Cleaning up Cleaning with Ryan Lupberger of Cleancult

Decarbonizing Commerce

In this episode, you'll meet Ryan Lupberger, founder and CEO of Cleancult, a company making cleaning products that are better for you and better for the environment. Ryan shares his experiences and lessons learned from starting up to scaling up, discussing how to meet both retailers and consumers where they are in terms of education and behavior change, driving awareness with a different product form and unconventional packaging, as well as fundraising and other challenges.

Learn more about Ryan Lupberger:

• Link to Cleancult’s website
• Link to Ryan’s LinkedIn

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TRANSCRIPT BELOW:
Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability.

Welcome to the Decarbonizing Commerce Podcast. I'm your host, Keith Anderson, and our guest this week is Ryan Lupberger, founder and CEO of Cleancult, a cleaning company with a focus on ingredients that are better for you and better for the planet and less wasteful packaging. And Cleancult is a brand that like many started in the direct to consumer channel, but has been expanding distribution in brick and mortar mass.

And it was really interesting to me to hear some of Ryan's experience and thinking about how to meet both retailers and consumers where they are in terms of education and behavior change as they're trying to drive awareness with a different product form and unconventional packaging, drive trial and change behavior.

So it's a very rich discussion. We also get into fundraising and other challenges of growing business in that category. So I'm eager for you to meet Ryan Lupberger, CEO and founder of Cleancult.

Ryan, good to see you. Thanks for joining us for the Decarbonizing Commerce podcast.

Ryan Lupberger: Thanks so much for having me today. Looking forward to it.

Keith Anderson: Why don't we kick things off just by learning a little bit about your background and the founding story of Cleancult?

Ryan Lupberger: Yeah. So, personally I'm, I'm crunchy. I was, born in Boulder, Colorado. So grew up with a lifestyle of better for you, everything, better food, better products. We looked at every ingredient list and it was just frankly like, imbued in the lifestyle of, of where I grew up. And the parents are out there.

They, you know, were part of the Transcendental Meditation movement and, really also just prioritized wellness, right? So kind of grew up in this space, and then went totally different direction, right? So then went out actually to the East coast and went to a school called Babson, which is a entrepreneurial school focused on supporting big businesses, right?

And family business to investment banking to consulting. But when I was there, I looked at the back of my bottle of laundry detergent and this was 2016 and I didn't see any ingredients listed. And, you know, I was still a Boulder kid at the time and basically said, "this doesn't make sense. Why aren't there ingredients?"

There's ingredients on my food, on my shampoo, even. Why not our household cleaning products? So just at this big kind of aha moment, it was "why aren't some of the things we put on our skin, in our homes, and on our sheets, for example, regulated?" Right? So the more research I did to why there weren't ingredients, the crazier the industry became.

And in the US compared to the UK, we allow basically over 1, 400 ingredients that are banned overseas. So it's just a, it's a pretty nasty space and, you know, I think we've seen this massive movement of in me, organic food. On me, personal care products. But now it's finally happened around me, right? And like 3 percent of the weight of your clothes is actually leftover laundry detergent.

But people don't think about that every day. So the more research I did in this category, it was the more "wow." And, it always wanted to support businesses that could solve big problems. So we went down this whole big journey and 2016 to 2017, I looked at all the natural products in the whole category.

But they're all covered in plastic packaging, right? For me, it was how could the better brands out there be better if they use so much petroleum packaging? And I walked Target, Kroger, Walmart, and it's a sea of plastic, right? And it was just this big cognitive dissonance for me. So I took a big step back and said, we got to do something better.

And I tried dilutables, concentrates, powders, DIY vinegar. But it was all too complex, didn't really work that well, and we basically said there's nothing out there that works. So, you know, took a big step back and said, "could we deliver a better product with cleaner packaging, cleaner ingredients in a way that would meet shoppers and myself where they were?"

So we did. So we launched the first ever, soap cleaners and detergents in milk cartons instead of plastic bottles and launched officially in, Jan 1 of 2019, so it's almost been five years now.

Keith Anderson: Well, that's great background and context. And I didn't realize you were a Colorado guy. I grew up in Aurora. I grew up in Aurora and then went to Boston College. So not, not an identical trajectory, but sort of similar. Now, did you, did you say, silk detergent?

Ryan Lupberger: Laundry detergent. So, no, just my typical laundry. And we tried, again, everything under the sun, but you, you just see that big plastic jug. And just for me, it never made sense. And, you know, the more research you do in this history of this category, the crazier it becomes because, really in the last only 20 years, have we started selling and making cleaning products in plastic products, 40 years ago, it was mostly in powder in a box, right?

So this new plastic problem we have is literally originated in the last 20, 30, 40 years. So it's, we created a problem out of nowhere and now it's how do we get back to, frankly, where we were 30 years ago. So that's really what we're trying to, trying to innovate and create here at Cleancult.

Keith Anderson: So, I'm interested, maybe, in starting with the ingredient side, you know, you mentioned we are a little more permissive with product formulations and some of our peers abroad. How do you define clean at Cleancult?

Ryan Lupberger: Yep, so we have basically our no no list, right, that would align with a Whole Foods, a leading, you know, natural retailer. So that's a big, big piece that we follow. But we also try to look at ingredients that have less or no carbon impact on the whole, whole chain, right? So cleaning products typically now are all petroleum based.

So they come really effective. You know, that blue bottle that works really, really well, but it has some negative downstream effects, right? And those petroleum polymers that are made really clean very well. It goes after dirt, grime, all these different pieces, but they don't dissolve very well when they enter the waste stream or the waterways, right?

So. We have our no no list and our formulations are mostly based in coconut, so it's sodium colcosulfite, so just as effective as we believe the leading natural products, leading products generally, free from all the harsh chemicals, free from dyes, free from, really any phosphates, which are also caused with what's called eutrophication, in waterways, which means all the algae grows and it's really bad for, again, our different waterways, and then essential oils, right?

So our, our formulation philosophy here is it has to clean. Has to be ingredients you can generally pronounce, has to be plant based and better for you, and wholly biodegradable. So that's the formulations that we've, we've created here across hand soap, dish soap, all purpose, and laundry detergent.

Keith Anderson: And has that been consistent pretty much since the start or have you evolved it a bit over time?

Ryan Lupberger: We've evolved it a bit, like every brand. I think we're on formulation, iteration eight, or nine, like every brand. But what we really figured out is, in this whole journey is, really, we have to meet the shoppers where they are. And I know I'll probably repeat that multiple times a day. Because when we started this, we had prices that were over, frankly, the leading natural or better for you cleaning products in the market, right?

Even though we had a reduced waste package or plastic-free products, customers were not willing to switch en mass, right? So we built a big DTC business. We had some big fundraising rounds, but even with that, they wouldn't make the jump. And again, a small population would, but not the entire.

So from us, our big evolution was we knew we had to be clean in packaging. We knew we had to be clean ingredients. We need to be clean in efficacy, but we also needed to be the same price, right? So it's almost taken us five years to get here and now is when we're seeing the wave, right? Offering a better solution, but at a similar price point, it's really been the biggest unlock for us.

Keith Anderson: Yeah, I, I see a huge focus on product superiority on the one hand. Or parity, I suppose, and on the other hand, economic parity, you know. I think a lot of sustainable brands, however you define sustainability, are working hard to break through to the mainstream. You know, there's obviously a whole specialty channel and a lot of brands that have found their following with, you know, a sort of subscale population, but I think given the mission of a lot of brands, including yours, the focus is increasingly on "how do we reach the mass channels and start to change behaviors?"

Ryan Lupberger: Yep. Agreed. And you know, I think the exciting piece is the retailers want it too, right, is one of the reasons we'll be in most, if not all, marquee retailers, is because they're putting their money where their commitments are. So it's actually been very encouraging to see is you have, you know, Target, Kroger, Albertson, Safeway, and then the big strategics, you know, Lever, Henkel, Procter & Gamble, all putting these very aggressive 2025 plastics goals as well as ingredients, you know, through and through. And they're starting also now to talk about regenerative agriculture through their entire supply chain. So what we're seeing is, if there's a way to crack the economic piece, there is demand both from consumers and retailers to actually start to shift all these categories.

So it's been an encouraging time for us.

Keith Anderson: I'm glad that you mentioned some of the incumbents. I mean, there have been some, to your point, there have been some really interesting developments quite recently, although I remember going back almost a decade, most of the majors that you mentioned had either acquired somebody or done some experimentation that, you know, one might argue was sort of, tucked away until either the consumer or the retailer said, "okay, I'm ready." But, you know, it sounds like you're finding the retailers are, you know, eager to add selection that meets some of the characteristics that your products do.

What is the competitive dynamic like? Do you find this is, you know, growing the category, shifting the category? How do you think about the dynamic between some of those incumbents and a newer emerging brand?

Ryan Lupberger: Yeah. Well, it may be broadly, but to,

one of the reasons we enjoy these conversations and again, appreciate you having us on today, is, it's going to come from consumers, right? The only reason that these big retailers and strategics are, have made these commitments is because Wall Street and/or their investors or direct consumers are forcing them to, right?

So one of the major big box stores just got really, frankly, criticized in the public markets because their plastic usage is increasing, right? And it was publicized, it was brought up on the earnings calls, so all of this is contingent on, like, you, the listeners, right? Without that, nothing's gonna happen.

That said, I think the retailers, you know, they're starting to shift. So, I will say generally, you know, cleaner products have a better margin profile for the retailers, but they don't move as fast. So, usually it's accretive, which is why they like this. It's usually a higher income shopper, too. So, one of, again, a larger retailer wants to attract this more. And I think what we're seeing in these categories is it's all incremental because you have massive organic food categories that have grown to be 10, 15, 20, 30 percent of overall grocery. Whereas cleaning is sub 3, sub 4, you know, it hasn't matched that. So, we think it's just room to run.

It's one of the reasons, again, why I think the retailers are, so open to this.

And at what point does the fourth plastic natural cleaning brand move the needle, right? And what we've seen in this whole competitive dynamics, concentrates, dilutables, tablets, all these other form factors that have tried to reduce waste in the house of cleaning, they might work digitally because you can explain it to a shopper, they don't work in store.

So all of these retailers, it's a, it's a graveyard of closeouts for every reduced waste form factor that's tried to shift behavior. So again, what we're seeing is excitement. I think there's frankly limited competitive developments right now that are meeting shoppers where they're at the same price point and still reducing waste and some negative, negative chemicals.

So, but it's complex. It's hard. We've been at it for, you know, seven years. It's a hard space.

Keith Anderson: Yeah its super interesting, though. I've never really heard or considered that point about

the importance of educating somebody on, you know, transitioning

to a different, not purchase behavior, but usage behavior for the different form factors and, you know, a lot of the way I approach things is, is sort of through the spreadsheet side of things, thinking about, oh, you know, concentrated powders have, have less weight and less cubed, but I think what a lot of folks that have been entrepreneurs in the space for a long time have sort of come around to, not only with their own brands, but even B2B services, you know, focusing on what works is a way to accelerate impact more than letting perfect be the enemy of the good. And I think there's probably going to be demand for different form factors for different consumers and, scenarios.

Ryan Lupberger: Yep.

Keith Anderson: Are you finding.

Ryan Lupberger: tide lifts all ships too, right? Which is why you digitally certain form factors can win, in retail others can. And we all help solve this issue. So, yeah, we're supportive. Yeah.

Keith Anderson: You're finding that the retailers are increasingly adding distribution for cleaner products in these categories. Are you finding, you know, you mentioned the in store education component of it. Is that a necessity in your case? And are the retailers creating, you know, wayfinding and other opportunities to help shoppers find and consider the products or is that stuff that you still got to do independently?

Ryan Lupberger: Yeah, you knoww, I think yes and no. You know, we'd always love more wayfinding with all of our partners, but I think the way we've designed this model is, how do we be so obvious that it does its education on shelf? Right? So originally we just had our milk carton and it was ingredient first. So it focused on our coconut based ingredients.

And frankly, it didn't work on shelf. There was a broad confusion of why and how and why is my cleaning products in a milk carton? So we spent two and a half years redesigning to solve for A, it's a cleaning product, B, this reduces waste, and C, it's premium. Right? And finally, we think we've nailed it, where there is no education on shelf.

Of course there's some, because no one's ever seen a milk carton in these categories, but it's like, I get it's a refill, I get it's less plastic, I get it's premium, I get it's better ingredients. Right? So, a lot of what we do is education on shelf, and it's taken, what, seven iterations also packaging to get here.

The other big piece we launched was the first filled and refillable aluminum bottles in the category. So when we started this brand, you know, five years ago, only refills. And we developed the technology, the intellectual property, and all of these pieces for the refills. But what we found is, even though we're winning amongst refills and cleaning, you have this whole ready to use that makes up 80, 90 percent of the category.

Like, you don't start with a refill. So I think the other big piece is we launched our aluminum bottles. And that was, you know, a, an intentional sustainability choice for us, because truthfully, we don't believe in single use aluminum being a better sustainable form factor. We believe in aluminum.

As opposed

Keith Anderson: to what?

Ryan Lupberger: Frankly, single use plastic, single use glass is, aluminum is, it's just like the reusable bags.

If you're using a different reusable bag every time, it's a lot of carbon, right? It's, it's challenging to make. So, for

Keith Anderson: Reused is different than reusable.

Ryan Lupberger: Exactly, exactly. So, yeah, so we think we've cracked it, right? It is a filled and refillable aluminum bottle, right, that you refill using our cartons.

And when people see it on shelf, they get it. So I think, you know, again, it's, it's, we understand there's a lot of education to this, but we're trying to be the least amount of education in the space.

Keith Anderson: You know, how big of a factor is the conversation at retail... how big is refill in the conversation with retail? You know, do they view it as, a barrier?

Is it a driver? Do they think about some of the impacts it might have on loyalty and trip frequency and some of those things, building a basket?

Ryan Lupberger: Yeah. I think that's the good news here.

In these categories, you refill and refilling, it's gaining a lot of momentum and it's, it's been around for a while, right? So hand soap refills today in the category represents, depending on your channel, about 30 percent of total sales. So it's, it's a lot, right?

And you think about even the big brands have big plastic tubs that you refill your hand soap. So, and that's growing at almost 12, 14, 15 percent annual growth rate. So it's, it's going very fast. Dish soap, it's about 20%. And people have gotten used to refilling their islands, right? In dish soap and that's growing quickly.

And with dish power spray, again, think about that blue bottle, there is a refill now. And frankly, the refill is, we believe a profitability play from one of the big strategics, because that big dish power sprayed trigger, it's very expensive, right, for them. But that said, it's still more sustainable, right?

So dish refills are now growing at a clip never seen before. All purpose, it's a challenging category in refilling, because people haven't much yet. But there's more and more development of dilutables, right? So it's not a little cartridge or two ounces, but it could be, you know, 32 ounces that makes 128 ounces added to water.

So we're seeing some movement there. And then laundry, you know, it's kind of the wild west right now because you're seeing sheets come into the market and completely disrupt liquids. You've seen pods come into the market. And our cartons are just direct dose, right? You just directly dose into your machine.

We're seeing these concentrated laundry detergents come out 32 ounces, and it's really gaining momentum. So, we believe, again, it's, there's a lot of support from, from retailers, again, potentially because of the margin profile and sustainability. But we think there's a lot of momentum across refilling right now.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience. Plus and higher tier members of decarbonize.co, stay tuned for the rest of the episode.

You mentioned earlier, you know, you've raised some capital. At what stage in building the brand and the business was it clear that that was the path that you wanted to take?

Ryan Lupberger: For us, we had to. And you know, I think there's a case to be made for bootstrapping is, you know, you have freedom to do what you want to do and how you want to do, you know, there really was never a choice for us, fortunately or unfortunately, because our category is really hard. It's one of the reasons we're the first company in the world to do this.

You can't put a non-food product on a food machine. And in cartons, there's no non-food manufacturers, right? So, because of that, there's no contract manufacturers that can help you spin this up. So, we literally had to buy all of our own machinery in the early days, and start from scratch. So, we developed our own machines.

We customized our own machines. We have a lot of IPs, almost 15 patents, a bunch of trademarks. So, and it was expensive. In early days, 2019 to 2021, we had negative gross margins. We lost a lot of money because our floor was covered in soap because our curtains exploded and the bottom seal didn't work and, you know, the soap, when you run it through what's called a piston fill, it foams like crazy.

So we had to figure out how to put soap in a carton at speed without foaming. So early days, incredibly painful. We raised our Series B in August of 2021 and haven't raised since then. But until that point, it was essential, frankly, to raise a fair amount, to get this business off the ground.

Keith Anderson: And when you went looking for investors, were there sort of impact oriented investors that you were, searching for? How did you find your partners in the end?

Ryan Lupberger: Yeah, I think in the end, everyone wants to, to do something better for the world, right? But it's really hard if impact isn't connected to returns, right? So pure impact funds that have, you know, no focus on returns, we didn't find whatsoever, right. Is I think there are few and far between, but there are so beautiful harmony of funds that see opportunities in sustainability that also want to support the world.

And we don't think they're mutually exclusive. So our first, first investor was David Heath, the CEO of Bombus Socks. You know, they are on a crazy growth trajectory and he's a very smart CEO. And they're also, they've donated and changed quite a bit of policies related to homelessness, right? And also some of the donation structure nationwide.

So, that was both, right? You saw the opportunity and also saw the benefit. In the early days, again, the first two years of fundraising, 2016 to 2018, we couldn't get a dollar. We spun our wheels. We did three accelerator programs around the country because it was the only way we could get capital. We partnered with the National Science Foundation,

did a bunch of ingredient research for the national, basically, it's called the SBIR, grant funding. We did pitch competitions, like, you name it. We did it to get that scraped, basically, that first, let's call it, half a million to a million dollars to get this off the ground. It wasn't until we had this carton.

And the first meeting I brought this carton is that this is where we're going, this is what we want to do. And it was just an unlock. It's "why hasn't anyone done this before?" And we shortly found out why no one had done it before. It's brutal, it's challenging, it explodes, shelf life is hard, you name it.

But we did it, right? So After that, we went to, you know, kind of New York City angels. So we had only almost 40 investors in that round. Then we went kind of consumer funds in the late 2019. Then we had more of the growth trade side in 2021 and we've had a great experience, again, growing quickly, but also trying to change and like fundamentally transform this category.

So, we've had a really good relationship with our entire investor base.

Keith Anderson: That's great. What would you say that you're looking forward to most? You know, it could be something in, in the roadmap or, new innovation, or it could be regulation or something else.

Ryan Lupberger: I think both. I think you hit it, frankly, the nail on the head there. On the innovation side, we just launched, our first ever laundry sheets in the category. And it's a really exciting space for us because liquid represents about 80 percent of the category, right? You know, our cartons will continue to win there.

But monodose, pods, or sheets are growing like crazy. And you just have such an opportunity to compact formulations, but also get rid of so much plastic. So we just launched our new laundry sheets. So they are now on Amazon and will be the first laundry sheets in Walmart. That's all public information now.

It's the first multi enzyme laundry sheets in the market. So enzymes are very effective at removing stains. We found out how to put multi enzymes on the same sheet. So that's probably my, the innovation I'm most excited about, because no one's quite figured out how to put laundry sheets in retail, and we believe we have the best and first retail ready laundry sheet packaging, because again, similar story, there's a lot of big digital brands in laundry sheets.

But none in retail yet, right? And it's how do we kind of really create this space for us? And then on the regulation side, SB 54, we think it could change everything. So, no one quite knows what it is, or what it's going to do, or how it's going to be implemented, but it basically forces responsibility on to manufacturers, producers, and sellers, retailers, and brands for plastic.

And, you know, we think it could change the face of US consumption in these categories, but there's a lot of loopholes, and there's a lot of ifs, ands, and buts, and there's a lot of interpretation to be done. So, I think, again, a lot of excitement there, it passed in California, and will then work its way east, just out of necessity, because California is so big.

But we have no idea how it's going to play into the landscape, and I think that's going to be a big thing to watch for us.

Keith Anderson: Yeah, it makes a lot of sense. I see,

both relating to plastic and packaging broadly, but, climate and sustainability broadly, California, I guess, New York to a lesser extent, and definitely Europe are really raising the bar. And, and I think. I've almost seen over the last two years, some folks getting really heartened to see all the activity and now I'm starting to see people say, "okay, a little too much stick.

We could use a little more carrot," or at least, you know, we need some decisiveness and consistency so that we have one standard we can go execute against.

Ryan Lupberger: Exactly. And we're at the, you know, packaging shows nationwide with some of the biggest producers. And even they don't know what's around the bend, right? So I think it's fair. I think regulation is important. I think incentives are important. But I think you're right. There does need to be some consistency because right now it's, it's, no one really knows what's, what it means.

Yeah.

Keith Anderson: Yeah. Yeah. I do think I share your view that consumers are ultimately the driver of a lot of these shifts. I do think, the second biggest motivating force in many cases, at least in the U S is competition and what some of the retailers are doing, not only with their nationally branded assortment, but you know, a few of the majors that you've already named are doing interesting stuff with their own labels.

And I think that is raising the bar in ways that, may accelerate things.

Well, if folks want to learn more about Cleancult or you, where would you send them?

Ryan Lupberger: You can find us on Amazon, Next Day Delivery, and we are the first, again, aluminum products now on the platform that you can price, same price as plastic products. Our website, Cleancult.com, and that's clean space cult. And then leading retailers, Albertsons, Kroger, Safeway, Walmart, all around you nationwide.

And, I think our, our biggest ask is advocate at the retailers, because those are who will make the decisions. And if you demand shifting these products and the retailer will have to shift these products. So we're, we're really hopeful and we see a lot of, you know, opportunity. And I think it's just the beginning for us and also the industry.

Keith Anderson: Well, thanks very much for joining us. Great to have you on the show.

Ryan Lupberger: Likewise. Thank you again for having me today.

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.

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