This week’s IPO of Beyond Meat (BYND) was a flashback to the dot-com boom as the company’s shares soared 167% on its debut. The valuation: a hefty $3.8 billion.
Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a profit).
But then again, Beyond Meat is a New Age food company that is disrupting a massive industry. Keep in mind that the global spending is roughly $1.4 trillion.
So how did the founder and CEO — Ethan Brown – pull this off? What are the lessons for disrupting an industry?
Let’s take a look:
Mission-Based Focus: In his shareholder letter, Ethan writes: “Beyond Meat’s story begins on farmland. Through my father’s love of farming and the natural world, my urban childhood was interwoven with time spent on our family’s farm in Western Maryland where we were partners in a Holstein dairy operation. As a child, I was fascinated by the animals surrounding us: the companions at our sides, the livestock in the barns and fields, and the wildlife in the woods, streams, and ponds. As a young adult, I enjoyed a career in clean energy but continued to wrestle with a question born of these early days: do we need animals to produce meat? Over the years, the question knocked more loudly and I set out to understand meat.”
Having a story is critical. It’s a way to get investors excited, inspire employees and to build loyalty with customers.
But Ethan’s story was more than just making healthy food that’s tasty. Through his research, he realized that his product has a positive environmental impact, such as with 90% fewer greenhouse gas emissions, 99% less water, 93% less land and 46% less energy. Oh, and there is also the benefit of animal welfare.
As a testament to Ethan’s vision, his company has amassed 1.2 million followers across social media and newsletters as well as 9.9 billion earned media impressions in 2018.
Market: When it comes to mission-based companies, there is always the issue of focusing on niche opportunities. For example, with plant-based meats, the market for vegetarians and vegans is less than 5% of the US population.
This is why one of the key strategies for Ethan has been to market to meat-loving consumers. Interestingly enough, he requests that his product be sold in the meat case at grocery stores.
Investors: Selecting the right ones is absolutely essential. To this end, Ethan received investments from top VCs like Kleiner Perkins Caufield & Byers and Obvious, which have deep experience with scaling startups.
But Ethan also looked to investors – like Bill Gates, Leonardo DiCaprio and Seth Goldman (the founder of Honest Tea) — who are influencers that can evangelize his story.
Product Innovation and Distribution: Getting this balance right is challenging. It’s common for companies to emphasize one over the other.
But so far, Ethan has been able to manage the process. When he founded the company in 2009, he started in a small commercial kitchen and experimented with different recipes. He also sought the help from researchers at the University of Missouri’s Bioengineering and Food Science Department at the College of Agriculture and Natural Resources and faculty and students at the University of Maryland’s Nutrition & Food Science Department. Ethan wanted to make sure his product was amazing, which would create a flywheel with distribution.
His first major partner was Whole Foods. Then over the years, he was able to get buy-in from Target, Kroger, Del Taco, Carl’s Jr., and T.G.I. Friday. Currently, there are about 30,000 distribution points across retail locations and restaurants.
According to the IPO prospectus: “[P]opular restaurants have approached us directly to carry our branded product, despite already carrying our competitors’ products. This type of demand for our products has been a driving force in building strong ties with customers who have been continuously impressed by the impact our brand can make on their business.”