Perfect Day: A startup creating cow milk without the cow

November 26, 2019 15:48
Perfect Day Founders Ryan Pandya (L) and Perumal Gandh. The food-tech startup released in July a line of real ice cream made with lab-grown dairy. Photo: Perfect Day

The dairy industry causes more damage to the environment than many people think. The massive production has an impact on various things: climate, soil, water resources, and even public health.

"Enjoying the dairy foods we love without compromising on taste or our commitment to animals and the environment." With this goal in mind, California-based food technology startup Perfect Day is pioneering “synthetic milk,” a dairy-free alternative that claims to resemble and taste like the original, in an animal-free approach.

This July, the company released a new line of ice cream made with lab-grown dairy in California; the product sold out in hours.

More than selling its animal-free milk, cheese, yogurt, and ice cream, Perfect Day wants to be the supplier of its proprietary "dairy" protein, created from microflora, to the global food industry.

Ryan Pandya, CEO and co-founder of Perfect Day, recently sat down with EJ Insight to share his journey of a biologist-turned-entrepreneur, and outline his vision to feed a growing world with sustainable, healthy, humane milk.

EJ Insight: What does Perfect Day do, and what is the flora-based diary protein created by Perfect Day?

Pandya: Perfect Day’s animal-free dairy protein is the same nutritious protein found in cow’s milk (casein and whey), but made without a single cow thanks to the magic of microflora.

Our flora-based dairy protein is the perfect base for dairy foods, ensuring the great taste and texture of dairy, with less impact on the earth. It is vegan and lactose-free, and provides the same, high-quality nutritional benefits as milk protein from cows while ensuring delicious taste, texture and functionality when used in dairy applications. This allows food makers to create entirely new products or build on existing ones to improve how we eat today and for years to come.

Q: How do you make the animal-free dairy protein?

A: We’ve developed dairy microflora that can produce the casein and whey proteins historically found in milk. We started with a natural type of microflora known to produce large amounts of pure protein for food. Using biotechnology, we gave this flora a “blueprint” that allows it to ferment sugar and create real dairy protein. This is the very same blueprint, in the form of DNA, which cows use every day.

Our protein is made using safe and proven fermentation techniques similar to how many common food components like vitamins, probiotics, enzymes, and natural flavors are made.

Q: We know that you were working in the biopharmaceutical field before starting Perfect Day. What made you leave the biologist life and why this passion on starting your own company and creating animal-free dairy protein?

A: I went vegetarian in 2009, and tried to go vegan, but two to three years after I had to retreat back… It is very difficult right now to have compelling nutritious products that are really good in the plant-based category of dairy alternatives, so my co-founder (Perumal Gandhi) and I were thinking there must be a way to do it than simply putting a whole bunch of starches to do a product and pretending to have the texture of dairy.

Protein is the geek, so we started to make it, and make our own dream come true of better plant-based dairy. Now we have it, we have been very happy starting with the ice cream, but of course, we have many other prototypes in our office, and this is happening.

Q: What has been the biggest change from a biologist to an entrepreneur, in terms of your daily life?

A: It is very different. As scientists we are generally thinking a lot about the details of how to make our products possible, as an entrepreneur, I have to make sure the world is ready for it, and that we are going to market it the right way. It’s more than just thinking about technology, it’s about communication as well, both externally and internally. I have a team of people to make sure that everything runs smoothly as a company.

Q: Who are in your team?

A: I have a team of 75 people; we have close to 60 scientists of which more than 14 with PhDs.

Q: Building up the technology is one thing, but trying to get your cash flow in order, and get funding, is another. Did the entrepreneurial instincts come to you easily?

A: It was not difficult as we were early in our career. When I started the company, I was 22, and Perumal was 23, we were young enough that first of all, we do not have the illusion that we knew everything in the room. We are always trying to hire someone smarter than us, which is not hard, because we were so young, and so many people are smarter than us. The first few years felt almost like a customized MBA program, what I mean is we were learning so much. Now we are ready to be seasoned entrepreneurs, just as the company is ready to commercialize, so it is perfect.

Q: Having co-founded the business in 2014, how would you describe your leadership and your management style?

A: It is about trusting the people you hire. We always hear entrepreneurs micro-manage the team, or you hire someone but you do not take their advice. We try not to be like that; we have always respected what we were hearing from our experts.

Q: Is there any 'Silicon Valley culture' in your company?

A: We do not do that, we are not that kind of company, we have a lot of work to do, we are here for a mission.

Q: Who inspires you on your journey? Who is your role model?

A: We are huge fans right now of the Zoom executive team and their founders. Zoom is a rising company as well, and they had an amazing exit recently. They have done a very good job creating their product even though they are in a category where there are plenty of players. They show that if you make a better product, people will adopt it quickly, and we hope to do the same thing. Within our category, we really like Impossible Foods, the products are great and they are doing a very good job.

Q: Does the work on governance structure, or communication with the public, get you frustrated?

A: It is not frustrating, but sometimes we worry that we need to be executing, it would be easy to be at conferences all the time, doing interviews all the time, but sometimes we have to get back to get work done. We have a lot of work to do, and we have to support our teams, so we are looking forward to, hopefully maybe after this trip [to Singapore], stay home till the end of the year.

Q: When do you get your best ideas?

A: Actually, while white-boarding. Give me a whiteboard marker and whiteboard, and often that helps us think a lot more because we are very visual people, Perumal and I. We will flowchart something out, draw a timeline, something like that, sometimes whiteboard is the answer.

Q: Is this a special culture within Perfect Day?

A: That works for me, we are not here to micro-manage everyone to do so. But when we move to our new office, we have inherited walls that are painted as whiteboards, so in several rooms, we have the whole wall as a whiteboard. That really got us more into it, because you can draw so much more, you can draw a timeline for ten years going forward.

Q: On the bigger picture you are creating, where do you see the company in the next five years?

A: We are developing different proteins from milk, we have scaled up the first one already. And in five years, we will expect that more than one [product]. We should have all dairy proteins, in full scale, and will have many different products, in pretty much, all over the world, different channels, food services, a lot of variety for what we can do. In five years, I expect we will be finally, cash flow positive.

Q: Cash-flow positive? For many startups, cash flow is not a major target.

A: It should. At the end of the day, we were supported by venture capital, and we cannot expect that we can just keep on plugging funding forever without actually giving anything in terms of returns. But we are lucky that we are going to be able to accomplish a lot of mission while making good returns. It's not very often you come across something profitable and also do good. I think we have been able to find one such model.

Q: We know that Perfect Day is funded by Horizons Ventures, the investment arm of Hong Kong tycoon Li Ka-shing’s philanthropy foundation, which has in the past few years been investing in innovative companies and disruptive technologies. How did you win the deal with Horizons?

A: They have been interested in food technology for several years, and you need to think about producing nutrition for China, and for developing middle-class growth in the region in general, not just China… I think they are looking for companies like us. They have invested in Impossible Foods already.

Q: Any specific strategy to convince Horizons Ventures?

A: We started in 2014, and we wrote an article in the New Scientist magazine. Solina Chau (co-founder of Horizons Ventures) reads New Scientist and she reached out to us for a call, just a few months after we started our company. It was very early. We visited Hong Kong in July 2014, we brought a tiny proof-of-concept, a little jar of milk, and a vision, and a story, and they believed in us, and they gave us a chance.

Q: What is your experience in working with Li Ka-shing, Hong Kong’s ‘Superman’?

A: We mostly worked with the Horizons Ventures team. Mr Li is very busy, but we had the luck to meet him, one time. They have been very supportive, they are just brilliant investors. There is a reason they are able to work with early-stage companies, yet see so positive returns. They find the right entrepreneurs; we are thankful to be among them.

Q: Funded by Asia-based heavyweight investors like Horizons Ventures and Temasek, what is your plan to go big in Asia?

A: From day one we had a global vision, to get nutrition to the people who need it, and where the population is growing, where there is a huge demand for protein, that’s Asia, right? So we have been working with Li Ka-shing, and recently with Temasek, mainly establishing some kind of foothold in the region. And as we get the ability to manufacture more protein, we would love to work with our partners.

Q: What can we expect next year with regard to Perfect Day?

A: We are pursuing the ingredient model, similar to “Intel Inside”, you would be able to buy consumer packaged goods saying they are powered by Perfect Day, you can also buy the powder, but typically you would buy like a food product, an ice cream, cheese, yogurt, milk. These products could be made by other companies using our proteins, and then you as a consumer would see Perfect Day’s name on the label as well.

Q: What about the China market?

A: We have met the [China] government, we have been to Shanghai, and of course through Horizons Ventures, we have a good entry point to Hong Kong. We love to work in China. In Hong Kong, we met with some officials responsible for economic development and the Greater Bay Area. The idea is to be able to produce protein in China. Right now it’s a lot of imports into China, so there would be a more preferable option that we actually manufacture our protein in China, so you do not have to ship it all into the country, we can make it there. [By doing so, we would be] bringing the synthetic biology industry to China. I think it is in their interests, especially for nutrition.

Q: Zoom, which you admire, had its blockbuster initial public offering (IPO) in April. Any plans for public listing for Perfect Day one day?

A: We are not currently planning a public listing, but I think it would be a very successful one. People are emailing us every day asking whether they could invest... but we are not available publicly. I am feeling that people would be very interested in it if we did, but we are not ready yet.

Q: Is a startup or tech firm better off staying private? Is going public really the right way for the development of tech firms and startups?

A: There are pluses and minuses, and there is a right time to do it, because it does change a lot about the governance structure of the company, it changes as to how much information you have to update to every public investor all the time, whereas we can move much more quickly as a private company. That's exactly why we are not ready yet. We won’t be listing any time soon.

Q: What happens if somebody comes up to you and says, “Let me buy over Perfect Day,” What would you say?

A: We would never say never, but it would be difficult for us to be convinced that someone would be the right one for the company. So we would have to do a lot of due diligence, say who is the party that is trying to buy us? Will they do the right thing with our technology? Or will they put our technology on shelf and forget about it? Do they have any core competency to work with synthetic biology? There are not many companies that offer that combination.

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Perfect Day is making its lab-grown, animal-free dairy proteins and using that to produce ice cream and other upcoming products. Photo: Perfect Day

EJ Insight writer