This episode features a conversation between Phil Dillard, Founder of Thruline Networks, and Dan Kurzrock, CEO and Co-Founder at Upcycled Foods Inc. and ReGrained. In this episode, Dan talks about the importance of upcycling food, regenerative agriculture, and the circular economy.
This episode features a conversation between Phil Dillard, Founder of Thruline Networks, and Dan Kurzrock, CEO and Co-Founder at Upcycled Foods Inc. and ReGrained.
Upcycled Foods, Inc. powers the B2B upcycled food economy with product development expertise, cutting-edge technology, and a growing portfolio of ingredient solutions. With its innovation hub – the Upcycled Food Lab – the company leads the way for food makers as the go-to development partner.
With a mission to better align the food we eat with the planet and people we love, ReGrained is an upcycled ingredient company and innovation partner that works with great companies to close the loop with better foods for you and the planet.
As you can tell, Dan spends most of his time championing upcycled food and the circular economy. Outside of that, you can find him conducting part-time gravity research on a mountain, nerding out with great books, or jamming to great tunes.
In this episode, Dan talks about the importance of upcycling food, regenerative agriculture, and the circular economy.
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Guest Quotes
“For the first few years, there was a lot of awareness building around what food waste is, what upcycling is. I used to give a lot of talks at places like industry trade shows and used to have the room raise their hand if they've heard of upcycling. There used to be like one or two people in the audience. Now, it's almost everybody.” - Dan Kurzrock
Episode Timestamps
(01:59) Dan’s vision at Upcycled Foods
(06:56) Product life cycles and supply chain
(10:24) Dan’s background and path to entrepreneurship
(18:05) Creating a patent and expanding the startup
(24:52) Enabling innovation for B2B customers
(29:50) Measuring impact over time
(37:21) The future for Upcycled Foods
Links
Phil Dillard: Hello and welcome to Thruline to the 4th Sector, where we're exploring fourth sector capitalism and impact investing as an invitation to innovation and changing the world.
This episode features a conversation between Phil Dillard, founder of Thruline Networks, and Dan Kurzrock, CEO and Co-Founder of Upcycled Foods Inc. and ReGrained.
Upcycled Foods powered the B2B upcycled food economy with product development expertise, cutting edge technology, and a growing portfolio of ingredient solutions. With its innovation hub, the Upcycled Food Lab, the company leads the way for food makers as a go-to development partner with a mission to better align the food we eat with the planet and people we love.
ReGrained is an upcycled ingredient company and innovation partner that works with great companies to close the loop with better foods for you and the planet.
As you can tell, Dan spends most of his time championing upcycled foods and the circular economy. Outside of that, you can find him conducting part-time gravity research on a mountain, nerding out with great books or jamming the great tunes.
In this episode, Dan talks about the importance of upcycling food, regenerative agriculture, and the circular economy.
Now, please enjoy this interview between Phil Dillard and Dan Kurzrock.
Hello everybody, and welcome to another episode of Thruline to the 4th Sector. I'm your host, Phil Dillard, here today with Dan Kurzrock. How are you doing today, Dan?
[00:01:40] Dan Kurzrock: Hey, Phil. Doing great. Thanks for having me on.
[00:01:41] Phil Dillard: Thanks for coming by. I really appreciate you sharing the time. I'm very excited to get to know you a little bit about the work you're doing at Upcycled Foods and how you're making impact on the planet.
So, uh, let's just jump in and get started. I always start with this really simple softball question. When people ask you, what do you do for a living? How do you describe what you
[00:02:02] Dan Kurzrock: do? It's a fun one that you actually have to be pretty comfortable, uh, sharing with a lot of people when you start a company, right?
You don't wanna be pitching too hard too often. So, you know, when I get asked what I do for a living, usually I actually just start very broad and I say, I'm in the food business, and I let them ask a little bit more. Um, and then I, uh, hit them a little trivia. You know, I like to ask if people, uh, you know, know I've ever had beer before.
Most people say the answer. Is Yes. And then I ask 'em if they know the ingredients in, in beer making cuz there's only four. And you know, from there I typically would explain that uh, you know, what we're in the business of doing is taking this incredible grain that has had its sugars extracted by the beer brewing process and turning it into a new ingredient.
Cause there's lots of fiber, lots of protein, lots of good stuff. And that we are, you know, applying that thinking to. All kinds of supply chains throughout the food system. Looking at what we're leaving off the table, you know, trying to contribute to, uh, you know, building a better world where we improve the way we value resources and we're able to do more with less.
[00:02:59] Phil Dillard: And that's a good way to start, right? I mean, you start getting people in a conversation and then peeling back the onion. What do they ask next? Like, because I would ask, okay, so I didn't know that there was anything left over. What do you do with what's left over and why is it different? What's the significance of doing something different?
[00:03:16] Dan Kurzrock: Yeah, it's a common question and you know, it's one that I started asking myself actually when I started the company. I was actually a, uh, an undergraduate and I, I learned how to make my own beer at the age of 19. You know, the beer making process was really fun at that age. Um, of course we didn't drink anything we produced that wouldn't have been okay, but perfectly legal to buy the ingredients and, and make beer.
And as we got more and more into the hobby, and I learned that. Beer's actually quite simple. And it's actually one of the, uh, the oldest food products you ever, you know, made as, as humanity. And what you're, what you're doing is you're taking hot water and you're mixing it with grains, with barley, typically extracting the sugars from it, you know, and that's what, you know, you add yeast to and ferments and you get beer.
Um, but if you're making the beer itself, you know, you're, you're then left with about one pound of this grain for every six pack of, of beer you're producing. So when I was just doing this as a hobbyist, I was making five gallons of beer at a time. It's about a third of a commercial keg, just to put that in perspective.
And I would use 20, sometimes 30 pounds of grain. So if you can, you know, picture, um, you know, a Gatorade cooler on the sidelines of a, you know, a sports match, you know, roughly like fill that with oatmeal. And that's kind of what we're talking about here. What it felt like to me, you know, at the beginning was that every time we were making beer, we were also making food.
But then we didn't have anything to do with that food. I was in, uh, Southern California where we didn't have a vegetable garden like I grew up with in Northern California. We didn't have a compost bin, certainly. And so tipping the stuff into the dumpster just felt like I was wasting food. So I started to dig in, you know, like you're asking like, what, oh, what, what normally happens with this stuff?
You know, we didn't making beer for thousands of years. And it actually turns out, if you go back even to like ancient Mesopotamia, there's evidence of. People making, you know, early versions of bread, you know, with this stuff. Or even more recently in the Middle Ages, you know, modern day Germany, you know, back 12th and 13th century, there's evidence of of bakers making, you know, bread with the grains from beer making.
So we actually have a, a food tradition, you know, with this. But as, as beer production has gotten more and more industrialized, you know, we've, uh, started. Instead of putting something to the path of, you know, highest value, you know, feeding people, it typically goes to the path of least resistant, which in most places about 80% of the supply in the US is going, uh, to, to animal feed, you know, cattle farms, uh, primarily, which is a whole, you know, rabbit hole.
We can go down if you'd like, but it's, um, you know, fortunately it's mostly not going to landfill, but, you know, we're, we're leaving a lot of nutrition off the table. Um, by not, not eating it directly, the stuff is got, uh, More protein than like quinoa. You know, for example, it's got a huge percentage of, you know, fiber and it's delicious.
Um, and so, you know, we started asking the questions as to, okay, well if we used to make bread with this stuff back in, you know, 12th century Europe. Uh, you know, why, why can't I walk into the grocery store and, you know, pick up, uh, you know, a loaf of bread that's made with it today? You know, what are, what are the reasons why, you know, that doesn't exist?
And so what we're trying to, to do is, you know, introduce, it's not a new way of thinking about things. You know, it's not new to think about. Making the most of what we have. You know, it's why, um, you know, your grandma has a great recipe for chicken broth, you know, from the roasted chicken, from, you know, Friday night.
It's why, um, we have pickles. It's why we have, you know, jams, right? These are old ideas of making the most of what we're producing. But in a modern context, you know, we're actually, we're wasting a lot of food, a lot of resources, and a, and a lot of opportunity, you know, to feed people. And so we're, uh, you know, in the business of, of, of introducing a new way for food businesses and, and consumers to make an impact with their, with their food choices.
[00:06:56] Phil Dillard: Yeah, it's really interesting. It's one of those, everything old is new again. Right? I grew up as a kid, you know, um, my mom's from was from the south, and, and they pickled their own, you know, um, jarred their own fruit and preserved it. And we made jams and preserved peaches and green beans and all this different stuff.
And, uh, I think in, um, an agrarian society where, you know, you had to save stuff through the winter, you had yet a different approach. But in a, in a modern big food. Processed food society, you have a, you have lost touch with a little bit of that background, and people don't even think about, you know, where their food comes from or, or, or where it goes.
So there's lots of opportunities on the industrial scale and at the
[00:07:39] Dan Kurzrock: consumer scale. Yeah. And you can actually stretch it, you know, to a global perspective too. So if you look at almost any product that we, you know, we're, we're used to, I'll use, uh, you, you, a coffee drinker, Phil.
[00:07:49] Phil Dillard: I'm more of a tea guy actually, but I was gonna ask you
[00:07:51] Dan Kurzrock: about coffee.
Yeah, well, I'll use an example that hits on both coffee and tea. So, coffee, you know, is a bean, right? We think of typically roasted, you know, you get it in a bag or a, you know, can or or whatever. And that bean is actually the pit of a, of a fruit. Most, most people don't realize, you know, that fruit. It's a, it's a coffee cherry, and that that coffee cherry actually has some really interesting, you know, properties itself.
And there's some interesting innovation, you know, happening with that. Um, but it actually turns out that the coffee plant also has a lot of flavor and nutrition in the leaf from that plant. And so, you know, while conventionally we would be thinking of coffee as being a singular product, You know, what we could be doing is thinking about it as a almost a, a portfolio of, of products, if you will.
We're using every part and putting 'em to their highest and best use coffee leaves. Have more antioxidants than green tea and have some great flavor. And similarly, if you, you know, globally look at a, you know, product like chocolate, which comes from cacao, cacaos, also the bean of a fruit and the.
Actually, the fruit itself is incredibly delicious. Very few people have ever tasted cacao fruit doesn't taste anything like chocolate. It's like a, a really cool tropical fruit. Or we think of, you know, you go buy some trail mix and it's got some cashew nuts, you know, in it, the cashew, uh, anyone listening to this Google, Google cashew fruit, and you'll see the cashew is actually this little tiny nut that is at the end of this apple, really.
And it's a, you know, incredibly, uh, interesting. Uh, Potential supply chain, potential source of nutrition that, um, we just haven't, you know, really put to its full potential as a, you know, market driven economy. And there's just so many opportunities like that. And if you zoom out and look at good ways more generally, You know, it's estimated that between 30 and 40% of all the food that we're growing is going to waste.
So food waste and food loss is a huge problem. It's like leaving the grocery store with five bags and dropping two in the parking lot, right? And just being okay with that. Like no one should be okay with that. If, again, food waste also happens to be one of the top, the levers that we have. Uh, and.
Mitigating the climate crisis, what we eat and how we eat it. And so, you know, I think this, uh, this world of looking at, uh, the food that we're, we're producing, asking, you know, questions of how it's made and what else, you know, might there be, you know, it's something that, um, is. Both like very kind of intellectually simulating.
I think it's really, it's really fun to learn this stuff, but it's also, um, you know, you start to feel like a lot of, at least I do, you know, feel a lot, a lot of urgency, you know, about, um, you know, clo closing these lubes and connecting these dots.
[00:10:21] Phil Dillard: Yeah. And I wanna get to the urgency and the industry part a little bit, but I wanna talk a little bit more about how you got here.
First, you talked about your beer hobby. What sort of work were you doing at the time when you were making beer in SoCal?
[00:10:32] Dan Kurzrock: I was a college student. I was studying economics, you know, at ucla, and I loved this hobby of making beer. And I was really inspired to learn about, you know, the history of human consumption around it and the nutritional value of my, uh, little more personal background.
My mom's a dietician. My father's a, a physi a physician. He's a cardiologist. And so really, you know, grew up like, you know, knowing the value of what we eat. And, you know, in our health and especially fiber, almost don gets enough fiber in their diets. And I learned that this, uh, material is a. Really wonderful source of fiber and can, uh, has been shown to a lot of promise around, uh, promoting good digestive health.
And so, you know, it was like, okay, you know, if we used to make bread out of this thousand years ago, Probably figure out how to, you know, how to do it now. And also there's, you know, some examples of brew pubs around the country that were doing that. So I started making loaves of bread actually and selling that to friends.
And then I'd use the money from, uh, this little kind of bakery operation to buy more ingredients to make more beer and, you know, pivoted from, from bread and to making little like granolas and snack bars and things like that, just, uh, as a way to fun, you know, have one hobby that's. Funded another hobby. I didn't immediately have an entrepreneurial aspiration for it outside of school, and so I started learning a lot more about how massive, you know, the opportunities at an industrial scale, like 20 billion pounds of brewers grain, you know, used by the industry every year.
It was like 9,000 breweries right now in the country. But going back then, you know, my aspirations were pretty humble. It was, Hey, I wanna be able to brew beer for free. Maybe someday it'd be fun to have a brewery that was also a bakery and, you know, kind of close that loop, uh, you know, internally. Um, but the more questions started asking and the bigger the opportunity is and the more inspired I felt to pursue it.
And so from school onward, I went on and a childhood friend and we, you know, we formally started the company and we started doing farmer's markets and things like that. Really just nights and weekends, you know, just, uh, trying to figure out if we were really onto something or not, you know? Cuz there's always this, uh, peril, you know, as an entrepreneur of, you know, Being concerned, okay, well no one's done this before.
It must not be a good idea. Right? There's this like appeal to tradition that exists out there. Like, oh, things are the way that they are. Cause that's the way that they've always been. And you know, had to kind of prove to ourselves that we were really, truly onto something. From there, I. Went on to pursue a, a master's in business from Presidio Graduate School, which is all focused on sustainable business.
And my goal was to take the idea that we had and turn it into a, a full-time operation. And along the way, one of the things that we discovered was that big reason why this hadn't been commercially viable in the past is, uh, actually. Somewhat of a, a food science engineering problem. This material is really difficult actually to, to handle in a safe and efficient way to create a commercially viable ingredient.
So we actually did a very uncon un unconventional thing and had a research partnership with the U S D A and um, we ended up inventing technology together. Why was that
[00:13:22] Phil Dillard: unconventional? I mean, and the other question I had was like, were you still making beer and bread when you were in your, in grad school?
[00:13:28] Dan Kurzrock: So to answer the second question first, when, when I was in grad school, we were making nutrition bars. So we were still producing a, you know, producing a product and, and selling it. And we were doing some e-commerce. We had some, uh, a couple like business accounts and we were doing events and it was really small scale stuff, but to really focused on test and learn.
So the reason we stopped making bread and started making bars actually, was because, you know, bread basically has a shelf life of a day. The next day. It's not fresh bread anymore. Um, and so we found that even if we use compostable packaging, you know, with these, you know, handmade bars, we could accumulate some inventory and we could, um, spend one weekend baking, you know, a couple hundred of them, which at the time felt like a lot, you know, eventually we were producing them by the thousands and had them in, you know, uh, a couple thousand stores.
Um, so, you know, things, things grew from there. But the, you know, the early days we were, um, Still making everything in a commercial kitchen, hand packing it, just trying to sell through what we made. And then we're trying, we're, you know, our goal was to fund the business with our sales. And at least in the early days until we knew what the long term, you know, strategy was.
So, yeah, that's why we were still baking and, and making products. Um, but it wasn't bread. It was, you know, it was bars at the time. And it was always a challenge to, uh, there's so much of this grain that's produced by these breweries every day about one pound per six pack, as I shared earlier. And it spoils in less than half a day if it's not, you know, treated and they know in some way.
And so we were loading it up on sheet trays and drying it in ovens for a long time. And it was very clear that that wasn't scalable. You know, that wasn't something we could really build a business around.
[00:14:59] Phil Dillard: And we, and it's a little. It's a little energy intensive too, right? It's a little, you know, you're, you're trying to do things that are good for the food and for the environment, so you gotta think about those
[00:15:08] Dan Kurzrock: components.
Yeah. Energy intensive, labor intensive, expensive too. And, you know, our ambition was to supply other companies with a new ingredient, not to be a, you know, a brand. Our ourselves. We saw the brand as a. As a means to an end, you know, of proving the market. And so we knew that we had to crack the code on producing this at a larger scale.
Uh, and so that's where, you know, the unconventional aspect of working with the scientists at the U S D A, you know, comes in. It's, uh, not common in my experience for entrepreneurs to think about cross-sectoral partnerships in the early days like that, where. You know, we feel very lucky to have been tipped off to this, uh, this group within the U S D A, the agricultural research Service and their Western regional, uh, research center, which is not too far from us in Albany, California, right north of Berkeley.
It's a really cool facility. And, um, they had a, a program that was focused on actually turning plant-based waste into novel ingredients. Like that was the title of it, which is a very, Uh, almost academic way of describing this idea of, of upcycling, which is what we were, you know, we were looking to do. So we came to them with this, uh, you know, problem statement around, you know, Hey, we know, we know we've got a great idea here, but we're not sure how to process this, you know, at scale.
And so, you know, together, we, uh, we did a couple years of research and, um, you that resulted in, uh, actually a, a patent. And how did you hear about the program? So it was actually one of my, uh, he is now a close friend. Uh, it was a, a peer in my, my grad school program. Who had a, uh, the opportunity to take a tour of that facility for a, a food company that he was working with at the time.
And it was just an offhand comment that, um, You know, it was, was made when they were introducing the type of work that they were doing where he learned about this program and he was working on a project with me related to, to my business. Um, at the time he was like, Hey, do you, do you know about this? And I was like, you know, 16 clicks into their website or something like that.
Never would've found it, uh, you know, on our, on our own at the time. And just my job dropped, you know, when, when I learned about it and thought it would be a long shot to give him a call and, you know, write him a note. And we heard back probably, you know, within a day or two actually inviting us to come in and, and, and meet everything kinda.
Stemmed from that.
[00:17:17] Phil Dillard: Yeah, we work with a company there. Before we were doing some, uh, waste methane to Bioplastics and, you know, the S B I R for phase one and phase two and getting, getting the company started and understand this space. It's really interesting because there are examples of government programs that help companies at this stage, but they have, you have to discover them and, you know, you share a very good example that I wanted to make sure we highlight.
That's like there's a great opportunity for starting with something that's interesting. And building a passion into something that's ignites something bigger, and then grabbing onto different resources, whether it's at school or through your networks or through government programs that give you the ability to get to an to another level and actually verify that you had what you thought you had and build it from there.
I think it's super cool and it's a really interesting start. So you're at grad school, you do the research, you've got the patent, and now you got this patent in hand. Where do you go from there? What are you thinking about and how do you take the patent and turn it into something, uh, even more
[00:18:16] Dan Kurzrock: substantive.
Yeah. Yeah. So it hit the point where it was very clear that we needed external capital in order to take it to the next level. Cause we, you know, we're talking about building machines, we're talking about, you know, the ingredient sales business. We learned, it actually takes about two years on average from when you introduce a new ingredient opportunity to what an innovation actually comes to market.
So you've got years without revenue, you know, coming in for every, every sale that you're, you know, you're working on making. And so we still wanted to. Take it slow and build something of a lasting value. So we weren't going straight to, you know, your kind of conventional venture capital, you know, firms with this idea.
We didn't feel like it was there yet. We weren't sure if it would ever get there, honestly. But we knew that we needed to at least have the money so that, uh, the two original. Founders, um, could focus on this full time. And the other thing that we were doing is we wanted to take our retail product and we saw it as a way to build the demand side of the equation.
You know, we saw this as a food waste is a market failure. Unquestionably the aspect of it that, that we're working on specifically, uh, as a market failure in which there's a lot of potential supply and a lot of latent value and a lot of potential demand from food companies that wanna create products that are better for you, better for the planet.
But those dots need to be connected. And so we saw ourselves as a really, a platform for facilitating that, um, you know, enabling that type of innovation. And we needed to prove that there was consumer demand. You know, we felt as a way to. Kinda helped create that pull through. And so we, um, you know, we also wanted to take our nutrition bars and we had a, uh, another product line, a snack line that came into the fold as well.
In this grad school program, I had the opportunity to do a capstone project where we, um, did, uh, a whole business model exercise for the ingredient business. Um, and, you know, got to. Present in front of a panel of judges, and I did well and started hitting the, uh, kinda the, the pitch circuit. Um, and it's around 2016 gonna things like food bites and slow food and, you know, there's lots of these great, um, events, you know, focused on giving a stage to sustainable food and sustainable innovations, you know, generally, or just.
Even just food tech, you know, type stuff. We started going, going out for that. Um, we ended up doing some, uh, some interesting things in terms of how we brought in capital to take things to the next level. We did a, a rolling close, so we just only raised as much money as we needed for certain periods of time, instead of like large dedicated rounds maybe would do it differently actually now.
But it enabled us to take things slow and, and focus on, you know, getting money from people that, you know, believed in the mission, not just the, you know, the profit maximization, you know, part of it. And we've always been about maximizing both, you know. Purpose and profit. And so we, we need to get some, um, some angel investors to come in.
But we did equity crowdfunding actually really early on where we did a, it's now called a community round, um, where we opened up our cap table to. Non-accredited investors in very small chunks. Uh, and it was a pretty novel concept at the time. It was maybe 2018, something like that, like pretty soon after the jobs act passed and that became something that you could, that you could do.
We found some success with that, and I actually see that bucket of community investors as strategic investors, just not in the same way that, you know, as conventionally considered,
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First they showcase that you have consumers who could actually turn into investors, and then that people see value in it. And the more you build the community, the more you have a reach into it's, it's a nice beneficial flywheel as long as you can manage the cap table and it's not getting out of control, you know?
And that it's a great resource to, to have. Yeah,
[00:22:53] Dan Kurzrock: that's really well put. And that's exactly how we've tapped into that community. And we've done things, you know, like, uh, run new branding, you know, by them for kind of internal market research or when we have new product launch. And we actually ended up going back and doing a follow on round for the community investors a couple years later.
So we got to do, uh, two rounds, you know, through, um, you know, through that, which was really interesting also to see, you know, someone who put in. You know, maybe a hundred dollars the first time come in and put $3,000, you know, the, the second time. I'm a big believer in community rounds and, you know, we've had a really good experience with, uh, you know, with that.
We also brought in, um, corporate strategics, you know, pretty early, not with major positions in the company, but you know, we recognized that we had a business that was focused on, uh, Pretty long value chain, right? From supplier through to to end customer. And so those, uh, those community investors represent like, you know, an end consumer customer, right?
But there's also, you know, business customers and there's, um, you know, suppliers. So we brought in, uh, the first one to come in actually was, uh, Barilla. The Italian, you know, food company, pretty small investment. You know, it wasn't about the size, it was about the relationship that we were building with them.
And we also, you know, brought in, um, Griffith Foods, who's a B2B food company that many, not many people are, are too familiar with. They sell to other food businesses. And then, you know, everything from,
[00:24:14] Phil Dillard: and what were those guys saying that it was different than what the adv, the venture investors are saying, or the angel investors were saying.
So
[00:24:21] Dan Kurzrock: we weren't really pitching the conventional venture investors. At the time because in part because our model. Was pretty different from what, you know, we weren't like a retail, like if you're a retail brand, there's a playbook, right? And you know, you, you qualify for certain level of investment. For example, when you hit a million in, in sales trailing 12 months, right?
And if you're not at that threshold, you don't fit the deal box, you know, for that, for that type of investor. Um, and then there's not. Really a lot of traditional venture investors, you know, at least at the time, you know, we felt that, like, understood the, the long tail of the B2B ingredient sales cycle.
Cause it was, you couldn't show traction in the, in the same way that you can with a, with a retail brand. It's just a different model that requires more, more patient capital. And so, It's just, it felt right at the time also to try to align the, like in, try to be corny, but like an ecosystem of, of stakeholders from supply chain through to the, the shopping cart.
So by getting, you know, Barilla in as a group that could sell to end consumers by getting Griffith Foods, the type of company that could sell to companies like, like Barilla, and we could create value added products together all the way to, um, the brewery. We actually, uh, brought in Molson Coors, you know, a large, uh, you know, brewery partner as well as an investor.
We felt like that gave us a good perspective into the different parts of the value chain that we would need to align in order to actually make our business, you know, successful. Um, and you know, now, now we're at a point where we're, you know, starting to hit a growth curve that is, you know, appropriate for, um, you know, venture venture capital, you know, more conventionally to to, to
come
[00:26:00] Phil Dillard: in.
Yeah. Can you talk about that a little bit about how the, how, how the business has grown from a, you know, single ingredient company to the, the things you have on the table now? What, what are the components of
[00:26:10] Dan Kurzrock: it? Yeah, so today we've doubled down on being all about b2b. So we're selling to food businesses.
Um, we're selling ingredients, um, and we are also enabling innovation, you know, for, for our customers and some of the ways that we've done that. Um, include entering formal collaboration agreements with companies, big food companies like, uh, Prados, who's a large bakery ingredient supplier. And with them when we walk into a conversation with a, you know, a commercial bakery, instead of saying, Hey, here's this great idea and here's a, a bag of powder, let's figure out what to do with it together.
You know, we, we start with the solution. We go on, we say, Hey, we understand your product portfolio. You're making sliced pan lobes, buns and English muffins, and here's how our upcycled grains can show up in these products. Like, here, taste an English muffin. Right? This is how the nutritional profile compares, you know, so it's, it's a much more, uh, sophisticated approach to.
Getting a new ingredient. Um, you know, in into market. We've done a similar thing with, with carry foods, uh, focused on, uh, our first product is a protein crisp. So a lot of nutrition bars, you know, we learned from experience use these textured, typically they're like a gm o soy or a whey crisp, or a, you know, pea protein is becoming popular in that.
That's a way to bring nutrient density with a texture that, you know, works well for, for bars. And so we, uh, you know, worked with them on developing, you know, uh, an ingredient product together where, you know, it becomes, if you think about that value chain, like we supply Carrie, you know, then Carrie supplies a, sometimes a contract manufacturer who then supplies a brand, who then supplies a, you know, a retailer.
But so we're, we're, we're, we're now operating in a place where we really are. Enabling, you know, inno innovation in there, especially within that, that b2, the kinda the messy middle of food and that like B2B space and sometimes b2, b2b where we are introducing these, these ingredients and what they can do with them and trying to make the right thing, the easy thing.
And we've learned a lot with what we can do with the, the brewery grains and we're starting to expand to other supply chains, you know, as well. We don't wanna leave opportunity off the table for. The different types of products we can create from this, uh, this barley from brewing. You know, as I was mentioning at the top of the show, there's, there's a lot of really compelling potential supply chains that we can fold into our model and offer a portfolio of, of complimentary ingredients to our, to our customers and what we're finding with the food businesses today.
It's very different than it was, you know, even five years ago around awareness of food waste, awareness of upcycling, even public facing commitments around, you know, reducing food waste. And we can help these companies. How does that
[00:28:49] Phil Dillard: change the market then? I mean, cuz early on if you're, um, a brewery and you, you're just pushing this stuff to landfill anyway, right?
Or maybe you're selling it to, to people for animal feed. Um, now I have different opportunity. So is it then a higher margin than opportunity that's now under pressure because of more demand? Or is it a higher visibility or is it, you know, greener because you're shipping it a, a shorter distance and like how does a market change impact?
The up cycler this way.
[00:29:21] Dan Kurzrock: Yeah. There's, um, zooming out a little bit and I guess starting with the demand side of the question. You know, we were, for the first few years, there's a a lot of awareness building around what food waste is, what upcycling is. I used to, I used still do give a lot of talks at places like, you know, industry, trade shows, things like that.
And you used to have the, the room, you know, raise their, raise their hand if they've heard of, of upcycling used to be like one or two people, you know, in the audience. Now it's almost everybody. Um, and. You know, now we get inbound inquiries from companies who say, Hey, we are looking to create upcycled products.
You know, how can you help us do that? Now they're still looking two years down the road for commercialization, but that's very different than us working our way into an organization, helping 'em understand something. You know, that should become a priority. So it's moving from a space of awareness, building more towards action.
Now on the supply side, it's gonna be a really interesting thing to, to watch in the upcycled space. Cuz if you look at. Examples, historically, there are many, you know, where there was once a byproduct that then becomes a, a co-product. If you look at the restaurant industry and their cooking oil, right, which used to be a cost center and a, you know, a huge headache and now, you know, you lock that stuff away because there's a, you know, a market, you know, with the biodiesel, um, you know, primarily, or if you look even, you know, within food at, uh, whey protein.
It's a sidestream from cheese processing. I mean, there's still actually a lot of whey that goes to waste, but there's also now whey protein companies or cheese is a byproduct of their process because they're, they're making, um, you know, so much, uh, margin on the whe I love that
[00:30:51] Phil Dillard: the byproduct becomes a co, co-product takes a big chunk of the waste out.
Then there's other impact that you're, that you're looking at. Can you talk a little bit about how you guys measure the impact of the work that you're doing? And how it's evolved a little bit over
[00:31:06] Dan Kurzrock: time. Yeah, for sure. And just to kind of round out the narrative of the last question, you know, we're not yet at a place where there's such a robust market for brewers grains, for example, where, you know, in the foreseeable future there's gonna be brewers, grain companies that are making beer as a, you know, as a, you know, as a, as a byproduct of that.
And, but we're, we're finally working towards a food economy where the latent value is being understood, you know, on both sides. And we're able to start facilitating, facilitating that. That's on the, uh, you know, the question about, you know, measuring impact food waste is something that has a lot of embodied impact, potential impact in it, you know, negative impacts if it doesn't go to the people, you know, and we, we often time talk a lot about, uh, water footprint actually, you know, cause it's really easy for most people to understand.
Maybe I'm biased in that and being, you know, from California, um, where. This Winter's rains were very, uh, exciting, you know, for, for, for a lot of reasons. You know, if you look at like the water footprint of, of beer, you would think it's in the liquid that is, you know, in, uh, the com that component of the, you know, of the beverage.
But it's actually mostly in the agricultural supply chain. Something like 90% of the water footprint of, of beer making in, in the agricultural supply chain of the barley. And it takes approximately 300 gallons of water. So, Or between 300, 3 50 gallons of water to produce the grain that goes into one six pack of beer.
So like, there's the embodied water footprint of about a two hour shower in the grain, you know, that goes into, that, goes into a six pack. And so when you're, you know, when you're looking at giving something a, a second life where there previously wasn't one, you know, it's, it's, we're talking about food with a water footprint of zero, with a land footprint of zero.
Right then there's the opportunity that we're really excited to make more impact around. We're only scratching the surface of this today, you know, to, uh, use upcycling, you know, business models as a way to also help, uh, with food insecurity. You know, we have these twin problems that shouldn't, shouldn't coexist as a.
Uh, global, you know, food system where we've got tremendous amount of food waste and we've got a tremendous amount of, of people who are unsure of where their next meal's gonna come from. Right. And, you know, food waste does not cause hunger, but, you know, might there be ways to, you know, innovation around reducing food waste to, to feed the world?
I mean, it's a definite possibility, right? And so we're really excited to go down that road, you know, as well. Then there's the carbon aspects. So just to like finish your question, you know, that's, uh, You know, carbon footprint is, is, is, is an important aspect of this to make sure that you're not using more energy to produce the upcycled product than you know, that you're creating a net benefit.
Right. Although, you know what I would, what I would caution against is that there's still a lot of, um, uncertainty as to the stage and the gate, you know, and an LCA analysis for, you know, carbon footprint of upcycled foods. Like where do you, and until that's, Standardized. Um, to me it's, it's an important aspect of this, especially as it relates to the net benefit for energy consumption, right?
But, you know, we, I really tried to center a lot of our com communication about this, around just the, uh, the obvious benefit of putting food to its highest and best use of feeding people, right? Like, we should be, we should be doing that. We should be consuming all of the food that we're producing. Like, pretty, pretty straightforward.
It's not that, you know, an LCA is, is window dressing, you know, or anything like that.
[00:34:29] Phil Dillard: It's gotta take the whole thing into account, right? I mean, your, your description of the amount of water that it takes to create the barley that's required for a six pack of beer is, is staggering, right? And if you think about that amount of water, you then you go, okay, well what else could I have used that water for?
And if, or if I'm gonna use that water most effectively then if I'm going earlier on, do I, you know, Is it better from regenerative practices or precision agriculture or, you know, more effective use of watering. But even then, if we're just tackling at the end of end of it, where you're saying I've received it.
I'm gonna make sure that we don't waste it cuz we've already invested this much into it. You gotta gotta really think about what that really means and how to tell that story. And I think it's interesting how you tell the story about the ingredients in a way that, um, people can understand the benefit of those ingredients and the, and the increase the trust in your brand and the brands that you put the, the, the food, uh, the, the ingredients into.
And I think you guys are doing some work along those lines.
[00:35:28] Dan Kurzrock: Yeah. Yeah. No, well put. Thank you. Thank you Phil. And that is, um, You know exactly the, you know, the kind of work that we're looking to do. And, you know, a big part of the challenge, maybe, you know, or opportunity with, uh, the type of work we're doing is to talk about this as a wonderful new ingredient without.
And talking about the impact of reducing food waste without yucking the yum of the customer. Right. By talking about food waste, you know, on a, on a package. Cuz this is not waste. The whole point is that this shouldn't be waste. Right? And so, you know, uh, one of the ways that we center that conversation is around how, you know, it's, it's, if we look back on this conversation, it's come up a couple times.
What we're saying here is that, hey, every time we're making beer or coffee, right, or cashews, or you know, whatever the example, we're actually producing multiple products. And the grain is actually, we call it a super grain because it's actually a healthier grain than any other cereal on the market after it's gone through that brewing process.
Cuz brewing, all they care about is actually extracting the sugars. Yeah. And so when you're left with is more nutrient debts, you know, and so this is not about. It's not just about doing good for the world, like, you know, preventing food from going waste. So it's also just about really improving the way we value what we, what we have.
Well, it's
[00:36:40] Phil Dillard: changing a mindset from one that was just not so well informed, right? I mean, we go back to where we started and we talk about preserving foods and, uh, turning jams and jellies and pickles and things like that. You know, when people were closer to their food, they had a different mindset. And I think when you first hear.
Or at least, I mean I did, when I hear people going, I'm too far from my food, it sounded a little, you know, fluffy, hippie, sort of, you know, very California stuff that people will be be that some very practical food people or some very practical consumers might not understand. But if you actually bring in a little coaster and you say, I love the way you say that.
When you create a beer, you're actually creating multiple products, and when you remove the sugars in, you have healthier grain. What a great opportunity to take that healthy grain and turn it into something else. It's a very natural. Process. Nature does this a number of times. If you study a little biomimicry, you understand that certain, certain ecosystems do this all the time.
So we're actually in getting back to nature, we're not becoming actually less modern or less civilized or less technologic, technologically enabled. We're actually getting back to a, a different source of wisdom and practice that allows us to embrace all of this and be. Uh, and live better. And I, and I think you're giving people a means, um, a means to see it.
I'm really excited to see how this, how this evolves. But you're giving people a means to see it. In a way that I, I don't see a lot of other places that are doing, and this whole, you guys are leading an industry is pretty amazing. I know you're kind of limited on time, so I just wanna ask you like, you know, one last question before we, before we have to wrap up, and it's along that line, right?
I mean, you guys are in the middle of it, leading the charge and going in a certain direction, five to 10 years sounds like a long time, but if you go in the future, in the foreseeable future, Can you tell me something that like excites you, that success looks like in this regard where you'd like to see the movement, the upcycling of ingredients go that um, really says, you know, we've gotten
[00:38:45] Dan Kurzrock: somewhere so.
Thank you, Phil. It's been a great conversation and I'm very optimistic and very excited about where this is heading. I'm very inspired by a lot of the other, you know, peers and leaders in the, the space, you know, that, that are out there, you know, building great companies, Roundup cycling, and I think we've seen, uh, especially if you walk at a trade show like, uh, expo West, for example, this year.
Yeah, there was upcycling in almost, almost every aisle. The Upcycled Food Association, which is an industry nonprofit that we, along with eight other companies, uh, co-founded. And, you know, there's now a certification standard. There's, there's like 300 members of that organization now. It's, it's amazing. A lot of them are really innovative startups and that, and that's where we're today.
And I think that's, that's really heartening. But what I'm really excited about in the, in the foreseeable future, um, even in the immediate future, is, The ways in which conventional brands, you know, that is non upcycling brands, you know, see upcycling as an opportunity to create innovative new products.
Brand extensions, line extensions. Because when that happens, we're then talking about companies that are already operating at scale, right? That already have distribution. And if we help see that they can use innovation as a force for good. You can make a much bigger impact, you know, a lot sooner. And so we focus, you know, a lot of our work commercially on working with those conventional brands, whether it's a, a retailer like, like Kroger and their new upcycled bread, you know, that we're, uh, you know, that we, we developed with them and our, our supplying.
Um, or there's an English muffin company in the northeast called Stone and Skillet that just, uh, the speak is launching a, um, You know, a new product that's made with ours, they, they're not an upcycled brand, but you know, they get it and they care and they're, they created a new item that is bringing upcycled to life.
And so, you know, where we're going is, is whether or not it's talked about on the front of package. You know, we're gonna start seeing upcycled ingredients incorporated into new product innovation across menus and, you know, grocery store aisles and, you know, e e-commerce, you know, from brands that are maybe plant-based brands.
But, oh, instead of, uh, using a. Highly processed, you know, plant-based protein solution. Maybe they're using a, actually like a plant-based meat, minimally processed from cashew fruit, you know, and that's, that, that's upcycled and, and plant-based, right? So this is, upcycling has the potential to transcend a lot of the food trends and really, um, or maybe transcend or maybe like power them right from within, uh, whichever.
I think we're looking at it both ways. Um, tracks for me and I'm really excited about, about where it's going and, you know, feel very. Inspired to to play a role. A role in catalyzing that. Sounds amazing.
[00:41:20] Phil Dillard: And it, it seems like it's just starting because, um, you know, when you talk about upcycling and then you think about things like precision fermentation or you think of like vegan foods and, and all these other areas, you're just expanding the palette from which innovators can create.
And that's pretty exciting. So, uh, I wanna thank you again for making the time with us. I really appreciate you and, uh, um, really excited about seeing what's next for you.
[00:41:48] Dan Kurzrock: Yeah. Thank you so much for extending your platform to this, to this conversation. I'm super honored and, and privileged to be here and look forward to continuing the conversation from here with you and anyone else who's listening.
[00:41:59] Phil Dillard: Definitely, definitely. If you haven't seen the site, there's some really amazing stuff on there. So, um, take a look, um, check out some of the details in the show notes and join us again next time for, uh, the next episode of Thruline to the 4th Sector. Thanks so much, Dan. Talk to you soon.
[00:42:13] Dan Kurzrock: Thank you.
[00:42:16] Phil Dillard: Please take a moment to rate and review the show and join us each week for a new episode. Thank you for listening.
Phil Dillard: Thank you for listening to this episode of Thruline to the 4th Sector. I'm your host, Phil Dillard. If you enjoyed the show, please leave a rating and tell a friend. To learn more about the fourth sector economy, visit thrulinenetworks.com. That's T H R U L I N E networks.com. Thanks again, and we hope to have you with us in the next episode.