After a health scare in his life, Jason Karp, started to really study the food that he was putting in his body. That led him to start Hu, a better-for-you snack maker that recently sold to Mondelez. In his latest entrepreneurial venture, Jason is the CEO and co-founder of HumanCo, whose mission is to make living a healthier life easier. I sat down with Jason to learn about his plans for HumanCo, the launch of its first brand Snow Days, and why it’s so hard and confusing to live a healthy life.
Dave Knox: Your first entrepreneurial venture was Hu, a restaurant that evolved into a CPG company. How did Hu lead to HumanCo and what is the premise of this new venture?
Jason Karp: While it started as a restaurant, Hu quickly started to turn into a consumer packaged goods company because of the chocolate that we launched. The chocolate is a paleo inspired, vegan, no refined sugar, organic, chocolate bar. And frankly, we didn’t really know what we were doing. I was a professional investor. Jordan was a real estate person. But we approached the industry as outsiders. And we did a lot of research. We asked a lot of questions. We were very honest about what we did not know. We started as a family, meaning there were no outside investors for the first few years. We really had this idea of creating a new standard within chocolate and then ultimately snacking. As that started to grow, I was the chairman and largest and controlling investor until we recently sold to Mondelez.
I became fascinated with the CPG industry as an investor and as just someone who wanted to accelerate this movement of providing healthier products to more people and frankly making eating healthy less confusing. I started to become an angel investor and advisor and a board member of many other companies in the space. I had a blast doing it. I really saw how much value I was able to add. I ended up having a bunch of very successful exits and almost by accident, I built an ecosystem around the health and wellness and CPG community of things like R&D expertise, logistics, supply chain, ingredient sourcing, relationships with certain retailers, relationships with executives of public companies.
I realized that there was a lot more to do, given that my heart ultimately was always this intersection of entrepreneurialism with investing. I decided, at the end of 2018, to retire from the hedge fund industry, and created HumanCo. HumanCo is sort of my second act after Hu. The idea was to build a modern holding company that’s focused on a healthier living. A holding company in the investment world is what consumers know of as a parent company or a conglomerate, where it’s considered a master brand more akin to what Berkshire Hathaway does or what SoftBank has done, where it’s a combination of investing by buying companies or buying control of companies and then growing them and they’re all under one roof, and incubating brands from scratch like we did with Hu and we just did with a newer brand called Snow Days.
Many of the well-known consumer-oriented holding companies like Unilever, Procter & Gamble, and General Mills and made up of brands and products that were developed 40, 50, 80, 100 years ago. We want to build a similar portfolio but in health and wellness and do it with a much stricter standard so that everything under the HumanCo umbrella has the same set of standards. Each company, even though they’re independent and have independent brands, can actually share resources with each other and share know-how. And it will provide a benefit to the consumer in that if a consumer knows what HumanCo is, and they see the HumanCo brand stamp, they will know that this is a brand that they can trust, and they will know who’s behind these brands and they can feel safe that we have done the fanatical vetting around what’s in it, how it’s made, where it’s sourced and what it does for you as a consumer.
Knox: One of your first brands under HumanCo is Snow Days. What inspired that brand launch?
Karp: I have two children, a seven-year-old son and a 12-year-old daughter. I grew up as a kid of the ’80s. I grew up in the Northeast in a small town northwest of Hartford, Connecticut. And I also grew up on junk food. At the time, we didn’t know it was junk food and many children of the’ 80s didn’t know it either. I later discovered that I have a pretty significant gluten intolerance. I was frequently sick as a kid and I believe a lot of that was because I did not respect what I was eating. For the last 20 years, ever since I got over my bad bout of illness, I’ve had to be very restrictive. A lot of those comfort foods that I grew up with, that I loved, have been out of my reach, meaning I can’t eat them without knowing I’m going to feel sick. What I have found is that a lot of consumers today, from all demographics and all age groups, are getting more informed about ingredients and what goes into the products they put in and on their bodies. And the more you get educated on what is in these things, the scarier life becomes, and you have this feeling of vigilance and skepticism where you ask yourself, “How am I going to feel if I eat that?”
Now back to our new brand Snow Days. I remembered growing up as a kid, that moment when your mom came in or you’d see on the TV that school was canceled because of a snow day. You had this feeling of unbridled enthusiasm, of euphoria, freedom, and liberation. We noticed when we created Hu Kitchen, that for people who were celiac, immune-compromised, or just were really strict about what they put in their body, those people had that same reaction when they went into our restaurant. I wanted to replicate that feeling, which is why the brand is called Snow Days. My kids love pizza. I love pizza. My wife loves pizza. But there are not that many options out there that I think meet the standards of the way we like to live. So, we wanted to see if we could create a comfort food that set a new standard that has not been done before in frozen food. Snow Days is a 100% organic, grain-free pizza bite that is made with sustainably-farmed, grass-fed mozzarella. It has seven vegetables infused into the sauce, which you cannot tell and my kids certainly can’t tell, and it performs and tastes like the best pizza bite you’ve ever had. The goal of Snow Days is to be a frozen food comfort brand that sets a new standard in what consumers can expect. It’s important that whenever we’re developing products, we have something we call the kid test. I have a palate now that is used to healthy foods. So, I’m not the right judge. Kids, particularly my son, does not have a palate that’s accustomed to healthy food. So, I want to see, “Is this something a kid would eat if you told them blindly that it wasn’t healthy?” You just handed it to them and said, “Hey, try this.” For products like Snow Days, and certainly for products that we made at Hu, they always had to pass the kid test.
Knox: Snow Days launched just a few weeks ago. What did the pandemic change when it came to that launch plan for getting that business out to the market?
Karp: We starting working on Snow Days before the pandemic, but the pandemic really accelerated our motivation. Frozen food is a remarkable category that for a very long time has been demonized in the sense that there’s a perception that frozen food is inherently inferior, inherently less healthy. Ironically, freezing food is still the best technology for preservation. It also happens to be the cleanest and the safest. You can preserve significant nutrient density if you freeze food within a few days of it being edible. So, think of like, as soon as a fruit gets ripe, you freeze it. Like anybody, we’re very busy in my family and everybody’s looking for better convenience. I think the pandemic just accelerated that. I think the pandemic has reminded people that we want to make food at home for our families, but we don’t want it to be cheap crap processed food. The pandemic really just forced us to lean into our Snow Days business plan even harder.
Knox: HumanCo will launch brands like Snow Days but also invest or acquire brands. What are you looking for in order to bring a brand under the HumanCo umbrella?
Karp: The most recent brand we did that with is a plant-based ice cream called Coconut Bliss. We bought Coconut Bliss just under a year ago. It’s a perfect example of what we’re looking for. We are first and foremost looking for an excellent product that meets our standards and our guardrails. We’re also looking for elements of real authenticity. Coconut Bliss was a family-owned brand from a third generation farming family in Eugene, Oregon. I always thought it was the best plant-based ice cream that was out there. It had grown pretty significantly. It’s the second or third biggest plant- based ice cream out there. They had a significant focus, well before it was cool, on plant-based, on sustainable farming, on fair labor practices and overall sustainability for the planet. They were doing this before anyone had asked them to do this, because this is what they believe, and this is how they live their own lives. That’s super important to us, because right now we’re in a time when a lot of people use this term greenwashing, which is that they make certain claims or say certain things about their products to appear virtuous, even though there’s no virtue behind the product. So, authenticity is a hugely important principle behind the things that we look at. What we’re really looking for are brands and products that have done a very good job getting to a certain point, but need help to get to the next level. This could be help in marketing, help in distribution, help in branding, or help in innovation and R&D. Coconut Bliss checked all those boxes. It’s a terrific family who is behind it and they are now our partners in the brand.
Our first three brands in HumanCo are all food companies. In addition to Snow Days and Coconut Bliss, the third one is a brand called Monty’s, which was a New York-based, plant-based cream cheese, and plant-based butter company. I eat a lot of plant-based stuff, and easily Monty’s was the best plant-based butter and cream cheese I’ve come across. We’re always looking for simplicity and real ingredients. We are also at a time right now when there’s a lot of innovation happening with biochemistry, what they’re calling synthetic biology, where a lot of companies are raising lots of money and applying technology to food. That is actually against my principles in many ways.
When you look across our products, we believe in evolutionary principles. We believe in using foods that are as close to nature as possible, not using chemicals or things made in a laboratory, that we have no idea what they do for human health over a 10 to 20 year window. And so when you look across our brands, they all have these attributes and that is what we will continue to look for.
Knox: While you are starting with food, you mentioned that HumanCo is a business focused on health and wellness. How to envision your portfolio growing in this regard?
Karp: We describe HumanCo as anything you put in your body, which you can think of is food, beverage and supplements and nutrition. But it is also anything you put on your body, which you could think of is things like personal care, things like soaps, lotions, hair products, beauty, and household products. So, things that you’re interacting with on a daily basis as part of your life. Then, we have this third bucket that we call human performance technology. As an example of that, I was a series A investor in Oura Ring, which is a ring that you wear that helps you measure a lot of very key attributes of your daily life, including heart rate variability, pulse, and how you sleep. It is a remarkable device. But the idea is that within the technology, it’s part of a healthier living ecosystem. What we’re doing, and it’s the overarching goal of HumanCo, is to just make living a healthier life easier, because it’s just too hard and it’s too confusing and nobody has the time to figure it out on their own. So, we’re trying to really accelerate that process.
Knox: Fast forward five years from now, where’s HumanCo going to be?
Karp: The short answer is that I don’t know. I get asked that question quite a bit. My partner, Ross, and I, who were both professional investors for 20 years, we take this approach of maximizing optionality. I have invested in enough businesses, had enough successes and failures to know that when you’re in hyper growth mode, even looking a year out is not predictable. You have to have some strategy around your guardrails of what you will do and won’t do, but you also have to be prepared to handle what gets thrown at you, good and bad. We don’t have a specific revenue target five years out. We just know that what we’re doing today is really exciting. We’re getting a ton of opportunities on a weekly basis and we intend to keep doing what we’re doing. We plan on buying many more companies. We plan on significantly investing in the companies we already have. I think my only goal in HumanCo five years from now is having HumanCo be a household name that represents trust and represents a new standard of quality within the health and wellness space, so that consumers can feel relieved and lower that vigilance of, “Who made this? Why did they make it? Do they have an ulterior motive? Are they out to get me? Is profit the first motive?” And I think that for us is probably the only really important goal five years from now.