Late last Friday I got a call from the communications team at Hampton Creek, the folks who are using food science to upend the factory farm.
Founder and CEO Josh Tetrick wanted to talk about recent rumors that he’d been a victim of an attempted coup. It wasn’t quite as dramatic as that, but his tale did include a forensic email investigation by a team of former FBI, CIA and NSA. The investigators uncovered systematic efforts to influence the corporate governance of Hampton Creek to strip his power. And he put a stop to it. Three employees were let go after the forensic analysis uncovered their attempts to limit Tetrick’s control by modifying the bylaws.
Corporate governance tales don’t usually make Law and Order’s “ripped from the headlines” reenactments. But the black-and-white bylaws, charter and board structure of a company are heady stuff for sustainability practitioners. They are key to maintaining a company’s mission — or, as Ben and Jerry found out, losing it. Like the case of Ben and Jerry’s, what happened at Hampton Creek wasn’t as cut and dried as do-gooders versus bankers. Instead, it was (and continues to be) a matter of how far to carry a mission and when to cash it in.
Hampton Creek has made quick financial success, reaching a $1.1 billion valuation with egg free products in over 20,000 locations after only six years. To really move the needle on our broken food system, they need to go bigger. Way bigger. An acquisition by a company like Kraft/Heinz could arguably do a lot of good for a lot of chickens. But would it eliminate the factory farm? Probably not.
“We will factually not achieve our mission if we don’t see the end of the factory farm. I know that to be true.” Tetrick explains forcefully. He’d rather bet the proverbial farm on that long term goal than see the traction and momentum he’s gained thus far slow or become derailed.
It’s not sell it to a large publicly traded food manufacturer. It’s not to keep it as a nice little private company. The only point to doing this is to try to increase the probability that we solve this challenge, we achieve this mission before we’re dead and gone. That’s what animates everything… If you gave me 100% chance right now, if you said ‘All I have to do is say yes’ And we’ll get acquired now for $2.1 billion dollars [or a billion over current valuation] and we’ll be integrated in to a larger food manufacturer, and we lose the ability to control this long-term mission. I would say, ‘No thank you.’ I’d rather a 25% possibility of really doing something more.”
That’s why the efforts to change the corporate governance to — presumably — limit his control stung so hard.
There have been a handful of different attempts over the course, really, of the last eight to 10 months, to change provisions in our bylaws and our voting agreement and the company’s charter. Provisions that each one of them, might seem benign, maybe, but taken together, and all pushed through, they would result in a world that’s much different than the world that we have today.
That world, as the Guardian reported, would be one where control was “hand[ed] it to investors.” Luckily for Tetrick, he’d taken the most “principled suggestions” from a group of mission-based company founders, investors and activists in animal welfare, environmentalism, and global poverty to tie up the corporate governance in terms of bylaws, charter and board structure. His goal: to protect the long term vision. Efforts to derail this structure were uncovered before damage was done. As a result, several board members have agreed to step away from active management into an advisory capacity. Tetrick explains his need to make this transition. ” Ensuring our employees maintain their ability to direct our mission is as critical as the technologies we deploy and the products we launch. We will always protect this principle.”
But the incident was close enough to shake Tetrick and give him the incentive to double down on mission and long-term thinking.
Maybe as a co-founder, I have a different time horizon than most. Today is really important, and next year is really important, but I’m trying to imagine a world, if I’m in a car accident 17 years from now, what happens to this place?
He’s been strategic, working with investors like Mitsui, a Japanese conglomerate which has been around for 120 years and the Heineken family who have been investing for over 80 years. These investors understand that big change doesn’t happen overnight, in a quarter, in a year or even a decade. And they are willing to wait.
Upending the factory farm “is hard and is a big bet, and it won’t be accomplished by selling ourselves, with all respect, to Kraft-Heinz or to any other food manufacturer. It will only be accomplished by taking the big bet that the people in this organization can do it and will direct the long-term nature of the firm, and we’re going to go for it,” he posits.
I applaud Tetrick’s vision and gumption, but our conversation left me wondering if a corporate entity, which will always have a bottom-line pressure, and which can only focus on a few things at a time, is the best-structure for a goal this audacious. Maybe he is better off selling for a billion dollars and starting a foundation to address the problem of factory farms from many angles. Just look at how The Ellen MacArthur foundation is transforming the circular economy from a pipe dream into a reality with a series of strategic investments. By investing in many different initiatives, the foundation is able to bet on a number of possible solutions simultaneously — arguably a faster, more effective path to change.
However, whether he’s chosen the best path or not, the man is still standing. Given the recent efforts to strip him of his power, and the ease with which he brushed them off his shoulders, I wouldn’t bet against him.