The hippie endurance athletes behind Epic
Provisions sold their natural food company to General Mills for a
reported $100 million. It began as an unexpected love affair. Then, it
got complicated.
On a cloudless mid-April morning in Texas's Hill Country, about 60 miles
west of Austin near a legendary honky-tonk town called Luckenbach,
Katie Forrest and her husband, Taylor Collins, eye a herd of bison
grazing in a pasture on the 900-acre ranch they purchased last year.
About a dozen of the giant beasts have formed a protective circle around
two baby bison as they amble, en masse, in their owners' direction.
"Oh, my god, I can't believe they're coming over here!" Collins marvels,
in the hushed, conspiratorial tone of a nature-show host. "This is
crazy. This is as close as anyone will get to a week-old baby bison."
This ranch, this field, this herd of animals, is what paradise looks
like to Forrest and Collins. A couple of Austin natives, they bought the
spread with money they made when they sold their startup, Epic
Provisions, to the Minnesota-based consumer packaged goods (CPG)
conglomerate General Mills in 2016, after a scant three years in
business, for a reported $100 million. Barely into their 30s, they were
suddenly rich beyond their dreams. They'd built the company, which makes
meat-based snacks, without taking enormous amounts of outside
investment, and managed to keep a majority stake in it when they sold.
They were also, like many founders of hip food and beverage brands,
obsessed with making products that offered a healthy alternative to big
food--healthy for consumers and for the environment, and humane to the
animals. The ranch would not only be an outlet for their outdoorsy
lifestyle, but also serve as a lab for regenerative grazing practices
that they hoped to push more of their suppliers to adopt. They wanted
Epic to be a force for changing America's food system, and the ranch
would help. They started raising bison, chickens, turkeys, ducks, geese,
and bees.
Epic Provisions’ married co-founders, Forrest and Collins, purchased 900
acres of ranch land, where some 70 bison now roam.CREDIT: Brian
Flaherty
Meanwhile, they were still running Epic, still working out of the back
of the same one-story Austin building, behind a barbershop. They still
went to work in flip-flops most days, still had half a dozen dogs
wandering around the office. General Mills, one of the world's largest
food companies--the parent of such conventional mega-brands as Cheerios,
Betty Crocker, Pillsbury, and Green Giant--might seem an odd home for
the couple's creation. But as big CPG companies have struggled in recent
years with changing consumer tastes, they've begun to look at food
startups as a sort of innovation pipeline. By buying a company like
Epic, General Mills could get access to Millennial consumers. Epic, in
turn, would get access to vast resources, with the potential for greater
impact.
It sounds like a business fairy tale: Lovebirds build a mission-driven
company, sell it for a fortune, and still get to keep it. Except it's
not that simple. There's no shortage of cautionary tales among insurgent
brands snapped up by the big guys, as when Kellogg's acquired the
cereal maker Kashi in 2000 and managed to turn eight years of impressive
growth into declining sales when it imposed its big-company ways.
Within months of Epic's acquisition, it looked like the company might
already be heading down that path. Forrest and Collins were chafing
against their new owners, to the point that they began avoiding calls
from unknown numbers at headquarters. "It was awful," Forrest says. "It
seemed like everything that was put on us went against our very core
values."
"We went there as a joke, to see the inside of this mega-corporation and understand what we were up against."
Yet here they are, two years later, not only sticking it out, but
insisting that they're not going anywhere. By Inc. estimates, Epic is
now on track to top $80 million in revenue this year, more than four
times what it did before the sale. But Epic's journey has been neither a
fairy tale nor a horror story. The reality of getting acquired,
concedes Collins: "It's hard."
At least part of the Epic story actually is a fairy tale. Collins and
Forrest first met in high school. He was a senior and she was a freshman
and they passed in the hall one day. They didn't say a word to each
other, but something happened: "It was like an atomic bomb went off,
like a burst of energy that shook my bones," Collins recalls. "I
remember it so clearly"--even though he never actually spoke to her, and
then soon graduated.
Six years later, when both were attending college at Texas State and
commuting the 30 minutes from Austin, Forrest got Collins's number from a
friend and asked if he would like to carpool. Then came a first date,
and he told her about his memory of that day in high school; she
recalled the same feeling. Within three months, they were living
together. Both passionate athletes, they took up endurance racing
together. They became vegans together. They began traveling together to
compete in triathlons and 100-mile bike rides, a hobby that requires the
kind of money and time broke and busy college kids usually can't
muster.
The solution: They started their first business, a commercial recycling
company. Austin didn't have a good system for restaurants and businesses
to dispose of their recyclable waste, so Forrest and Collins scraped
together $2,000 for a trailer and made weekly rounds to about 30
businesses. It was "gnarly work," Forrest says--"4 a.m. shifts, rats
flying in your face"--but it earned them as much as $10,000 a month.
Once they finished school, they started a vegan protein-bar company
called Thunderbird Energetica. Thunderbird drew the interest of Whole
Foods, which gave Forrest and Collins a $100,000 loan and distribution
in 30 stores, but the experience was a "disaster." They made mistakes in
everything from manufacturing to branding. The only upside was they
discovered they worked well together: Collins tossed up wild ideas and
Forrest would figure out how to actually implement them.
Then, Forrest started having health problems. After numerous doctors
failed to help her, a holistic health practitioner suggested her vegan
diet might be the culprit. "So we hit the reset button and started
eating meat again," Collins remembers. The paleo movement was just
starting to take off, and as Forrest's health improved, the two decided
they should hit reset with their business as well.
They entered Incubation Station, a local startup accelerator focused on
consumer products that is now called SKU. By the time they had finished
the accelerator, they were convinced they should pivot to meat. Epic,
the new brand, were protein bars that substituted the powders in
products like Quest bars with blended bits of meat, fruit, and nuts. An
angel investor in Houston loved the idea and invested $750,000. (Forrest
and Collins later raised an additional $3 million, mostly from a
Colorado-based venture capital group.)
At the time, no protein bar of this kind existed, and it wasn't easy to
get the product right. Once, when they were experimenting with an
extruder in their backyard, nuts clogged the system and caused an
explosion that sprayed 10 pounds of raw meat across the grass. When they
needed samples for their debut trade show, they packaged their first
batch of bars in their guest kitchen--only to find out two days before
the show that not all the bars were sealed properly, which created "the
most disgusting mold I've ever seen," Collins says. Despite the setback,
the trade show was a success, and they returned with $100,000 worth of
order commitments from retailers.
Forrest and Collins had hit on a powerful formula for new food brands.
It was a novel product concept that fused two hot categories, protein
bars and meat snacks like jerky. There was their mission for a larger
purpose--sustainable sourcing--and, of course, the couple's own
compelling story. It all added up to exactly the kind of authenticity
that legacy companies only wish they could create on their own.
The first time Forrest realized General Mills was sniffing around was
only a few months into the business. She noticed that someone in
Minneapolis kept ordering multiple boxes of bars on a daily basis.
Assuming it was a General Mills product-development person trying to
copy their concept, she started canceling the orders as they came
through online. Eventually a woman from General Mills contacted Epic and
explained that she was actually from the company's VC arm, 301 Inc.
Forrest agreed to stop canceling the orders. Soon, General Mills went
quiet.
Two years after that, in late 2015, the food giant surfaced again, and
Forrest and Collins accepted an invitation to visit its headquarters.
"We went there as a joke, to see the inside of this mega-corporation and
understand what we were up against," remembers Collins. The experience
ended up being revelatory. Other large food companies had reached out to
Epic over the previous three years, and every conversation felt like
the start of a transaction, not a relationship.
General Mills seemed different. Rather than sitting down with a bunch of
suits pumping them for financial information, "we spent the whole
afternoon talking about values and mission and founding principles,"
says Collins. The difference was even more striking when an executive
named John Foraker stepped in to become Epic's main contact. Rather than
being rolled up into the giant's snack division--the home of such
brands as Bugles and Chex Mix--Epic would align with other natural and
organic brands inside the conglomerate. Foraker, 55, had been the CEO of
Annie's Homegrown for a decade when that brand was acquired by General
Mills in 2014, for $820 million. Foraker, who was supposed to stick
around only a year after the acquisition, had instead settled in for
what looked to be much longer-term involvement at General Mills. And
Annie's was thriving, launching new products and becoming the flagship
of a growing family of natural brands at General Mills that included
Cascadian Farm, Muir Glen, and Lärabar.
Once, when they were experimenting with an extruder in their backyard,
nuts clogged the system and caused an explosion that sprayed 10 pounds
of raw meat across the grass.
Collins and Forrest couldn't have invented a better mentor and
protector. "If we do this deal, you will report up to me and never have
to talk to anyone else in Minneapolis," they remember Foraker telling
them. "We do this right." It was everything the Epic founders wanted to
hear. Foraker, who has a degree in agricultural economics, also felt
strongly about GMOs and organics--one of Forrest and Collins's highest
priorities when they thought about how General Mills could help them
muscle suppliers to adopt more regenerative practices.
When Epic agreed to a deal in January 2016, the three-year-old company
had a dozen employees and had brought in a reported $20 million in
revenue the prior year. Things started out promisingly. Epic had long
exhausted the meager North American supply of meat from grass-fed,
grass-finished bison for making its most popular bar, and the company
lacked the leverage to get ranchers to change. Forrest and Collins had
started selling two versions of the bison bar--one of which contained
grain-supplemented bison, a move that neither founder felt particularly
good about.
A year after the acquisition, though, Epic's CFO and COO, Robby Sansom,
traveled to Wisconsin with General Mills' head of natural and organic
ingredient sourcing to visit NorthStar Bison, a well-respected
family-run farm. As they sat on the porch drinking iced tea, they came
up with a plan. With General Mills' financial backing, Epic would prepay
for 1,200 animals and enhanced infrastructure for NorthStar, two years
in advance, if NorthStar would agree to raise them during that time
according to Epic's standards.
"General Mills, almost to our dismay, didn't even bat an eye to cutting a
multimillion-dollar check for product that we would not see for a
couple of years," Sansom says now. Besides the money that General Mills
was able to provide up front--more money than Epic had raised before its
acquisition--it also offered legal and deal-making expertise.
Suddenly, too, there were deep relationships with giant retailers that
Epic could tap to reach new customers. "Epic's biggest retailer at the
time was Whole Foods," Foraker remembers, while its mainstream grocery
business was "next to nothing. Very quickly we got it in front of the
key buyers in the main chains." Because of General Mills, it was also
able to lower costs for logistics such as trucking. "When you have a $16
billion company behind you," says Foraker, "a lot of people will work
for you for a lot less."
From the outside, it appeared that a smart, strategic partnership was
blossoming. But internally, signs of friction began to surface.
From General Mills' standpoint, the Epic founders arrived with a chip on
their shoulders, a perception that wasn't helped by their showing up in
Minneapolis at that first meeting in flip-flops and shorts, seemingly
believing that because they had a unique product they were somehow
special, that the usual norms didn't apply. "Our battle cry was: Come
and take it," Collins admits. "It's a tribute to the start of the Texas
revolution. We were basically going to defend our culture to the death."
Epic was "growing like a rocketship," Foraker remembers, but there were
all kinds of ways it wasn't as efficient as it could have been. "These
small companies don't have super-refined systems. Their cost models
aren't great, they have a lot of yield loss. A big company wants to fix
that stuff and improve margins. From a big-company perspective, that's
smart and fair. From Katie and Taylor's perspective, they were like,
'You're holding back from focusing just on growth!' "
The Epic founders got testy. "There were lots of difficult
conversations," Foraker remembers. "Their style is extremely direct. For
people who aren't used to that, they can come off as caustic and
obnoxious. They were just being themselves, and things like speed and
candidness and calling bullshit are entrepreneurial trademarks that big
companies are not used to." Foraker found himself interpreting each
side: "I often had to come in and moderate peace, make sure both parties
understood each other."
One blowup centered on a line of cooking fats that Epic was selling. At
the time of the acquisition, Epic was ramping up a strategy it called
the Whole Animal Project. As part of its mission to make its supply
chain more sustainable, the company wanted to develop products that used
as much of the animals it relied on as possible. So it came out with a
line of pork rinds, bone broth, and cooking fats like bison tallow.
After the acquisition, a single General Mills staffer complained about
an off-taste in one of the cooking fats, and the food-safety team
launched a review, which found no contaminated products, but did find
just enough variation in the products that it couldn't rule out the
possibility of contamination at some point. The company recalled the
entire line--a cautious and probably wise big-company move that Forrest
says Epic would never have done on its own: "It would have put us out of
business." It also effectively stalled the Whole Animal Project.
The recall came about halfway through a yearlong process that Forrest
deems "the worst ever"--systems integration. A global company like
General Mills can take advantage of its scale only if every part of the
business talks to every other part--from communication systems to how
financial results get reported to how UPC codes are handled and
inventory is managed. These are slow systems designed to handle high
volume, not quick adaptation, and implementing them in a scrappy startup
can feel like installing the steering system of a school bus in a
hatchback.
"Instead of focusing on selling and growth and marketing, all of the
budget for those things got pulled back and we had to put our energy
into this integration," Forrest remembers, her exasperation still just
below the surface. The frustration grew to the point that, if an unknown
General Mills name popped up on her or Collins's phone or in their
email, they wouldn't pick up, or they'd hit delete without reading the
message.
From General Mills' standpoint, they arrived with a chip on their
shoulders, a perception that wasn't helped by their showing up in
flip-flops.
Foraker remembers, "I would get calls from senior people at Mills that
were like, 'What the fuck? Can you help these guys understand what we
are trying to do here?' "
Despite all the talk about maintaining Epic's mission, there were
fundamental differences about how much to focus on it. "When small
companies come into big companies, they're used to making decisions on
the basis of social impact and growth and being badass innovators," says
Foraker. "The big-company goals are not the same. They're focused on
safety and quality, and they care a lot less about the other stuff."
In August 2017, as Epic was in the thick of its hell year of systems
integration, Forrest and Collins got hit with what seemed like their
biggest blow yet: Foraker announced he was leaving to join the actress
Jennifer Garner in a new organic-baby-foods company, Once Upon a Farm.
"We were scared," Collins remembers. "We didn't know what was going to
happen. We tried to tell our team that everything was going to be OK,
but the only thing we could do was just see what happened."
Shortly after Foraker's departure, Jon Nudi, who oversees all of General
Mills' U.S. brands--which have some $10 billion in annual sales--made
the trip to Austin to visit Forrest and Collins. They had committed to
staying at General Mills for at least three years, according to Nudi and
the couple, and they were almost there. "It's too bad you guys will be
leaving soon, because we're just getting to know you," said Nudi.
Forrest and Collins looked at each other, startled, and then back at
Nudi. Despite all the drama, leaving their creation behind was not
something they were planning to do. "We didn't ever think of the
three-year deal as marking some kind of closing date," Forrest
remembers. She said so to Nudi, and explained her hope that Epic's focus
on regenerative agriculture could influence General Mills' other brands
and suppliers. That was something she and Collins could get excited
about.
Suddenly, the fog lifted and the two sides saw each other clearly.
It turned out Nudi was genuinely interested in bringing more of Epic's
insurgent energy into General Mills proper, and he welcomed Forrest and
Collins's bluntness and focus on mission, especially because sales of
General Mills' legacy brands have sagged. "Every one of our brands has
to stand for something and have a point of view," he says. "And we can
learn from Epic's agility and speed."
A funny thing happened after Foraker left the company. "John sort of
stood as a barrier between Epic and General Mills," Forrest says. "His
intentions were always super positive, like not wanting anyone to mess
up the Epic culture, not wanting anybody touching it. So we thought
there was nobody at General Mills who was excited to help us, because he
was the gatekeeper. That was probably a good thing for a year. But it
probably wasn't for two years. So when he left, it opened a direct line
of communication."
In retrospect, even Foraker agrees. "I was able to help get issues
resolved, but I'm sure one of the unintended consequences was that I was
a buffer, not a filter, and at some point that was not helpful," he
says. "Their having to be more directly connected to the influencers
gave them more credibility, and probably forced them to polish their
edges in a way that they didn't have to when I was there."
One of the biggest tests since Foraker's departure was the development
of Epic's first nonmeat offering. General Mills' snacks division wanted
to create a protein bar made with egg whites and dates, and the company
asked to do it under the Epic brand--which would require a whole new
supply chain to get cage-free eggs. "The Epic team sort of coached the
snacks team through the process," Nudi says. "There were some heated
conversations, but ultimately it made the product and the branding
better." What's now called Epic Performance Bar went from concept to
market in 28 weeks, he says, "faster than we've ever developed almost
anything." A couple of years ago, he says, "it would have taken us two
years."
One day this spring, the couple brought a bunch of General Mills brass
out to the ranch for Epic's first-ever Impact Summit, an attempt to
rally other brands within the conglomerate to cooperate on
sustainability goals. They walked around testing soil health and
examined the effect of chickens' pecking and pooping on grass growth.
They slaughtered some birds for dinner and finally got around to talking
about business.
An Annie's executive discussed a partnership it had developed with a
farm in Montana to create a line of organic mac and cheese with
ingredients from regenerative agriculture. When the farm isn't growing
corn and wheat, it plants cover crops and rotates cattle.
Collins spoke up: "Hey, guys, don't you know a company that uses beef? Can we expand this partnership [to Epic]?"
Then someone from Cascadian Farm added: "Their cover crops are oats, and
they don't know what to do with them--but we need oats!"
Similarly, General Mills recently purchased Blue Buffalo, a natural dog
food company, and Collins sees that as an opportunity to revitalize
Epic's Whole Animal Project, in a new way. "With the eggs we're using
now, we use only the whites," he explains, "but can Blue Buffalo use the
pastured egg yolks? I see us being 85 percent animal utilization in
bison, beef, venison, and turkey over the next year. What we don't use,
[Blue Buffalo] might be able to use." Epic's goals suddenly seem more
achievable than ever, not despite but because of General Mills.
"Their style is extremely direct. For people who aren't used to that, they can come off as caustic and obnoxious."
The couple have started spending every weekend on their new ranch, and
they intend to turn it into a profitable business. Watching them bond
with their herd of bison or marvel at the effects of chicken scratch,
it's easy to imagine them opting eventually for a full-time life on the
range. And yet, Collins says, "that's not going to happen any time
soon." It's likely their roles at Epic will evolve after their
three-year commitment ends, and they'll relinquish some day-to-day
management. But their new working relationship with General Mills
presents too much opportunity for them not to pursue it relentlessly,
like entrepreneurs, for the foreseeable future.
The relationship with General Mills, Collins says, is "kind of like an
arranged marriage." Unlike the love that led to his and Forrest's
marriage, this kind of love had to be learned.
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