Latest / Specialty Matcha Podcast / Our Startup Pitch, Matcha Shortage Recap, and Reflections

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Our Startup Pitch, Matcha Shortage Recap, and Reflections · Specialty Matcha Podcast

0:00
Hello and welcome to the Specialty Much Podcast, a very
0:03
special Specialty Much podcast. My name is Ryan, This is Michael
0:06
Hozongjun. Hello.
0:07
Hello. Who also goes by Sam.
0:09
Yeah, we launched this podcast to discuss our learning journey,
0:12
Matcha, share startup stories and interview experts, and today
0:15
marks the 50th episode of this podcast and the end of Season 2.
0:20
Yeah. So we titled this our startup
0:23
page because we wanted to talk a lot more about the company, what
0:27
we're working on. Part of our intro, you know, we
0:29
talked about telling startup stories and we realized we're
0:32
not telling very many. So this was a fine opportunity
0:35
to share a bit more of what we're working on, how we
0:37
presented, what our next steps are, and sort of why we want to
0:41
form a community of specialty matcha people.
0:43
So we structured this in four different parts. 1st is sort of
0:46
a reintroduction, What is this podcast, what is the specialty
0:49
matcha podcast and kind of a performance review of ourselves,
0:53
what we are very happy with that we have done and what we think
0:57
we could have done better throughout these 50 episodes.
1:00
We're going to do a recap on the matcha shortage.
1:03
We recorded a breaking news segment on Mario Q's matcha
1:08
shortage announcement, but a lot more news and takes on the
1:12
matcha shortage have been published since we published
1:15
that. So wanted to give everyone a
1:16
recap of what we're reading and kind of our thoughts and
1:20
opinions on the topic. Then we're going to give our
1:22
start up pitch the things that we actually give to investors or
1:25
people that we meet as we're trying to scale up what we're
1:29
working on as we're developing technology to mill Matcha fresh.
1:33
And then we're going to share some of our goals not only for
1:36
the coming season, but for our company through the rest of the
1:39
year. And we have a pretty strong call
1:42
to action where we're looking for some partners to launch the
1:45
mill. So we want to give some more
1:47
details about that and thought that anyone who regularly
1:51
listens to this podcast should be the first to know.
1:53
Well, Ryan, should we give our audience a new introduction of
1:58
this so. We never thought that we would
2:02
be this regular with the podcast.
2:05
We started it because we had a few unique things to say and a
2:08
few things that weren't really floating out there in the
2:11
Internet sphere. Really just a find excuse of,
2:15
you know, talking to people to begin with.
2:18
Yeah, actually a huge part of it was a wonderful platform that we
2:21
could use to just get access to some people.
2:24
So he reached out to some people in the really early days and we
2:27
struggled sometimes to meet some of the match of founders that we
2:31
that we wanted to talk to since we had a match of business.
2:34
Turns out everyone is just so nice, like so willing to share
2:38
about, you know, their knowledge and their experience in the
2:41
realm. They really were thankful to us
2:43
providing them platform for them to speak, which was very
2:47
unexpected. Zhongjun and I both have startup
2:49
experience before, and we worked.
2:52
Zhongjun, you worked for the startup for maybe five years.
2:55
I worked there for eight years. It's called Gastrograph AI and
2:58
the company originally came out of T Research and that got spun
3:03
off from Penn State University and it went, we went through an
3:06
accelerator program. There's two really big ones.
3:09
One is called Y Combinator, which companies like Airbnb and
3:12
Dropbox have been through. And but the other big competing
3:15
1 is called Techstars. And we went through Techstars.
3:18
I was really young at the time, I think I was maybe 22.
3:21
It's a really formative experience going through
3:24
Techstars. The rejection rate is higher
3:26
than Harvard. And so I just got like super
3:28
lucky when I joined that company on the founding team.
3:31
And the biggest thing that they # into you at Techstars is give
3:36
first. Don't ask for things.
3:38
Give first when you're networking, when you're talking
3:41
with other companies or investors or advisors or people
3:44
working in industry that's you need something from.
3:48
You shouldn't go up to someone and say it could be a mentor.
3:50
You need to have the mental framework of what can I give
3:53
this person 1st? And something that was really
3:56
missing was in the matcha economy was something more of a
4:00
media platform. You have the Global Japanese Tea
4:02
Association, but that's more than just matcha.
4:05
And there weren't many other like media or diverse media
4:08
properties where people were having these types of
4:10
conversations. So, you know, giving or reaching
4:14
out to people to interview them to tell their story was just a
4:18
fantastic way of us to give first before, you know, ever
4:23
asking for anything. And and that's sort of our
4:26
approach to business in general. So we love the specialty launch
4:29
of podcast, not only to share these diverse voices, but you
4:34
know, we're ultimately talking to other small businesses or
4:38
other content creators. And you know, even though this
4:40
isn't the largest audience platform, you know, we really
4:43
believe in this concept of giving before asking for
4:47
anything in return. And it's really we don't see it
4:50
as transactional at all. Like sometimes what we get in
4:52
return is just knowledge or perspective or experience.
4:56
And we're happy to share that and give first with everyone
4:58
listening as well. And so that's that's one of our
5:01
ethoses behind the specialty much podcast.
5:03
So we aim to bring on a really diverse set of voices.
5:06
I think we've done pretty well with that from many different
5:09
corners of the world now, which has been great, and covering
5:13
some more controversial topics. I think we've done that really
5:16
well, especially around authenticity and poetic names
5:21
and giving some perspectives that I think some people are a
5:23
little shy to talk about. One thing I think we've done
5:26
very poorly is bringing on the Japanese people.
5:29
Well, the language barrier is true.
5:31
It certainly is a hit to our credibility.
5:34
The lack of virtual like Japanese ethnic, Japanese tea
5:38
farmers is something that we would really like to have.
5:42
They tend to be quite a bit more reserved.
5:45
Almost everyone we've talked to doesn't want us to talk about
5:49
them publicly. So we talked about them in the
5:52
general case. And so I think it's just going
5:54
to be a much slower burn on that of relationship building and
5:58
trust building. And it's kind of the lack of
6:01
Japanese people and Japanese tea industry people on this is a
6:06
great reflection of our naivete and the fact that we're kind of
6:09
newcomers to this game. Yeah, but they're definitely
6:13
gold mines out there for us to learn more.
6:16
Gold mines of knowledge, yeah. It's, it's definitely true.
6:20
And hopefully, you know, this coming year, we can spend more
6:23
time in Japan talking to them, you know, building better and
6:27
deeper relationship with all these farmers.
6:29
And hopefully, hopefully my Japanese can get a little bit
6:32
better. Can certainly make it much
6:34
easier. Yeah.
6:35
And we would like to do so. Something we did in Season 2, if
6:37
you haven't listened to it already, we did notes at origin
6:40
or sourcing trip notes and that we recorded in real time.
6:44
And so we would like to do quite a bit more of that as well,
6:47
especially during harvest season this year.
6:49
The other thing that I think we can do better or we haven't
6:53
actually really tried is to bring bringing multiple
6:56
perspectives at once. Yeah.
6:58
So having multiple guests in one episode in one conversation, I
7:02
think will be very, very interesting because, you know,
7:05
this is not only a platform that we aim to build and, you know,
7:10
learn and share for us or for just one perspective, you know,
7:14
it's also a platform that we really hope to can be a
7:18
Information Center for all the content creators and the
7:21
industry friends out there too. And certainly our economic
7:24
incentive in building this and this will be, we'll, we'll talk
7:27
a bit about this more during our startup pitch.
7:30
And that we would like to share with everyone is that we would
7:33
like to see the specialty matcha blossom much like the specialty
7:36
coffee or third wave coffee did 2025 years ago at the turn of
7:40
the last Millennium. And one of the biggest barriers
7:43
to entry is just knowledge in English.
7:46
I remember when I first started studying tea back in 2013, at
7:49
least studying teas very seriously, it is very, it was
7:52
very hard to learn even about Chinese tea and Japanese tea
7:56
outside of the context of tea ceremony was even more
7:59
difficult. So we really would like to see
8:01
these barriers lower and so that more people are drinking and
8:05
wanting specialty matcha and we would like to kind of grow the
8:08
whole size of the pie. And especially we would like to
8:11
see more vendors and more businesses that are doing more
8:15
value creation. So like the the core theme of
8:19
our company is creating infrastructure to mill matcha
8:22
fresh. And we think that there's a
8:24
whole bunch of things that foreign companies, non Japanese
8:27
companies can do to create a higher quality product for their
8:31
customers because no one knows their customers like they do.
8:35
Like traditionally when you talk about like being a macho vendor,
8:38
owning a macho brand, I mean, what you're really doing is
8:41
repackaging someone else's product, right?
8:44
You're not the farmer, you're not the blender, like you're
8:47
coordinating with your packaging and your material, but the value
8:51
add or you're bringing the customers, you're bringing the
8:54
education. And it's a huge value add and
8:56
typically it's worth 100% markup or really large margins.
9:00
And it's a really important part of the value chain.
9:02
But it's start, it's time for the consumer piece and the
9:06
people that know the consumers the best to start influencing
9:09
what's happening downstream even more is something we would like
9:13
to see. Because if you look at things
9:14
like specialty coffee or bean to bar chocolate, there's this
9:18
whole rich ecosystem of people doing really interesting value
9:23
added creations to better meet the needs of their local
9:26
customers, whether or not it's blending or sourcing or milling
9:30
fresh. Roasting fresh.
9:32
Like it'd be cool to see someone buy a roaster, lightly roast
9:36
some tensha fresh, give it that nice Hika aroma, and then mill
9:40
it fresh. Like that's wild.
9:42
That'd be super cool to see. And there's probably a bunch of
9:45
other similar ideas that can be done.
9:48
Oh yeah, definitely, for sure. Like not only we want to see it,
9:50
we want to be part of it. And part of the goal of Sanko is
9:54
really to be part of these infrastructure development to
9:58
empower people to create, you know, better match of products
10:02
or more innovative much of products and helping them to
10:05
realize their imagination and turn them into reality.
10:09
And I think this mentality really transcends beyond this
10:13
company. For the podcast, we also want it
10:16
to be a infrastructure of this community to, you know, have
10:19
people feature to share their ideas and to have conversations
10:23
bounce back and forth and forming new ideas.
10:26
And I think that will be a really happy future and that we
10:30
are proud, proud of to be part. Of that and we don't know what
10:33
the answers are. In some cases, we don't even
10:35
know what the right questions are.
10:37
So by bringing in different perspectives during this podcast
10:40
gives us a fine opportunity to fill our own knowledge gaps
10:43
first, you know, with the assumption that other people
10:45
might have very similar questions.
10:47
And weirdly enough, if we talked to quite a few people now that
10:49
listen to this that have reached out, like there are a lot of
10:52
very like minded people out there who like totally see this
10:56
the exact same way and probably had like recognized a lot of
10:59
these problems in the industry before we even entered it.
11:03
So it's been really wonderful connecting with the community
11:05
and the people that we've talked to.
11:06
Yeah. Yeah, and the fact that knowing
11:10
those people don't really know each other or their existence,
11:13
like really trigger some matchmaking passion inside me.
11:17
So there will be some interesting conversation
11:20
upcoming. Absolutely.
11:22
We've also gotten a little bit of negative criticism, as in
11:25
June. Or feedbacks, really.
11:27
Yeah, feedback. We wanted to share that our use
11:30
of the word baggage, especially when talking about chanoyu or
11:35
Japanese tea ceremony or the more broader cultural
11:38
connotations of matcha in Japan, was a very impolite and
11:43
disrespectful word. Especially when we're trying to
11:47
source a Japanese product, mill it fresh and sell it and quote,
11:51
UN quote, profiting off of what is a legacy Japanese cultural
11:57
food product and that we should give it quite a bit more
12:00
reverence. What were some of your thoughts
12:03
behind that? Oh, I think, you know, it's a
12:06
very context specific term. Like we're talking about
12:11
Japanese tea ceremony as a baggage, not because of, you
12:14
know, it's a baggage to matcha itself.
12:17
Like thank you. Japanese tea ceremony like, like
12:19
this is the very reason why matcha still exists today.
12:22
We can still consume this product, but it is a baggage in
12:26
certain contexts, especially when it comes to innovation in
12:30
modern base, especially so when it comes to treating matcha as a
12:34
specialty product. And you are encountering all of
12:37
these legacy inertia that you know, work the product to the
12:41
other way. Yeah, if you view it from a very
12:43
different perspective, let's say a really high end coffee shop
12:46
who wants to do matcha properly and goes to the proper sources
12:49
to learn the way they quote, UN quote, do it traditionally and
12:52
authentically in Japan, right. In that context, it kind of is
12:56
cultural baggage, retrofitting ceremonial tools into a place
13:00
where they really weren't intended to be used and using
13:03
them in ways that they weren't intended to be used.
13:05
You know, which is fine if it works for them, but it's not,
13:09
it's not definitively the correct way of preparing matcha.
13:13
There can be other ways, just like there is no correct way to
13:16
drink wine or to brew coffee. Just different ways of doing
13:20
things well. It's very context specific
13:23
right? There is a correct way of doing
13:25
matcha in a China U context, yes.
13:28
But there is no correct way of doing matcha in a modern
13:32
consumption context in a cafesha.
13:34
Like probably using the ceremonial correct way to do
13:38
matcha in a cafesha will not be very effective.
13:41
So this is a word that we are actually going to continue to
13:44
use. We deeply respect Japanese
13:47
culture and matcha and where everything came from, but this
13:50
is the specialty matcha podcast. We care about matcha as a
13:54
specialty product and a specialty ingredient, which has
13:58
found a really new audience outside of tea ceremony
14:02
practitioners. And while we repeatedly say how
14:06
much we care about and respect Japanese culture, we don't need
14:10
to bend the knee every time we have something critical to say
14:15
about a legacy or heritage or traditional practice.
14:19
These practices are by no means perfect in their own merits,
14:23
right? There's actually quite a bit
14:25
wrong and quite a bit of valid criticism about a lot of the
14:28
Japanese tea ceremony institutions and various
14:31
institutions hutching Japanese tea which are just because it's
14:35
traditional or heritage does not make them immune from criticism.
14:39
So we want we have a balanced perspective.
14:42
We deeply care about the culture, and we are much more
14:45
forward-looking than retrospective looking.
14:48
The way someone did something in the past is not necessarily the
14:51
way that something should be done in the future.
14:52
So we apologize if we've offended anyone with some of our
14:56
sharp tanks. And we being tea ceremony
14:58
students ourselves, we have deep respect where these things come
15:02
from. And we are outsiders.
15:03
Sam is Chinese, I'm half Korean, half American, and it's, you
15:10
know, we are exploring this from the outside in, not the inside
15:14
out. So, you know, who are we to make
15:19
any of these criticisms? But you know, we are the new
15:22
matcha consumers, right? Matcha consumers now exist
15:25
outside of Japan and that's just the reality.
15:30
And we are a very consumer focused company and that is our
15:33
biased narrative. We care a lot about the
15:36
consumers, we care a lot about the product.
15:39
And we think that there's lots of other companies and tea
15:41
ceremony schools and institutions doing great work
15:45
promoting traditional practices and traditional crafts.
15:47
That's just not where our focus lies.
15:49
Yeah, again, context specific. Yes, so I think that is a good
15:53
summary. Please keep sending them.
15:55
It only helps us improve and give perspectives.
15:58
You know, we're we're really happy to have a dialogue and
16:00
then to invite people on that we disagree with them too.
16:03
So if you have any contrasting opinions while listening to what
16:06
we're saying, please let us know.
16:07
And thank you for everyone who has let us.
16:10
Know. Yep.
16:11
It's. Before you unsubscribe, please
16:13
send us a message. So thank you.
16:15
So Zhongju, moving on to Part 2 around the matcha shortage
16:18
recap. I mean, this is by far the
16:20
single most important thing that's going on at matcha right
16:23
now. And everyone kind of has their
16:25
own explanation and own hot tape about what's going on with the
16:30
matcha shortage. So when you go out to different
16:34
media properties or different magic companies, I've noticed
16:37
that a lot of people actually have a slightly different
16:39
explanation. There's some common threads, but
16:41
the causes are you have different people emphasizing
16:45
different things. One unique perspective came from
16:48
Mark from Oh Ika. I think he reported a reel about
16:50
this. And something that I don't think
16:52
has been talked about enough is that there was a labor shortage
16:55
during COVID, During COVID, a lot there.
16:57
I don't know if there were layoffs exactly, but there was a
17:00
personnel shortage in the actual production.
17:03
And you know, it takes about three to five years for a little
17:07
baby tea tree, tea Bush to go from being put in the ground to
17:12
being something you can harvest any tea from.
17:15
So you know, that time window dates back exactly back to COVID
17:20
when you look at about a three to five year time horizon now
17:23
that we're here in 2025. So you know, that was one
17:26
impact. And obviously the massive
17:28
tourism boom, which is something that Ian from You know Me had
17:31
mentioned on that special podcast episode that we've done,
17:35
especially since the yen is so weak.
17:38
As an American, at least it feels like you can go to Japan
17:40
on a 20 to 40% discount. Yeah, it's.
17:44
Time to Yolo. But yeah, really great time to
17:46
travel to Japan. Yeah.
17:48
But you know, I was reading an article from Saison talking
17:51
about the whole shortage from a different perspective.
17:55
And I think people are getting very conservative in making any
17:59
new development or investing any new capital into overcoming the
18:05
shortage because this has happened before.
18:07
And and this surge has was like it happened right before COVID
18:12
and hit a historical high and then COVID hit and then massive
18:17
layoff and the whole market plumped.
18:20
And then now the new demand surged again.
18:23
And a lot of people are actually a little bit hesitant about, you
18:25
know, like, is this a just a new passing trend or this will be
18:30
the new status quo? Like, you know, it's very
18:33
uncertain for people in Japan to make new, new investment
18:37
because, you know, the the cruel reality has fooled them once
18:41
before, so. Yeah, and I was reading an Eater
18:44
article where Zach Mungan, Mungan Mungan, excuse me if I
18:48
mispronounce that, who is the founder of Kettle was doing a
18:53
interview for Eater about the matcha shortage.
18:55
And he was talking with someone from Maruku who's, you know,
18:59
Major supplier, traditional blend house.
19:02
And he says they didn't, this is was coming from I think believe
19:06
the president of that company. So they did roughly 6 months of
19:10
sales in a little less than a month.
19:14
Like, that is an insane spike largely caused by by retail
19:20
sales from new tourists coming to Japan, especially even
19:24
visiting Uji. I mean, when you visit Uji, it's
19:26
actually very touristy. I was talking with some friends
19:29
that are not really into tea at all.
19:32
I'm like, Uji was on their list. Yeah.
19:34
Like, why? Like, how do you know about Uji?
19:37
And like it was, it was pretty surprising to see that this is
19:41
like entering like the mainstream list of places to go,
19:46
which is awesome from an awareness perspective.
19:49
Yeah. So I mean, I don't think this is
19:50
a trend. I think this is actually a
19:51
pretty sustained preference. People want coffee alternatives,
19:54
people want healthy products. And I think the and people
19:57
clearly want a high quality product.
20:00
If you if you notice, it's not the Super industrial shop stuff
20:02
where there's a shortage and people have actually found
20:04
fantastic value with these traditional blend houses and.
20:08
Want to buy it? And it's interesting, Zhongjin,
20:10
you made a pretty interesting observation.
20:12
So something we've been talking about is Matcha's perishable
20:15
product. It's also a renewable resource.
20:17
Every season we have new things. If you could age Matcha, this
20:21
might turn into like a serious bubble.
20:23
Yeah, yeah. I mean, like I was comparing the
20:26
current sentiment in the market to the poor bubble that happened
20:30
back in. Wow, this almost 20 years ago in
20:34
China, Yeah. But for those of you who don't
20:36
know, poor is a type of fermented tea.
20:39
Yeah, in China. Very high aging potential, like
20:43
a young cake. And with comparison to its older
20:47
form, 20 or sometimes just 10 years of aging for that same
20:52
cake, the price can be 200 to 500 times.
20:56
So the difference, yeah, it's crazy.
20:58
Like some of the more legendary cakes being sold in auction for
21:03
like half a million U.S. dollar. So that's some like really,
21:06
really insane price tags out there.
21:09
And if Mata is the same like ageable product, Oh my God I
21:14
cannot fathom how big this bubble can turn into.
21:17
Yeah, if it got better with we get some, some very interesting
21:21
market dynamics, Yeah, because now you do see some horting
21:24
culture, but it does you know it's perishable, but.
21:27
Tensha can be aged. Yes.
21:29
Theoretically. Especially in a cold
21:31
environment, tensha can be aged. In fact, I saw something very
21:35
interesting. I think it was from Song Tea and
21:37
Ceramics in San Francisco. That company had some 10 meal
21:41
cultivar just very new from a 2019 harvest that was milled in
21:47
2024 and it was the first time I, you know Mark from Oika has
21:51
had some older vintage matcha that he's milled that was only
21:55
like one or two years old. But seeing something 5 or 6
21:58
years old really got my interest that's, you know, if people have
22:02
the capacity to know much of fresh, there might be some aging
22:05
potential for Tensha and to create some very interesting
22:08
matcha products. And you know, it does happen at
22:10
these large traditional players, but because they're not
22:13
transparent, you just don't know.
22:14
Oh. My God, maybe it's time for me
22:16
to start investing a new freezer.
22:20
Wow. We certainly want to do those
22:21
experiments. You know, it's really once the
22:24
tensha is browned into a fine powder, that's when everything
22:27
goes wrong. But otherwise it's an
22:28
interesting transformation. But, you know, like, it's also
22:31
interesting that reading all these articles, like everyone is
22:34
framing this whole shortage phenomenon as something that's
22:39
negative. Like, there is a, you know,
22:41
internal negative tone in all of these articles and all of these,
22:44
you know, retailers and much manufacturers, but they are
22:49
selling more tea than ever before.
22:51
This is going to be the future. There is no time in human
22:55
history where more diverse group of people are consuming more
23:00
matcha on net than ever before. Like this is a win, yeah.
23:05
We got guys. Money's dropping out from the
23:08
sky. Also the spreading of culture.
23:11
Even people frame this as like it's at the expense of tea
23:14
ceremony practitioners, but tea ceremony practitioners don't
23:18
inherently care about taste, so it's important that they have
23:21
traditional product to do. But as a tea ceremony a Moto
23:24
senke student for what was it 3-4 years, almost never was I
23:29
aware of what I was drinking. It could have been random green
23:32
powdered stuff, like it just was not the focus of what the
23:36
lessons were about. In fact, some practices we
23:39
didn't even drink matcha. It was incredibly disappointing.
23:43
Sitting says out for two hours. Learning how to fold rags and
23:47
Wadi geiko and all this other stuff.
23:49
I remember very vividly one Sunday morning, I think I was a
23:53
sophomore in college, where all the guys of the group, our job
23:57
was to clean the floor, tell me it was like 9:00 AM on a Sunday
24:01
morning. And all the girls in the group
24:03
did all of the other stuff, like hydrate the Sha Sands and
24:07
prepare the tea bowls and kind of a more pleasant work, sift
24:11
the tea. Household role-playing training.
24:13
So if Japan is exporting more and more matcha and more and
24:17
more tea farms that we're not making pensha are now making
24:20
tensha to produce more matcha, then less there's even less
24:23
supply of loose leaf tea will be produced in Japan, which means
24:27
that it's destructive for domestic Japanese tea
24:32
consumption. So that is a negative
24:34
externality. But I actually think the
24:37
pendulum might swing back the other way.
24:39
That might be true temporarily, but as more and more people get
24:43
interested in matcha internationally, naturally a
24:47
subset of those consumers might become very interested in Bono,
24:52
you, Japanese tea, General Senchado, like moving to Gokhoro
24:57
or sencha. It's like it's a pretty rich
24:59
ecosystem of diversity of things to be interested in.
25:03
And it just so happens that matcha has become the new entry
25:06
point for a lot of new consumers.
25:08
So I kind of see this as a pendulum where it's being shared
25:11
with the rest of the world, and at some point the rest of the
25:13
world's going to develop a large segment that's interested in
25:16
these traditional crafts who need a new market.
25:19
I mean, Japanese from a demographic perspective, Japan
25:23
is a dying country. Literally, it's a shrinking
25:26
population. And so in order for any of these
25:29
arts to survive, you need domestic interest and something
25:33
that's often forgotten in all of these narratives.
25:35
If you look at the number of tea farms that have been declining
25:38
since like the 1980s, in the 1970s and 80s were an incredibly
25:42
weird time in Japan. Japan was just saturated with
25:46
hash and money and like all of these rich businessmen who could
25:52
afford to buy and support all of the parts of the matcha and tea
25:57
and traditional craft value chain.
25:59
I live in Paris now because my girlfriend found a job there and
26:02
there's a wonderful exhibition called Golden Threads and it was
26:05
about the use of golden colored threads in clothing and
26:09
throughout all different times and all different cultures in
26:11
history. And there was this little
26:13
documentary on Japanese special type of Japanese woven golden
26:19
fabric and threads. And apparently at its peak about
26:23
40 years ago, which also happened to be like the peak of
26:26
the Japanese economy, there were thousands of these looms, most
26:30
of them automated, creating all of these gold textiles.
26:34
Now I think there's just like one couple left who are using a
26:37
semi automated mill, or excuse me, loom that mill, semi
26:42
automated loom. And they check every thread as
26:45
it goes through. But the man has just shrunk.
26:48
And if they leave, then it's no longer, it's gone.
26:51
And that is just one example of these traditional crafts.
26:55
And Japanese people are not interested.
26:57
Other companies and other markets like China or even
27:00
Bangladesh or other textile producing regions can create
27:04
much more competitively priced products.
27:06
And that wealth just doesn't exist in Japan anymore.
27:10
The stagnant economy and it won't exist in Japan anymore.
27:13
So actually if it doesn't internationalize and get more
27:16
people interested, yes they're going to be some quota UN quote
27:19
matcha girlys on TikTok or just guzzling it down like in an
27:24
overconsumption scenario at worst and at best very
27:27
thoughtfully is probably where most consumers are anyway.
27:30
I don't like this negative framing around going viral on
27:34
TikTok. These are real people, like real
27:36
people who are enjoying this. Products, yeah, it's a real
27:40
passion and real demands out. There and sharing it at a scale
27:44
that's never been seen before now a single creator can get 10
27:49
million views on a real or a TikTok sharing it with a whole
27:53
new group of people. And naturally the sub segment of
27:56
those people are going to swing back and create a new
27:59
international demand for these types of crafts which is what's
28:02
actually needed for them to survive.
28:05
And something that Mark from Oeka talks quite a bit about is
28:07
that the lifeline for the Japanese tea industry is not in
28:11
the domestic market. So actually we're quite excited,
28:15
yeah, about all of. This, I think that's for anyone
28:21
that's Japanese listening to this podcast, I don't think
28:25
there will be a lot, but we are happy to be part of this new
28:29
trend and happy to build this future together.
28:31
Yeah. And I think is a net industry.
28:33
That's that's where it stands now.
28:35
One really negative externality of the the matcha shortage that
28:40
no one's talking about that I think is worth a few minutes of
28:43
airtime here is that these are suppliers to other small
28:47
businesses. You have small businesses all
28:50
over the world who are reselling things like marquees products
28:54
or, or in Shishiman's products or Epodos products and they
28:58
don't have stuff to sell. Look, it says that as a fine
29:00
example. They specialize in these
29:02
traditionally blended products. They don't have anything to sell
29:06
at the moment. That must hurt, right?
29:09
And many other places as well that cannot be supplied who are
29:13
basically buying wholesale. And so we really hope that this
29:17
doesn't hurt a lot of those vendors in the short term.
29:20
While there is record demand, you know no one wants an
29:23
inconsistent supplier. It hurts customers and it hurts
29:27
those businesses. System stability is definitely
29:30
needed within this market. Yeah, but this is, I would, I
29:34
would say it's inevitable growing pay.
29:35
But you know, like as we are, as the holding industry understand
29:40
this will be the new status quo. I think you know, like with new
29:43
investment, with new, you know, planning for the coming years, I
29:47
think this will be would not be a problem in the future.
29:50
Yeah. And two is, you know, people
29:53
start looking to places like Korea and China for really high
29:55
quality products that can maybe serve the bottom of the market,
29:59
not necessarily the top, but for random people just tasting, you
30:03
know, mixing stuff in a matcha latte in a random cafe setting,
30:07
maybe they don't need the best. Yeah, maybe like, and I mean
30:10
that in the best way possible, but they could have a much more
30:13
industrial product or product is not necessarily from Japan and
30:17
not everyone cares. I mean, honestly, if you're
30:19
putting it in your bubble tea, do you need to have the best
30:22
thing when there's tapioca and all these sweeteners?
30:24
Maybe you you know something from another country might be
30:27
lower in price and just be nearly equals quality when it's
30:31
being used as an ingredient in that context.
30:34
Only when you are using handmade bubbles and fresh Hokkaido milk.
30:38
There we go. Sounds good.
30:45
So that's our take on the matcha shortage after hearing all these
30:48
different perspectives. And we think it's a net
30:50
spreading of culture, but certainly does have some
30:53
negative externalities. The most common thread that
30:56
everyone explains is that it can only be produced about once a
30:59
year, which is interesting. But I don't think it's really
31:02
the 'cause. I mean the cause.
31:03
It's overwhelming demand. Natural constraints are in all
31:06
industries. So it's not a 'cause.
31:09
It can only be produced once a year, but you know, every year
31:12
there's a new batch coming. It's a renewable reason.
31:15
It's a renewable reason. So I think it's a fine segue
31:17
into sort of where we see ourselves in all of this and
31:21
starting a new company. So Sandco and which is the
31:24
company that runs a specialty much podcast is now about two
31:27
years old. We've been commercially active I
31:29
think for closer to 18 months. First six months of our
31:33
existence was really figuring out what direction we wanted to
31:36
point the company in. But we would like to share our
31:39
startup pitch and we apologize that we buried this so deeply
31:42
given the expectation set and the title, but we're going to
31:45
make it very short kind of elevator pitch style.
31:48
This is who we are. So it's eco matcha products.
31:51
Our goal, our vision is to enable the creation of the
31:54
highest quality matcha in the world at scale and particularly
31:58
help other people create the highest quality matcha in the
32:01
world and at scale. We do this by creating
32:06
technology to mill matcha fresh and to lower the barriers for
32:10
preparing high quality matcha for both consumers at home and
32:14
at cafes. We're also establishing direct
32:17
sourcing relationships with Japanese tea farmers to create a
32:21
tension supply for anyone who has our mill.
32:24
But we're also going to keep our mill an open ecosystem.
32:27
We'd love to work with brands as well as using our milling
32:30
technology and their tension supply and their brand to use
32:34
this as infrastructure to create a very fresh product and to kind
32:38
of rethink the existing supply chain for Matcha products.
32:41
And then last, we focus on education such as this podcast
32:45
and we also plan on writing a book very soon.
32:49
So more details about that to come.
32:52
We are a small but mighty team of three people.
32:55
We've all worked together actually as former colleagues at
32:57
our last company which is called Gastrograph AI and we're very
33:01
internationally distributed. So Zhongjun shifts goes back and
33:04
forth between the US and China. I'm from the states, but I live
33:08
in France now full time. And then our founding team
33:12
member Gwen is based in the States.
33:14
And so we're usually distributed across three time zone, which
33:16
actually makes it very easy help coordinate shipments and stuff.
33:20
Yeah, to serve a pretty global audience.
33:23
That's it's been an advantage. So our background started at the
33:27
Tea Institute at Penn State, which was an interdisciplinary
33:30
tea Research Institute dedicate the study and preservation of
33:33
all tea ceremony. I was the second executive
33:36
director of this research group, and Zhongjun was actually the
33:39
third executive director. At any time, there were anywhere
33:43
from about 30 to 40 student researchers there, and our
33:48
mission was really to study and promote Japanese, Chinese, and
33:52
Korean tea ceremonies. At the time, we were the only
33:55
institution in the United States that hosted both Omoto Senke and
33:59
Urasenke schools of Chanoyu, or traditional Japanese tea
34:03
ceremony. And we also brought in a lot of
34:05
Chinese and Korean tea experts. We as part of this program, we
34:10
both flew in international experts to come speak, usually
34:14
in long form exhibitions and then we also sent students
34:20
abroad to learn about these products at origin.
34:24
A huge part of the mandate of the Tea Institute was to have
34:28
student LED research. So 1 of Zhengjun's projects, for
34:31
example, was using his GIS background, which is like
34:34
satellite imaging. Yeah, to look at the tea growth
34:38
from from the heavens. Yeah, it was a quite quiet
34:40
experience. So we were using a satellite
34:43
imaging technique to essentially picking up the spectral
34:46
signature of the tea bushes on the ground and trying to monitor
34:51
the growth and shrinkage of at the time was focusing on
34:55
Taiwanese tea time patients. But we thought that it might be
34:59
a very interesting topic to use that technology to study, you
35:03
know, the historical growth and now probably shrinkage of
35:07
Japanese teeth. Yeah, so actually we'd really
35:09
love to see like to met to do a study on Hunzu shading because
35:13
it's probably of a pretty clear infrared signature from the sky
35:17
as long as you got to whip out that skill set and train some
35:20
models. We need to get you some good
35:21
data too. Anyone this thing is any good
35:23
satellite data let. Us know that said you know any I
35:27
knew. Thanks.
35:27
But one of the earliest research projects at the Tea Institute
35:30
was developing a system to measure flavor in tea and using
35:35
then more sophisticated methods than what was being used in
35:38
traditional sensory science in the science of taste at the
35:41
time. So I'm the founder of the Tea
35:43
Institute, did research using AI methods, some cutting edge AI
35:46
methods on predicting both perception and preference of
35:51
flavor of tea, and then also started collecting a lot of data
35:54
on coffee and other specialty products.
35:57
It was a little difficult to recruit students outside the Tea
36:00
Institute to taste tea. So we opened it up to coffee,
36:03
and it turns out it's easier to get Penn State students to show
36:06
up to taste coffee and fill out a survey form.
36:09
And then when we started doing beer tastings, we got a whole
36:12
lot more students and didn't have any data problems at all.
36:16
By surprise. And with this data set and these
36:19
new AI methods, and we started to realize that you could make
36:22
pretty accurate predictions on what people would like and
36:24
dislike and build these predictive models.
36:26
Realized it didn't belong in academia and spun it out of the
36:29
university to form its own company, which is called
36:32
Gastrograph. AII was on the founding team of
36:34
that before we did any sort of large scale institutional
36:38
rounds. And then Zhongjun joined right
36:40
after our series seed investment of $4 million from venture
36:44
capitalists. So we moved to New York City, we
36:47
went through Techstars, we started working with gigantic
36:49
food and beverage companies. We found a really good product
36:52
market fit in large FM CGCPG products as well as some of
36:57
their suppliers. There's a whole industry called
36:59
flavor houses which sell and create flavors.
37:02
So found great success there as well.
37:04
And part of what Zhongjun joined part of our job right after
37:08
raising our series seed $4 million, we we had another data
37:12
problem. We needed to collect much more
37:14
international consumer preference data.
37:16
So Zhongjun and I went on basically a year long road trip
37:20
across over a dozen countries collecting consumer preference
37:24
data. So we basically landed in a
37:27
country, worked with the local recruiting firm, had them, went
37:30
grocery shopping, had them taste a bunch of different flavors in
37:33
combination of flavors, collected that consumer
37:36
preference data that we then send back to the team who are
37:40
building preference models and selling them onto food beverage
37:43
companies. And so that was our life for a
37:45
very long time until COVID kind of shut it down.
37:48
And then after COVID, I continued to do that in Zhengjun
37:53
had it got stuck in China and did a lot of business
37:55
development in Shanghai. So, but across, so we did this
38:00
across cumulatively across all of our team went to about 30
38:04
different countries in person and recruited anywhere from 100
38:08
to thousands of consumers to understand their preferences.
38:11
So not only do we have hard metrics about what people like
38:14
and dislike, we had a lot of anecdotal learnings from doing
38:18
this. I think I'd been to around 18 to
38:20
20 countries just myself and doing that.
38:22
And one thing that just became super obvious was that matcha
38:27
showed up everywhere, in places that I just wouldn't have
38:31
expected, seemingly overnight. I was into matcha like a little
38:35
bit before it was cool. It wasn't in every coffee shop
38:38
when I started learning to it. Like matcha to me was a
38:40
ceremonial ingredient with strong memories associated with
38:44
Sunday mornings being yelled at to move something 2cm to the
38:49
left. And now I'm starting to see it
38:51
in all these corners of the world.
38:53
And we realized that there was a real opportunity here.
38:56
So both as we were transitioning outside of our roles within that
39:00
company much later on in 2022 and 2023 respectively, we wanted
39:09
to see like OK, what is like the biggest problem in Matcha, where
39:13
can we add value? And what we really realized is
39:17
that the whole existing supply chain industry was serving
39:20
yesterday's consumer for the most part, it was very
39:23
ceremonial focused and that the rapid growth, if you track that
39:27
up and to the right versus the innovation that was going on in
39:30
Matcha, these are two very divergent vectors.
39:34
They're very divergent lines. And that what was needed was we
39:38
had to have like this third wave moment of infrastructure to
39:42
enable higher quality products, right, Third wave coffee and
39:46
specialty coffee. They didn't need to invent
39:48
espresso machines or gooseneck kettles or pour overs or PID
39:53
controllers. These are all things that
39:55
already existed that just needed to be leveraged.
39:59
All that infrastructure was there.
40:01
Like people are still literally grinding things on these 25
40:05
kilogram stone mills. So we realized that probably the
40:10
biggest quality barrier was the lack of efficiency to mill much
40:13
of fresh. So that was what we decided to
40:15
work on. Our goal is to focus sort of
40:18
tomorrow's customer. You know, it's not a problem if
40:20
you're in Japan domestic market, right?
40:22
Everyone keeps fresh stocks like you have 10 JAW getting milled
40:26
into matcha and being quickly consumed.
40:28
That's just not what the supply chain looks like anymore.
40:30
Now it's got to sit on a boat or sit on a plane and go to someone
40:34
else's warehouse and they got to sell it.
40:36
And by the time this chaos gets to the consumer, it's been 6
40:39
months to 18 months and the product is basically dead,
40:42
right? But the infrastructure within
40:44
Japan to do this type of milling and like these short supply
40:48
chains, it didn't exist. So we thought, you know what, if
40:50
everyone could have the ability to mill macho themselves at an
40:53
incredibly high quality standard.
40:56
And then we're also really interested in creating a new
40:58
line of equipment for preparation for cafes.
41:01
The reality is, is that chasans and chawans and all of the
41:05
existing preparation equipment for matcha has been designed and
41:10
optimized from a form and function standpoint for
41:13
centuries. For a tea ceremony practitioner
41:17
who is not using them very often and expected to treat them with
41:21
a lot of care, using these in a cafe where you're making 50
41:25
matcha lattes a day just doesn't make very much sense.
41:28
It's not gonna work. I mean like doesn't?
41:29
Work well. Well, originally those tossin
41:33
were meant to be using probably only once.
41:35
Yeah, they're tosins are actually.
41:37
Disposable, they're disposable products now.
41:40
They're using like 50 times in some of the high volume cafes,
41:44
probably in two hours. It's really a we are
41:48
retrofitting of a legacy product.
41:51
Yeah. So we wanted to gather some
41:54
agency to help change that kind of in a very similar fashion
41:58
that fellow of the coffee company does that creates coffee
42:01
equipment. We're very inspired by their
42:04
aesthetic and form and function and want to do a very similar
42:07
play, but on matcha and for matcha equipment.
42:10
And so that's where we see ourselves fitting into the
42:13
industry and that's kind of our startup pitch and not perfectly
42:16
well rehearsed, but that's that's who we are and what we're
42:19
working on. It's who we are for the moment.
42:21
That's true it. Goes, you know, we'll inevitably
42:26
be changing along with the industry and the growing
42:28
community, but you know, the core vision of us remained as a
42:33
giver, a provider, a infrastructure builder for this
42:36
community will remain the same. Yes.
42:39
And we're heads down focused on creating a fresh milled matcha
42:44
product and creating these mills to enable other people to mill
42:47
it fresh. That is really our primary
42:50
objective. We focus that's that's our full
42:52
time job at the moment. And then everything else is just
42:55
in service to the broader mission, whether or not it's
42:58
this podcast or finding a tensha supply or working on other
43:01
products to create Matcha fresh. That's our sort of our secondary
43:05
work and goals. So that is a fine segue into the
43:09
last segment of this podcast, which is sort of our call to
43:12
action. Our mill is creating things that
43:15
taste really good. We're comparing it to
43:17
benchmarks. We're doing a bunch of
43:18
experiments and we are finally milling things and that taste
43:22
pretty good, and we're closing in on finalizing the mechanical
43:26
designs of this. Once we do that, we'll have a
43:29
better sense of price. And we're also in parallel
43:32
working on aesthetics. We are not going to do a
43:34
gigantic splashy launch in the beginning, but we want to run a
43:38
beta program with what are essentially prototypes.
43:43
We want to get these mills out into people's hands, out into
43:46
the world. And a battle test.
43:48
Them we want to battle test them and we want to be your partner.
43:52
We want to be partners with all of these different beta testers.
43:56
We will come physically wherever you are in the world.
43:59
We will show up physically in person, do an implementation
44:03
work with you with this machine and understand how you might use
44:08
it, how you want to use it and triage through any problems.
44:11
And we're also going to have a lot of guarantees.
44:13
We're working out the the final details around like making sure
44:17
that we either fix something immediately if it breaks on you
44:20
or just get you a new prototype if anything's broken.
44:22
So we want to de risk this proposition, but we're really
44:25
looking for early adopters that are interested in testing out a
44:28
matcha mill. Perhaps people that were
44:30
interested in buying an Ishiyusu and didn't want to make the
44:32
investment or people who decided not to buy an Ishiyusu but would
44:37
like to mill matcha fresh. And so we're actively looking
44:39
for partners. I'd say we have about 5 people
44:41
committed so far to being a beta tester.
44:43
We would like to see that number closer to 10, especially because
44:46
it's anything more might be way too much travel for us.
44:49
But we do want to do this in person and understand how these
44:52
are going to be used before we solidify and make the
44:56
investments for us as a company to create molds to make these
45:01
things at scale. Because basically every
45:03
prototype is going to be one off manufactured like CNC routed
45:07
absolutely inefficient. And we want to do a pricing
45:10
model where it is very fair, much cheaper than a niche used
45:14
to, but enough that it covers our costs and bringing it.
45:18
But we'd like to be partners and we really commit to de risking
45:21
this, but we would also really like to learn from you.
45:23
So anyone who's listening that has a matcha business or a
45:26
coffee business that would like to be an early adopter in being
45:31
a part of our beta program, please reach out.
45:34
My e-mail is ryan@sanco-cha.com and Zhengjun is the same
45:40
Zhengjun at sanco-cha.com. And we would love to to talk
45:46
with you, get to learn about your business.
45:48
Our timeline is within the next few months we would like to have
45:51
these released and then as we solidify all of the other
45:55
details we're then after the beta testers we're going to open
45:58
it up to pre sales for the main actual commercial launch of
46:03
these mills. We are doing an open ecosystem
46:06
model. So if you have your own brand
46:08
and you'd like to source your own time shot, totally fine, you
46:11
can use that. And we're going to have a pretty
46:14
competitive wholesale program where if you supply cafes or you
46:19
supply other much of businesses that might be interested in the
46:21
milk too, we're going to create incentive structures and so that
46:25
you get a Commission of that sale.
46:27
Right now the functionality and the features of the machines
46:31
pretty agile. You can tweak the pressure
46:34
compression, pressure of the millstone and change the RPM and
46:38
also change the capacity of the pooling system.
46:41
So in this way, we wanted to really give you the freedom of
46:45
using this machine in any circumstances for any of your
46:48
usage contacts. But there will be things that we
46:52
hadn't thought about and throughout the process it will
46:55
really be a learning experience for us to help us bring more
46:59
value add to your business. Yeah, absolutely.
47:01
And also the plates are completely swappable and
47:05
interchangeable. And so like a pretty big risk
47:07
factor buying an Ishiyusu is dropping or damaging in some way
47:11
from the millstone face. But with these we can get them
47:14
made at scale and to really high precision from an engineering
47:19
and manufacturing perspective. Yeah, we don't need to ship you
47:22
a Japanese grandpa. Chiseling damage, The issues of
47:25
plates. Yes.
47:26
So those will be much easier to replace and will definitely come
47:31
with spare millstones in case something does happen.
47:34
But also what's very exciting about this model is that these
47:37
millstones are completely swappable and interchangeable.
47:41
So in the future we might experiment with different groove
47:44
patterns which gives different levels of efficiency.
47:47
Different. Material and different
47:48
materials. So something we're actively
47:50
investigating are using some form of hard and stainless steel
47:54
plate and even finding Ishiyusu makers that are interested in
47:58
making plates that will fit this mill to have a stone ground
48:02
product as well. So if anyone knows any Ishiyusu
48:06
makers that might be interested in this opportunity, we would
48:09
love to be connected with them to see if we can make that a
48:12
reality even faster. Since there seems to be high
48:15
consumer demand for it, we don't see it as necessarily necessary
48:18
from a strictly a food science perspective.
48:21
From the ceramic plates that we have created are incredibly
48:24
hard, incredibly durable, incredibly easy to manufacture,
48:29
and very food safe. It's extremely biologically
48:31
inert. So for example, a lot of coffee
48:34
grinders use similar material. Actually, they use the same
48:37
material and so it actually makes more sense from a food
48:41
processing perspective than using a stone.
48:44
Yeah, it's also a lot of pharmaceutical industries using
48:47
the same material. Yes, but we're also want to have
48:51
a a stone version as well, almost certainly not going to
48:54
launch with it. But the idea with this mills
48:57
that it's a pretty flexible platform where we can give
49:00
maximum agency and potential for creativity to the user to create
49:05
new and interesting match up products.
49:08
We're working on a pipeline and getting a high high range of 10
49:11
shot supply. To really diversify the choice
49:14
for consumers to getting more exposure to a wide variety of
49:19
Japanese. Yeah, we've actually been
49:20
talking to a large number recently of people more in the
49:23
dessert bubble tea sector of this.
49:26
Maybe they want something that's bitter, but they want a fresh
49:29
ground product because one, it's more nutritious, but it also
49:32
might just be more potent than what they're buying.
49:35
So we think that we kind of you need matcha for everyone to, to
49:38
borrow a phrase from MTCH. And so we want to focus on that.
49:42
I'm not just a high end artisanal product, although we
49:45
want, we think that's very important, but also having
49:49
product that is very economical for all different types of
49:51
businesses. All right, that's a perfect
49:54
place to stop. We've had a blast filming season
49:56
2. We're going to take a week off,
49:58
so there's gonna be nothing in the feed.
50:01
Holidays. We can't believe that we've done
50:04
this for 50 episodes in a row. It's kind of crazy.
50:07
And we'll see you on the next one.
50:08
Yeah. Coming soon.
50:10
Thanks.