S5 Ep4: Microbial Oil— Solving Global Issues with the Tiniest Organisms on Earth with Lars Langhout
“Everybody gets opportunities. It’s a matter of recognizing them.” — Lars Langhout
Palm oil has been causing havoc in the food industry for years. It has been a major cause of deforestation, with the production causing large areas of forest to be cleared to make way for palm oil plantations. This has been a major contributor to climate change as well as animal cruelty and exploitations.
As a result, many companies have pledged to remove palm oil from their products. But palm oil is also a versatile and cost-effective ingredient that is hard to replicate. With no viable alternatives, the food industry has been at a standstill, unable to provide its consumers with the products they desire.
However, recent scientific discoveries in the field of food technology have paved the way for the first truly palm oil-free food products. The most exciting thing about plant-based food is not the taste or texture, but the fact that it has the ability to revolutionize the food industry by replacing the need for palm oil in food production. With these products finally on the market, the food industry has a new direction and purpose.
Founded in 2020 by Lars Langhout, NoPalm Ingredients seeks to create a better alternative to palm oil. Its mission revolves around three critical goals— local, circular, and sustainable. Thanks to their non-GMO and vegan-friendly microbial oil, the need for palm oil is replaced, not only in the food industry but also in its use in cosmetics and detergents. At the Fi Global Startup Challenge held last year, NoPalm Ingredients was named the Most Innovative F&B Ingredient or Processing Technology.
In this episode, Lars explores the scope of the problems caused by palm oil production and the future with no palm alternatives. He talks about what microbial oil is made from, how it is processed, as well as how it can be applied in different industries. Justine and Lars also talk about the steps needed to make an impact, recognizing opportunities that come, determining the right time to make a move, ideas on raising funds, and the new trend about alternative fats.
Connect with Lars:
After a career in strategy consulting, Lars took the plunge to have a positive impact on the climate. Inspired by the likes of Irving Fain (Bowery Farming) and fellow CBS alumni Ethan Brown (Beyond Meat), Lars founded NoPalm Ingredients to replace the need for palm oil altogether. As CEO, Lars is responsible for all commercial aspects of NoPalm Ingredients
Episode Highlights:
01:16 The Issue with Palm Oil
07:08 Prerequisites to Making an Impact
11:00 When to Make a Move
13:46 The Future with NoPalm Oil
16:01 Raising Funds
20:15 New Trend— Alternative Fats
22:00 The Microbial Oil Advantage
Tweets:
Food producers have long used palm oil to preserve and enhance the flavor of their products. But over the past few years, consumer awareness of the impacts of palm oil production has led many companies to search for more sustainable alternatives. Join @jreichman and NoPalm Ingredients founder, Lars Langhout as they talk about how this revolution is happening today! #podcast #entrepreneurship #socialgood #inspiration #impactmatters #NextGenChef #EssentialIngredients #NoPalm #sustainability #deforestation #cliamtechange #animaldeplacement #palmoil #microbialoil #alternativeprotein #alternativefats
Inspirational Quotes:
02:46 “The palm oil plantations are monoculture, which basically means endless rows of palm oil trees, which is not a good habitat for animals. And it happens that the rainforest is the habitat of a lot of endangered species. So, that’s a big issue as well.” -Lars Langhout
03:11 “A lot of the local population involved in the production of palm oil is pressured by large corporations owning those plantations.” -Lars Langhout
07:56 “I wanted to do something on a crossroads of having a commercial role but also making a real impact.” -Lars Langhout
12:50 “Everybody gets opportunities. It’s a matter of recognizing them.” -Lars Langhout
14:40 “Our microbial oil has the advantage and the technology is widely applicable… If we can pull that off, scaling our technology is limitless.” -Lars Langhout
17:58 “The hardest challenge was convincing people that this is possible on an industrial level… because not everybody is familiar with the technology and what’s possible.” -Lars Langhout
Transcriptions:
Justine Reichman: Good morning, and welcome to Essential Ingredients. I'm your host, Justine Reichman. Today with me, I'm very pleased to introduce Lars Langhout, CEO/Co-Founder of NoPalm Ingredients.
Welcome, Lars.
Lars Langhout: Thank you. Thank you for having me.
Justine Reichman: I'm so pleased to finally arrive here with you. We had a little trouble getting here, but we've managed time differences and challenges in life. I'm so glad that we're finally able to get here, so thank you.
Lars Langhout: Likewise.
Justine Reichman: So Lars, I'm so excited to learn a little bit more about what you do and introduce you to our community so they can learn a little bit more about NoPalm Ingredients and about you. So before we get off into our conversation, I always like to have our guests just to introduce themselves and talk a little bit about what it is they do. And for you, I'd love for you just to introduce you and what NoPalm Ingredients is.
Lars Langhout: Yeah. I'm a large loan out CEO and Co-Founder of NoPalm Ingredients. Born and raised in the Netherlands. By education, I have a business background, my MBA at Columbia Business School.
Justine Reichman: In New York.
Lars Langhout: Yeah.
Justine Reichman: Oh, so you travel. Okay.
“The palm oil plantations are monoculture, which basically means endless rows of palm oil trees, which is not a good habitat for animals. And it happens that the rainforest is the habitat of a lot of endangered species. So, that’s a big issue as well.” -Lars Langhout
Lars Langhout: And basically, I had a career in strategy consulting, so I work domestically and abroad. But I also wanted to have more of an impact from a sustainability perspective, specifically. And in 2020, basically, in the COVID period, I decided to quit my job because I was pursuing an entrepreneurial career. And in the meantime, I met my Co-Founder, Jeroen Hugenholtz, who back then was a professor at the University of (inaudible) in the Netherlands. And this is a University focused around biology, chemistry. And in our discussions, we identified the opportunity there is for NoPalm Ingredients. Because what we're doing with NoPalm Ingredients is we're trying to solve the palm oil problem.
“A lot of the local population involved in the production of palm oil is pressured by large corporations owning those plantations.” -Lars Langhout
Palm oil is bad because of a number of things. First of all, with the production of palm oil, a lot of carbon emissions are released in our atmosphere because rainforest is being cut down or burned down which releases a lot of these carbon emissions. But also with the refinement and the transportation of palm oil across the globe, there are a lot of carbon emissions involved. And secondly, the palm oil plantations are monoculture, which basically means rows and rows, endless rows of palm oil trees, which is not a good habitat for animals. And it happens to be that the rainforest is the habitat of a lot of endangered species. So that's a big issue as well. And the third thing from the palm oil issue is that a lot of the local population involved in the production of palm oil is also basically, yeah, pressured by the large corporations owning those conditions. There's a lot of intimidation, a lot of land grab. So there are a few number of things that qualify palm oil as a really big issue globally. So what's the solution? That's what my Co-Founder came up with is microbial oil. And it's basically an oil we create by fermenting waste streams. We don't like to say waste streams, we prefer to say side streams. But I always need to introduce this a little bit always for people like, what are you talking about what side streams? But in the further discussion, I continue with the sidestream. So that can be anything from potato peels, rejected vegetables, brewer spin grain, as long as it contains sugars, fatty acids or alcohols. One of the benefits of our solution, it's widely applicable to side streams.
For example, in the Netherlands, but it can be US based side streams, can be Japanese side streams. And what we do is we ferment those side streams with polar genius yeasts, and that yeast, like brewing beer, eats the sugars and converts it into oil rather than alcohol. And then we squeezed out the oil which brings us with an oil that has similar characteristics to form oil, and therefore can be replaced as an ingredient in food, cosmetics and detergents. And this is a wonderful solution because our oils can be also widely applicable. I mean, we can have certain fractions of the oil so that it can be used in different kinds of products. And then a third thing, it's already quite circular what we're doing because we're using the side streams, but 90% of the feedstock we put into our process is a side stream from our process. But the benefit we have is that it's worth more in terms of value, because protein is one of the byproducts of our production process. So at the moment, it's mostly animal feed companies buying the side streams, and we can sell that back to them. But in the future, and we're already seeing that happening, other companies, mostly startups at the moment are interested in our byproducts.
Justine Reichman: I just want to break this down so that we can have a little bit of a conversation and really understand your story, so that people can see what inspired you. This is amazing. You've built this impact driven business to solve a problem that gives back to the environment and allows people on a daily basis to use products for themselves that are better for them. And you started off at Columbia Business School in New York, where I'm from, so I always love to hear people's experience on that. And you found your Co-Founder back in the Netherlands when you were consulting, doing strategy consulting, is that correct? Were you at one of the big agencies like Bain, or PwC, or something?
Lars Langhout: I worked at Strategy&, which is part of PwC.
Justine Reichman: Okay. I used to work at PwC a hundred years ago. You're in a completely different world. It's a fun world. I liked working doing strategy consulting, but it's a completely different animal. I'm curious, when you were at Columbia, I know that they do degrees in sustainability, was your degree in one of the sustainability master's programs? Or was it strictly a business degree, and it wasn't not part of that sustainability program?
“I wanted to do something on a crossroads of having a commercial role but also making a real impact.” -Lars Langhout
Lars Langhout: It wasn't part of the sustainability program. So it was your regular MBA, basically. But back when I was there in 2015, 2016, there were a lot of things already going on around the Green Business Club and speakers from companies that were having a real purpose at the core of their business. And I remember Ethan Brown from Beyond Meat speaking at Columbia, back then, Beyond Meat wasn't that popular or known to the wider public, so was quite a small audience. But his story made a profound impression on me, basically the journey he had and where he got to. And that's one of the moments during my MBA career at Columbia that I realized that I wanted to do something on a crossroads of having a commercial role, but also making a real impact.
Justine Reichman: That's wonderful. Because I wonder, when people are getting their MBAs and they're studying to do these different amazing things, what the crossroads is for them to be able to, or make that decision that they want to create an impact driven business.
Lars Langhout: Yeah. To be honest, when I applied for Columbia, I had a real different journey in mind. I wanted to focus on retail and consulting, and that went overboard within the first two months. Stereotypical MBA story, but meeting so many inspiring people, both classmates, professors, speakers made me realize, and the time also to reflect made me realize that I wanted to have a real impact and be really purpose driven. So that was a nice experience to undergo.
Justine Reichman: And so from Colombia, you then went back to the Netherlands where you then got this job. And so you got this job, and it wasn't necessarily purpose driven, was it?
Lars Langhout: No, it wasn't. But I was basically returning to my employer.
Justine Reichman: They sent you for the MBA, yeah?
Lars Langhout: Yeah. It's part of the career trajectory at consulting firms in the Netherlands, at least the larger ones.
Justine Reichman: And so when you came back and you realized that your future was going to be different, and that you really wanted to change, how did you approach them or your next steps?
Lars Langhout: When I decided to return to the Netherlands, I also felt that I needed a few years of more experience before I could found a business by myself. I didn't feel ready yet. So what I wanted to learn is to learn the industry to get to know the industry a bit better in order to and also lead teams. And that was something that I hadn't done prior to my MBA, not really. And when I returned, I focused on the consumer retail sector within our firm, which basically meant that I was working for food and beverage companies all the time, both domestically and internationally. And I think that helped me shape my understanding of how these businesses work, how the industry works, who the power has in the value chain. And it also provided me with a great network of companies that I am still in touch with and potential customers of our oil, which I think is crucial in the steps that we're taking at the moment.
Justine Reichman: Yeah. And once you realize that and you made that pivot, if you will, or that change that intentional change so that you could then build the funnel for your future, how did you make that final leap to now be where you are today?
Lars Langhout: I think the COVID situation with the lockdown made me reflect and realize that this was actually a blessing in disguise. I mean, don't get me wrong. COVID has been a really nasty experience for a lot of people. But to me, it was a period of rest because I was traveling all the time. I was basically only at home on weekends. And now, I was there for the entire full week. So let alone giving up traveling provided me with a lot of time to reflect and realize that I did have the experience I set out to get when leaving Miami returning to the Netherlands, and also giving the news around climate change and publications. It really felt to me that this was the right time to make the move. You just mentioned that it seems years ago that you've worked at PwC. For me, it's the same--
Justine Reichman: Seems like 2000, by the way. It was years ago.
Lars Langhout: It was years ago, but it also already feels like--
Justine Reichman: Yeah. And why palm oil? How did that come to be for you? Or no palm oil, I should say.
“Everybody gets opportunities. It’s a matter of recognizing them.” -Lars Langhout
Lars Langhout: No palm oil. Well, throughout my years, I've traveled the world as well. I've been to Indonesia, I've seen the palm oil plantations, and that was also a profound impression I had. And when talking to my Co-Founder about the potential opportunities microbial oil has and why it's a good replacement for palm oil, it was, basically, math was quite easy. This was the opportunity, and that's also a thing I learned in my MBA. You need to recognize opportunities that come by. Everybody gets opportunities. It's just a matter of recognizing them.
Justine Reichman: Yeah, it is. And it's also timing. It's seeing what's in front of you. It's being open to change because things change and evolve. And it's about timing and being there in that moment.
Lars Langhout: Definitely, definitely.
Justine Reichman: You have this no palm oil, how do you see the future? What do you see for your future with no palm oil?
“Our microbial oil has the advantage and the technology is widely applicable… If we can pull that off, scaling our technology is limitless.” -Lars Langhout
Lars Langhout: So we're at the moment still at an early stage as a company. We've been opening up our lab in January, our own lab, because we were doing work at the Laughing University. And this year, everything is centered around scaling up to industrial levels. We've basically mapped out our entire journey with milestones to get there. But like the mid to long term ideas that next year, we're gonna raise a new round of funding and build a pilot factory. And then a year and a half to two years after that to build a larger factory. And also worth mentioning is that we're thinking about applying to different business models. So the standard classical model where you build a factory, make a product, sell that product, ship the product. But our microbial oil has the advantage that the technology is widely applicable, and it's widely applicable in products as an ingredient. And we want to use a licensing model to work with the larger producers of food and cosmetics to use the sidestream on sites that they have in their production process, basically their waste, and convert their waste on site into our oil that they can use as a replacement for palm oil. And that would be to us the Holy Grail. Because if we can pull that off, then scaling our technology is limitless, basically.
Justine Reichman: It sounds amazing. When you kicked off your company, was this something that you self funded? Initially, you and your Co-Founder, did you go for friends and family? How did you finance this originally, because it seems like building a lab can be a very expensive endeavor. Our show, this show is for founders, researchers and people building a better for you food business. So I asked these questions, because I know that people listening will find this very inspiring. And it's really meant to be able to give people access to the information so that as they're building their businesses, they can make more informed choices.
Lars Langhout: For sure. So what we did is partially self funded. But the larger chunk we did, when we started raising money, we started with friends and family. And that really helped set a base for other external investors to invest in us. And then we reached out to a limited number of venture capital firms.
Justine Reichman: So you went institutional.
Lars Langhout: Yeah, we went institutional. So we had several conversations and then decided to go with three firms, Green Creators, Icon Capital and Future Food Fund. And then the remainder that we've raised was a financial loan, basically, provided by a Dutch bank that invests or loans money to startups like ours in the early stages. And at the moment, we're also trying to get some grants in the Netherlands that are focused on circularity sustainability. But that would be an add on that would allow us to accelerate our progression. But it's a tough journey, especially the first race is a hard sell. Especially in biotech, often you don't have a real product yet. The benefit we had was that my Co-Founder already did this at university, and we had a small sample that at least we could show to our investors, what it was, what it is. And also the fact that he was a professor at the University of Laughing, he still is at the University of Amsterdam, also provided the credibility we needed for our investors that actually knew what we were doing rather than just simply having an idea without any material progression.
Justine Reichman: What would you say the hardest thing or the greatest challenge you had was when you went out to go raise money?
“The hardest challenge was convincing people that this is possible on an industrial level… because not everybody is familiar with the technology and what’s possible.” -Lars Langhout
Lars Langhout: I would say the hardest challenge was convincing people that this is possible on an industrial level. Nobody's done this before. But there are multiple companies going at this always from different angles in terms of the reason why they're doing this, how they're doing this. But we're the only ones using waste streams, basically as an input. And he had to validate that, and we already knew. But within these discussions, we made the companies validate this with industrial experts. Because when you're meeting with venture capital partners, they mostly don't have the in-depth experience or expertise to ask these super technical questions. So you very quickly moved to a phase where they are involving their own experts, and I think that was the biggest challenge because not everybody's familiar with the technology and what's possible.
Justine Reichman: What do you think sets you aside to make it possible for you to raise money? What do you think was your biggest asset?
Lars Langhout: Me personally?
Justine Reichman: Yeah. All right, your vision?
Lars Langhout: Well, we were raised in the Netherlands, which is a completely different environment in terms of startups and the entire startup ecosystem. When looking at the US, I always think races are on steroids. If I look at the amount of money raised in the US compared to the Netherlands, if you would have two identical companies in the US, you would raise at least tenfold on what you would be able to raise in the Netherlands. But I took some of that with me from New York to Amsterdam, and I'm dreaming big. So I'm not the kind of guy that wants to take it step by step. I painted a picture, a vision of what we can do, what we can achieve and what we need to achieve. And I think that really helped our discussions because I was not talking about this year or the next step. I had a real clear path of where we're going in the next 10 years rather than the next 24 months, basically.
Justine Reichman: So if you look at the food industry, what do you see? What's new? What's next? What do you see that's new and innovative in the space?
Lars Langhout: So in terms of trends, obviously, alternative proteins are front and center at the moment. But the next trend is alternative fats, because all these plant based alternatives need protein, that's for sure. But they also need alternative fats. Because when we're focusing on sustainability, you can state that, hey, I have this plant based burger, but I'm still using a highly polluting product like palm oil as an ingredient. And there are all kinds of companies now working on alternative fats. And I think that's going to be the next hot topic in a year or two from now.
Justine Reichman: So before we wrap up, I just want to ask you, there's a lot of companies out there that make palm oil, that makes Sustainable Palm Oil that talk about how they work with deforestation. I mean, there's a company called Nutiva. Are you familiar with them? Can you talk to me a little bit about them? They say that they're doing great things so I'm just curious, what are your thoughts on that?
Lars Langhout: I don't believe in Sustainable Palm Oil. It's a bit strange. You've already cut down huge amounts of rainforest and burned it down, and then claim that you're not going to cut down anymore, and therefore it's sustainable. I'm oversimplifying it a little bit, but that's what it is. Because it's not only the sustainability part, it's not only cutting and burning, burning down rainforest, it's also refining oil because they need it, they need to use a lot of chemicals to make this work in food and cosmetics. And secondly, you are still transporting it from Indonesia, to the US, or to Europe. And there's nothing sustainable about that. So if I compare that with our alternative, which is a local alternative, at least in my vision, I envision that we have multiple factories around the globe, also with customers so that you create or grow the oil on site, making sure that you don't have any of the transportation anymore, making sure that you don't have to cut down or burn down rainforests anymore. And also the refinement is different because these companies use chemicals to make the palm oil tasteless without a smell. We're using mechanical extraction, and the fermentation process allows us also to play around with the flavor. So we're going to work with our customers to see what's the flavor we actually want. You might not even want a flavor list of ingredients. If you're adding additives like an orange flavor or anything, we can work with that.
Justine Reichman: Wonderful. Lars, thank you so much for joining me. I really know you, I love learning your story, and I love learning all about NoPalm Ingredients. So we look forward to continuing the conversation, following your journey and learning all about what you bring to fruition as time goes on.
Lars Langhout: So looking forward, Justine. Thanks for having me.
Justine Reichman: Great. Thanks so much for joining us at Essential Ingredients, and we're here every Tuesday.
