As a privately held company you couldn't short the stock so the next approach is to short debt if any, then bank loans. But you are already diluting your possible return because even the most insane loan book has more than one borrower. So it usually comes down to figuring out the fraudster's suppliers and trying to place a bet on them getting stiffed.
Here's the latest on Eat Just from Wired, November 16:
Insiders Say Eat Just Is in Big Financial Trouble
Vegan egg and lab-grown-meat startup Eat Just is being sued for more than $100 million. Former employees allege that’s just the start of its problems.
Popular vegan egg and lab-grown-meat company Eat Just is in deep financial trouble. A WIRED investigation bringing together court records, documents, and interviews from former employees suggests that the company frequently struggled with paying its suppliers on time. Now it is being sued by a former partner for roughly $100 million and faces lawsuits from other vendors, some of which are reported here for the first time.
“The biggest issue was absolute financial mismanagement,” one former senior Eat Just employee alleges. Multiple former employees claim that the practice of delaying or withholding payment to vendors was “entrenched” and “endemic” at the company. “We had vendors we were six months behind on. We were constantly having to beg and plead to get our product out of refrigeration and into stores,” says another former senior employee. WIRED has agreed to withhold their names because they were not authorized to speak to the press.
Eat Just is one of the leading startups to have come out of the boom in plant-based alternatives to animal products. Since 2011 the startup has raised around $850 million—making it among the best-funded startups in the industry. Its vegan eggs are sold in thousands of stores in the US, and in 2020 it became the first company to sell cultivated meat to customers. In May 2022, a wholly owned Eat Just subsidiary called Good Meat announced it had signed an agreement to build 10 giant bioreactors to grow animal cells for cultivated meat—a project orders of magnitude larger than anything attempted before.
A WIRED investigation can reveal that even as the company embarked on the nine-figure bioreactor project, there were concerns it was struggling to pay vendors and contractors. Ultimately the Good Meat deal would collapse into a legal dispute, with bioreactor firm ABEC alleging that the company owes more than $61 million in unpaid invoices. The startup is also being sued in two separate recently-filed legal disputes. One from an engineering firm for more than $4.2 million for alleged unpaid work and another from a food processing firm alleging more than $450,000 in unpaid invoices for ingredients.
Big Promises
Eat Just, which has backing from the Qatar Investment Authority, hedge fund manager UBS O’Connor, and Charlesbank Capital Partners, is now facing a series of legal cases that could threaten to overwhelm the company. Former employees paint a picture of a Silicon Valley unicorn led by a charismatic CEO, Josh Tetrick, who managed to bring in swathes of venture capital. But all the while, as one former senior employee claims, the company was failing “drastically’ to manage its finances.
Eat Just is no stranger to legal battles. In addition to the lawsuits already mentioned, court records show the company has been sued on at least seven other occasions since 2019. In most of these cases the sums involved were relatively small. One lawsuit filed by food processor Archer Daniels Midland in July 2020 alleged that Eat Just failed to pay a bill of $15,640 for shelled hemp seed and shipping. In early 2021, the laboratory equipment firm VWR International sued Eat Just for $189,244. In March 2021, Eat Just’s landlord sued for nearly $2.6 million in unpaid rent. A month later, FedEx sued the company for more than $72,000. Eat Just’s head of communications, Carrie Kabat, says that all these lawsuits have been settled.Former Eat Just employees allege these nonpayment lawsuits were the result of the company running up large bills while it waited to land new funding rounds. “It was a pervasive mindset that we could always raise more money, and even if we didn’t have money in the bank, we could push forward on different initiatives,” says one former senior employee. Another former employee says it was common for the company to rack up large debts between funding rounds. “It was a house of cards, and as long as the investor money was coming in, it was fine,” alleges a third employee.
As Eat Just moved into the business of cultivated meat—growing meat from animal cells without requiring the slaughter of animals—it started to commit to more ambitious projects. In December 2020, Eat Just’s cultivated meat was approved by Singaporean regulators—the first approval of its kind in the world. Shortly after, its meat—in the form of chicken nuggets, chicken curry and other dishes—was sold at a restaurant in one of the city-state’s five star hotels. In mid-2021, Eat Just created a wholly owned subsidiary called Good Meat to focus on cultivated meat. Until June 2023, when Upside Foods was also cleared to sell cultivated meat in the US, Good Meat was the only company selling lab-grown meat to the public anywhere in the world.
Former employees claim that the pressure to achieve industry firsts led to poor financial planning. “The desire to be first in everything drove decisions,” says one employee. In May 2022, Good Meat publicly announced its biggest project yet: It would work with the bioreactor firm ABEC to design and build as many as 10 large bioreactors, each with a capacity of 250,000 liters. In an industry where most companies are using bioreactors that hold just hundreds or thousands of liters, the size of the project was unprecedented....
....MUCH MORE
Some of the Just Mayo saga:
September 23, 2023Hey, Remember Just Mayo? After Four Pivots and $600+ Million in Funding They Are Now Stiffing Their Suppliers
Hampton Creek became Just Mayo became Just, became Eat Just and....
I've lost track of how much money this one has burned through, in part because they don't always disclose the size of their funding rounds, of which the last one was a "G" round if memory serves, though it could be deeper into the alphabet.
All the while the management since 2011 has been trying to find a business they can make money at, keeping the plates spinning, raising new money and playing fast and loose with their customers, suppliers the media and it looks like their funders.
We used to call it the create-a-corp. model, if we can just hang in their long enough... (see also yesterday's post on The Lindy Effect)
Here's the latest from AgFunderNews:
September 1: "Eat Just closes financing round led by VegInvest/Ahimsa Foundation, moves ‘closer to operational profitability’ in JUST Egg operation"
September 6: "Eat Just’s GOOD Meat division hasn’t paid its bills, says bioreactor co; parties in arbitration"
September 8: "Eat Just/GOOD Meat sued by 2nd engineering firm (CRB) for failing to pay its bills on time"
Some previous posts:
August 2021
"Inside Silicon Valley’s Mayo Marketing Madness"
Remember
Just Mayo? For a while it was just Just. Now it's Eat Just. They've
pivoted off the vegan pitch and among other things are experimenting
with cultured cellular meat.And raising money. In March they announced they had brought in another $200 million, bringing the total take to 2/3 of a billion dollars....
As noted in 2020's "Singapore is the first country to approve the sale of lab-grown meat":
February 2019
Remember Just Mayo? They Rebranded to Just and Raised Another $200 Million
Mr. Tetrick is one tech bro I would not trust with anything.
And what's with all the rebranding going on? Snapchat becomes Snap, WeWork is now We and Google became Goo Alphabet.
FDA Says "No Eggs, Not Mayo": VC-backed Hampton Creek's CEO Is Defiant
July 2017
Hampton Creek, Attempting the 2 1/2 Twisting Reverse Uber, Sticks the Faceplant Landing! Entire Board Leaves, CEO Remains!
And the Valley is going crazy!
But seriously, we would have expected nothing less. What a performance!
Bill Gates Invests In Another Lab-Grown Meat Company
"Bill Gates headlines an all-star list of investors pumping $75 million into meatless burgers"
Mr. Gates also partnered with Li Ka-Shing and Khosla on Hampton Creek which is attempting to pivot from Just Mayo into laboratory-grown 'meat'.*
"Mayo-scandal firm Hampton Creek from San Francisco going whole hog for Frankenmeat: report"
Just Mayo Guy, Hampton Creek's Josh Tetrick, Pivots to Industrial Scale Ingredient Supply Biz
Hampton Creek: Remember All Our Vegetarian Talk? Never Mind
Questions America Wants Answered: Is Eating Lab Grown Human Flesh Cannibalism?
"People buying meat from strangers on social media is a serious problem"
Seven Startups Creating Lab-Grown Meat
Target Corp. Cuts Ties With Hampton Creek: Just Say No to Just Mayo
Hampton Creek (Just Mayo) Reports an Attempted Employee Coup
"Just Mayo" Guys, Hampton Creek, Used Investor Money To Buy Its Own Product Off Store Shelves
Silicon Valley's Favorite Futuristic Food Company, Hampton Creek, May Be A Bit Fraudy
Just Pay-O?
Either way, Elizabeth Holmes breathes a sigh of relief as she drops off the front page.
May 8, 2017
Bro Culture Apparently Works Best With An Unending Supply of Other People's Money: Hampton Creek Edition
“Leveraging our Hampton Creek Instagram channel through condiment launches for our Just Mayo and Just Dressings allows us to showcase our condiments in a playful, creative way and allows us to connect with different consumer demographics across the country. We also leverage Hampton Creek fan reposts and user-generated content...."That is Hampton Creek's brand marketing director quoted in Progressive Grocer.
As the man said when told his Chinese takeaway was cultural appropriation:
When you talk like that you are self-identifying as an idiot.Ahem.
Last Wednesday the Financial Times' David Keohane pointed us to a Hampton Creek article that reminded me of nothing so much as Christopher Isherwood's sad stories of the he-whores and she-whores who overstayed the great Weimar Berlin party of the 1920's.
All I could think of was "Dude, the rave's over, go home"....
Hampton Creek CEO Fires Top Execs After Fundraising Struggle
*As early as 2015 the WeWork scam was apparent:
January 14, 2019
Programming Note: Climateer Investing Is Dropping Coverage of the Company Formerly Known as WeWork
It was fun back in 2014 when headlines like WeWork Worth $5Bil., Weally were fresh and new.
And in 2015 it offered an intellectual exercise: How To Convince Investors Your Startup Is Worth $10 Billion: "There has got to be a way to short this".
And: $16 Billion Valuation WeWork Cut Forecasts as CEO Asked Employees to Change ‘Spending Culture’:
"It has been a long cherished dream to figure out a way to bet against this one, links below....
Climateer Investing even took "WeWork: 'Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.'" at face value:
Roger that, energy and spirituality. Over....
