Startup Series: Compound Foods
Today's guest is Maricel Saenz, Founder & CEO of Compound Foods.
Maricel Saenz is the founder and CEO of Compound Foods, a food-tech startup recreating coffee without coffee beans. Maricel and Compound aim to create a sustainable coffee that reduces the negative environmental impact on the planet and ensures we have coffee for the foreseeable future.
Maricel is a Costa Rica native, passionate about sustainability and coffee. She has a Bachelor of Commerce from The University of British Columbia and attended Singularity University's Global Solutions Program in 2017. Maricel has a background in finance and previously co-founded Nextbiotics, a synthetic biology startup addressing antibiotic resistance. She worked in international development in South Africa, with local entrepreneurs, and in Cambodia with Hellen Keller International to empower women. She also worked with Monitor Deloitte in corporate strategy and innovation consultancies. In addition, Maricel was named on the 2022 Forbes' 30 under 30 list.
In this episode, Maricel walks me through her career path leading up to Compound Foods, why coffee is so important to her, and the company's approach to beanless coffee. We also discuss the impacts of climate change in the coffee industry, the startup's most recent raise, and how sustainability has shaped Compound Foods. This is a great episode for those interested in the intersection of food and climate change.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded February 23rd, 2022
In Today's episode, we cover:
An overview of Compound Foods
Why Maricel founded the company and her climate journey
The destruction the coffee industry has had on places like Costa Rico
Compound Foods' evolution and the process going to market
Early company financing and the skillsets Maricel looks for when hiring at the early stages
The climate-conscious food landscape
Compound Foods' future and potential for expansion
Key stages bringing their product to market
Compound Foods' recent seed round and Maricel's thoughts on non-dilutive capital v venture funding
What motivates Compound Foods' customers and how important sustainability is to consumers
How Compound Foods plans to expand and scale
How sustainability has shaped Compound Foods
How Compound Foods measures impact and KPIs
Links to topics discussed in this episode:
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Hello everyone. This is Jason Jacobs. And welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Maricel Saenz, founder and CEO of Compound Foods. Compound Foods is a food tech startup focused on creating coffee without coffee beans through precision fermentation.
As the yield and quality of coffee are affected by the increases in temperatures and unpredictable weather conditions, Compound Foods aims to create future proof coffee that's also better for the planet. We have a great discussion in this episode about the origin story for the company, the state of the coffee making process today, what it is that makes it unsustainable, what some of the factors are that put it at risk over time. What a better way could be and of course, how Compound Foods can help their solution, their progress today, their approach, the stage they're in, what's coming next. And just generally, what it will take to help Compound Foods reach its fullest form. As a coffee lover, I greatly enjoyed this episode and I hope you do as well. And don’t miss Pique Action’s mini documentary on Compound Foods coming out soon! Maricel, welcome to the show.
Maricel Saenz: Thank you Jason, excited to be here.
Jason: I'm excited to have you. For a few reasons, one, that the way that we produce foods we love including coffee is delicious, but, but does take a big toll from a resource and emission standpoint on the planet. And so I, I get that we need to do it differently, but I also just really love coffee. So this is gonna be a fascinating discussion because I have so many questions for you as someone that's trying to reinvent coffee in a way that doesn't involve coffee, at least, at least that's my understanding.
Maricel Saenz: Yep. I love coffee too, so I'm with you.
Jason: Well, Maricel, maybe for starters, what is Compound Foods?
Maricel Saenz: So Compound Foods, we are an early stage food tech company and we're working on recreating the flavors and the aromas and the effects of coffee without using the coffee plant.
Jason: So essentially it is fake coffee that's indistinguishable from coffee? How do you react to that?
Maricel Saenz: Well, I don't, I don't like the word fake because it's real, it's real food. It's a product that tastes like coffee, but it's not made with a coffee plants.
Jason: Got it. So it is, it is a coffee alternative that is using other sources to recreate coffee in a way that is more sustainable?
Maricel Saenz: Exactly, more sustainable and with a more resilient supply chain.
Jason: Interesting. So we can dig more into that a little later, but for starters, where'd the idea come from and what led you down the path of doing what you do today?
Maricel Saenz: Yeah, so I'm originally from Costa Rica, born and raised. We make some of the best coffee in the world, although we don't make that much anymore because of, you know, both the environmental conditions of making coffee as well as the economics of it, but we make high quality coffee and I grew up-
Jason: Is that happening everywhere or is that specific to Costa Rica?
Maricel Saenz: It's happening everywhere. I think in Costa Rica it's a little bit more dramatic than in other places. Like when we started, coffee was the first product that we put in the market as an export for a very small country. And there was a time where it was 80% of our exports and now it's less than 3%. It has to do with the conditions. It also has to do with just the fact that coffee is grown in the central valley where San Jose is also located and the city has sprawled. It's kind of like eating into our coffee production and it's just more profitable to have, you know, a mall than a coffee farm, where they used to be.
Jason: Interesting. And I wonder if that's gonna continue to be profitable to have malls given the rise of online commerce and less foot traffic in the malls.
Maricel Saenz: Yeah. But then they'll, they're making real estate development, then Costa is getting super popular. We're getting a ton of foreign investments. So there's a lot of development going on and that's definitely eating into our coffee production as well as the fact that the most recent report came out earlier this year, that in the last two decades we're producing 30% less in terms of yield from the coffee farms that are still going. So we're definitely being affected by the environmental conditions as well.
Jason: Okay. So you grew up in Costa Rica?
Maricel Saenz: Yep. I went to school in Canada and then I fell in love when I was there with entrepreneurship and in particular, social entrepreneurship. I draw a lot of inspiration from the Jacqueline Novogratz of the world, around how we do business trying to solve problems by empowering people and building sustainable initiatives that solve the problem versus things like charity or foreign aid. And then I came to the Bay Area a few years ago and I started a company in biotech because I have a co-founder who was doing a PhD in biophysics.
And he was like very intense, you know, very early, very early days of synthetic biology for those of us who understand it more on, on the mainstream, not for people who had been researching it for decades. But it felt like a very nascent field in 2017. And we started a company trying to engineer [inaudible 00:06:47] to address antibiotic resistance, which was a huge, huge goal. And we ended up trying to replace the use of antibiotics in food. So I got really, really deep into the food industry and tried to understand how do we produce food? How do we produce protein? What are the things that we're adding to things like our chicken so that we can make them more efficiently?
And after I learned enough, I was like, I do not want to be part of the legacy food industry and instead, kind of challenge again, how we're making the foods that we love. And we have all these tools that have been built, been built in the last few decades around, you know, being able to manipulate organisms and getting them to do different things and produce different compounds. How can we bring that to market? And I was worried about coffee because I love it and I, I could see it being decimated.
And I was, I just fell in love with the problem and I've gone through very different iterations of what the solution for that problem looks like. And I am just so focused on just trying to create an alternative for coffee so that we can have it for a very long time. And we've tried very different technology approaches. And right now, we think we have the winner one, which is to use fermentation to recreate the flavors and aromas of coffee so that we can create a drink that is still issues. But at the same time, that we can produce locally, that doesn't have such a long supply chain and, and complicated logistics, as well as that it's more resilient to the changes of climate change.
Jason: And when you say you fell in love with the problem, what is the problem as you describe it?
Maricel Saenz: Yeah. So coffee has many problems, but the, the first one is it grows in the region of the world called the coffee belt, where countries like Costa Rica sit in, Brazil, Columbia, and the countries we normally see, you know, where good coffee comes from like Ethiopia. And it's a very sensible crop. So it grows in these regions because it likes very particular environmental factors. In particular places like Costa Rica, we don't have a winter in a summer. We just have like a really nice constant kind of temperature with, you know, rainy season and a dry season.
Jason: Given that I'm in Boston, that, and it's our winter, that almost feels like gloating, as you said it, that just, it felt a little malicious.
Maricel Saenz: No, but, well, I, I always, I'm always either, I live in San Francisco now and I'm always very, very cold. And my excuse is that my body really never learned to regulate temperature 'cause it was just like this is, you know, chilling in the middle. And so are the coffee plants, they're like, we just like, you know, this like temperate weather, they grow like higher in the mountain. And all of a sudden, climate change is leading to really, really high temperatures. Right?
And it's also leading to erratic rains. So it's leading to some places having floods while other ones have drought. There's not enough rainfall in some places or too much in others. And what it's leading is that we're having lower yields of coffee and lower quality. So actually the coffee that is at higher risk is Arabica beans, which is high quality coffee, which is specialty and more expensive, more delicious, but also more fragile as a plant.
So the latest study again, came out January 2022 from Switzerland and we're on track to, the word we use is loose, 50% of the land where we grow coffee. And, but what we mean with losing is, it's no longer gonna be suitable. You know, the land's still gonna be there, but it's just the conditions are not gonna allow us to grow coffee. And even coffee producing leaders like Brazil, Brazil produces 40% of the world's coffee, they are on track to lose 79% of their coffee production. And we're seeing the effects on Brazil already.
So Brazil last year had a frost. They lost a big part of their coffee production. And then what happens, that reflects directly on price. So climate change is leading to a problem in the supply chain of coffee, which affects price. So coffee is the most expensive that it's been in the last 10 years. And that price has continued to increase, which is being passed on to consumer as well as, as to coffee distributors. That's from like the supply perspective, which is a big, big part of the problem. And then the other one is that the current way that we produce coffee also contributes to climate change.
So we use a lot of water and create a lot of carbon emissions in coffee production. One kilogram of coffee produces around 17 kilograms of CO2 equivalent and to create one cup of coffee, we need 140 liters of water. So it's kind of a double edge problem where climate change, it's, you know, putting its future at risk and at the same time, the way that we produce it contributes towards climate change.
Jason: And so once you fell in love with that problem, and thank you for clarifying the problem that you have grabbed onto. You mentioned that you have now landed on what you think is the winner approach with this fermentation, but maybe talk about some of the twists and turns. So once you landed on the problem, then what? And what are some of the, the evolutions between then and where you are today?
Maricel Saenz: Yeah, so initially I thought, okay, so then why don't we grab a coffee plant and we engineer it to be more resistant to heat and need less rainfall? Thinking about projects like the papaya project that was in, in Hawaii, where they were able to modify papaya to make it resistant to virus. I was like, I tried that papaya, I'm like, it's delicious. Why don't we do the same to coffee? Right? And I went to some of my scientific advisors and mentors, they're like, great idea. You know, that's a PhD, you can be in it for like seven to eight years, I'm not a scientist.
They're like, you know, by the time, it takes between four and five years for coffee to grow, so it's like, oh, first you have to do all the research, then you need to modify the plant, then you make sure it works. Then you have to wait for five years to pick it to see if it tastes how it needs to taste, that if it's actually going to be resistant. So that approach takes too long. And as we both know, when it comes to climate change, we have urgency. We need to solve this problem and we need to solve them now. So that approach didn't work. Then we started thinking about what makes coffee, coffee, right?
And coffee is really an extraction of chemical compounds with this like perfect balance that makes the aromatic and taste profile that we all love. But at the end is, you know, chemical compounds that we're extracting with water from the plant. So that's when we started focusing, okay, how do we recreate those chemical compounds without having to grow the entire plant? And we explore things like using synthetic biology. So looking at yeast and how can we make yeast to produce these compounds?
And we are still working on that, but we focus that as an R&D project because that also is gonna take a few years to get it, you know, up to speed, to get it to the yield and optimization that we need it to be as well as to get it through regulatory approvals. And on the flip side, coffee has over 800 compounds and that is why we've landed on using fermentation and through communities of microbes, getting to the flavors that we need, because it gives us the ability to produce a much wider breadth of products, flavor profiles that we can modulate, that we can change.
Coffee is amazing because it's different because you know, you, in every cup, you can taste different things from every region, from every, you know, way that it's roasted. And that's really what we wanna replicate. We wanna have the platform and the ability to recreate multiple types of product. And we find that with our current approach, it gives us that flexibility.
Jason: When you were going through these twists and turns, how was the company financed during this period? And also, was it just two of you? Or what kind of skill sets did you have in the company when you're in that mode?
Maricel Saenz: Yeah. So when I, when I had the idea of like the plants, that was just an idea. When we started looking at synthetic biology and fermentation, because we've always been exploring both of them, we raised our pre-seed round and then we raised a seed round last year.
Jason: Yeah.
Maricel Saenz: We're in 2022. 2020, 2021, 2022, get merged together for me, but 2021-
Jason: Oh, no, I don't even know what year it is right now.
Maricel Saenz: We raised our seed round and we've grown our team. So right now, we're a team of nine and we have a really, I'm looking at them, but we have a really different set of skill sets. So we have a couple people that come from the alternative food space. So people who have worked and recreated things like egg or milk or cheese, because there's a lot that we can extract from trying to understand what makes a product, a product and then how do we recreate it with different techniques?
And then we have people who have spent a lot of their time in industrial fermentation in industries like dairy, which, you know, does fermentation at a really large scale and then try to apply that to vegan cheeses, which we think there's an interest correlation between that and, and what we're doing. So most of our team actually comes from this industry that I think of like alternative foods, both in like the fermentation and food science, as well as R&D projects.
Jason: And I, I mean, I still have a ton of Compound Foods questions, but putting Compound aside for a minute, a more general question about, about the marketplace. When you think about replacing these products that are at risk and also contributing to the problem as you described, I would imagine there's tons of products like that across the food landscape. Are the solutions gonna be wildly different on a category by category basis? Are the challenges wildly different? Is the ex- expertise needed wildly different? Or are there parallels, and do you think that there's gonna be companies that get built that are leaders in each category, or do you see there are ultimately being consolidation?
Maricel Saenz: I think there's definitely parallels when we think about the things like plant-based milks, right? And we think about how they were adopted and why. I always think it's really interesting to look at things like almond milk, right? We were, most of us were drinking a lot of almond milk. Then we learned that, you know, almond takes like 17 times more water than giving water to a cow. And then we looked at things like, oat milk. And, and, you know, it was a big time, the, the rise of Oatly.
but to me, that shows that consumers are willing to learn, right? That if we give them the facts about how products are grown and created, that they're willing to make decisions that are aligned with environmental and, and their own values. So I think there's a lot of parallels that we can draw there, then we can think about adoption and look at companies like Impossible, right? And like how they started by going at smaller restaurants and then they ended up in Burger King, which I think was a big milestone for the entire industry because it shows acceptance at, at the mainstream.
We're like starting to cross the custom where, where a lot of us are still, you know, in the early days. So for me, I think there's a lot of different parallels that we can draw. In terms of category, I think there'll definitely be consolidation in things like dairy, for example, right? As we see in traditional dairy, so like milks and cheese, and it all starts to become very similar, as well as meats. I struggle to believe that there's going to be one company that's gonna be able to do all of those things, right? Because inherently, all those things are very, very different from the way that they're made, the way that customers wanna interact with them and what customers are looking for.
So coffee in particular, is completely different than meats, and it's completely different than dairy, both in the way that we're making it, but also what our consumers are looking for. Consumers interact with coffee in a very different way. Coffee is like a treat for most of us. It's like, we've done a lot of customer interviews and I love having people describe what coffee means to them. And it's, you know, if you are a mom, it's like those five minutes that I get to myself, or it's like, you know, in the morning where I'm like gonna kick off my productivity or it's like me with a book on the couch.
And I think for us, it's gonna be really important to be able to speak to all of those values and create a company and a category around what coffee means to people, which is different than what, you know, meat and dairy and seafood means to people as well.
Jason: Why is the company named Compound Foods instead of Compound Coffee?
Maricel Saenz: So what we're trying to do is to understand what makes coffee, coffee, and recreate it. And our goal is that then we're gonna be able to use the same approach to recreate other products. We are however, a sustainability mission company, focus-company. That's why we were born. We were born to create solutions to climate change. So our goal will be to focus on products that are being challenged because of climate change or contributing to the problem.
Jason: And you mentioned that each category is wildly different. What are some categories that are more synergistic with coffee that could be potential expansion areas over time?
Maricel Saenz: Yeah. So for us, it's more around the beverage world, right? So like coffee and the beverage that are around coffee that can lead to climate change as well as things that are made in a similar way. The very obvious one for us is chocolate. So chocolate also comes from, from a plant, it's beans. It also has a lot of problems in terms of how it's being produced. So there are things, you know, and, and be people also relate to coffee and chocolate more similar than they relate to like coffee and meat.
So those are some of the areas, but at the same time, there's the saying in Spanish, which I think translates to, or in English people would say like, I don't wanna buy more than we can chew. And right now we're extremely focused on making the best coffee product that we can. And from there, we wanna make the best coffee lines that we can and then we'll move on.
Jason: And from a technical standpoint, what are the key initial stages between zero and actually taking product to market at scale? And where are you on that journey today?
Maricel Saenz: Yeah. So first step for us is formulation. So product development and formulation around, you know, our food science approach, as well as combining that with our fermentation outputs. Then, you know, it goes through our process of QA, QC, making sure that we have, that we're compliant and we have the shelf life that we want and then scale up. You know, making sure that what we can make in our bench, we can make it at a larger scale and start to do those runs, and then we'll go to market. And where we're at right now, we are the final stages of formulation.
We're going through QA, QC, and we're lining up for scaling up, which is really, really exciting for us. And it's a different stage of the company now we're starting to work on running those trials to see our baby products, you know, be producing larger batches.
Jason: Got it. And so the seed round that you raised, I think fairly recently, although again, time is a blur, so I got, might be way, way off on that, but was that primarily meant to get through the formulation phase or did that include scale up as well?
Maricel Saenz: So our goal when we raised our seed round was to finish our first product and do the first kind of batch of scaling up and to start working on our second product, which we're doing to grow the team and work on our brand. So we have a lot of really exciting brand projects going that we are going to be announcing in the next few months, but we are on track with that seed round. And then we're, we're gonna start thinking about series A, to scale at an even larger volume and for commercialization.
Jason: Nice. And so when you think about go to market, and don't share anything that, that's still confidential information, but how do you think about go to market in terms of channels and who the buyer is for Compound Foods?
Maricel Saenz: Yeah. So in terms of the buyer initially, right? Our goal is really to compete on having a really amazing product that people wanna consume, right? That it's a brand that stands by the values that we share, that is a delicious product, that is at the right price. I think that's very, very important when we think about what are the requirements that we need. We need a high quality product that we can scale and that we can scale quickly and that we can do it at the right price. Those are the things that we're thinking about, because again, we're trying to solve the climate change problem.
We're not just trying to create products for the sake of it. So our first target market is really older gen Z and millennials. So we like this market because they resonate with making choices around sustainability. They're already changing their consumer habits and they also love coffee. They spend a large share of their wallet drinking coffee, they go out in drinking coffee shop. They also make it at home. They're willing to try new products. And we've just had a lot of conversations with people in this target market that just really resonated and are excited about what we're doing.
So that's where we're gonna start, but ultimately, you know, we need to expand. And, and our goal is that because it's gonna be a really high quality product, that we're gonna be able to expand into, into a larger market. In terms of distribution, we are going to partner with coffee shops to start. So we think the best place for people to try our product is in a coffee shop and that is where we're starting.
Jason: In terms of positioning, how prominent is sustainability in the value proposition to consumers? So I, I know it's very important to the company, how much are you leading with that as it relates to persuading consumers to make the switch?
Maricel Saenz: Yeah, I think when it comes to coffee, consumers care about a couple different things. First is taste, price and availability. Like it matters where you get it, you know, for some reason, a cup of coffee and a nice coffee shop tastes better than a c- cup of coffee on the side of the street. But there's also a lot of social issues with coffee that people are more and more aware. And that, you know, so if you go to coffee shops, there's a lot of information around sourcing and traceability and, you know, fair trade and pay farmers properly.
So again, different from other markets like meat and dairy, where first, you know, we're not really challenged in the, the meat production is not being challenged by the environment. It's more like we're trying to produce an alternative. Also, there's not this knowledge around the issues with production as much as, when it comes to coffee. And the fact that we know farmers are not being paid a lot and that it is a very long supply chain. So consumers do care where their coffee comes from.
But as with most sustainable products, I think you have to lead with a really cool brand and a high quality product because people ultimately are like, I just wanna a good cup of coffee that I can get in my regular coffee shop and that I don't have to pay, you know, $10 for a cup of coffee. Although, the other day I pay [inaudible 00:23:17], $7 and 50 cents for an ice latte in the mission. I'm still not over it.
Jason: And again, if you're not ready to share this, don't share. I'm just, I just find myself being curious. So if I'm the barista and somebody in, either the barista and what they say or what it says on the wall behind the barista when someone's making their choices, what's gonna persuade me to try the Compound product? And I don't even know what you'll call it when it's, when it's in market, if it'll be called the Compound product or something else, but.
Maricel Saenz: Yeah, you're gonna be proceeding with something like, do you wanna try this delicious beanless coffee, it's cold brew. It tastes really great. It has really amazing acidity and chocolate notes. And on top of that, you know, it's from this new company that's trying to do it in a sustainable way where it has less carbon emissions and less of a water footprint.
Jason: So I,t it's being positioned as a coffee alternative?
Maricel Saenz: We're calling it beanless coffee, not coffee alternative, 'cause the coffee alternatives that are in the market are things that are made out of like tea and herbs. I mean, a lot of the times, coffee alternatives are equated to no caffeine, are equa- are equated to like you like the taste of coffee and you like a warm beverage in the morning, but you don't wanna be caffeinated. Our coffee has caffeine. So we are going need to build a new category, which is not traditional coffee and it's not coffee alternatives but it's beanless coffee, which is coffee that is made without the coffee plant but has those flavors, that aroma and that effect.
Jason: Is it the same kind of caffeine? Does it have the same kind of effect or is it a different flavor of caffeine and buzz?
Maricel Saenz: The caffeine molecule is the exact same. We do make sure that it has the same amount of caffeine in that regular cup of coffee. I'm gonna say what we've been hearing a lot that people also get interested about the fact that that means that we can have a coffee with more caffeine or less caffeine. And then we've seen people be excited about that because it is the exact same molecule. So you have the same effect. And what really changes is the amount
Jason: As you think about out bringing product to market, and it sounds like coffee shops will be the initial entry point, is it initially about a small sampling and showing good customer adoption in the small footprint that you have? Or are you thinking about it more widely out of the gates from a distribution standpoint? I guess how important a scale? Is, is my, is a more succinct way to ask it.
Maricel Saenz: Scale is really important. We're gonna start small because we wanna learn, we wanna put product in the hands of consumers and we wanna learn what they care about, what they like, what they don't like. Our first launch will be small and then we'll learn and we'll grow from there.
Jason: How should we think about timing? When and where will this coffee, this beanless coffee be available? And again, don't say anything you, you don't wanna say yet.
Maricel Saenz: We are going to do our first launch towards the end of this year, but that will be a small launch. And then after series A, we'll work on, on a larger scale commercialization and scale up.
Jason: Great. And you mentioned seed round, you mentioned pre-seed round, you mentioned seed round and you mentioned series A, all those sound like equity, has equity been the only type of capital to date and is equity the only type of capital you're thinking about directionally?
Maricel Saenz: So equity has been the only type of capital to date. It is not the only thing that we're thinking about in the future. We've actually been approached by people that offer distinct methods of financing. I haven't explored those in depth if I'm honest with you. And I mean, if someone's listening to this and to help me think through that, I will definitely take them up on the offer. I think that there's a lot different, new, creative ways that we can think about funding.
I did go a little bit into a couple different rabbit holes. I actually listened to one of your podcasts on like web three because of that rabbit hole around how like we finance things in a different way. But right now we're so focused on product and technology that, that's taking most of my creativity.
Jason: What about non dilutive capital grants, for example?
Maricel Saenz: Yeah. So we are, we are going to be looking into grants in the next few months as well, but we haven't until now.
Jason: And I think I know the answer to this, but what are the biggest risks that are on your currently and heading into this next phase?
Maricel Saenz: The biggest risks are that people love the product that, you know, that, that it resonates with people and that they're excited. At the same time, I think they will be because it is an exciting project and product, but that is definitely number one. And then we do have risks as every startup does when we're scaling up, we have to be ready for things to break. And that is just how it works when you're doing difficult things and you're doing new things and developing new processes for new products, it always takes a little bit longer.
So we're actually, we've started on scale up earlier than we had planned to just so that we can line up our partners and do our trials. Those are, I would say are the major to risk. And then the third one, which I don't know if it's a risk, more of a challenge, but as you probably, you know, the war for talent out there is an intense one. So hiring the right people at the time that we need them is a challenge as well, which I think a lot of the companies in this space share currently.
Jason: And when you think about defensibility, how difficult is it to do what you're doing? What are the most difficult aspects of that? And then from a competitive standpoint, if it does show early success in the marketplace, what prevents bigger, more well capitalized competitors like the large coffee players for example, from copying you and executing from a similar playbook?
Maricel Saenz: Yeah. So I do think we have unique insights from the technology point of view, as well as the market and how we combine those to create our approach. We are filing, our IP strategy includes everything from patents to, that, our patents on like specific components as well as methods and processes. And we're also going to file trade secrets when it comes to formulation. So we are building, you know, defensibility and, and [inaudible 00:28:47] around our technology.
I think the risk of, I know, I feel like every Google, every software startup gets asked like, what if Google does what you're trying to do? Which is kind of like the same question for us, but maybe the name is, is not Google, but some of the large food companies. And although that is always a risk, I think defensibility for us will come from our patents as the processes that we're developing are, are not as simple to reproduce just by trying to reverse engineer them.
I also think that brand and how we build this category will differentiate us and that more and more customers are not only gonna be consuming our product, but because of what the product stands for. I would say those are the main, the main three things. I always think it's a risk, but as a startup we can do is, you know, move fast, be innovative, be creative and make that one of our points of advantage in terms of how we're innovating and improving our products much, much faster than big, big, well capitalized companies could ever do.
Jason: And you mentioned that the reason this company exists is to help address climate change and that, that is really core to the why for, for you and, and for the team. How has that manifested in terms of, if you didn't have that at the core, but you were building an alternative, you know, a beanless coffee kind company that didn't have that at the core, what decisions would you make differently than you made today? Or, or said another way, what decisions have you made differently because sustainability is at your core, that you wouldn't have done otherwise, if, if any?
Maricel Saenz: So sourcing, I think is the best, the first one. It's like when we're thinking about what are the ingredients that we're using, we're not gonna replace coffee by using an ingredient that's equally or worse for the environment. So we put it through a filter where we're looking at, what are the carbon emissions? What is the water footprint? Where are we getting them from? Right? If we have to ship them from crazy places, then what's the point?
So when we're thinking about building our product and where we're getting our inputs from, sustainability comes first, when, when we think about sourcing. It also comes when it, when we think about processing. So we're also not gonna make processes that are incredibly wasteful or inefficient, that are going to again, be detrimental to the environment. And then the third piece is around priorities. So the ones that I just described to you earlier around high quality, price and scale of capacity, those are because we are trying to solve a climate change problem.
If we weren't, then we would probably be sitting here thinking like, what is the most complex, like technologically complex product we could ever make that no one could ever repeat? Even if it takes us, you know, 10 years to get it to market, maybe that would be the approach. Right? But in our case it's like, because we're just trying to create a solution for what we believe is a pressing problem than our priorities are different and we act on them.
Jason: And you, you sort of answer this, although I'm gonna ask it more directly since it is a different question than I asked previously, but how do you measure impact? And is that something that you have wrestled with in terms of the, the right KPIs to do so?
Maricel Saenz: So we use an LCA, so life cycle analysis and we calculate the water and carbon footprint of our product. One of the things that once we start selling, we are going to have not only revenue targets, but carbon and water targets, because I think that's gonna keep us aligned as a team. And we also think it'll be important for our partners to be aligned when we are gonna go to market, we wanna get amazing partners that sell delicious coffee, but also that care about the environment, that are gonna care about our target.
So I think, you know, you can, we need, we need to measure the right things. And in, in our case, those are gonna be the, the three things we measure from a sales standpoint. And right now, you know, we have an internal tool where we put in, input our formulations and how they're changing and see how that's affecting our results in terms of reduction of carbon emissions and water use.
Jason: And as someone who grew up in Costa Rica and who loves coffee, and I assume loves the country where you grew up in as well, the people in it, the coffee industry is a big source of employment. If you're successful, does it potentially jeopardize that industry and, and those jobs and how do you think about that? And do you, do you wrestle with that at all? And I, and I guess, you know, one could ask the same question about the coal industry or, and I'm not suggesting that the coffee industry is the coal industry, but, but it'd just be interesting to hear how you think about that given that you're so uniquely situated, having grown up there.
Maricel Saenz: I think about that a lot. In the early days, it would keep me up at night. Like I would wake up in the middle of the night and be like, I can't do this because I, first I'm gonna lose my citizenship if I go back to Costa Rica and I like stole a bunch of jobs. And second, it's just like, you know, it's, it's different when, when the problem has a face, when you've seen these people, when you've met these people, when you've been to their houses and you understand how it works. So at Compound Foods, we believe we also have a responsibility to the people.
You know, the, the planet is really important, but when we think about climate change, we also know that those that are already in a disadvantage are going to suffer the most, the people that are already in poverty, that are already leaving in complicated situations, their conditions are gonna get worse. Coffee farmers currently do not make a lot of money. They're barely in making, you know, surviving with, with the current prices of coffee and the very long supply chain. So our thinking a lot is around how do we help them? What is our role? And our question is how do we help these people transition into a climate resilient future?
Because if we believe the data to be true, which we do, coffee production is just going to get worse. Like they're not al- already not making a lot of money and it's only going to get worse. So it's also not the right choice for us to be like, keep going at it, right? Like we're gonna help you put it in the US. And then in five years, it's just gonna be worse. So instead we're thinking about where should we go? Should we help them produce different crops? What are those crops look like? Could we help them produce some of the inputs that we use?
Should we give them skills? Right? And what are those skills? But I, though I understand the problem, I don't think I have the answers. So we are working and talking to a lot of different organizations that are boots on the ground, helping these coffee farmers transition. And we're fleshing out a couple different initiatives that are gonna be announced by the time we launch. But definitely, people are at the center of this. And, and Compound is a company that cares about the environment, but we're going to use our products and our capabilities to put something in the market for people that also help the people that have been producing coffee for years.
Jason: Switching gears, going back to something we talked about before, how you said that the biggest risk is not the only risk, but, but that the biggest risk is consumer adoption. I'm just curious, so for a science heavy company like this in the early phases, it makes total sense why you'd be more science and biotech heavy, for example, on the team. I guess my question is twofold, one, how much, and how early have you, or should one involve the consumer for a business like this?
And then secondarily from an expertise standpoint, how important is it to get more diverse perspectives on the team? Like go to market expertise, like consumer expertise, like brand, like brand and storytelling expertise? So what, how much of that do you have on the team today? And what advice do you have for others listening that are maybe earlier on building a similar type of company?
Maricel Saenz: So we do a lot of consumer research. We do focus groups. We do consumer tastings. We have been doing consumer tastings probably once a month for the last few months. And we send samples out and we get people to taste, get their feedback both on like, what is interesting about the concept as well as like from a flavor profile. So we do ask consumers very often what they like, and don't like about our product. We're starting to build out or like flesh out more of our business capabilities in house. We currently have one more person, but actually, our next big hire is on the marketing side.
So I'm gonna do a shameless plug. And if anyone thinks that they're super creative and love coffee and love working in climate, that is the next part of the company that we're building and I would love to hear from people. We do work with a lot of agencies and a lot of different advisors. I reach out to entrepreneurs that I think have built amazing brands and just start to get their advice about like, what do we need to be doing at the early days? Right now, the way we think about it is we're laying the brand foundation.
So we've done a lot of like brand strategy, the brand creative work. And now the next step is really bringing that to life through partnerships. And I just love picking brains of people that have done it in the past, which is the hardest part. But yeah, we have, we work with agencies, we work with advisors, we have one team member now and we're hiring.
Jason: And if you look to the future, let's say 10 years out or, I mean, we could, we could even go longer if, if you wanted to. But if Compound Foods is wildly successful beyond your wildest dreams, what does the company look like at that time and what have you achieved?
Maricel Saenz: So in 10 years, we are a large company that has a culture of like keep trying new things and, and trying new ideas. We have a line of multiple coffee products that have a line of cold coffee products, hot coffee products. We also have gone into some of the different crops that I was mentioning before. And really, we are known as this company that has the capability of understanding foods that we love and recreating them in a way that is sustainable.
And we are, that has stayed with their values. I think a lot of the times I personally, recent brands that go and, you know, paint a really blue sky. And then I learn they do bad things in the background. So I hope 10 years from now we've stayed true to our values and we continue to do the things that matter for the environment and the people around it.
Jason: And if you could wave your magic wand and change thing outside of the scope of your control that would most accelerate your progress, what would you change and how would you change it?
Maricel Saenz: Oh, what a great question. With a magic wand, if I could change anything that is nodding my control, I would change, I think at this time a lot about shipping and logistics. I would just make a lot, way more efficient, direct kind of connections between suppliers and vendors and a lot more transparency around where we're getting our things from and where we're shipping our things. So just from a logistic supply chain perspective, if I were, it would be like really easy. It's like, I want something from you and you send it to me and it's direct and it's fast and it's transparent. And then I send it back to you and it's the same.
Jason: Does the coffee industry have a strong lobby? Are you in touch with the big incumbents? What does that relationship look like if, if any?
Maricel Saenz: Yeah. So we've talked to you a lot of people in the, in the coffee world, you know, in places like the Specialty Coffee Association or the National Coffee Research Foundation, like in everything there's lovers and haters. There's some people that are like, we don't wanna talk to you 'cause you're doing something completely different and there are others that are like, you, you know, I love coffee and because I do, I understand that it is at risk and that it's time for us to think about new ways. And I think it's this same with every industry that there are some, some incumbents that are just like stuck in their old ways. And there are some others that are starting to pay attention to what we're doing. So I think there's a little bit of both.
Jason: Uh, how much do you think about policy if at all, and is that something that you resource to?
Maricel Saenz: I think about policy a lot, because I think that for a lot of the grand scale changes that need to do on climate, unfortunately are down to policy specifically when we think about things like energy transition. So far, we haven't resorted to policy that much because we're really trying to make a change from the other side. Right? We're trying to make a change from consumer demand, but you know, like the other day somebody asked me if I had six months to live, what would I do?
And I said, I would keep doing this, but I would probably spend, you know, more of my time just like pleading to policy makers to make the changes and, and, uh, implement them right away. So I think it's, it's central to making climate solutions work.
Jason: And for anyone listening that's inspired by the mission of the company and your work, who do you wanna hear from, if anybody? Besides heads of marketing candidates, so which you already mentioned, like, how can we be helpful to you?
Maricel Saenz: If you love fermentation or food science, you know, we always love to hear from people as we gear up to, for another round of hiring as well as in the marketing side. But then I just always love to hear from people that might have no ideas and be like, hey, have you thought about, you know, maybe putting your coffee in this place, which I think would be a good idea because X, Y, and Z? I wanna hear it. So if you have an idea that you think would be innovative and helpful and just wanna share it, I, I, we definitely wanna hear from you.
Jason: Is there anything I didn't ask that I should have or any parting words?
Maricel Saenz: No, I'm, thank you so much for having me. I am a big fan, I love that in your podcast, we think about climate in a more broader spectrum when it's just, not just about like the one problem that we're solving or the technology, right? But that how does that fit into the broader ecosystem of people and policy? And I think that's how we need to be thinking about such a big problem like this one. So thank you for all that you do and for having me here today.
Jason: Well, vice versa. And I can't wait to try the product as soon as I'm able, so I will definitely keep my eyes out for the launch and let us know as well. We can always do a follow up, maybe, you know, do an AMA for the community or, or some other way. 'Cause I, I suspect that, uh, especially in climate where the work is hard, you know, people work long hours, they're, they probably drink a lot of coffee.
Maricel Saenz: yes, absolutely. I would love that, that would be great.
Jason: Well, Maricel, thanks so much for coming on the show and best of luck to you and the team.
Maricel Saenz: Thank you so much, Jason.
Jason: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co, note, that is .co not .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter at JJacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The [inaudible 00:42:25] made me say that, thank you.
