More Hollow Attacks on a Promising Start-Up

By Curt Albright, Sr. VP Investment Banking

Let’s face it: our food system is profoundly broken. Chronic obesity, diabetes, heart disease, carbon emissions higher than even the transportation sector’s, deforestation, animal cruelty: there’s much that needs fixing when it comes to how we feed ourselves. And what’s happening in the fight to fix the food industry today, offers valuable lessons for companies of all types.

In short, our broken system — while creating so much harm — has also created special interests that work feverishly to keep things the way they are, including trying to squash companies working towards something better.

Take Hampton Creek — an American start-up making plant-based mayo, cookies, sauces, dressings and much more. Their products are more sustainable, healthier and more affordable, raising the ire of those in favor of the status quo.

In 2014, just three years after its founding, Hampton Creek was sued by Unilever, the maker of Hellmann’s/Best Foods mayonnaise. The $137 billion Goliath argued that Hampton Creek — then a start-up working out of a garage in San Francisco — was causing “irreparable harm” and “stealing market share” by selling its egg-free brand, Just Mayo. The company cited an archaic pre-World War II regulation stating that to be called “mayonnaise,” a product must contain eggs. This, despite Hampton Creek not even using the word “mayonnaise,” Unilever went on the attack.

Goliath attacked David and an intense backlash ensued, even culminating in David Letterman poking fun at Unilever on the Late Show. After weeks of embarrassing media coverage, the conglomerate dropped it’s suit.

Then, a Freedom of Information request uncovered that the American Egg Board (AEB) — a quasi-governmental organization overseen by the USDA — conspired for years to covertly destroy the company. The AEB paid bloggers to write negative stories about Hampton Creek, paid a lobbyist to try and convince Whole Foods to refuse Hampton Creek products, and hired the world’s largest PR firm to wage a communications campaign against the company. Disclosed emails even showed AEB email strings floating the idea of murdering Hampton Creek’s CEO.

Like with Unilever’s lawsuit, backlash ensured — causing AEB’s president to resign in disgrace over the scandal.

Then came the FDA’s attacks: the agency sent harsh letters to Hampton Creek which resembled Unilever’s attempted lawsuit. Again, the public galvanized behind this new company finding itself yet again pitted against powerful interests, and the FDA eventually relented.

Hampton Creek has also been hit by attacks from Silicon Valley reporters: over the CEO’s dog, Jake, sneaking back into a test kitchen to steal freshly-baked cookies, or over the company’s staff showing off “cool-looking machines” to investors.

The latest media attacks are focused on Hampton Creek’s product buyback focused on select grocers two years ago. The young company purchased some of its own products to conduct quality assurance while simultaneously trying to create an initial buzz around the new items. In total, those purchases represented a miniscule one-tenth of one percent of total sales. Yet opponents tried to portray it as a massive scheme to mislead investors. The critics failed to also acknowledge that start-ups (or good ones, at least) need grassroots-style quality checks as they get up and running — especially when their multi-billion dollar competitors have entire departments focused on doing just this.

The lesson is clear: Hampton Creek’s marketing of its sustainable, healthy, humane products right next to the conventional big players’ disease-causing, carbon-emitting, cruelty-riddled products — while competing on price — is the only reason it faces these attacks. The company’s motto is,“What would the world look like if we started over?” Certainly, embracing a sustainable, healthier world — rather than trying to take down those working to create it — would be a good start.