WTF is Going on at Eat Just?
Wired exposes CEO Josh Tetrick's irresponsible spending and troubling mismanagement
In September, I wrote about the head-scratching news that the animal rights movement’s largest donor was giving the plant-based egg and biotech meat company Eat Just a whopping $16 million. This despite a disturbing pattern by founder and CEO Josh Tetrick of serious ethical breaches and financial mismanagement.
Next came news of layoffs, along with an annoying email in my inbox from Eat Just’s head of PR, Andrew Noyes. (Noyes has since left the company, after seven years.)
A few folks with insider knowledge have been sharing with me additional evidence of layoffs, including sales staff, out of stocks of the egg, and other ominous signs.
Now comes the latest deep dive, this time in Wired, entitled, “Insiders Say Eat Just is in Big Financial Trouble”. The article describes various mega lawsuits the company has been subjected to, along with a pattern of excessive spending leading to perpetual fundraising, all caused by Tetrick’s “impulsive and dogmatic” style, as one former employee described it.
“Money Out of the Sky”
The Wired article highlights the CEO’s brash personality, along with his woeful mismanagement. For example:
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.
Large swaths of VC money indeed; around $850 million, making Eat Just one of the most heavily invested “alternative” companies. Where has all that money gone?
Financial mismanagement is the main theme of the article:
"It was a very poorly kept secret that all employees knew about, that we weren't paying our bills," one former employee alleges. Another former senior employee believes that Tetrick spent money aspirationally. “He felt like because he had some successful fundraising he could just snap his finger and pull money out of the sky,” they say.
People who keep spending other people’s money irresponsibly while raising more money tend to get into trouble eventually. Sometimes a LOT of trouble. This part of the article stood out to me as sounding like another Silicon Valley darling, recently on trial for fraud.
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.
Are investors really OK with this? That recent $16 million influx from a vegan philanthropist is looking more and more questionable, especially when so many nonprofits could use the cash.
Price Parity or Price Parody?
Then there is the deception regarding the pricing of Just Egg. It’s important for plant-based food companies to offer consumers who purchase animal foods “price parity”, meaning comparable prices as compared to the corresponding animal product.
Tetrick, always seeking a PR opportunity, dramatically dropped the price of Just Egg at the same time prices for chicken eggs were rising. This Food Navigator headline from last year went along with the PR game without questioning any details: “Just Egg reaches price parity with premium chicken eggs”. Tetrick claimed he was able to cut costs by scaling production. Except for the not so minor detail that the company has in fact been selling Just Egg at a LOSS, as was uncovered by Wired:
In 2019 a carton of liquid Just Egg retailed at close to $8, according to Bloomberg. In March 2021 the price of a carton of liquid Just Egg was dropped to $3.99, a price just below the average retail price of conventional chicken eggs.
The decision to reduce the price of Just Egg was controversial within the company, according to several former employees. Executives believed the company couldn’t afford to sell the product at a loss, while others argued that they needed the low price point in order to entice more first-time customers to try the product. One former senior employee argues that the claims of price parity with conventional eggs were “absolutely misleading.” The price of the liquid egg was increased to $4.99 in spring 2023, but Tetrick says that each carton is still sold at a loss at retail.
Sure, anyone can claim “price parity” by artificially reducing their prices. But that’s not a sustainable pathway. The whole idea behind price parity is to get the plant-based alternative costs down to actually compete, not play games. Moreover, continuously selling at a loss is never a sustainable business practice, period.
Where else did Tetrick make this deceptive claim of “price parity”? If he made it to investors, that could be very serious. Given the company seems to be in perpetual fundraising mode, it’s certainly possible.
Investors in plant-based foods need the “flexitarian” market to grow a brand, as vegans make up too small a consumer segment, and pricing is a key factor to draw new people in. Tetrick showing off that Just Egg could compete on price with chicken eggs would be a very sexy sell to investors. Ironically, Tetrick was relying on investor money to price Just Egg at a loss, causing the need to raise even more money.
“Too Big to Fail in his Own Mind”
So why is Tetrick still at the helm? Some employees are wondering too:
Other former employees question whether Tetrick is still the right person to lead the company. One calls his leadership “impulsive and dogmatic.” Another gives him a “failing grade” when it comes to management. A third source says that Tetrick has a “very non-collaborative working style” that keeps people uncomfortable. “I think he really does believe in the mission,” says a fourth source, adding that he’s “too big to fail in his own mind.”
This to me is the heart of the problem: when ego takes over, anything goes.
Another sign of mismanagement is ongoing company layoffs. Again, from Wired:
The company confirmed two rounds of layoffs this year—in February and September. Around 80 employees were made redundant over the two rounds, Bloomberg reports. Several senior members of staff have also left the company in recent months. Tetrick says of his remaining team: “It’s a really solid team that’s putting their head down in a really, really challenging, cash-constrained environment” and working to cover business costs by generating revenue.
“Putting their heads down” without sufficient resources, combined with a “very non-collaborative working style” all sounds really stressful. While I am sorry for those employees laid off, I worry even more about those left behind. How will it all end?
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You haven't identified any "serious ethical breaches" Josh Tetrick was accomplishing amazing milestones at a super fast-growing startup. The production cost of the Just Egg product was falling. The fact that the company was not profitable was not at all unusual for a high-growth company. Amazon was not profitable for five years. The problem is simply that interest rates shot up, funding dried up, and start-ups of all types ran into a brick wall. As Josh states in the article, “At the heart of our large-scale program was an assumption that we would continue to raise capital for that large-scale facility. That did not happen.” His challenge now is to adapt in time to avoid bankruptcy.