20X growth in five years: How Factor pushed healthy eating beyond broccoli

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1:18Welcome. I'm Michelle To, a journalist most recently with CNN, and this is Behind the Business, a show about the people behind top consumer brands, category creators, and emerging disruptors, and how they push through to make the most of both work and life each day. Today's guest is Adam Park, CEO and Managing Director of Factor US, one of the fastest growing names in health and nutrition that bills itself as the number one ready-to-eat meal company in America. You might have seen them around delivering meals to people's doorsteps that emphasize high protein, veggie forward, low calorie or even GLP-1 supportive options, making it easier to eat clean at home.

1:59Now, since being acquired by one of Europe's best known consumer brands, HelloFresh, back in 2020, Factor has grown more than 20 times, fending off fierce competition to capture about 75 % of the U.S. market. To what do you attribute this kind of success? I imagine a lot of it has to come from also leveraging HoloFresh's resources and efficiencies. Full disclosure, Factor is a partner behind the business, and we're grateful for their support this season. But truthfully, even long before that, I've been excited to dig into how the company has scaled so quickly, what's next as consumers look for smarter, healthier ways to eat, and some of Adam's lightbulb moments and lessons along the way.

2:41It would be so much easier for us to reduce the ingredient variety, chuck salt all over everything to make it taste good. Competitors do for understandable operational reasons. That's not what we're here to do. I have no interest in selling snake oil to consumers. I would only work for a company that truly is invested in delivering fantastic product and service to customers. Adam is the former CEO of HelloFresh UK and a former partner at Boston Consulting Group. Outside of work, he's a passionate endurance athlete who's completed ultra marathons and expeditions all over the world. And he cares deeply about supporting communities that face food insecurity.

3:24We'll get into all that and more. Adam, thanks so much for joining us. Thank you for having me. So, Adam, before we get into the company, I'd love to start with you. I understand you were born and raised in Seoul, South Korea, before heading to the UK for boarding school, then going on to Oxford, London, and now New York. How do you think this international background shaped your worldview and ambitions early on? As you mentioned, I grew up in Korea until I was 10, and I left home when I was 10 to go to boarding school in the UK. And I think that experience was a fantastic one and one that really shaped my worldviews.

4:03A few interesting things about that experience. I went from kind of being the class president, even at that age, and being top of my class to someone who suddenly overnight couldn't even understand a word of what was going on in my class. And suddenly being exposed to new culture, having to adapt sort of independently away from home and parents and so on and so forth. And I've actually, it was tough right at the beginning, but I've actually loved it. and loved sort of getting to know new people, new cultures, and actually realizing that once you get through the hard part, there's a lot of amazing things that you can experience and learn.

4:39And so ever since then, I've been gravitated towards those kinds of challenges and experiences. So it's kind of reduced the barrier to jumping into new challenges in new places, new industries, and so on. And I think that's what kind of helped me through my career going from nuclear to investment banking to consulting, where I experienced a lot of different industries and situations, and now taking on a new challenge with HelloFresh and then Factor. Yeah, you know, I was going to ask whether there were any particular lessons from kind of moving between these cultures that have influenced your approach to work and leadership today.

5:17Yeah, I think actually when it comes to work and leadership, it started before that. Growing up in Korea back in the 80s and 90s was a fantastic experience. It was on a hockey curve sort of trajectory of growth coming out of being one of the poorest countries in the world back in the 50s post-war to now fast forward, you know, 75 years to one of the top economies in the world. being right in the middle of that, seeing sort of the ambition level, the hard work ethic and so on and so forth of the country and growing up in the middle of that was very impressionable for a young kid. And my family was kind of a microcosm of that.

6:00We grew up with my mom who became a single mother after her divorce in her late 30s. And she suddenly had to start a business to support the three of us and she started a consumer business. And so I grew up her obsessing over customers, what they need, building relationship, whatever time they turned up at the door. You know, I still remember the opening and closing times of the store that she ran. Seven o 'clock was the closing time and I had to be at the store quite a lot as a kid waiting for my mom to finish. and it killed me when a customer turned up at 701 and my mother would never turn a customer away.

6:44And however long it took to show them 10 different things that they wanted, check different sizes and so on and so forth, it was frustrating at the time. But now looking back, I realized how important that was to building a business, being customer-centric, building double-digit number of year relationship with a customer on the back of that kind of care and building trust. And also now as a new parent myself, the tension that she had to manage of, you know, ultimately, she was doing all this to support the three of us. But at the same time, she had to deal with, you know, a seven year old who's dying to go home and making sacrifices on the spot to manage that tension.

7:23And I that was very impressionable on me. Yeah, it's carried through. It sounds like that was such a formative experience for you. Did you say what kind of shop it was? Yeah, it's an amazing story. And I want to write a book about it one day. My mother, at the age of 40, started an import business, importing luxury and children's goods from the UK to start with into Korea, because there was a growing need for nice children's clothes. But she knew nothing about the business. And there's a story where she goes to, there was no VC funding or anything like that at the time. So it was all bank loans, right?

7:59So she would go to the bank and present her idea to the bank manager. And apparently she was asked, do you know what the margin is going to be for this business? And she had to say, I'm so sorry, what's the margin? And the bank manager said, you shouldn't really be asking me that. And so that's really where she started. But the mindset is phenomenal. You know, she didn't get deterred by that. She was ready to learn and figure things out. And somewhat she had to. She didn't have a choice. Yeah, it's a phenomenal story. And she then went on to build two other businesses, the last one being importing luxury and Italian foodstuffs into Korea.

8:40So I've been alongside the food industry for a long time. It sounds like that taught you a lot about grit and perseverance. Just felt normal, quite frankly. And the mindset of my family and Koreans in general is that if something needs to get done, it needs to get done. What other choice do you have? Yeah, exactly. And that was just very normal for us. Yeah, I think we come from somewhat similar backgrounds. My parents are Malaysian immigrants, and they very much have that kind of mindset as well. Adam, before joining Factor and HelloFresh, as I mentioned, you came from the consulting world, where you spent years as a partner at BCG, Boston Consulting Group.

9:15What did you take from that experience that still informs how you lead today? So I've loved every minute of working at BCG and working alongside my colleagues there. Actually, half of my groomsmen at my wedding were ex-VCGers. What I got to experience there was really valuable, particularly because I focused on strategy as well as transformation. So I think the benefit of working in one of these companies is that you get to do a lot of reps of things that executives only tend to experience maybe two or three times at best in their careers. whether it be large-scale transformation, reorganizations, operating model changes, mergers and acquisitions, large-scale PMIs, and so on and so forth.

10:04I got to get a lot of reps of those things in lots of different industries and contexts, which was a phenomenal education. And that's really deal with a lot of situations and not to spend too much time thinking through how to navigate complexities at HelloFresh and at Factor. What it didn't give me was sort of going through a lot of that as the leader, having to motivate and inspire people and teams to come along and buy into the vision and get them through the hard part because change inherently is hard. Yeah. And leading from the front to do that. And so I thought that was a natural progression of the things that I wanted to do in my career.

10:48And that's what I'm enjoying in my current phase of my career. Well, that segues really well to our next question, because I was going to ask what made you want to join HelloFresh and this space in particular, especially going into operations directly, right? Having come from the consulting field, was that what you felt like was missing? And you kind of felt like you always wanted to go into that directly? Yeah, and I still feel like I'm just getting started. I have at least 20 more years of my career left. As a student of business, I want to keep experiencing and learning and adding value and having greater impact.

11:24And what I was really impressed by when I first encountered HelloFresh and started engaging in conversation and now Factor, in particular, are three things. One, fantastic product. I have no interest in selling snake oil to consumers. I would only work for a company that truly is invested in delivering fantastic product and service to customers. I don't think I can operate in any other setting. So that was number one. And two was really the customer's obsession of the board. The leadership at Factor and HelloFresh have a great ambition to add real value to consumers and actually change the way people eat forever for the better and have an impact on sustainability in a meaningful way.

12:16So I was really impressed by that and I wanted to participate in that journey. And third, really, particularly with Factor, is the brand's potential to add even more value to consumers. You know, Factor has grown 20x since we acquired it back in 2020. But the amazing thing is it has so much more runway and potential, whether it be in expanding into more product categories, into more functional health, channels, geographic expansion. The brand has so much stretch potential and more runway left. And that's what I'm really excited by in driving in the next phase of this company's journey. good sleep is everything that's why ollie's science back support is made with a blend of melatonin and l-theanine for both kiddos and grown-ups so when your mind won't switch off you've got something that can help erasing thoughts and restless nights won't stand a chance find ollie sleep solutions for the whole family at ollie.com that's o-l-l-y.com and we're live from the living room as doug eyes up the match day spread He's reaching for the buffalo wing.

13:29Perfect. Hang on, what's this? Oh, he's going for a can of Pepsi too. Incredible. What a finish. Sensational combination. Look at the delight on his face. There's no doubt about it. It just tastes better. Match days deserve Pepsi. Food deserves Pepsi. Grab a pack of Pepsi Zero Sugar for today's match. It's poetry in motion. Did you know that you would be joining a food company in particular? and how did this opportunity really arise? Honestly, I was, you know, just before I moved to the UK, I was based in San Francisco for seven years, during which time I got married and we went through COVID and I was a remote husband for a while.

14:13And then we had a kid, you know, while you can be a remote husband for a little bit, you can't be a remote dad. Congrats. So thank you. I have a three-year-old boy now. And that's what really triggered the move to the UK. which I think coincided with the right timing for me to look for something new. And so I was under no pressure, but I took the opportunity to talk to a lot of people in my network and people who thought they could put my experience to good use. And one of the ideas that really came was to apply my experience to being a GM. And HelloFresh, I have to say, and Factor is a place where they have a long history of betting on people's potential rather than necessarily track record and giving people a lot of runway and opportunity to realize their potential.

15:02And it's been extremely, it's very, we're very, very good at identifying talent and really it's paid off for us. And I've been a beneficiary of that opportunity. And yeah, here I am still. That's so refreshing to hear, especially because HelloFresh is one of the biggest names in Europe, as I mentioned. You wouldn't expect that necessarily, right? Absolutely. And it's in our DNA. Our founders started this business more than a decade ago, young 20-something-year-olds. And they have lived and breathed this space. And they've worked alongside really smart and energetic people. So they know what good talent that fits our brand and business looks like.

15:44And I hope that I can add something new to the team with my experience as well. Well, during your three years at the helm of HelloFresh UK as CEO of that business, it went through some major transformations. Can you share maybe a couple of highlights or moments that really taught you something about scaling a consumer brand? When I took over, the business had just gone through a huge growth curve, especially during COVID. So the existential sort of challenge was to catch as much of the demand that was spiking at the time. That means really hard and gritty work, you know, opening several new factories overnight, essentially, recruiting hundreds, thousands of people to get food and boxes out the door in quality to suddenly massively ramping demand.

16:38And so business went through a lot of that. And it's one and it's really difficult. And that's why there aren't that many companies that have successfully scaled as much as HelloFresh and Factor has. That was really hard work for us. What did that look like? Was it a lot of kind of like all nighters or, you know, looking at stickies on the wall? How did you kind of approach that and tackle that? This is actually more the history and experience of my peers who were there before me as well. And I took over the baton somewhat when it was slightly more stable, but absolutely needed to appreciate the journey that the company went through and my people went through in order to be able to lead us into the next phase.

17:16And that experience was, wow, a lot of fun and a lot of hard work and a lot of pain and tears too, right? So there were folks who, as you exactly said, all-nighters, weekends at the factory. And for food safety reasons, our factories have to be chilled to a very low degree the whole time. And really tweaking day in, day out to fix all sorts of challenges that we were having. Delivery issues, customer feedback with missing ingredients, quality. Really looking deeply at our operational lives, being on the floor, seeing where the mispicks of the ingredients were happening, where the quality issues were coming from, calling suppliers.

17:58Exactly right. Stickies on the wall, day in, day out, phone calls to each other, not waiting for the next Zoom call to wait to discuss the issue, being on the phone right away. Yeah, you got to move. Exactly. And that's where I think, you know, relationships, trust, sort of setting the norms of having quick communication channels is really important for a company that's really trying to break through. Yeah. Really. So fast forward to February of this year, you're named CEO of Factor US, which had been acquired by HelloFresh about five years prior. What was your initial mandate coming in and how did you see the opportunity?

18:40It was a privilege, first of all, to take on a business that has already been so successful in scaling and being the market leader. We have, as you mentioned, over 75 % of market share in the US, and we've maintained that for a while. The brand really, that was on the back of having a fantastic product and a brand, particularly around the core meal. And just in case people haven't really experienced our food, the thing that makes it really unique and differentiated compared to the typical sort of microwave and oven ready meals is really dietician approved. And a lot of science goes into making sure that there's good macro and micronutrition, good portion control.

19:21And it's also crafted by chefs. I have a large chef's team who really think about helping consumers break the trade-off between convenience, health, and having a great taste experience. And so it grew as a ready meal business in this space. But I truly believe the next phase of this brand is to become more of an everyday health and nutrition partner to our customers. More than just ready meals, but into different product categories, whether it be supplements, protein shakes, bars, breakfasts, lunches. And I'd love to tell you all about the amazing product launches that are coming and that have happened this year.

20:02More on that later. Yeah, exactly. And also across channels. We're very much focused on D2C to date. But we have a lot of opportunities grow into a lot of other channels. and also benefit folks in channels like Food is Medicine, where currently the option set for folks who are getting benefits through various agencies in the UK, while they're getting funding for it, are getting terrible food, quite frankly. It's all frozen, limited options, and so on and so forth. So we have the capability already and the amazing food range and also the nutrition focus to be able to make a difference to a lot more people's lives.

20:40So I'm really excited about that. So I'd ask people to watch the space. Yeah, absolutely. Well, as we mentioned, Factor has had a remarkable ascent, right? Since the acquisition, as you said, it's grown 20x. And it's previously cited a whopping 250 % growth in year-on-year revenue after becoming part of HelloFresh. To what do you attribute this kind of success? I imagine a lot of it has to come from also leveraging HelloFresh's resources and efficiencies. Yeah, absolutely. So first of all, the reason we bought it was because it had a fantastic product, right? And that is core. And I can't emphasize enough how important it is to really provide differentiated value to customers and not try to market something that doesn't have substance behind it.

21:30And that's what I love about this brand. So that's core of the success. And then the scaling part really came with being able to leverage Shallow Fresh's platform technology and experience and talent. One, in marketing. We are probably one of the biggest and most sophisticated D2C marketing platforms in the world. And we know how to scale fantastic products in that space, especially in food. Second is our fulfillment capability. It is extremely difficult. And quite frankly, we are the only player in the world who do what we do at scale, which is providing ready meals with over 100 different options on the weekly menu that rotate every week.

22:15If you go to a typical ready meal manufacturer, they typically make maybe two or three different dishes and they run that factory on the same setting for weeks because that's how you manage sort of mass production and scale and cost and so on and so forth. And they typically pick recipes that are easy to manufacture, like spaghetti bolognese, for example, few ingredients, ground meat, and so on and so forth. Our product, and also they're typically frozen. So our product is never frozen. So it has to be just in time and delivered fresh. And we want to give customers maximal shelf life because it's a weekly subscription.

22:52And it's whole muscle meats, right? You get filet mignon with us, which I was actually quite frankly skeptical how good a microwave filet mignon could be. But I guarantee you it's fantastic and it's delicious. And the rotation and the variety make it extremely complex to operate. And that is a unique moat that we have to be able to do that at scale and deliver to the entirety of the U.S. Nobody else can do that. And we now operate the largest food manufacturing footprint in the US. Yeah, that's really been a fantastic synergy between the product and the brand that we acquired and the capability we have around, particularly around marketing and also technology and fulfillment.

23:39So much to unpack there. But I will say on the filet mignon, I actually just tried it. And I was so surprised to see that you guys had this on the menu because frankly, when I think of clean, convenient food, I'm not necessarily picturing something exciting, right? maybe some greens, grains, simple proteins. To your point, I tried a similar type of service back in Hong Kong years ago. And I remember I got sick of it so quickly because it was like peppers every meal. Then I look at Factors menu and you're serving truffle butter filet mignon, premium seafood like barramundi, all without extra cost.

24:08And it was really surprising to me. That just feels like a real differentiator because it's a treat for the customer, right? So can you walk me through a little bit of the thinking behind that approach and how you balance standing out to customers with, you know, obviously managing cost pressures and margins and all that good stuff. Yeah. Our philosophy is first serve the customer. The customer doesn't really care what our margins are, how difficult it is or it isn't to produce the food. That's not what matters to the customer. We've got to really focus on delivering value to the customer and helping break that trade-off that has, you know, really made the customer experience poor in the past between, you know, what I mentioned, having a good eating experience, convenience, health, and costs as well.

24:56So we really start there. And we love doing hard things, you know, it would be so much easier for us to reduce the ingredient variety, chuck salt all over everything to make it taste good, but terrible for your health, and so on and so forth, pour preservatives all over it. And a lot of our competitors do for understandable operational reasons, that's not what we're here to do. And so we really focus on the product first. And then our scale has helped us make the process of getting that amazing food to the customer efficient. That's how we sequence our thinking and approach. And I so appreciate that, by the way, because I've really noticed, especially after moving to America, that food is not always regulated.

25:39So there's a lot of people out there making claims or, taking shortcuts, if you will, without backing anything up. And it sounds like you're saying, even if it takes us longer, and it's going to be much more of a headache, we just got to do it. That's just not worth it. We are a subscription business at the end of the day. That means we rely almost entirely on repeat custom. Yeah, it's not a one time purchase. So we have to deliver great experience day in day out. And especially if we want to maintain our position in health forward, ready to eat space, we actually are responsible for delivering outcomes, right?

26:18And so if after, you know, eating our food for a while, the customer doesn't feel good and they're not seeing the benefit of achieving their goals, whatever it may be, you know, generally eating healthy and getting variety of ingredients and balanced meals, supporting their GLP-1 journey, losing weight, putting on muscle, whatever it may be, if they don't see the outcome, then we don't win the repeat custom. So a lot of science has to go into delivering that. And that's what we're here to do. And that's what excites all of us at Factor. Well, ready to eat meals are a highly competitive space and a notoriously tough business, as you alluded to.

26:56What's been the biggest challenge when it comes to keeping Factor differentiated from other players? Is it kind of one of the things that you just mentioned, or is there something else that comes to mind? Quality, it's choice, and it's really the science are backed nutrition and the flavors. It's food at the end of the day. You know, there's a lot of complexity to running the business, but the value that the customers are looking for is simple. So that's what we really focus on. And one of the things that I'm really proud of my team for achieving this year, particularly in the variety aspect, is that we went from having 40 different things on the menu at the beginning of this year to over 100 different options for our customers.

27:36Today, just in the short sort of six to seven months that we kicked this initiative off, we're about to add another 20 completely new and amazing salads and grain bowls to the range just in the next few weeks. And so we've really accelerated this product development and focus on variety. That's one of the things that matter really to customers and what we invest in. It's so interesting because I did see that, that Factor just unveiled its biggest menu expansion yet. And that's really a bet, isn't it? It's a bold bet because, as you mentioned, all this stuff adds complexity. One menu item at a time.