need some of the same skills…
Willem: I would also imagine that the time to market is similar.
Daan: I don’t know about how that compares. Another difference is that we are looking to make a commodity using biomedical processes, so our incentives and our pricing will be different. So there is some overlap, but mainly in skills: working on cells is something that is transferrable to any field.
Willem: You seem like a very positive person and I admire your commitment to lab-grown meat, but surely there will be some serious challenges along the way to the mass market…?
Daan: Currently, we’re riding on a wave and people are confident about the difference we can make, but then there will be technical challenges as we upscale. We are looking at the kind of scale which has never been seen before, way beyond what pharmaceuticals do: if you just think about the millions of kilograms of meat, this is unprecedented.
Willem: What about the consumer shift? There are currently lots of documentaries about the issues you outlined in the beginning, about how meat is causing climate change and harming animals; then there is the health issue. That is something you are looking to tackle in eight years’ time, but we’re already seeing a huge shift to plant-based foodstuffs. Who will you be looking to convince? Meat-eaters? Or vegetarians – like me…?
Daan: Let me put it this way: if we had a demonstration burger here and it were indistinguishable from real meat, would you as a vegetarian try it?
Willem: Yes, although I’m not sure how representative I am of plant-based eaters or vegans: I’d be curious to see their reactions. From my point of view, I avoid meat due to the issues you described – and you are offering a solution. So I’m completely aligned with your goals and could be convinced to switch.
Daan: Great! Another potential customer! Generally, however, we’ll be targeting meat-eaters because they are the ones already eating meat. Nevertheless, there are lots of people like you who don’t eat meat for ethical reasons, but who actually enjoy eating it – so why not? I foresee us getting people to switch from both sides.
Willem: What is your plan for distribution? Direct to market? Or through supermarket white labels?
Daan: In the beginning, we need to show that people want the product, so we’re thinking of having a flagship store somewhere so that people can come in and try it – and we can educate them: “See, there’s nothing scary about it!” That will also allow us to talk to them about why we’re doing it. What I don’t see us doing is having our own distribution channel. There are so many companies who already have everything in place, so I think we’ll be looking to partner with an established distributor.
(Willem talks about Ojah as an example of how newcomers in the alternative food space operate and asks again whether there will be a Meatable brand. Daan replies that he can see Meatable both as a brand but also as an ingredient for other products: why not on a pizza? Nevertheless, Daan likes the idea of having his own branded piece of meat, at least as a lead product)
Willem: Alex, would you switch to cultured meat if it were available?
Alex: Of course! And I think that the moment it is presented in the supermarket looking the same as a normal piece of meat and costing roughly the same, people will buy it. What is more – and that’s one reason that, with my father-in-law, I’m active there – the meat industry is lacking in brands: there’s no Pringles or CocaCola. Apart from Wagyu, it’s just the difference between filets and rump steaks.
Daan, can you plot a curve like: “Today, one kilogram of artificially-produced meat costs $1 million. In six months’ time, it will cost $500,000?” Will there even come a point when it’s cheaper than standard meat?
Daan: There are multiple models: one is the computer model in which you can see the size of chips shrinking and the price declining as performance goes up. The best model, however, is DNA sequencing: just look at how fast the cost of analysing the human genome has been dropping over the past decade and you’ll get an idea. Today, I think it costs around $1000 to sequence human DNA; back in 2003 when the Human Genome Project launched, it cost over $1 billion spread over multiple countries. That is how scientific progress works: you’re standing on the shoulders of giants. People have given their lives to finding out about this and now we are on the cusp of having an application for it.
So within a decade, I think we could have cheaper artificial than regular meat.
(Alex brings the podcast to a close by asking Daan what he will be able to show them if he returns to the WimLex show in a year’s time. Daan paints an exciting picture of the progress he expects and Alex finishes with some reflections on meat-eating, stating that he thinks this is only the beginning for this exciting new technology.)