8 ms·

Hampton Creek Ran Undercover Project to Buy Up Its Own Vegan Mayo

114 points by pgroves 10y ago

dismal2 10y ago
I guess that's one definition of dogfooding!
hyperbovine 10y ago
> “The most important next step with Safeway is huge sales out of the gate. This will ensure we stay on the shelf to put an end to Hellmann’s factory-farmed egg mayo, and spread the word to customers that Just Mayo is their new preferred brand. :)” Wow! :) Shady! :) As far as displacing Hellman's, good luck with that. http://webcache.googleusercontent.com/search?q=cache:uWZnLEmJ64wJ:www.slate.com/articles/life/food/2013/12/hellmann_s_mayonnaise_formula_why_does_this_high_amplitude_condiment_taste.html+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:uWZnLEm...
- homegarlic 10y ago
  When the tax benefits of the farming industry start to fall, the prices will go up, and the Hellman's may become a niche product. This is just engineering and science at it's best. Produce food that tastes the same but has a much smaller production cost. The energy conversion from soy to chicken egg to mayo is less efficient than soy to liquified soy with some protein emulsifiers (not that it's made out of soy, I just picked soy randomly).
themgt 10y ago
> In at least some cases, Hampton Creek lumped in expenses related to buying its own products with wages paid to contractors, according to five former workers. All five said money they were given to buy jars of Just Mayo were treated as taxable income, making them liable for a higher tax bill than their actual earnings would require. One former contractor provided H&R Block tax records showing this to be the case. Another Creeker asked the company in an e-mail to separate the expenses from taxable income. But the request was ignored, the contractor said. Hampton creek declined to comment about the alleged practice. Sketchy and unacceptable
- mathattack 10y ago
  Worse than sketchy - it's fraud. People should go to jail for this.
  - conover 10y ago
    That's a bit extreme. Non-violent crime and all. A fine perhaps.
    - Normal_gaussian 10y ago
      I'm not so sure. It is obviously fraud, and couldn't appear not to be that way for the perpetrators. So if they only face fines it makes sense for them to weigh up the potential gains against losses - and its not just flat cash. On top of that bear in mind that high sales figures will allow them to grow faster - you can't fine growth very easily.
    - mathattack 10y ago
      Defrauding investors is a serious crime. Think of the widows and orphans and their pension funds. :-)
    - gremlinsinc 10y ago
      Lots of non-violent people go to jail for marijuana use as an example... Lots of violent destructive people never see jail -- you know the kind of people that forcefully take homes and money from people with the help of the sheriff because they knowingly sold homes to them that they couldn't afford..
      - nwah1 10y ago
        This is the worst argument, though, if your point is to argue that these people ought to be in prison. Many non-violent crimes that people go to jail for are activities which should never have been made into crimes in the first place. And if you extend this out, you start to wonder just how many non-violent crimes ought to be punishable with prison. The shoplifting example, for instance, might be something that should only be a civil penalty rather than criminal, as long as it isn't armed robbery. It's hard to know where to draw the line, but if you want these people to go to prison, then don't highlight crimes that the majority of Americans now think shouldn't be crimes.
bluejekyll 10y ago
This is yet another young company that I've heard of which is being driven by a desire for quick growth by trying to short-circuit the natural growth of their product. LendingClub: misrepresenting financial standing of borrowers. Theranos: their new test is as accurate and more efficient than existing tests. Zenefits: dodged proper training of employees. All of these seem to be inline with spurring growth. Is the expectation of quick return and/or increased valuation (no down rounds) driving companies to make these poor decisions?
- hkmurakami 10y ago
  Lending Club: Not only that, they also misrepresented the terms of the contract and legal clauses present in them by falsifying the date of loan forward to one that was after they made changes to their language (I believe Jeffries was the counter party). Blatant securities fraud. edit: since I seem to be the target of downvoting by people presumably with a stake in LC, here are some sources. "he falsified dates on $3 million of loans that were bought by Jefferies" http://www.bloomberg.com/news/articles/2016-05-10/jefferies-said-to-have-pressed-lendingclub-to-improve-disclosure http://www.bloomberg.com/news/articles/2016-05-10/jefferies-... http://ftalphaville.ft.com/2016/05/10/2161309/the-legal-tweak-that-led-to-disaster-for-lending-club/?Authorised=false&_i_location=http%3A%2F%2Fftalphaville.ft.com%2F2016%2F05%2F10%2F2161309%2Fthe-legal-tweak-that-led-to-disaster-for-lending-club%2F&_i_referer=&classification=conditional_registered&iab=barrier-app http://ftalphaville.ft.com/2016/05/10/2161309/the-legal-twea... http://www.wsj.com/articles/inside-the-final-days-of-lendingclub-ceo-renaud-laplanche-1463419379 http://www.wsj.com/articles/inside-the-final-days-of-lending...
- 2muchcoffeeman 10y ago
  'It's easier to ask for forgiveness than permission' seems to be a feature of American startups.
  - kevindong 10y ago
    I mean, that's basically Uber's business model.
bagacrap 10y ago
Perhaps naive, but how is this different from spending investors' money on traditional or viral advertising? Seems like either way they are spending money to create demand. Is the only difference how it shows up in accounting? I wouldn't feel too bad for their business partners---Safeway was still making a profit, presumably, just as an advertising company instead of a retailer.
- alanpost 10y ago
  One salient detail that's a bit difficult to pick out of the article: Hampton Creek gave cash to contractors with instructions to use that cash to purchase Just Mayo. However, they recorded (some of?) these cash payments as wages on those contractor's 1099s, meaning those contractors had to pay taxes on that "income" when in truth this was (at best) a business expense.
  - paulcole 10y ago
    What I don't get is why the contractors didn't just claim the expense on their taxes to striaghten it out?
    - alanpost 10y ago
      My comment is based on the single report substantiating the larger story in the article. I think you ask a reasonable question. Maybe the particular contractor had an axe to grind. Maybe the bookkeeping was a mess but for reasons of incompetence rather than fraud. I think the larger picture is troubling, but I can also see a scenario where each of the pieces that builds up to that case has a plausible and benign explanation. I don't think there are enough details in this article to conclude one way or the other.
    - pcvarmint 10y ago
      Because their expenses would have to total at least 2% of their AGI in order for them to deduct them. This means someone making $50K would need to buy $1000 worth of Just Mayo or other qualifying unreimbursed expenses.
alaskamiller 10y ago
Reddit: faked accounts to seed activities AirBnB: scraped and spammed craigslist OrderAhead: faked phone in orders to restaurants not participating LendingClub: faked financial viability to lenders Zenefits: faked hours for accrediting licenses Homejoy: faked out investors
- rwc 10y ago
  And Theranos?
  - alaskamiller 10y ago
    Different class.
- fnimick 10y ago
  Part of being a modern startup means you have to break the rules to catch up with established competition. If you get big before the law catches up with you, you win. See: Uber. Flagrantly illegal, but it's gotten big enough to pressure governments rather than the other way around.
- erdevs 10y ago
  "Startup = growth" :/
dpiers 10y ago
They're defrauding retailers by manipulating the results of their trial runs, resulting in larger buys and wider distribution than they would have obtained otherwise. I would be surprised if the retailers didn't have language in their agreements prohibiting this type of behavior. If the product ends up having high sell-through rates, this is just a clever growth hack, and it's a win-win. However, if the product doesn't sell after they tricked a retailer into putting a large quantity of product on shelves nationwide, it could easily end in litigation. Especially if these test runs and subsequent retail orders were material to the investment decisions of their backers. Also: if they engaged in these practices, it probably isn't the only unscrupulous thing they've done. A fish rots from the head/where there's smoke there's fire/etc.
deleted 10y ago
[deleted]
SwellJoe 10y ago
I really like Hampton Creek products (I'm vegetarian, and my girlfriend is vegan, but Just Mayo is a high quality product regardless of whether you eat eggs or not). I'm honestly excited to see it show up in local stores, and have been known to go to stores that I know stock it specifically to buy it. But, this is pretty sketchy behavior. I guess investors will be forgiving if the growth of the company ends up catching up with the faked numbers, which seems to be what's happening, but I dunno if the stores will be as quick to forget. Then again, if demand catches up quickly, they may not mind, either.
- jdoliner 10y ago
  > but I dunno if the stores will be as quick to forget. Why would the stores be mad about this? It seems like Hampton Creek has basically sent them a jar of Mayo for $5 and then turned around and bought it back from them for $10. (I'm making these numbers up but I'm assuming the stores aren't selling this Mayo at a loss.) Stores should be happy to do that all day long. edit: I guess part of the reason they did this was to deceive the stores into giving them more shelf space. I could see that rubbing stores the wrong way.
brazzledazzle 10y ago
If you're going to order your employees to do questionable things you'd better make sure they're treated right. You would think it goes without saying...
- brazzledazzle 10y ago
  Upon rereading this it may seem like I support what is ostensibly fraud and I should make it clear that I do not. I just wanted to note that mistreating (and in some cases apparently defrauding) someone who can testify against you is probably not a smart move. It speaks to their ignorance, stupidity or perhaps narcissism.
WhitneyLand 10y ago
They have placed themselves on the wrong side of the line between growth hacking and actionable fraud. Worst yet, when Josh Tetrick (CEO) was called out on it, he tried to justify it rather than coming clean and promising not to do it again. He'll be lucky not to be sued by investors since funding was granted based on falsified data.
coverband 10y ago
How is this different from other guerrilla marketing tactics? If I'm a small company just starting operations, of course I'll do whatever I can to make myself look to be more in-demand. Not defending the accounting or payment/expense irregularities, but if they were only spending a small amount that could otherwise be spent on advertising, I would consider this an effort to help them take off in the marketplace.
- WhitneyLand 10y ago
  They lied to investors about it and won financing based on the results of falsified sales data.
  - coverband 10y ago
    I'm not endorsing fraud, but if they spent only $77K (or twice as much) to carve their product some shelf space against Kraft or Conagra with their billion-dollar marketing budgets, I would look at their action in a different light. Without knowing the true intent and just based on the limited info presented in the article, IMHO, this is not in the same league as what Theranos was doing.
    - tssva 10y ago
      They have shown themselves to be deceitful, so how can you have any trust in that $77K number?
Overtonwindow 10y ago
I don't see any problem with this. If it's illegal, then prosecute them. If it's not illegal, then it's up to the shareholders to hold the executives responsible. I don't see how consumers were defrauded or deceived in any way. Major food producers pay huge buckets of money to be on those grocery store shelves. And we know the major food producers have been trying to put Hampton Creek out of business since it started. I like Just Mayo and I say good for them.
woodruffw 10y ago
Isn't this the same company than ran afoul (no pun intended) of the FDA for labeling their non-mayonnaise product as mayo? I bought a jar of their stuff about two years ago. It was essentially thickened vegetable oils and a sizable heaping of salt and coloring. I was unimpressed, to say the least, considering how far vegetarian and vegan alternatives to meat and dairy have come in the last decade.
dfsegoat 10y ago
This is not at all surprising if you know anything about putting a product into retail: Big box retailers have suppliers pretty much literally bent over a barrel (unless you are PG, General Mills, etc). If your product does not sell through (volume in units) to their satisfaction in ea. / every store or region, typically you will be contractually bound to do almost all of the following: * You will pay them to buy all product back * You will pay logistics / restocking fees to remove the product * You will have to figure out how to put all that product back onto your books. Compound that with a highly perishable, refrigerated product - and of course this happens all the time. ^Edit for punc ^^ edit for detail
- xenadu02 10y ago
  This is all true and it is even worse in many cases. Wonder what those "don't return this item to the store" notices are about? Most big box retailers have automatic refund percentages and penalties built in so every returned item gets placed in the trash compactor and the manufacurer eats the cost plus a penalty. Too many returns result in escalating penalties.
- dragonwriter 10y ago
  > Compound that with a highly perishable, refrigerated product AFAIK, "Just Mayo" is not a highly perishable, refrigerated product. It is a refrigerate-after-opening product sold off regular, non-refrigerated grocery shelves, just like normal mayonnaise.
repnation 10y ago
http://www.businessinsider.com/hampton-creek-ceo-complaints-2015-7 http://www.businessinsider.com/hampton-creek-ceo-complaints-... Let's not forget, no one really has any idea what is in their "mayo." They've been caught lying about ingredients and their "huge" database of flavors
ars 10y ago
I'm finding it hard to be troubled by this. If real customers will not buy the product then it will fail, no matter how much the company tries to fake it. It's not that different from gaming the system to get on the Best Seller list. Or how movie studies get their films to rank high so everyone thinks it's the thing to watch. Or to mess with amazon sales rank.
kumarski 10y ago
I love the mindset of this founder for utilizing this tactic. I'm okay with it as long as the LTV exists. Reddit faked comments in the early days. SocialCam juiced user invites before Apple banned the practice. I see this as no different. I do however believe they should have outsourced the calls more efficiently utilizing something like upcall.com. This founder believes he has the vaccine of sorts to a ton of waste and if the result is a product that will reduce consumption because it's environmentally friendly, I'm okay with him being a bit vicious with it. Also for QC, you usually buy a statistically small number of units. You can't do this type of fake demand tactic though without letting the investors know. I think that's murky territory. Homejoy did something similar buying fake reviews and juicing yelp reviews. So there's always a fine line, really it's important to make sure you have lifetime value on the product.
fasteddie 10y ago
A friend at a mobile gaming company once had to run an analysis on the cost/benefit of spending her company's money in one of their game to drive it up the top grossing charts. The question was whether high placement on the top grossing charts could drive a lower CaC (the cost being the 30% of spend that goes to apple) than buying similar amount of users through FB ads.
- trimbo 10y ago
  Soooo... did they do it?
kristianp 10y ago
Scrolling away from the video prevents it from playing on the news sites I usually visit. Not Bloomberg! "Don't try to get away from that video by scrolling down to the article, we'll keep it in the corner for you!" Thanks bloomberg. Adding their video player to ublock.
hristov 10y ago
Hampton Creek are flat out dishonest. They have a product that is not mayonnaise, but they call it mayo. Furthermore, their product does not include any eggs but they had a huge image of an egg dominate their entire label. The entire product was based on a lie and I am not surprised they tried to mislead their investors and distributors as well. I am all for removing animal products from the diet but that does not excuse lying to the consumer. If you think you have a great egg-less mayo like sauce, you should be proud of the fact that is egg-less and make sure the consumer knows it. Not hide it. And no it does not taste anything like mayo. It has a weird spicy taste. Mayonnaise is not supposed to be spicy. Some people may like it, but the people that are expecting the taste of mayonnaise will be quite disappointed. I am willing to bet that a lot of food has been thrown in the trash because of this little marketing trick.
- erikpukinskis 10y ago
  What about bacon fat mayo, which is made with bacon fat instead of the traditional olive oil? Or how about Hellman's which almost certainly doesn't use olive oil, instead using some cheap vegetable imitation, should that be allowed to be called Mayo? In Japan they use apple cider vinegar or rice vinegar, should that also be labelled as "rice-vinegar based mayo-like sauce"?
  - jstsch 10y ago
    Mayonnaise is almost never made with 100% olive oil. It will dominate the flavor (sharp/grassy/bitter). A dash is fine, but a neutrally flavored vegetable oil like canola, rapeseed or sunflower oil is typically used.
    - erikpukinskis 10y ago
      From Wikipedia: > According to Trutter et al.: "It is highly probable that wherever olive oil existed, a simple preparation of oil and egg came about — particularly in the Mediterranean region, where aioli (oil and garlic) is made." So, no. What you are talking about is some imitation Mayonnaise-like sauce which should be law not be allowed to be called "Mayo". Because that's what the legal system is for: protecting the traditional definitions of foods from people like you who think some sort of cheap Canadian imitation flower seed oil should be allowed to be used in a traditional recipe like Mayonnaise.

114 points by pgroves 10y ago

I guess that's one definition of dogfooding!

> “The most important next step with Safeway is huge sales out of the gate. This will ensure we stay on the shelf to put an end to Hellmann’s factory-farmed egg mayo, and spread the word to customers that Just Mayo is their new preferred brand. :)” Wow! :) Shady! :) As far as displacing Hellman's, good luck with that. http://webcache.googleusercontent.com/search?q=cache:uWZnLEmJ64wJ:www.slate.com/articles/life/food/2013/12/hellmann_s_mayonnaise_formula_why_does_this_high_amplitude_condiment_taste.html+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:uWZnLEm...

homegarlic 10y ago
When the tax benefits of the farming industry start to fall, the prices will go up, and the Hellman's may become a niche product. This is just engineering and science at it's best. Produce food that tastes the same but has a much smaller production cost. The energy conversion from soy to chicken egg to mayo is less efficient than soy to liquified soy with some protein emulsifiers (not that it's made out of soy, I just picked soy randomly).

themgt 10y ago

> In at least some cases, Hampton Creek lumped in expenses related to buying its own products with wages paid to contractors, according to five former workers. All five said money they were given to buy jars of Just Mayo were treated as taxable income, making them liable for a higher tax bill than their actual earnings would require. One former contractor provided H&R Block tax records showing this to be the case. Another Creeker asked the company in an e-mail to separate the expenses from taxable income. But the request was ignored, the contractor said. Hampton creek declined to comment about the alleged practice. Sketchy and unacceptable

mathattack 10y ago
Worse than sketchy - it's fraud. People should go to jail for this.
- conover 10y ago
  That's a bit extreme. Non-violent crime and all. A fine perhaps.
  - Normal_gaussian 10y ago
    I'm not so sure. It is obviously fraud, and couldn't appear not to be that way for the perpetrators. So if they only face fines it makes sense for them to weigh up the potential gains against losses - and its not just flat cash. On top of that bear in mind that high sales figures will allow them to grow faster - you can't fine growth very easily.
  - mathattack 10y ago
    Defrauding investors is a serious crime. Think of the widows and orphans and their pension funds. :-)
  - gremlinsinc 10y ago
    Lots of non-violent people go to jail for marijuana use as an example... Lots of violent destructive people never see jail -- you know the kind of people that forcefully take homes and money from people with the help of the sheriff because they knowingly sold homes to them that they couldn't afford..
    - nwah1 10y ago
      This is the worst argument, though, if your point is to argue that these people ought to be in prison. Many non-violent crimes that people go to jail for are activities which should never have been made into crimes in the first place. And if you extend this out, you start to wonder just how many non-violent crimes ought to be punishable with prison. The shoplifting example, for instance, might be something that should only be a civil penalty rather than criminal, as long as it isn't armed robbery. It's hard to know where to draw the line, but if you want these people to go to prison, then don't highlight crimes that the majority of Americans now think shouldn't be crimes.

bluejekyll 10y ago

This is yet another young company that I've heard of which is being driven by a desire for quick growth by trying to short-circuit the natural growth of their product. LendingClub: misrepresenting financial standing of borrowers. Theranos: their new test is as accurate and more efficient than existing tests. Zenefits: dodged proper training of employees. All of these seem to be inline with spurring growth. Is the expectation of quick return and/or increased valuation (no down rounds) driving companies to make these poor decisions?

hkmurakami 10y ago
Lending Club: Not only that, they also misrepresented the terms of the contract and legal clauses present in them by falsifying the date of loan forward to one that was after they made changes to their language (I believe Jeffries was the counter party). Blatant securities fraud. edit: since I seem to be the target of downvoting by people presumably with a stake in LC, here are some sources. "he falsified dates on $3 million of loans that were bought by Jefferies" http://www.bloomberg.com/news/articles/2016-05-10/jefferies-said-to-have-pressed-lendingclub-to-improve-disclosure http://www.bloomberg.com/news/articles/2016-05-10/jefferies-... http://ftalphaville.ft.com/2016/05/10/2161309/the-legal-tweak-that-led-to-disaster-for-lending-club/?Authorised=false&_i_location=http%3A%2F%2Fftalphaville.ft.com%2F2016%2F05%2F10%2F2161309%2Fthe-legal-tweak-that-led-to-disaster-for-lending-club%2F&_i_referer=&classification=conditional_registered&iab=barrier-app http://ftalphaville.ft.com/2016/05/10/2161309/the-legal-twea... http://www.wsj.com/articles/inside-the-final-days-of-lendingclub-ceo-renaud-laplanche-1463419379 http://www.wsj.com/articles/inside-the-final-days-of-lending...
2muchcoffeeman 10y ago
'It's easier to ask for forgiveness than permission' seems to be a feature of American startups.
- kevindong 10y ago
  I mean, that's basically Uber's business model.

bagacrap 10y ago

Perhaps naive, but how is this different from spending investors' money on traditional or viral advertising? Seems like either way they are spending money to create demand. Is the only difference how it shows up in accounting? I wouldn't feel too bad for their business partners---Safeway was still making a profit, presumably, just as an advertising company instead of a retailer.

alanpost 10y ago
One salient detail that's a bit difficult to pick out of the article: Hampton Creek gave cash to contractors with instructions to use that cash to purchase Just Mayo. However, they recorded (some of?) these cash payments as wages on those contractor's 1099s, meaning those contractors had to pay taxes on that "income" when in truth this was (at best) a business expense.
- paulcole 10y ago
  What I don't get is why the contractors didn't just claim the expense on their taxes to striaghten it out?
  - alanpost 10y ago
    My comment is based on the single report substantiating the larger story in the article. I think you ask a reasonable question. Maybe the particular contractor had an axe to grind. Maybe the bookkeeping was a mess but for reasons of incompetence rather than fraud. I think the larger picture is troubling, but I can also see a scenario where each of the pieces that builds up to that case has a plausible and benign explanation. I don't think there are enough details in this article to conclude one way or the other.
  - pcvarmint 10y ago
    Because their expenses would have to total at least 2% of their AGI in order for them to deduct them. This means someone making $50K would need to buy $1000 worth of Just Mayo or other qualifying unreimbursed expenses.

alaskamiller 10y ago

Reddit: faked accounts to seed activities AirBnB: scraped and spammed craigslist OrderAhead: faked phone in orders to restaurants not participating LendingClub: faked financial viability to lenders Zenefits: faked hours for accrediting licenses Homejoy: faked out investors

rwc 10y ago
And Theranos?
- alaskamiller 10y ago
  Different class.
fnimick 10y ago
Part of being a modern startup means you have to break the rules to catch up with established competition. If you get big before the law catches up with you, you win. See: Uber. Flagrantly illegal, but it's gotten big enough to pressure governments rather than the other way around.
erdevs 10y ago
"Startup = growth" :/

dpiers 10y ago

They're defrauding retailers by manipulating the results of their trial runs, resulting in larger buys and wider distribution than they would have obtained otherwise. I would be surprised if the retailers didn't have language in their agreements prohibiting this type of behavior. If the product ends up having high sell-through rates, this is just a clever growth hack, and it's a win-win. However, if the product doesn't sell after they tricked a retailer into putting a large quantity of product on shelves nationwide, it could easily end in litigation. Especially if these test runs and subsequent retail orders were material to the investment decisions of their backers. Also: if they engaged in these practices, it probably isn't the only unscrupulous thing they've done. A fish rots from the head/where there's smoke there's fire/etc.

deleted 10y ago

[deleted]

SwellJoe 10y ago

I really like Hampton Creek products (I'm vegetarian, and my girlfriend is vegan, but Just Mayo is a high quality product regardless of whether you eat eggs or not). I'm honestly excited to see it show up in local stores, and have been known to go to stores that I know stock it specifically to buy it. But, this is pretty sketchy behavior. I guess investors will be forgiving if the growth of the company ends up catching up with the faked numbers, which seems to be what's happening, but I dunno if the stores will be as quick to forget. Then again, if demand catches up quickly, they may not mind, either.

jdoliner 10y ago
> but I dunno if the stores will be as quick to forget. Why would the stores be mad about this? It seems like Hampton Creek has basically sent them a jar of Mayo for $5 and then turned around and bought it back from them for $10. (I'm making these numbers up but I'm assuming the stores aren't selling this Mayo at a loss.) Stores should be happy to do that all day long. edit: I guess part of the reason they did this was to deceive the stores into giving them more shelf space. I could see that rubbing stores the wrong way.

brazzledazzle 10y ago

If you're going to order your employees to do questionable things you'd better make sure they're treated right. You would think it goes without saying...

brazzledazzle 10y ago
Upon rereading this it may seem like I support what is ostensibly fraud and I should make it clear that I do not. I just wanted to note that mistreating (and in some cases apparently defrauding) someone who can testify against you is probably not a smart move. It speaks to their ignorance, stupidity or perhaps narcissism.

WhitneyLand 10y ago

They have placed themselves on the wrong side of the line between growth hacking and actionable fraud. Worst yet, when Josh Tetrick (CEO) was called out on it, he tried to justify it rather than coming clean and promising not to do it again. He'll be lucky not to be sued by investors since funding was granted based on falsified data.

coverband 10y ago

How is this different from other guerrilla marketing tactics? If I'm a small company just starting operations, of course I'll do whatever I can to make myself look to be more in-demand. Not defending the accounting or payment/expense irregularities, but if they were only spending a small amount that could otherwise be spent on advertising, I would consider this an effort to help them take off in the marketplace.

WhitneyLand 10y ago
They lied to investors about it and won financing based on the results of falsified sales data.
- coverband 10y ago
  I'm not endorsing fraud, but if they spent only $77K (or twice as much) to carve their product some shelf space against Kraft or Conagra with their billion-dollar marketing budgets, I would look at their action in a different light. Without knowing the true intent and just based on the limited info presented in the article, IMHO, this is not in the same league as what Theranos was doing.
  - tssva 10y ago
    They have shown themselves to be deceitful, so how can you have any trust in that $77K number?

Overtonwindow 10y ago

I don't see any problem with this. If it's illegal, then prosecute them. If it's not illegal, then it's up to the shareholders to hold the executives responsible. I don't see how consumers were defrauded or deceived in any way. Major food producers pay huge buckets of money to be on those grocery store shelves. And we know the major food producers have been trying to put Hampton Creek out of business since it started. I like Just Mayo and I say good for them.

woodruffw 10y ago

Isn't this the same company than ran afoul (no pun intended) of the FDA for labeling their non-mayonnaise product as mayo? I bought a jar of their stuff about two years ago. It was essentially thickened vegetable oils and a sizable heaping of salt and coloring. I was unimpressed, to say the least, considering how far vegetarian and vegan alternatives to meat and dairy have come in the last decade.

dfsegoat 10y ago

This is not at all surprising if you know anything about putting a product into retail: Big box retailers have suppliers pretty much literally bent over a barrel (unless you are PG, General Mills, etc). If your product does not sell through (volume in units) to their satisfaction in ea. / every store or region, typically you will be contractually bound to do almost all of the following: * You will pay them to buy all product back * You will pay logistics / restocking fees to remove the product * You will have to figure out how to put all that product back onto your books. Compound that with a highly perishable, refrigerated product - and of course this happens all the time. ^Edit for punc ^^ edit for detail

xenadu02 10y ago
This is all true and it is even worse in many cases. Wonder what those "don't return this item to the store" notices are about? Most big box retailers have automatic refund percentages and penalties built in so every returned item gets placed in the trash compactor and the manufacurer eats the cost plus a penalty. Too many returns result in escalating penalties.
dragonwriter 10y ago
> Compound that with a highly perishable, refrigerated product AFAIK, "Just Mayo" is not a highly perishable, refrigerated product. It is a refrigerate-after-opening product sold off regular, non-refrigerated grocery shelves, just like normal mayonnaise.

repnation 10y ago

http://www.businessinsider.com/hampton-creek-ceo-complaints-2015-7 http://www.businessinsider.com/hampton-creek-ceo-complaints-... Let's not forget, no one really has any idea what is in their "mayo." They've been caught lying about ingredients and their "huge" database of flavors

ars 10y ago

I'm finding it hard to be troubled by this. If real customers will not buy the product then it will fail, no matter how much the company tries to fake it. It's not that different from gaming the system to get on the Best Seller list. Or how movie studies get their films to rank high so everyone thinks it's the thing to watch. Or to mess with amazon sales rank.

kumarski 10y ago

I love the mindset of this founder for utilizing this tactic. I'm okay with it as long as the LTV exists. Reddit faked comments in the early days. SocialCam juiced user invites before Apple banned the practice. I see this as no different. I do however believe they should have outsourced the calls more efficiently utilizing something like upcall.com. This founder believes he has the vaccine of sorts to a ton of waste and if the result is a product that will reduce consumption because it's environmentally friendly, I'm okay with him being a bit vicious with it. Also for QC, you usually buy a statistically small number of units. You can't do this type of fake demand tactic though without letting the investors know. I think that's murky territory. Homejoy did something similar buying fake reviews and juicing yelp reviews. So there's always a fine line, really it's important to make sure you have lifetime value on the product.

fasteddie 10y ago

A friend at a mobile gaming company once had to run an analysis on the cost/benefit of spending her company's money in one of their game to drive it up the top grossing charts. The question was whether high placement on the top grossing charts could drive a lower CaC (the cost being the 30% of spend that goes to apple) than buying similar amount of users through FB ads.

trimbo 10y ago
Soooo... did they do it?

kristianp 10y ago

Scrolling away from the video prevents it from playing on the news sites I usually visit. Not Bloomberg! "Don't try to get away from that video by scrolling down to the article, we'll keep it in the corner for you!" Thanks bloomberg. Adding their video player to ublock.

hristov 10y ago

Hampton Creek are flat out dishonest. They have a product that is not mayonnaise, but they call it mayo. Furthermore, their product does not include any eggs but they had a huge image of an egg dominate their entire label. The entire product was based on a lie and I am not surprised they tried to mislead their investors and distributors as well. I am all for removing animal products from the diet but that does not excuse lying to the consumer. If you think you have a great egg-less mayo like sauce, you should be proud of the fact that is egg-less and make sure the consumer knows it. Not hide it. And no it does not taste anything like mayo. It has a weird spicy taste. Mayonnaise is not supposed to be spicy. Some people may like it, but the people that are expecting the taste of mayonnaise will be quite disappointed. I am willing to bet that a lot of food has been thrown in the trash because of this little marketing trick.

erikpukinskis 10y ago
What about bacon fat mayo, which is made with bacon fat instead of the traditional olive oil? Or how about Hellman's which almost certainly doesn't use olive oil, instead using some cheap vegetable imitation, should that be allowed to be called Mayo? In Japan they use apple cider vinegar or rice vinegar, should that also be labelled as "rice-vinegar based mayo-like sauce"?
- jstsch 10y ago
  Mayonnaise is almost never made with 100% olive oil. It will dominate the flavor (sharp/grassy/bitter). A dash is fine, but a neutrally flavored vegetable oil like canola, rapeseed or sunflower oil is typically used.
  - erikpukinskis 10y ago
    From Wikipedia: > According to Trutter et al.: "It is highly probable that wherever olive oil existed, a simple preparation of oil and egg came about — particularly in the Mediterranean region, where aioli (oil and garlic) is made." So, no. What you are talking about is some imitation Mayonnaise-like sauce which should be law not be allowed to be called "Mayo". Because that's what the legal system is for: protecting the traditional definitions of foods from people like you who think some sort of cheap Canadian imitation flower seed oil should be allowed to be used in a traditional recipe like Mayonnaise.