Matias Muchnick, cofounder and CEO of NotCo, shares incredible insights about how he built NotCo into a $1.5B company, got Jeff Bezos to invest in 3 days, and ultimately, built not just an ordinary Unicorn, but a Good Unicorn.
What’s a Good Unicorn? Of 835 Unicorns from 40+ countries, I’ve so far only identified 48 potential Good Unicorns in my research. NotCo is one of them. Good Unicorns are in service of at least one of the United Nations Sustainable Development Goal. NotCo is in service of at least two: Goal 12 (Responsible Consumption and Production) and Goal 13 (Climate Change).
NotCo is replacing animal-based foods with plant-based alternatives that taste exactly the same as the animal ones, using Artificial Intelligence. NotCo’s AI, named Giuseppe, analyzes tens of thousands of the world’s 300,000 edible plants (the western diet is composed of only approximately 200 plants) to look for combinations humans would never think of to replicate the exact taste of animal food products. NotCo’s ultimate mission is to replace animal-based foods entirely and become the most significant force in the food industry for reducing CO2 and Methane emissions.
Let’s dive into the deep end!
Tsai: Ok so before we dive into everything, I just have to ask you this question about Jeff Bezos investing in NotCo. How long did it take him to be like, “Take my money Matias!”
Muchnick: So the story goes like this. I was doing postgrad at Stanford. One of my professors said to me, “Who is the one guy in the world you want NotCo to partner with?” And it took me zero seconds to say, “Jeff Bezos.” And so he said, “Let’s try.” And two minutes later he said, “This is your lucky day – I went to school with the general manager of Bezos’ fund.” And he sent her a blurb of NotCo, and she said she wanted to meet me. So we did a call, she talked to Jeff Bezos, and within 3 days Bezos said he was in.
Tsai: 3 DAYS! Jeez! Ok, let’s talk about the problem you’re solving and how you’re solving it.
Muchnick: The problem is that consumers don’t want to sacrifice the taste of the foods they know and love. And the food we love, animal-based products, is destroying our environment.
The thing is, if we just do a super plant-based, vegan, trendy, hipster well-being brand, we’re not going to move the needle of sustainability. We need to make a technology that will allow us to produce food products faster, better, more accurately, at less cost while using less resources. We need to be a mass market company, not niche.
That’s where NotCo comes in. We knew that by utilizing artificial intelligence, we could use technology to bring the best for our bodies, tastebuds and the environment to tables across the world. The western diet is composed of approximately 200 plants accounting for all the fruit and vegetables we eat, while the planet contains about 300,000 edible plants. So we use AI to make combinations of these plants to replicate the exact taste of animal products.
We’ve been lucky to find success and expand across multiple countries, including Chile, Paraguay, Argentina, Brazil, Mexico, the US and Canada. The reason we’re valued at $1.5B is because we’ve actually penetrated the mass market. NotBurger has 8% of Chile’s burger market now, not just plant-based – the entire meat burger market!
There’s another data point that is super incredible: in our last poll, 92% of our consumers were not vegan, non vegetarian. 92%!
Tsai: Incredible. I want to dig into sustainability and your core mission. How do you measure impact?
Muchnick: We measure impact on a few levels. First is the obvious impact our company has. Our team conducted an internal audit in 2020 and found that NotMilk™ reduced the energy used in the production process compared to regular milk by 74%. The audit also revealed that the process uses 92% less water and emits 74% less carbon dioxide compared to regular milk.
The food industry has become so important in the methane industry. We estimate that if NotCo can get to 20% of the animal food market, we can reduce greenhouse gas emissions by the food industry by 5 to 10%. The morning we do that, I’ll wake up and really be like, we did it.
Tsai: Incredible. Ok now back to Giuseppe, I have a lot of questions about your AI. How exactly does it use plants to replicate the taste of meat?
Muchnick: Giuseppe is our proprietary, state of the art, artificial intelligence technology that allows us to create true plant-based replacements faster, better, and more accurately than anyone else in the industry. Giuseppe’s algorithms analyze thousands of plants in its database to produce combinations that replicate animal-based products almost to perfection. Our team then takes these recipes and tries them in real life until we have delicious plant-based options, from milk to meat, ice cream and more – that we know you’ll love.
Tsai: Wait a minute. So this algorithm is analyzing all these plants, and then generating possible recipes…how did you even land on the idea of creating an algorithm to solve this problem? No one else is doing this! It seems so counterintuitive, I’m curious.
Muchnick: We knew that the only way to catch the attention of the mass market, we needed to exactly replicate the things we’re most used to like milk, cheese, eggs. And doing that is not an easy task. Foods are super complex and made up of nonlinear patterns. To be able to replicate the taste of animal-based food exactly, we needed to first understand all the molecular composition components of that food. There are more than 300,000 species of plants, and we have no idea what they do, right? We have no idea what the combination of pineapple and cabbage can create, or cacao beans and yellow peas. All of that would be possible, without an algorithm, because for a human being to combine these things together would be so crazy. We needed to spend so much money, so much time, and resources in order to identify the chemical reaction between the components of pineapple and cabbage and all the other variations that we finally said, we’re literally going to run out of time. This world needs to change, and we’re not going to be able to do this unless we have AI that can understand these plants and predict the combination of plant-based ingredients that should results in a target taste.
And now, the algorithm is getting smarter and smarter, because it’s establishing the underlying patterns between the molecular components in food and the human perception of taste, texture, smell, and color. And if you train that algorithm, you know, enough, you will start generating a general purpose algorithm, and the algorithm will start to understand the human mind when it comes to food. What do we taste? Why do we like this better than the other? At some point we might be able to not just replicate the taste of milk with plants, but make it even better! Milk with better nutrition, better for your metabolism. AI gives you a world of possibilities that you have no idea, right?
Tsai: This is fascinating. What are some of the strangest and most unexpected plant combinations that have created similar taste to something familiar?
Muchnick: So one time, at the very beginning, we were starting to develop milk. One day, one of the food scientists comes into my office with a weird look on her face, and a glass that was filled with blue liquid. And I was like WHOA! What is that? I s it safe to drink? She says, “super safe”, so I drink it, and it literally tasted like milk, exactly. I was like, what is this? It had some weird algae with an amino acid structure similar to what’s in milk, and it had tinted the milk blue. I was like, this is fantastic, we’ve hacked the system, we’ve exactly replicated the taste of milk with plants, but I can’t sell blue milk! It would be super weird to sell this.
So that’s actually when we created the database of visuals. This was to help Giuseppe understand that looks matter; our AI needed to take into account not just taste, but also replicating the look of the product we were replicating.
Tsai: Ok so I have to ask, what has NOT worked on the journey to building a Good Unicorn?
Muchnick: So many things did not work. Really. When you first start you’re doing so much, chasing every opportunity, and end up doing nothing. 75% of our effort in the beginning was going down the drain. I’ll give you examples. Expansion was a painful, painful failure in the beginning. We tried to launch in Argentina 3 times and failed. Brazil 3 times and failed too – we built teams that didn’t work, over and over again. We thought the blueprint of Chile would work well in Argentina and Brazil but they had totally different markets. So many failures. I’d say in 2018, nothing worked. But yeah, that’s part of growth. Without those failures, we wouldn’t be here in the US becoming one of the fastest growing companies in the country.
Tsai: Thanks for this – super vulnerable. 75% didn’t work – what was the 25% you should’ve been focused on?
Muchnick: COVID really got us to understand the 25% we should be focusing on. Before COVID we had 35 innovation projects and 5 countries we were trying to launch into. Some of our innovation projects, the effort was so big, the market so small. Like NOTella. Everyone was so excited about NOTella (plant-based alternative to Nutella), but ultimately we had to ask, why are we doing this? Because we think it’s cool or because there’s a real market that’s big enough? So we cut our 35 innovation projects down to 1 (the burger) and our 5 countries down to 1 (the US). We recently launched in the US with NotMilk, the first plant-based milk that actually tastes like milk, in Whole Foods in 500 stores.
Tsai: Ok, so let’s lean into this conversation on strategy. As CEO, where do you put your focus? What are your highest leverage activities?
Muchnick: That’s a great question. I focus on 3 things and I think about it in the shower every day.
- Culture & storytelling, where we came from, why we’re here. My agenda is open to every single employee to have 15 minutes to talk to me about whatever they want to talk about.
- Strategy. I talk to everyone across all departments, all levels, about: what are you seeing? What do we need to improve? What do you feel we need? How can I help you with resources?
- The next 5 years. How do we grow from a $1.5B company to a $50B one? I talk to a lot of other CEOs, incumbents or challengers. I surround myself with a lot of explorative conversations.
Tsai: Finally, you know how I specialize in studying Good Unicorns. There are currently 835 unicorns from 40 countries now, and the ones I study are the Good Unicorns like yours, that are making a transformative impact for our people & planet – the Good Unicorns. Are there any unique challenges or differences between building a Good Unicorn or like an ordinary unicorn?
Muchnick: It’s a great question. And I don’t know if I have the right answer, but I’ll try.
Good Unicorns, we’re disrupting so much. We don’t just have an interesting value proposition in terms of business model. We have so many other things we have to do right, we have to be better in every single way. You need to do operations, supply chain, packaging, absolutely everything different, because you’re leading the way and showing everyone inside the system that it can be done differently and better for our planet. It takes more time, it’s harder – because you have to be better in every single form. It’s hard. If you’re only good at one thing, that’s not good enough for becoming a Good Unicorn. It’s super, super hard.
Tsai: Oh gosh I just got goosebumps. Ok so one final question. So the purpose of these interviews is to create a blueprint for entrepreneurs to dream bigger than just building Unicorns – to dream of building Good Unicorns. And especially, for the 65% of Gen Z that want to build companies to dream of doing massive good at massive scale and being massively rewarded for that. So what’s your advice for these entrepreneurs?
Muchnick: First, build a startup for the right reasons. I think this is one of the things that I have encountered a lot. And so many times, I’ve heard so many crazy arguments of saying, “Oh, I want to become an entrepreneur to, you know, to never have a boss,” let me tell you, that the board is your boss. So you have not only one, you have like, six, seven. So do it for the right reasons, right?
Second, do the thing that is a general pain and not just your pain. This is also another big mistake. People thinking their pain means other people feel the same. Ask: Who cares? This is the most important question. And not only when, you know, you’re starting, but when you’re in the middle as well.
Finally, don’t just have a romantic speech about changing the world. Actually DO IT. Move the data, measure the change. Relentlessly execute. And the way you do that is by building a team that complements you in every single way.
Tsai: Finally. How does somebody think up something like this? Who are you? What brought you to this moment here with NotCo?
Muchnick: My dad’s side is Polish, my mom’s is Spanish, I was born in Chile and then we moved to Argentina when I was 3 because of my dad’s job. My dad was a banker, my mom was a photographer, so I had the finance side and the arts side growing up. After school I went into private banking.
And so this is the part in the story where I had my AHA moment.
Private banking allows you to really kind get to know families and people who make their wealth in different ways. So what I saw was there was a common denominator to the happiest clients I met – and that was that they were entrepreneurs. So every time I got to meet a client who was an entrepreneur, I took an hour and a half with them, and they would always tell me a story about how they changed the world. It didn’t matter what they did, they always thought they changed the world, and they would get all bright eyed, and emotional, and the story was so nice to hear. And I didn’t feel that way about finance! So I decided, I want to become an entrepreneur.
And then food, why the food space? I’m such a foodie. I get grumpy if I have a bad meal. And I knew after the subprime crisis what a broken system looks like, and I saw it in the food industry, the exact same signs of the financial industry during the crisis. You had these big food companies sending overly complex products to consumers that were totally disconnected to the actual implications of this food on the environment. It was crazy, digging deeper into water scarcity, ocean depletion, loss of species, methane emissions.
And there was this new generation of consumers growing up with Netflix, aware of these issues, asking, what are we eating? What are the implications of this food on the environment? And I realized, holy crap, this is going to change severely. And so my first company, before NotCo, was a vegan company. We literally bought machinery from China, made vegan products in my friend’s sister’s bedroom, and ended up selling in Walmart and the four biggest retail chains in Chile. I was the one cooking, labeling, delivering everything.
After we sold that company, I came to the US to study at Berkeley, to surround myself with the biotech, biochemistry, and synthetic biology people. What I saw was incredible. The difference between R&D in food versus pharma was unbelievable. At the time pharma was launching CRISPR technology. I’m just thinking, why don’t we learn from pharma and plug their best practices into food?
And then I met my cofounders. And so I met Kareem, a computer science PhD postdoc from Harvard, he used to work with the astrophysics department over there basically, took data from telescopes, applied machine learning algorithms for astronomers to understand the composition of a star density of the atmosphere, so on and so forth. He took terabytes of data and gave astrophysicists valuable knowledge. That was the same problem that we had in the food industry. There might be a lot of data, we have no idea how to process it or to understand it, right? So I kind of pitched Kareem with this idea. He was like, “I’m in.” I was like HOLY moly, he’s in! I had no expectation of that.
And then I met Pablo, Pablo is a biochemist, he’s my other co-founder and a biochemist, biotech postdoc from UC Davis. And he’s an expert in plant genomes. So he really knew what to look at in plants in order to understand them. What was data that was important, relevant, or what wasn’t, and so on.
I’m the only non-scientist in this, I just got really, really curious and I’m a guy who gets obsessive when something is in my mind.
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