In late 2014, fledgling entrepreneur Josh Tetrick persuaded
investors to plow $90 million into his vegan food startup Hampton
Creek Inc. Tetrick had impressed leading Silicon Valley venture
capital firms by getting his eggless Just Mayo product into
Walmart, Kroger, Safeway, and other top U.S. supermarkets within
about three years of starting his company.
What Tetrick and his team neglected to mention is that the startup
undertook a large-scale operation to buy back its own mayo, which
made the product appear more popular than it really was. At least
eight months before the funding round closed, Hampton Creek
executives quietly launched a campaign to purchase mass quantities
of Just Mayo from stores, according to five former workers and
more than 250 receipts, expense reports, cash advances and e-mails
reviewed by Bloomberg. In addition to buying up hundreds of jars
of the product across the U.S., contractors were told to call
store managers pretending they were customers and ask about Just
Mayo. Strong demand for a product typically prompts retailers to
order more and stock it in additional stores.
Also, don’t miss the wonderful animated illustration by Steph Davidson accompanying the article.