The Startup CPG Podcast

Sam Kass
I do think that one of the things that we're learning is particularly true on the sustainability side is that every category and every product really within certain categories are perceived slightly differently. So the same person will have different expectations. The like say on the sustainability side for milk and dairy products than they would for chips, even if they're hardcore evangelists for climate change. And then the same, by the way, is true for health.

00:35
Dana Kim
So there's the data quality is compromised, to say the least. The effort is really expensive, it's really slow. You know, all of that clunkiness of physical product testing is the world I come from. The key to unlocking product success is consumer insight and hard data to power all the decisions that you're making.

00:55
Daniel Scharff
Welcome everyone to another exciting episode. Welcome back to another episode of the Startup CPG podcast. Today we are tackling a totally fascinating topic. It's what do health and sustainability really mean to consumers when it comes to cpg, there is so much to consider. There's government, health policy, there's brands own messaging, there's consumer education and beliefs. And how do people actually interpret your product when they get it based off the taste and packaging? Today we're welcoming Sam Kass. He is the former White House chef and senior policy advisor for nutrition under President Obama. He's also the co chair of the board for Plezi, which is a better for you hydration brand by Michelle Obama. And also he's a partner at Acre Ventures. We're also joined by Dana Kim, who is the founder and CEO of Highlight.

01:37
Daniel Scharff
It's a product testing platform that helps brands actually understand what consumers think about their products. She's going to help us learn all about what the data says about consumers when it comes to health and sustainability and what they think of all of our products. I love this discussion so much. I know you will too. All right, here we go. All right. Hello everybody. I am very excited to tackle a pretty interesting topic today. So I've got two guests, I've got Sam and Dana on and what I really want to talk about is like what do health and sustainability actually mean to consumers?

02:12
Daniel Scharff
The reason that I want to get into this is because I think all of us as brands, most of us anyways, are coming up with better for you versions of different products that are out there or coming out with something that we want to improve the CPG ecosystem and one way often health or sustainability. But what do consumers actually think about all of that? Right? And will they think the thing about our brand that we think about our brand and how will they interpret all of the messaging that we really try to get through to them but is often very difficult to actually do? So we've got two awesome guests on here today. We've got Sam Cass and Dana Kim. So first of all, maybe I'll just come to you guys for some introduction. So Sam, do you mind kicking us off, please?

02:52
Sam Kass
Great to be with you. I ran food policy in the Obama administration for President Obama and ran Michelle's big health campaign called let's Move. I am now a partner at Acre Ventures which is investing in climate change, environmental health, human health through food and ag systems broadly including and very proudly our more esteemed guest Dana and her company Hilai and co chair of a company called Plezi, where Michelle is co founder of that as well as a co founder of a company called Spring Food. So definitely actively working on all these issues.

03:22
Daniel Scharff
All right, very busy. Okay, Dana, coming to you.

03:25
Dana Kim
Awesome. Okay, I only have one title I'll dress to Sam and that is founder and CEO of Highlight, Fortunate to be a portfolio company of Acre, which Sam is a partner of. But we are a physical product testing platform. So Nestle, Pepsi, png, but also Momofuku, Sol de Janeiro, some of the more disruptive brands in today's world. Our customers of highlights, they use Highlight to run really scaled quality, effective product research with consumers and they're running really cool tests to do competitive benchmarking, claim substantiation, pre launch formulation testing. Essentially gathering really critical consumer insights to answer critical business questions to win in this world. We answer a lot in terms of physical product performance in terms of health, and a lot in terms of sustainability. So excited to share a bit more about what you've learned.

04:16
Daniel Scharff
All right, great. So I think it's really cool to have both of you here because Sam, you obviously go very deep on nutrition. And what do different parties, including the administration and the former administration think about nutrition as well as Dana, who you are on the front lines of this. You are testing with consumers. What do they actually think about these brands? So let's get into it. So Sam, I'm sorry, this is a super basic question, but I think probably everybody wants to know what is it like because you were the White House chef for President Obama and the first lady. Like, come on, what was that like? Give us some info.

04:50
Sam Kass
Yeah, I guess I realized I forgot the chef part. Did I? I guess the cooking side sort of like my side hustle, sort of my other job there. Look, it was an amazing run and I had a pretty unique Experience both as running food policy and trying to build a family health and children's health for the first time really in modern history, certainly out of the White House and cooking dinner for the family and then sort of being the resident friend, working out with them in the morning or playing pool with the president at night. So I pretty deep and multifaceted, and it was intense. It was exhausting. It was exhilarating. It was a true honor. And we got a lot done and something that very proud of.

05:25
Sam Kass
And I think we'll always sort of chase the feeling of having impacted that kind of scale at such a young age or something that is hard to replicate. And we'll always try to find ways to even come anywhere close to having that kind of impact again.

05:38
Daniel Scharff
So that was a pretty novel initiative from what I understand. What was there before that, and how did it come about for you to be working on that and coming up with those kind of policies?

05:48
Sam Kass
So I was cooking for the Obamas in Chicago during the campaign, and, you know, Michelle really saw the impact on her kids and on herself of starting to change the way they were eating. And I was already very focused on health and the issues that were grappling with. And so as she experienced that, and, you know, we would spend many hours talking about what's happening in the world. You know, she felt like it would be a very important issue to take on if were lucky enough to make it to the White House. And she actually writes about this in her book. We got very carried away one night dreaming of all the things we could do, planning a garden and then doing a big health initiative for kids and deal with schools and all this stuff.

06:24
Sam Kass
We just started laughing so hard because we remember this, like, this dude named Barack hussein Obama is 30 points down the polls. Nobody knows who he is. He's like, this isn't going to work out. And so we got very carried away in our dreaming, but were wrong, thankfully. And so when we got to the White House, we knew were going to do the garden that was predetermined. And our intent was to do a really big health campaign for kids and families. But we wanted to sort of see what was the response of the nation. How do people react to the garden? Was there a real openness to try to make some. Some progress on its issues? And the answer was decidedly yes. So off went.

07:00
Daniel Scharff
All right, and what kind of eaters are the Obamas? If you can give us some info. What are they? Like, what are they. Are they eating the same kind of food as regular old me, or are they cooking them up some specialty foreign dishes? What's going on?

07:13
Sam Kass
I used to be able to say when I was in the White House that was top secret information I didn't have to disclose. That was, of course, not true. But I got. I used to say that people believe me. That is obviously definitely not true. Now, they're very simple. They are as you would hope they would be. They're really down to earth, easygoing. We were in the White House. We worked very hard to make the experience feel normal, like it was really a home. I mean, the girls were young, and Michelle didn't want them to feel like they were living in a hotel. Like, you know, the butlers, when we first got there, they all wore tuxedos, like, for dinner. And she was like, those tuxedos. Gotta go. You know? And so dinner was one plate. There was no courses.

07:52
Sam Kass
It was one plate every night. Simple, easily recognizable food. Nothing fancy at all. You know, she likes to throw down sometimes and, you know, enjoy herself. She loves good food. He's always a very simple, practical eater. Nothing fancy for him ever.

08:05
Daniel Scharff
All right, I have to just tell a quick Malia Obama story, which is I was flying back from D.C. To LA after Thanksgiving, and I got. I was lucky. I got upgraded, was flying a lot. And then this woman boards and sits next to me, and I wasn't really paying attention. I was, like, working. And then the flight attendant comes over and just starts making a rig a really big deal out of the person next to me. And I couldn't really tell, but I. And I, like, kind of looked over. I'm like, I don't know. The flight attendant was like, I'm such a fan. Like, I watched you grow up. I said, who is this person? I really didn't know.

08:40
Daniel Scharff
And then, you know, like, when you're on a flight, pretty much the only acceptable time to talk to somebody is when is during the meal, right? And I think her phone wasn't charged, and it was cracked, and she was just kind of sitting there maybe reading. And so during the meal, I'm like, hey, where you live? You from D.C. She was like, oh, kind of, you know, kind of all over. And I'm from D.C. And I. But I still had no idea who she was. And then, like, eventually figured out where she went to high school, which famously is, you know, where the Obama kids went to high school. And so I think I've been talking to her for, like, 10, 15 minutes. She was so nice and, like, interested in What I was working on and everything.

09:17
Daniel Scharff
And then I was like, oh, I'm an idiot. Like realize who she was. But oh my gosh, I just was really struck by how down to earth and we had such a pleasant conversation, was learning about some of her professional interests, like filming. And she was like telling me she was really interested in movies and like dark comedies and stuff. It was super cool. So anyways, big celebrity story for me. Also I had switched seats at the end. Like the guy in front of me who was actually a very famous actor, like sort of looked at, he got up and recognized her and looked at me like, who is this jerk off that it gets to sit next to her? And he told me later, like, that was supposed to be my scene. So anyways, I was very excited about it.

09:56
Daniel Scharff
All right, so back to like the administration and I guess more of the policy work that you were doing then, like, so, okay, now we know a little bit about what they personally, but how would they. And you have looked at what healthy food is then and also how is that evolving maybe in your mind now?

10:15
Sam Kass
Well, that's a big can of worms. The now part is a can of worms, which we can go there if you want. But back then, you know, we started what the data and science said about, to the best of the science ability, describe what a person should be eating on a daily basis, what they were eating, you know, what the country was generally consuming and where are the problem spots and where are the opportunities to try to move the country in a different direction? And the moving the country in a different direction would be rooted in what are the policies that we could do, like around school nutrition that we had some control over that could be highly impactful? What businesses can we try to engage with and get them to make changes in how they're producing food?

10:54
Sam Kass
And we did a lot of that. And then I think most importantly, in some ways, although hardest to get credit for or track with metrics of any kind, is how do you shift the culture and the values that, you know, we have around what we eat. And if we don't fundamentally shift the culture so that we are saying we care about the nutritional value of the food we eating, we care about the impact on the planet and our ability to feed ourselves in the future, then we're only going to get so far both on the policy standpoint as well as, you know, what businesses, both big and small are going to do from a product standpoint. So that's how we started thinking about it and sort of set off with a strategy to try to, you know, move. Move all those areas forward.

11:35
Daniel Scharff
So sounds like you guys did a lot, but also, like, how much can you do when people just kind of want to eat stuff that we are all used to eating, right, so. So it sounds like you think that really is the biggest obstacle. There are probably a lot of, like, bureaucratic obstacles also. Like, you want to get certain policies done, but there are a lot of lobbyists and things, you know, kind of preventing you from doing that. But yeah, I mean, when the consumers demand something also that helps.

12:01
Sam Kass
No, I would say, yeah, the challenges and barriers were multifaceted, say the least. You know, it was hyper partisan time, as it still is, obviously. Although this issue is changing a little bit on that in ways that are very weird. But maybe good. Hopefully good. But yeah, were met with resistance at every turn by the party. And there's also just a limitation around how what the government can actually do to shape what ends up on your plate. I think it's really overstated in people's minds how, you know, how much control we have. There is definitely huge impact that the government can have on certain areas, particularly like school food or what served in the military were kind of. We're really directly deciding the standards by which, you know, people are producing that food has to operate within.

12:43
Sam Kass
But like, you know, for anybody on their kitchen table or a restaurant owner serving in a restaurant, the government is not really that well positioned to shape that. There's ag policies that definitely have had an impact certainly in the past and still do in some ways today, for sure. But it's not anywhere near as profound as I think people's perception of it is. But I think then you run into the culture and you run into the complexities of what it means to be human on planet Earth, eating at least three times a day if we're lucky. But many of us more than that. And food is not only how we nourish ourselves, but it's also how we express our very identities. It's really who we are and also how we express who we're not. It's how we show love to each other.

13:28
Sam Kass
And it's habits and tastes that have been shaped for literally our entire lives. And so when you're trying to change how we eat, you know, you're trying to change people at their very core. Everybody's an expert, you know, unlike, you know, energy policy, where nobody knows anything about that, everybody's an expert on food. And so it makes changing it very complicated and very personal. And so from a government standpoint, you know, it's a treacherous path to say the least.

13:55
Daniel Scharff
So yeah, that makes sense. And you know, I'm thinking about the kind of subsidies that people talk about on different kinds of food. And then also thinking back on the food pyramid and all of the things that I hear from people about how that was influenced by different lobbyist groups and it's like outdated. But hold on.

14:10
Sam Kass
I just have to correct you. I got rid of, we got rid of that I helped get rid of. There's the food pyramid is no more. It's been replaced with my plate, which was not influenced by company lobbyists. But yes, there's been plenty of. Look, nutrition education and information has evolved a lot. We've learned a lot. The nutrition community has gotten. Science has gotten some things wrong in the past and it's very complex science and it's hard to know. And there's a lot of, you know, people are different and so people have different needs. So there's that part, you know, it will always be evolving. The cynicism, I think is more than it needs to be though, in terms of the reality of how it actually works.

14:46
Daniel Scharff
So if you could have just gotten rid of all the obstacles or if you could even do that now based off what you think people actually want and should have versus what is actually out there, what would you do?

15:00
Sam Kass
Man, that's a big question. I mean, it's one that's hard to answer given that it's so not in my worldview about how to, how I think given that's not possible. Look, I think the things that have gone taking us really off course is the plethora of sugar in the various forms of sugar in, you know, a whole host of products that would never otherwise be there. And the products that it would be there are extreme, extraordinarily high levels. Portion sizes in general have exploded and are a major driver of the amount of calories we're consuming. So on the health side, I would really work to dramatically reduce the amount of sugar in our diet and dramatically reduce the portions that we are eating. If we did that, we'd go a long way at, at fixing people's diets. You know, there's some of the.

15:48
Sam Kass
More, even if it's not sugar based, the hyper processed foods that are nutritionally devoid should, if I could, I'd just get rid of them. I mean, I don't, you know, there's some chips, I probably keep a couple of things that I, you know, that I like that. I would keep. But like, besides that, I think those would have to go. And I think on the climate side, and this is very important. Yeah, I think we would have to transition our systems to far more regenerative agriculture. We have to dramatically reduce the amount of animal protein we're consuming because the planet simply cannot sustain that level of consumption. And that's running squarely into some of these trends and all these influencers on social media saying you should literally only eat steak. And it's like, well, that's fine.

16:26
Sam Kass
But there will be only a handful of people able to do that in the future. And it comes at a tremendous cost to society as the environment continues to be degraded at alarming rates. So I think balancing nutrient density and doing in a way that allows for future generations to be able to sustain themselves and feed themselves is the balance we always have to keep. Keep in mind. But yeah, so I think you have to kind of really work on both.

16:51
Daniel Scharff
All right, this is super interesting. I have so many more questions, but I really want to loop in Dana now because. Yeah, Dana, like I mentioned, you are kind of on the front lines here. You are talking to consumers all the time. There are a lot of brands that work with you specifically for consumer testing. Right. So they're getting products in the stuff that you guys sent out and you ask consumers for their feedback. What do you think health and sustainability mean in the minds of consumers?

17:15
Dana Kim
I love all these big, broad questions that Sam and I can take anywhere. So tons of research with consumers of all ages, products of all categories, companies of all sizes and stages. So I feel like we have some pretty unique and zoomed out perspective on what consumers think of consumer products, how they make choices, how they decide what to buy for the first time and repeat over time. When we talk about health and sustainability, it is frequently on the product level because we are running physical product testing. And the interesting thing about products and what drives purchase of products is that for food and Bev, like we're talking about the three big purchase drivers that haven't, hasn't changed, will not change for a long time are taste, cost and convenience. Nowhere in that list is health. Nowhere in that list is sustainability.

18:11
Dana Kim
And we see those two factors having sort of orthogonal adjacent influence to those three purchase drivers. But at the end of the day, if you are a chip company, you need a chip that tastes good, that costs amount and amount that you're willing to pay and is within reach for your. Whatever occasion you need it for. For beauty. It's efficacy, cost, Convenience. You know, there are some very clear, tried and true not changing drivers of purchase that consumers, whether they'll admit it or not, whether they'll vocalize that or not, are relying on for product purchases. So when brands come to us asking like what do consumers think about in terms of health? What do consumers think about first in terms of sustainability? Sure. We have lots of awesome custom research that we've run on a more global scale.

19:00
Dana Kim
We are very pointed in saying it is we need to get very specific about your product because the health implications, sustainability implications and signals you can give vary greatly depending on whether you're a chip versus a fruit snack versus an apple and whether your target audience is the gen pop Walmart customer or it's the Erewhon Tastemaker per se. So long way of saying there is real diversity and thought across the board depending on who you are talking to. I think it's fair to say health and sustainability are creeping up in terms of what consumers care about in that list of purpose drivers. But it still hasn't eclipsed that like fundamental what you need to get right in order to have a successful product and therefore a successful brand.

19:45
Daniel Scharff
Okay, so taste, cost and convenience. Convenience meaning it's available near me, it's at stores or the convenience of the packaging or can you tell me?

19:53
Dana Kim
Yeah, all of the above. It needs to fit into my routine easily. There can't be friction in procuring it. There can't be friction in literally opening it. It needs to be easy, an easy experience.

20:03
Daniel Scharff
Okay. I also really like the point you're making about health and sustainability. Like it really how you communicate that on a product level. It really does have a lot to do with who are you actually trying to talk to. Right. Because maybe the barrier is not going to be as high if you're trying to talk to a Walmart consumer convincing them that your chip is better than a Dorito. Right. There are probably a lot of there's low hanging fruit there that you can go for. Whereas if you're going for the tastemaker erewhon consumer, because I've demoed there a lot and they give me a lot of flack no matter what. Like someone has a problem with everything. Right.

20:38
Daniel Scharff
Whereas it may be a higher order benefit that you need to give them because you're not convincing them it's better than Doritos because they don't eat Doritos, you're convincing them it's better than Flaxseed or something like raw that they're eating because they're all pretty healthy already. So that makes a lot of sense that you really need to figure out your strategy and what health benefits you're trying to convey before you figure out even how to talk about it.

21:00
Dana Kim
Yeah, and there are absolutely like staying on the food train for snacks, for example. We just ran some custom research in partnership with Rachel Krupa at the gridsmar and we learned some really interesting global takeaways and put some hard numbers to what are facts that we can report on that are relevant and across the board. One of the stats we came away with was 94% of consumers are actively seeking sustainable packaging, meaning either recyclable, it's not single serve, it has some recyclable iconography. It is so superficial and so basic and so simple. It is a really important signal for consumers to make them feel good that I'm buying a sustainable product.

21:45
Daniel Scharff
Now what does seek mean? They're seeking it. Does it mean like oh it'd be good or does it mean I am going to buy things because. And I'm going to check and I'm going to think about it and maybe do they know about it also? Because they're often it's like the education is harder to come by.

22:00
Dana Kim
Yeah. Seek meaning like it is in their consideration set. If they're buying something that is not sustainable, they'll feel bad about it. If they're buying something that is sustainable, they will feel good about it. It's still again, it doesn't eclipse taste cost convenience in terms of purchase drivers, but it is something that is becoming more and more acute, especially for the younger generations.

22:19
Daniel Scharff
And what do you think the biggest violators of that are? Like packaging that they're going to look at and be like oh no, I'm going to feel bad if I buy this thing a lot.

22:27
Dana Kim
Most frequently it's plastic use of plastic. And if something is has a high ratio to product, ratio of plastic to production and it feels wasteful, thick packaging. So the amount, the volume of plastic packaging is something that will actively make consumers feel bad when previously it might not be a consideration in the consideration set. It can signal like whoa, I feel like a bad consumer for purchasing this and having to throw it away. The other like I mentioned is single serve packaging. So if there is just a, it goes back to that sort of plastic to product ratio. But if there is a inordinate amount of material used for the amount of product actually there it feels wasteful and it's, you know, Sam and I talk about this all the time. It's.

23:14
Dana Kim
Some of it is real and there's been real marketing around plastic gene being bad for the environment and there's marketing with, in the oceans, the little soda can, you know, organizer being around animals next and there's real marketing around, you know, recycling being important. But there's. Some of it is not as rational. Some of it is really comes down to feeling and what makes people feel bad and what makes people feel good. And so yeah, the sustainable packaging and all the symbols and signals of sustainable packaging make people feel good in ways that sometimes you can't even really quantify or understand.

23:49
Daniel Scharff
I gotcha. So okay, back to that data point though. So generally everybody, at least the people who shop at Goodsmart are very interested in conveniences on their mind. And by the way, this is not like even if were doing this research at Erewhon, it's probably a hundred percent right because you know, that's where the trends really start around health and you know, environmental awareness I would say. And so for you to be getting that kind of data in New York means it's not just our west coast, you know, perfect living friends.

24:18
Dana Kim
I will clarify. So the beauty of this research was we used the highlight community, which is nationwide representative for a gen pop read and then we boosted that with the taste makers in the Goodsmart community. So we got sort of mass America and then we got some more like coastal or trend setters. Tastemakers is what we called them.

24:37
Daniel Scharff
Okay, cool. Any differences that you saw there between. Really interesting to see between some of the tastemaker consumers and the mass consumers, let's say.

24:46
Dana Kim
Yeah, absolutely. So I think some through lines and consistencies across both groups there is a real movement towards and we're focusing on food and snacks here, but there's a real movement towards back to basics. So minimally processed things. Proteins for example, high protein being really important, but no longer looking for plant based protein. Actually looking for animal protein. Whey no longer being a protein that people are against because it is non vegan. There's an absolute sort of back to base mix. Real food, real products, avoiding processed food across the board. High protein as I'm sure you've heard a ton about and I think you've done some podcasts with high protein founders and low sugar are absolutely consistent across the consumer base. The differences come down to actually levels of education and how engaged people are in the category.

25:37
Dana Kim
The specifics when you go beyond just wanting low sugar products. So there are we actually like dug into what sugar content is acceptable, what kinds of sugars are acceptable? What sugars do you prefer? Is it monk fruit? Is it erythritol? Is it Hasbro tol? You know, what's acceptable versus what is not. And the thresholds for what is acceptable versus not varied depending on tastemaker versus mass consumer. And the what is the actual sugar itself or what is the actual sweetener itself was more important for tastemakers versus for the general population. It was more important to have just low sugar. No, no matter the sort of sweeteners involved. That makes sense.

26:17
Daniel Scharff
I mean, that's all really interesting stuff. I want to know the answers to all of that. How can people see some of the results of all of that around the different kinds of sugars and sweeteners and all?

26:27
Dana Kim
Yeah, well, we'll definitely, we'll share the report. I'll share the link with you, Danielle, so you can share with your community.

26:31
Daniel Scharff
But all right, check the show notes, people. There's going to be a hot drop there.

26:35
Sam Kass
I think just add. I mean, I do think one of the things that we're learning is particularly true on the sustainability side is that every category and every product really within certain categories are perceived slightly differently. So the same person will have different expectations, like say on the sustainability side for milk and dairy products than they would for chips, even if they're hardcore evangelists for climate change. And then the same, by the way, is true for health. And different cues, different words and symbols will be received in a different way depending on the product.

27:08
Sam Kass
Which is why the testing that highlight is and their capabilities of highlight is so valuable to brands because there's a lot of nuance here that if you're just doing like, you know, a little test on a computer screen to get your survey done or you're going by your gut, it turns out like that's not good enough in the modern era. And we're finding that highlights capabilities are really transforming how companies are designing their products and are going to market with their products, even sometimes in subtle ways that make a huge difference. And there's a lot of companies who have focused really hard on their actual product, particularly from a, say, from a sustainability standpoint. But you put it in the wrong package and people's experience with the product will be like, this is a highly unsustainable product.

27:49
Sam Kass
But actually they've done a lot of work, spent a lot of money to have what's inside top notch. But so you can, things can fall down in subtle ways. And that's why the Work that Highlight's been doing with brands has been really powerful and it's why we're here, you know, as investors. Because I believe, you know, there's a chance you're gonna crack companies abilities to market and sell products that are truly healthier and are truly more sustainable in a way that just hasn't gotten the scale that we need.

28:17
Daniel Scharff
I mean even beyond just trying to figure out what consumers think about your product on health and sustainability, I just believe really strongly in getting feedback from people who are not your friends and who you didn't beg to try your product because they'll all be nice to you and even me if somebody sent, if you corner me to trade show and ask me to try your product, I'm going to be like, it's good. You know, unless you actually, unless someone's like, hey, I actually want your real feedback and then I will give it to them. But you know, most people, I think it's very hard to just get blind, authentic feedback. Even when you're demoing in person, you might get a little bit more of it, but it's still hard because people want to please other people.

28:55
Daniel Scharff
It's hard to just look someone and tell them that the pro their product is not good. Right. And so the testing box, I mean it's very important to get that at the early stage too because it can save you years of working on something that ultimately was very flawed.

29:09
Sam Kass
Totally. I mean, look, and I think we all have our biases and we're all in bubbles. I mean, you've said it now a few times. Reference. Erewhon is sort of like the epicenter of product development and change, dude. And that is true in some levels, but it's like the most elite, high end, pretty monolithic group of people who shop there who all kind of more or less think the same, looking for the same thing and have a shared set of experiences rooted in extremely high priced products. And if you're trying to build with all the. I love Erewhon. So I, you know, I'm with you on that. I'm not pointing any fingers. If I lived in la, I'd be there all the time.

29:43
Sam Kass
So it's also important that unless you just want to build a company for Erewhon and if you do, you should stop now. But if you're trying to build a, a company that has a much broader reach, then you need to talk to the people who are actually, you want to consume your products and something that is a perfect fit for erwan, is one thing, but if you want to sell it in Columbus, Ohio, and you want to sell it in Pittsburgh and you want to sell it all over the country, those are people with very different set of experiences, tastes, perceptions, and, on some levels, values. And so it depends on, you know, what your ambition for your company is.

30:15
Sam Kass
But whoever you're trying to sell to, you should probably make sure you're getting some feedback from them because it will surprise you what you see is. Is oftentimes not what they experience. And so your intention is not what they experience. And the very small amount of resources vested in the beginning on that can save you millions and millions of dollars in potential to save your company, frankly, if you spend the time and the resource to get it right from the beginning.

30:38
Daniel Scharff
Yeah, I think, you know, at least in my experience, okay, when I ran a beverage brand before, I think if I had done some testing on it at the onset, I think we would have realized what we thought about the product is not what consumers thought about the product especially. We had a couple different product lines, and we're like, no, it says it so clearly on the can. I think if we had tested, people would have been like, this is confusing. I don't know what all these different things are. Please don't confuse me. Just tell me straight what this is. And there are too many things on your can. I don't even know what this is. Let me just read one thing.

31:07
Daniel Scharff
I think that's probably what we would have found that would have been helpful because that would have saved us a couple product lines, which is a lot of money and effort and selling things in and then having to try to swap them out or unwind them. Right. Where even the brand that I ran, ultimately we ended up discontinuing every single SKU that we launched with and eventually just moving to a completely different product line. So, yeah, I mean, some testing, like, testing probably would have been helpful. I kind of wonder, Dana, though, if I had tested it, would I have been able to hear it, or would I have just been looking for it to confirm the things that I really thought about it? Like, when founders work with you guys and test the stuff, can they act on the feedback?

31:43
Daniel Scharff
Like, can you tell who can and who can't? Or do they argue with you about the feedback?

31:47
Dana Kim
It's such a good question. And the answer is, like, there's two types of founders and two types of brand owners. One gets hard feedback, was not denial. And Wong gets hard feedback and is so grateful for all the future mistakes avoided in either Case we are proud of ourselves for doing the job. But the beauty of what Highlight does is we add rigor and sophistication and actual statistical significance, quantitative hard data and facts to deliver to your team. So when we're telling you that the majority of consumers are confused by the message on your can, you need to really create a story and a narrative in your brain that is quite creative to deny that fact.

32:28
Dana Kim
And we are, you know, we're running again, quantitative level analyses so that you can feel confident that the data is not just something we heard at the market or something one consumer said or something that's anecdotal and not representative. It is our job as a software and as a team to ensure that you trust the data and you can make the decisions that you want from the data.

32:48
Daniel Scharff
Like that a lot. Because when people ask me for feedback, especially if it's around marketing, I always start it by being like, look, I'm just one guy and I don't know a lot about marketing, but here's a bunch of things I don't like about it, but don't change it based on me because I'm just one guy. So I wish I had like some ammo of hey, yes, I just tested it with 500 people and here is the proof that the thing that I think is actually true, although many times it would not be true. So. And when you guys test it, can you just tell me how it works? Exactly. So how many people does it go out to? How do you collect the feedback on it? How do you actually give brands that feedback?

33:21
Dana Kim
Yeah. So taking a step back, I my first job out of college and where I spent the bulk of my career prior to Highlight was a consumer research product testing agency. So I was for many years standing in malls, grocery stores, focus group facilities on behalf of the Fortune 100, handing product out one by one, saying, hey, wait, stop right there. You know, family dollar shopper in the middle of central Florida, try this new Dr. Pepper. Tell me what you think. And that was how we gathered physical product feedback. And we would do that for weeks at a time to get to a sample size we felt good about.

33:55
Dana Kim
And we would deliver this data back to these, you know, multi billion dollar brands with one eye closed because were unsure of the data quality, because this is feedback given after I'm running after you in a store with a grocery, with a gift card. Grocery store gift card.

34:11
Daniel Scharff
Although like in New York, I hate everybody is on every corner trying to get you to stop and talk about some issue and sign something. But I mean with food testing it's amazing. I used to work for Mars Chocolate and there would be a huge line every time they wanted to test a new M and M or something like that. So I mean running after somebody with a Dr. Pepper, so I feel like they're going to receive that better.

34:30
Dana Kim
Yeah, exactly. So there's the data quality is to compromise, to say the least. The effort is really expensive, it's really slow. It's, you know, all of that clunkiness of physical product testing is the world I come from. So Highlight was built on this like premise of the world of consumer products is not going anywhere anytime soon. It's only getting harder for everyone in the CPG community, especially in the startup CPG community to win and compete in a very saturated and competitive CPG landscape. The key to unlocking product success is consumer insight and hard data to power all the decisions that you're making. So how can I build a software, a platform to actually power product success by way of consumer insight is the, you know, the mission of Highlight.

35:13
Dana Kim
So that's the foundational why we exist, power product success or prevent product failure is we have a community of testers, we have integrated logistics, so we have a actually fulfillment centers that are able to ship products to those testers. And then we have really beautiful research software where founders, brands, researchers can go in, target their audience, send product and collect feedback really seamlessly. The most exciting part of the entire experience is once data is coming back and you're getting your feedback, we have a really powerful analytics suite where you see your data side by side and you get the cold hard facts. Like were talking about before I mentioned competitive testing, competitive benchmarking is a really big use case for our customers.

35:59
Dana Kim
When you see your product say it's a better for you soda, total hypothetical and it is performing and you've decided to run a test of that vs Poppy vs Olipop vs Sprite vs you name it and you see the taste score side by side with green, yellow, red across the board. It's pretty undeniable where you are winning, where you are losing and the opportunities for improvement for your product. So the ultimate output and outcome is you come to us with a product question or a consumer question or a brand question. You run the research to get you the data you need and you are presented that data in a really powerful way. I will also say, you know, we've talked a ton about it depends on the audience, it depends on who you want to reach. We Have a really robust community.

36:46
Dana Kim
So you could reach everyone from women over 50 who are spending $100 plus on retinol per week to teen gamers who are chewing gum three times a day to anyone across the board. Or you can run a broader test with a broader audience and then you can filter by segment and see like wow, then I'll actually filter my data by Gen Z. This skew is really resonating. Or when I filter my data by gender, I find that this flavor actually really pops with she. Her.

37:15
Daniel Scharff
Her.

37:16
Dana Kim
So there's lots of interesting insight that can come from testing across the life cycle.

37:20
Daniel Scharff
All right, so you can like, oh wow, all these rude comments came from the Erewhon shoppers. That's so weird. I actually, I just remembered always used to play jokes on our team members at ours and one of the days they were doing testing, we convinced one of my team members that it was because they were testing left Twix vs right Twix to see which was better. And he went and got in line. It was so good. Yeah, put that on your list for testing. It's like when they did that whole campaign around it. Oh, it was so good. All right, so Sam, obvious question. Did you guys test plesi? What did you learn?

37:55
Sam Kass
We absolutely tested plenty. And frankly like, I will not invest in a company at this point and not insist that they use highlight for any product of any kind at any place. In fact, like, I'll just say I think data driven decisions is kind of a modern theme. I would be pretty confident that we're sort of using data to make decisions across the economy all the time. And increasingly so I will say the food industry has been, and the consumer packaged goods industry in general been slower to some of that in a modern way I think than other parts of the economy. I think increasingly this will just be the standard way that decisions are made. Also, by the way, from a retail standpoint as well, we're starting to work with a number of the biggest retailers in the country right now.

38:38
Sam Kass
Retailers are sort of doing it like a lot of early stage companies used to do. It's like this one, it's like I like this flavor, this brand, this design looks good. I think in the future it's going to be straight data driven and the merchandiser for whatever category is going to get the data and decide which product, no added time, which product is resonating with their consumer base and make a data driven decision. I actually find it completely insane frankly that is not how it's done and it's not how it's done at all. Now, lots of respect to those buyers. They are incredible. They've been at a long time. They hold a ton of wisdom and expertise, but the data speaks to themselves and it's going to bring down the miss rate significantly for these retailers. So for me, it started.

39:17
Sam Kass
It's definitely started something working a lot on in a few years. I just think it's just going to be standard operating procedure. And so from a pleasant standpoint and frankly, other companies now that have gone through the highlight process, sometimes it confirms your instinct. Like, yeah, that's our best flavor. I like that one the best too. I knew it. I mean I, you know, I have a decent sense of what tastes good given my recovering chef experience. But. But there's also times where it's like you thought you had a winner and turns out this wasn't. It's good, but it's not great. I think the thing where a lot of brands fall down on like you're trying to break into a highly competitive category with giant incumbents, which is basically every category is being good is not good enough.

39:54
Sam Kass
Like you have to be great to change people's behavior and get them to either consume something they normally haven't consumed or to make a change, make a switch of something they've been consuming for quite some time and as good isn't good enough. So we had a couple products that were scored kind of as good, maybe a bit better, and we realized that was not going to work. And went back and worked on the product and worked on that product and made it better. And I think that's where the risk is. Right? Like good enough. Like good, but not good enough. So we had a, you know, a lot of that and I think that has helped push us frankly to make our products better.

40:28
Sam Kass
And we are fundamentally a better company, you know, as a result of the data we got back from these tests. And there's something very different about setting product to somebody's home where they're tasting it as they would continue product and getting like real data, like real reaction to from somebody that's completely objective, that's on their own terms in their own time. That is a very different quality as opposed to like the value prop testing that, you know, do you do big master bay? Would you. What would your intent be? That can give you some signals and direction in the very beginning, but that's. You don't know if you got a winner from that. When somebody says, yeah, by looking at that can I think I would prefer to buy that over this. It's like that is worth basically nothing. So, yeah, it's.

41:11
Sam Kass
It's will be a foundation of any company I'm involved in.

41:14
Daniel Scharff
Okay, so to try to tie some of the things we've been talking about together today. Sam. So if you think about just overall, you know, health policy and then also, like, you know, how consumers think about health, how consumers told you they think about health with your product, what is Plezi trying to do? What's the impact that it wants to have, and how does it communicate that?

41:34
Sam Kass
So Plezi is trying to create a platform of products that are designed for young people, that are fundamentally healthier for them, but can compete with a hyper, sugary, very sexy brands that have been denigrating the health of society for a long time, but have a lot of market power and a lot of market share. And that is no easy task. And to do that, especially for young, when you're older, you know, so a lot of these, you know, kind of prebiotic sodas, you know, the ones that have just transacted the big numbers when you're marketing to, like, an older consumer sort of really focused on their health, they're willing to sacrifice taste, you know, if they think it's better for them. There's some portion, there's some segment of the market. It's not that big, but it's there. We taste all these products.

42:22
Sam Kass
Am I allowed to swear this?

42:23
Daniel Scharff
So I think so, or you prefer. Yes.

42:25
Sam Kass
I don't know any other way to say, like, when you taste like. They just taste like. I don't know. I have no other word to describe how bad some of this stuff tastes. But they've been able to, like, kind of carve out a niche space when you're trying to really disrupt big incumbents and you're trying to do it particularly with young people who are quite discerning, both on, like, your brand, but also on a taste. And they're not willing to sacrifice taste. That's an interesting challenge. So we've worked really hard to reduce sugar dramatically 75%, 70%, 60%, depending on the product, but not sacrifice most labor experience, certainly the beverage category for sure. But in many categories, it's just rooted in sweetness, and it's been a sort of an arms race towards more sweet tastes better.

43:04
Sam Kass
It's a real challenge when that standard of taste has been set. And that's what people have been used to tasting, to find ways to bring down the sugar and sweetness but still hold the Flavor and keep people, you know, in your boat. And so that's been the hard work. And so far, we made a lot of progress. We just launched a hydration project with Steph Curry, which is just sitting the shelves and is doing very well. And we got a fizz product coming as well, sparkling product, which I'm also very proud of. And, I mean, we got a shot.

43:33
Daniel Scharff
I love it. I had this product in mind for Steph Curry. Not that I know him, but I was like, wouldn't it be cool to launch? Because, you know, magnesium is a huge thing these days. And I was taking some magnesium gummies for sleep. I thought they were really cool. I was like, what if. If we could launch a magnesium gummy and get him involved and call it night. Like his gesture when he puts a team out for the count and he, like, puts his hands next to his face the night. And I was like, wait. I think it might be a really good idea. I feel very stupid even saying it now, but I did look into it, and my trademark lawyer was like, you should not do that. There is a very litigious company that will help come after you for that.

44:11
Daniel Scharff
I was like, all right. I guess that's why I want to do it.

44:14
Sam Kass
I don't know. I think that's a good idea. Look, if we ever take that up, I'll cut you in, I promise.

44:19
Daniel Scharff
Oh, my gosh. When he did that in the Olympics, I just watched the ESPN or Netflix documentary on it that was actually produced by the Obamas. And just rewatching him just go nuts in the finals, it was like, just one of the most beautiful things in sport that I've ever seen. And he just put him out with a night. It was beautiful. Usa. All right, thank you for telling me all about that and reminding me about my beautiful product idea. So just, I guess one more question for you, Sam, which is, so we're our chef, right? And, you know, a lot of what I would view as chefs are like, you know, cooking, like, real food, quote unquote, like, center plate protein dishes, like fresh veggies, that kind of stuff. And. But Plessy is a consumer packaged good.

45:02
Daniel Scharff
So what do you view as the role of cpg, consumer packaged goods in what we would tell people and consumers would think is healthy and sustainable?

45:13
Sam Kass
It's a great and very complicated question, one full of controversy and no great answers. I think that we have to meet people where they are, and I can close my eyes and envision a future, you know, that is much more rooted in the kind of food I cook, the kind of lifestyle I live, the commitment to health and climate change and ability that I have. But that doesn't do that, doesn't get us very far.

45:35
Sam Kass
I think trying to understand who we are as a nation, how we're consuming food, what our preferences are, and then asking ourselves, okay, how can we as a company and every single company should be asking themselves, and I find it deplorable when they're not and most aren't frankly, but should be asking themselves, you know, how can we take the response we have as a consumer package, as a food company? And frankly, it's true at any part of a consumer company in my opinion at this point, given the challenges that we face currently. And how can we one put a fundamentally better product from a health standpoint into the market? And how can we do that in a way that does not further degrade the health of the planet?

46:17
Sam Kass
And not because like you have to care about the health of the planet for the sake of health of the planet. It's because our very lives depend on it, literally. And our kids and their kids ability to have anywhere near the life quality that we've had is rooted in decisions we're making now. And I no longer think that you could call your product high quality product if it's destroying the planet. Like for me that's a trash, low quality product. I don't see how you can say you're a responsible company or even a high quality product if you're undermining the health of the people who are consuming. Especially when one in three kids are on track of diabetes in this country.

46:55
Sam Kass
So I think what's really going to happen is not that the first, second and third order value that consumers are shopping for, the data outline in the beginning is ever going to change. I think it is going to get redefined and I think it is being redefined about what those words of taste and quality mean. And so I think the consumer packaged good industry has to play a role in it. Just the reality. And so yes, starting a beverage company was a pretty controversial thing to do, especially one that wasn't just like a little flavoring, you know, and just like sparkling water with a little flavoring, one that has real flavor can compete as a full calorie, I mean, sorry, as a full flavored beverage with lower calories.

47:31
Sam Kass
We took some heat for it frankly, because people advocates who are more pure being like none of this food should exist at all. And I like in an ideological way, I don't disagree with them, but in a pragmatic way. You look around, it's like, I'd much rather 17 year old reach for this than a Mountain Dew or frankly, most of the stuff that they're consuming. And that's just the pragmatic reality of how over time we can move our country and younger people to better options that aren't undermining their health. And that's. There's no hardcore right or wrong. I think it's going to take all sort of approaches and perspectives to move us forward, but that's the one we chose to go down.

48:05
Daniel Scharff
Yep. And I think it really ties back to the points that Dana made about the taste and the cost and the convenience. Right. Because I am that consumer. Honestly, I like sweet stuff I wish I didn't. Like. Yeah. I mean, and like, I've definitely have been, like, pretty overweight at different times in my life. And someone would like, look at me and be like, why don't you just drink water and like salads all the time? Like, I don't know. I can't though. For whatever reason, Even if I should be able to do all of that, I can't. And I want something sweet. And actually it makes a big impact for me if I can have like a soda that is not as bad as the stuff that's out there, but still satisfies whatever I feel like I need to indulge with.

48:45
Daniel Scharff
But is that just, like, healthier? Because I'm gonna do that. So give me a better option. Great. Like, yes. Because I'm not like, I'm not just gonna sit and drink water all day. It's just not who I am, unfortunately. So I really do believe in giving people better options than the stuff that they would choose. And I also think it is a really interesting time, the last two years to be looking at what's happening right now in the overall diet. I think a couple things that stand out to me, one Coke Zero, switching from the black can to the red can.

49:12
Sam Kass
Like, whoa.

49:13
Daniel Scharff
All right. They see the writing on the wall here. They're looking at the data. They just crowned Coke Zero and then had this advertising campaign that was, quote, unquote, the best Coke ever. Question mark. Right. So I think they see that the full octane Coke is not growing as much.

49:31
Sam Kass
Can I just say, as an aside to just. It's an interesting sort of symbolic milestone about where we are. And when were in the White House and I had many conversations with Coca Cola, they would not show an image of red can Coke in the same Image that Diet Coke or Coke Zero was in, they would never be pictured in the same shot. They would. They would be totally separate. And it was a James Quincy, the CEO, came in after Mutar. It was a huge deal when he said, we're going to put them all in one ad. Redcan in front, Diet behind, and Coke Zero behind. That was always the red can, was always the hero, but it was inside of Coke. It was a raging debate. It was like World War II and thereabout, is that a thing we should do?

50:15
Sam Kass
And now for them to switch, actually cooking to red means that, like, it is. The market is changing, and you're seeing.

50:21
Daniel Scharff
It pretty quickly, and it is changing so fast. And I think, you know, things like Poppy and Ollie Pop that have caught on well, I mean, those things are just going to continue to grow. And sometimes the biggest impact that brands like that can have is actually forcing the biggest players to change. Right. Which is where you do see, for sure, Coke Zero going red. And I think, also I think I read maybe last year was the first year that the obesity rate actually started going down. Maybe it's GLP1. Maybe it's a bunch of those other things, like, probably all kind of contribute, but I think it's just. It's an interesting time. Like, they're just. Things are starting to change a lot. Obviously, the current administration has some views around what's healthy and what isn't as well. So there will be changes.

51:00
Daniel Scharff
I hope we all get healthier, you know, regardless of who gets the credit and who actually does it. I hope I do. I hope everybody does.

51:07
Sam Kass
It's not about credit. Don't get me started on that. But we'll leave that for another day.

51:13
Daniel Scharff
All right. Hey, Dana, Just to wrap up here, I just wanted to get your advice to some founders because a lot of people test through you. You see the kind of messaging and stuff that's on their cans when they launch. I wonder if there's anything that you see consistently that you could recommend to brands based on all the testing that we've done and what brands want people to think about their brands versus what people actually think about their products.

51:35
Daniel Scharff
What is some advice that you would give them specifically around their product and the packaging and how they portray themselves to consumers who aren't going to get the benefit of talking to them at Erewhon or in Pittsburgh or whatever, to hear that full, beautiful story about their upbringing and why they started the product, Just specifically what's going to go in the can and on the can.

51:55
Dana Kim
Oh, man. I Think Sam said it well when he said you have to meet your customers where they are. So the maximum effort that you can do to really understand your customer. In early days, it's farmer's markets, it's demos in stores, et cetera. Later down the line, it's more robust consumer research. But get to know your customer because you need to be able to tell your story. But it needs to land and what consumers care to listen to, what consumers remember, what consumers even read with their very short attention spans. It's a game of trade offs. You only have so much space on the front of pack, you only have so much space on the can. You have only so many seconds in an advertisement. And you really need to understand what those trade offs are and what you are.

52:38
Dana Kim
The must haves versus the nice haves in messaging, whether it is brand level, mission level messaging or it's product level claims and attributes, it's always a game of trade offs. And so just go in eyes wide open of understanding. If you put X on there, what is your consumer going to think? If you put Y on there, what is your consumer going to think? It is highly competitive and you only have so much space and time to capture a consumer's attention.

53:02
Daniel Scharff
All right, so if people want to maybe check out what's going on with their product using Highlight, how can they do that? What's a good way for them to follow up?

53:10
Dana Kim
Yeah, well, you can always email me directly. I'm Happy to chat danaetshighlight.com or go up to go to our website and book a demo. We'd love to show you our software. Spend more time giving more specific advice based on your category or subcategory, your use case. I know we keep saying, you know, you have to get really tailored, but it is because based on your audience, based on your stage, based on the question at hand, based on the timing of when you're entering the market, what you need to do to get it right is going to look very different.

53:37
Daniel Scharff
You know, what I want to do is test some of the old products that have now become successful that went through a huge change. So I've seen those Celsius glass bottles from like 10 years ago or whatever before they took off. Let's test them both and just see what actually people say about them. Let's get the mothers, which was poppy before it rebranded, right. And run tests on those both. I just really see what the differences are. All right, stay tuned for those results, people. Okay, Sam, just to end with you, can you just let everyone Know what's a great way for everybody to follow along with Plezi the Journey, support you.

54:10
Sam Kass
All right now we are on the west coast and so at Albertsons and many of your more, you know, well known retailers out there. So please, if you see Plesy, buy it. That's a great start. Follow on social media. Plesy's all over social media, of course, is every brand must be in the modern era and then we'll be expanding pretty dramatically in the next year nationwide. At least that's the plan. And look, I just, I think in the end, both for Plessy, but you know, I care about the world as well. I think for consumers, any of us who are buying products, you know, we should be choosing products that are trying to do a better job on health and especially on climate change and sustainability. And there's plenty of greenwashing out there.

54:54
Sam Kass
And I know there's some cynicism and there's some reasons to be cynical. If everybody just started buying products that had those claims and those attributes, it's a lot easier than to get the companies to start doing what they say they're doing than get them to say it at all. And we can start to send a really powerful signal that this is the future that we are demanding. And that's so I wouldn't even worry as much of whether you think it's like legit or not. We need every product that gets tested at Highlights should come back. Like if you have a sustainability claim or attribute, you're going to dramatically outperform those who don't. And we're starting to see initial signs of that, but nowhere near the level that would sort of equate to a transformation of the products that are coming to market.

55:33
Sam Kass
So I would encourage all of us eaters or purchasers of goods to look for that. And then as founders and, you know, entrepreneurs, you got to keep these things in mind. It's definitely the right thing to do. It's definitely the right thing for business certainly over the middle and long term. And I think doing the hard work to figure out how to have higher quality, more environmentally friendly products is going to outperform those entrepreneurs who aren't doing that hard work. And so, you know, I think we all can win if we start on both sides. Product development and purchasing prioritize those qualities.

56:07
Daniel Scharff
I love it. And I've seen the data from NIQ that talks a lot about how when people learn about the brands with sustainability claims, it really helps, especially on repurchase because I think, you know, they buy it and then they learn a little bit and they feel good about it and they can identify with the brand and then they want to keep supporting them and they'll tell their friends, like, hey, do you know that actually they do this? So awesome. All right, well, hey, I want to thank both of you so much. This has been a super interesting discussion. I still have a million questions, so hopefully we'll get to do it again someday. So thanks a lot and thanks to everybody for listening along. All right, everybody, thank you so much for listening to our podcast.

56:46
Daniel Scharff
If you loved it, I would so appreciate it if you could leave us a review. You could do it right now. If you're an Apple podcast, you can scroll to the bottom of our Startup CPG Podcast page and click on Write a review. Leave your company name in there. I will try to read it out. If you're in Spotify, you can click on about and then the star rating icon. If you are a service provider that would like to appear on the Startup CPG podcast, you can email us@partnershipstartupcpg.com lastly, if you found yourself grooving along to the music it is My Band, you can visit our website and listen to more. It is super fantastics.com thank you everybody. See you next time. Time.