By Nick Travis, partner at Smith & Williamson
This article was originally published in Smith & Williamson's Enterprise magazine, a thought leadership publication for entrepreneurs and growth companies. You can download this issue of Enterprise here.
The world has a food waste problem: up to half of the food produced globally is never eaten, equivalent to over $1 trillion worth. That could readily feed the 800 million people across the globe without enough food to live on, including the 1m in the UK who regularly access food banks.Food waste is also an environmental issue. Food is expensive to produce: it creates deforestation, it damages biodiversity, it uses precious resources such as water (uneaten food accounts for 25% of all fresh water consumption globally). At the other end, if food waste ends up in landfill, it decomposes without access to oxygen. This creates methane, a far more deadly greenhouse gas than carbon dioxide.
It is unquestionably a vast issue, but for Tessa Clarke, it started small. Packing up her home in Switzerland after a job had ended, she found herself unwilling to throw away some perfectly serviceable vegetables. She roamed her neighbourhood, looking for the woman who usually asked for money outside her local supermarket, wondering whether to call on her neighbours. In the process, she asked herself ‘Why isn’t there an app for this?’.
Her background had been seen as a management consultant and then working with a series of smaller businesses, including as managing director of Emap’s Planet Retail. She was managing director of ecommerce for Dyson, before being bought in to turn around troubled consumer loans group Wonga. She spent eight months in the clean-up, but decided to leave in 2014. It was packing up to leave Geneva that she hit on her big idea.
The idea started to take shape when co-founder Saasha Celestial-One came on board (this is her real name – her parents were Iowa hippies). The pair had met at Stanford Business School. For Tessa, Saasha’s backing confirmed she was onto something. Saasha already had experience in this type of local sharing business, having founded a pay-as-you- go childcare solution in North London.
The pair did a lot of work before launch. Tessa says:
“We wanted to understand whether this was or wasn’t a big problem. What we found truly shocked and horrified us. A third of all the food we produce each year is thrown away, and if it were to be a country, food waste would be the third largest source of greenhouse gas emissions after the USA and China. In parallel, we’re puzzling over how to feed a population of 10 billion people by 2050, while also keeping global warming to within 1.5 degrees. It therefore seemed crazy to us that we should be throwing away so much food.”
The next question was whether people really cared about it on a personal level. Here too, they found that it was a massive problem, with one in three people admitting they were ‘physically pained’ by throwing away food. “But did this mean they would take the next step? Would they actually share their food with a neighbour?” she says.
To attempt to answer this, they undertook a two- week experiment with 12 volunteers and a WhatsApp group. They found that fairly quickly, sharing started to happen. When they debriefed with these volunteers,they said: “You have to build this, and it only has to be slightly better than a WhatsApp group! And how can I help? This gave us the confidence to think this might fly.”
The pair found a development agency in Bristol who gave them reduced day rates in exchange for a share in the company. OLIO started with five postcodes in North London in 2015. It was made available across the UK at the end of 2016. Today there are 1.7 million who have joined OLIO, sharing 3 million portions of food.
There have been plenty of challenges along the way, which have required creative solutions. Tessa says: “The first one was how to grow and scale with no marketing budget. We took our original 12 people and created an ambassador programme where we provide them with posters, letters, flyers and they do guerrilla marketing for us. It has proved a high quality, low cost route to market.”
Another challenge was that the early adopters didn’t generate a lot of food waste because they care about it. OLIO has since branched out to form partnerships with local businesses. Local ‘Food Waste Heroes’ collect unsold food from these businesses and add it to the app. This is now the source of around half of OLIO’s food.
This is also how the pair make their money. Tessa and Saasha charge businesses to help them deal with food waste, including big name brands such as Pret-a-Manger, Eurostar, Selfridges and Costa. These businesses pay for OLIO to collect unsold food and redistribute it to the local community.
She adds: “The biggest challenge right now is encouraging people to take the leap and add some food. They may not believe that it will work. Is it worth doing it for a bit of broccoli? We’re saying ‘yes, definitely’ – half of food is requested within one hour of being added to the app! We encourage people to start by doing a cupboard clear-out. Once they’ve had the experience of giving away something they don’t want or need to someone who does, that’s when they realise how great it is.”
The food has to meet health and safety standards. Tessa says that while they will allow food that is older than its ‘Best before’ date, users can’t share food after its ‘Use by’ date because that’s a health and safety issue. Food that has been opened is fine. Users can be flagged for removal if they break the rules. Each person has a profile and a rating.
OLIO now has more than 20 full time employees. It has been through three rounds of equity financing, raising money from a combination of Silicon Valley venture capitalists and impact investors. Tessa says they have the ambition of a Silicon Valley business – they want 1 billion people to be using OLIO within the next ten years – but with a strong purpose at the heart of the business: “For too long, we’ve had this dichotomy between charities that do good but aren’t particularly scalable, and businesses that are scalable, but too often have questionable impact on communities and the environment. We are part of the new paradigm for businesses, which is ‘profit with purpose’.”
Tessa has no regrets:
“The only one, perhaps, is that I didn’t do it sooner. It’s been a transformational experience to be working on something that the world so desperately needs.”