Our investment in Shellworks

“Doing something that nobody else has done before is actually quite hard,” said Ruben Rausing, founder of Tetra Pak, the largest food packaging company in the world, with over €11bn in sales as of 2021.

Rausing’s approach to building Tetra Pak was a revolution in the materials industry, where many companies start by marketing a technical invention. He started instead by studying the market to understand what his future company should be able to do. Or “make something people want”, as YC’s Sam Altman would put it. This, and many other ideas and ways of operating we associate with developing software products rarely break through to such old fashioned, “boring” industries such as packaging. And that is why, when it happens, we get excited.

“When I first met Amir he was building a chair out of slime, and I immediately connected with his ability to play with materials,” Insiya shared with us when talking about Shellworks’ story. We were inspired by the combination of Amir’s creativity with Insiya’s experience in product design, manufacturing and operations from her years at Apple, to tackle a problem that is spiralling out of control. Since the birth of the plastic industry in the 1950s, global production has increased enormously, reaching ~360m tonnes in 2019, with the most sizeable application being, by far, packaging.

We urgently need new solutions that are performant, cost-competitive and truly sustainable. To check all three of those boxes is a lot to ask of a new material, and yet it’s something the Shellworks team has already started to achieve. What do these criteria really mean?

— Plastics are an extremely performant material: versatile, durable and infinitely customisable. Any new material needs to be as performant to stand a chance at displacing the enormous amounts of plastics we use. One of Shellworks’ edges is their ability to customise shapes and colours to a brand’s liking.

— Plastics also benefit from a large and established, global supply and manufacturing chain, which means economies of scale. To be cost-competitive, Shellworks’ materials piggy back off of this manufacturing apparatus, requiring minimal changes to the way packaging is made. And, in the short to medium term, Shellworks doesn’t necessarily have to compete on price, as with its first customers, all fast growing beauty brands, they can already achieve cost parity with other solutions. This segment’s growth mindset is also a good match for Shellworks’ ambition. As Amir puts it, “we like to move in increments of 10x.”

— It’s no secret that both the ways plastics are made and disposed of are hugely problematic for the environment. 99% of plastics is petroleum-based, which means more emissions, and 91% of it currently ends up in landfill or the ocean. Shellworks has a big focus on using renewable feedstock to make its packaging. It has made a bet on compostable material as a solution to plastic pollution, but one of the key things the team wants to demonstrate is that the material can behave sustainably in any waste stream. Finally, it’s not just plastics Shellworks is hoping to displace. Most of the beauty brands using Shellworks are actually trying to replace glass, since glass packaged products emit more carbon when shipped due to weight and as glass recycling is highly energy intensive.