Alec Lee is the Co-Founder and CEO of Endless West. Endless West is using science to create its blend of spirits. The company raised a $21 million Series B round last April, bringing its total funding to over $33 million, and has nearly 50 employees. He explores the unique challenges that a food-tech startup faces — from managing investor expectations to common mistakes in hiring.
This interview has been edited for length and clarity.
Aoi: Hey Alec, can you tell us a little bit about your scientific background and your journey to founding Endless West?
Alec: I studied biotech at the University of British Columbia in Vancouver for my undergrad. While I was in undergrad, and for the first few years after I graduated, I started and ran an online education company, helping pre-medical students prepare for entrance exams for med school and a few other test preparation services. I ran that for several years, but I wanted to expand beyond the education space, so I took a backseat to that company and went to business school.
I attended the first year of Harvard Business School's MBA program, but I dropped out after the first year, initially thinking it was just going to be a pause. But I realized later that the opportunities that came up having moved to the Bay Area were just too good to pass up and never ended up going back.
After that first year, I joined my now co-founder at a stem cell technology company. We were working with mesenchymal stem cells extracted from human bone marrow and were selling them to academic researchers for tissue engineering studies, to build generic and functional libraries of those stem cells and the derivative tissues of those stem cells.
But largely by accident, we stumbled upon this idea to start what became Endless West. The idea was to dig a lot deeper into the food tech space, in a deconstructionist approach, from a molecular and chemistry perspective, and apply the technical knowledge we had built over the last several years into the food technology space and focus on alcoholic beverages.
The founding story is reasonably straightforward. He stumbled across this famous wine and this famous winery and fell in love with the allure of how rare and difficult it is to access, and wondered what if we could just build it from the ground up from its molecular components. That became the third startup, very deeply focused on hard-science and life-science matters, but in a more consumer-friendly way.
Aoi: You have a lot of experience starting different types of companies. What do you think makes founding and managing a food tech company different from other types of companies, whether it's traditional biotech or deep tech?
Alec: A big difference between food tech and other hard sciences is that you’re expected to deliver a product quickly.
There are certainly many sophisticated investors who know the space well, understand that there's a life cycle of development, and are not expecting to commercialize a product in the next year. Quite frankly, if there's an expectation that you'll commercialize a product in the next year, either you're not doing anything that's fundamentally novel, or the investor just doesn't understand what you're doing, and you should probably run from that investor.
Investors often have unrealistic expectations because they think it's just food. And “oh, like you can make food quickly. I know all these other companies that have commercialized their product quickly.” But there's not a “typical” life cycle in food. There’s a lot more diversity.
Whereas in pharma, everyone knows that you will have to go through FDA approval. If you're creating new drugs, you know what that lifecycle looks like, and maybe you can shave off a year or two here or there, but you're going to go through Phase 1, 2, 3. You roughly know what each of those steps looks like.
There's a lot more diversity in food. And a lot more assumed expertise, as well. It's a lot easier for unsophisticated outsiders to think they understand the life cycle of your business because they are consumers of food. Whereas laypeople very rarely think that they understand the drug development process. They're just like, “I don't know anything about that. I leave that in the realm of experts,” but everyone’s like, “Well, I eat food, and everyone I know eats food, and I buy stuff in the grocery store. So yeah, I know what it takes to make food.”
You end up in this weird place with the press, with the investor community, and with potential consumers. Everyone wants to be a self-proclaimed expert, like, “I like to read the back of the ingredient label and see what's in there. Tell me more about what ingredients you’re using,” and things like that. Whereas, again, in drug discovery, you're not going to get that kind of assumed expertise.
Aoi: One of the expectations with food tech is that the product eventually becomes commercialized, whether it’s something in the supermarket or whether you're selling into restaurants. When did you attempt to evaluate the commercial viability of your product?
Alec: It depends so much on what the product is. If your company is, “I have a new cookie dough recipe,” then you should have some validation before you ever go to raise any money. You should have made it and tasted it with a bunch of people. There's a lot of startups in the food space, though I wouldn't call them food tech companies, that start exactly that way. It's hard to justify that if you don't have some deeper technological component, whether it's on process or ingredients or whatever, that you go and raise money without any of that validation.
Conversely, you could have a deep technical component or significant regulatory hurdles. For example, alcohol is an extremely regulated industry, far more than pretty much anything else that we can consume, other than perhaps drugs. Even with just very basic restrictions on who can manufacture alcohol. And then to do consumer tasting panels. So, as is typical with startups, there's a little bit of pushing the boundaries in the gray area, but you have to be careful to make sure that what you're doing is compliant and safe.
The interesting thing about validating a product in food versus pharma is that in pharma, you're looking for really objective metrics. Like, “Does this drug work better than placebo or not?” It's that simple. You're answering really basic questions in clinical trials, like, “Is it safe? And is it effective?”
You don't have that same type of calculus in food other than “Is it safe? Is there an allergen? Is it gluten-free?” In terms of market validation, you have a very different set of considerations. That’s because there's so much diversity in people's preferences. Ultimately, you're trying to make people happy, which is very different from making people healthy. You can taste-test a thousand people, but maybe you tested it in the wrong market. Maybe you should've tried it in Asia versus here because they have a different preference. Maybe you chose the wrong demographic. Maybe you just didn't present it in the right way.
There are a lot of really great selling food products out there that taste objectively bad. And there are a lot of really great products that don't sell very well. A really big challenge with food is just how much it isn't about the food itself.
Aoi: It seems similar to, say, Kevin Kelly’s “1000 True Fans,” where you need to find the right market for your product. Which is quite distinct from the rest of the scientific startup world with its fundamental research and solving a core underlying research question.
Endless West now has nearly 50 employees. A lot has been written about different management challenges associated with software startups, but I haven't found much written to advise on how to build scientific companies. What would you say are the greatest challenges in scaling a scientific company? What's the difference between managing a 10-person team versus a 25-person team versus a 50-person team?
Alec: In the beginning, you don't have the credibility or the firepower to recruit the best talent. So the type of person that you're looking for is going to be much scrappier, like a jack-of-all-trades scientist who’s willing to cut through the noise and figure things out.
And that's going to work well when you're a small team of sub-10 people because all we’re trying to prove is general proof-of-concepts. But as you grow a scientific company, you can't keep hiring people like that. There’s nothing inherently wrong with people like that, but as your team grows, it needs to formalize more; you need to create hierarchy and reporting architectures; and you need more specialized expertise. The people you bring on in the early days aren't appropriate for the company in the later days. The challenge is figuring out, “Who are the people who can grow; who are the people who are not able to grow as quickly, but are willing to have teams built around them; and who wants to go back to the way things were done before, and resists changes in hierarchy and structure.” For the latter, it’s in everyone's best interest that they leave.
Those dynamics happen quickly. The faster you grow, the more quickly you notice them. This includes founders as well. Some founders are great in the very early days, and they're okay managing a team of two or three people. But you increase that to 20 or 30, and they suddenly don't know how to deal with that. They may not be personally prepared for it, or they may not have the coaching for it, or they just may not have the personality to deal with it.
At the point you're dealing with a team of 20 people, you're not a scientist anymore. You're a politician. In many ways, I view my role today, with 50 people here, as a political role. It's mostly about making sure that I'm allocating resources appropriately, making sure that all of my department heads, who I hired because they are subject matter experts, all have the tools to be successful, and as much as I can, not be all up in their business with how to do their jobs.
Some people aren't willing or able to be that type of politician needed for a large organization. And then you often have to make a really difficult decision about, is it right for this person to stay in this role? Then you have to manage again, politically, the egos of those people who have to recognize, one way or another, that they're not right for the role as it grows. Those are often the most challenging things.
The experience of being a scientist is, in many ways, much more linear. Your experiment works, or it doesn't work. Maybe you've had an intractable problem, and you have those Eureka epiphany moments of solving that problem. But it's still very much in a locus of control that other people are often not. People are a lot more complicated than scientific experiments.
Aoi: How did you learn to scale yourself? I’ve always found it interesting that the most successful entrepreneurs, at any given stage, are managing an organization that's larger than they've ever experienced. The company is probably growing day by day, so it's a new experience every single day. How did you learn your best practices? Is there anything that you wish you had done differently?
Alec: I was pretty strongly influenced very early on in undergrad. There was a scientific founder of a startup who I looked up to who said, “You never want to be the smartest person in the room. And if you are, you’re in the wrong room.” He didn't mean IQ. He was referring to experience and ability to counsel on specific subject matter expertise.
You see it every once in a while, where leaders are fragile to the idea that they don't know everything. And that they're not the most competent person in that room. Those are the types of people who aren't looking for counsel, but they think they have all the right answers. That can be dangerous for an organization.
Some are just like, “Oh, I know all the right answers. I've got 30 plus years of experience.” You always know that when someone starts their explanation in that way, whatever's going to follow isn’t going to be something that they've thought through or can articulate in any justifiable way beyond “That's how I've done it before. And so that's how I'm going to do it again.” That doesn't mean it's wrong. It just means it's not thought through or articulable in a sufficient way.
So those who can come into an organization and talk you through why something makes sense, even if they've done it a thousand times, to talk you through why this is the right outcome in this case, here's the alternatives, and these are the potential consequences. And finally, “It's your decision. What do you want to do?” And let you own that. Those are the ones you want to keep.
Aoi: How do you provide effective guidance to your team when you typically don't have as much context as you used to? You're no longer in the weeds.
Alec: I view that as no different than any of the other department heads or any of the other executives that I have to bring in.
The vast majority of technical founders don’t have a finance background. Maybe they'll have to do some of the accounting in the very early days. They might hire an accounting firm or use QuickBooks or whatever and learn the ropes. But that doesn't make them finance experts.
It's reasonable that most founders will not be subject matter experts in every technical area. Maybe they have a PhD in one narrow area, and they should have a high-level understanding of everything that's going on, but that doesn't mean that they know the most about every single thing that's happening. That's why you hire VPs. That's why you hire executives under you in the same way you would in finance.
As a CEO, you're not the chief engineer. Your purpose is to be the CEO and to do CEO things. It's not to have the title and then just act as a chief engineer while you're at it. I don't think that you should look at the technical part of the organization as any different than any other part of your organization. You hire lieutenants and competent people to help you run that team, and you should have a high-level understanding of it. But if you're trying to run the day-to-day of it, as if you could run the finance team knowing little about finance, then you're probably focusing your time on the wrong things.
Your time is mostly spent recruiting, investor relations, PR, working with your go-to-market team, strategy, and just being a team manager and the organization’s face. And none of those things that I listed have anything to do with you dealing with the actual day-to-day project management. That has to be done by a team that you hire beneath you.
Aoi: Is there anything about project management or scientific leadership that you've changed your mind about since starting Endless West?
Alec: I've gone back and forth over the last several years on how I feel about bringing in seasoned experts to answer specific questions or manage specific projects versus people who are scrappy, really smart and motivated, and hungry to learn fast.
That’s a dilemma that pretty much any hiring manager has had at some point. And certainly, one that a founder will have, especially in the early days when you don't have the firepower to always hire the best person for the role or the most expensive person for the role, even if they're right.
There's a great deal of merit to people who learn quickly, but it costs you time. Maybe they can't grow quickly enough, and then they don't deliver. But you're living with that risk with seasoned people as well. Maybe they're not as good as you think they were. So it doesn't go away just because you hire the more experienced person.
I used to believe that anyone can learn to do anything as long as they have a basal level of knowledge and are hungry enough. I don't think that that's wrong, but it's a myopic approach because some things you just don't have the luxury of time to deliver on. For certain R&D projects, you better deliver on it on the timeline that your investors are expecting. Especially things that are operations or scale-up related.
There are times now when I want to work with someone, but they just don't have the experience. They're just not seasoned enough. They haven't seen it big enough. And yeah, I fully believe that they could get there and run the whole thing given enough time. But how long is it going to take them to learn it all?
I've seen startups buy the wrong equipment because the people who were there just didn't know that this other thing was going to work better. Or that the thing they were buying wasn't going to do the job it needed to do here. That costs you a lot of time and money. We've dealt with that. I know very few startups that haven't dealt with that, and smart, scrappy people will make those types of mistakes. Not because there's anything wrong with them, but because they're learning as they go. And if you don't have the luxury of time, you better get someone who knows the answer from day one.
Aoi: Are there any skills that you're still working on today or trying to improve?
Alec: The skill of being a manager is creating management architectures, creating reporting frameworks, setting expectations with your team, and becoming a better hiring manager. Those are things that you'll do for the entirety of your career, and no one ever gets it right. You've always got room for growth.
Those are some of the areas where it's hardest to grow because it's very easy to have blinders on, and you have a lot of blind spots about your type of personality and how you deal with other people. People are often not going to tell you what they think about your style because they might want to protect their job, or they might want to protect your feelings. And so you always have that question mark in the back of your mind, like, “Do they like this? How could I be doing this better? Are they telling me the truth or not?”
And that's where you come back to having really good counsel that you can trust and who trust that you're not going to blow up in their face when you hear something that you don't want to hear.
And then there are certain skill sets, like, do you have a sufficient level of finance understanding or corporate structuring, or law or regulatory. There’s always growth there, but it is less important than whether you are good at building a team. At managing the people around you. At managing up, which means managing your board and managing your investors. At managing across, which means managing other CEOs, competitors, clients, press, people who don't report to you. And then managing down. I fully believe that you can get better, that you're not born a manager, but you’re developed as a manager.
If you are seeing high turnover and constantly dealing with personnel struggles, you need to get an executive coach. You need to get someone whose job it is to tell you the truth about what you're doing well and what you're not doing well.
Aoi: Do you have any resources that you might be able to recommend to learn some of these best practices, like books or courses? Or is it mostly just learned through experience?
Alec: There's so much startup literature out there for various aspects of being a startup manager, but it's never going to be written about you. That's only going to be you figuring it out, at the moment, with really good advisors. And so much more than reading a book, article, or even a course. I prefer to, in real-time, work with people who can understand the context of what I'm dealing with, draw on their experience, draw on contexts that we’ve had before, and come up with a reasonable solution about what to do.
Aoi: Alec, thank you so much for your time.
Alec: Thanks for having me.