Haas Undergrads Take On Big Food

Alejandro Velez (left) and Nikhil Arora founded Back to the Roots at the end of their senior years at UC Berkeley's Haas School of Business. Courtesy photo

Alejandro Velez (left) and Nikhil Arora founded Back to the Roots at the end of their senior years at UC Berkeley’s Haas School of Business. Courtesy photo

On the fringe of Jack London Square in Oakland, California, stands a row of old brick buildings. The buildings were there when a youthful Jack London ambled along the waterfront watching ships filled with crops and produce dock in the Oakland Port. Now, in one of those brick buildings, 20-somethings in t-shirts and jeans scurry about a large room filled with cardboard boxes. On a bookshelf, Black Faces in White Places rests against a 30-year-old copy of McGraw Hill’s Financial Accounting–possibly the truest indicator of a business with a social pulse.

“This is an incredible moment for people wanting to take on food,” insists a grinning Nikhil Arora, a graduate of the UC-Berkeley Haas School of Business. “There is a massive disruption happening.” Arora would know. Instead of ships docking with produce at the nearby port, his team is frantically passing around mushroom grow kits, mini water gardens and boxes of stoneground cereal flakes. Arora founded Back to the Roots–a startup hellbent to “undo food”–with Alejandro Velez, another Haas student, in 2009. And what began as an odd experiment in a fraternity kitchen has bloomed into a multi-product, $7 million venture capital-backed commercial food company in just under seven years.

“The big food brands–your Krafts and Kelloggs and General Mills–are getting hammered right now,” Arora continues. “They can’t compete. They’re not connecting with this generation anymore. They’re on a totally different wavelength. The entire ecosystem is being shaken up.”

GROWING MUSHROOMS FROM COFFEE GROUNDS WASTE

Back to the Roots is setting out to do exactly what the name conveys–connect with a generation through “radical transparency” and a reconnecting with the earth and food that comes from it. Confidence gushes from the lanky Arora as he discusses why he thinks big food is about to be upended. And why he thinks his venture is one to pave the way. The Irvine, California native has a massive grin and laughs often. He arrived on the campus of the University of California-Berkeley in 2005, where he majored in political science and business. In a business ethics course at the Haas School of Business taught by professor Alan Ross, Arora learned something intriguing and random.

“This fact came up that you can grow mushrooms from coffee grounds,” recalls Arora. So he sent Ross an email asking for more information. “He (Ross) said, ‘honestly, I have no idea where it came from. I think I read it somewhere. But, you know, another student asked about it and you two should link up,'” remembers Arora.

The other student was Velez, who is originally from Medellin, Colombia. “It was coincidence or fate or something,” bursts Arora, now unable to muzzle the excitement. Despite both majoring in business in a relatively small program, the two had never met. “It was the last semester in the same class and we both caught on to this random fact–literally one sentence–and we both reached out after class via email,” says Arora, seemingly still in disbelief at the randomness of it all.

BARGING INTO CHEZ PANISSE

The two soon met and bonded over their obsession with growing mushrooms from coffee grounds. They spent days watching YouTube videos and reading internet articles on the obscure idea.  “We searched growing mushrooms and you can imagine what crazy stuff came out of those searches,” laughs Arora.

Nevertheless, the duo read enough to feel confident they could do it themselves. So they snagged 10 paint buckets and attempted to grow 10 batches of mushrooms in the kitchen at Velez’s fraternity house. “Alex (Velez) would receive emails from his fraternity saying, ‘who the hell left the lights on? What the hell is growing back here,” recalls Arora, again laughing. “We turned the kitchen into an experiment.” Then they left for spring break. When they came back, nine were “contaminated” and not growing at all. “But one of them had this gorgeous crop of mushrooms growing out of it,” says Arora.

They waltzed straight to nearby Chez Panisse–an upscale cafe owned and founded by world renowned chef and foodie, Alice Waters. And Waters happened to be there with her head chef. “He said, ‘Oh my God, these are delicious,'” remembers Arora. “And that was the first confirmation we had.”

The two sashayed their crop to all the nearby grocery stores. But these aren’t your normal grocers. This was Berkeley. They went to upscale grocer, Andronico’s.  They went to the Berkeley Bowl where the produce section takes up half the store and people walk around barefoot as dogs wait patiently outside–think every single hippie-chic Berkeley stereotype and Berkeley Bowl is the epicenter. But all the managers of the produce sections shared the assessment by the Chez Panisse chef–the two business majors could grow delicious mushrooms.

‘THAT’S WHEN WE SAID FORGET CONSULTING, FORGET BANKING’

With their undergraduate days ebbing, the two had to make a decision. Would they try to grow a mushroom business or go down the consulting and investment banking paths they’d spent four years sending themselves down? A timely and game-changing $5,000 grant from the university’s chancellor and an agreement to supply mushrooms to the local Whole Foods led them to choose the former.

“That’s when we said forget consulting, forget banking,” exclaims Arora. He had spent time working at Raymond James Financial, while Velez had worked at both Morgan Stanley and Qualcomm. But Arora also spent six months working for a recycling company in Ghana, and Velez was very involved in UC-Berkeley’s Sage Mentorship Program. “We were both really passionate about business but also sustainability and education,” explains Arora. “And growing mushrooms off of something that’s waste, we thought this could be both a business but something deeper.”

Coffee ground waste is a problem–especially for large brands such as Starbucks which has created a policy on how to properly dispose of the grounds. Grounds are also commonly used by gardeners because they slowly release nitrogen into soil.

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