[Case by case #2] Ludovic Cailluet: lessons from Yuka, a fast-growing impact company

How are the strategy and operations of an impact start-up like Yuka different from those of a traditional company?

Impact companies like Yuka focus first and foremost on a positive social and/or environmental objective: making consumers more aware of the quality of their food, changing the behaviour of manufacturers. Immediate profitability is secondary.

Another characteristic of this type of company is the choice of investors in line with the mission, often via public or alternative financing. Yuka has also opted for a governance pact that limits their influence: no seat on the board of directors, only an advisory role, no promised profitability and a commitment not to sell their shares to agribusiness.

Yuka has also built up a highly engaged community of users on social networks. Via LinkedIn, it manages to involve opinion leaders. This was decisive, for example, in setting up a fund when industrial charcuterie companies took the start-up to court. (3)

Have the food scandals of recent years affected Yuka's success? Did timing play a key role?

In 2017, Yuka arrived at a time when a number of food and health scandals were making headlines. Consumers were therefore more receptive to its mission, and media coverage more favourable.

At the same time, awareness of sustainability and well-being was growing, especially among young people. More than a product scanner, the application became a tool for citizens who wanted to take action. Conversely, the agri-food industry's historic efforts to limit regulation in favour of better quality food created an opportunity for Yuka.

Did the personalities of the founders influence the success of their project?

Yuka's three founders enjoy working together. They have varied backgrounds and their respective expertise combines around a shared commitment.

A specialist in digital transformation, Julie Chapon has solid management skills and knows how to navigate the business world. Her ability to publicise Yuka's mission in the media, her sincerity and her personality were key factors in getting the public and investors on board. The relationships she developed and her network of EDHEC alumni were also decisive.

Benoît Martin, a purchasing expert for banks and insurance companies, managed the financial and accounting aspects of the project. His business school background was an asset. With a more technical background, his brother François Martin played a key role in the development of Yuka, thanks to his experience in designing websites and mobile applications.

How has the user community been integrated into the overall strategy? What role has it played in its resilience in the face of attacks from the food industry?

The community is at the heart of Yuka's strategy. From the outset of the project, the startup has involved the community in contributing to the database of product references. Through its blog and other platforms such as Instagram, Yuka has developed a content strategy to educate the general public about its missions and maintain a high level of engagement.

Indeed, when Yuka was taken to court by the food industry for reporting the presence of nitrites in charcuterie (3), the community mobilised. Yuka benefited from a "David versus Goliath" effect in relation to the industrialists who wanted to silence it. The opposite happened: the application found itself in the spotlight and the public was made aware of the health problems associated with certain food products. It's a typical example of the Streisand effect.

On social networks, the strength of the community has also supported the international expansion of the application. At the end of 2021, influencer videos on TikTok were a major factor in Yuka's rapid growth in the United States.

How do you use this case study (2) with your students? Have you had any surprises?

This case can be used in a strategy or entrepreneurship course, with bachelor's or master's students as well as with executives and managers in executive education. It provides an opportunity to reflect on the context of strategic practice. It differs depending on whether the main stakeholders are an owner family, a pension fund or the members of a non-profit organisation.

Yuka represents the rather singular case of a genuine commercial enterprise that has to make a living from its revenues, but whose managers and their investors are aligned on one idea: the company's most important objective is not to maximise financial interest. It is to bring about a profound and lasting change in consumer practices and eating habits, and to reduce the distribution of cosmetics containing ingredients that are harmful to health.

For many of our students, this entrepreneurial ambition based on the desire to have a strong impact on society is surprising. They were quick to question Yuka's business model and the sincerity of its directors. They also question the independence and integrity of the data collected via the app.

This case study provides a rich opportunity to engage in a dialogue about the raison d'être of an entrepreneurial project and the difficulty of "holding a responsible line" while growing a business. The Yuka example is also an interesting one for highlighting the importance of making the right choices.

References

(1) Yuka: changing the world one barcode at a time, Ludovic Cailluet and Hélène Gorge in Whittington R., Regnér P., Angwin D., Johnson G. & Scholes K. (2023). Exploring Strategy, Text & Cases (13th ed 2023). Pearson.

(2) Harvard’s ‘teaching power’ puts business school in the lead for influence, FT.com, May 2021

(3) Nitrites dans la charcuterie : le droit à informer de l’application Yuka reconnu en justice, Le Monde, 9 déc. 2022.