Inside Hydefy’s fungi-based future of fashion

By creating microbe and bio-based materials that are both durable and beautiful, it’s proving that circularity and innovation can go hand in hand, and that the future of materials can be one of abundance and delight. Hydefy’s model is in line with IDEO’s thinking—that we can make a far bigger impact on climate if our products are sustainable, yes, but more importantly, more desirable. I’m inspired by the way Hydefy is reshaping what’s possible, not just in fashion but in how we think about the everyday things we touch and use.

Recently, I sat down with Rachel Lee, Hydefy’s General Manager, to hear more of the story behind the work. From her career spanning BCG and the Gates Foundation, to her leadership guiding Hydefy from scrappy experiments to a Paris runway debut with Stella McCartney, Lee has unlocked a method for building breakthrough solutions.

We chatted just before Climate Week NYC 2025, where Stella McCartney was honored with a “Fashion Steward” award at the first-ever NAT Gala for her pioneering role in fashion sustainability, including the use of more eco-friendly materials such as Hydefy in her collections.  

Keren Ruth Wong: I’ve admired your work for a long time, both as someone who also works in the innovation space and as a dear friend, so this is a really cool opportunity. Would you mind starting by telling us a little more about Hydefy, and how it’s different?

Rachel Lee: At Hydefy, we create high-performing, planet-friendly biomaterials. We utilize nature-derived inputs to produce textiles and leather alternatives that minimize our reliance on animals and fossil fuels. The materials we are initially commercializing—the ones featured this year in Stella McCartney’s Paris Fashion Show Spring/Summer collection—use fermentation of sugarcane inputs and a fungi from Yellowstone National Park. That’s the connective tissue to Nature’s Fynd, the parent company that utilizes the same fungi, called “Fy,” to create alternative meat and dairy protein products. Both Hydefy and Nature’s Fynd are part of the Fynder Group. We’re both interested in creating new solutions for consumers that have a lower environmental footprint.

Keren Ruth Wong: So there’s this fungi-based alternative material. And now you’re looking at many different applications, whether it’s across both food and consumer products, is that right?

Rachel Lee: Yes. We started with Nature’s Fynd, where we created meat and dairy alternatives that we commercialized nationwide, mostly through Whole Foods Market. Those initial offerings truly represent the ethos of what we’re working on: delicious and nutritious products with lower environmental footprints. I joined the company to work specifically on biomaterials because there was a rising interest on the retail side around these new types of sustainable innovations and textiles. There were no other commercial options available, actually, when we started working on it.

‍Keren Ruth Wong: When we look at other products or materials on the market that are alternatives to leather, what are those typically made of? How are they different from the material you’re working on and the material that ended up being used in the Stella McCartney bag?

Rachel Lee: Most of the vegan leathers that you see in the market are made from polyurethane or polyvinyl chloride, so they’re essentially plastic, which means, in addition to using fossil fuel resources, there are also potential health implications, depending on what type of inputs went into it. We’re trying to give consumers a third category of options that don’t rely on animals or petroleum.

Keren Ruth Wong: Let’s go back to you and your rich career journey. You didn’t start out focused on sustainable products. You’ve gone from BCG to Gates to biotech entrepreneurship with Hydefy and Nature’s Fynd. What’s the throughline that connects these experiences for you? 

Rachel Lee: The connecting theme throughout has always been the mission of the organization, or a particular passion or problem that I want to contribute to. This has served as my North Star, particularly in relation to natural resources and equity.

I became interested in the innovation and biomaterial space, in particular, because while my work at the Gates Foundation allocating resources was extremely important, I also wanted to be a part of creating new solutions. I believe that’s what’s needed for meaningful change for the next generation. So my desire to create more options for consumers led me to Nature’s Fynd and Hydefy. I definitely do not have a formal materials science background, but I think it shows that sheer enthusiasm and passion can really go a long way!

Keren Ruth Wong: Can you tell me a bit about what’s gone on behind the scenes at Hydefy? What were some unexpected changes in direction or pivots that ended up being really interesting or beneficial for the company?

Rachel Lee: The sustainability landscape is constantly changing. Initially, we responded to brand requests because we wanted to make our customers happy. Eventually, we decided that we can’t just be swayed by whatever the new flavor of sustainability is that year. We needed to be intentional, take a stand based on our principles, do something that we feel good about, and build a business around that.

One big decision: we fundamentally changed the process and formulation halfway through. We started with a more traditional, tanning-like process, similar to the one used for animal hides. We would grow these sheets of microbe and bio-based materials and use different chemistries to achieve what tanning traditionally does: making the raw material stable, durable, and giving it a nice hand feel, among other benefits. However, we realized we were trying to play the game that a traditional industry is based on. Ultimately, we needed to leapfrog that. 

To truly have an impact, we also needed to be able to handle volume. So when we took a step back and thought about what would enable that, and also play to our competitive advantage and strength of being based in the US (a lot of the best tanneries and equipment are in Europe), we decided to redesign the whole process so it actually doesn’t look anything like leather processing. Thanks to the brilliant scientists on our team, who have cross-functional backgrounds in other industries, we now utilize plastics industry equipment used to produce materials such as flooring and laminates. 

So, that was the big pivot. There were trade-offs because some properties that high-end luxury companies valued were more feasible with the older process. It was an intentional decision to adopt a more scalable process that would enable us to serve a broader audience and, ultimately, relocate anywhere, as the equipment we use is widely used globally in manufacturing.  

Keren Ruth Wong: I would love to hear more about the early days at Hydefy. What it was like just to lead your team through trying to produce a breakthrough, both in terms of product and process. I’m sure there were a few moments of scrappiness.

Rachel Lee: “Scrappy” is the greatest compliment. With any early-stage startup, it’s critical to prototype quickly, de-risk at each stage in an iterative manner, generate proof of concepts that will convince investors to provide additional funding, and be able to hire talented people. In hindsight, scrappiness went beyond extending our runway and increasing ROI. I think the biggest lesson we took away from those early, scrappy days was the importance of team culture and mindset. The positive, compounding effect of a “can-do” spirit has propelled us forward, even as the stakes and our lab continue to grow and become more professional. To this day, it’s our greatest asset.

Another effective practice at Hydefy was creating a flat hierarchy. We have a culture that encourages every person to contribute—and contribute beyond what their role might traditionally allow. Because when you’re navigating new scientific breakthroughs, you can’t just follow an existing playbook and have a former fermentation engineer and a former F35 fighter jet scientist do the same things they did at their last jobs. Everyone has to think a little out of the box. I don’t think traditional manager-led team meetings and processes would have gotten us there.

People often discuss team culture, but I think the reason it’s been a superpower is beyond making it fun to go to work every day, which is special in a hybrid work world. It’s also a smart business decision. A solid team culture means you have good retention, low to minimal turnover, and very few HR issues. Because, at the end of the day, every company issue is essentially a people issue.

Keren Ruth Wong: I want to get a little bit more into the product itself, particularly because it made such a big splash earlier this year on the Paris runway. Can you tell us, in a few sentences, about the bag you created in collaboration with Stella McCartney?

Rachel Lee: The crossbody bag is part of Stella McCartney’s newest Ryder collection. She unveiled it at her Spring/Summer 2025 runway show in Paris. Stella McCartney is a vegan brand, so they already use a lot of vegan materials—predominantly polyurethane leathers. We’re one of their few suppliers of next-gen materials. The brand has been an innovative leader, consistently showcasing as many natural and sustainable materials as possible. We created a custom color for them: silver metallic. It was a very interesting collaboration—a new design, featuring a new material, in a new color.

Keren Ruth Wong: I want to do some myth-busting here. I think that we often view vegan leathers as being somewhat inferior to luxury animal leathers. To me, as an outsider, it’s remarkable that you were able to collaborate with such a renowned fashion and luxury brand as Stella McCartney. Yes, it’s a vegan brand, but how did you convince them that a mushroom-based material could be aspirational, desirable, and luxurious? 

Rachel Lee: Our strategy of working with luxury partners and brands is very attractive for a number of reasons. It creates a feeling that these materials are aspirational, rather than inferior. In this case, there was synergy because many European luxury brands have incentives to adopt these types of materials due to the upcoming 2030 emissions targets. From a business perspective, it makes sense. Luxury brands also have the highest standards, because their items are expected to last much longer than typical fast-fashion purchases. This means the development timeline may actually be longer if innovators were to target the luxury brands, which is a bit of a risk.

When Hydefy got started, there were maybe three other companies tackling alternative leather. Now, there are over 70. Novelty will only get you so far. For a product to endure, it needs to have a unique feature, value, performance, or something that goes beyond. In our case, we anchored on performance attributes and durability. With other products in our pipeline, we offer not only performance and durability but also customized aesthetics and optical effects, providing designers with something new. When the economy is strong, sustainability may be of interest on its own. When the economy’s not doing well, some of the first things to go are R&D, sustainability, or other nice-to-haves that don’t directly contribute to the company’s P&L and performance in the short term. It becomes even more important to have product features that go beyond traditional options.

Environmental regulation is really interesting because it changes the baseline. At a certain point, the base materials that manufacturers work with may no longer be viable, in which case they might have to scramble to find other options sooner rather than later. Personally, I would not build a whole business that relies on a specific regulation being passed within a certain time frame, because we have seen how unpredictable that can be. However, if new innovators are considering which materials to pursue within the biomaterial space, regulation is worth examining, as it can completely alter the rules of the business overnight.

Keren Ruth Wong: Ultimately, the breakthrough product isn’t just going to last because it’s shiny and new. It has to be attractive enough to sustain a business.

Rachel Lee: Totally. And it needs to align with the metrics that your customers care about. In our case, there are multiple “nested” customers. There are designers who value a material’s novelty, aesthetics, performance, and so on. Then, there are the strategy and sustainability teams, which focus on risk mitigation and carbon emissions. A material needs to be able to compete on all the factors. It’s a complex ecosystem of decisions.

Keren Ruth Wong: So, Climate Week NYC is underway, and Stella McCartney is being honored for her sustainability leadership. What does it mean to you to see a brand you work with be recognized this way?

Rachel Lee: Stella McCartney is not only at the forefront of publicly advocating for more sustainable practices and influencing key decision-makers, but also acts on her words by collaborating with numerous companies, such as Hydefy, as well as with some of our peers, who are working on equally exciting, bio-based, next-generation materials. It underscores the crucial importance of partnerships among like-minded individuals and groups in driving change forward.

Keren Ruth Wong: Looking ahead, what does success look like for Hydefy, whether it’s in fashion or any other categories? Where might Hydefy be making headlines next? 

Rachel Lee: There’s, of course, the typical business success around other collaborations we’re working on, which, hopefully, we can talk about soon. And then there’s thinking about our next wave of products. We’re continually striving to enhance our materials, making them stronger, softer, and more sustainable. 

But success is not just about our bottom line. For me, success would be if we encourage new innovators to enter this space. Or, if more brands adopt some of these materials. Or, more importantly, if we can shift traditional companies, such as large tanneries or chemical companies that produce plastic to develop more sustainable products. If some of the major manufacturers adopt greener chemistry, that will truly have an impact. Hopefully, Hydefy and other innovators in this space will demonstrate that there’s demand for creating more nature-friendly alternatives to the mostly petroleum-based ones, and move everyone forward.

Keren Ruth Wong: If you could wave a magic wand and change how the world thinks about materials, what would you wish for? 

Rachel Lee: First and foremost, I would want us to think about materials more. Whether it’s the laptop that we’re working on or the clothes we’re wearing, where are these materials coming from, and where are they going in their afterlife? Once we start thinking through these questions, I want us to evolve in how we think about the cost and value of these materials. The true value of a material should encompass its lifetime value, durability, circularity, carbon footprint, and impact on human well-being throughout the supply chain. My hope is that we can start moving away from a system that views materials as commodities and begin to appreciate them for their true value, which I believe is the precursor to any meaningful change.

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