Quest To Take Back The Global Food Supply
You can tell how well things are going on inside Quest Nutrition by how poorly things are looking just outside. There, in the parking lot of the company’s El Segundo, Calif., headquarters, cars battle for spots that don’t exist; a ballet of near-fender benders between customers, employees—current and potential—and partners—current and potential.
“Yeah, we pretty much had outgrown this place by the time we got all moved in,” says Nicholas Robinson, Quest’s chief marketing officer.
As anyone who’s stumbled upon an old high school yearbook knows full well, growth is not always pretty. In 2010, Quest was three partners—Tom Bilyeu, Mike Osborn and Ron Penna—and a bunch of friends, rolling pins in hand, working in a buddy’s kitchen to make protein bars that tasted good without compromising on healthy ingredients. Today, lo these many five years later, Quest products, including bars, powders and chips, are sold in 73 countries at more than 70,000 locations, and annual company revenues have increased from an initial $123,000 to nearly $200 million in 2013, an increase of—you might want to steady yourself—more than 57,000 percent. (Inc. magazine named Quest the country’s second-fastest-growing company, behind only Android tablet maker, Fuhu, also based in El Segundo.)
That kind of seismic activity presents challenges in just managing it, whether it’s your low-speed, Mad Max of a parking lot, manufacturing machines that don’t—or can’t—manufacture your product, or finding out that your healthy bars, without cover of preservatives, are getting cooked as they sit in a container in Saudi Arabia. Challenges are met head-on and from a company bedrock of a Big Idea melded with an intimate knowledge and ongoing conversation with its customers—“Questies”—throughout the world. That has allowed Quest to handle any problem that comes its way—if a company that’s growing at a 57,000-percent clip can be said to have any problems—directly. Perhaps it’s a habit formed at its outset, when the company’s reason for being was to handle directly one of America’s—and the world’s—biggest problems: obesity.
“We’re committed to making food not that’s better for you but that’s good for you,” says Bilyeu, company president. “And frankly, we’re only scratching the surface. I tell people we’re not competing with other protein bar manufacturers; our aim is to take the food supply back. I’m competing with General Mills. We’re a food company. One day our goal is for you to walk into any aisle at a supermarket and be able to find our healthy version of that food that used to give you trouble.”
The statement would have sounded more than silly five years ago, landing somewhere closer between deluded and “What?” But to look at the company today, to see truckloads of product heading out from the company’s manufacturing plant to points all around the globe, some that were expected markets—Canada, the U.K.—and some very unexpected—Saudi Arabia, Colombia—and to see that it’s not just protein bars and powders on the trucks, but snack chips, spaghetti and fettuccine, and to realize it’s all happened in five years, the question becomes less about “What?” and more about “When?”
For Bilyeu, the problem of obesity was personal. His entire family had struggled with obesity. As a teenager, he says he watched an uncle “eat himself to death,” and was especially concerned about the long-term health of his sister Kim. Of course, it wasn’t, or isn’t, just Bilyeu’s family who struggle in their relationship with food; obesity has become a full-blown public health issue that figures to have worse days ahead. Consider that in 1990 the state with the highest rate of adult obesity was Mississippi at 15 percent. By 2013, Colorado ranked as the state with the lowest rate of adult obesity at 21.3 percent. (Mississippi’s rate had more than doubled to 35.1 percent.)
As focused and as well-meaning as their intentions were at the start, the partners now admit that they perhaps miscalculated which part of their operation would present the most challenges, i.e. coming up with the perfect formula for their bars.
“When we began, we poured so much into creating the best recipe,” Bilyeu says. “After we had done that we thought it would just be a matter of farming it out to manufacturers—you know, easy peasy.”
It was anything but. They were turned down by every manufacturer they contacted, informed that their unique formulation just could not be made by modern machines. The reason? Over the past 60 years, the food industry and the equipment manufacturers who serve it have grown up together making food with high fructose corn syrup. For all of the drawbacks of corn syrup, it does have great benefits in manufacturing: it’s cheap, tastes great and, of particular importance in Quest’s case, it makes food pliable and therefore easier to send through complicated machines. But Quest doesn’t use corn syrup; in fact, the binding agent the company does use tends to stiffen up like Kevlar when under pressure, as it would be in a machine.
“They said there was no way it could be made,” Bilyeu says. “But we were determined. We said we’d get our own equipment and show these guys that with enough determination you can make it work.
The thing we had to tell ourselves was: We’re either going to do this right or we’re not going to do it. We’re going to have to buy our own equipment, going to have to manufacture it ourselves. Up until that point we hadn’t crossed over to a point of no return. We didn’t really have a lot of money invested into the company. But if we were going to buy the equipment now, we were committed. Now it had to work. It was like we were burning the ships on the shore. It was do or die.”
They ordered a machine which arrived in pieces with inscrutable directions; what was supposed to be the transformative moment in the company’s history had shown up like a college kid’s futon. After putting the machine together they began to put their bars through and found, Bilyeu says, “that everyone who told us it could not be made was right!”
The machine kept breaking down because the bars weren’t malleable enough. The partners found that they could actually make more bars in a shorter time by hand. Osborn, raised on an Iowa farm, looked at the equipment and said he thought he could re-engineer something, but he would have to cut the machinery apart to do so.
“Now at that point we were committed but at least we could get some of our investment back by selling everything, including the machinery,” Bilyeu says. “Now we’re to the point if he cuts it apart and it doesn’t work, now we’re done. Now you’re gambling everything. But he cut it apart, put it back together and it worked. That was us jumping into manufacturing.”
The jump from manufacturing to relative success was not far. The partners followed a plan of marketing and selling Quest products exclusively online. Orders got bigger and began to range all over the globe, pushed by the global tribe Quest had created on social media.
“We knew we were going to build this company through social media,” Robinson says. “We didn’t have a marketing budget so we said let’s do something by entirely building the communities; not by pitching the product but by giving them content for the lifestyle. We just sold online. It helped in building our global community. People have asked if we were thinking about selling globally even when we were starting out. Well, we believe that once you make that decision to build online and through social media, you are global.”
Soon enough, there were people asking to sell the product in their stores, people asking to partner with Quest in their own countries. And soon enough, the partners started the process of vetting international distributors and partners to sell Quest in their nutrition stores and markets. That put in motion the near-constant stream of interviews with potential global partners. Robinson says Quest management has gotten very good at “thin slicing” individuals—their motivations and talents—when they meet.
Bilyeu says he has developed a test of his own, part of which involves the openness which the potential partner is willing to give of themselves: “If you can’t get to an 80 percent rate of accuracy about what someone is about after meeting with them face-to-face for 30 minutes, you’re begging for problems.”
But there is a second test and it involves Bilyeu simply starting to talk—which he can do quite well and for a quite a long time—to “evangelize” about the product as he puts it. The whole time he’s talking, he says, he’s less concerned with what he’s putting out as to what he’s getting back.
“I’ll be talking and I’ll watch them to see if they flatline,” he says. “If they’re not excited by what I’m saying, by our mission or the way we view the world, that’s a deadly sin for us. If you’re not behind why we we’re doing it, this is not going to be a good marriage.”
This is critical, Bilyeu says, because he needs to know that his international partners are more interested in the long-term health and happiness of the Quest customer than their own bottom lines. Say, for example, a particular bar, though popular, is found to be lacking in some way. The distributor who only cares about money will be less than enthusiastic about pulling a proven money-maker off the shelves.
The company believes so firmly that the quality of the product is basic to the reason for Quest’s very existence that when bars started showing up discolored in their Saudi Arabia markets, they quickly investigated what was the problem and before blaming others, looked to see if there was something in their recipe that could be adjusted.
“We ended up re-formulating our bars, because in other countries, if they’re sitting on a boat, in customs or, in the case of South America or Saudi Arabia, sitting in extreme heat which can be an absolute disaster for protein bars,” Bilyeu says, “we can’t depend on preservatives because we don’t use them. So we put them through research and development, which guides everything we do, and we came up with different types of protein now that work much better in transit. Now, you could practically put a bar in the oven and it would be fine.”
To Quest management, a bar that’s anything less could spell the end of a very fast, successful beginning. And, in some ways, the Quest customers on social media not only provide marketing information for the company but quality control as well. If a product is not working or is not up to Quest’s standards, their customers let them hear about it. And Quest listens.
“The thing with marketing on social media is you can’t do what companies have done in the past and talk at your customers,” Robinson says. “You are engaged in an ongoing conversation where they are equal partners. You have to not only listen to them but act on what they’re saying. Basically, you have to respect them. If you don’t, they will leave you. Quick.”
Of course, just the opposite has been true. Customers have been flocking in ever greater numbers to the brand. Once the company gets labeling issues settled it will soon be selling in Japan and it has a foothold in the two massive markets of India and China. Bilyeu says the company wants to ease into both markets to make sure they do it right. The company is built on a Big Idea and runs on Big Passion, but the partners know none of that is any good if not backed up by Big Work and Big Results.
“When I’m looking to hire someone, either here or overseas, I’m looking for ambition. They want to do something big. I mean, we’re talking about taking back the food supply. If people think that’s too big or just plain stupid, they’re not for us,” Bilyeu says. “And I’m looking for drive. You actually have to have the will to do it. Because we’re not empty dreamers, we’re dreamers who act.”
And actions have yielded good works. For one, Kim, Bilyeu’s sister, a Questie herself, has lost 120 pounds and recently completed her first half-marathon. For another, things at Quest just keep growing, parking lots be damned. Ask Bilyeu where the company will be in 20 years and he reiterates that his food company will continue to be guided by making a difference.
“We’re only scratching the surface,” he repeats, though even he recognizes there have to be some limits. “Though, I imagine the growth will have to slow down at some point. I mean, if not, we’ll eventually represent the global GDP.”
NARS 2019 Annual Meeting