Reinventing meat

beyondmeat_seasoned_nutritional_9-28Nine billion people are expected to live on earth by 2050. What’s everyone going to eat?

Venture capitalists are investing in startups that are engineering new foods for a hungry planet–alternatives to chicken, beef, eggs and salt that deliver environmental or health benefits. The food industry, they say, desperately needs reinvention.

“The way we generate protein today is just not sustainable,” says Samir Kaul of Khosla Ventures, which has invested in a half-dozen food startups. “We’re running out of fertile land. There are water issues. Health issues.”

“Our population is growing, and agriculture just hasn’t kept pace,” says Amol Deshpande, a chemical engineer who worked in the seed business before joining Kleiner Perkins.

One company that’s getting lots of attention: Beyond Meat, a startup that has developed a vegan alternative to chicken. Kleiner invested. So has Bill Gates, and the founders of Twitter, Biz Stone and Evan Williams.

I’ve written a long story about Beyond Meat that was posted today at fortune.com. It was originally destined for the print edition of the magazine, but Wired has just run an excellent story about Beyond Meat, so my editors chose to post my story on the web. Here’s how it begins:

FORTUNE — Most people consume protein in what vegetarians call “the secondhand form,” that is, after it has been digested and converted into meat by chickens, cows, and pigs. This is inefficient, as Winston Churchill noted In “Fifty Years Hence,” an essay published in 1931. Churchill wrote: “We shall escape the absurdity of growing a whole chicken in order to eat the breast or wing, by growing these parts separately under a suitable medium. Synthetic food will … from the outset be practically indistinguishable from natural products, and any changes will be so gradual as to escape observation.”

Then again, predictions are hard — especially about the future. Food scientists and entrepreneurs have tried to reinvent meat for decades, with little to show for it. Last summer, Dr. Mark Post, a Dutch scientist and medical doctor, unveiled a five-ounce hamburger that was grown in a laboratory from cow muscle, at a cost of $325,000. (Google (GOOG) founder Sergey Brin picked up the tab.) Closer to home, mock meats from companies like Kellogg (K) and Kraft (KRFT) can be found in supermarket freezers, branded as “Chik’n Nuggets,” an “All-American Flame Grilled Meatless Burger,” and “Classic Meatless Meatballs.” Soy-based, mushy, and more expensive than the real thing, they remain niche products.

And yet, the need for alternatives to meat has never been greater. Global demand for meat has tripled in the last 40 years, driven by population growth and a doubling of per-capita meat consumption, according to the Worldwatch Insitute. That has intensified pressures on land, water, feed, fertilizer, and fuel. Meat is a climate change problem, too: Animal agriculture is said to be responsible for about 18% of human-induced greenhouse gas emissions, more than the transportation sector.

This presents a big opportunity for someone who can devise a tasty and affordable plant-based substitute for meat. That is exactly what Ethan Brown, the founder and chief executive of a California-based startup called Beyond Meat, aims to do, and he has persuaded some smart people to put their money behind him. Beyond Meat makes vegan “chicken-free” strips that it says are better for people’s health (low-fat, no cholesterol), better for the environment (requiring less land and water), and better for animals (obviously) than real chicken; most important, if all goes according to plan, they will cost less to produce than chicken. Fortune has learned that Bill Gates is an investor; he sampled the product and said he couldn’t tell the difference between Beyond Meat and real chicken. “The meat market is ripe for invention,” Gates wrote in a blog post about the future of food. Kleiner Perkins, the Silicon Valley venture capital firm, made Beyond Meat its first investment in a food startup. “KP is looking for big ideas, and this qualifies as a big idea,” says Amol Deshpande, a former Cargill executive and a partner at the venture firm. “The single biggest inefficiency in agriculture is how we get our protein.” Other investors include Evan Williams and Biz Stone, the founders of Twitter; Morgan Creek Capital Management; and the Humane Society of the United States, an animal-welfare group.

You can read the rest here.  The story goes on to explain that one advantage that Beyond Meat should enjoy over “real” chicken is that its product will use less feed than chicken. As I write:

It takes four-tenths of a pound of feed, mostly soy and pea protein, to make a pound of Beyond Meat. (A chicken breast is more than 60% water.) By comparison, even after decades of selective breeding and production efficiencies, broilers require nearly three pounds of feed, mostly corn and soy, to yield a pound of ready-to-cook chicken. Feed accounts for about 35% of the costs of chicken, so when corn prices spiked last year, the prices for whole chickens rose by 21%. As the costs of feed increase over time — and they likely will, as the costs of energy and fertilizer rise — Beyond Meat’s competitive advantage should emerge. “A chicken is just a bioreactor raised for the purpose of delivering protein to humans,” says Kleiner’s Amol Deshpande. “If you can do that more efficiently another way, that’s good for everyone.”

I’ve tried Beyond Meat, and it’s good, especially when chopped into a “chicken” salad or used with a sauce. In his Wired story, Food Network celeb Alton Brown writes that Beyond Meat’s “Chicken-Free Strips could replace chicken in at least 30 percent of the existing chicken recipes floating around out there,” to no ill effect. Brown is also pursuing a b-to-b strategy for his product.

I don’t know if Beyond Meat will grow into a big company. But I’m pretty sure that the way we produce and consume meat today is unsustainable. One way or another, we need to figure how to produce meat more sustainably or, better, eat a lot less of it.

Tires, and the second chemical revolution

EarthTalkTires“If we’ve made it once already, why should we make it again?”

Alan Barton, the chief executive officer of Lehigh Technologies, is talking about tires, but his question could be asked about almost any product.

In a world of limited resources and rising energy costs, why not turn everything that we no longer need or want into something else?

This is the aspirational goal of what’s called cradle-to-cradle design. It’s easy to talk about and hard to do, as I was reminded last week when talking with Barton about Lehigh, a privately-held, venture-backed company that turns worn out tires into what it calls “micronized rubber powders,” or MRPs, that are then used in new tires as well as shipping pallets, asphalt roads and waterproofing, among other things.

I learned a lot about tires during our interview. Roughly speaking, about one tire per person is discarded every year in the US or western Europe. That’s a lot–nearly 300 million in the US. They used to be discarded under bridges or in trash dumps until governments and the tire industry set up recycling and collection systems. Now, most are burned for fuel, often in paper mills or in cement kilns, with an emissions profile similar to coal. Others are ground up for construction materials, mulch, roads or sports surfaces, according to the Rubber Manufacturers Association. Some, of course, still wind up in dumps. [click to continue…]

Recylebank: It’s not just trash to cash

Recyclebank is on a roll.

The New York-based company that rewards people for recycling their household garbage last week announced a $20 million strategic investment from Waste Management, the nation’s largest trash hauler.

As part of the investment, Waste Management said it expects to provide access to Recyclebank’s green rewards program to its nearly 20 million customers in North America.

Currently, Recyclebank has about three million members, so this is a big deal.

Jonathan Hsu

But there’s more to the story, as I learned last week when I interviewed Jonathan Hsu, Recyclebank’s CEO, at the GreenBiz Innovation Forum in San Francisco.

Recyclebank has bigger ambitions than turning trash to cash. It’s seeking to become a Internet marketing platform that will reward people for engaging in more environmentally friendly behavior. Its members will be able to earn rewards points by using energy more efficiently at home, reducing water usage, by buying greener products, even by walking to work instead of driving.

This makes Recyclebank a very interesting company to watch, because it is betting big on the green consumer–a risky but promising strategy. [click to continue…]

GreenBiz: Innovation is alive and well

Despite policy gridlock (or worse) in Washington, despite cheap abundant natural gas (which threatens the development of renewable energy), despite Solyndra (which highlights the risks of crony capitalism), there is good news in the world of business and sustainability.

Innovation is alive and well in companies big and small.

That’s my takeaway after spending the last 36 hours at the GreenBiz Innovation Forum in San Francisco. I’m a senior writer at GreenBiz and let me tell you, it’s been great to get outside the Beltway bubble this week (and not merely because the weather here in SF is spectacular). Here’s are four reasons why:

Nike goes for gold: While she was tantalizingly skimpy on details, the always dynamic Hannah Jones of Nike made clear that the company’s drive to become more sustainable is causing people inside the company to ask ever bolder questions–including how to generate sales without necessarily making and selling more shoes and apparel.

“How do you think about the world of sport and the athlete and human potential in terms of services?” Jones asked. “Could one create revenue streams that are decoupled from any material?”

“Our mission statement isn’t ‘make lots of stuff,” she said. “It’s ‘inspire and innovate on behalf of the athlete.” [click to continue…]

Waste Management earns its name

Big companies aren’t good at breakthrough innovation.  Disruptive innovation usually comes from start-ups or entrepreneurs. (See Big Business’s big innovation problem.)

Big companies are even worse at innovation when it threaten to cannibalize their existing business. Think about why newspapers failed to create a Craigslist or why the music industry missed the chance to invent iTunes. It’s scary to embrace a new venture that just might upend  your old way of doing things.

Yet Waste Management, the nation’s largest trash hauler, is doing exactly that–it’s embracing a new business model that is designed to erode its traditional business of collecting garbage and dumping it in landfills. Instead, the company wants to find the highest, best use for waste in an effort extract the value of what we throw away–value that’s estimated by CEO Dave Steiner to be worth as much $8 to $10 billion a year.

I’ve got a story about Waste Management in the current issue of FORTUNE. (Cover date: Dec. 6) It’s the latest in a series of profiles of FORTUNE 500 companies that I’ve been writing for the magazine. Here’s how it begins:

Reusable grocery bags. Online media. Concentrated laundry detergent in small packages. All are good for the environment because they reduce waste, but they’re a threat to the business of collecting and disposing of garbage.

No wonder executives at Waste Management (WM, Fortune 500), America’s biggest trash hauler, got nervous when Subaru’s TV commercials boasted that its Indiana auto plant sent nothing to the landfill. Or when Wal-Mart (WMT, Fortune 500) embraced the idea of zero waste. In a world where people throw less stuff away, the future of a traditional garbage company looks bleak.

That’s why David Steiner, Waste Management’s chief executive, is turning the company in a new direction. Instead of simply trucking trash to the dump, the Houston-based firm will look for ways to extract value — energy or materials — from the waste stream. When companies like Alcoa (AA, Fortune 500) or Caterpillar (CAT, Fortune 500) want to reduce their waste, the company has a team of consultants that will help — even if that means cannibalizing the core business of burying anything and everything in landfills.

“Picking up and disposing of people’s waste is not going to be the way this company survives long term,” Steiner says. “Our opportunities all arise from the sustainability movement.”

There’s a lot more to the story, including a look at a series of venture investments that Waste Management has made (alongside such VCs as Kleiner Perkins) in companies that are recycling organic waste, or trying to extract energy from waste in new ways. This company is very much worth watching.

Awaiting clean tech’s “Netscape moment”

John Doerr

John Doerr

John Doerr, the brilliant and hard-charging venture capitalist, has told me several times that clean tech is still awaiting its “Netscape moment.”

What he means, I think, is that  investors will get excited about start-up companies across a range of so-called clean technologies — solar, wind, biofuels, energy efficiency, green chemistry, lighting — when one of them has an attention-grabbing initial public offering like Netscape’s in 1995 which, by some accounts, set off the Internet investing craze.

I don’t see a “Netscape moment” on the immediate horizon for clean tech but, of course, no one knew that the Internet browser company would take off before its IPO. But if we are to get the clean-energy transformation we need, enormous amounts of capital will be required. So any evidence that investors are warming to clean tech companies is welcome. I’ve seen several encouraging signs lately. [click to continue…]

Why count carbon?

Hara Software is a clean tech startup, funded by Kleiner Perkins, that originally got a lot of attention as a company to that help others curb their carbon footprint. Oops. That doesn’t look like such a great selling point today, as proposed U.S. legislation to curb greenhouse gases is stalled and we are moving farther away, not closer to, an international agreement to deal with climate change.

But Hara now talks about “organizational metabolism” — the idea that companies can run more efficiently while consuming fewer inputs — and says that its software will help clients “minimize environmental impact and maximize profits.” It’s got a solid list of customers, including Safeway, Intuit, News Corp., Brocade and, most recently, Hasbro.

logo_greenbizThis Tuesday (6/29) at 2 p.m. EDT, I’m going to moderate a free webinar organized by Greenbiz.com (where I am a senior writer) in which we’ll learn more about how environmental, energy and carbon management can deliver bottom-line benefits. It’s called “From Reporting to Reduction: The Resource Optimization Imperative” (not my title!) and you can sign up for it here.

I’m looking forward to it because the speakers who will be joining me are smart executives with long and impressive track records in business, the nonprofit world and government. Matt Arnold is a principal with PriceWaterhouse Coopers who leads the firm’s climate change practice; he previously worked at IBM, Merrill Lynch and as a top exec at the World Resources Institute, and he’s a member of the board of Forest Trends. Michel Gelobter is the chief green officer at Hara, the founder of Cooler, the former director of environmental quality for the city of New York, and a board member of the NRDC and Ceres.

Please join us — we’ll be taking questions during the hour-long webinar.

Yale’s bet on clean tech

Yale_LogoOld Blue is investing in green.

Yale University’s influential $16.3 billion endowment has taken stakes in startup companies aimed at developing clean technologies, Chinese solar and wind turbine manufacturers and in timberland certified as sustainable.

In their most recent annual report [PDF], Yale’s investment managers write:

We are confident that the University stands to benefit enormously from the Endowment’s involvement in green ventures, both as an investor and as a stakeholder in the health of the environment.

Why would anyone other than Yale staff, students and alumni care? Because David Swenssen, the chief investment officer, his staff at the Yale Investments Office and the outside money managers they hire have earned a reputation for shrewd investing during the 25 years that Swensen (a 1980 Yale PH.D.) has been overseeing the endowment.

This report makes clear that Swensen is a believer in green investing, an arena that has a spotty track record at best. That’s significant.

Kroon Hall, a LEED platinum building at Yale

Kroon Hall, a LEED platinum building at Yale

So where is Yale putting its money? It’s hard to know, because the endowment doesn’t provide a full accounting of its investments or even a list of its outside money managers. While Swensen is best known for his pioneering approach to portfolio management (he’s the author of a book called Pioneering Portfolio Management), he also adds value by selecting and collaborating with outside managers and doesn’t want to share his best ideas. Still, there are some illustrative examples of Yale’s holdings in this 36-page report, which explores not just green investing but sustainability on campus and endowed support for environmental studies. (Yale’s renowened School of Forestry and Environmental Studies was founded in 1900 by Gifford Pinchot, the first chief of the U.S. Forest Service.)

As part of its venture capital portfolio, the report says, Yale has more than $100 million (as of June 30, 2009) invested in more than 70 clean tech startups. Two promising companies are highlighted: Silver Spring Networks, a Silicon Valley-based firm that enables development of the smart grid, and Mascoma, a cellulosic ethanol startup based in Lebanon, New Hampshire. [click to continue…]