While other cultivated meat companies are collapsing, this one turned a profit | E2317

0:00Let me drink a hot cup of tea.

0:06Cho, that didn't get picked up on the mic, did it? How's it going, Cho? You okay? Okay, everybody, welcome back to This Week in Startups in Japan. It's great, great to be back in my favorite city in all the world after my hometown of New York, my new hometown of Austin. That's Tokyo. Man, I love coming here. It's always so inspiring. If you're a founder, if you're an investor and you haven't come to Japan, I highly recommend coming because you get to see people building and working with extreme pride and trying to get better at building their product or service every day of their life. It's called Kaizen, is the Art of Constant Improvement.

0:47The founders here in our second cohort of Founder University have been incredible. I was telling my team, the first cohort, we had so many great companies, but very raw. we were just getting started. In the second cohort, we saw a lot more companies that were ready to go global and that had their company formation in the United States. So I think we're actually going to find some really great investments or candidates to come to our accelerator. If you want to find out about this Founder University program, we run it twice a year in Tokyo, twice a year in Riyadh, Saudi Arabia, and then twice a year in the United States.

1:25Founder.university is the webpage where you can see all three programs. The sun never sets on Founder University, and you don't even need to be incorporated. It could be you and two of your friends. You've built a project. You've got a prototype. You've vibe-coded something in lovable or Claude Code or Grok or Perplexity Computer. We want to see it all. We love to work with founders in year zero. I'm super excited today because we have Dr. Yuki Hanyu, And he is making cultivated meat.

2:21accounting, taxes, or other back office administration needs, visit every.io. And you're doing this in a different way than some of the cultured meats that we got to experience in America. I think impossible meat was one? That is actually plant-based meat. That's plant-based meat. Yeah. And then what was the next one that did chicken in America? Upside foods. Ah, yes. Yeah. So there are major companies in this field is like upside foods, believer meat is now defunct, but there's a wild type without the so-called salmon. What was the salmon one called? Wild type. This has been around for a couple of years.

3:06Between the veggie, the fake chicken, fake fish, or mock, I think is the term, it's gotten some fans in America, but it hasn't broken out yet. Why? Why hasn't it become very mainstream? Or has it? I would say it's just technology just not being there. Because the issue has always been the scaling and unit price. Got it. And also on the other side, that will be the unit economics that's not quite working yet. Got it. So consumers have shown they want it, correct? That's another. because unless you have sufficient quantity, you can't even test for real to the consumers. And until then, it will be all fantasy, to be honest.

3:55There hasn't been enough scale for a large amount of customers to try it, so it's hard to understand demand. But I know from my friend group in San Francisco... You can always ask, but what consumers say and what they actually buy are always very different, as you know. as Steve Jobs taught us, right? If he asked people like what they wanted in an iPhone, it would not be beautiful, elegant. And I guess when it comes to food, if you were to ask a chef, if the chef were to ask you what you wanted, you would not be as delicious as omokase and or, yeah, correct? Yeah, I go for like half price. Yes.

4:3330 % off. Things like that. Yeah, you want to really have, so your company, Integri Culture? is working on a new way to create this food, yes? Yes, I would say protein. Without to call our product as meat, that's a different story. Got it. So for protein, and it's going to get a little graphic, so people be prepared if you, you know, we're talking about meat, but the ingredients and the process for creating mock meat previously, this was using FBS. In some cases? Not really, because I would say FBS has been only for like a level three scale tests for like a regenerative medicine, cell culture, those things.

5:21Yes. And no one has actually made any commercial product with FBS. It's too expensive anyway. Too expensive. And this is, of course, fetal bovine serum. That's the blood of unborn calves. And that's going to be used for organs in our body. Maybe? Maybe. But even within that field, because such a quality control of FBS is really difficult. As you can imagine, how would you control the exact chemical composition if it's made that kind of way? So the industry is going, I mean, medicine, biopharma, they're going to chemically defined ones, but very expensive. But it's medicine anyway. How are some of the other companies built the mock fish?

6:06I'm going to say mock fish and mock chicken. How did they make it taste? For me, I tasted the chicken. And when they put it in sauce, I didn't taste very different. It tasted a little different, but I would say maybe it was 70 % as good as real chicken to me. So what was the strategy they used for those specific verticals? So obviously there's like different levels of, I would say, imitation level completeness for cell-cultured meat. Cell-cultured meat, yes. So if you're talking about, it's 100 % cell-cultured is a little bit hypothetical, but if that is, there is one. That's kind of like synthetic diamond versus natural diamond.

6:53So it's basically talking about chemically the same thing. So that's why, so no wonder it tastes just like chicken. Yes. But as of now, because of the state of technology, it's not 100 % imitation. Somewhere like, say, 70%, let's say. What do you think it's at now, if you were to pick? I would say, I think as of now, the 70 is like the maximum. And the reason is, right now, the cell-cultured meat, what they say, is made in large stirred-tank bioreactors. And it is not making steak. it's making slurry of cells. Yes. So you have to modify the slurry of cells to taste and look and taste like meat.

7:37But it's not quite the actual muscle tissue. Got it. So right now, anybody who is a vegetarian has turned off the podcast. That's okay. But for us who do like meat, it makes a slurry, which has the chemical composition, but now it doesn't have texture. So it doesn't have the fabric of meat that we like in a different cut of steak, different cut of chicken. You might like the chicken breast. I might like the chicken wing. The fibers and the structure is another piece of this. Some people were making a 3D printed one or other techniques, but essentially current state of the art is making this in a big giant vat with chemicals in order to get activated and then you make the slurry and then you put it into chunks, I guess, or different formats.

8:25Well, chemicals, but exactly speaking, things like glucose amino acids which is like something we eat every day anyway yeah okay so you have a different technique for this that you're pursuing tell us about it uh yeah so uh first of all we are not we are not aiming for meat so we're making uh something uh it's trademarked craft sn it sounds a little bit german but it's just uh well the japanese people sometimes do the kind of thing just take any long words without even knowing the word the origin of the word yeah Anyway. Yeah. I have seen this. Sometimes you'll go to a cafe and it has a name that doesn't, for the American mind, make a lot of sense.

9:04But so tell us the German word you're using. Yeah. Kraft Essen. So basically craft food. Craft food. Yeah. So basically, yeah. So that is basically cell culture, duck liver cells on cellar scaffolds that actually looks like this. Got it. So you're going to make duck liver like pate? Yeah. So it's actually the same sales as foie gras. I love foie gras, but I feel guilty eating it. Well, if you don't need to, if it's so cultured. Yes, then I can eat foie gras every day. Make sure you get enough vegetables as well. Okay, yes. So the first product you're making is going to be foie gras-ish. If we decide to go with that marketing strategy, but probably not.

9:50Yeah, this is a very niche market. What is the technique you're using and what's unique about your technique? So we have a number of ways, but it traces back to our origin as a company. So originally we were not even a company or even a for-profit entity. We were more like an open source cultured meat project. I do that DIY cell cultured meat, making cell cultured meat at home. The manual is here, by the way. Oh, wow. So there are nerds. There's a technical word in America. There are nerds who want to do this at home as a hobby. Yeah. You're one of them. Yeah. You're the leader of the nerds? Because I thought it was funny.

10:29You thought it was funny to make meat at home. Yeah. And I was basically distributing this manual in Comic Market. So I would go to a comic store and you have the manual here, I'm holding it up, that has all the different tools you need to make your own meat at home. Yes. I think some of the copies are still in Comic Zin in Akihabara still. In Akihabara. But also in London Science Museum. In the London Science Museum. Hilarious. How many years ago did you start this hobby? One of the most important things you can do as a busy founder is stay focused. You need to prioritize the decisions and workflows that are going to move your company forward, not get lost in extraneous details and minutia.

11:09That's why the best decision you can make for your business is signing up with Every. Every is the all-in-one platform for incorporation, banking, payroll, benefits, taxes. basically your entire back office. They're going to keep up with all the bookkeeping and paperwork so you can stay laser focused on your next big product or hiring, features, customers, all that important stuff. If you're just getting started, they're going to handle your Delaware C-Corp and getting yourself a registered agent, all with no legal fees and no delays. And Every has worked with over 1 ,000 startups already. That's the kind of know-how and experience you can rely on.

11:44So head over to every.io and stop wasting time on stuff that isn't growing your company. That's E-V-E-R-Y dot I-O. We started back in 2014. It's called Shoji Meat Project. It's still ongoing. Okay, so 10 years ago, over 10 years ago, you start this open source project. Yeah. And how did that grow and who joined it? Yeah, all sorts of random people. Very random. Some of them like high school students. and it was actually one of the high school students who did the DIY cell culture at home and NHK came to film her growing cells in her room and that got televised nationwide and that sort of funded the seed funding of Integrity Culture which is the direct spin-off from this Shojin Meat project, this DIY movement Got it.

12:38So there's the DIY open source movement created your company. And how many people participated and actually made lab-grown meat at home over the last 10 years? We haven't been even counting, actually, because at least we have… Hundreds? Thousands? I would say, including those who did cell culture in schools after following the teacher's instructions and the teacher being trained by the Shojin Meat Project workshop. Yeah. I just don't know the number. But maybe thousands even. Potentially, I don't know. Potentially, yeah. And so this technique, maybe you can show us some of the items you have here, but you've got a technique for doing this.

13:19That's open source. And then you're going to go to market with it and you've raised a seed round, yep. Yeah, so in the early phase, our worry was that so the sale culture could change the world, but it could also easily get into the GMO situation, like being politicized, Basically, if we just let capitalism take this, things go bad. So we need a clever way. So what we came up with was to build an ecosystem. So Shojin Meat Project is open source. They do the more visionary stuff, like in this latest zine. And then there's Cell Agricultural Institute of Commerce, non-profit. They speak with the government, regulators, and maybe established industry association.

14:08Then there's an integrated culture company that builds the physical infrastructure. And anyone who wants to develop cell culture meat could use integrated culture companies' capabilities, materials, equipment, and in the future, production capability. Got it. So you're starting with the products you need to do it at home or business if you wanted to start a startup. and then eventually they'll be able to come and you might have a factory to do this on behalf of some other entrepreneurs. Yeah, if things go well, what we are going to get is some hobbies developing novel sort of cell cultured meat.

14:46It could be like pork muscle, tuna fat, healthy meat, something like that. And if it's good and he or she wants to expand, they could come to integrated culture companies to expand. So that way, how to make is open source, how to scale on the business. Got it. It's almost, I think they call it contract manufacturing in the United States. CDMO. Yeah. So you come up with your formula and then somebody else packages it for you. And then there's distributors after that. You mentioned two different meats together. This is, I think, something people don't understand. We're comparing it to things that we've put in our mouth before and flavors that we understand.

15:27So I understand tuna, chotoro, otoro had all these great flavors, seared toro. Then I also understand wagyu, Miyazaki beef, 5A5, New York strip, Australian beef, different profiles. But somebody could take these two concepts and build a flavor profile that somehow incorporates toro, yuzu flavor, and maybe steak. Yeah? Yeah. So if it's still cultured, you can design that meat, or better say fruit, in any way you want. So has anybody done anything interesting that you've tasted? Valve Foods, it's an Australian company, they did quail meat. Quail? Yeah, quail. Yes. This little bird. Little bird. Yeah, which has never been on the supermarket, is it?

16:20It has the quail meat. Yes. By setting the initial products as quail meat, they cannot benchmark against any existing category. So they can put it in whatever price they want. And also it shows the possibility of this technology. Right. So there have been some stunts like mammoth meat, but a bit more on the realistic side when they actually distribute stuff, they went with quail. Well, and it's somewhat controversial. And so I'll be delicate. but in certain cultures the idea of killing a cow in some countries is considered a sin and just terrible other cultures in Alaska seal meat, dolphin meat whale meat is part of the culture, history and then in other cultures it's looked at there's a very big controversy between the west and in fact Japan and in Nordic countries we consider oh my god how could you kill a whale or how could you kill a dolphin it's very strange first time i one of the first times i came to japan i went to the skiji fish market yeah before it was popular and i saw this beautiful meat in bricks and i said oh it must be this beautiful tuna and then i got closer and closer and it was whale uh beautiful cuts of whale and i was like whoa i've never seen that before so sometimes things that maybe are either extinct or maybe controversial You can't sell whale meat in America.

17:49It's not allowed. Contraband. Just like in some countries now, in some places, foie gras is considered too cruel to create and they don't let people do it. So have people started to think about that? You know, dolphin meat, whale meat, etc. These are things that people are just not able to access, let's say. Yeah. So those things are on the possibility as a niche market. So the market has developed. It starts with some like stunt products. Yes. Then niche products. Then something a bit more mainstream before going to the actual mainstream. So the industry has to take each step to reach the mainstream.

18:26What stage are we in now? Are we in the stunt phase? Stunt phase. Got it. So are you able to buy many of these stunt meats in supermarkets now? Well, right now in Japan because the food regulation is not ready yet. So it's not there. In Singapore, some, yes, with Vau Foods. and Parima, which is a French company that makes self-cultured foie gras. They've got the clearance, regular clearance, but I don't think they have put it on the market yet. Oh, you haven't tried it yet or have you? Vau Foods, quail meat, yes. How was it? Well, I enjoyed it. Although, because it's a stunt meat, would I eat it every day or...

19:08Regularly? Regularly, probably not. But because it's expensive. Ah. Yeah, partially. What is it per pound versus real quail? I don't know the price of the real quail. So that's the whole point. But it's multiple times the cost of poultry or chicken. And partially because it was in a fancy restaurant. So it was a good experience. Yes. It's also interesting. Maybe you wouldn't normally use a larger quantity or a different format. For example, to use 5A5 incredible Kobe beef or Wagyu Miyazaki beef in a hot dog or for like a bacon or some common meat or to make hash brown or like a corned beef hash, you would never use it.

19:53It's too high quality. You'd be offensive to use it. So you could have maybe more accessibility. You could have a hot dog that's a Wagyu hot dog. This might be the best idea ever. maybe I should contract manufacture this yeah but actually when it comes to those stunt products it doesn't have to be it doesn't have to be just food that you are selling it could be part of a bigger experience like so for example have you heard of a video game called Cyberpunk 2077 yeah of course so basically if there's some sort of special event of Cyberpunk 2077 and part of the event is the cell-cultured meat. So basically, you're selling not just the cell-cultured stuff itself, but you're selling the whole experience.

20:43Got it. So that's the sort of approach we have to take for this stunt market. When will the regulatory framework make it possible to put these in more supermarkets and more restaurants? Yeah. So, well, you mean in Japan, right? Yeah. Yeah. So that depends on what the consumer affairs agencies say, that they at least did the hearing session to consumer groups already. Okay. And so those industry association people says, well, end of this summer or maybe beginning of autumn. So it's very close, I hope. Yeah. In America, and maybe you know about this more than I do, there were some places, Florida or Texas, that wanted to ban these things, yes?

21:28Yeah. I don't know. those haven't passed or those are controversial, I think. Yeah, because it has become a part of the culture war in the US. Ah. Yeah. The founders I'm talking to are shipping code faster than ever thanks to AI. But one big important question remains. If every feature you write and ship has to slow down for an overwhelmed database, what's the point? But fear not. The solution is MongoDB. Instead of wrestling with rigid schemas and painfully reworking antiquated data structures and formats, MongoDB's native data model perfectly mirrors the language LLMs are already speaking. MongoDB gives you the flexibility to ship at the speed of AI.

22:08The ACID compliance guarantees you actually get to sleep at night while it scales to handle massive Fortune 500 workloads. And the best part is developers swear by it, literally. I can't use the actual words they said in this ad, so let's just call it a really great database. Start building at mongodb.com slash AI because it seems woke to have mock meat. Yeah. As opposed to it might taste better or it might be more interesting or it might be more luxury product. It could be framed as those, but people are trying to protect the cattle industry maybe. Well, to be honest, I talked about the scale earlier and the scale is so tiny That is, I think it's 0.001 % or even less compared to the existing meat industry.

22:57So it's not even a dent to the industry, but it's just too woke. How many cycles do we need to do sprints to get it to be the same price as the equivalent product today, do you think? So sprints. Or years, you know, How many revisions do you still need? Do you have to do maybe 10 revisions, five revisions every six months? And two or three years from now, it'll be same price for a steak or chicken breast. Yeah. Yeah. So actually what could happen is that because the existing meat price is also the moving target because of all the climate change and geopolitical, this and that. Yeah. Well, let's assume meat prices continue to go up maybe 5 % a year.

23:48Yeah. So it's, you know, going to double every 10 years, I think is what it's done previously. So to meat categories like eel, foie gras, I think the price parity is close. And when it comes to like regular beef, if you're talking about Wagyu beef, things like that, it also depends on texture, but I would say like 10 years or so, but it also depends on the branding actually. because it's actually paying for the brand rather than the meat itself when it comes to wagyu and those expensive meats. Let's go with chicken. So chicken is a commodity. People make chicken salad. They make chicken breast.

24:26They make chicken nuggets. That's the hardest one. Why is it the hardest one? Because it's cheap. So to make it cheap, you probably have to go with a large-scale factory or something, which even if the technology is ready, you know how many years it takes to build a nuclear power station. Yeah, too long. We'll be talking about that kind of thing. Like a decade or two maybe. And we don't have the technology yet. So when do you as a startup, you've raised a seed around, how do you stay in business long enough to get there? Because obviously you're enabling other people, so you're selling the tools and the system.

25:07By making ourselves a sell-agriculture company rather than sell-cultured food or sell-cultured meat company, Got it. Yeah. So there's this kind of like nested fields of ideas. Cell-cultured meat is a future form of cell-cultured food. And outside the cell-cultured food, we have cell-cultured cosmetics, cell-cultured leather maybe. Well, this is plastic, but anyway. And even outside that, we have regenerative medicine and other biopharma stuff. Got it. So we are cell agriculture company rather than cell culture food or even cell culture meat. Got it. And leather could be really interesting. And beauty.

25:53Cell culture cosmetics. Yeah, that's one of the ways of keeping us alive. Tell me about the cosmetics. Is it a better product, a cheaper product? Are you making things that can't be made? today and you're going to have breakthrough products? Yeah. So it also resonates with what we discussed a little bit earlier about this previously impossible sort of food. So when it comes to cell culture, we can make one of the most common beauty ingredients like placenta in Japan and East Asia. But that alone, safety is one. ethical side is another. But if it's cell culture, it basically solves all these problems.

26:42And another is that, it's becoming more important, but supply chain stability is another. It is in competition to so-called stem cell serum, a lot imported from Korea. Got it. So this is something for your face or something, or this ingredient would go into another product. Or to our client's product. Your client's product. Yeah, and that one's more supply chain stable because we don't need to import from Korea. Got it. And the existing stem cell serum is human cells, but that one's like vaccine-grade eggs, placenta cells, so safer. Yes. And also, it's actually a little bit cheaper. Yeah, so better supply chain, more ethical, less controversy.

27:24Safer. Safer, so many things to navigate. Yeah, just with this particular brand alone. Right. And we could develop all sorts of other products using different sales. You can make something better. Ah, fascinating. And so how much money have you raised so far? Who's the investors? Is it venture capital yet or just crazy seed investors, crazy angel investors? So, so far, our fund rates so far have been something like somewhere between 15 to 20 million USD, which is far less It's smaller compared to our industry peers in the US or in Europe. Yeah. But it's still a big amount of money for Japan. Yeah.

28:06And you have how many years to figure all this out? Two years to make it work? Well, initially, we have been doing cosmetics from day one. Oh, so you have revenue now. Yeah. Oh, amazing. Yeah. So that's actually one of the reasons why a lot of our better-funded peers are collapsing. while we're totally healthy. We actually turned profitable last year. Oh, congratulations. It's fantastic because you picked a good beachhead market. You have a good first market, ideal customer. Yeah. And then you wait for the other things to show up. And also the contract manufacturing and building the tools. A little bit in the future, but yes, we already provide the tools.

28:45Yes. And that business could be big too, yeah? Yeah. Excellent. So this is an important lesson for a lot of founders. We talked earlier, sometimes you have a big vision. We have one founder here who wants to put robots for elder care, and the robots aren't going to be ready for one, or he thinks one year, I think two, maybe realities, three. What can you do before the future is ready, right? Before the technology is ready, you have to find really good ideas. Then there's a trick, because I would better say a trap, because a lot of venture capitalists, when they invest, they basically tell you to focus on something, which goes against that sort of strategy.