Chobani: Hamdi Ulukaya (2022) | How I Built This with Guy Raz

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no english no money and somehow figured out how to build the biggest yogurt brand in america and since i last spoke with hamdi in 2022 the company's done some pretty big things which i'll tell you about at the end so for now enjoy the show i used to get really upset when i see yogurt on the lid on the lid you didn't want to see it on the lid you wanted to be so perfectly Perfectly smooth in the cup that it wouldn't touch the lid.

Yeah. I would open a cup, and if I see yogurt on the lid, that was a bad day.

You were totally obsessed with it, as you should be, because you're trying to make a product that's so good that it's going to knock people out the first time they try it.

Exactly. I have no luxury of, oh, I wish I had done that, I wish I had done that.

This is one shot. If it's not successful, I'm out.

Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I'm Guy Raz, and on the show today, how Hamdi Olakaya arrived in the U .S. with no money and no plan, bought an abandoned yogurt factory, and built Chobani into one of the top -selling yogurt brands in the U .S. If you were to walk up and down the yogurt aisle in American supermarkets in the 1980s or even the early 90s, your options were pretty slim.

You'd see Dannon, Yoplait, and supermarket brands.

And what we now call Greek yogurt was almost nowhere to be found, and mainly in small specialty stores.

Which is kind of crazy, because today, Greek -style yogurt accounts for 50 % of the entire $8 billion yogurt market in the U .S. That's roughly $4 billion of Greek yogurt yogurt sold each year in America alone.

And the brand most responsible for its rise?

Chobani. Chobani's founder, Hamdi Ulukaya, is from Turkey, but Greek is the term Americans use to describe yogurt that has most of the water strained out of it, so it's thicker and creamier than other kinds.

It's the type of yogurt that Hamdi ate when he was growing up in a remote part of eastern Turkey.

And when he emigrated to the U .S. in the mid -1990s, he had no intention of turning the thick, creamy yogurt of his childhood into a billion -dollar brand.

And the story of how Hamdi came to do exactly that is one of the most improbable and yet inevitable stories we've ever told on the show.

Improbable because Hamdi barely had any money when he got here.

He spoke almost no English.

He had no background in business.

this. He'd grown up in an isolated community of shepherds and farmers.

But that is one of the things that makes his success, well, almost inevitable.

Because those shepherds and farmers, they knew everything there was to know about cheese and yogurt.

And from an early age, Hamdi learned how to make it himself.

He also learned how to be incredibly resourceful and, and, as it turns out, incredibly determined, even stubborn when he had to be.

He would need those traits to navigate the many hairpin turns he encountered while building Chobani, starting with a feta cheese business that almost drove him into the ground.

Hande Ulukaya grew up in the 1970s and 80s near a tiny town in a Kurdish region of eastern Turkey.

He lived in the mountains with his family in a semi -nomadic community.

community the nomads were really isolated from the everyday life yeah we kind of we were kind of people like from mars really we would come to town and buy our flowers and sugars and whatever it is and then the second we are done we are on our horses and and mules and we are up in the mountains right so we don't get involved with anything yeah and the only thing that we has exposed to stories outside of that little town and the mountains is the people who come back from the big cities, whether for military service that they have done or they travel for a reason of selling the cheese or bought

some grains, and they will come up with stories and what they saw.

But we really were very much isolated from the reality of lives.

Mm. From what I've read, your dad had quite a successful cheese making business, right, in town.

Yeah. So, he was Aga.

So, Aga means he's the leader of the tribe.

And my father kind of didn't want to follow that tradition, but he was kind of natural leader.

Now, because you're Aga, you don't have other things.

Like, you know, we didn't have bicycles, for example.

We didn't have toys.

We ate the same thing.

We had the same conditions.

We live under the same tents.

So it didn't make it too much difference in life.

But what it did is you had a reputation.

People will trust you.

They will value your opinion.

And usually you will buy all the other people's cheese and you combine them and you would – my father would take it to big cities and sell them.

Right. You know, it's interesting because when you hear like semi -nomadic, you think – I think people think like the steppes of Asia or Tibet or something.

But, I mean, when you grew up, when you were a boy, like, you were more or less, you know, I mean, you had everything you needed from what I understand, right?

Absolutely, yeah. Yeah.

You weren't living, like, in a dirt room sleeping on the ground.

No, no, no. We had a, you know, decent life.

I don't think we called ourselves poor.

We never considered ourselves poor.

You know, we considered ourselves lucky.

And you had television, refrigerators, and ovens, right?

Later, yeah, later.

Yeah, when it arrived to town, we would afford to be able to buy TVs and refrigerators.

I remember my mom, when she got first time the washing machine.

It was just fascinating.

We would all watch it how it does it, you know.

Gather around. Yeah.

Yeah, it was decent life, absolutely.

You did go off to college, from what I understand, to Ankara University.

Yes. And from what I gather, from what I understand, you were a student there during a particularly volatile time in Turkey, especially for people like you, for ethnic Kurds.

And you became a bit of a political activist at the time.

You were, I guess, even involved with some left -wing and socialist groups, which I guess made you feel like Turkey at the time wasn't the right place for you to live.

and and so you decided to leave the country yeah exactly i thought okay i'll go to europe just because everybody else did at the time and i had a passport luckily so i was thinking like i would go to france i would go to germany or somewhere around in europe and i was talking to my friend a stranger who i shouldn't say stranger it's a person when i helped my brother in his stores he He would come every evening around 5, 36 o 'clock.

Yeah. That guy heard me saying to my friend that I'm going to go to Europe.

He just said, don't be stupid.

Go to America. And I remember telling him, why would I ever go to a capitalist, imperialist country that has done all these bad things?

You know, that typical language.

the language um he said you think europe is good go to america and if you don't like it you can always go to your europe so i dismissed them i said get your eggs and meat and go to your place and i'll see you tomorrow um that night i couldn't sleep i i thought about what that guy said now i had no knowledge of america other than what i saw in movies and tvs so i waited it that day, the next day, until that guy showed up.

And I put him on the side and I said, tell me more.

How do you know America?

How do you go to America?

What can you tell me more about it?

Turns out that he studied in the US and he knew a lady in the center of Ankara that had an agency that would send students to universities across the country for learning English.

And he gave me her numbers and he said, go to this person, go to school, try to learn some language.

If you like the land and if you like the way of living, you can stay and further study.

And if you don't, you can go wherever you want to go.

So you basically came to the U .S. under this, on this program to learn English, to study.

And where did you land?

Where did you arrive to?

So I go to this lady, and she said, okay, so you want to go learn English?

I said yes. And she says, where do you want to go in America?

I said, I don't know.

So she opened this map, and she was telling me, and I remember like yesterday, oh, I have school in Boston, I have a school in Delaware, I have school in New York, and she was going on.

And I said, okay, stop New York.

New York is good. And then she opened up another map and says, where in New York?

I have few schools in New York.

And that was the first time I realized New York is not a city, it's a state.

So she had a school in Albany.

She had a school in Manhattan.

And I remember saying that, you know, those big buildings and a big town, big city, not in there, but not too far from there either.

So she said, okay, I got you.

And two weeks later, I had received the acceptance form.

And this whole thing happened within a month.

And I went back to my hometown where I grew up and my mom was there and I spent a week there with my mother and probably one of the hardest goodbye of my life my mom was old now she couldn't go up in the mountains anymore that it is at the time where you start seeing snow up in the you know summits of the mountains in it and you know this is the time that the The families are coming back.

And I dropped her in the hospital where she needed to have a checkup in the town.

And we hugged, and I said goodbye.

And I had a nephew, and I was taking him to Ankara to his dad.

And I was driving. This is one of the few times that I started to learn drive.

And I was driving from town to Ankara.

and when I left I saw my mother on the rear mirror and that picture I remember always in my life and she's having that motherly walk on the streets towards the hospital and my nephew tells me uncle why are you crying and I say I'm not crying it's raining and it was raining from the window that was my last goodbye to life of tribe, my last goodbye to my town, all the life that I had in those mountains and the tribes the Shepherds, all the conflicts, all the university, everything that was designed to go on for me in that life.

I just go back to that moment, and that goodbye, and within two weeks I was in New New Jersey.

That was the last Turkish Airlines landing in New Jersey.

Wow. And I think you ended up starting out at Adelphi University on Long Island.

Is that right? Yeah.

Turns out that acceptance was Adelphi University in Long Island.

And it was one of the most expensive English class.

And I had $3 ,000 in my pocket.

My brother gave me from Istanbul.

So you arrived with $2 ,000?

Three. $3 ,000, and you get to Adelphi to study English, and how did it go?

Or how long did you last there?

Because I don't think you were there for very long, right?

A month. A month, okay.

Yeah, just a month, because the $2 ,000 of it was spent in the first month.

You're running out of money.

I was literally running out of money.

I couldn't. I had to learn how to speak.

I had to learn. I had zero, like really zero English.

You had zero English?

Zero, zero. That's amazing.

that's 1994 it's not that long ago yeah this is october 1994 um and you're like a fish out of ocean it is this whole life has dramatically changed in so fast i wasn't even having mental preparation for this yeah 23 years old 22 years old um you know it's not easy it it must have been incredibly lonely very very but i have other worries what do i do for living what do i how How do I pay for the school?

Where do I work? Am I allowed to work?

How do I survive? Who do I trust?

Who do I talk to? And all that kind of stuff.

Yeah. And I think at this point you had transferred to Baruch College in Manhattan.

And you were still studying English there, is that right?

Yes, exactly. And a few months in, a teacher at the Baruch College gave a homework for language.

And she asked us to write something in English how to make.

And I understood that part.

And I wanted to write how to make cheese.

Where the assignment was how to make anything?

Just something. How do you make something?

So with the help of someone in that place where I was living, I tried to write how to make cheese.

And then a week after, this amazing lady teacher, teacher she comes to me with a paper in her hand and tries to tell me with a very passionate voice I don't know if she's angry at me with what I wrote or if she's trying to tell me something I don't understand so I brought another Turkish student from the other class and and ask him to tell me what she was trying to tell me so it turns out she had a farm in upstate New New York she had goats and cows and she loved my paper and she was inviting me to her farm for a weekend so we can make some cheese together wow because you of course knew how to

make cheese because you'd grown up making cheese I know it's like yeah and she had to happen to have the uh the raw materials but just didn't know how to use them yeah and actually the the part that shocked me that in New York there was farms I mean I never even imagined that there were farms or the animals I mean I thought that was in our part of the world I mean I never I never thought about it so I was having a hard time and I can't wait for the weekend to come she tells me which bus to take and where she's going to pick me up and she wrote down everything if I get lost so I can ask people

and she put numbers and she picked me up from the bus station in Albany and then from the Albany bus Bus station is another hour drive to the border of Vermont.

You know, this beautiful, I mean, as I'm going, I'm just, I can't believe what I'm seeing in these hills and the mountains.

I feel like I'm back home.

And it was a simple farm and that they were professionals, a husband and wife, one a teacher and one was an engineer.

And they wanted to have a farm.

And it was their weekend, like their weekend home?

Yeah, they would come for the weekend.

So you get up there and what do you do?

You're there for the weekend.

So what did you do?

How do you teach them how to make cheese?

We made it from the goat's milk, which is the closest to sheep milk that I grew up with.

And in the evening they made sandwiches.

They made fire and we sit around the fire, which is, you know, that's what we used to do, you know, when we were up in the mountains.

I had the best time and the end of the second day as I was getting ready to go to the bus station I said um what would take like in that line I don't know how I said it for me to stay in the farm and work in the farm and go to school from here um she I don't know what she exactly said I think there were some issues with it.

But a month or two months later, she said, you know, if you still want, you can come and stay in the farm.

Huh. So she was offering you to go move up there.

Yeah. When I came back, I made my mind there is no way.

No way I'm living in the city.

I'm moving somewhere up there.

Definitely. Because now I know a place like that exists.

want to be around goats and sheep exactly and trees and rivers yeah I get it I totally get it so so so she offers you to move up there and and you took the out we know you took the offer I jumped you jumped oh my god I jumped what we can do for for was she offering to pay you too or were you just going to figure that out on your own well I don't think they could pay me yeah but I could live and help right so that's that's kind of how it could and I till I get the job or I move out and all that stuff.

But it ends up being that I lived in that farm for a year and a half.

And what did you do?

I did everything. I did everything in that farm.

And you're living there by yourself in rural New York, upstate New York, on the Vermont border.

Just you, this kid from Turkey.

That's exactly how you describe it.

This kid from, you know, the Kurdish kid from eastern part of Turkey living in a farm.

And what do I do? so I wake up five o 'clock in the morning I gather the cows and I put them on the lined up I milk them I water them make sure that the calves are fed and then I will drive 60 miles to Albany to go to school in Albany continue to learn English.

Oh wow and you did that every few days?

Every day every day I drive.

And and by the way Hamdi did you have any friends I mean you're like Like in your 20s, you're a young guy.

Were you just like milking cattle?

You're working on a farm, going to school.

Working on a farm, going to school.

In the last six months, my brother, my younger brother came and joined me.

Not much friends. The everyday farmers.

I interacted with farmers.

And really, I think I got to know America really well because I moved up there.

And I got to interact with farmers.

I got to interact with residents, real people.

In New York, really, you have people from all over the world, right?

So you have Turks and everybody.

Up there, I was probably the first person from Turkey that I've ever seen.

Yeah. All right, so your brother comes and visits you while you're there.

And then I think the following year, 96, your dad comes to visit you in New York.

Yes. The simple way I've put it in is my mother sends him to say, go check them out and see what they're doing.

Right. and then he comes and I'm trying to figure out what I'm going to do with my life I don't know and but one thing is for sure we have to work we have to make some kind of income and he said seems like there's not good feather cheese in here your dad when he visited he noticed that that the well what we might call feather cheese right is not good here and it was not good it was pretty awful Yeah, it was pretty awful at the time.

And just to be clear, like this is something that he would just eat for breakfast every morning, right?

He would have feta or, I mean, olives, right?

This is kind of a traditional Turkish breakfast. Right.

And he tasted and he says, this is really bad.

Is there anything good?

I said, no, this is it, what we can find.

And he said, wow, why don't you ask your brothers to send you feta cheese?

And you can sell it here.

That was the big idea.

Yeah. So I got to work and found an Armenian distributors who carried Middle Eastern products based in Queens.

In Queens. Okay, so you found, and you called them to see if they would be interested in carrying your cheese?

I called, and I went to visit with him.

So at that time, I got some samples and stuff from back home.

My brother sent it to me.

And I went to visit, and I said, we make this cheese.

Would you be interested buying it?

And he says, well, you have to know the law.

It has to be 100 % sheep milk.

Otherwise, it will be exposed to duty.

It will be too expensive.

All these worries and questions.

But the answer was, yes, I will consider it.

And that was the beginning of my business journey.

Until that moment, I had never been involved with business.

Wow. Yeah. Can I ask you a question about the cheese?

So this is cheese that your brothers were actually making back in Turkey.

Yes. And was the cheese in jars?

Was it canned? I mean, how did they ship it?

Was it shipped in coolers or did it not require cooling at all?

How did you receive it?

Oh, definitely cooler.

Yeah, definitely cooler.

It has to be refrigerated.

Right. And we made really good money on importing that cheese, at least compared to, you know, working here and there, right?

So we don't have a lot of expenses.

Right. It was just you and your brother and just making sure the cheese arrived, and that's all you were importing, just the feta.

Yeah, that's it. Yeah.

But then my mother got sick, and I went to Turkey, and I came back with my mom, discovered that my mom had a very severe liver disease that we had no idea that she had it.

Then six months after she passed, I had this time of being, again, feeling like numb.

it was this time of total loss because she was the most important person ever been in my life and she was the most important person in the family she you know my my father was a big shot and all that kind of stuff but really it was my mother the reason that I was in New York City that she made me to be that person to be independent and come here and of course my god the love that she had and caring that she had and she made us I can speak on my own she made you feel like you were the most special person in the whole universe and made sure that you believed in it she was my backbone she was everything

that I was and now she's gone so it was a very very massive event And it was extremely difficult to really stand up and get out of the bed for a long, long time.

Wow. I guess you were eventually able to somewhat recover from that and get back to the business that you were running with your brother Bilal.

Yeah. But from what I gather, you started to – maybe both of you started to think, you know, hey, we can probably make more money or grow our business if we made the cheeser or we made it here in the U .S., right?

Yeah. How did you start to – tell me about that thought process.

When did you start to think that that's what you should do?

do? It was another idea of my father of saying, this importing thing is with the currency going up and down and all the things that are happening, and it's not a very hard cheese to make, and you can even make it with the cow's milk.

Why don't you find a place where you can make this cheese here?

Given there were domestic feta being made here, the problem was it was horrible, literally awful, it was so bad.

And say, okay, people are buying this stuff, so if you make it a little bit better, you know, it's endless.

So this is a no -brainer.

The question is, okay, where do you make it?

How do you make it?

What kind of environment, what kind of place?

And how do you put this together?

When we come back in just a moment, how Hamdi starts his own cheese business, but switches to yogurt after pulling a vital piece of junk mail out of the garbage.

Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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Hey, welcome back to How I Built This.

I'm Guy Raz. So it's around 2002 and Hamdi has decided to start making and selling his own feta cheese.

He gets a local development grant to open a small factory in Johnstown, New York.

And now he needs to get hold of some vats for making the cheese.

How do I afford to bring the vats?

Vat is this stainless steel vessel, let's say 2 ,000 pounds.

They can go 10 ,000 pounds where you pasteurize the milk.

Right. It's like, how do I afford to these equipments?

And there was a local bank called MBT in Johnstown.

The gentleman there said, you know, you can get the USDA to have a loan guarantee, meaning it gives some kind of comfort to the banks.

I guess that's the way to put it in place.

That they will lend to the local businesses to start their business or expand their business.

and if it goes wrong, then the risk is 90 % removed.

And they set up the meeting with a gentleman out of Syracuse of the USDA and he came and met with us.

And then we heard back after, I don't know how long, a month or two, that we were given 90 % guarantee or the banks was given 90 % guarantee.

It was mind -blowing.

So that basically took care of that part.

All I had to worry about is the 10 % and working capital and all the unthinkables.

Yeah. All right. So you get the loan, right, to make this happen.

And you've got two things that you have to do.

You have to start making cheese, and then you have to start selling it.

So was, first of all, the making cheese, because I think the factory opened in 2002.

You called it, it was called Euphrates.

This is the company that you and your brother started to make cheese.

Exactly. And did you, so you made cheese.

You had a pallet by that year for sale.

So I'm assuming the making the cheese part of it was not that hard. It was the everything else that was hard. Or am I wrong?

No. I, you know, in theory, it should have worked.

You know, you have the milk.

You have the culture.

And it should work.

I had one of the worst time making the cheese.

Why? Why? You know, it turns out the theory and the reality is two different things.

But you knew how to make cheese.

You've been making cheese for years.

Yeah, the milk is different, right?

And then you make the cheese, and then how it stays after two months or a month or two weeks.

The texture is not right.

I mean, it's close, but it's not perfect.

You're saying getting the consistency is hard because every milk, every shipment of milk is different.

Every shipment of milk is different.

Now, we made cheese with unpasteurized milk.

Now you're pasteurizing and so you have to fine tune that and you're relying on culture companies, you're relying on equipment companies to be able to make that kind of adjustments.

So there's a lot of trial and error.

We couldn't do all of those things until we had the vats in place.

Yeah. By the way, how many people are working there?

Five, 10? 10, 12 people.

Yeah, I'm making the cheese.

I'm packing it. I'm salting it.

I'm putting it in the pails.

pails you know 10 pound pails or 20 pound pails whatever it is where did you find where did you find customers to sell all that cheese so that's a good i start looking at greek distributors now because now i'm really making feta like really feta yeah this is not a table cheese anymore it's a salad cheese it's a cheese that they put on their greek salad right so um who are the buyers of this cheese are the Greek distributors.

And what they do is they deliver to diners.

You know, these diners are all over the...

Northeast, there's Greek diners everywhere in the Northeast. Everywhere, yeah.

It's the to -go places, right?

So in these diners, one of the most popular thing that comes even without your ordering is the Greek salad.

And that Greek salad has...

Chunks of feta on it.

Yeah. Yeah, but soon enough, I realized that this is not a huge margin thing.

Yeah. You have large manufacturers, even though their product is pretty awful, you have these large manufacturers out of Wisconsin that make millions of pounds.

Right. They ship it all around the country.

And you look at the diners, the quality is not the number one thing, really.

It is, but it's not.

He said, yeah. He says, I get it.

But I put onions in there and I put black olives in there and I put in black olives and I put the olive oil.

No one cares about the feta.

By the time you, yeah.

Yeah, I get it. I get it.

And were you going literally from diner to diner or were you working with like a big distributor who would then do that for you?

Yeah, so not big, but the distributor.

You can't go diner to diner.

Yeah, it's not possible.

You can't scale that, right?

Yeah. So the first eye -opening for me was I called this distributor in other Syracuse.

He says, can I come and show you some fat?

I said, sure, come.

And I go and I show him.

He says, okay, I'll buy it from you.

And I'm like, wow. I feel like this is cool.

I said, how much you buy?

It's two pallets. A week?

No. Every other month?

Oh, God. I mean two pallets every other month it's not even a fraction of it's nothing yeah basically so how many of these people I have to have to be able to even pay for my expenses it is at this point I'm saying what an F I did now like what I get myself into yeah I read I read something you said you said that the years those two years from 2002 when you started the factory Euphrates in 2004, the first two years, you said it was the most difficult time of my life.

Yes, it was literally the most difficult times of my life.

And I have gone through some difficult life before that, but this was really, really hard. There was no way I could survive.

There's no way this could make it to the other side.

There's no way. Every day this business was going to die.

Every day? Every day, every day.

I don't have resources.

I don't know the knowledge.

I don't have experience.

I'm new to the country I getting myself into this I'm already not complete since my mother's dad I mean it's it's a lot of emotions and I remember there was a little Creek next to the you know plant and I will go there and I would cry and cry and cry by myself and then I will come up after I'm done into the inside And go inside the factory and start making cheese.

But it was that two years made me who I am today, but also it was one of the most difficult times of my life.

That two -year period, you got through it, but you did start to turn a profit after those two years.

A small profit, I think.

Yeah. So I realized that I'm not going to be able to sell the feta amount that needed to pay all my expenses in this place to one person or two person or five person.

I have to get it as much as I can.

so that means that I have to go between Boston or New Hampshire or Maine to all the way down to Florida and eastwise maybe Detroit and Chicago and find all these small distributors that would buy one or two pallets a month.

I slept on the roads with the van and meet all these amazing small distributors family -owned small distributors yeah and I end up getting them them, hundreds of them.

Yeah. Because I think your sales were, I think you hit about $2 million in sales by 2005, but you had like 40 employees.

So no one is getting rich, you know, off of $2 million in sales and 40 employees.

No. I didn't think that this would make me rich or you would get rich out of this.

Right. All I wanted to do is survive, you know, and two years, 2004, you get it and you say, okay, I think I survived.

I think I survived.

Yeah. Like middle of 2004, I felt like I could breathe, yeah.

Yeah, wow. But that year, something pretty pivotal happened.

A property came up for sale, I guess, not too far from there.

Tell me the story. How'd you find out about this property?

What was it? So here's the thing.

I'm really a messy person.

Even today, I'm pretty messy in my office, in my desk.

so once maybe a month maybe every couple of weeks i decide that i'm going to organize my desk i'm just going to go through all the documents all the papers all the letters you know yeah and you open the envelope sometimes you don't even open the envelope you look at the where is it coming from and you know this is somebody's trying to sell cars somebody tried to sell mortgage somebody tried to sell credit card whatever that is you know those junk mails and you just tear them off and put them in there and every once in a while you see an interesting envelope yeah so i come to this one and i open

the envelope i don't know where it comes from of course it's interesting i open it i look at it it's literally an ad um it says fully equipped yogurt plant for sale wow and you can tell that's a really really old i mean the picture is also says 1920 you can tell it's an old and of course you know no interest so just like the other ones that i don't remember what it was, I throw them into the garbage, I continue and you're going through like 20 -30 minutes and I still don't know why I went back to that garbage and I picked up that page now my tea remaining's in there my, you know, my cigarette that it was put

it into a tea cup that is also in there and I look at that picture again and I'm staring at it and there's a big number on top that turns out that it's a real estate agent from Utica.

And I called, the person answered and said, yeah, this is a yogurt factory.

It's an old one. It's craft and they closed it and they're selling it as is.

And I asked the price.

I said, what's the price?

He said $700 ,000. For a yogurt factory?

Yeah. And I'm looking at this whole thing, and you say, even if it's the worst condition, how could this be $700 ,000?

You mean it was underpriced?

So cheap. It's very cheap.

So I thought he meant $7 million.

You thought, based on the photo you saw on the postcard, that it was $7 million just because of the equipment?

yeah because I know pretty much what things cost from the experience of putting a smaller version into our plants yeah it's 20 ,000 square feet this one says 67 ,000 square feet so it's three times bigger and it was owned and it was owned by Kraft at the time they were selling it yes okay yes so it was enough interesting so I said can I come and see it tomorrow and I picked one of the guys from the plant who was working in the production.

And it took us two and a half hours to find it.

It was just back roads and country roads.

It's not like next to the highway.

And I saw it from a distance, this old place.

And I get there, and you go up, and then someone named Rick Lake, Rich Lake, says hi I'm the production manager the plant manager is not here I was told to give you a tour and he takes me to the plant and it's basically every time he goes into places who turns the lights on it's not a working factory anymore it was until maybe four months ago five months ago yeah so that's basically the The last week of the plant, all employees are 55 people in the last six months.

They're just, I guess, closing down, slowly bringing down, shutting things off.

I am not seeing the buildings anymore.

or I'm seeing, I'm reminding this sad feelings that only would come to our town where I grew up if somebody died in the Euphrates River.

And for months, for weeks, there was these heavy feelings all over the town.

You felt that when you got to the town?

You felt it, yeah, you felt it.

Wow, like a funereal feeling.

Yeah, I felt like somebody died.

Because they were about to lose their jobs.

They were not only losing jobs.

They're losing a place that's been there for 70 years.

It was a sign of life, really.

That steam came out of that place.

It was a sign of life.

Everybody's grandfather worked there, mother worked there, father worked there.

It was just walking in that plant was walking in a cemetery.

It was that kind of.

And by the way, from what I understand, this was a place that made cream cheese.

Philadelphia cream cheese was made there.

Exactly. And yogurt too.

Yes. Breyers yogurt.

Yeah. And I'm curious because from what I understand, from what I've read, it was really old.

I mean, it was like crumbling paint and it was not in great shape.

It didn't look good.

Yeah. And there is a smell, old smell.

Like old, just kind of stale or, you know, kind of.

Yeah. old cheese smell.

Yeah. Everything is old.

The biggest important things that the real estate agent keep telling me is that it is as is.

We don't take any liability.

Whatever the things that you find is good and bad, it's all yours.

And I left that place after a couple of hours.

And then when I left, I called Mario Papa, who was my attorney in Johnstown.

And I called him up and said mario i find this place i didn't think that i would be interested walking in but now i just left it's a really amazing place it's got everything uh i can make yogurt there and i want to buy it and i'm like i'm just like you know when when you see something you just call and you don't make sense you throw all the words that you know into it and you're excited and all that kind of stuff this guy's like wait wait wait wait wait wait just wait hold on hold on tell me what you think who owns the company who's closing it what kind of place and the guy said Hamdi this is the largest

food company in the world Kraft yeah yeah wonderful and then getting out of yogurt business they're closing the factory who the F are you you think that you can make something out of this which is a fair question I mean if the biggest one of the biggest food companies is getting out of the yogurt business at least there in that factory, why would you think you could make it work?

He was asking you. Fair question.

Yeah, makes no sense.

Very fair question.

And I said, no, no, they don't make good yogurt.

I can make good yogurt, and I know how to make good yogurt in Turkey, and people love it.

I've seen it in New York and all that kind of stuff.

And he said, $700 ,000, right?

I said, yeah, it's cheap, $700 ,000.

He said, you don't have $700 ,000.

He said that to you.

He said, you do not have $700 ,000.

You will never have $700 ,000.

and if anything you haven't paid me in the last six months I have bills it just basically said and it was true I had not so he said you just made it I know it's been painful for the last two years you just you just can't breathe now don't do this to yourself I know you get excited about things but just just breathe which is very good advice I mean it's good advice because he's trying to look after you he knows what a grind it was the previous two years to make the cheese factory the cheese you know plant barely profitable and he knows that you're in for a nightmare if you try to do something new

now yeah it's he thinks that this is the stupidest thing yeah and I took his advice very seriously he was right yeah and I am in my office maybe a few weeks after I have this regional bank it's called KeyBank.

And, you know, they're salespeople.

They go from businesses to businesses in the communities and say, what can we do?

Do you need anything?

You know how they are.

And there's this two gentlemen shows up.

One, his name is Pat Bucci.

And then he has another person next to him.

His name is John Ryder.

And I said, Pat, I just went to this place and I saw this yogurt yogurt factory and they're selling it for seven hundred thousand dollars and you know i i call mario mario think it's a stupid idea but i thought you know if i get this place i could make some really cool yogurt out of this place and i keep talking about and he says hamdi you know we are partnered with sba small business administration and if we get their backing we can come up with a plan I mean of course I have to go look at the plant and look at the equipment and all that kind of stuff we could make this happen it's a small chance

but it's possible wow it's worth pursuing and says why don't you make a business plan and you know I'll send you some applications and you fill it and we can look at this now I said business plan I've never done a business plan how do you make a business plan yeah uh in the last couple of weeks I put a business plan together a couple of pages he helped me how to do it and then few weeks later we went to few days later we went to the plant and see it and we kept in contact with the real estate agent to tell the to make the story short they got you the loan they got me the loan wow can i can i ask

you a question about the business plan for a moment i mean your plan clearly was to make yogurt but what were you you going to do that was different how are you going to i mean if if if craft wasn't making it work what was the thing that like when people said to you hey hamdi what are you going to do what would you say um so here's the little bit of background you know i don't know if it's i mentioned we eat so much yogurt in turkey right so yeah breakfast lunch dinner i mean you can't imagine a meal or time or occasion that you don't somehow consume yogurt right but compared to what what it was here

the yogurt was 10 times worse it it was literally horrible like it was awful stuff right and i thought it's milk and culture there's no cost side of this it's just milk and culture it's just knowing how to make it and i thought people will love it why would it not if there is a better yogurt that is made i thought people will love it if they are buying this shit they They could buy that stuff.

If they're buying that stuff, they would buy that thing.

That was my data point.

And then the second data point for me was, you know, if you meet people and people ask you where you're from and you say, I'm from Turkey, the next thing they say, oh, I was in Turkey or I was in Greece.

And within a few minutes, the first thing that comes up is the yogurt that they had in Greece and Turkey.

You know, with honey and walnut and that was one of the best things ever.

So there is a disconnect between how people are talking about it and how the market conditions are.

So you have the confidence that this can work.

You get the money to buy the factory.

And from what I understand, that summer of 2005, you spent a lot of that time just getting the factory like cleaned and painted and repaired.

Yeah, exactly. So within that, I have four factory workers that I hired.

Actually, the plant manager who was closing the factory, I asked him, I said, if one day I wanted to bring this factory back, who are the people you would recommend for me to hire?

And he recommended, he says, you've got to get Maria because she knows all the vendors.

You've got to get Rich because he knows all the production equipment.

You have to have Mike Allen.

Mike is the guy. The guy knew exactly where all the pipes were, where the lines were.

Because there was no drawings.

This was so old. No one had the blueprints of the plant.

So I had to convince Mike Allen to come back, which I did.

And then the wastewater side of things, that was Frank.

He knew how to turn that back on.

So I had those four people with me in the summer of 2005.

And they're questioning me.

They're looking at me.

he says like who is this guy how are we going to and I can tell the way that they are interacting with me that they're not overly excited they're not overly you know drunk with it uh but they're cautious at least they have a job and they're looking at me and saying what kind of you know ideas and improvements that he's going to make so I'm managing that human psychology at the same same time while I am not saying I don't have any ideas, but at least I'm not sitting around and doing nothing.

All right. One important point.

And I, you know, just to, and I think a lot of people know this, which is the reason why what we call Greek yogurt is thicker is because it's separated from the whey, right?

Because milk is 99 or 97 % water, right?

And then when you turn it to yogurt, there's still a lot of water in there.

So you've got to literally like put in in a centrifuge, spin the yogurt really quickly to get the water out.

But you did not have...

That's a very expensive piece of equipment.

I don't think it was in that factory, right?

Because this factory wasn't making Greek yogurt.

It was making regular American style watery yogurt.

You're 100 % right. Commercially, this cannot be done with a cheesecloth.

It needs to be centrifuge separator.

And these separators are, I would say, close to a million dollars by the time...

Million dollars. And by the way, you just spent $700 ,000 buying this production facility.

Yeah. So there's no way in hell I have million dollars to buy something like this.

I only have maybe a couple of hundred thousand that I can spare and that includes everything.

So I need a used version of this.

So I'm going on internet looking at everything I can and see if I can find something that is used.

So I found one in Madison, Wisconsin.

and I called the person they said they have it I wanted to go see it so I went to Chicago drive from Chicago to Wisconsin and in that drive basically I came up with the name Chobani Choban means shepherd in Turkish and Chobani in a little bit of different way of saying it is also means shepherd in Greek but the meaning of the word is always pure simple simple, you know, someone who helps, someone who leads someone.

It's a very beautiful word in all dimensions.

Yeah. And I was so excited with the name.

I couldn't wait until I get back to Chicago to go to my room and see if that Chobani .com was available.

And I guess it was because you got the domain.

Yeah. And so now you've got a name and you've got a separator to make the greek style yogurt so so what else did you need to do what what happened next so i spent an enormous amount of time about the cups you know what the cups is going to look like the cups for your yogurt that you were going to sell i was so convinced that if i am going to make this yogurt and is going to make it uh in this shelf it cannot be the in the cups that is available in this country it needs to be some european cups but the cups are as simple as it sounds if it goes into yogurt it needs to be fda approved so so you

can't just get the cups from anywhere it needs to be um fda inspected plant and i found out that there is a plant in bogota colombia that i went and they said we will make it for you we will sleeve it for you and we'll ship it for you and i said that was good because none of the packaging companies here would make it for me and this was going to be initially chobani was just single serving yogurt it wasn't like it in in the big tubs that you buy it in now initially it was just a small cup exactly small cups yeah and then I wanted to have a foil that every flavor has his own foil design on top

of it and at that time you know for now it's very very normal it's not a big thing but at that time people said why you know people never do those things and don't you don't you waste don't you Aren't you wasting your money?

Aren't you making yourself competitive and all that kind of stuff?

My view was I spent so much time making this yogurt and I think it's one of the best that I've made.

And people will not, you know, see the difference if I put them in the same cups.

So if I can catch their eye, have them to try it once, the yogurt will finish the work.

Got it. And that will be the conversion.

And the recipe is simple.

It's milk and a culture.

But I guess when you talk about perfecting it, it was about how long you sort of you heated it, you know, and how long you sort of let it kind of rest. I mean, because the basic ingredients, it's two things.

It's milk and culture, right?

That's exactly right.

And unless you make the flavor ones, but the basic thing is very simple, milk and culture.

And you don't want to use preservatives and you don't want to use any other ingredients.

So it was just trial and error until you find it.

it was yeah and really it was about it was about experimenting with temperature time and incubation and then you've got to blend it to make it creamy right right after you strain it the it's it's it's particulates you know you have small particles lumps yes lumps and you need to smooth that without breaking the texture right so yeah that's that's extremely important as well i mean i used to get really upset when i see yogurt on the lid you know on the lid i didn't want to see it on the lid you want it to be so perfectly smooth in the cup exactly it wouldn't touch the lid exactly i would open a cup

and if i see yogurt on the lid that was a bad day right right you were totally obsessed with it as you should be because you're you're trying to make a product that's so good that it's going to knock people out the first time they try it exactly i wanted to make it something that that they look at from every dimension this is something that they've never seen before and probably halfway through it would have made the job because this is huge standards i'm going yeah but i have no luxury of oh i wish i had done that i wish i had done this is one shot if it's not successful i'm out and i'm out in a very very

you know very bad way why don't we come back in just a moment how chobani starts growing so quickly that handi can can barely keep up.

And then how it almost goes bankrupt.

Stay with us. I'm Guy Raz and you're listening to How I Built This.

Hey, welcome back to How I Built This.

I'm Guy Raz. So it's 2007.

seven. The yogurt factory is up and running, and Hamdi has found the first retail location for his Greek -style yogurt, a kosher grocery in Great Neck, New York.

When I made that first yogurt, it took us all night.

Kyle and I, one of my colleagues who led the sale side of things, we were in the plant probably until like one or two o 'clock in the morning, and we made four flavors each about 50 60 cases and we shipped it to this person and i'm waiting for some kind of response how is that going to come and when i received the second order i called the person and i said what do you see if you could share me some some observation he says yeah you know he didn't say this is flying off the shelf he didn't say this is amazing he said well it looks like people are buying it and some people came back and bought again so So yeah,

send me some more. And that was encouraging.

Yeah. And then I guess pretty soon after you got into that kosher store in Great Neck, you got into your first grocery chain, which was ShopRite, which is a chain of stores on the East Coast. And that must have been a pretty big deal, right?

Yes. That is the biggest event in the history of Chobani.

Now, in order to be able to make it to ShopRite, or that kind of conventional stores, you have to pay what they call a listing fee.

And every cup, I don't know what it is now, but I think at that time it was $30 ,000 for each cup to be on the shelf.

Just let me understand this.

So when you go to a small kosher grocery store in Great Night, New York, you just send them a pallet and that's it.

But if you want to get into a big grocery store like Kroger or ShopRite, you actually have to pay them a fee to stock your products.

And it can be a lot.

It could be tens of thousands of dollars per product that you sell.

Exactly. And by the way, all grocery stores do this, right?

Target, Walmart, they all do this.

Most of them. And they do it because they can, right?

Basically. That's the only way.

That's a revenue generation for them.

And for a small startup, it's a big block.

If you want to play in the mass supermarket chains, you can pay, I don't know, if you have four SKUs, four products that you put on the shelf.

So four times, you know, $120 ,000, $150 ,000.

And $150 ,000 massive money.

And if it doesn't work within three to six months, it comes off the shelf.

So it has to perform to stay.

There's no obligation.

So it's a huge risk.

It's a huge risk. But here's the thing.

It seems to me the next logical step would be to go to Whole Foods and to try to get into Whole Foods.

Yeah. Which is easier in a lot of cases because there's a lot of autonomy and the buyers are regional and they don't have the high stocking fees or I think any fees.

So why wouldn't you just go down that route?

So I did not have huge interest on natural channels.

I wanted this product to be in a mass channels that ordinary people shop.

You didn't want this to be like an elite product.

Exactly. I was very convinced once I can make this the main channel and people tasted it, this is going to go up.

Everybody was going to be happy.

All I needed was one example.

And then the ShopRite guy said, how are you going to pay for the list MP?

And this is a true story.

The guy said, well, we need to get paid.

And we had no money.

And we said, can you take percentage of that 150 ,000 from each invoice when we ship it to you?

And the guy said, yeah, that's fine, but what if it doesn't sell?

I have no invoice, I have no, what am I going to cut it from?

I personally said, if it doesn't sell, I will give you the factory.

Wait, so he's saying, well, what if it doesn't sell?

You're saying, my factory's the guarantee.

Yeah, I said, I'll give it back.

And the guy laughed, and I think he found out that this is pretty crazy and bold, and he made a decision to take it and then and about two two weeks later I had a phone call from him he asked Kyle to call me and he called me and he says I don't know what you're putting inside this yogurt I don't want to know but I cannot keep it on the shelf wow when he called me that was the combination of three years of doubt hard work finding solution being on the road trying to figure out things and all that kind of stuff hassle that call really summarized the whole thing for me how is that possible hamdi

you got how do you just put it on the screen the thing is is that you put on the shelves and you still have to get people to notice it because you go own a grocery store there are 25 30 000 products how did people even know about it it was the cup it was just it was just the label it was bright yeah yeah it was just it's to look different yeah and then i priced it below my cost at that time you knew you were going to lose money yes i was It was okay to lose money for probably two months.

Okay. And by the way, how many shop rights were you in?

Like five, ten? No, no, it's all of them.

I think it was over 100, 120, something like this.

Wow, so. Yeah, you get into system -wide, yeah.

But I had a simple napkin calculation.

If I reach the 20 ,000 cases, I will break even.

And everything after that, it would be profitable.

And a case is how many cups of yogurt?

Twelve. Okay. So you were taking a gamble that people would just find out about this as shop rights and buy it.

Exactly. And when he put it into an ordinary shelf, like a common shelf where everybody shop on Yogurt Isle, I received an order and it said 25 ,000 cases.

And I'm looking at this order and I'm saying, is this 25 ,000 or is it 2 ,500?

I'm not sure. And I called Kyle.

I said, I said, is this accurate or is it missing one zero?

He says, no, that's accurate.

And I said, is this for a month?

He says, no, that's for the week.

Yeah, I'm wondering, Hamdi, I mean, this is a thing, right?

It sounds great. You're selling all this yogurt, which is exciting.

But then you have to actually fulfill those orders.

How are you actually able to make all that yogurt?

So that is… so you know you say you get this all good news that yeah he wants 25 ,000 cases the other one times cases and then you look at your blueprint you look at available equipment and the volume you look at all the limitations that you can think of and they all cost money right and how are you going to how are you going to meet the demand yeah so you're converting you know cooler space into a filler room.

We're converting toilets into the offices.

Whatever needs to be done outside of jeopardizing the quality of the food, we're trying to find.

I read that you were like, people were like sleeping in the factory because you literally had to fulfill these mass orders and you just did not have, I mean, the people and the facilities to actually do it unless you just operated 24 hours a day.

It is. I mean, you're talking about Thanksgiving, Christmas, Fourth of July, weekends.

Anyone who has a minute to spare, they're back in the factory.

And it's not even I'm asking.

They're doing it by themselves.

You have to realize, guy, this is a plant that was the last factory that got closed, right?

So you have a large corporation closed and left. They're looking at me and says, what are the chances?

And then they see the orders are coming.

and this is like, what the hell is going on?

Is this ever possible that this could happen?

So everyone went from complete disastrous mindset or soul set to exciting place where everyone got so elevated.

We were just high in a way.

Right, and you were chain smoking just to get through the day.

yeah and I was I was I was taking Tylenol Advil like nuts I was I was wow not you were not taking care of your health no I was physically mass most of the nights I'm sleeping on the floor on my office there there's an office I guess on chairs really eating pizza every day I mean it's it's pretty pretty horrible lifestyle yeah um all right so you obviously this thing is taking off and then you start to get more accounts and there's bjs and then and then costco um but you had to i mean now you really have to bring lots of people in and one of the things that you you did was there was a i guess like

a this refugee resource center like in that part of upstate new york And they had people who just needed work.

And you were like, great, we need people to work.

Tell me how you connected with them.

So this is how it happened.

Utica is about 30 minutes drive from where the plant is in South Edmonton.

And I lived in Utica.

Utica, New York. Yeah.

I lived in a apartment in Utica.

And I hear that people are settling in Utica as refugees from around the world and they're having a hard time to find a job.

Yeah. And I called the refugee center.

And I said, what is the problem?

And she said, these are people who have a right to work, legally settled, and they don't speak the language.

They don't have, you know, transportation or people don't want to touch it because it's an unknown and, you know, all the other social issues.

I immediately said, we can solve these problems. I drive from Utica to plant every day.

So why don't we get some cars and buses that people can come with.

and we will hire some translators and we will train them at the work and we will make this work.

And people had concern and said, well, are you sure how people are going to take this?

I said, I'm pretty sure.

I know my people. And that started very slow and the people who started working there brought their brothers, their sisters.

It became a community.

And I never thought that was a refugee work.

It was people in the community and an opportunity for them to participate as much as everybody else participating.

So you have the people, right, and you've got this plant.

By 2010, so just in three years, you're doing $260 million in revenue.

That's like, by my calculation, that's more than 150 million cups of yogurt that you're selling.

How do you go from maybe hitting 200 ,000 to 150 million cups?

How were you doing that?

Well, one of the best things that I had is the price architect that I put in place.

It was giving me enough profit to be able to invest back into the company.

So you could finance the growth entirely through the sales of the yogurt?

You could finance, because making more yogurt means buying more milk, means buying more containers.

Like, you got to pay for all that.

And that is usually when a business goes out to investors or private equity, you know, to bring in a big chunk of cash to scale.

You were able to do that just from the sale of the yogurt?

Exactly. And having a micro attention on the cost, keeping it extremely simple.

You know, at that time, you know, not only $250 million, until $600 million, I run that company on QuickBooks.

Wow. And everything, everything in Chobani was internally financed.

We never had an outside investors.

Right. So, I had over a billion in sales in five years and making really, really good margins, good profits.

Every penny. I had not even taken a penny from the company.

And I just put it back into the company and invest in equipment.

But here's a question, Hamdi, right?

You're this guy from a village in rural Turkey, right?

And it's a Kurdish village.

You barely spoke English when you came to the US.

Here you are now, okay?

So a couple of things I'm assuming start to happen.

First of all, the big, big brands, the Danons and you know, of the world start to see this and are like, we got to get into the Greek yogurt business.

But the second thing that I imagine is, you've got people coming up to you and saying, Hey, Hamdi, you're going to get crushed by Dan and you'll play the General Mills soon.

You got to bring in outside capital, you've got to blitz scale this thing, you've got to bring in a professional team to run it because you are not equipped to do this.

You don't have the experience.

You're going to get crushed.

And I have to imagine people are saying that to you.

They are. And I'm getting a lot of phone calls from private equity people, venture capitalists and all that kind of stuff.

I'm getting calls from the ordinary banks.

But this is the blessing I had.

I was isolated in that small town upstate New York.

I have no previous network of people in business.

I don't know anyone.

and I am kind of unreachable.

I have no board. I have no advisor.

I have no investors.

And the people in the company is factory workers and salespeople and that kind of stuff.

So we are kind of from Mars.

Right. You just had your head down just working all the time.

You weren't - I don't think it sinks at me that what I have just made it.

I don't even realize what it is.

until, like you just touched it a little bit, that I realized that this is how it is.

You build something, the big food is going to come with two things.

One, do you want to sell?

And in that is a hidden another information.

If you don't sell, I'll make the same thing.

Yeah, I'll crush you.

I mean, your big food companies must be coming to you and saying, look, sell to us, we can make this bigger.

You'll make a lot of money, but if you don't do it, let's do it on our own.

and you know, we've got massive marketing budgets, we've got a huge distribution network, like you're gonna be in trouble.

Yeah, that's very scary.

And all this time, I'm betting on they're going to be very slow, and they were slow.

So, by the time they wake up, really, I was at $500 - $600 million sales area.

Wow. And they did come, and they said, what about selling?

And the numbers were with billions.

Wow, they were offering you, and you could have just because you own the company, it was yours yeah it's a great great offer so now imagine this guy you know working in the factory 24 -7 living in a one bedroom apartment in Utica that the bed hasn't been you know fixed maybe chain smoking not taking care of himself drinking a lot of coffee eating pizza slices okay exactly and then somebody says you can't be a billionaire and i can't even spell billion you know really literally i didn't know how to spell billion so now that's you yourself having this real moment right um no one can tell you what to

do yeah no one can stop you what to do i have done no promise to anyone i have no partners it's just this thing is in front of me so there must have been a pull to just do it take the plunge hi imagine i am in upstate new york and i am mid -30s right maybe at that time i don't know close to 40 and i have offered this huge amount of money and yeah there's endless what you can do with this money yeah and i said no to it and i said no a few times and why i was more excited about the journey the these things was happening then the value was generating from it and it felt like i'm in the soccer game

i'm in the middle of the soccer game and i love it and i'm into this game in such a massive way and I'm completely elevated first time in my life I feel like things are coming out of my being that I didn't even realize it existed and I feel alive like the childhood I used to be is like I'm wondering what is behind that mountain what is behind that and I have this enormous amount of curiosity and I wasn't going to stop it for anything that in the world, that desire to see where this was going to go.

Yeah. But you clearly had enough confidence that your brand at that point, because I think by 2011, you were the number three yogurt brand in the country after Yopla and Danon.

But at that time, you knew that there was going to be an explosion of competitors.

Absolutely. And you weren't worried.

I was very worried.

I was very worried and when I said no to those things I knew that I needed to build another factory out west to make more you well to produce more obviously yeah to produce more and de -risk it you know be in one location and bring more innovation to it when people will copy the first thing I do I would be on my way to the second thing and third thing yeah and I built the factory in Idaho which I went to Idaho first time I said we need to build this factory really It's a million -square -foot plant.

Yeah. I think now it's 1 .4.

At that time, it was close to one million -square -foot plant.

Wow. And with 14 lines, we built it in less than one year.

Wow. So that really, it was in a borderline stupidity, meaning I underestimated how complex that was going to be and I underestimated how crucial would that be on the health of the company if I was wrong and if I did something not right.

And one plant or one location or early company's journey is completely different than the second phase.

And if you don't make that transformation, it's going to be extremely damaging.

And it became almost, the problem with that is you do not know how to make separation with your people that you started with when the company grows.

In other words, you had to basically get rid of some people and it's hard to do that because they were the loyal people who helped you start it.

Exactly. But you had to make some changes.

Yeah, we made changes after we hit the wall, right?

We had a quality issue with mold.

Well, this is in 2013.

I think you had a recall, which really was very damaging.

It was actually quite damaging for you because you don't use preservatives and you had some containers that got spoiled.

Yes. I will never forget that gentleman that came to our plant in Idaho.

He said, Hamdi, this is mold.

Mold is in the rooms, in the bread, it's everywhere.

everywhere. You know, you open the cup and you see green mold and it's not nice.

And it was a recall.

And as you said, it was very damaging.

But we came out, we fixed it, all the issues, and it took us three more years after that to get to the bottom of the structural issues, like peoples and all that kind of stuff.

But to my bone, to myself, I knew the investment in Idaho was the right thing.

What I would question now is the way that I did it, right?

I would have have been more prepared and I would have done in in stages I wouldn't do it in as fast I would be more cautious I would put more you know team members in place make some changes right because the the the mold issue came from that manufacturing plant in Idaho exactly right and there was a time that I will never forget which is another you know moment that I will always go back to file bankruptcy.

You were about to file bankruptcy.

Exactly. I've never talked about this anywhere before.

So that recall was that damaging you'd gone from?

It wasn't that damaging, but what it is is the banks got really nervous and they wanted their loan to be paid back.

And that loan was used to build a factory supported by EBITDA.

Now you have an enormous amount of losses because of that factory.

Yeah. So the recall happens, all the loans get called in and you've got to basically come up with a cash.

And so you're thinking we're done.

We got to file bankruptcy.

Well, there's cash but people want the world.

They want so much from it.

And the people who are showing interest, looking at your situation and they start acting opportunistic.

So they offer less money.

They offer more money, but they want more.

They want more equity, right?

Exactly. And then they use different, different reasons to come up with those things.

A time came, and I remember the gentleman called me and he said, here's the amount that you will get.

Here is the percentage of the company that you have to give away, which was almost majority at that time.

And you will be out of the company.

And I take this. I said, okay, what will happen if I take this?

I'll probably regret every day going forward you are an entrepreneur you build things and you make one misstep and then someone comes with the money and say hey take it or leave it or this is our conditions for you to do it and I look at this and I say I must say no to you and I tell you why because if I'm gonna die I'm gonna die now I'm gonna die one time I'm not gonna die every day rest of my life.

So I said, I'll take this company to bankruptcy.

Wow. And he said, how do you go from the top of the mountain to bottom of a hole in within three to four months?

Yeah. Right? And I'm not expecting that, accepting that.

And I said, okay, it's fine.

I built it, I'll bury it.

It's a very, I mean, you're very stubborn, right?

And I mean, that's a good quality, but it can also be, it can also be sometimes not a good quality.

Yeah, asked my wife about that yeah so she would say the same you have a way you have a way to make me say things that i've never said before but i love that this conversation because because we come close to making decisions like that that people normally don't know it is hard that people make decisions yeah but i had no doubt at that moment i remember walking from my apartment At that time, I had an apartment in New York to an office where I was meeting one of my colleagues and a lawyer and a financial person.

And next to the park, I cried.

And I saw the tears coming because it's hard. It's hard that you are about to bury something that you gave your best to and you built.

And the options were not good enough for you to be able to save it.

Clearly, you didn't file for bankruptcy.

You didn't. But how did you get out of that?

A night before. A night before.

Wow. Yeah. One night before we filed the banker called and said, Hamdi, we hear that you're going to do this.

It's going to make us look so bad.

I think they were also acting really out of ordinary at that time, forcing me to do something.

And he says, well, why don't we give you so much money and six months, as long as you You promised you're going to do an event that you're going to deleverage yourself in certain things.

I said, yeah, sure.

But I had no idea this was going to come.

I knew this was a road that we were going to end up.

And this company was going to be a bankrupt and maybe wouldn't exist later on.

Yeah. If you had filed bankruptcy, it doesn't necessarily mean that the brand would shut down, right?

I mean, you could restructure it.

But it was unclear what would have happened.

I don't know. I mean, but the one thing is how do you go become one of the fastest growing company in the history?

Because we literally went from zero to billion in 2005 years without taking a penny from outside in that factory.

It shouldn't have happened.

It's a story that should never have happened.

We should have been buried by the big yogurt makers within a year or two.

Yeah. Hamdi, you know, I'm curious because when – after that crisis, right, in 2014, TPG, this private equity firm comes in, makes an investment.

And part of that agreement is that a man named Kevin Burns would become the interim president and COO.

You were the CEO. You had founded this company from nothing.

You built it from a cheese place in upstate New York into what it was.

So the achievement at this point was enormous.

Now, there was pressure for a new CEO to bring in a professional CEO. At the time, there was an article in the Wall Street Journal.

I'm sure it was not easy for you to read, but it was critical of you.

It said, you know, he's in over his head.

You know, there's not, the operations are scattered and blah, blah, blah, blah, blah.

I'm sure that must have been difficult for you to read, but I also wonder whether a part of you was able to say, you know, look, I've done this, I've made this.

Maybe we should have a different CEO in here.

I think you come to a realization in a certain time and you say, okay, I'm good at certain things, but I'm not good at this and this and this.

I was very convinced that I knew how to start things, how to scale things, but not necessarily put the infrastructure in place to be able to run the company day in and day out without being involved in the floor every single day.

So I saw that value.

And that's not because we were not growing.

That's not because there was a lack of opportunity or I was tired or I didn't want to do it.

I was questioning myself if I'm capable of taking this company from what it is to the next level because I had never done this before.

And you should be, and by the way, you should be asking yourself that question.

A hundred percent. Yeah.

The problem with the, the, the, the, the CEO things is through this journey of my, from 2009 to 2011, I probably interviewed five, maybe six candidates for CEO. And every time I, I interview the person and I would see a dimension that would not fit with Chobani.

I would see a dimension that it would be risky.

I would see a dimension that it would not, it would not be a good working relationship with me.

Whatever that might be.

Yeah. I was extremely worried about the culture and what I want this company to be.

Now it's coming to a place that business can be really, really powerful force.

And it is not about, you know, money, it's not about this, but what is the role the company can play in society?

I can't say I had that state of mind in 2009, 2010, 2008.

No. Right. Because you, in the last sort of seven, eight years, really very much publicly turned, kind of made Chobani into a company that was, you know, big advocate of immigration reform to hiring refugees, you know, supporting refugee, you know, admissions into the United States, things like that, that are risky, right?

Because a lot of companies don't want to, for understandable reasons, don't want to take stances on hot button issues, because they just want to focus on their brand.

And oftentimes, that's a good decision, right?

You just like, we just want people to buy Coke and Pepsi, like, don't ask me what our politics are.

But you decided, we're going to actually stand for these things that there's lots of people in America aren't happy about.

So why? I mean, it's risky.

I look at from the human perspective side of it.

I said, why can't we do things that is good for the society and community?

And yet, I can prove the only reason Chobani is extremely successful, if it is, is because of those angles.

I didn't follow the craft route.

I followed the kid from Kurdish mountains, I believe, mixed with the farmers in that community and say, you know what, let's open the doors.

Let's open the windows.

Let's open the walls that people can come in and participate and be part of the success that you built.

But never ever in my statements, I have said something that I have not implemented into my own place for years and prove that this works before I have a credential to go out and talk about it.

Yeah. Hamdi, there's so much we can talk about, and obviously we're not going to be able to get to everything in the story of Today, you know, roughly Chobani's got about 20, 22 % of the yogurt market in the US.

It's a, you know, massive company with lots of different brands.

There, you know, there's talk about eventually taking the company public, which may happen next year, or maybe beyond.

And when you think about the story of this young guy who is like grew up, you know, helping his family for their flock of sheep and goats to, you know, how you kind of made it to the U .S. And, you know, all those people in New York who brought you their farms and let you kind of live there.

And then you built a company with a multi -billion dollar valuation.

How much of that do you think has to do with just how hard you worked in America?

And how much do you think has to do with how lucky you got?

I guess a combination of all.

I don't know. I sometimes pitch myself to see that this has really happened.

I always say I brought a seed.

maybe it was loaded with a lot of tradition love you know knowledge and whatever it is but this land was a great soil for that seed to become something yeah and my I have three kids now a girl and two boys and that's I feel like it's my biggest responsibility to make sure that the next generation my children and the children's and children's and everybody's children find the land the way that we found it and if anything it's improved.

But I think it's in an enormous amount of stress and we cannot take this as you know as like granted.

We just have to make it work and we need to work harder to make sure that this stays alive.

That's Hamdi Ulukaya, founder and CEO of Chobani.

About a year after we ran this interview, Chobani acquired the ready -to -drink coffee company La Cologne for $900 million.

And this year, it bought the plant -based frozen meal company Daily Harvest for an undisclosed amount.

Chobani also announced that it would be spending over a billion dollars to build a huge factory in central New York, not far from where the company got its start 20 years ago.

Hey, thanks so much for listening to the show this week.

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And please sign up for my newsletter at guyrazz .com or on Substack.

This episode was produced by Josh Lash with music composed by Ramteen Arablui.

It was edited by Neva Grant with research help from Claire Murashima.

Our production staff also includes Alex Chung, JC Howard, Carla Estevez, Sam Paulson, Casey Herman, Catherine Seifer, Carrie Thompson, I'm Andrew Thompson, Andrea Bruce, and Elaine Coates.

I'm Guy Raz, and you've been listening to How I Built This.

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[The Improbable Rise of Chobani: How Hamdi Ulukaya Built a Yogurt Empire from Scratch]-[Chobani: Hamdi Ulukaya (2022)]

📋 Summary

The Improbable Rise of Chobani: From Kurdish Mountains to American Yogurt Empire

Roots of Resourcefulness

The Birth of a Vision

Obsession with Quality and Craft

Scaling Through Adversity

A Legacy of Purpose

🎯Key Sentences

📝Key Phrases

📖 Transcript