The Kitchen of the Future
Winnow is addressing a problem that weighs approximately 1.3 billion tonnes each year. That’s over four times heavier than the weight of every person on earth combined. What could possibly be that heavy? The food wasted every year, or about one-third of all food produced. It’s a $1 trillion problem globally and it costs $100 billion to the hospitality industry alone.
Given that one in nine people go hungry, the opportunity presented to make our food system more efficient is nothing short of mouth-watering for a triple bottom line entrepreneur, especially given that we produce enough food to feed 10 billion people. That's one and a half times the size of our current population.
Unlike other startups, which build a business around a product or the prospect of an exit, Winnow exists to address this massive global food waste challenge.
In 2013, the company set out to change the operations of some of the biggest food businesses in the world by building “the kitchen of future” which leverages AI to help chefs reduce food waste and run more profitable and sustainable kitchens. Winnow Vision, which launched two years ago, comprise of a “smart camera” that is placed on top of where food is thrown away. The smart camera can identify the food type, weight and cost better than humans. The technology can easily and accurately calculate the cost of the food discarded, giving the Chef and kitchen staff valuable insights into the business.
Since its founding, the startup has helped businesses save $30 million a year. But this is just scratching the surface of Winnow’s potential, the company has set out to save its customers $1 billion dollars a year by 2025.
Why is this so exciting? Food waste remains one of the biggest and least addressed issues of our time.
Winnow is focusing on one part of waste reduction in the value chain and, boy, have they developed a compelling business case in the process. The more food waste is avoided, the more money kitchens save. This model demonstrates Winnow's goal to benefit both business profit and the planet.
Marc Zornes is the company’s CEO founder and is an INSEAD alumnus. Before he started Winnow, Zornes won INSEAD's business venture competition for his earlier triple bottom venture named Sefaira. The venture comprised of software that makes buildings greener and is now run by co-founder Peter Krebs whom we also interviewed.
After graduation, Zornes worked for the Sustainability and Resource Productivity Practice within McKinsey. In 2011, Marc co-authored a report for the McKinsey Global Institute “Resource Revolution: Meeting the world’s energy, materials, food, and water needs“. The report cites the top 15 high-impact resource productivity initiatives. The first was building efficiency, the focus of Marc’s first company, and the third was reducing food waste.
Marc had a lightbulb moment. “It was an enormous issue that nobody was doing anything about.”
The first version of Winnow was a tablet saran-wrapped to a scale in the McKinsey breakroom. Back in 2013, computer vision technology was not nearly developed enough to build the product Marc envisioned. Instead of waiting for the technology to mature, Marc decided to take what was more or less his MVP (minimum viable product) requiring manual user inputs and scale up the business.
“I’m more stubborn. I wanted to be the first one to build the solution… even before the technology was ready.”
As a testament to the market’s demand for reducing food waste, Winnow built a meaningful business with it's “V1” product. The startup was even one of the fastest-growing tech companies (76th) in Europe according to the Financial Time's ranking, with 50 employees and sizeable revenues to boot. But, as Marc explained, “The ambition has always been to let computer vision solve the problem and collect data automatically.” For the product to really be successful, it has to be as automated as possible.
The accuracy of data collection and the time needed to collect data were both initially barriers in scalling the product. When computer vision technology finally got to a place where it was ready for commercial use two years ago, Winnow moved quickly. Once computer vision technology “caught up”, the business is “that much more scalable”, explained Marc.
The Market Opportunity
Food waste is certainly a complex problem and the market is far from saturated. Given the magnitude of the problem, and new regulations surrounding this topic, entrepreneurs and investors are moving fast in taking the advantages of this “big orphan” Marc refers to.
Solving this problem will require a lot of players addressing different parts of the value chain like Apeel (extending food shelf life), or TooGoodtoGo and Karma (food from restos and retailers), and Rubies in the Rubble (jams and condiments from produce that would have otherwise been thrown away). “There is $1 trillion dollars to play for, so this is naturally going to start to attract investment.” Indeed, in 2018, food waste startups attracted more than $125 million in venture capital and private equity in the U.S. alone.
The technology also generates network effects. As you scale the business up, the technology improves and becomes more beneficial to it's users. For now, the company is focused on the hospitality market. Winnow is going after large hotel chains for scale. There is also a powerful business case for these chains: a 2-10x ROI in year 1.
For Winnow, “sustainability” in and of itself is not yet a compelling enough value proposition for companies or investors. In Marc’s experience, people still have a connotation that sustainability is “lighter on the business case.”
“Sustainability is a tiny part of the value proposition I present to companies. I’d rather not sound like a tree hugging hippie when it is really the economics that will drive [the business] at scale.”
Where the labelling of “sustainability” has helped Winnow is in finding top talent and active investors. It has also helped Winnow “punch above its weight in terms of awareness. The impact of our marketing dollars is higher.”
Food waste prevention doesn’t require government subsidies or tariffs to make the business viable (as with other sustainable innovations). Yet, policy can play a role in accelerating the speed of adoption of Winnow and other food waste reduction products and behaviours.
“Businesses and people are habitual creatures. Even if it does make economic sense, they won’t prioritise.”
Indeed, in some countries there is increasing legislation and government support, especially given that governments don't want food to be thrown away due to concerns around food security or avoiding landfill.
The UK government, for example, is advocating measurement of food waste in the hopes that this transparency will shed light on where the system is broken.
SDGs and Sustainability
SDG indicator 12.3 focuses on global food loss. According to Marc, the SDGs offer a helpful point of legitimacy for his business.
He is working to lobby companies to set public targets for food waste. Beyond keeping companies accountable, these public targets create a peer group of businesses who are measuring food waste.
“Then people start to wonder why companies don’t have targets or why companies aren’t meeting their targets,” Marc explains.
We know just the company to help.