Soylent's $60M Exit

A story about how John Coogan and his cofounder started Soylent in a hacker house, grew it to nearly $100M in revenue, but ultimately sold for around $60M after raising $100M in venture capital.

"We met in a hacker house. My cofounder and I went to preschool, middle school, high school together, went to college in the same city. We moved to Silicon Valley looking for a place. Found something on Craigslist - they said 'this place is incredible, it's got a pool, 5 bedrooms, exactly like The Social Network.' We show up - the pool is filled with algae, bathrooms don't work, absolute squalor.

We grind for 6 months there, eventually moved to the Tenderloin. Living in technically a 1-bedroom with 3 guys. I was living in the living room, Rob (who came up with Soylent) was living in what was technically a closet because it didn't have a window. We were just hacking - wake up, program, go to sleep, wake up, program, go to sleep.

Rob starts whipping up these powders, figures out this meal replacement. Instead of buying a cheeseburger or groceries, he buys a 200-pound sack of protein powder. He lived on it for 30 days, which created curiosity. People would say 'this ingredient's stupid' but if you survived 30 days only on this, they'd probably take a sip to see how it tastes.

We grew to almost $100M in revenue, but the outcome wasn't good. We sold for around $60M after raising $100M, which basically means the common stock doesn't get anything. Peter Thiel had diagnosed everything that would go wrong in our business in one hour - he said this is just a widgets business, run it like any other business. He was basically like 'this is a great lifestyle business guys, congrats.' Then we raised a bunch of venture and it was a disaster."