Selling Billions of Crickets a Year

Published Aug 18, 2022, 4:05 AM

Mohammed Ashour is the co-founder and CEO of Aspire Food Group. The company just built the biggest cricket factory in the history of the world.

His problem: How do you sell billions of bugs a year?

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Pushkin. When Mohammed Assure was in medical school back in twenty thirteen, he and a few friends heard about this contest. The team that came up with the best idea for a business to address global food insecurity would win one million dollars to launch the business, and, like lots of people before them, Mohammed and his friends soon discovered crickets. They learned that crickets are a super efficient machine for turning grain into protein. Quick comparison, a cow eats eight pounds of grain to make one pound of beef. For chicken, the ratio's two and a half to one, and for crickets the ratio is just one point three to one. Incredibly efficient. This is the part of the eating bug story that we've heard before, but the problem always seems to be how do you get a mayors to eat bugs deep crickets. Mohammed's big idea was to avoid that problem altogether. Instead, he and his co founders would bring down the price of crickets for millions of people in other parts of the world where people already eat crickets, but where crickets are not always available or affordable. That turned out to be a surprisingly hard problem. To solve, but the idea was enough to win the million dollar prize and launch the business. I'm Jacob Goldstein and this is What's your problem. My guest today is Mohammed Assure, founder and CEO of Aspire Food Group. The company just built the biggest cricket factory in the history of the world. Mohammed's problem now, how do you sell billions of crickets a year. Today's show is a story about finding your market and also about one of my favorite ideas, an idea that maybe not surprisingly has become one of the recurring themes of this podcast. The idea is this, one of the key drivers of human progress is using technology to make things cheaper. In this case, the thing technology is making cheaper is crickets bugs. When we started the business, our goal was not actually from the get go to get North Americans eating bugs. In many of the world's countries, insects are already consumed as a delicious delicacy that is highly nutritious and celebrated. But in many of those countries, crickets or other insects are just not available, not affordable seasonal. So you want to go to a place where they're at delicacy. I mean the reason they're at delicacy is because they're expensive, right, Like that's delicacy means. And so the idea was, we want to now make this protein source which is already accepted here, available and affordable year round. Right. Some of those countries I mean, I know famously Wahaka right in Mexico. What are some of the other places where people at crickets, Oh gosh, I mean in Africa alone, you have you know, Gonea, Nigeria, you have South Africa, you have Niger. If you go to the Middle East, you have Saudi Arabia, you have Kuwait. Like these are places where locusts are widely consumed. If you go to Asia, you have some of the countries like Thailand and Vietnam. And now it's not in every one of these countries. There are certain you know, cities or municipalities or areas where insects are widely consumed because of their geography or their climate, and others less so. But fundamentally, it's a very large percentage of the world's countries that have some history of consuming insects. So what you want for your for your mission really is a place where lots of people are hungry, you struggle to have enough food and where eating crickets is already normal exactly. That's that's right, and that that was our focus from the beginning. And so if that was the focus, this is why not build the factory there? Yeah. So one of the challenges we've faced is we actually tried. So when we first started the company, one of my co founders moved to Ghana, and one of us moved to Wahaca, Mexico, and I moved to Austin, EXUS where we were starting to pilot cricket farming. And the challenges we faced is both the talent that you needed to have placed there in order to build the capability, not just the engineering talent but also the entomology talent and the understanding of how to grow those insects at scale, and the agricultural requirements to regulatory requirements of a lot of factors were very challenging to be able to pull off for a bunch of like expat foreign students. Okay, so you tried. So the answer, as you tried, the answer is too hard to Yeah. Yeah, for us, for us as a founding team, given our specific circumstances and given some of the realities we were we were experiencing at the time, and now when we when we decided, okay, well we're going to produce crickets in North America and you know, focus perhaps on shipping overseas to some of these markets, that's when we also started to see this opportunity. And part of this was driven by inbound requests. So back in twenty fifteen, right around when we built our factory in US, our very first facility, there was a bunch of startups that we're getting funding on, like shark Tank and a whole bunch of others that we're getting, you know, funded on Kickstarter very successfully, that we're making, you know, protein bars from crickets or other snacks from crickets that we're reaching out to us asking us if we can supply them. So, okay, you realize you aren't going to be able to build a factory somewhere people already eat crickets. You're thinking maybe you'll ship them there, but but you also think, well, you've got the crickets anyways. People are kind of into crickets in the US right now, and you actually try this sort of plan B move where you sell bags of crickets like chips in the US, right, tell me about that. So the idea was simple. It was to so try to go on one side where you are so explicit about the fact that this is a cricket that you actually present it as a snack in whole cricket form. Right, So you take these crickets, you roast them, you apply seasoning like you know, it's like chips seasoning, right, like barbecue or sour cream or whatever, and they would be consumed not dissimilarly to something like jerky in the sense that it's a very meaty, high protein snack that is savory. And it was very interesting to see the response we got because you sort of had like a certain percentage, and I would say, it's a small but extremely dedicated, you know, very devoted following of people who found this to be super nutritious and delicious, but of course and also made it like their whole identity, like, hey, call me cricket, I'm the cricket that I love to snack on crickets. Ask me about crickets. Yeah, that's right. And they were remarkably popular amongst children in particular. And then you had on the flip side. I would say a much larger percentage of people whom that was too much in terms of like just visually seeing a cricket and being able to pick it up and eat it. I don't want to eat a bug. Seems like that's right, not that surprising response. Yeah, so okay. So at this point, like plan A, build a factory where people already eat crickets. That didn't work. Plan B, sell crickets to people in North America. That's not going great. But then there's this moment when you kind of get your big break. Tell me about that. We were actually at a food in Anaheim, California. We had at the time a large company that primarily focuses on pet food, looking for human grade ingredients so they could sell some premium thing like give your dog chicken that's as good as the chicken you eat, that kind of thing exactly, And that led to was this unbelievable rabbit hole where we became to understand that Over the last decade or so, there has been a two major trends in pet food. The first has been the humanization of pets. Pets are no longer this furry thing that greets you and makes you feel good. It is a member of the household, and in most households, the favorite child. Yeah. And as a result, when that's your philosophy, that means you feed and clothe your pets accordingly. Yeah. And the amount of money that people are spending on their pets a staggering And by the way, pets represent about one in four calories consumed when it comes to animal products in North America. So just to be clear, twenty five percent of the meat calories and consumed in North America is consumed by pets. That's correct. Okay, let's go back to Anaheim. So you're taught in the some pet food company, yes, And they come to us and they start asking us about you know this this cricket protein, and you know what are we feeding as as human grade? Oh yes it is. Okay, Well, tell us about sustainability, and we start describing the sustainability benefits, and their eyes just flash and they start describing to us the challenges their customers are facing because they're sort of in a moral an ethical dilemma that a lot of their customers face, who are mostly millennials, the largest pet owning demographic by far, face this dilemma where on the one hand, they want to feed their pets like their humans, and that's benevolent, but then most of what they have to choose from to feed their pets is not very environmentally ecologically healthy. And that's the other thing. Two dogs are, you know, omnivores that preferentially consume meat in their diet, and cats are carnivores. So there's also a challenge with just using purely plant based or vegetable based. Yeah. Right now, if you're like a center left millennial, you want to do the right thing for your pet and do there I think for the earth? What do you do exactly? And so this was the opportunity. Now, the next question this customer asked me is well, how what's your volume today? We're very interested. This customer is a big pet food company. Yes, that's right, and well and they also manufacture and distribute to other pet food companies as well. Okay, so they ask us, you know, what's your production volume today? We said, well, our production volume today is you know, maybe low hundreds of thousands of pounds a year. They said, oh, okay, well that's that's too bad. We said, well, why why is it too bad? They said, you know, the guy said to me is like, Muhammad, You're not going to be able to move the needle in the pet food market unless you get to a million pounds a month or more because the demand is very significant and the production the way you produce in terms of like the kibble, et cetera, has always done at significant scale, and my customers, even if they do a test launch in just one market, that's like millions of pounds of a required product. So of course I immediately said to that person and said, well, listen, there's like clearly a value in a philosophical alignment between you know, the market you represent and our mission as a company. So I mean, if we were to have the resources and capacity to scale to meet that volume, is that something you would commit to? And they said, we would sign today, you know, a commitment if you were able to meet that volume and if you were to meet that demand. And in fact, that is what led to us being able. Now with this significant demand in hand, we were able to justify building a commercial facility that can lead to us meeting that market. So you're gonna sell billions of crickets a year for pet food startups in the next year, or so yeah, yeah, exactly when are the first crickets going to go out the door of your factory headed for a pet food factory? In three months? In three months? Okay? Yea, And couldn't you say what pet food company is buying crickets? You'll find out very soon, Okay. I mean the only pet food company I've heard of is Purina, so I'll just say, is it Purina? No comment? Interesting? And it's not just one It's not just one pet food brand, by the way, So okay, plan See this pet food idea seems promising for a few reasons. One is, pets eat a lot of meat, which I didn't even really think about much until I had this conversation with mommy, so there's a real environmental problem to solve it. And also, bugs are clearly not grows to most of the dogs and cats I have known, at least, like if my dog found a cricket on the sidewalk, he'd eat it. But now that Mohammed has found his cricket demand, he has to come up with the cricket supply coming up after the break, how do you build the biggest, most high tech cricket factory in the history of the world. Now back to the show. Earlier this year, Mohammed and his colleagues opened a giant cricket factory in London, Ontario, Canada. From the outside the factory, it just looks like a big white industrial building, and on the inside, to a large extent, it also looks like a big industrial building. You know, think of like robots moving around palettes with big plastic bins on them, But inside each bin is tens of thousands of live crickets. Is it allowed when you go to where the crickets are is allowed? Not yet? You know, we expect that once we get to full production capacity, you'll have a nice sort of comforting, soothing chorus of chirping. Actually, a group of crickets is called an orchestra, which is why we've named our facility here in the orchestra. Okay, tell me about the place where you're sitting right now. Where are you talking to me from? Our facility is one hundred and fifty thousand square foot mostly factory with a headquarter office component, and it is the world's largest fully automated cricket production facility, largest fully So does that mean there's a big not fully automated cricket production facility. No, it doesn't. This is just a very comprehensive description. It is the largest cricket farm and it also holds the record of largest automated cricket farm. It also holds the world record farm. So you're talking to me from the biggest cricket farm ever in the history of the universe. Well, I don't know about the universe, but certainly planet Earth. Good, good point. And when did it open? And we began production this past month. Cricket number one arrived this month, correct? And when are you going to get to cricket whatever one billion? Yeah, later this year, towards the end of the year. Okay, just because the crickets have to make more crickets. Is that what happens? Right? That's right. So a single female will lay somewhere between one hundred to two hundred eggs per week. So the reproductivity of the crickets is pretty remarkable, and the rate at which we will grow will be quite exponential. So let's talk about this factory like, are there are there sort of tricks or efficiencies you're gaining or is it just more crickets? You know, you can ten x the amount of crickets, and you don't have to ten x the amount of staff. And therefore it's just basic simple economy of scale. There's a combination of the two. Let's do this. Tell me the story at this new fancy, biggest ever cricket factor you have, like start with what an eggs? At the right place to start? If we start with an egg, or maybe with the mother laying an egg, wherever you want to start, start at the beginning and end with somebody eating cricket. Sure, how does that story go? Yeah? So sure. So the way it works is you have our breeder totes. So we have these bins in the facility that are dedicated to crickets that are sexually mature and will mate. And then effectively, the females will deposit their eggs into a substrate. That substrate will be incubated and then slow down a little I want to slow down a little bit. So you have a breeder You called it a tote, like, yes, think of it as a in the size of a palette. Okay, so like a shipping palette. Yeah, like a shipping a box. That's that's a pretty large box the size of a palette and that's the single unit that we move around in the building. Think of that as like the housing unit for a certain population of crickets multiplied by you know, many thousands of these touts in the facility, and the total of that is the total population of crickets. And so your crickets live in these boxes. And so you have sure some with with crickets that are breeding and they lay eggs, and they lay eggs and then those eggs are incubated and then they hatch. The newly hatched crickets are called pinheads, and that's because they are so small they could literally fit on the tip of a pen. Okay, how many crickets grow up in in a bidden Yeah, approximately thirty thousand are in each bin. Thirty thousand, okay. Um And those bins will now have food and water and all of the requirements that the crickets are going to need for the thirty day period in which they are going to be housed in this umility until they are ready to be harvested. So, in other words, you're putting everything the crickets need that is fully sufficient for that thirty d period. You're sealing and closing the lid and effectively not touching or interfering with or in any way interrupting this process for thirty days. You come at the end of thirty days, and in that thirty days crickets grow about eight hundred times their body weight. That's the equivalent of a human baby growing to become a t rex in thirty days. So you have at the end of thirty days now these crickets that have reached adult size, and you harvest them the way we harvest the crickets as we actually freeze them. So okay, that's the process of how you raise the crickets. And the point of building this big factory and of using the plastic toads and everything else is to bring down the cost of crickets. Right, So let's talk about cost. What is I don't know, what is a pound of crickets cost? Yeah? Sure, So, typically speaking, crickets are purchased as either a powder or in a raw material form a powder in powder form that we would take about let's say four pounds of crickets to produce one pound of cricket powder. Right, So today a pound of cricket powder will sell for about call it somewhere between fifteen to twenty dollars per pound of powder. Okay, okay, So if it's four pounds of crickets to make that powder, that means even just a pound of plane crickets is still more expensive than a pound of like chicken, absolutely, and that price is largely based on the scale challenge that this industry has had. Now, as you scale up and you introduce more automation, your cost per unitive production starts to dramatically drop, and the more you scale, the more efficient your costs are overtime. So for us, the premise always has been that if you look at the math like on paper, if crickets use less land, less water, less energy, less food, then really the inputs that are typically the largest driver of cost when it comes to livestock production, if they are much lower for crickets, then therefore crickets should be much less expensive. It's pretty simple math. The reason they're not is because the scale at which you're producing crickets today is so small and your labor cost per unit is so high that obviously your price is quite significant. This is why this facility that we've just built is such a massive step, because we are going to be able to dramatically increase the affordability of our crickets within the next twelve months. And to put that in perspective, you know, if a pound of cricket powder today sells for about twenty dollars, within the next twelve months, it'll drop below ten dollars, and we anticipate that within the next three to five years we will actually be close to the five dollars per pound mark. You seem confident in those in those predictions. So you're saying the price a year from now is going to be half what it is today. Yes, how do you know? How do I know? The reason I know is because you look at what is driving the cost today of twenty dollars per pound, because you know you're lost yet granularly, So there's two reasons you're expecting the price of crickets to fall in half in the next year and what in half again a few years after that? Basically is that right? If I understand it. One is just scale. You just have a really big factory now and it's more efficient, fewer dollars of labor per cricket. Two, you're just getting better at raising crickets. You're getting figuring out how to be more efficient. Is that right? Yes, we gather. We will be gathering about thirty million data points every single day on everything like temperature, humidity, light intensity, sound, pressure, and understanding how each one of those things maps to growth. So if I see a certain cluster of touts in my orbins in my facility, that I see a five percent increase in yield compared to a different control, and I look at the underlying data and what was actually happening in each bin. A. I know what this is happening in each bind because I'm capturing that data, and B I can look at the nuances of what those differences are and then immediately set that new baseline. When we first started, I think we were getting so out of thirty thousand crickets, we were getting maybe something like two pounds of yield. You got a box full of crickets, a box of thirty thousand cickets, thirty thousand baby pinhead crickets, and by the end of a month you get two pounds. Okay, now we're close to twenty pounds per bin and that and what was Is it because of more of the crickets are surviving? Now? Is it because they're bigger, is it something a combination of the above. So figuring out, for example, what is the optimal feed where do you ideally place the feed because a pinhead cricket is so small, So even like the particle size of the feed matters. If you have your feed is not crushed into a certain particle size, it may be difficult for the crickets to eat it. Water water access right when they're When you have a cricket the size of the tip of a pen, it can literally drown in a drop of water. So how do you ensure that it can drink water in that very fragile state in its early days and still be able to access water when it gets older and larger? And how do you optimize the number of crickets? Wait, what's the answer to the water one? How do you do that? That's a trade secret? Is it really is a cricket trade secret? It actually is a cricket trade secret? Yeah, So like is the end? Can you tell me what what's going on inside the bin? Or it's like that's a literal black box, Well it is. It is in many ways of black box because that's ultimately when you think about all of the intellectual property of the company. It kind of comes down to not just what you have in the bin and where it's placed, but also what there are the decisions around how you've done that. So I think if you look at the major difference between what we've done and what we've learned compared to virtually any other cricket farming operation in the world, and there is quite a few the differences. We are the only cricket farming operation that has devised a successful way of farming crickets in a fully enclosed bin, and that allows you to do so many interesting things. Now you can stack the bins. Now you can have a lot more efficient packing in your facility, the way you're moving it around, and presumably it makes it super scalable because you just close the box and go away for a month and come back exactly. And also the other aspect of scale that is crucial is you know, a lot of startups I think get too hung up on IP in the early days, right because you have to you have to kind of put your elbows out and prove why you're different, why you're so special, specifically if you want to attract investor dollars. But as you get as you grow up as a company and you want to scale up. Actually it becomes a disadvantage for too many things to be customed because it's very hard to modularize. It's very hard to scale. Ideally in our case, when we focus all of our ip on what's happening inside the bin, now we can make everything else off the shelf, right the factory conveying systems or off the shelf, because the unit of the bin is a palette, and we universally know how to move palettes around inside warehouses, inside factories. So that allows you to take advantage of so many already proven, already you know, de risk technologies and to focus your core competency on the thing you know best, which is what's actually happening inside these bibs. So, in a sense, outside the bin, it's just a generic factory and you can use all the generic factory technology that already exists. Yeah, it's a super super cool factory. Hopefully you'll visit one day. And robots got like robots driving them around and yeah, yeah, lots and lots of robotics, lots of robotics, lots of you know, factory conveyance. That's a fully automated sensors, computer vision, that sort of thing. So you had this original idea of basically bringing down the price of crickets for people in places where people already eat crickets. You still working on that, yes, So for us, that's the that's the North compass. The problem we found when we did the math in the early days is to profitably sell crickets to a single of mother of three children in Kumasi, Ghana, you have to have an unbelievably tight operating cost structure, and we're not even there yet with this facility. So what we eat, what were my view and my vision long term is that within the next five years we will finally hit the cost floor that allows us to now be able to build a facility at scale in the Middle East, in Africa to actually meet the demand in some of these markets. And what's really heartening is we actually received an investment at the end of last year from a fairly large Korean food and beverage company that is interested in building out a factory in Korea that distributes to many parts of Asia and where the ultimate objective there is to address food security and to meet the nutrition requirements of populations but profitably doing so. And that's when we began to drip. And how much does the cost of cricket production have to fall for it to be a real protein food source for people in the developing world? I would say it would have to drop another thirty to forty percent from where we are today. Okay, And how long is it going to take you to do that? I am optimistic within the next five years will be there. I love it when stuff gets cheaper. In a minute, the Lightning round, we have lots of questions about bugs. That's the end of the ads. Now we're going back to the show. Let's do the Lightning round. Let's just do ask questions. Okay, indeed, um, first insect? I ate? Sure? You want to do that one? You could ask me sure? How about what was the last time what was the last time you ate an insect? This weekend? Cricket powder in my pancake makes with kids. Does it even taste different or is it just like pancakes with protein. It doesn't taste any different. Crickets taste like what they eat. And so you have this very very kind of mild flavor that's kind of corn in it, and it's odor and texture, and we blend it with flour. Doesn't you can't tell any difference. Um, you're tired of the sound crickets make? No, I'm not. You like it? You like it still? Yeah, it's it's souping sound. Can you make it? I can't know, and if I did, it would not be seething. Why do you think is the most underrated insect? I'd probably say ants. I think I think bees get a lot of credit, but but ants have an unbelievable role they play ecologically to sustain our ecosystems. Um. And I'm just amazed at how powerful they are relative to their body size and the way they can act in concert. Right, the way they can act in concert. Yeah, as a team, the teamwork is just for me personally. I can't get enough of ants. What's your second favorite insect after crickets? Um, I really enjoyed I really enjoyed palm leavel larva in Ghana. Very tasty. How do you just eat them? How do you eat them? It's like you skewer them on a shish kebab and then you consume it no differently than you would like a chicken shish kebab or a beef like you added to a stew or rice or with a pieta bread or something like that and or gelaf rice. In that case, it was very tasty. If everything goes well, what's a problem you'll be trying to solve in five years. There's over one million species of insects in the world that have been identified, and I believe every insect is a source of some natural superpower raw material. We've happened to match crickets to protein. We know that honeys and bee and silkworms and silk. Imagine all the other raw materials and all the other insects that are yet to be discovered once you know how to produce them at scale. Well, what's give me one or two that are on your short list, then I'll tell you what. There's a specific species of insect that has been shown and has shown very promising potential to actually biodegrade pet plastic in other words, literally eats plastic and produces glycola on the other end. That's very exciting. Muhammad Ashure is the co founder and CEO of Aspire. Today's show was produced by Edith Russolo, engineered by Amanda ka Wong and edited by Robert Smith. I'm Jacob Goldstein and we'll be back next week with another episode of What's Your Problem.

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