Elevator pitch
Hello there. We've given the Elevator Pitch section a makeover thanks to our friends at Flick Electric Co, so you get to read about three awesome entrepreneurs per issue instead of just one. And, in a new video series, we're profiling one start- up in an
Humblebee, No Ugly and Smartass
We gave Humble Bee founder Veronica Stevenson a little longer than an elevator ride to pitch her biotech startup that mimics the material created by a species of native bee that’s just like plastic.
It’s no secret that human kind’s fixation with plastic is costing the planet greatly. The rate at which plastic is ending up in oceans has been dubbed a ‘planetary crisis’ by the United Nations Oceans chief, while the EU plans to ensure that every piece of packaging in the continent is reusable or recyclable by 2030.
In New Zealand, Colmar Brunton’s Better Futures 2017 research found that build-up of plastic in the environment is the fifth biggest concern Kiwis are facing. But Veronica Stevenson believes she may hold the key with her biotech start-up born out of Wellington, Humble Bee.
Stevenson has a background in reproductive anatomy and structural biology, as well as a Masters in science communication. The idea for Humble Bee was inspired by a line she read in a scientific journal about a species of solitary bee which makes a natural nesting material that has the properties of plastic.
“This paper I was reading was written by an entomologist (an insect expert) and there was a throwaway comment from them: ‘The bees are using this material to store their larvae and managing to prevent fungal and bacterial invasions, as well as water damaging their developing brood.’ Then they’d written – ‘it’s kind of like cellophane, I wonder if it could be used as a plastic?’ And then went back to talking about the life cycle of the larvae,” Stevenson says.
She got hold of the material and had it analysed by AgResearch and found it had incredibly useful industrial properties, such as resistance to fire, acids, bases, oil and water.
Stevenson says she thinks the reason nobody has capitalised on the material made by these bees yet is they’re solitary, unlike honey bees.
“They’re tiny and they make it to their specifications, so it’s about trying to remove the bee from the equation and make it an appropriate scale for international markets,” she says. “That’s where the challenge is. That’s what we’re solving.”
The next step was to get up close and personal studying the process the bees went through to create the material.
Stevenson says to do so, she embarked on a crash course in “bee real estate design”, which meant creating an environment or ‘apartment block’ that the creatures would happily make a home out of in the wild to study them.
The bees weren’t exactly easy going in their requirements, either. Some of their demands include ensuring they didn’t have too many neighbour bees in their apartment block as they prefer solitude, as well as a dappled light effect inside, which Stevenson created via a laser.
Scientists from the Ferrier Research Institute have since been studying the bees and their internal anatomies and are going to try replicate a way of manufacturing the material in the lab using biomimicry, which is the imitation of models, systems or elements of nature for solving human problems.
While Humble Bee is early stage, preproduct, Stevenson’s aim is to disrupt the plastics industry – and she’s just been awarded a Callaghan Innovation project grant worth up to $120,000.
The first market she wants to target is the outdoor apparel market, which uses a type of plastic (polymers) as a protective layer on top of their clothing from water and oil.
“This market is particularly sensitive to the issue of plastic pollution and the use of toxic chemicals in their products, because the people who are their customers love the outdoors,” Stevenson says.
HUMBLE BEE
What I’ m trying to do i s create a company with a product that i s so compelling from a performance and a price point that i t’s going to be a no brainer to shift. If we start at a really high l evel, the amount of plastic going i nto waterways and l andfills will change i mmediately. NO UGLY We gave Aaron Taylor a l i ttle l onger than an elevator ri de to pitch his scientifically formulated wellness tonic, No Ugly.
“They don’t want their tent to have been made using deeply toxic materials that hurt the habitat they enjoy.”
After all, British fashion designer Alexander McQueen once said, ‘There is no better designer than nature’. So, it makes sense that in order to fix a problem deeply impacting on the environment – plastic – nature’s design principles should be used as inspiration.
The next step for Stevenson’s team is capital raising so Humble Bee can manufacture a small amount based off the formula they’ve come up with, do a performance analysis and compare their synthetic version to the bee’s material and see how they fared.
At the moment, Stevenson thinks their synthetic version will be effective, but says it might not be affordable enough to manufacture at scale yet.
“We’re drowning in plastic so we’ve got to be cheap, and we’ve got to be competitive,” she says.
Stevenson says they’ll be using the genes that the bees use to make the material and develop manufacturing microbes, which will help them get to a disruptive price point.
If all is successful, the plan after that is to go global immediately. Stevenson says she received a letter of intent from the CEO of a global chemical distribution company that says if Humble Bee pulls this off, any brand in the world will want to be talking to them.
She says the material could also be used in drug delivery, construction, aviation and consumer plastics and packaging, but the outdoor apparel market will be the main focus initially.
“One thing about these new regulations around plastic is they’re going to put more pressure on industries to find alternatives. Currently, the alternatives are expensive and not quite as good as the status quo, and that means there’s not enough industry incentive to shift yet,” she says.
“That to me is a real problem, so what I’m trying to do is create a company with a product that is so compelling from a performance and a price point that it’s going to be a no brainer to shift. If we start at a really high level, the amount of plastic going into waterways and landfills will change immediately.”
In 2018, casting a glance around the world can be a bit disheartening. There’s global leaders who espouse racist, offensive views, companies with corrupt practices and food and beverages being created with some nasty ingredients in the mix.
Enter No Ugly wellness tonic. Its founders, Auckland-based Aaron Taylor and partner Jo, have worked in the advertising sector for more than 20 years, working on clients that span from banks to beer, and from fashion to food.
They’d noticed the rise of the conscious, health-minded consumer: a growing group of shoppers who were cutting out products, ingredients, behaviours or beliefs that didn’t align with their own values and were negatively impacting on them or the planet.
“We felt there was something interesting about a brand that became the clarion call for people who rejected ugly,” Aaron Taylor says. “A brand that was brave and spunky with a higher purpose: to wage a war on ugly.”
After looking into the untapped potential of the wellness category, the pair decided they wanted to launch a wellness drink.
Before 42 Below, vodka i n New Zealand was hohum. Before Lewis Road Creamery, milk was very commoditised. The same goes for Wellness. No Ugly i s the l i ghthouse brand that stands out from the rest.
“It was easy to identify: people love drinks, hydration is critical and people are far more aware of it,” Taylor says. “Wellness beverages were booming globally, over 28 percent growth between 2010 to 2015 (according to a 2016 Euromonitor Report), the average price for a wellness beverage in New Zealand was around $12, and beyond the ‘energy’ segment, there was exponential growth in segments that solved a real problem for people. It was a no brainer, really.”
As well as this, they had taken a close look at the branding of pre-existing drinks and felt they lacked excitement.
“We want wellness to be fun and accessible, and doing something good for yourself that can make you feel good like a fashion or booze brand can,” he says.
He says New Zealand’s increasingly populated Kombucha market is evidence of this.
“The brands in that segment are hanging their hat on a recipe or flavour profile. And it’s easy to copy. But that goes for most beverages. We need a strong brand to rise above the sea of sameness that the entire category is fast becoming. Before 42 Below, vodka in New Zealand was ho-hum. Before Lewis Road Creamery, milk was very commoditised. The same goes for wellness. No Ugly is the lighthouse brand that stands out from the rest.”
Taylor says they decided the problem they wanted to tackle was people juggling many responsiblities in life and feeling as though they’d burned the candle out at both ends.
After bringing food technology consultant Jan Wuis on board and trialling different formulas, flavours and nutrients, 30 iterations later, No Ugly had found its magic ingredient: enzogenol, an antioxidant extracted from the bark of New Zealand grown pine trees.
Taylor says all the health benefits touted by the brand are pre-approved claims by the Food Standards Authority and are well researched.
The extract has been proven to increase alertness, cognitive performance and improve memory. It’s also often used to treat brains after a trauma, such as a concussion or stroke. Research by AUT University has found people with brain injuries who took it were three times more likely to recovery everyday memory than those who took a placebo.
In December, the team tweaked its production systems with a few hiccups (one flavour wasn’t ready in time for launch due to a key ingredient not being delivered). No Ugly started off just online with a small audience, but once it hit Farro Fresh and other shops, Taylor says sales have gone “absolutely nuts”.
“It’s amazing how influential Farro Fresh can be for start-ups,” he says.
The other initiative that sets No Ugly apart from its counterparts is its subscription service. When the Taylors realised the bottle they’d chosen looked a bit like a quart milk bottle, they imagined what it would look like in a crate.
That sparked the idea to set up a subscription service where people can receive a regular delivery of a crate of No Ugly drinks, with the empties being collected and recycled by the brand too. For each Swappa Crate returned for recycling, No Ugly donates a lunch to Eat My Lunch.
Taylor says the subscription model is similar to what Eat My Lunch and My Food bag have built their businesses on, as people love convenience and brands with a higher purpose.
He says it also helps with the issue of recycling being notoriously difficult to sort.
“No Ugly is waging a war on ugly, this is our way of doing something good for the environment. Hence, we now have No Ugly Swappa Crate and it’s grown at 500 percent each month since we launched – of a tiny base of course, but it’s growing very quickly and people aren’t falling off.”
About 20 stores are stocking No Ugly’s beverages currently, with about five more signing up each week. The drink is currently available in two flavours – ginger and cucumber.
Taylor says the plan is to continue expanding, as well as rolling out a new flavour and new summer formats in 2018. Eventually, they’d like to move into new product categories as well.
“Our vision is to be the most valuable wellness brand on the planet,” he says. “There are many verticals we can go into – we just have to stick to the plan, not get distracted by too many shiny things and by 2020, we’ll be on fire globally.”
S SMARTAS We gave Tony Small slightly l onger than an elevator ri de to tell us the story behind his company Innocent Packaging and i ts tree- free toilet paper and ti ssue brand Smartass. It can't j ust be more sustainable than the next product, because you're only going to sell i t to the 10 percent [who really care]. So we need to produce a product that people want to buy … You can buy a 20- pack of toilet paper out there for $ 10, and ours i s going to be $ 4.50 for four. We've got to create desire. I believe the way that we do that i s through design.”
I n the world of start-ups and innovation, toilet paper isn’t typically the first thing that comes to mind. But sustainability increasingly is. And Innocent Packaging’s Tony Small spotted an opportunity for a better, much cooler toilet paper brand cheekily dubbed Smartass.
Smartass toilet paper, which the website says is “cushiony soft and strong”, is made using a combination of bagasse (a waste product from sugarcane) and fastgrowing bamboo. It’s also free of bleach, inks, dyes and perfume.
It’s also a brand extension of Innocent Packaging’s previous products, which include coffee cups, bowls, plates and other disposable food packaging that’s made of plants.
Like many of the best business origin stories, Small says serendipity played a big part in the creation of the Smartass brand and he says they “fell into the B2C business”.
“We supply about 800 cafes throughout New Zealand. Initially, we designed this product thinking that we would supply the bathrooms with toilet paper. And then people saw the product and started asking where they could buy it, and so we built a website and started offering subscription services. It's sort of just grown from that.”
While there is more potential revenue with the B2C model, it is also a different discipline and “it's been a big transition for how we deal with that demand”.
But it’s a transition worth making. He says Smartass is now about 10 percent of parent company Innocent Packaging’s revenue. It is the company’s biggest selling product and over the past 16 weeks, sales have tripled.
It hasn’t been all smooth sailing, however. Small was confident the cafes would love the idea of Smartass and sales would grow quickly. But after they launched the product, nothing really happened.
“It took a good six months for it to get any traction.” And if it hadn’t picked up recently, he said they were considering flushing it.
While there are many companies offering similar products, Small sees a lot of potential overseas.
“We've just started supplying coffee cups into Norway. We get a lot of inquiry from Australia, and I'm heading to the U.S. and the U.K. next week to see what's going on overseas … Our goal over the next five years is [for Innocent Packaging] to have a revenue of over $20 million.”
But he says there are some unexpected pitfalls of being in the toilet paper business.
“It is funny. When I stay in hotels overseas, and I'm meeting suppliers and stuff like that, I've got all these samples, and I put them in my hotel room. I come back, and they've been chucked in the bin. I have to hide them now.”
It’s also very hard to change people’s engrained behaviour. And while many people claim they’re environmentally friendly, they don’t often act that way – sometimes their buying behaviour may be motivated by price or habit, especially for a commodity product like toilet paper.
But Small says that’s why Smartass spends a lot of its time, energy and resources on design.
“It can't just be more sustainable than the next product, because you're only going to sell it to the 10 percent [who really care]. So we need to produce a product that people want to buy. You can buy a 20-pack of toilet paper out there for $10, and ours is going to be $4.50 for four. We've got to create desire. I believe the way that we do that is through design.”
Its smaller packs of toilet paper, as well as Innocent Packaging’s tissues and paper towels, are now in 13 Huckleberry supermarkets and it is currently talking to a big supermarket chain about stocking the brand.
In the future, there’s also the potential to roll out new sizes of toilet paper packs.
“A big question we got when we launched the 48-pack online was ‘can we get it without any [plastic] wraps?’ And then, another question was, ‘can we buy smaller packs?’” Small says. “We've looked into producing a smaller pack for about a year, and we wanted to avoid plastic. So it's taken us a lot of R&D to work out how to make it affordable but 100 percent plastic-free as well.”
Smartass also wanted to give something back to the environment not only through more sustainable products, but through charity.
“We partner with a charity in New Zealand called Million Metres,” Small says.” Our rivers and streams are pretty polluted in New Zealand and our biggest industry is tourism, yet we're extremely wasteful for a very small population. So we donate 10 percent of our profit to Million Metres to help them plant trees, to reduce the waste in our rivers.”
The FMCG market is a competitive industry and challenger brands are likely to arise. Australian social enterprise Thankyou, soon to launch in New Zealand, is another brand with a more sustainable, charitable approach. It has now moved into areas like nappies and is going gangbusters.
So does, Small think the big global conglomerates that dominate the FMCG market will be worried about Smartass and its ilk?
“I don't think so yet. From what we have seen, the toilet paper industry is pretty competitive and pretty aggressive.”
But for now, in a company where pun usage is mandatory, Small’s on a roll.
And, as he wisely says, when you’re 80 and looking back on your life, will you regret starting a business, or will you regret the business that you didn’t start? For Small, the answer is obvious.