Vegan startup Hampton Creek paid its employees to go into supermarkets and purchase its own eggless Just Mayo, making the product appear more popular than it actually was, before a round of venture funding in 2014, Bloomberg reports.
“At least eight months before the funding round closed, Hampton Creek executives quietly launched a campaign to purchase mass quantities of Just Mayo from stores,” the story reads. “In addition to buying up hundreds of jars of the product across the U.S., contractors were told to call store managers pretending they were customers and ask about Just Mayo. Strong demand for a product typically prompts retailers to order more and stock it in additional stores.”
By late 2014, Hampton Creeks CEO Josh Tetrick had secured $90 million from investors and impressed Silicon Valley venture capitalists when his eggless mayo made it into Walmart, Kroger, Safeway and other top U.S. supermarkets, according to the company-cited Wiki page.
Tetrick said it was a practice to check the jars for misaligned labels, breakage and ingredient separation, which could happen during transportation and shelving. He said the program cost about $77,000, representing less than 0.12 percent of the company’s sales.
But several contractors told Bloomberg saying “they were told to simply buy up jars at nearby stores and were free to consume or discard them—not look for quality issues.” Bloomberg says two ex-contractors for Hampton Creek sued their former employer in February 2016 seeking unpaid wages and referenced an assignment to “buy out shelves” of the company’s products in a lawsuit filed in a federal district court in New York.
The employee purchases came before a public tussle faced by Hampton Creek with the conventional mayonaisse industry. The FDA last year allowed vegan startup Hampton Creek to use the name Just Mayo for its eggless mayonnaise, ending a campaign against the label by the Egg Board and Unilever, the maker of Hellman’s Mayonnaise. At the time, the decision gave the company a big boost.