727 Stephen Williamson : Co-Founder and CEO of Forager Project

0:00Kara Goldin:I am unwilling to give up, but I will start over from scratch as many times as it takes to get where I want to be. You just want to make sure you will get knocked down, but just make sure you don't get knocked out. So your only choice should be, go focus on what you can control. Hi everyone and welcome to the Kara Goldin show. Join me each week for inspiring conversations with some of the world's greatest leaders. We'll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can't wait to get started. Let's go. Hi, everyone, and welcome back to The Kara Golden Show.

0:45Kara Goldin:Super excited to have and honored to have our next guest with us here today. He is someone who has really been a legend, and I've admired him from afar, and I'm super excited to have him here. So he is also somebody who is rethinking what dairy means. And this person is Stephen Williamson, who is the co-founder and CEO of Forager Project, a family-owned organic dairy-free creamery crafting premium yogurts, milks, and creamers from cashews and coconuts. And Stephen launched Forager Project in 2013 with his stepson, J.C. Hanley, who actually we had on a few years ago, but we really are excited to have Stephen with us here today.

1:35Kara Goldin:So Stephen, driven by a bold mission to flip the dairy model so plants make up 85 percent of global consumption instead of just 15%. And before Forager, you may recognize Stephen Williams's name. He was the CEO of Adwala, helping grow that brand to over 400 million and with an acquisition by Coca-Cola. So, so excited to have you here to gain all your wisdom, Stephen. And I can't wait to hear all about the journey building Forager Project. So welcome to the show. Thank you so much for being here. Well, it's nice to be here, Kara. I think we're similar spirits. You know, we've been through the entrepreneurial battles of building beverage companies.

2:26Kara Goldin:Absolutely. Well, before we jump into all things in your journey, let's start with Forager Project. So can you go over the brand and mission and tell people why you decided to do this? Well, actually, I think you did a very good job. I mean, we're very simple. We're an organic dairy that uses plants, not cows. And the problem that we're trying to solve is simple. Look, eight and a half billion people on the planet, cows are inefficient. And in the history of capitalism, efficiency wins out. Cows require, I mean, they require nine to ten times more land, nine to ten times more water. They produce seven to ten times more greenhouse gases.

3:22And if you just look at, as an example, a gallon of cow's milk and compare it to a gallon of cashew milk, well, a gallon of cow's milk comes along with a gallon and a half to two gallons of urine, 40 pounds of manure. It's got a big waste stream, and a cashew is just incredibly clean and efficient. So the problem we're trying to solve is global warming and really about humans living in sync with nature. And dairy may have worked with 3 billion people on the planet or 4 billion, but 8.5 billion is just inefficient. And I would just add, I love cheese. And I do. I'm not a vegan. I eat many, many, many vegan meals, but I do eat cheese occasionally, and I love cheese.

4:20And dairy has its place. It just shouldn't be the primary, or cow-based dairy has its place. It just shouldn't be the primary ingredient plant.

4:28Kara Goldin:Yeah, definitely. What was the moment when you had this idea? Do you remember it, where you said, somebody's got to go and do this with cashews and with coconuts? I mean, what was the moment? Because you've spent time and we're kind of in the same neck of the woods between Sonoma and kind of the Marin County area and Sonoma Valley area. So was there a moment when you said, this just doesn't make sense that somebody's not bringing this to market? Well, just to go back and look back for a moment, as I said, today we're an organic plant-based creamery. When we started Forager, the name actually was kind of relevant in that Forage is to Wander and Seek.

5:21And I knew that if I was starting this from scratch, I didn't know what I was going to run into and how it would work. And we actually didn't start as a plant-based creamery. We started from my old wall of roots, making organic vegetable juice. And we started from the basic principle that so much in food is mislabeled, not straight up, is hype. and that we would make organic vegetable juice that was actually vegetables first, which was not what was going on when we founded the company in 2013. But foraging forward, it was clear to me that wasn't going to be a defensible business, a big enough business.

6:09And from my old wall of days, we migrated into nuts. And when we started the exploration of nuts, we ended up with the creamiest nut. I could find, which was cashews. And that took us to a whole worldwide tour hunting for the right cashew. And from that, it kind of took us into dairy. And then that was a chance to really look at this and go, what is the problem we're solving and how can we be unique about this and how can we build a defensible business?

6:43Kara Goldin:And here we are today. That's terrific. So let's jump into Adwalla and we'll backtrack with Forager Project. So your time leading at Walla and the influence that you had, how did that transpire into Forager Project and everything that you've done with this? Because dairy is such a different category. And even though you're not in dairy, I would assume you're still dealing with the buyers that are dairy buyers, correct to some extent? I mean, it must have just been, it looks like it's the same, I guess, for the same buyers. But how, like, tell me about those days. Well, we're going back here. Udwala was, what we had then would never, I don't know if it's possible today.

7:38You know, we ended up with a delivery system that we built ourselves that was based around somewhere around 30 different distribution centers around the country. We produced all our product in Dinuba, California and shipped out to these distribution centers. And at those centers, we had our own trucks. Now, we did all our own delivery. We had our own coolers. I mean, I look back at that. I don't even remember selling products into these stores because when we started, it was pre-barcode. And our whole point was we'll manage the cooler. We'll manage the space. We'll own the cooler. We'll put in the electrical.

8:19We'll service this. And you are going to make a good deal of dough as a retailer. Well, those days are obviously completely different. The whole retailing environment has radically changed. And the routes to market have radically changed. And yeah, it's a completely, Forger is a completely different experience than Odwalla.

8:47Kara Goldin:So Odwalla, can you take us back to those early days? What prompted you to start that company? And you touched on this a bit. I didn't start it, Kara. I found Odwalla when Greg Steltenpol was the CEO. it was virtually insolvent. I mean, the top people in the company had four or five paychecks uncashed. So they tripped all the covenants with Silicon Valley Bank. They were in desperate shape. And I had no experience in food, no experience in CPG. I'd been an investment banker on Wall Street living in Manhattan. I was from the Bay Area, but I found, literally found out about Odwalla on a plane ride sitting next to somebody who said, there's this funky company that needs money.

9:44You might want to look at it. So I went and met Greg, and next thing you know, I invested, and it was a mess. I remember driving home like the second night, and I was crying, going, I've lost all my money. This place is so much worse tonight. How bad could this be? What an idiot. I didn't do good due diligence. I've just taken all my bonuses from my investment banking days and fired them into this company. What a mess. And it was sort of at that point, it's like, well, either I'm going to just cry or I'm going to fix it. and went about fixing it. And, you know, I came in as a board member and CFO, became president, became co-CEO, CEO, and then chairman and CEO.

10:36So I had a long number of different experiences there. and I went at the end of it I mean I go into the end of it so we bought a company on the east coast called Fresh Samantha and if you go back and you'll remember Cara the recall when we had Ecoli 0157H7 found in our product our sales dropped 90 % and we lost $3 million the first week. And we had, after that, I think it was like$11 million in cash. So it was pretty clear I had four weeks to go before we were dead. We had at that point about 750 employees and we had to dig out. And it was a brutal, brutal experience. And we had a grand jury criminal investigation against us.

11:41We had 700 claims, 50 lawsuits. I mean, it was like, when this happened, I said, we used to have a business. Now we have a business that is crushed. We have to reimagine our business and we have to deal with the forces that will try to crush us. And it became a very, very different experience. Well, part of getting out of that was we ended up buying an East Coast company that got going when we were hobbled. And we really did. We needed the East Coast. And this was a company called Fresh Samantha. And I thought we could help it and go further with it. And so we bought it. And in that deal, we ended up getting shareholders from private equity.

12:27And, Cara, you'll know what private equity is like dealing with. Well, we ended up with an off partner. and they attempted to fire me, but they did it poorly. And we ended up being rather fast on our feet and selling the company to Coke, which really wasn't my desired outcome. But, you know, desired outcomes in reality can be very different.

12:55Kara Goldin:Yeah, definitely. Definitely. And I'm so curious, too, when Coke eventually, they ran the business for a while and then they discontinued the business for a while. I've talked to many people, including Seth, who bought the brand, his brand back. Did you ever think about doing that? Well, they showed it to me, but they showed it to me late. They destroyed it. you're super familiar with gross to net. It's really one of the easiest ways to measure how strong a brand is. The gross to net, when they showed it to me, was like 30 points. I mean, they had destroyed the manufacturing. They destroyed the brand.

13:47They had cheapened the product. They just so messed it up. When we sold it to Coke, I went in there and showed them, this is your galaxy of nourishment. You've got this and this and this. You have a short shelf life distribution system. There's so many other good products you can put in this. This will be the nourishment vehicle for the country. It can be incredible. And I gave them the whole list of products. And the first thing they did was shut down DSD and shut down innovation and cheapen the product and shrink the size. They just made one mistake after the other. But look, part of selling a business is let go.

14:30Yeah. I let go. I let go. And I said after that, Kara, I'm not going to go into food again. No way.

14:38Kara Goldin:And then here you are. Hey, I'd love to hear your opinion. So on the Gross to Net, for those who are listening, what's your opinion on Gross to Net? When do you have a problem in a brand? when you're looking at gross to net? And I know it varies based on factors, but what's your opinion on that? Well, I think it's so category specific, but if you are looking at buying something, you better understand in the category you're buying at, what is the top performer achieving in gross to net and where's the company you're looking at and what are the opportunities to improve that? Are they sinking? And how much of their product's on deal?

15:26Because it's such an interesting area grossed in that, and deals, and people think they're getting deals, and retailers wanting to be on deal. That's a quagmire. So I can't give you a specific, but I can tell you that where we are at Forager versus where Coke was with Odwalla was in different universes, maybe different galaxies.

15:54Kara Goldin:I love that. So when you, I'd love, you also have your own manufacturing plant in running Forager Project. So can you talk about the process of building your own manufacturing plant and why you made that decision so early on with Forager Project? Well, I think it's probably two things. insane, or maybe three things. Insane, slightly stupid, and I love to cook, and I just don't understand. This is just me personally. I want to make my own food, and we don't have any co-packers. We make all our own food. We obviously don't grow cashews, but we source the cashews. We have feet on the ground. We are at the soil, at the tree.

16:41And I just felt like I wanted to make my own food. I mean, that's where it comes down. I just don't, there are plenty of successful food brands that don't manufacture them, but for what we do, there was no place to go. Sorry, here comes my dog. He sits on my dog, looks out the window. I love it. No, no, no, all good. By the way, he is on the kids' packaging. You'll see Wallace as my dog. He's part of the brand.

17:15Kara Goldin:Oh, I love it. I love it. So when you were first getting started, were there co-packers that could do your product? So we opened our plant in 2015, so two years after going, starting. And when we started, we did use a facility in Southern California. Ted Lehman, who is our head of manufacturing, worked with me at Odwalla and then ran Evolution Fresh. It's manufacturing. He and I would effectively rent this facility once a week and go down and make our product. And I was very straight up with him. At some point, we will leave you. We will build our own plant. But I still have a good relationship with the facility we use.

18:16And I don't recommend building a plant before you know whether you've got legs because you can end up building a plant that is useless. So we wanted to make sure we had legs. And once we felt we had legs, then it was okay. It's time to build a plant. But we've made so many mistakes. I mean, Kara, I'm just a king of mistakes.

18:45Kara Goldin:I love it. When you think about those mistakes, is there one that, you know, really stands out as maybe it was a mistake, but it actually really ultimately pushed your product to be what it is today. I didn't think you were going to ask the second part of the question. I was going to say the first part of the question, which I'm going to answer differently, was one of the things, and I think you can relate to this in your own situation with Hint, I was not guarding a board seat carefully enough. And, you know, the board as a CEO matters and you better count your votes. And I made a mistake in my Oduwala days and that was why I ended up, they ended up trying to fire me and they did it so poorly.

19:36I got away from it. But as far as, you know, I don't know if there are mistakes, but the failures are so many. I mean, where do you start? how about cheese? I felt like, okay, there's no good cheese. We can make a great cheese. And we spent a long time and a lot of money. And obviously, I don't make cheese anymore. I completely messed it up because I didn't have a big enough vision. And I didn't build a, because I could before it, a proper backend manufacturing. So I could make the cheese block, But getting from the block into the package, I had to use third parties, and it was a mess. You couldn't get the quality you want.

20:31Our product is obviously pretty alive, unpreserved. I like the simple thought, Kara, that all good food should become bad food over time. And it rots. It returns to the earth. And those wonderful lines about Twinkies that you can leave on your desk for two years and they're still fine. It's like, yeah, that's true. That's food. That's a lot of chemicals. And being dyslexic, I can't pronounce 70 % of what's in Twinkies.

21:08Kara Goldin:Yeah, you're hitting on some—you and I are very, very connected. My dad was in the food business. He had started a brand called Healthy Choice. years ago. And so I was probably the only child who had a Twinkie in the kitchen. And my dad was amazed at how long you could actually have it there without a growing mold. And I was like, I am never having one of these products. And I just was horrified by the sight of that. And the other story, actually, I wrote a book a few years ago called Undaunted about the building of Hint. And one of the stories, it's partly my story, but it's partly my husband Theo's story, which is that we weren't using preservatives, still don't use preservatives in the Hint product, but we didn't really know how to do that.

22:05Kara Goldin:And so we, you know, just decided to watch the product on shelf in the Bay Area very, very closely and continue to get it tested every day to make sure that there weren't any issues. But we got a call from Whole Foods early on sharing that there was this strange cloud-like figure in the bottle. And they thought it was mold and they needed us to pick it up. So we picked up the product, went and talked to the buyer. The buyer was going to kick us out. And my husband said, so you don't have mold in your store at all? And this is before kombucha and something. And she said, no. And he said, well, what about blue cheese?

22:51Kara Goldin:What about that? Like, is that, that's not mold? There's different types of mold. The most important thing is, is it the kind of mold that's going to kill you? right and so by the end of the conversation we had saved the relationship of whole foods and just by sharing the fact that you know it didn't look good we were in complete agreement right but it was uh and we were going to replace the product but at the end of the day we were doing something that was really really hard right and uh and the idea that no mold was in any product was ridiculous. I mean, our product's alive, right? We put cultures in it to grow, to transform the product into yogurt.

23:40That is the essence. I like to say we only do 40 % of the work. The cultures, the 15 billion cultures in there do 60 % of the work, transforming the product from 6.5 pH to 4.4 pH. and giving it the body and feel and taste. Definitely. We're just stewards.

24:06Kara Goldin:Yeah, exactly. So were there any times in growing the brand where maybe you had gotten some shelf space and then all of a sudden the buyer calls you and tells you, it's not working anymore. You're going to be leaving the store and we're going to discontinue you. And then you were invited back. I remember early on with Hint, people had told us that don't ever get kicked out of a store because you'll never get back in. And I frequently tell other founders, it just takes a buyer change, right? And maybe a little bit of time and you'll get back in. Don't worry about that. Well, I mean, shelf space is valuable and it's fought over.

24:53And we certainly had many. I mean, I've got a wall of failures in the office. And some of it's too early. Like, for instance, we went early on protein and failed and failed. We were just too early. So we've now come back in. And I think that failures actually helped us because what we've ended up creating is unlike, I think, all of the protein yogurts, plant-based protein yogurts that are out there, they get their protein level and they spend the rest of their effort trying to cover up a terrible taste. We took a different approach, which was how much protein can we get out of cashews and how do we complement that?

25:47And what's the right protein to add in with the cashews to create an incredibly great-tasting, smooth, non-gritty, easy product. And by the way, let's also start with the hardest product, which is unsweetened plain, so you have nothing to cover up. And so we did that. We've just literally launched it. It's been out for a couple of months, and it's doing incredibly well. And you'll see in the fourth quarter of this year more of our large tub yogurts coming out, plus cup yogurt, all Greek. It's really good. We spent a long time on it. And that was a process that we used. the painful learnings of being beaten in our base yogurt by the competitors to go, okay, time to be better and figure out what we did wrong and admit failure.

27:00And I think it's so important to try to understand where you are and admit when you're failing. It's hard. As an entrepreneur, All you want to do is be successful and push and push and push, but to look, just be quiet for a moment and go, I'm failing. This isn't working. It's hard. It's hard to be honest with yourself, but we've definitely, I got a lot of failures, Kara. I got a lot of failures.

27:29Kara Goldin:I love it. So when do you know that you're failing, I guess is the question. So, you know, you launch SKUs. You get them out there on the shelf. Maybe they're working in some stores, not working in other stores. You know, it's confusing or I should say other channels. Maybe it's working in. You're like, is there a certain metric that you've used over the years in either of your careers? You have to look at your, today everyone buys data. And you need to look at your data and go, if I'm in the bottom 10%, I'm done. And if you're growing, I think you can sometimes convince buyers to give you time.

28:22I think you have to be really knowledgeable about the shelf. One of the things I loved about O'Dwoll is we had our handhelds, and we had obviously a lot of our sales were on our coolers, but many stores wouldn't give us coolers. So in our handhelds, I made all the route salespeople rate the space from A to F. And when you're in a D space and you're in the ballpark with someone who's in the A space, you got hope. You got to convince the retailer and show them, hey, look, we're an ankle space and these guys are high, high space. And yes, they're four times bigger than us, but that's standard for that type of deviation and shelf space.

29:11So, I mean, every single buyer meeting I go into, I realize we're there at their gift, if you will, their decision making. And we need to be absolutely prepared to be thrown out. and understand it's their prerogative. And I've certainly had plenty of disappointing meetings with large retailers. That's part of the process. I mean, I've got tons of products we launched that failed. Yeah.