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Nicolas Hartmann is the Co-Founder and Managing Director of Vly. Based in Berlin, the FoodTech startup aims to disrupt the dairy industry by developing novel alternatives using food science, fermentation, and data. Nicolas holds a Master’s degree from the University of Oxford and is passionate about a vegan lifestyle.
Transcript (Semi-automated, forgive typos!)
John: Nicolas, welcome to the show.
Nicolas: Thanks, John. I'm happy to be here.
John: It's great to have you. Let's start off with your background, how you ended up in the food industry. I know your background in nutrition. Maybe you can take us through your pathway into the field and how it is that we're talking together today.
Nicolas: Yeah. I'd love to. I always say there are three pivotal moments in my life that brought me to where I'm today. First was my youth of playing basketball. I was playing in the German youth national team. It was my big dream to be the next Dirk Nowitzki. But at some point, unfortunately, I had a pretty dramatic injury and that ended my career. And that basically brought me pretty low in life. I tried everything and nothing really helped. But in the end, it showed me kind of one thing and that was I needed to look a bit more holistically at things because what finally got me out of this injury was like a holistic healer. That person kind of looked at my body as a whole and so I was way too tense. My back was not right. My shoulder was not right. And then my elbows bursted. But the problem was not really the elbows in the first place. It was like all the other things. That was the first pretty pivotal moment. The second is that my parents, on my mom's side. They used to be farmers. I was working in an internship in a private equity company, and I was very interested in eating healthy. So I told them, hey, we have to look at all these new organic brands. It's going to be like a new big company that brings them all together. So we went to the site where they produce organic milk in Germany, and I thought, this is like top 10% in the world, probably from the quality standpoint. And I was shocked, like I saw exactly what you see in all these videos, right? The inflamed bags of the cows that they were overweight that they couldn't really walk the feet, the animal feed. And I realized, wow I always thought this was my healthy food, and then I realized no way I now believe that this is good for anyone, not for cows but also not for myself. So from that part onwards, I started my journey towards veganism and figuring out where does my food comes from, how is it being produced, I was visiting farms and really trying to just understand what's going on. But then from there, I finished my Master's in Oxford where I studied financial economics. Started working actually in Blackstone in London in private equity, and basically the opposite of what I was standing for. Right? I was personally being really passionate about veganism and going to all these events. All we did in my first year was like, we bought a cigarette filter company, and I realized this is a pretty big mismatch. So I tried to go kind of further into what excites me. And first I did like an apprenticeship as a nutritionist. So I kind of just while working, I did it on the side. So I worked with some former friends of mine that were pro athletes and saw, like how are they eating today? And then that excited me a lot. So I went one step further and did a second master's degree in micronutrition and regulatory medicine and fascinated me how much potential we have in our body really if our metabolism is right. And then it really clicked with me when I thought, like, wow, this is what's all possible with these athletes and with perfect micronutrition and everything. We have the general population which in Germany, you eat white bread, butter, and jam and that's your breakfast. And then I'm like, no wonder that people don't start with like energy thriving into the day. And yeah so this really got me kind of hooked on this journey. My last station before founding Vly was that I worked in a management consulting firm and I was consulting quite some CBG companies and then one of my last projects should be for a big dairy company selling milk powder to China as a growth market for infants formula. And then I really thought, like, yeah, I mean selling milk powder from European cows to China where most people are lactose intolerant as a growth market. It's really not something I believe in was the point where I was like, okay, I need to change this. And that's why we started Vly to really create better dairy products from plants.
John: So can you get through a little bit then that process so you're the co-founder, so how did you meet your founder? What was the kind of story there?
Nicolas: We are three founders. One, Niklas was my best friend in Oxford, so he went on to do management consulting afterward and he covers a lot of the sales topics now for us. The other one was Moritz. I met Moritz in Berlin at a food tech event. Moritz has a very interesting background. He used to be a Michelin Star chef before. He worked in fine dining for five years and then he went back to the university. A little bit like I went back to finding my passion there and studied food science and food technology in Berlin. And that's also where we started at the beginning of Moritz and me, we both went to the lab here in Berlin. They rented us the lab and that's where we started, basically with our first experiment.
John: Fascinating. When was that? How many years ago was that you all got started?
Nicolas: Like three years ago. March 2018, I quit my job in Amsterdam and stand up and work full time for Vly.
John: Okay and so you have two lines. Is that correct? Can you take us through kind of your offerings? What are the product offerings that you all have right now?
Nicolas: Yes. Our first product offering is a milk alternative that we have Barista SKU and unsweetened SKU and an original SKU. These are currently stocked in around 10,000 POS in Germany as well as sold online. And now we launched our second product line which is a cool drink. It's a little more kind of a to-go format. And then the future product lines will be more around fermented products so we've been working basically for over two years on the fermented side of dairies so you can think of yogurt, quack which is a traditional kind of Greek yogurt German product, the cream cheese. There's a lot of stuff possible when you think about fermentation.
John: And what are the main ingredients that you're working with? I know, generally speaking, aren't adding sugar. Is that correct? I mean, I know you're really interested in the nutrition side. So what are the kind of key components of these drinks?
Nicolas: So the key component is protein. We work a lot with pulse proteins in general. And we decided for the milk on pea protein and that's kind of our core ingredient and the core where we beginning worked around was how can we fight these off-flavors that are usually characterized as beanie, bitter, grassy. And these are all things you don't want to have in your milk. But on the other hand, we want to have milk that has more protein than the animal version because we don't want something that's worse than the animal version, but that's better. So that was really the challenge on the protein side. And then, as you mentioned, the next one was the whole sugar short-chain carbohydrate topic. I'm a strong believer that there is way too much sugar added to all kinds of products. That's been something that's very important to us that we have a very low amount or no amount at all of short-chain carbohydrates in our product. So that's why we don't use sugar in any of our products and if, for example, in the Cacao drink where we use dates, it has just about 70% less than what you see otherwise in industry. So very low quantities.
John: Yeah, that's fascinating. So you started with milk, and that was the reason you picked milk? Is that just because of your history or what motivated you to start specifically with a kind of vegan milk?
Nicolas: Well, I wanted to start with quark. Quark is like a hard product. So I think most people in the US, I think don't know quack. At least when I lived there no one ever was like, what's this thing quack? You can imagine Greek yogurt, it's like thick Greek yogurt. That's really thick. It has twelve and a half percent of protein content, no fat, and it's kind of like it started out as a product for like, bodybuilders and so on. But now it's really kind of just like a healthy dairy product. And so this is something we always wanted to crack and I think that's why it made it was so logical for us to start with the proteins because, in order to reach 12-13 percent protein content, you need to really know your proteins. Otherwise, the thing is not going to taste any good. Right? So that's really kind of where we started. And then we realized a little bit getting into the food industry, starting with a short shelf-life chilled product would be breaking our neck basically, right? Because we always knew we didn't want to do something like small kind of manufacturer like a small kind of thing. But we wanted to really change the industry. And so if we think about the billions of liters of milk, the billions of yogurts that are sold, we know we need to go big. But of course, with a short shelf-life chilled product, you can't go big immediately if you don't have all the shops because then you basically produce a lot which you have to trash, and then you're basically out of money. So that's why we went into milk because plant milk, they are long shelf life. So they usually shelf-life of twelve months. And we started with that. And now we're transitioning to the chilled products because now we have all the distribution. We have all the logistics running and so it made more sense for us this way.
John: I got a bunch of questions for you here. Part of this is just personal interest, because, for one thing, it's really neat to me that you have come into a really established area where there's an established way of doing things. And it seems to me you have at least kind of three things going for you, right? Because you've got operational efficiency, maybe from your economic background. But it seems like you're very efficient operationally. You've got the vegan, plant-based. Sort of angle, if you want to call it and focus the lifestyle focus, right? And then you have a chef that is helping with the development. Now, how has your experience been to what extent are you learning from traditional practices within the food industry? Adopting some of them? I mean sensory is obviously a topic that's really interesting to most people on the show. Like, how much of what you're doing is still guided by a kind of expert opinion versus is there kind of day-to-day quality control where you're using more typical sensory methods? Where are you on that continuum in terms of what would be considered the industrial standard at a food company for how sensory program works versus how you're still operating, maybe as a startup with your expert opinion informing a lot of the judgment, how much of the traditional food industry are you adapting to your practice versus how much are you just creating your own path?
Nicolas: So I think when it comes to production, operations, logistics, sales, and distribution, we're pretty traditional. And when it comes to marketing and product and R&D, we are quite different. And so I think when it comes to product, it really started even in our earliest iterations like we and you can't tell this anyone, of course. But now you can is when we started, we took literally the prototypes we did and we just went to a coworking space. We sat there with literally like two glasses, A and B, and we just literally did consumer tests every day. We're just sitting there next to the coffee machine and just doing our work. Whenever someone came by, they would say, I prefer A or I prefer B because of that and just running very continuous A B tests and that was really how, before launching the milk, we did 400 iterations of different versions against each other to really come to one then that one against basically the benchmark which was the best selling milk at that point in a blind taste. Then we knew we were onto something and we are ready to launch. And so this is kind of how it started and this mindset we still want to keep. So now we have a tested community of over 3000 testers, for example, that we can just ship the product. With covid, that was super crucial that we could do this digitally. We basically send, we produce a batch, we send them and they say, oh, well, I like this better than this. But then we realized and this is the interesting part, that we can't only do this tech way because there's a certain science to it, right? So this is when we hire Christina, a sensory scientist, and she now builds our own panel which comes in once a week here. 18 people that are trained by her specifically on our off-notes our tastes and really giving us a bit more elaborate feedback. And then also when it comes to analytical elements such as GCMS and flavor active compounds, or now in the yogurt, for example, measuring acids and really figuring out what's the right acidity. And so now there's coming a bit more like science elements that we start to bring in so we kind of has the whole picture of good feedback. There's the fast consumer feedback, there's elaborate kind of sensory feedback and then there's analytical feedback. And if we bring all of this together, then we believe we have a pretty good basis to make better decisions.
John: That's very interesting. Well, something I definitely want to ask you about because I can imagine a lot of our listeners probably have their own ideas for food startups. I'm sure that's very common that you've got people who are working in sensory departments and they have little ideas, some pretzel concept, or whatever it might be. So what advice do you have, can you take us through the journey of going from your ideas, experimenting, sitting in the coworking space? How did you go from that to finally having, how many employees are you at this point? You said 10,000 stores.
Nicolas: They are now 35.
John: And I'm sure that it's very productive in the sense that you're getting like that's a kind of light and lean and highly efficient group. Getting to that point is a big deal. So can you take us through this whole journey of how does someone starts a food company? What does that look like?
Nicolas: I think it always starts with passion and with the problem. For me, it was really this strong drive of believing. Okay, we need to change the way we do dairy products. Like this is not working and I think you need a very deep and strong route that will keep you standing with all the stuff that comes your way because it's not a fun exercise. There's a lot of stress and ups and downs. This, I think, is number one, and then when you have that clear for yourself, then it's the same with the consumer. It's figuring out, like, where's the problem? Why does the world need another milk? It's a big question we had to ask ourselves in the beginning. Now there are so many milk alternatives out there. What is different? Like, why do you need them is what you think or is a problem? Is that really a problem? Do people really want the milk with very little sugar, or do they really care about the protein content, and does your taste really differentiated or does it taste actually almost the same? Like all these critical questions which come from the consumer and that's kind of a very strong belief we have is if you have something that creates true value for the consumer, then you can build an amazing business around it. It's not easy but if you don't have that, then you're kind of lacking the core of it. So that's really what I focus on in the beginning is doing tests with consumers, interviewing them, figuring out, is this really a problem or not? And for example, in our case, we realized quite quickly that for many consumers, this can really make a difference. So just an additional point, especially three years ago, a big thing was that many kinds of milk were watery and they didn't like that it was watery and the high protein content gave it some thickness. And then they are all foamed because proteins are responsible for form stability. So all of our milk foam well. There are a couple of things that really people loved and then realized, okay, then we went to the next consumer which is the gatekeeper, in our case, the retailer and we figured out, do they have interest in new milk alternatives now, or do they say, I got ten on the shelf, 20 waiting? No, don't come back. We were also surprised at how interested they were. They are just trying it out. Everyone was like, yeah, let's put it in a very interesting concept. Somewhere else like we had a couple of pea protein products and often worked. But then we knew, yeah, we worked so much on this. Like, we believe our product is much better than all the other pea protein products that you had before so give it a try. But we realized, okay, there was an interest from these consumer groups, and then we're like, okay, let's give it a try. But then the iteration did not end, right? We launched with Milk 1.0 in January 2020. Now we had version 3.0. So we had a big upgrade to 2.0 at some point. Then we went 2.1,2.2,2.3 then now big jump again to 3.0. So we believe it's not done yet. It needs constant refining, evolvement, and improvement. And this is usually the case. It's very certain that you hit the first thing, one hit, leave it like this for 50 years.
John: Right? Now, that's very interesting. Okay. So you launched almost into the pandemic. Is that right?
Nicolas: Yeah.
John: That's great. So at that point, there was a period of time where people, generally speaking, we're not going into grocery stores, right? They were maybe ordering their groceries for delivery or how much lead time for how long were you in markets before there was a lockdown and it was about three or four months was it there in Germany?
Nicolas: A bit lesser. Yeah like, two or three months. Luckily, we secured a big listing before, and they didn't drop the listing because new listings were very difficult to get during the pandemic because everyone was like, I don't want new stuff now. Like, I need to keep my ship running. And what helped them is that we have a direct-to-consumer business, right? So we had proper kind of e-commerce webshops like foods.com and we started shipping to consumers online, and people liked the excitement of a nice design carton with some messages. We realized like, oh, this is pretty amazing that we are a startup and we can just boom. We had that already planned just to try it out. But then I was like, okay, and now, in hindsight, I was like, man, I should have invested much more money back then. We were reaching new customers at costs that were incredibly low, like, 2-3 Euros for new customers. That's incredible in e-commerce terms. But back then, we were like, oh, no, we can't burn too much money and we need to be profitable so we were really not marketing it too aggressively. But that was really good to have at that time.
John: Interesting. What was your advertising on Facebook, search engine stuff, Instagram, what were your kind of avenue?
Nicolas: Exactly. Facebook, Instagram was the biggest then influencers we did a lot with but not kind of on a paid promotion basis more on an emission alignment level. So we had a lot of kinds of friends and friends of friends, and we give them the product and we're like, hey if you want it, you can have it. But we are like, young startup, we didn't have really money to pay influencers at that point. So we're just like, if you use that, that's cool. You can have it for free. Like, we have a product, and if you post something, awesome, if not not and we realized how people are interested in telling the story, they were interested in trying something new. Like, I heard about this new milk alternative for pea protein and firmly amazing coffee so can I try it? That was a really nice spiral that we kicked off. That was our two kinds of the main channel.
John: Well, this story is really fascinating. We don't have too much to talk about because I have so much to ask you about. Well, let me just ask you just about lifestyle. So what is the name of the fermented product? I've never heard of this, like, this type of fermented yogurt.
Nicolas: Quark. Yeah, some people call it Quork, but it's not exactly the same thing I think.
John: That's fascinating. Okay. So you'll be launching that. That's going to be your kind of third product line. Is that the case? I mean, is that in the works?
Nicolas: Yogurt is a little bit easier because the protein content is roughly half of it.
John: Oh, I see.
Nicolas: So we'll do yogurt first and actually, that was why I was late for this podcast because we tried some new prototypes upstairs, and yeah, so we're getting there. It was a long road for the yogurt because it's staying clean like, we have zero sugar yogurt getting fermentation right. Like, masking the pea protein off-flavor. And that's why when I talk about the power of fermentation where I get so excited, how we can these flavor active compounds that we measure with GCMS and where we get an idea of what we want and what we do not want. We can basically, in theory, create any of these with microbes, right? By kind of designing and through the evolution of these microbes, they could technically produce any kind of these compounds that we want in our final products. In yogurt, they produce acids and become like a sour product. But that actually doesn't really have to be like they could also produce something else and not acids and you could use them even for milk and create things that taste like milk and you don't need natural flavors or these kinds of things. So we think it's a really big frontier with loads of opportunities. Yeah, it's a fascinating field.
John: Yeah. That is very interesting. So I do want to ask you a little about your journey into food science. So you really originally were trained as economists, some business-minded then you got interested in nutrition, so what is your journey into food science been like? I mean to what extent do you have to really learn these aspects of food science versus turning, I mean, it sounds like you've become fairly knowledgeable actually, but yeah.
Nicolas: It's just personal interest. I don't have a formal background in it but I also have a strong belief that you can learn anything if you're really interested in it. And if you're curious and you've got the right mindset. You can read. We do a lot of trial and error which I think just like kids, it's the best method for learning as you try things and you try and you try and you ask yourself why and you try and you try and you try differently and you see. So this is really my journey. Now, luckily, I have a team that is much more talented than I am and knows much more than I do. So I can ask them a lot or ask all of my questions and they have to figure out what the answers are. But I think that's really the fundamental thing of it is curiosity.
John: Yeah. I totally get that. Your story is actually extremely inspiring. I find it to be, for me as a founder, I know that the journey is like and it's definitely not for everybody and so to see you putting the pieces together is really exciting. So let me ask a little bit about lifestyle because you got the vegan lifestyle, right? Right now, there's a lot of interest in intermittent fasting. So to what extent are you also working to educate your consumers on some of these? I mean, as a nutritionist, is this something, for example, fasting, is that something that you're personally interested in that you try to educate your consumers on? Is there a kind of bigger lifestyle vision for you with this brand as you move forward, how does lifestyle fit together with your product?
Nicolas: Yeah, for sure. I think the big fact starting at all is that around three-fourths of our death, driven by non-communicable diseases. Non-communicable diseases come not through like viruses or things you get from other people, but through kind of ourselves, through our lifestyle.
John: Right.
Nicolas: So food is a big element of that, but it's more than just food, right? It's also the lifestyle around it. So there are things like fasting I'm really passionate about. There are things like meditation that I don't know. For example, our brand, we want to go more and do meditation, challenges and change people's lifestyle movement is a big one, right? From stretching to getting into your body like breathing. There are many elements, and food is, of course, the closest to our product. But what we really believe in is that we need to change people's lifestyles and people's habits. And it's not that we change them. But we need to inspire people to change in themselves because otherwise, it's not sustainable.
John: Well, that brings me to the last point just to kind of wrap up. So the vegan lifestyle, that's something that I have been interested in but I've never really been able to figure out in terms of going vegan and feeling really healthy and strong. Maybe it's got the amount of protein. I don't know. But for people who want to go vegan? Do you have particular advice about how to feel as good or better as a vegan than you would if you're eating a more traditional diet? Any key learnings that you've had on that front?
Nicolas: I mean, generally, it's pretty general advice that I would also give if you're just flexitarian and that focuses on whole foods a lot, a lot of legumes and cook a lot so specifically, unfortunately, most processed foods and even in restaurants, it's usually not ideal. And then it's really like, I believe a lot in also checking your personal blood levels, like the products from your nitrile cycle used to really just seeing where you had and so a lot of things we see with people is suboptimal levels of vitamin D, levels of Omega 3 so there are a lot of things that you can easily test, and if they're not optimal, it's not a big adjustment, right? It's like just taking vitamin D drops or Omega 3, like algae oil, like it's not a big thing, right? And I think so many people would benefit just from a bit more of a regular checkup. You just measure the value and look at it and you're like, oh, I'm doing good or like, maybe I should up my magnesium intake. I guess that is suboptimal and a pretty stressful phase. That's been something I've been doing quite passionately since that master program and that I always advocate for people to just look at the independent of what form of diet you personally prefer is really just look at the facts and how you feel, I think it's a good point, John where you start, right? But also these things.
John: Get some numbers, get some actual data. That's good. That's excellent. Al right, Nicolas, this has been great. We always close the question with advice for young scientists. You might also advise for a young entrepreneur, but what would you say or advice for someone, maybe they're a graduate student, they're doing a food science degree. I mean, typically, the listeners to show tend to be more sensory and consumer scientist. What advice would you have for a young person who wants to do something kind of new and different? How would you advise that person?
Nicolas: Big question. I mean, I would stick with the quote of "Stay with your curiosity", specifically what I learned now with the whole biotech precision fermentation topic. There's so much untouched stuff in the world that you can learn, and it's never too late to kind of if you're curious about it, read books, speak to people and get into it. And I think now if you want to then find a job. If someone like me is seeing this passion and someone who's really going into it and trying to learn about it and understand themselves, that's worth more than all the degrees you can have. That's the mindset that you bring. And similarly, if you want to start a company, it is kind of the fundamental element that you need. Otherwise, how do you find out what consumers really want and what problem-solving is? You got to be curious to understand where the pinpoints are that you're solving.
John: Yeah, I definitely agree with that. Well, Nicolas, it has been a real pleasure. It's really nice talking to you and, yeah, I look forward to it, I mean, I'm sure your company is going to do very well. How can people find, like, where should people go if they want to order?
Nicolas: So the easiest is vlyfoods.com or just on Instagram. If you type in Vly, and that is V-L-Y and then you can find it on kind of all channels.
John: Okay. Are you delivering to America or are you just in Europe right now?
Nicolas: Not yet.
John: Okay, well, I can't wait.
Nicolas: My Instagram is probably the best. Well, LinkedIn, of course, you can find me, Nicolas Hartman.
John: Okay, well, I cannot wait to order your product when you deliver to America, so I will get some for sure. Alright, thank you, Nicolas. It is really a pleasure.
Nicolas: Thanks. Ba-bye.
John: That's it. I hope you enjoyed this conversation. If you did, please help us grow our audience by telling your friend about AigoraCast and leaving us a positive review on iTunes. Thanks.
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