Consumers are seeking eco-friendly alternatives to everyday products. Stagnant brands lose market share to conscious competitors that disrupt the status quo by building a better world. That’s why companies like Cleancult are so exciting. “Our mission is to bring zero waste to the masses,” Ryan Lupberger, Cleancult’s CEO & co-founder, tells We First.
The detergent and cleaning products company is made with eco-friendly and refillable packaging as well as nontoxic ingredients. The purposeful brand has attracted interest from an impressive investor pool, secured national retail placement and grown a strong direct to consumer (DTC) presence.
While purpose is paramount for any brand today, it alone does not make companies successful. “I got frustrated because a lot of the entrepreneurs put mission first, rather than product excellence. That is the biggest disconnect,” Lupberger says.
Through thoughtful branding, a dedication to quality, ease of use and a commitment to sustainability, Cleancult is carving out a competitive advantage. The fast growing start-up offers valuable lessons for brands looking to Lead With We.
Ryan grew up in Colorado in a family that always sought out natural food, skin care and cleaning products. After interning at TED, he “fell in love with the innovation space,” then landed a gig at Unreasonable Institute. That is where Lupberger had his realization about the mistake many companies make when they put mission before product. “It was transformative for me because it is the largest accelerator for companies that are changing the world. I think that impact can be done better in a different way.” He released a TEDx talk about it.
Shortly after, Lupberger attended business school at Babson College and “fell in love with brand-building.” While attending school, he noticed that laundry detergent didn’t have any ingredients on it. “I did all of this research and it turns out there were about 1,200 chemicals that are banned overseas in the UK, Australia, Europe that are allowed here. There’s comparatively little regulation in the United States,” Ryan says. “Plus, look at the natural products in the market. They all had plastic. How can these ‘better for the world’ brands be better for the world if they have so much plastic?”
The problem presented an opportunity for the young entrepreneur. Cleancult was formed to fill the need for transparency, accountability and sustainability in the cleaning industry. “Look at the history of cleaning. First, it was brands like Dawn, Downy, Tide and PG. They were hyper-effective but petroleum-based and potentially contained toxic ingredients,” Lupberger explains. “In the ’80s, Seventh Generation tried to solve that with natural cleaners and led this big movement, frankly, for 20 years.
Then, Method came around and said, ‘We want to make cleaners sexy. How do we take a natural cleaning product that’s typically very “crunchy” and take it to the mass market?’ They did. They launched in Target and built a beautiful brand. They were super important in this movement, but the challenge keeps coming back to the use of plastic packaging. We’re basically trying to solve that.”
Cleancult uses milk carton detergent packaging and refillable glass dispensers to minimize plastic use. They’ve also invested in their direct to consumer (DTC) subscription strategy. “There’s not a dominant online or DTC brand in household cleaning,” Ryan says. “From a market perspective, we also saw an opportunity to build a presence online and on social media to inspire people to go natural and zero waste.”
By innovating around purpose and implementing a strong digital plan, Cleancult is finding an opportunity to take market share.
The movement increases demand:
Cleancult is joining the cultural conversation around plastics and zero-waste living. It goes beyond their brand or industry and creates avenues for collaboration and opportunity.
“The most exciting news in our space in at least 20 years is the US Plastics Pact,” Ryan says. In August of 2020, retailers like Walmart, Target, Whole Foods, Albertsons, Unilever, P&G, Safeway and others committed to be 100% recyclable, refillable or compostable. They also agreed to actually recycle or compost at least 50% of packaging and have at least 30 percent recycled or bio-based material in plastic packaging by 2025. The retailer movement is largely inspired and supported by consumer demand. This is especially true for millennials and Gen-Z, who are gaining purchasing power.
While consumers and retailers want zero-waste packaging, there aren’t many product options that will lead to the US Plastic Pact targets being met. A recent Greenpeace study measured and ranked the 20 largest grocery retailers in the US on their plastic consumption. The highest scoring retailer only received less than 35 out of 100 points.
“Phasing out plastics is really challenging for retailers. An executive will tell them to hit reduction targets but the buyers are still saying, ‘How do we do this without hurting our P&L? How do we do this without damaging our profitability or our commodity volume?’ Unfortunately, there’s not a single retailer in the U.S. that’s making good progress at the moment,” Lupberger says. “As of now, we are the only zero waste product that can actually live on a retail shelf. We’re the only solution for these retailers.”
Unlike competitors such as Blueland or Grove Collaborative, which sell concentrates, Cleancult is a direct replacement for laundry detergent contained in paper-based packaging. The products have a shelf life of about a year and are currently in a handful of retail locations, including select CVS Pharmacy stores across the country. Cleancult’s model includes high-margin glassware, which also entices retailers.
Essentially, the movement to reduce plastic waste is encouraging retailers to look for new products, which also creates opportunities for brands that are up for the challenge.
Challenges, research & development:
It took Cleancult a lot of experimentation and persistence to get where they are today. While the mission was clear, perfecting the mechanics was riddled with obstacles and uncertainty. “If we knew how challenging this category was going to be, we probably would have never done it,” Ryan says.
After three years of development, Cleancult launched in January of 2019. “It was the right place at the right time,” the innovator says. “We had to build our machinery from scratch and 100% of our cartons leaked. The floors were covered with soap, slippery and almost a liability. We got banned on Amazon for dozens of listings because the products kept exploding and we just kept optimizing and getting a little bit better year over year. In 2018, we had 100% leakage. In 2019, it was about 40% leakage. 2020 was about 10% leakage. This year we have sub 1% leakage. It’s been a long journey,” Lupberger recalls.
Another challenge to growth is inspiring consumer behavior. “We’re asking someone to buy detergent in a refill glass bottle and milk carton rather than a plastic bottle. It is a minor behavior change but it’s definitely the biggest challenge,” Cleancult’s CEO says.
Fundraising via shared vision:
It’s capital-intensive to get a business like Cleancult off the ground. It can be a real challenge to secure funding, especially in the early stages without proof of market adoption.
“There were three phases for us. The first phase was proving to investors that this was something. We did three accelerators, Babson Venture Accelerator that was MassChallenge and Parallel 18 in Puerto Rico. All those put together gave us our initial funding,” Ryan says. “Then it was science grant backing. I can’t speak more highly about the SBIR program. We actually got a large grant of nearly $500,000 from the National Science Foundation for some formulation work.”
The accelerators and grants allowed Cleancult to iron out some of the kinks with formulation and packaging. In turn, that reduced the risk for private sector investors. The detergent maker was then welcomed into the New York investment circle. “Dave Heath, the CEO of Bombas was their very first investor and took a risk on us. Shortly thereafter, we just continued to close. We had over 40 investors in our first pre-seed round, 50 more in the next and another 40 in our Series A,” Lupberger says. “We have a great group of very diverse investors. They range from angel investors to venture capital to family offices and they all come together and believe in this vision for a better category.”
It can be a challenge to manage that many relationships. The right partners are critical to fundraising. “My co-founder, Zachary Bedrosian, is phenomenal. If I’m the front face of the brand, he is the back office, from technology to design to brand. That’s been crucial for this journey,” Ryan says.
“You have to be choosy about your investors, too. They have to have the right balance of optimism and patience. People see stories in the media about venture-backed companies going from $10 million to a billion. It’s only now that we are exploding in a positive way.”
The lesson here is that it’s critical to find the right partners when it comes to fundraising. Make sure you have the internal team ready to attract and work with investors. Furthermore, make sure the investors share the vision and are committed for the long term.
COVID-19’s business influence:
The novel coronavirus has affected nearly every business. “Retailers made roughly a 2% reduction in plastic year over year, for about 20 years,” Lupberger says. Unfortunately, retailers rushed to plastic in the wake of the virus and lost most of those reductions.
“On the consumer side, we saw two things. The first is that they all moved to heavy killing cleaning products,” Ryan says. “What’s exciting is that even with that growth, the natural cleaners grew faster than their conventional counterparts throughout COVID-19. I think the pandemic inspired people to start viewing cleaning products as an essential and not just an add-on in their lives. It happened with organic food and skin care products. Now people want to know, ‘What’s in my air? What’s on my sheets? What’s on my countertops.’”
Brand messaging is essential to attracting eyeballs, educating consumers and changing behavior. “Historically, there’s been a drawn out educational journey when a consumer goes from a product like Tide to a natural alternative,” Lupberger says. “We’re seeing people come directly from conventionals to our products. They can get their heads around the plastic reduction and they don’t have to be sold on this natural journey. Plastic is much more understandable than a large-scale issue like climate change.”
When it comes to retail product messaging, “efficacy is still the number one influencer of purchasing decisions right now in household cleaning,” Lupberger says. Consumers immediately see the carton on the shelf, which sends the environmental message but they often need to be convinced that it cleans well. “Online is totally different. Those consumers already trust natural cleaners, they need to be convinced that our model is the best from a reduction of plastic perspective. So, online storytelling is only zero waste.”
Purpose and culture:
Cleancult’s purpose and storytelling not only helps the company connect with retailers and consumers, it also cultivates a strong internal culture aligned around shared values.
While the 25 team members are split between New York and Puerto Rico, the brand purpose has kept the group together. “We’ve never had anyone quit. No one’s been poached. I think part of that is because they’re committed to the mission.”
Purpose also fosters innovation and accountability within the company.” Last year, our team said, ‘We’re not okay with you just doing 16-ounce refills. We need 32-ounce refills because it reduces even more plastic.’ We agreed. They said, ‘It’s not good enough. We have to move to carbon neutral shipping. When you have a purpose-driven team, they force you to be accountable and do better,” Ryan says.
3 key takeaways for entrepreneurs:
Through his journey with Cleancult, Ryan Lupberger is joining the movement to abolish single use plastics, disrupting the liquid detergent market and building a loyal customer base. Here’s three lessons he learned on his way to success.
- “Find a phenomenal co-founder that you can honestly trust with your life.”
- “If you’re an aspiring entrepreneur in the consumer goods space, the push to achieve carbon neutrality is so exciting and creates immense opportunities. It means that there are thousands of product categories and white spaces being developed.”
- “You have to have two characteristics that carry you through everything; endurance and optimization.”