Tag Archives: Food

What “Big Ideas” In Food Get Funded In Silicon Valley?

Originally posted at: http://ediblestartups.com/2013/10/14/what-big-ideas-in-food-get-funded-in-silicon-valley/

Much has been written about the ascent of Silicon Valley (SV) as the go-to global incubator for transformational change.  SV has become the Jerusalem of the techno-optimist religion. In venture capital doctrine, the absolution of humanity’s sins begins with seed financing for the next spate of Big Ideas. And in an America where the federal government no longer functions (quite literally), Silicon Valley has taken on new gravity. It is ground zero for ingenuity as cathartic salvation.

The unsustainability of the modern food system is one of humanity’s biggest problems. So, it’s worth taking a look at which Big Ideas in food the leading SV venture capital firms (VCs) are voting for. Where are VCs placing their bets for the salvation of food? (Note: this piece will focus on venture capital financing, but not crowd-funding, angel financing, or later-stage private equity financing, all of which also play an important role in advancing Big Ideas in food.) SV’s rising focus on food has already received attention from the mainstream press.

Before diving in, it’s important to bear in mind a few truths about the VC business model. To have a chance of being funded by a VC, a company must “walk and talk” like a high-growth technology firm. VCs look for: a) billion-dollar marketplaces; b) game-changing innovations; c) short innovation cycles that can quickly lead to high-margin revenue; and d) a promising path to “liquidity” (meaning the sale of the VC firm’s equity shares in the company). One problem cited by food entrepreneurs is that food businesses often don’t fit this profile. So as you peruse the ideas below, it’s also important to consider what’s not being financed. But, more on that later.

Agriculture Inputs: Information, Resource Management, Seeds

VC graphic 1VCs love agriculture input innovations. Why? Inputs undergird all of food production, and thus represent massive marketplaces. Plus, VCs understand the imminent scarcity of inputs such as water and petroleum-derived fertilizer. If technology can reduce or supplant the need for threatened resources, it can probably be monetized. (However, because such technologies often hinge on bets about unforeseeable commodity price trends and/or government distortion of markets, they bear resemblance to some of the “cleantech” investments that burned VC firms in recent years.)

A good place to start is with the recent sale of The Climate Corporation (CC) to Monsanto for over $1 billion. Having liquidated for about ten times the $109 million in venture funding the company has received since 2007, CC is rightly hailed as a successful venture investment, and was backed by big-name firms such as Founders FundKhosla Ventures, Google VenturesNEAIndex Ventures and Atomico. CC is a “Big Data” company that processes historical and real-time weather data with predictive algorithms, and then intelligently prices crop insurance and weather informatics for farmers. CC produces something that tech-oriented VCs can understand, and they’ve cracked into the multi-billion dollar insurance and business intelligence marketplaces. While we may not think about risk management and production intelligence as agriculture inputs, farmers certainly do! CC is an important case study because it shows VCs that they can make money playing in agriculture.

Another interesting information-seller is Solum, which produces soil sensors and an accompanying analytical platform aimed at reducing fertilizer inputs. The company provides farmers with detailed knowledge on the health of their soil to enable precise decisions on how much additional application is needed to maximize crop yields.

VCs have also focused on companies trying to reduce water use. The Roda Group financed mOasis, a company developing a polymer gel that retains soil moisture and reduces watering intensity in arid climates. Both Banyan Water and PureSense offer technology platforms to economize water application on irrigated landscapes. And Khosla Ventures backed NanoH2O, a membrane technology company that lowers the cost of desalination (and brings farmers one step closer to using abundant salty water for their fields).

Seeds are an additional big focus of VC firms. Kleiner Perkins has two non-GMO seed companies in its portfolio: Kaiima and VoloAgri. Both are trying to coax better productivity out of crop lines without directly altering genetics, a la Monsanto.

Note that what all these companies are really selling are data-derived intelligence or intellectual property that could shift entire marketplaces. They are high-risk, but potentially high-return, with global applicability.

Ag Production & Food Processing: More Efficient Protein, Process Automation

VC graphic 2Another concept that VCs love is substitutes for conventionally produced animal protein. If you know anything about how resource-intensive it is to raise a cow, you realize it’s probably possible to produce protein far more efficiently. Furthermore, the market for proteins is large and growing as more middle-class consumers come online worldwide.

The animal protein alternatives market is currently dominated by next-generation plant-protein synthetics that closely mimic real meat. The most “buzzy” among them is Beyond Meat, which leads a class of startups investing heavily in food science and processing technique to bring the flavor, texture, and visceral eating experience of their substitutes as near as possible to “the real thing.” The promise for VCs is that these companies will make delicious products with a much lower production cost, thereby carving out a large fraction of the global market by virtue of a favorable price point. Also in this vein is Hampton Creek, an egg substitute with exceptionally promising early market traction, and Lyrical Foods, which is going after cheese.

Further down the pike are companies attempting to grow real animal cell cultures (and ultimately complex animal tissue compounds) in a lab. Rather than originating from a cow in a field, your hamburger would come from “in vitro cultivation” in an industrial incubator. Again, the investment promise of companies such as Modern Meadow is that they will someday streamline production and drop costs – although today, a single “cultured” burger costs $325,000.

(Keep an eye on one more animal protein substitute: farmed insects. While I am not aware of any insect companies currently being financed by institutional VCs, they are thriving on crowd-funding sites such as Kickstarter.com.)

Another well-attended class of ventures is those that are automating processes in the semi-structured environment of food production. For example, Blue River Technology is using computer vision technology to automate in-field weeding and plant selection processes, which have historically relied on manual labor or excessive application of chemicals. Primary backer Khosla Ventures envisions a future where autonomous robotic vehicles diligently roam every agriculture plot around the world. A similar company is Rowbot, which is focused on fertilizer application.

And not far off will be a series of investments in flying drone vehicles used in food production. I don’t know what these will look like, but some have ventured a guess.

Storage, Distribution, and Consumption: Supply Chain Traceability, Numerous Consumer Applications

VC graphic 3Information is of paramount importance in distribution. Since supply chain traceability is of interest for food safety, cost control, and consumer education purposes, VCs have bolstered technology company HarvestMark, which can help track fresh food items down to the package level.

Further along the supply chain is the intersection of food and consumer purchases. Because “consumer Internet” (the intersection of internet technology and the traditional consumption of goods and services, the latter of which composes over 70% of U.S. GDP) has been such a massive area of investment for VCs, the ecosystem of ventures that allow people to seek out, buy, and consume food is extremely robust. Instead of trying to catalogue notable investments in this space, I will refer readers to Brita Rosenheim’s exhaustive map of “Food Tech and Media” companies. For ongoing coverage, Food and Tech Connect monitors this space very well.

What’s Being Left Out?

Anything that is regionally oriented, serves a small market, or fails to provide an “exit opportunity” for VC investors is unlikely to be funded. The reason such investments are left out is because the business of venture capital is to make money, and do so relatively quickly. VCs raise investment funds from limited partners (smaller investors), and promise to “close” a pool of funds and deliver returns within five to seven years. What that means is that even a company that receives investment early in the five-to-seven year life of a fund doesn’t have a tremendously long time to grow and go public, be bought by a competitor, sell to a private equity firm, or otherwise recapitalize to “liquidate” equity shares. If the “exit opportunity” never manifests, the VCs can’t make money, and they won’t make the investment in the first place.

Contrast the five-to-seven year exit timeline with the life cycle of most agriculture and food businesses. Pistachio trees take seven years to mature after planting. Converting land from conventional to certified organic takes at least two years (and probably closer to four in practice). Building sales and distribution in a physical sales network takes much longer than in an e-commerce network. VCs simply aren’t willing to wait for many food businesses to generate a competitive return on their investments.

And, even if VCs waited, a competitive return may never appear. Most parts of the food value chain generate modest profit margins. Contrast the 15% operating margin of Kraft Foods (a mature and profitable food company) to the 34% operating margin of Microsoft (a mature and profitable software company). For a VC chasing “superior” returns, the profit profile of a business matters a lot.

So what “progressive food” business models are unlikely to be courted by VCs? Big Ideas that are a bit ahead of their time (such as vertical farming); “low-tech” agriculture production technologies; local foodshed farming operations; regional food processors or distributors; artisanal “mom and pop” food manufacturers; most restaurant chains; retailers targeting “food deserts”; niche cooking or nutrition education platforms; and most publications or blogs. VC is not interested in Slow Food or Slow Money. And it’s important to recognize that many of the changes needed in the food system simply don’t fit in the “techno-optimist” paradigm. For those changes, alternative investment channels are springing up, but may never develop at all. Future posts will address complementary avenues of investment in other parts of the food system.

In the meantime, cutting-edge food start-up incubators such as Local Food Lab and Accel Foods, and investment enablers such as CircleUp, are trying to close the broad gap between new food businesses and institutional VC financing. As more Big Ideas (and laudable Small and Medium Ideas) in food continue to emerge, stay tuned to the evolving infrastructure of support for food companies.

Careers In Food System Change: Where Should You Start?

Originally published at: http://ediblestartups.com/2013/09/24/careers-in-food-system-change-where-should-you-start/

I have had many career path conversations with people who are fired up about changing the food system. These conversations are often tricky. The food landscape is complex, and there are many different ways to plug into the ecosystem of affiliated industries we collectively call “food.” Navigating that ecosystem can be overwhelming.

In my opinion, the easiest way to make sense of the job landscape is to apply filters. Perhaps the most potent filter is passion. I believe people do their best work (particularly if it’s entrepreneurial) when they are in tune with their unique zealousness. Finding it takes some self-reflection. Career-seekers need to begin with the question: What about food fixates you? Then, they can dig into specific opportunities.

I want to introduce a framework for mapping passions for food system change against the “value chain” in food production. We’ll call it the “Food Change Career Matrix.”

Let me note before starting: the matrix outlines a way to think about driving change in the food system. It assumes you think something is wrong in the system and you want to work on changing it. So this is a way to structure a conversation about how people and organizations are (or are not) driving change today.

The Food Change Career Matrix


Dimension 1: Whom Do You Want To Impact?

Dimension 1 was inspired by my realization that food stretches across every level of Maslow’s Hierarchy of Needs. Food is simultaneously a basic physiological necessity, an element of safety and security, an expression of love and belonging, an instrument of esteem and respect, and a sophisticated symbol of self-actualization. And I think one can rightly discern a person’s priorities by understanding where they fall on Maslow’s Hierarchy. As go the priorities of the people, so go the priorities of the food system (and the broader economic system). I find that most people tend to have a visceral connection with driving change at one (or a few) levels of Maslow’s Hierarchy. For simplicity’s sake, I’ve reduced Maslow’s Hierarchy from five levels to three.

The priorities for a local, regional, or national food system depend greatly on the economic status of the people served by that food system. Let me illustrate through a set of examples:

a)   People in the global “impoverished class” tend to worry about caloric security. Much of their daily energy is directed towards fulfilling basic needs: are they physically safe? Do they have clean water to drink? Do they have enough food to avoid starvation and malnutrition? In short, their next meal is not guaranteed, and the food system is oriented to provide as many calories as possible as cheaply as possible.

b)   People in the global “middle class” tend to be preoccupied by the integrity of their food. Finding enough calories to survive is not the most pressing issue; rather, people with disposable income now have choices over how to fulfill their caloric needs. The issues of wellness and status emerge: food is both a source of nourishment and a symbol of “doing well.” A bell curve emerges in weight: some people under-eat, and some people over-eat. The role of the food system shifts from producing enough calories to serving a mix of nutritional demands from consumers.

c)   People in the global “upper class” tend to treat food as symbolic, instrumental, and part of lifestyles and contexts. Caloric security is moot, and food consumption becomes a reflection of sophisticated individual preferences and social behavior patterns. Restaurants, retailers, brands, and novelty matter. In a vast sea of purchase options, consumers use their money to vote for particular food systems, forms of nutritional richness, or their unique social station. The role of the food system is to provide many options across a wide spectrum of preferences.

Different people are passionate about driving food system change at different levels of economic development, and none is “better” or more worthwhile than another. Someone may see value in helping feed the poor, for instance, but they may see more value in developing advanced food systems in “upper class” societies that can then be replicated across less-developed economies. Indeed, many disruptive technologies and systems originate as experiments in wealthy economies.

Dimension 2: Where In The Food Value Chain Do You Want To Work?

When we picture food production, there are different stages along the path from field to fork. Segmenting the stages and studying what occurs in each is another effective filter in understanding where change can occur.

a)    Agriculture inputs: soil, water, seeds, fertilizers. Resource development and management.

b)   Agriculture production: farming, tools and technologies used in growing, agricultural systems.

c)    Food processing: converting food from a raw state to a consumable state, and creating a brand identity.

d)   Storage & distribution: getting food to market. Includes commodities.

e)    Consumption–retail: points of sale where people buy groceries and bulk foodstuffs.

f)     Consumption–restaurants: points of sale where people buy prepared food in a social setting.

g)    Consumption–cooking/other: points of consumption where people eat at home or in other settings.

I think there are also career options outside the strictly defined food production “value chain”:

h)   Food education: nutrition, general health and wellness, food policy, food systems.

i)    Investing: providing capital to food-related entities.

Examples: The Matrix In Action

Food Careers image 09.24.2013

A career-seeker might start by considering the personal resonance of each dimension, and then do research on which companies fit into applicable parts of the matrix. Some illustrative examples are below:

  • Food safety + Agricultural production: Kickstart International manufactures hand-operated water pumps for farmers in developing economies. These pumps obviate the need to carry buckets of water to the field by hand. They also displace the use of pumps powered by diesel generators, which are both expensive and environmentally unfriendly.
  • Food integrity + Food processing: Stonyfield Organic introduced tasty, affordable, organic yogurt to the mainstream marketplace. Stonyfield was one of the first organic food products to be carried by WalMart, which had a resonant impact throughout the entire dairy industry.
  • Food culture + Storage & distribution: Farmigo is a software company that connects farmers to consumers. Shoppers can use Farmigo software to order a basket of customized of high-value goods from local area growers and artisanal food producers. Products are delivered to shoppers’ doors or to a centralized pickup location.

A Valuable Starting Point

The matrix can help people dig into what they feel most strongly about changing in food, and where they might apply their unique backgrounds, talents, and passions. It’s a way to structure thinking and conversations.

I welcome your feedback on this tool and any suggestions for improving it.

The burger will cost you a buck. But the bad ideas are free!

Originally published via Edible Startups: http://ediblestartups.com/2013/08/14/the-burger-will-cost-you-a-buck-but-the-bad-ideas-are-free/

Amidst the preening flock of sanctimonious food-related articles that flit across our social media newsfeeds or strut into our inboxes each month, there is occasionally a dark horse.  Dark horse pieces in contemporary food writing stand out not because they proclaim that the current industrial food system is broken.  Even ardent critics of the food reform movement know deep down that our calorie production infrastructure is untenable and bloated with hidden costs.  No, the dark horse compositions take a bolder stance: they unabashedly lionize the crown jewels of our fast food imperium.  Typically, dark horse authors view themselves as martyrs for the lower classes, standing bravely athwart a runaway torrent of invectives penned by “out of touch” (and probably smelly) vegans, or sneering nanny-state propagandists who want to raise the cost of living for our neediest citizens.

And good for those contrarian writers. A balanced dialogue makes for a healthy social conversation. But Kyle Smith’s recent dark horse piece in the New York Post, “The Greatest Food In Human History,” is little more than a litany of borrowed, scattered, and weak assertions amassed in slapdash fashion under the NYP’s bright red Look At Me! banner. During a casual read, Smith seemingly commands the reader’s fidelity to the argument that poor people need low-cost food and that the obvious leading option for them is “the greatest food in human history” (TGFIHH): the McDonald’s McDouble cheeseburger.  The TGFIHH term is Smith’s, but he derives it from a blog post belonging to “Freakonomics” author Stephen Dubner, in which a reader named Ralph writes to Dubner claiming that the McDouble is “the cheapest, most nutritious and bountiful food that has ever existed in human history.”

One should begin by recognizing the voice behind the piece’s core argument.  The voice does not belong to Kyle Smith (whose primary role at the Post is as one of four film critics), nor to Stephen Dubner (a fine writer but a self-described “personality” with provocative views), but to Ralph. Who’s Ralph? A guy. We don’t know. But Smith is happy to mention Dubner and (John Bates Clark Medal-winning economist) Steven D. Levitt by name, even though Levitt is not tied to the blog post in any way.

Smith and Dubner hold aloft the following statistics about the McDouble: it has “390 calories, 23g (half a daily serving) of protein, plus 7% of daily fiber, 20% of daily calcium and so on. Also, you can get it in 14,000 locations in the US and it usually costs $1.”  It is, in Smith’s words, an “unsung wonder of modern life.” Ok, Kyle. Ready for this? I agree! It’s a “wonder.” That’s a lot of stuff for $1 out of my wallet. But is it TGFIHH? Big question. And I was sort-of kind-of understanding the logic until I re-read the subtitle of the article: “In terms of cost per calorie, no locavore, organic veggie can compete with the McDouble.”

Willful Confusion

When you get the game wrong, you crown the wrong champions.  Smith starts clearly: we’re talking about cost per calorie. But then he starts cavalierly offering other arguments. The McDouble is not only cheap, but it’s “nutritious” and “bountiful”. Bountiful, maybe. Keep in mind that Dubner’s blog post is titled “The Most Bountiful Food In Human History,” not “The Greatest Food In Human History.” But “cheap” and “nutritious”?


Addendum to the original post (added 8/14/13): It’s been brought to my attention that $1 menu items at major fast food chains, particularly the burgers, are “loss leaders” for those chains. Meaning, they lose money on each unit sold. Why would they sell items at a loss? Because few customers buy only a $1 burger. They also buy high-profit items like soda, which net the fast food chains 90% profit margins. That fact is critical to this cost debate: there is no such thing as a $1 burger. Even McDonald’s is McSubsidizing the consumer to artificially lower the direct cost of the burger. Food system cost distortions abound, even where you least expect them. And it’s critical to keep this in mind as you consider the true cost of a McDouble.

It’s on the cost dimension that Smith really goes bananas.  “Produce may seem cheap to environmentally aware blond moms who spend $300 on their highlights every month, but if the object is to fill your belly, it is hugely expensive per calorie…Junk food costs as little as $1.76 per 1,000 calories, whereas fresh veggies and the like cost more than 10 times as much…A 2,000-calorie day of meals would, if you stuck strictly to the good-for-you stuff, cost $36.32.”

I’ve already submitted in earlier writing that I’m well aware that eating fresh, high-quality produce is expensive and doesn’t necessarily appeal to many American palates. But Smith paints this as an “either/or” proposition where (A) fast food is cheap and (B) fresh produce is prohibitively expensive.  Here’s why this “fill your belly” argument is simple and dangerous:

  •     Is the object in America to fill our bellies? FeedingAmerica.org does not even offer figures on how many people in the U.S. are starving or chronically hungry—meaning, at a true calorie deficit. Instead, they use the term food insecurity, defined as when someone does “not always know where they will find their next meal.” FeedingAmerica asserts that one in five children are food insecure, and are unable to “consistently access nutritious and adequate amounts of food.” Note that “nutritious” is first in line, ahead of “adequate amounts.” So why isn’t FeedingAmerica offering stats on how many young Americans are starving? My hypothesis is that starvation (albeit a real problem) is a much smaller issue in contemporary America than lack of nutrition. It is hard to argue that our most pressing issue is “to fill our bellies” when:

In sum total, our bellies are not full. They are overfull. The majority of Americans are not ravenous when they go to bed. They are bloated. We need to ask not whether we can fill our bellies, but with what, and for how much. Which leads me to:

  • Fast food is not all that cheap! Sure, there are cost advantages that McDonald’s passes on to consumers thanks to operational scale and efficiencies. Your local farmer’s market doesn’t offer those same competitive advantages. But as a good student of economics, I must continue to flog this point: externalities matter. You pay far more than $1 for a McDouble. How? You pay through your taxes (inefficiently, mind you) for the government subsidies that make corn, soy, and wheat cheap, and thus make the meat from cows that eat those crops cheap. You pay for the massive environmental degradation that concentrated animal feeding operations levy on each ecosystem they operate in. You pay for the strain on resources that burger ingredients impose: think of all the waterenergy, and other inputs that go into a burger but aren’t reflected in the price (for example, water prices are blunted by politics but water scarcity is a huge and growing problem; energy prices are blunted by politics but energy production is laden with externalities, such as atmospheric carbon and geopolitical turmoil; etc.). You pay for the ballooning public and personal health costs caused by avoidable chronic disease (because, let’s face it, we’re likely eating that McDouble with fries and a soda). On the last point, America has the highest health care cost burden of any country in history. Think that might be related to our cheap food?
  • Finally, produce and “healthy eating” do not have to be ruinously expensive. Fresh, organic produce is certainly costly. But many frozen or canned fruits and vegetables are not that costly, nor are many fresh selections. There exists a broad spectrum of options between 2,000 calories of McDoubles at $5.12 (direct cost; the fully loaded cost with externalities is substantially higher) and 2,000 calories of produce at $36.32. There is real choice. And we can afford to pay more than 6% of our household income if doing so offsets real economic externalities that we pay for anyways! A penny spent wisely is a penny saved somewhere else, particularly when it comes to our health.


Even Dubner asks on his blog, “if you attack on the ‘nutritious’ dimension (I suspect you will), be very specific.” Let’s do it. We’ll go macronutrient-by-macronutrient through fat, carbs, and protein, and of course let’s talk about micronutrients as well.

The McDouble has 19 grams of fat, which accounts for roughly 170 of the 390 calories, or 44%. That means almost half of those cheap calories are fat. Fat can be OK, but the 8 grams of saturated fat are bad for you. By eating a McDouble, you’ve exceeded one-third of the government-recommended daily limit of saturated fat via one-fifth of your government-recommended daily calories. And the bulk of those grams are from the meat and cheese, which, taken together, are nearly devoid of any meaningful micronutrient benefit (particularly on a per-calorie basis): no fiber, 4% of daily vitamin A, no vitamin C, 8% of daily iron, and 8% of daily calcium.

The 33 grams of carbs equate to roughly 132 calories, or another 34% of the total calorie count.  28 grams of those calories come from the bleached wheat flour bun, whose third-most-voluminous ingredient (after flour and water) is high fructose corn syrup. From this bun you get 5% of daily fiber, no vitamins A or C, 10% of daily calcium, and 10% of daily iron ensconced in simple carbs that are fast-metabolizing and obesogenic. Not a great tradeoff there.

Finally, you get the 23 grams of protein at roughly 92 calories. Arguably, this macronutrient is the best “bang for your buck”. The government recommends that an adult eat about double this amount per day. But remember that this is beef and cheese, so that protein is bound up with a considerable amount of fat.

To put this all in context, let’s compare what you get above to a serving of frozen spinach. 45 calories of spinach provides 366% of daily vitamin A, 20% of daily calcium, 14% of vitamin C, 16% of iron, and 18% of daily fiber. This comes with 1 gram of fat, 6 grams of protein, and 7 total carbohydrates.

Nutrition table

Note: the cost of 5.5 ounces of frozen spinach was derived from the per-ounce price ($0.14) of frozen spinach on Safeway.com.

So if we’re trying to award the mantle of “most nutritious,” it’s not much of a contest. The table below highlights the difference: except on total calories and protein, spinach is cheaper than the McDouble (and that’s without factoring in the agriculture subsidies and other economic externalities that favor the McDouble). And spinach has less fat and fewer simple carbohydrates than the McDouble, so it wins on those fronts too. If your aim is to simply “fill your belly,” then the McDouble wins. But if you care about what you’re putting in your body, spinach is a very economical champion.

Equivalency Cost table

Keep in mind again that we talk about the lack of “nutritious” foods available to the food insecure before we talk about “inadequate amounts” of foods available to the food insecure. In America, lack of nutrition means lack of vital micronutrients more than lack of vital macronutrients. Let’s face it: fat and carbohydrates are cheap.

And although protein is not far behind fat and carbs on a cost basis, it may be the exception here: protein is clearly the best thing going for the McDouble. Protein is indeed important to development and health, but there are innumerable sources of protein that are reasonably priced (the reviled “McBoiled Lentils” that Smith casually dismisses; or soy; or chicken; or fish) and, unlike beef, don’t have the same amount of fat bundled up with each gram of protein. And I have to emphasize yet again: our beef ain’t all that cheap when you tally up the externalities.

So the “nutritious” argument may be somewhat relative, particularly when you map nutrition against cost, which forces subjective prioritization. What is “nutritious” depends on your personal goals. Want to bulk up with a side of heart disease, but get your protein on the cheap? Spend on the McDouble. Want an “unsung wonder” of multitudinous micronutrients critical to your health? Buy the spinach. What do your intuition and your brain tell you is the “greater” food for you?

Nobody – probably not even Smith – would argue with a straight face that the McDouble is more “nutritious” than spinach.

Just for fun: Bountiful?

According to Smith, there are 14,000 McDonald’s storefronts in American. That’s a lot.

But there are 36,536 grocery stores. Let’s say half carry frozen spinach at prices comparable to, or less than, Safeway (which I used in my cost analysis above). That’s more than 18,000 stores.

Nearly everything is bountiful in America. And that’s part of the problem. You can have too much of a good thing.

Senselessness: Cheaper Than A McDouble!

The newsstand price of a weekday issue of the New York Post is $1.00, the same price as a McDouble. For that money, I can read Kyle Smith’s movie blog, or his occasional foray into a critical social debate that demands meaningful economic deliberation. Alternatively, I can just read those pieces for free on the Internet. But both the burger and the blogger come loaded with hidden costs: the burger’s are outlined above; the blogger’s are oversimplification and cavalier grandstanding.

Smith says that “class snobs, locavore foodies and militant anti-corporate types” are “completely heartless when it comes to the other side of the equation: cost.” It’s an eye-catching line, and has some roots in truth. But are economists heartless when they take into account real externalities? Am I heartless for pointing out that micronutrients critical to health are far less costly in produce than in burgers? Or that we’re literally eating ourselves to death because of our collective belief that food is always better when it rings in cheaper at the register?

If Smith were a respectable conservative thinker, he’d admonish the government for lavishing subsidies upon food producers and the industries that support them (energy, etc.). He would be irate about the massive economic inefficiencies caused by artificially cheap fat and carbs. But he’s not. He’s just grabbing attention by defending the status quo against “Marxists” like me who have been taught to think by the nutty leftists at a top graduate program in business. Are the poor people that Smith defends doing better because of the ascent of the McDouble? Look at the stats on obesity. Or the broadening real income gap that’s catalyzing the slow death of a once-vibrant middle class. That gap has been widened by higher health care costs. It certainly has not by closing thanks to industrialized food costs.

The status quo is the McDouble. Is that the best we can do? Is that The Greatest Food In Human History? For our sake, I sure hope not.

Can we be saved from our own appetites?

Originally published via Edible Startups: http://ediblestartups.com/2013/07/23/can-we-be-saved-from-our-own-appetites-by-guest-blogger-austin-kiessig/


Where I live, my rent is sky-high, I can see the ocean, and I commute to work via bicycle and train.  One facet of my lifestyle that I value immensely is that my neighborhood enables regular access to nutrient-rich, fresh foods.  Farmer’s market-worthy produce and meat are available within a short walk at dozens of distribution points—Lululemon-trafficked grocery stores, cafes filled with earbudded heads floating above glowing Apple logos, and a smattering of high-priced “date-worthy” restaurants.  Oh, and farmer’s markets.

My lifestyle bears little resemblance to the average American’s.  I’m a card-carrying San Francisco stereotype.  Don’t stop reading yet, though: it’s not as bad as it seems.  I’m not cool enough to be a hipster, nor wealthy enough to be an insufferable snob.  But I am a Pollanite: a devotee of Michael Pollan’s normative proclamations about how all of us should eat.  In short, I believe that every American should seek out less packaged and/or fast food, consume far more produce, cook at home more often, and, frankly, pay more for food.  Among all economic goods, food is the ultimate “you get what you pay for” proposition.  Want readily-available, cheap burgers?  Okay.  But be prepared to foot the bill later on for the “externalized” costs of agriculture subsidies, a degraded ecosystem, waning natural resources, and skyrocketing public health bills.  Paying more for food today generally means you’re just paying those “externalized” costs up front instead of later.

But I am cognizant of a critical, stubborn fact of life: not everyone can afford to eat like a Pollanite.  And importantly, even if they could afford to, not everyone wants to.  In fact, I believe that the vast majority of Americans don’t want to.  It bears repeating—lest my Silicon Valley and Manhattan readers forget it—that my (your?) lifestyle is an anomaly in our country.  I sought out that lifestyle and made it so, particularly the food part.  But for many Americans, the aptly-named industrial food system works quite well.

In no other place on earth at any time in history have people been able to get fat (and happy?) spending such a small percentage of their incomes on food.  And, for the most part, Americans LOVE that food.  Even the most devout Pollanite must confess to the guilty pleasure of a road trip stop at In-N-Out, insulated by hundreds of miles from the judging eyes of their preachy fellow apologists.  Or the bliss of a late-night Taco Bell ambush.  I imagine that even when Alice Waters bites into a Big Mac, she cannot stem the Requiem For A Dream-style pupil dilation, heart rate escalation, and heady endorphin release.  Those physiological responses are universally triggered by the food science opus that is sugar, salt, and fat masterfully calibrated within a perfectly replicable architecture of bun, meat, and fixings.  Our corporate food giants have achieved six-sigma production of sensory rapture on a global scale, and that achievement is heralded every time a consumer opens their wallet and votes for more.  How many billions have scampered hungrily towards the Golden Arches to date?

Americans are addicted.  There is no longer a debate.  Excellent journalism has laid bare that reality.  But it’s more than just an addiction to sugar, salt, and fat.  It’s an addiction to cheap prices and convenience.  Industrial food rules the day because it has conquered the competitive (un)holy trinity: taste, price, and distribution (a.k.a. convenience).  For the average American, the Pollanite diet wins out on precisely zero of these three critical hinge points of consumer choice.  Fresh produce fails to frenzy the taste buds, is pugilistic on the pocketbook, and seems (or actually is) absent from their aisleways.

Change is Needed, but What Kind?

I want the food system to change.  But I understand the enormity of the challenge.  Agriculture subsidies for a select few crops prop up an enormous infrastructure of industry and profits.  If those subsidies were taken away, eventually Americans would be able to buy nutrition at price parity to their empty calories.  But the subsidies will not go away any time soon.  In short, that means that industrial food will continue to win on taste (the momentum of food science undergirded by a cheap ingredient menu), price (buoyed by an uneven economic playing field), and distribution (an entrenched, scaled supply chain).  Silicon Valley’s techno-optimist hackers dream of a killer app that will streamline the path of produce to farmer’s markets and grocery stores and lower the cost of “the good stuff” so profoundly that denizens of inner city food deserts will simply have to buy it.  But I don’t think nutrition-rich food price parity is achievable in the current system.  Ever.  Today’s factory food machine is too damn good at what it does.  The gap is too large.

Which leaves us with one saving grace: consumer behavior change.  If Americans can’t be compelled by a better product (per the unholy trinity) that doesn’t and won’t exist, then they have to choose to spend their money in a different way.  Which leads to another big question: why would they do so?  That query demands a survey of which behavior change models tend to work.  And which don’t.

The Scared Straight Model

The reason I chose to eat healthier was because of a very acute medical problem I suffered for two years when I was in college.  I developed two benign bone tumors—cause unknown—that pitched me into the darkest emotional and physical times of my life.  As a result of losing control of my health, I vowed I would do everything in my power to avoid getting sick again down the line.  A visit with a nutritionist and reams of reading convinced me that diet was one of the most important levers in steering my health.  So I set out to understand what I ate, and stopped eating the things I determined were “bad” for me.

This past year, I’ve spent a considerable amount of time trying to develop a healthy snack for people managing diabetes (both Type 1 and Type 2).  The product development process was incredibly educational, but not principally because I learned about the science and tactics of commercializing a mainstream food product.  Rather, I was most struck by what I heard when interviewing physicians and diabetes educators who worked with Type 2 diabetics.  Nearly all of my interviewees insisted that better snack options were needed, but they also cautioned that if those products were truly healthy, their patients would not buy them.  At first, I couldn’t understand why.  In my opinion, this demographic above all others should be motivated in the search for better food solutions.  After all, those patients who had been told they were pre-diabetic or diagnosed as Type 2* had a stark choice: reform your diet (and start pumping yourself full of synthetic insulin), or get sick and die much sooner.

But what those physicians saw among most patients were reactions spanning from modest (and earnest) dietary changes to complete denial and zero changes.  Dietary pathways and food addiction were so engrained and provided so much pleasure that many patients struggled mightily to make lifestyle modifications.  (In fairness, the synthetic insulin industry represents a powerful crutch that permits people to avoid meaningful diet change.)  A pair of physicians who managed a high-touch intervention practice told me morosely that one benchmark goal they set for their most at-risk diabetics was to integrate one (!) weekly serving of broccoli into their diet.  Many of those patients bluntly failed to deliver on this seemingly innocuous target.  To those patients, a spiraling, sickly death was less intimidating than cruciferous greens on Tuesday night.

It became clear that “scared straight” by health issues worked for some people (including me), but wasn’t powerful enough to redirect many others.  It’s worth mentioning that my research was admittedly unscientific, but the anecdotes I heard took on a weighty resonance when overlaid against the tragic macro-data on our nation’s continuing obesity, diabetes, and heart disease epidemics.  Many people get sick or stay sick not because they lack options to remediate their illness.  They end up on that path because it’s hard to change.  And if people with their lives on the line can’t change, what hope is there for the rest of us?

The Education Model

There is another school of thought espoused by many food reformists: teach people (sick and healthy alike) to eat better, and they will do so.  The idea is that an informed consumer is a healthier consumer.  Undoubtedly, there is truth to this.  But nutritional education tends to come from one of a few places: corporate marketing (guess where this leads?), parents and friends (declining household cooking rates lead to less knowledge of what’s being eaten), the government (see Marion Nestle’s writing on the constantly evolving, obfuscating, and commercially corrupted “food pyramid”), or self-directed research.  (Note what’s conspicuously missing and pragmatically far-off: food education in schools.  God bless you for trying, Jamie Oliver.)

The self-directed research pathway is perhaps the most promising, but it is a difficult one.  Why?  First, it takes time and energy.  Second, it’s confusing.  Personally, I’ve been trying to understand nutritional science for over a decade, and sometimes now I feel further from the truth than when I started.  “Nutritional science” is a muddle of contradictory dictums cobbled together from corporate-funded experiments with pre-ordained outcomes, highly specific clinical studies that provide few general answers in the context of complex diets and genetic variability, and whatever “diet du jour” is being espoused by the Dr. Phils of the world.

Despite the flaws of a constantly evolving body of nutritional science, most people manage to cobble together a body of edicts that they can live by.  The average person, when asked, can readily share their “food rules”.  For instance, someone might say “I know fat is bad, fruits and veggies are good, and I shouldn’t drink too much soda.”  Great start.  But, depending on which expert you ask, each claim is subject to befuddling scrutiny.  Fat is bad?  Well, it’s true that fat is the most calorically dense macronutrient, but fat may not be what’s making you fat or causing heart diseasemany fats are good for you, and fat can actually help you lose weight.  Fruits and vegetables are good?  While it’s true that fruits and vegetables are fiber- and nutrient-dense (always desirable), too much fructose or starch can be obesogenicmuch produce is loaded with toxic pesticides, andfrench fries are technically a vegetable.  And how much is “too much” soda?  I won’t even open that can of worms.

The example above is simply meant to show that “shortcut rules” veil deep complexity.  World-class research nutritionists cannot agree with one another, much less endorse the op-ed proclamations of Dr. Oz.  So how is the average American supposed to cut through the clutter in a meaningful way?  Confusion leads to emotional flooding, and emotional flooding leads to the drive-thru.

My point is not that education isn’t worth pursuing.  It certainly is.  But unbiased or meaningfully targeted resources are rare and expensive to come by (think high-touch personal counseling by a nutrition professional).  The average American can’t (or, more sadly, perceives they can’t) afford the time and resources needed to become nutritionally savvy.  And savvy is what it takes to navigate the perilously enticing industrial food landscape.  Savvy can be the wax in your ears that helps you ignore the song of the sirens in food marketing.  But I don’t see mainstream America becoming so aggrievedly informed that they start picketing Burger King.

The Cash Incentives Model

One proven way to get people to eat better is to provide a cash incentive.  Since I don’t expect the government to provide blanket subsidies for better eating, we turn to the only other institutions that have an incentive to pay people to eat better: health insurers and employers.  Since both are exposed to the rising cost of medical care should an insured/employee develop an avoidable chronic disease, either might provide a “carrot” for preventative wellness through healthier diet.

Safeway is the case study for adopting a cash incentives program that improved employee health.  And numerous insurers now offer premium discounts for insured customers who improve on biometric markers of health (blood pressure, blood glucose, weight, smoking cessation, etc.) over time.  Even one startup is trying to get into the cash incentives game.

However successful these programs have been, they are hamstrung by the reality that most insured people will change employers or insurance carriers every few years.  What that means is that investments made in an employee or insured today may not pay off for a decade or more, so most employers and insurers have not made material investments in better eating.  For the time being, this is a dietary “fix” incentive available to a minimal fraction of U.S. citizens.

The Subversive Psychology Model

Change is easier when choices have already been made for you.  The field of psychology is rich with examples of behavior change catalyzed by subtle (or even not-so-subtle) environmental alterations.  One of my favorite examples along these lines highlights our “default bias”.  In European countries where motorists being issued new drivers’ licenses are designated, by default, as organ donors, more than 90% of people ended up registering as organ donors.  In European countries where new licensees were designated, by default, as non-donors, only some 10% of people ended up opting in as organ donors.  People tend to accept the default they are presented with.

Now, extrapolate such findings to dietary behavior.  People will generally eat as much as they are given, without even realizing how much they eat.  But people can also be anchored to consume less.  Reduce serving sizes so that people have to order two servings instead of one to consume the same amount of food, or have to return to a buffet multiple times instead of passing through once, and they will eat less.  These effects are probably familiar to all of us: if I don’t keep Oreos in the house (a particular Achilles’ heel for me), I won’t eat them.  And if I do eat them, I will eat fewer from a four-pack than I might from a family-sized container.  Environmental structure and psychological nudges matter.

The allure of subversive psychology is that it works for pretty much everyone.  Moreover, it is low-touch and low-cost.  Shrinking plate sizes does not require multi-week counseling: the change is built into the decision process from the front end.  The same cannot be said about other methods of behavior change.  And that is why I think subversive psychology is our cheapest and most-likely-to-succeed way of changing the diet of the mainstream consumer.

(Author’s note: if you can provide evidence of other meaningful and economical behavior change models, please do so!  I love being proven wrong.)

Fast Food as Savior?

The cover story in the July 2013 issue of The Atlantic magazine is David H. Freeman’s piece How Junk Food Can End Obesity.  Upon scanning the title, my inner Pollanite began frothing at the mouth and mentally mapping out an erudite, 2,500-word retort.  Why even bother reading a defense of the titanic commercial demons that had turned us from a lively nation of trim Wally Cleavers into a waddling amalgamation of gelatinous aortic congestions?  I set upon reading Freeman’s piece as a predator sets upon prey: you poor thing, you never stood a chance.

But my inner Pollanite was steadily quieted as Freeman’s arguments began to win me over.  You see, Freeman builds to the same conclusion that I have: fast food has already won.  The unholy trio of commercial success (taste, cost, distribution) is firmly in industrial food’s clutches, and there’s no easy path to wresting it away.  Nor would the majority of Americans want the food landscape to change: as it turns out, the unholy trio is the recipe for commercial success precisely because it is what consumers demand from their corporate paragons.  To a Pollanite, the tale of the American food landscape is one of master and slave.  To many, many Americans, the tale of that same landscape is one of happy marriage.

Which is why I think no mainstream obesity solution can occur without the use of subversive psychology through industrial food channels.  In Freeman’s article, we see that McDonald’s’ greatest successes reformulating products to make them more healthy came when consumers didn’t know healthy changes were being made.  Conversely, many of McDonald’s’ greatest failures came when they tried to sell healthfully branded food items.

But think of the massive impact McDonalds (or Coke, or Pepsi, or Frito Lay, or Yum Brands) could have if they began cleaning up the most obesogenic foods clogging American alimentation.  Take the sum of all the calories avoided by people who changed their diet to address illness, or who improved their dietary education, or who began cooking more at home, and I am willing to bet that number will pale in comparison to the caloric consumption that was eliminated from the system when McDonald’s eliminated Super Sizing as a menu option.  There are simply too many people eating too many calories through industrial food channels to think that we can’t treat industrial food as The Front Line in the war on obesity.

If you agree with me at this point (and I know that some won’t), the next question is obvious: would these companies make those changes?  Why would they pull the rug out from under their customers, at risk of being outed as “value destroyers” or losing market share to competitors?  To assume industry giants will make such benevolent changes is to invite cognitive dissonance, ignore the inevitable outcome of the prisoner’s dilemma, and take on faith that the impossible is possible.

But for once in this long missive, I will espouse optimism.  The enlightened Pollanites of San Francisco and Manhattan can and should continue to pressure industrial food to clean up its act.  To date, incremental change has proven possible.  McDonald’s got rid of super sizing.  Pepsi has reduced sodium across much of its product portfolio.  And WalMart has stocked its shelves with a laudable array of healthier food options.  These are real wins.

(For now, I won’t engage in the question of “what types of changes are best?”  Obviously, smaller portions and real foods are preferred.  But is a Big Mac with 10% fewer calories but more synthetically engineered ingredients a “win”?  For obesity alleviation, probably.  For general health?  That’s an exceedingly complicated and subjective debate.)

And the non-Pollanites (most people, good people, the salt of the earth that make our country and economy tick) will continue to learn and ask for better.  Despite the labyrinthine zig-zag of nutritional science headlines and diet fads, people increasingly “get it”.  Americans drink less soda.  Obesity trends have leveled off in key parts of the country.  Most people probably feel a healthy pressure to make better food decisions every week, day, or meal.  Does that mean they’ll start shopping at the farmer’s market and start cooking at home?  Probably not.  But the needle is moving.

Furthermore, I won’t rule out regulation as a means to reform the corporate food giants.  I don’t oppose government strictures to remedy the ills brought about by government subsidies (in this reasoning, two wrongs at least point in the direction of a right.)  But Americans’ libertarian streak is a real hurdle, as evinced by the strong backlash to New York City mayor Michael Bloomberg’s ban on large serving-size sodas.

In sum, I believe you can’t really change the way the American mainstream eats unless you fiddle with the places where the American mainstream eats their food.  The industrial food machine has a vice-grip on our appetites, and that’s a hard truth to acknowledge.  But real changes cannot be made unless those hard truths are wrestled with.  The Pollanite doctrine may work for some of us, but we are the economically and geographically privileged few.  One of the largest errors I believe the food reform movement can make is to bifurcate the country into “the enlightened” and “the rest”.  Instead of eschewing McDonald’s altogether, go buy a salad there and then write them a letter telling them that the salad was great and the Big Mac had so many calories that you threw half of it away.  And then ask them to add broccoli to the salad.  Rinse, repeat, and see what happens.

This is not to say that we, the food reform advocates, should not push forward on all fronts complementarily, in parallel, and apace.  But we cannot expect the juggernauts of our food system to change course unless we push and pull them, hand by hand, in a new direction.  That is the biggest way we can put a real dent in the American obesity crisis.

*For Type 1 diabetics, the choice was even starker.  A major trip-up in daily diet could lead to hospitalization or death.  Because the impact of poor diet was so temporally acute, I found that the Type 1 diabetics I interviewed were among the best eaters I knew, period.