Elizabeth Stein 00:00
Hi, everyone. I'm Elizabeth Stein, founder and CEO of purely Elizabeth. And this is live purely with Elizabeth, featuring candid conversations about how to thrive on your wellness journey. This week's guest is Jason Karp, founder and CEO of human co a mission driven holding company that invests in food and builds brands focused on healthier living and sustainability. In addition to human code, Jason is also the co founder of Hu, one of the fastest growing snacking companies in the US. Since 2018, Jason has focused his efforts on health and wellness, embracing the belief that improving health is the most effective strategy to increase global prosperity. Today, he sits on the board of the advisors at the Tufts Friedman School of Nutrition Science and Policy, as well as the Tufts Food and Nutrition Innovation Council. His philanthropic interests and Family Foundation, focus on education, prevention and treatment of autoimmune disease, chronic disease and childhood obesity. In this episode, Jason shares all about his personal wellness journey, starting Hu after almost going blind in his 20s. And using food as medicine to heal, he opens up about scaling Hu and selling to Mondelez. His struggles with mental health, how he's now impacting the next generation of food brands with his creation of Human Co, which has invested in Snow Days, Cosmic Bliss, Against The Grain, and True Food Kitchen, and so much more. I learned so much from Jason in this episode, and really admire and look up to him for his greater mission and success. Keep listening to learn all about Jason. Jason. Welcome to the podcast. Thank you so much for coming on today. I'm so excited for our conversation.

Jason Karp 01:50
Me too. Me too. Thanks for having me.

Elizabeth Stein 01:53
And as a side note, Jason and I met a couple of years ago, over the holidays, because as it turns out, our dads are golfing buddies, which was like, so random to find out.

Jason Karp 02:06
Yes, yeah. No, it was my my father said, do you know, this Elizabeth girl, who owns a granola company? And I said, Dad, is it? Is it? Are you talking about Purely Elizabeth? And he goes, I don't know.

Elizabeth Stein 02:18
They were like, clueless.

Jason Karp 02:19
So, yeah. Yeah, they had no idea. They had no idea.

Elizabeth Stein 02:23
That's great. Well, let's start with your personal wellness story, because that was certainly a huge inspiration for your trajectory into this world of Hu, and the multiple iterations that have come from it. But I would love to start there.

Jason Karp 02:40
Sure, sure. So I've kind of lived a dual life for quite a long time now. Straight out of college, I went into the finance industry, and picked a very high stress, long hours kind of job. I started in the hedge fund industry, which is actually what I did for 21 years. And in my second and third year of work, I got really sick. And I had a whole host of autoimmune diseases that many doctors back then thought were not related. But the the worst ailment of all was I was going blind when I was 23. And they told me, there was no cure for what I had, and that I had to put my name on a corneal transplant list. And that if I didn't get all this dealt with, I'd probably be blind by the age of 30. That as you would imagine, for anybody, but certainly a 23 year old, was very traumatic and very difficult to process. And it made no sense to me. I was I was an athlete, my whole life. And in college, I was a division one athlete, and I always thought I was healthy. And like something changed in that first two years of working where I went from, like, super healthy to like, literally, like falling apart. And I, I went down a lot of of research rabbit holes, particularly around inflammation. And back then the field of functional medicine was pretty nascent. I don't even think they call it a functional medicine back then. But there were some kind of OG doctors that had written some books that I started to read, guys like Dr. Andrew Weil and Dr. Mark Hyman, who were very early, Andrew Weil was like the earliest but really just connecting the concepts of processed food, inflammation, and how that manifests in your body in various forms of diseases. I decided to go and embark on this journey of really cleaning up my diet and my lifestyle. At that point, I was doing the whole work hard, play hard, 23 year old in New York City thing, you know, lots of caffeine in the morning, drinks and cocktails at night, not a lot of asleep, high stress, definitely no exercise, trying to get ahead the whole thing. I had to reverse all that. And it was very hard for me because back then giving up caffeine, giving up alcohol, giving up processed food, giving up gluten. Back in the year 2001, people looked at me like I was nuts. And it was really hard for me, it was very difficult to do that it was especially difficult to give up alcohol as a 23 year old single guy in New York City. Yeah. And like, go out, and I'd be holding like a sparkling water and people would look at me like I was an alcoholic, and, and there was a lot of stigma back then. Anyway, long story short, after it was only like a couple months, I started to notice really significant changes in my vision.

Elizabeth Stein 05:43
How quickly did you start to notice like any change period, because that must have propelled you to say, okay, well, I want to keep doing this.

Jason Karp 05:50
I'd say I started noticing differences within two weeks. It started in my skin. I also had like some really significant atopic skin disease issues like eczema and psoriasis and my skin started to clear up really quickly. And my hypothesis, by the way, was that my skin ailments were linked to my eyes, which was a naive hypothesis that proved to be true. Because your skin is A, it's your largest organ. But B, it's sort of the canary in the coal mine in terms of what's happening inside of your body, and it and it's showing the first signs of like, there's a problem, your eyes are made up of a very, very thin, delicate tissue. And so my hypothesis was, if I could clear my skin up, maybe I my eyes would get better, which my ophthalmologist said was insane. And like, there was no way it would work. And it worked. And you know, thankfully, the eye disease that I had wasn't like a subjective kind of disease, there's actually an objective measure that uses a device where they could literally map the surface area of your eyeball, and they could see if the disease is there or not. And after about four or five months, I went back in to get the scan and it was gone. Wow, fully reversed a disease that the doctor had said he'd never seen in his career, anyone reverse this disease because it's a degenerative disease. At best, you could slow it down or halt it, but you could never reverse it. And at that moment, I had this kind of eureka, of like, oh my god, everything I've been taught in terms of Western scientific medicine, might not be correct. And then I don't know if I can fully trust, the guidance that a lot of people been giving me. And the fact that I was literally poisoned by the food system was like a huge wake up call, not only for me, but then it also made me quickly become really philanthropic, and realize like I need to help other people. And then eventually, when I had children, and started a creative family, and I started meeting a lot of friends and people who were also ill with autoimmune stuff. It just really, really became like a key part of kind of who I am and what I care about. And then years later, my brother in law, my wife's brother, Jordan, I started comparing notes and giving him some of the books that I was reading. He wasn't sick like I was, but he started reading all these books that I had read on anti inflammatory diets and lifestyle. And he noticed that when he ate this way, he looked better, he performed better, he felt better, he slept better. And he said to me, you know, after a while, and we geek out on this stuff, and this was like early biohacking time. This is like 2007 2008 timeframes. And he said, there should be like a restaurant. That's the manifestation of all these principles that we're doing. And there's not there's nowhere for us to eat that's like this. And back then it was, people didn't really use the word paleo back then. But but basically our inspiration, our inspiration, and particularly my education was was really around evolution, and anthropology. And, and a lot of what originally guided me to test what I tested was this hypothesis, that we don't really live the way we've evolved. And or we don't live in a way that's consistent with how we evolved as humans, and of all the kinds of dietary options and lifestyles, the Paleo Diet was the one that resonated the most with me, and was the one that worked the best for me, which was basically eating in a way and living in a way that was more consistent with how we evolved. And that was the genesis of the name, Hu, because our slogan is get back to human because we believe that people aren't really living in an optimal human way anymore. And so Hu started as a restaurant, it did not start as a chocolate company, which most people don't know. And I did not want to do it. My brother in law convinced me to do it. As a professional investor, which was my day job, restaurants are typically very difficult businesses, especially in New York City, and usually lose money. And I was like, listen, I'm a professional investor, like, I don't want to, like just commit to something I know has terrible odds. But he really pushed me and basically said, like, we need to do this. And we'll hire people who know what we don't know. And we were very humble about what we didn't know. And then about two and a half years later of planning, my wife, Jessica, Jordan, and me, we opened Hu kitchen, at the end of 2012. And the chocolate was an accident, which also people don't know, which is that, we were baking, the whole restaurant, by the way, it was gluten-free, dairy-free, refined sugar free, we only cooked with with olive oil, avocado oil, coconut oil, so we were no seed oil back in 2011. Everything we made was basically in house, we made our own ketchup, we made our own sauces and when we went to we were baking grain and gluten-free items like muffins and cookies and scones. Before we opened, we wanted to have chocolate chip versions of those. And we could not find chocolate chips that met our specs. And all the chocolate chips we found that were commercially available had soy, had dairy, had refined white, genetically modified sugar in it, we just realized, like we have to make our own chocolate chips. So we have to find someone who can make chocolate. And we found this guy who was amazing. And after a lot of trial and error, we landed on a chocolate chip recipe that we loved. And Jordan had this idea of turning them into chocolate bars. And we started making by hand in this very small batch operation chocolate bars that we only sold in the restaurant. And then one day one of our chefs, his girlfriend worked at the Columbus Circle Whole Foods location. He used to bring her home our chocolate bars. And she basically said this is the best healthy chocolate I've ever had. Can we sell these in Whole Foods? And we didn't know anything about the CPG business. And so we we were like, okay, and that was how we got into the CPG business.

Elizabeth Stein 12:02
Well, first of all, thank you for sharing that your your origin story, because I think the more that people hear stories of food as medicine is just so impactful and I think encouraging when people are going through those issues. So thank you for sharing that. And especially you talking about my Mark Hyman, for me, that was the moment when I went to Integrative Nutrition back in 2007. And hearing him speak and talking about the effect that food has and showing what that look like on a child's handwriting who had ADHD. And then they took gluten out of their diet. And it's like incredible to see that all of a sudden the kid's handwriting was perfect script. So such an influential person in the industry and, and your restaurant was as a New Yorker, it was the place to go and such an influential space and a destination for so many people. So as you came out with the bars, certainly as you said the intention wasn't to get into CPG was just to have these bars here and then experiment with it. At what point did you realize I suppose that hey, this, this is going to be much bigger than just selling the bars at our restaurant. And we want to create this CPG brand. Was there a pivotal moment that you remember?

Jason Karp 13:24
Yeah, it was fast. It was pretty quick. They were, they would fly out of a restaurant. And there were people that were coming in. At one point, like I remember noticing their people coming in from like out of state. And there were people buying 10, 20 bars at a time and leaving. And we were getting feedback from people that it was just so amazing and different. And it was just kind of clear, we had something that was unique and special at that time. And with my investor hat, it was pretty clear that that developing products was a far more scalable far, kind of better return on capital than opening up a bunch of huge spaces, especially in New York City, which is very difficult to run. And as you remember, it was a big operation. Huge. Yeah. And so it was very early on I'd say it was it was certainly in the first year we were open where we decided and at that point, you know, we had no outside money it was just us. And so we were we didn't we weren't running Hu, like like a venture capital company. We were running it like a family business and we didn't want to lose money. And and at that point, we split out two subsidiaries we called it you'll basically paraphrasing because they had legal names but it was Hu restaurant Co and Hu Products Co and Hu products was was was to develop the CPG side so that we could account for the CPG side properly and the restaurants was the same thing. And it was pretty early on after that, that Jordan, because we had someone who was running the restaurant. And we didn't, we weren't restaurant like true operators at that point. So we had a lot of people that were helping us. And that was when Jordan effectively went like full time on on building the CPG part of the business and it started out of his apartment, literally him and his younger brother, my other brother in law, Jordan would go around with a suitcase full of chocolate bars, and go like door to door to like Bodegas in New York, and little health food shops like Westerly market.

Elizabeth Stein 15:40
Ah Westerly, so good.

Jason Karp 15:42
Because, because at this point, we literally didn't know how it worked. We didn't know what like distributors were. And we also didn't have, I didn't really want to spend the kind of money that would that would propel us that fast. I wanted to sort of grow in a way that was organic. And we had a problem, which is our chocolate was a lot more expensive than anything else out there. Because it actually had ingredients that that truly were were more expensive and costs more and had better practices. And, and I had the knowledge, or at least a common sense to say, like, a lot of these stores aren't going to accept our $8 chocolate bar. But even at eight bucks, we weren't making like a great margin, because it was still made in a very artisanal way. And then you know, it just it just kept growing and growing. And then we eventually hit a point where we knew we needed to involve a lot more people who had a lot more wisdom in CPG than we did. And we had to become really fast learners.

Elizabeth Stein 16:44
So as you think about scaling, I would love to touch on two things, one being, you know, tips for entrepreneurs and scaling a food company. But I think another one which isn't really talked about as much is what do you wish that consumers knew more about scaling? Because I think you've done a wonderful job of keeping the integrity of this brand over the years, as you've scaled and that's hard. Like there, there comes a point where there's hard questions that you have investors, and they say, you need to have better margins, and X, Y and Z. And so what do you wish that more consumers knew about the hardships and struggles that the good the bad?

Jason Karp 17:27
Well, I did have the foresight, because I was I was an investor, and I ran a hedge fund. And so I had an investors of my other business. And one of the things that I did witness many times, is that when you have outside investors, they all have different goals and needs. And most of them, especially at that time, were focused first and foremost on the return, like am I going to make a good financial return? And because we knew that what we were doing at Hu in the early days, was was pretty like out there in terms of it being weird and novel, and like most people thought I was insane. You know, we did a lot of things that no one had ever done. Like no one had a restaurant that didn't have seed oils, no one had a restaurant where everything was gluten-free and dairy -ree and refined sugar free and grain and grain free.

Elizabeth Stein 18:30
And tasted great at the same time.

Jason Karp 18:33
Right and didn't taste like like a health food store. Right. And when I had I had spoken to enough people over the years when I was telling him that we were going to do this, and they're like, you are nuts. And so we had that kind of foresight to say we're not going to take outside investors for a while, because they're not gonna understand what we're doing. And I never wanted to have the conversation with an investor, where they said to me, hey Jason, why don't you not use pastured grass fed beef, and just use just sort of generic beef, that'll be half the cost and double the margin, because nobody's going to notice the difference. I never wanted that conversation. Because what we were doing had never been done before. And so having control of our company, which, by the way, is obviously a blessing that we had the wherewithal and the financial resources to do that. But having control of Hu through the end, by the way through the sale was a material part of why Hu became the way it did. Because there were many times we eventually did take outside money, as you know. And there were many times when there were debates about how do we improve margin and how do we do this? And some of those discussions were at odds with our philosophy. And if we did not have control, we probably would have lost that battle out a bunch of things that would have made the product less good for the world and less good for people. So I would say, when it comes to mission driven real or purpose driven stuff, it's really important if you don't have control, that you are fanatical about your investor selection, because there's going to be times when shit hits the fan, there's going to be times when the business looks like it's in trouble. And the people who care mostly about returns and money are going to resort to the way to make more returns in money. And that will almost always come at the expense of doing the right thing in terms of the product for people's health and the planet. So that would be kind of my, my, my first really important kind of revelation, or sort of advice about scaling something that is purpose driven within consumer packaged goods.

Elizabeth Stein 20:55
Yeah, it's so important to have surround yourself with the right team. Right.

Jason Karp 21:02
The other thing I would say, Just Just to follow up on that, is that be humble. Like know what you don't know. Like, we always were very honest about what we did not know or did not know well. And we serve when we went out,

Elizabeth Stein 21:14
What do you think you didn't know well?

Jason Karp 21:16
Well, we were, I would say we were, we were fanatical about the kind of ingredients that we wanted. We were fanatical about taste. And about, like understanding like, we use it, we use the word epic. And it needed to it needed to be an epic product. And it needed to taste. We had a an expression called the kid test, we needed to be able to give our products to kids, not tell them it's quote healthy. And them to say this is amazing. And if it didn't pass the kid test, we didn't want to do it. And so we had a really, really high bar on quality and taste. But we didn't know how to make the stuff. Right. So we didn't know we didn't know production. We didn't know ingredient sourcing ingredient procurement, we didn't know, like the inner workings of the retail food system. What do broker brokers do? What do distributors do? Like? What kind of markup to the retailers take like, what is slotting? What is trade spend? Like we didn't know any of that stuff? So we had to we had to hire people from industry. And basically say, look, we're, we're gonna be the people that create and come up with the ideas. And we'll be the people that say, these are the kinds of things we want, this is how they need to look, this is how they need to taste. We're, we were really good at what I'll call brand equity building, and, and kind of understanding like, what is Hu all about? And how do we educate people, but like, how to actually do it? We didn't know. And so we just had to be humble and say, look, we don't know how to do this. We're gonna basically say, this is what matters to us, and you'll be part of our team and like, will help us do it. And then eventually, we obviously figured it out. But that was was critical is sort of knowing what you don't know. Yeah. Because once you admit what you don't know, you know, how to surround yourself with people that do know.

Elizabeth Stein 23:12
Absolutely. That's a great tip. So it's now been almost two years, right? Since since she sold to Mondelez. January of 21. Yeah, so we're right there. I'd love to hear how that's been for you since then. And particularly, is there anything that's been surprising or any revelations that you've had?

Jason Karp 23:40
It was very bittersweet, when and it was, it was a combination. So we weren't and all of this is public informatio what I'm about to say, but we weren't for sale at the time. And we kind of weren't thinking of selling for several years. But because of some unique circumstances, you know, we ended up receiving an offer for the company from one of the other large companies that was not on our board. We had sold a minority stake to Mondelez, who was on our board. That was in 2019. A very small stake. But but we partnered with Mondelez because we loved them. We thought they were one of the few public companies that was actually like walking the talk, in terms of them trying to get healthier in their product portfolio. There were several people that we knew at the company that we really respected. And we wanted their knowledge and their wisdom and their guidance because they're the largest company in the world. And then right at the beginning of COVID, another company came in and basically approached us and said we want to buy the whole company because the prices that were being discussed, were really compelling from an invest from an investor perspective as a fiduciary, the family, me, Jordan and Jessica, we had to like really take it seriously, even if we didn't want to sell it because it would be fiduciarly irresponsible to not, it turned into a process. And then we eventually sold to Mondelez. And it was done in a structure where we were involved for another two years. The entire Hu team works for Mondelez now, but my wife and me, were out. And I was the chairman, that was kind of really interesting for me to go from like being deep in it tonight not being in it. Yeah, it's mixed for me, because their goal is to sort of create like, a a global, ultra clean, trustworthy snack bran, primarily in chocolate, right? So think of it like could could Hu become the healthy Cadbury over time that has that kind of scale. And so part of me was, was obviously really excited about that prospect, because it would be great if we could replace like real shitty candy with Hu and have a lot more people benefiting from that. And they obviously have the scale to do it. But on the other hand, like this was our baby, and it's like, we're still involved until basically January of 23. But after 23, after like, a month from now, there will probably be products, or are after a time and you know that that you Jordan is going to continue to work for them. But there may be a time when he's not. And there will be a moment when there'll be a product that's launched, that we had no idea about. And that's going to be a very weird feeling. Yeah, I can't even imagine that. What I will say, which is really important for everyone listening, and I know you care about this too, with your products, Mondelez was fantastic. And in terms of honoring what makes Hu special. And many of the elements that make Hu special, are contractual in the sale, meaning, vile, they can't ever violate. And that is something that's actually good for them, because it's going to ensure trust. But it was really important to us, the founders for our legacy, that like Hu will always be a gluten-free brand. Basically everything that you see on the front of package, all the nos, they can't ever go against them. Because those are basically the foundational principles of what Hu is. And so that's like, super important, because at the end of the day and 20 years, if Hu was a gigantic company, we want to make sure that it still has the essence and the guardrails of why we created it. And I think with a lot of companies that sell, that doesn't happen.

Elizabeth Stein 27:46
No, well, congratulations. Because that must have I mean, obviously selling was exciting and all of that, but to really have your passion for the brand, stay intact. And that's what I was going to say earlier is it looks like they've done done a phenomenal job of not changing anything with the brand. And so as consumers, I think, hopefully, you know, there's a stigma I think of when brands sell and consumers have a negativity toward that, that hopefully that this is the start of things being different. And and for any entrepreneurs listening, having that in your sale document sounds like a very important tip.

Jason Karp 28:29
Yeah, and it's related to the earlier point that we talked about, which is if we didn't have control of the business, and we just said investors, were looking at a big return, right? Because these were negotiating points. Sure. These aren't necessarily like obvious concessions, right? And so if if, if if you just had investors that just cared about money, and there was like a moment in time where they're like, no, we don't want to give you that, just take the money. There's also a risk that that the acquirer doesn't honor the the guardrails of your brand. And so at the beginning of the process, and this is really important to anyone that ever gets into a sales, where they're selling their company, like be very upfront about it before you get deep, you know, and say look like this is our family's brand, like literally my wife and my brother and let's face or on the chocolate, or on the packaging, and to say like before we go down this road of due diligence and valuation and structure. Like I just want to make sure that these things that are critical to our legacy, and our brand will never be compromised, and that's going to have to be in writing and that's the moment where they'll say like, okay, or no, and then you don't have to spend all your time on negotiating if they won't.

Elizabeth Stein 29:49
That's a great tip. Thank you for sharing that part of the story because I think certainly a lot of people don't know that. So. Alright, let's move on to third phase of Hu human or Hu turns into now Human Co and let's share about what Human CO, is what your vision is, and what's next in that world.

Jason Karp 30:10
Yeah, so you can think of Human co when we first created Human Co a lot of people were confused, was it part of Hu, was it not part of Hu? I like using the word human in everything we do, because a lot of our philosophy was based on this concept that I mentioned earlier that we need to like live more the way we evolved as humans. So Human Co is kind of my second chapter in in doing healthier products for people. It was it was created as a separate company. Because when the initial idea of Human Co started to form, in my mind, we had already had outside investors. And we didn't want to kind of muddle or muddy the waters, so to speak, with what Hu was, which at that point was was, was already scaled and had a pretty clear identity. But the idea was that when I was ill, a