If you're a bro looking to get some more sweet Silicon Valley funding for your dope-ass eggless mayonnaise that nobody seems to like, what do you do?
For Hampton Creek founder and CEO Josh Tetrick, who was looking to raise a $90 million Series C round, the answer was apparently pretty simple:
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.
Tetrick claims that the buybacks were done for qulaity control. But some of his contractors told Bloomberg a different story:
In-store marketing is a crucial way for a young company to build a brand and boost sales. Hampton Creek held Just Mayo tastings and other demonstrations in supermarkets around the U.S. Wearing the required uniform of a black hat and t-shirt with the startup’s three-leaf logo, the Creekers were supposed to persuade shoppers to try the product and then hopefully buy a jar.
In 2014, the job changed, according to five former Creekers who asked not to be identified for fear of reprisal. Now they were being asked not simply to promote Just Mayo but to start buying it as well—an initiative the company dubbed “Special Project” or “Buyouts,” they say. Love, who has since been promoted to Hampton Creek’s vice president of mission, suggested how Creekers could do this most effectively in an April 2014 e-mail to a contractor. “I might go through the self-checkout lanes, or make several transactions going to different cashiers each time to avoid questions like, ‘Why are you buying so much mayo?!’” Love wrote. “Make sure you are not wearing your HC gear when you go into Safeway. This is an undercover project.”
Well, that doesn't look great.
Tetrick and his team are arguing that the buybacks had no material effect on their overall sales numbers (kind of missing a large part of the point) and that they aren't guilty at all for their totally well-intentioned and not at all channel stuffing behavior.
In fact Tetrick went on CNBC today and told "Squawk Alley" that he is not even a little sorry for slurping up his own mayo a few years back.
"We have all the data to back it up," he said. "Of course we didn't break any laws," he added.
Tetrick went on to say that Hampton Creek is still buying back its product and that it spends more on office snacks than it does on buybacks. He even said that he thinks the buybacks makes Hampton Creek a better company.
In the end, Tetrick told CNBC that he would do it all again and that he will not brook any further criticism of his team's accounting:
"We're selling to thousands of stores across the country," he said. "In this 'great mayo buyout of 2014,' as reported by Bloomberg, it was noted that 'hundreds of jars were not accounted for.' We sell millions of jars ... Of course it was properly accounted for."
For a guy selling something without eggs "Mayonnaise," it makes sense that Tetrick is all about seeing things from a certain perspective.