Carol Cone:
I'm Carol Cone and welcome to Purpose 360, the podcast that unlocks the power of purpose to ignite business and social impact.
The next series of Purpose 360 episodes were taped in person on site at the One Young World Summit that was held in Montreal. For those of you who are not familiar with One Young World, I hope that these conversations will get you very, very excited to follow them online because they are making terrific impact around the globe. At the conference, there were nearly 2,000 changemakers. And you have to apply to get accepted to this amazing event. And some leaders at the conference say, "You know, it's harder to get into this conference than it is to get into Harvard." Wow. The young ambassadors represented 190 countries, and you should think of this like the Olympics for changemaking. Also in attendance were leaders across the board, around the world. Think older individuals like myself, who have worked in the field for so many years helping to make change.
Welcome to Purpose 360, and I love socially responsible and sustainable brands, and today we're going to have a conversation with Elio Leoni Sceti?
Elio Leoni Sceti:
Perfect.
Carol Cone:
Very good, thank you. And he has this amazing company called The Craftory in London and in San Fran, and we're going to learn about his love of creating CPG brands with purpose.
Elio Leoni Sceti:
That's what we do.
Carol Cone:
So welcome to the show.
Elio Leoni Sceti:
Thank you. Great to be here.
Carol Cone:
Oh, it's my pleasure. So why are you attending the One Young World Summit? Let's just start right there.
Elio Leoni Sceti:
So One Young World is one of my greatest passion. I've been a founding counselor and I'm a trustee of One Young World from day -1, 14 years ago.
Carol Cone:
Oh, no kidding. From 2010.
Elio Leoni Sceti:
That's it. That's it.
Carol Cone:
Great.
Elio Leoni Sceti:
And it is just such a unique way to pull together everybody from around the world, 195 nations out of the 197 recognized, that send, in a way or the other one, their future leaders. And the combination of that youth and openness and energy, it's just unmatchable.
Carol Cone:
Yeah, the energy is extraordinary. So we'll return to that in a moment, but I want to understand The Craftory and where that came from. I mean, you worked with traditional companies at many stages in your career, a very long time, you might mention which, and then all of a sudden, some light bulb happened.
Elio Leoni Sceti:
Yeah. So what happened, I've been, let's say, involved in CPG, consumer product goods, for 35 years. And I've been growing in the career, I've been CEO of two companies. I spent most of my time with Reckitt Benckiser, before that, Procter & Gamble, then Reckitt Benckiser, up to CMO growth office. I was CEO of Europe. Then I left, I was CEO of EMI, the music, and then I left and I was CEO of iglo, Birds Eye, Findus, which is frozen food. And so this is where I'm coming from. And we did marvelous things. We built wonderful brands. But over the course of those years, let's say, that environment, planet, responsive consumption wasn't part of the thing that we were thinking about every day, none of us. No Reckitt Benckiser, no Procter, no Unilever, except for you.
Carol Cone:
Except for me, yeah.
Elio Leoni Sceti:
So when I stopped being executive, I started to step on a couple of boards. I've been with AB InBev for 10 years. I'm now on the board of Kraft Heinz.
And as I was on the board again, I realized that there was so much that actually big corporate can do. And I started progressively, almost by choice, to become a little bit the brand and the purpose champion at the board level for this company that I was with.
And then six years ago, I was sharing with a good friend of mine who I've done business with and worked together that I thought that it was such a big gap in the investment world to have somebody that actually has operational experience that could be really helpful to the new founders that are needing to grow and that they have some operational challenges that is difficult to understand and overcome. So a knowledgeable investor that could help these young, new brands that had very high stickiness, a level of loyalty, retention, consumer loved them, but they either didn't grow or they grew to a point in which one of the big guys would buy them out and integrate them into the machine and they would lose the reasons why they actually were founded.
So I said, "Why don't we set up a company that actually invest and we offer our operational expertise, we help them grow, and then we get them to a point where they're so big that when they got bought or they go public or whatever they do, they're so big, they can prove that the theory that they can improve people, planet, or society cannot be denied?" And that's how he started. This person I spoke with is Ernesto Schmitt who became my co-founder with The Craftory, a very different background. He comes from entrepreneur, tech, data kind of guy. And yeah, that was six, six and a half years ago.
Carol Cone:
So the companies that you would like to fund, do they come to you with purpose or sustainability at the center or do they come to you with a great idea and then you help them find their purpose and then help them leverage to sustainable supply chains and marketing and things like that?
Elio Leoni Sceti:
So the way we express it is that they have to have it on the front label.
Carol Cone:
I love that.
Elio Leoni Sceti:
So a brand that has this, yeah, a brand that has it on the back label that 25% of plastic might be recycled on a Monday morning is not really what we are interested in.
So they come to us. Normally, we look at brands that have already sort of 15, 20 million run rate sales, so they already have some proven tractions and some consumers that have already chosen them for a reason, but we recognize that responsible consumption, that's the way we define it, they have some cause, that is either about health or about planet or about progressing society. So there's some cause under this responsible consumption umbrella that is on the front label.
And then what we do is that if we like that, if we like the founders, and if there are a number of financial key indicators that we want to recognize for potential, if you want, then we invest and together with the investment, we bring our operational expertise and help them grow.
Carol Cone:
Okay. So front of the label means authentic, it means it's embedded in many, if not all, processes of the company, employee engagement, communities, sourcing, supply, marketing, packaging, all of that.
Elio Leoni Sceti:
Yes. The one that we want in front of the label doesn't have to be all of them because it's very difficult already in consumer goods to have one thing that is unique to you and recognizable. If you try to have five, it's becoming mission impossible. So front of the label has to be one thing.
Some other brands might have plastic on the front label, some other brand might have no toxic ingredient. So on the front label, you got to have one, but your ethos as a company has to embrace them all.
Carol Cone:
Okay. Now, do you go look for them or do they find you or what's the best way?
Elio Leoni Sceti:
Well, when we started six and a half years ago, we were a totally unknown entity. I've been in consumer goods for a long time and work on many brands, but The Craftory was inexistent. So we looked for, we established some way to look for these brands out there. We produced some material. You might've seen the one with the death of the VC-
So that was a way to cut through some of the noise and to establish our brands as it was. And then the brands, like all complex systems, evolve and adapt on the needs of the market. We had COVID in between, high inflation, some of the consumer pattern differences, and we became more known. We've done 13 investment, some of them very good brands, they're growing very well. And so now, I would say, we are on the receiving end. People are looking for us.
Carol Cone:
Okay. People open the door and they're saying, "Hey, we want to join these guys."
Elio Leoni Sceti:
Yeah, we're very sharp. We're consumable, not even, consumable consumer goods. So if you are in this specific, which consumable basically means you have a bottle and a cap, you have a tube and a cap or something, at the end of the week it's finished, you go buy another one. So that's a consumable.
Carol Cone:
But put the plastic in the right place.
Elio Leoni Sceti:
But put the plastic, possibly compostable and recyclable, in the right place. And so if you're in that space, if you're growth-stage in consumable consumer goods, you probably heard about The Craftory. And if you're raising funds, you're probably thinking that we might be a good capital to partner with.
Carol Cone:
That's great. And talk about the categories, because they're listed very plainly on your website, that you're interested in.
Elio Leoni Sceti:
Yeah. Well, it's really just across the consumable-
Carol Cone:
Which is baby and food.
Elio Leoni Sceti:
Oh, everything. In this moment, what we think is very interesting is the pet care space. It's been going for a while. We just had a wonderful exit to General Mills, one of our portfolio company called Edgar & Cooper, invested about three and a half year ago. We grew sales about five times from the moment we invested to the moment we exited. The founders are great and we exited to General Mills who has other brands like Blue Buffalo and others. And it was a perfect poster child of what The Craftory does because it's great founders, great brands, great cause, mission. And then when it gets into General Mills, whatever they do, it can actually impact much bigger by being used by General Mills as a standard also for the other ones.
Carol Cone:
Right. So you wouldn't be looking for a Clif Bar that sold for a huge number to Mondelez. Smaller companies?
Elio Leoni Sceti:
Yes. When we enter 15, 20 million, a little bit more run rates, and then we exit whenever the time comes. The good thing's is that we're not a fund, so we do not have that sort of cliff moment that we have to sell.
Carol Cone:
Oh, great. Oh, that's very good.
Elio Leoni Sceti:
We stay with the company as long as it's right to.
Carol Cone:
Okay. So are some of any of these companies that you're looking at B corps?
Elio Leoni Sceti:
I want to say that out of the 13 brands that we have now, probably B corp is in our... We publish an impact report. I want to say that there are already five, if not six, that are B corp, and the other one, we're helping get there.
Carol Cone:
Right. What do you love the most about the business now that you like to do?
Elio Leoni Sceti:
I think that it's a very interesting moment in which mission, as in sustainable ESG, whatever you want to call it, it changes all the time, but responsible consumption used to be something that you had to do and you had to show in order to receive from the consumers that you wanted that nod of approval and you can price it accordingly and all of that.
And we're now at a point in which it has to be in the DNA of the company. It is not anymore an extra label that you want to put on the front, like B corp or whatever. If, as a brand, you do not have it in the DNA, meaning when you develop new product, when you decide maternity leave, when you go to market in certain ways that are whatever, fuel efficient and good for footprint or whatever, if a brand doesn't have that into the day-to-day business, it becomes almost impossible and unsustainable over time because of the cost and the difference.
So what I really like is to help identify companies that have the potential to, and then find a way to help them bring all of that response and consumption into the DNA of the company.
Carol Cone:
So who do you like that you haven't worked with that's a great example of a company that's getting it right? It doesn't have to be large.
Elio Leoni Sceti:
I think that Tony Chocolonely is a very good example. I think a very good example was in beauty, which is very rare, there are not many companies in beauty, was The Ordinary that Est�e Lauder bought some years ago. They found this way to bring it down to the single ingredient and say, "Be simple and straight focus. If you want this ingredient, buy this thing and not the other one." So to not over-ingredient, over-complex, over-price what people need, the Ordinary was a very good example. But hey, we love the one we have in our portfolio.
Carol Cone:
Can you name any others in your portfolio?
Elio Leoni Sceti:
Sure. I mean, Seed, which is basically a system for gut health that works in the biome, microbiome for gut health and gives you general health. It's very science-based, incredibly well-researched. It's probably the more science-based supplement out there. Hippeas, which are the delicious snack with peas. It's a puff.
Carol Cone:
Oh, yes, I've had them. They're lovely.
Elio Leoni Sceti:
They're lovely. They're fantastic.
Elio Leoni Sceti:
And then we have one called Dyper, D-Y-P-E-R, Dyper, which is basically compostable. And a lot of the landfill is paper, is diapers and so on. And so this is a wonderful US D2C-only, for the moment, brand that does diaper with a very clear angle. Yeah, so those are... You know. I can give you another nine, but-
Carol Cone:
So let's talk about the environment in terms of everyone says, "Gosh, Gen Z, they're going to... They will change brands for one that's more socially responsible. They want to work for companies who are socially responsible. They want to advocate or be an activist against." And I did some of that research, so I'm one of the perpetrators.
How are consumers today? Are they really buying with a sense of conscience, or are they at, "Eh," they're talking it but they're not walking the talk?
Elio Leoni Sceti:
I would say that up to COVID, it was really meaning it. And I would say that the COVID years and the excessive consumption, because COVID, everything sold 20, 30, 40% more for really no particular reasons. People did not need it more. They just had more time to buy.
Carol Cone:
And they did.
Elio Leoni Sceti:
So after those years and then the massive inflations, and if you take a look at consumer goods over, since then, average have increased like 30, 35% price. It's huge. I mean, we've not increase price 35% in whatever, 20 years before. So I think that is now a little bit less obvious that ESG matter, that responsible consumption matter, even for Gen Z, Gen X, cross-generational, really, because the price has started to play a more important role and people have less disposable income. And also, because there is a little bit of a backlash of the excessive consumption of the COVID year.
So particularly with the younger, there is a little bit of that, "We actually don't need all of that. We don't need all of that makeup. We don't need all of that fine-tuned, custom-made, tailor-made meal that is only delivered to me." And so they realized that there is a little bit less reasons for being of all that. And so a little bit less driven by it. I would say it's on the decline, it's not on the rise.
Carol Cone:
Ah. So it's going to be, not for you, but for a consumer, it's a secondary reason to buy. It's not a primary.
Elio Leoni Sceti:
Yeah.
Carol Cone:
I mean, taste, obviously, price important, but then it's the next level.
Elio Leoni Sceti:
I think it's the next level. I mean, on average, we've looked at data, you're talking about maybe, let's call, it 10, 12% on any category that are the sustainable warriors type of sustainability-first kind of buyers.
Carol Cone:
Right. Let's talk a little bit about the plastics issue because it is everywhere and everything from PFAS to in your bloodstream and every place, in the placenta. How do you... Do you address that at all in any way with the companies, one, that you're looking at? And then two, are you doing anything at The Craftory in terms of trying to, you can't ameliorate it, but can you make somewhat of a dent in it?
Elio Leoni Sceti:
So the way we approach it is we look at companies that have solved the problem and if we do find one, definitely invest on it. We haven't yet found one that has solved the problem. But in our portfolio, I would say there are at least three that have a very distinct step forward in this. One, as I mentioned before, Dyper doesn't have the plastic in the various adhesive areas and so on, which makes it compostable and therefore significantly better. The other one is Dropps, which is laundry detergent, and-
Carol Cone:
I know Dropps.
Elio Leoni Sceti:
You know Dropps?
Carol Cone:
I had him on my show.
Elio Leoni Sceti:
Fabulous.
Elio Leoni Sceti:
It's doing very well. And we started now we went also on the grocery channels. We're about to extend all the retail. So from D2C only, it's also know omnichannel or multichannel, and Dropps basically have no plastic in the whole product and primary, secondary packaging.
And the third is that we have actually invested in a platform which is a cross-platform. It's called Polymateria. Polymateria is basically something that is an active that you disperse in the macro granules that when you do PET or different type of plastics in the manufacturing process. So that actually accelerates the time that it takes to the degrade for plastic, which is like 500 years, accelerate it to five or 10, which is a significant improvement. It is not zero, but it is very significant, and it's growing very nicely. And it's, as I say, it's a technology. It's not a brand.
Carol Cone:
Right. So you're also investing in a technology as-
Elio Leoni Sceti:
As long as it serves the purpose of the brands that we invest in-
Carol Cone:
Okay, got it. Fabulous.
Elio Leoni Sceti:
... because it gives us some added value in that relationship.
Carol Cone:
Oh, it makes you stronger. Yeah, absolutely. Okay, so let's now turn back to One Young World Summit. So have you ever found a company over the years that you've been here, 14 years or whatever, that became somebody that was part of The Craftory?
Elio Leoni Sceti:
Not yet, not yet.
Carol Cone:
Oh, I know you want to!
Elio Leoni Sceti:
I've been here fishing for it for 15 years.
Carol Cone:
15, okay.
Elio Leoni Sceti:
But no, jokes aside is the two things share so much of the values, One Young World and The Craftory, but just the stage at which we've seen many fabulous companies, some of them have become fabulous, but not in consumable goods and not at the stage that we're looking at.
Carol Cone:
So when you're asked to provide counsel to these young changemakers, what are some of the areas that they're really seeking information and inspiration from you?
Elio Leoni Sceti:
Priority-setting, it's a big one. It's a very complex world for anybody to set up a company, make it succeed because you have to do a million things, a million things and never well done. You always have to do the first one of five and then you get to 10 and then you stop. So priority-setting is one.
Pragmatical advice on how to solve specific issue like going retail. I mean, stepping back for a second, in The Craftory, we have some areas in which we're specific craft partners that are expert of. One is go-to-market. It really requires knowledge and experience. You can explain it in books, but you've got to have done it for a while to know it.
The other one is unit economics and specifically designing a P&L that has the right curve, that has the margin in the right place. Because if you start with the margins below the right place, it just, even if you scale, it never goes. So economics and P&L.
The third is brand power. So advice on brand power is very important because you need to make it relevant, unique, distinctive. It's not easy and you need to understand what it means. Then team dynamics, organizational design, how do you make it agile but structured in a way that you do not waste it? And then importantly, what sector, how you price it in a sector, and how is the sector growing? Because you don't want to swim against the river. You want to skate, now that we're in Canada, I can say this, skate where the path will be. Right?
Carol Cone:
Right, right, right. I always say that, even the US.
Elio Leoni Sceti:
So these five areas that I described that are the expertise of The Craftory is actually the sort of five areas that young people tend to ask me advice for because they intuitively understand that they're very important.
Carol Cone:
Nice alignment. Nice alignment. Well, this has been a wonderful conversation.
Elio Leoni Sceti:
Same here.
Carol Cone:
And if I come across anybody, I'm going to send them your way because I do, everybody's calling me about purpose and things like that.
Elio Leoni Sceti:
Please do.
Carol Cone:
But I always like to give the last question, answer, advice to my guest. So how would you like to leave our listeners today?
Elio Leoni Sceti:
With a very positive and optimistic view on the fact that the only thing that matters is to think and believe that impossible is nothing. This young group of fantastic people really have that energy and that undiluted view of the world that allows them to have a vision to go beyond the boundaries that we'll believe are unremovable boundaries. Well, actually they are. They're breakable. They're removable. They know how to do it. If they have a belief, impossible is nothing.
Carol Cone:
I love that. If they have the belief, impossible is nothing. So thank you, thank you, thank you. It's been a fabulous conversation and please continue to do what you're doing because we need more CPG brands that are responsible and sustainable and something that we need and want to use and love. So thank you very much.
Elio Leoni Sceti:
Love chatting with you and thanks for the question. Bye-bye.
Carol Cone:
This podcast was brought to you by some amazing people and I'd love to thank them. Anne Hundertmark and Kristin Kenney at Carol Cone On Purpose, Pete Wright and Andy Nelson, our crack production team at TruStory FM, and you, our listener. Please rate and rank us because we really want to be as high as possible as one of the top business podcasts available so that we can continue exploring together the importance and the activation of authentic purpose. Thanks so much for listening.
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