Chobani: Hamdi Ulukaya (2022)

Hey everyone, it's Guy here. So our team is taking a quick break this week, so we've got an amazing story from the archives for you by conversation with Hamdi Ulekaya, the founder of Chibani. And this really is one of those episodes that people always tell me is one of their favorites because it's a story of a guy who came to this country with 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 smooth in the cup that it wouldn't touch the lid. Yeah. But 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 Ross and on the show today, how Hamdi, LaKaya arrived in the US with no money and no plan but an abandoned yogurt factory and built Shobani into one of the top selling yogurt brands in the US. 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 Dan in, you play, 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 US. That's roughly $4 billion of Greek yogurt sold each year in America alone. And the brand most responsible for its rise? Shobani. Shobani's founder, Hamdi, LaKaya 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 US 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. He had 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, 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 fetishies business that almost drove him into the ground. Hamdi Olaqaya 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-nomatic community. The nomads were really isolated from the everyday life. We were people like from Mars. 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 meals and we are up in the mountains. So we don't get involved with anything. The only thing we have 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. From whatever ed your dad had quite a successful cheese making business. In town. Yeah. So he was Aga. So Aga means he is 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 are 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 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 steppe Sveja or Tibet or something. But I mean 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. You weren't living like in a dirt room sleeping on the ground. No, no, no. We had a you know this in life. I don't think we call ourselves poor. We never consider ourselves poor. You know we consider ourselves lucky. And you had like a television or fordrators and you know ovens and right. Later. Yeah. 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. Gather around. Yeah. 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 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 like Turkey at the time wasn't the right place for you to live. 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 actually a stranger is this person when I helped my brother in his stores he would come every evening around 536 o'clock. 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 this bad. You know that typical language. He said you think Europe is good, go to America and if you don't like it you can always go to Europe. So I dismissed him. I said get your eggs and meat and go to your place and I'll see you tomorrow. That night I couldn't sleep. I thought about what that guy said. Now I had no knowledge of America other than what I saw in movies and TV. So I waited that day, the next day until that guy showed up and I put them 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 his 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 US under this program to learn English to study and where did you land? Where did you arrive to? So I got 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 Bukh. Boston, I have a school in Delaware, I have school in New York, and she was going on. 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 big cities, 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, good-bye of my life. My mom was old, now she couldn't go up in the mountains anymore. That it's just the time where you start seeing snow up in the summits of the mountains. And you know, this is the time that the families are coming back. And I dropped her in the hospital where she needed to have a check-up in the town. And we hugged and I said, "Good-bye." 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 my life. And she's having that motherly walk on the streets towards the hospital. And my nephew tells me, "Ankle, why are you crying?" And I say, "I'm not crying. It's raining." And it was raining, you know, from the window. That was my last good-bye to life of the tribe. My last good-bye to my town, all the life that I had in those mountains, in the tribes, the shepherds, all the conflicts, all the university. Something that was designed to go for me in that life, I just go back to that moment and that's good-bye. And within two weeks, I was in New Jersey. That was the last Turkish Airlines landing in New Jersey. Wow. And I think you ended up starting at Delphi University on Long Island, is that right? Yeah. Turns out that acceptance was at the 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. You had two that you saw you arrive with $2,000. Three. $3,000. And you get to a Delphi 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 were running out of money. I was 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. It's amazing. But this 1994, it's not that long ago. Yeah. This is October 1994. And you'd 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. You know, it's not easy. It must have been incredibly lonely. Very, very. But I have other worries. What do I do for living? How do I pay for the school? How 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. With the assignment was how to make anything? Something. Something. Something. Yeah. 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, 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 asked him to tell me what she was trying to tell me. So it turns out she had a farm in upstate 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've grown up making cheese. You know, it's like. And she had to happen to have the raw materials but just didn't know how to use them. Yeah. And actually 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 there was in our part of the world. 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 brought 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 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 these hills and the mountains. I feel like I'm back home. And it was a simple farm and that they were professionals husband and wife one in teacher and one was 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 all right so you get up there and so what what do you do and 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 ship milk that I grow up with. And in the evening they 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 in 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 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. She I don't know what she exactly said I think there were some issues with it but in month or two months later she said you know if you still want you can come and stay in the farm. So she was offering you to go move up there? Yeah when I came back I made my mind there's 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. You want to be around goat's and sheep? Exactly and trees and rivers. Yeah I get it I totally get it. So she offers you to move up there and you took the out we know you took the offer. I jumped. Oh my god I jumped. What were you going to do for what was you offering to pay you to or were you just going to figure that out on your on your 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 on the Vermont border just you this like this kid from Turkey. That's exactly how you describe 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 line up I milk them I water them make sure that the calves are fed and then I will drive sixty 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 Humdy did you have any friends I mean you're like in your 20s your young guy where you just like milking you're working on the farm going to school working the farm going to school. And 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 not in New York really you have people from all over the world right so you have Turks and everybody up there you know I was probably the first person from Turkey that I have ever seen. Yeah. Alright, 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 of putting it in is my mother's sense 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 fetishies in here your dad when he visited He he noticed that good the what we like called fetishies, right? It's not good here and it was not good. It was pretty awful Yeah, it was pretty awful at the time and and just to be clear like this is something that he would just eat for breakfast every morning Right, he would have yes, that or and and olives right this is kind of a traditional Turkish breakfast. Right And he tasted and says this is really bad. Is there anything good? I said no, this is it what we can find and So why don't you ask your brothers to send you fetishies? 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 and Queens Okay, so you found and they were and and you called them to see if they would be interested in Carrying your cheese. I called and I went to visit him So at that time I got some samples and stuff from back home my brother sent it to me Yeah, and I went to visit and I said we make this cheese which would be interested Buying it and says wow you have to know the law if it has to be 100% ship milk otherwise it will be Exposed to duty. It will be too expensive all these worries and questions, but yeah, and so 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. Yeah, 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 you how did they ship it was it shipped in coolers or did it not require cooling at all? How did you receive? 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 it was just you and your brother and just making sure the cheese arrived and and that's how you were importing just the just that 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 then six months after she passed I had this time of being again feeling like numb It was this time of total loss. Yeah 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 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 and and then she made us this I can speak of my own She made you feel like you were the most special person in the whole universe and and make sure that you believed in it So she was my backbone. She was everything that I was and now she was gone So it was it was very very massive event and it was extremely difficult to To really stand up and get out of the bed for a long long time well I Guess you were you were eventually able to to somewhat recover from that and and get back to the business that you were running with your brother below Yeah, but but from what I gather You started to maybe both of you started to think you know You know, hey, we can probably make more money or grow our business if we if we made the cheeser or we made it here in the US, right? Yeah How did that how did you start to? Tell me about like that that process. When did you start to think that that that's what you should do? It was another idea of my father of saying you know this important thing is You know with the currency going up and down and all the things that are happening and it's not a very hard Chees 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 fatabi made here the problem was it was horrible like literally all like it was so bad And say okay people are buying this stuff. So if you make it a little bit better You know the it's endless yeah, so this is no brainer The question is okay, where do you make it? How do you make it what kind of what kind of environment what kind of place? And how do you put this together? When we come back in just a moment how Humpty 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 Ross and you're listening to how I built this Hey Hey, welcome back to how I built this I'm Guy Ross So it's around 2002 and Humpty has decided to start making and selling his own fetiches He gets a local development grant to open a small factory in John's town, New York and now he needs to get hold of some vats for making the cheese How do I afford to bring the vats that is this still is still vessel? Let's say two thousand pounds they can go ten thousand pounds where you Pastorize the milk right. It's like how do I afford to these equipments and There was a local bank called MBT In John's town the gentleman there said you know You can get the USDA to have a loan guarantee meaning right and gives some kind of Comfort to the banks. I guess that's the way to put it in place That they will land to the local you know businesses to start their business or expand their business And if it goes wrong then their risk is 90% Remove and they set up the time 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 it was mind-blowing So that basically took care of that part all I had to worry about is the 10% and You know working capital and all the unthinkables. Yeah, all right So you get 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 if it starts selling it So was first of all the making cheese because I think you the factory opened in 2002 you called it It was called you fray these this is the company that you and your brother started to make cheese And did you so you made cheese you had a palette by you know 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. Yeah, you have the culture and it should work I Had one of the worst time Making the cheese. What why? You know 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 in 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 the cons and getting the consistency is hard because because every milk every shipment of milk is different Every shipment of the milk different now we made cheese with unpasserized milk now you're Enasterized in and so you have to fine tune that and you're relying on culture companies you rely on you know equipment companies to be able to make that kind of adjustments So there's a lot of trial and error we couldn't do on of those things until we had the vats in place Yeah, by the way, how many people working there five ten? Ten to twelve people. Yeah, I'm making the cheese. I'm packing it. I'm salting it. I'm putting in the palette a pales You know ten pound pales or twenty pound pales 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 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. Northeasers, Greek diners everywhere in the Northeast, yeah. Yeah, it's to go places, right? So in these diners, one of the most popular thing that even comes, even without your ordering is the Greek salad and that Greek salad has. Trunks are fed on it. Yeah, but I soon enough I'd realize that this is not a huge margin thing. Yeah. You know, you have large manufacturers, even though their product is pretty awful, you have these large manufacturers out of Wisconsin that make millions of pounds. They ship it all around the country and you know, look at the diners, the quality is not the number one thing really. Yeah, it is, but it's not. It says, yeah, it says, I get it, but I put onions in there and I put. Black olives. Yeah. And I put them black olives and I put the olive oil and. No one cares about the setup. By the time you. Yeah. Yeah, I get it. But so, 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 distributors, you can't go diner to diners. Yeah, it's not possible. You can't scale that, right? Yeah. So, the first eye-opening for me was I called this distributor on the Syracuse. I said, 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, you know, 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, to pallet every other month is not even fraction of it's nothing. Yeah. It's 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 got myself into. Yeah. I read something you said. You said that the years, those two years, from 2002 when you started the factory for eighties in 2004. It's the first two years you said, was the most difficult time of my life? Yes. It was literally 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 got into myself into this. I'm already not complete since my mother's dad. I mean, 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 will cry and cry and cry by myself. And then I will come up and have done into the 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 I'm not going to be able to sell the Feta amount I 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 hundreds of them. Well, 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, for 2 million in sales and 40 employees. No. I didn't think that this would make me a 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 say, okay, I think I survived. I think I survived. Yeah. Like middle of 2004, I felt like I could breathe. Yeah. Well, but that year something pretty pivotal happened. A property came came up for sale, I guess, not too far from there. What tell me the story of what what how did 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, 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 to sell mortgage, somebody 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. It says fully equipped yogurt plant for sale. Wow. And then you can tell that it'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 is 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, top that turns out that it's a real estate agent from Utica. And I called the person answered and he 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. Okay. And I'm looking at this whole thing. And you say, even if it's the worst condition, how could this be $700,000? What 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 because of the equipment? Yeah, because I know pretty much what things cost from the experience that putting a smaller version into our plants. 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 craft at the time. They were selling it. Yes. Okay. Yes. So it was enough interest in 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. Yeah. And I saw it from the 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 to the places, he turns the lights on. It's not a working factor anymore. It was until maybe four months ago, five months ago. Yeah. So that's basically 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. Yeah. I am not seeing the buildings anymore. I'm seeing, I'm reminding this sad feelings that only would come to our time where I grew up if somebody died in the Euphrates River. And for months, for weeks, like there was this heavy feelings all over the town, like people. You felt that when you got to the town? You felt it. Yeah. You felt it. Wow. Like a few nearly old 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. It's been there for 70 years. It was a sign of life, really. The steam came out of that place. It was a sign of life. Everybody's grandfather walked there, mother walked there, father walked 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. Phil D'Alfio cream cheese was made there. Exactly. And yogurt too. Yes. Brides yogurt, yeah. And I'm curious because from what I understand from what I've read, it was a really old, and he was crumbling paint, and it was not in great shape and look good. Yeah, and there's a smell, old smell. Old, just kind of stale or, you know, kind of old cheese smell. Yeah, everything is old. The biggest important things that the real estate agent kept telling me is that it is as is. We don't take any liability. Whatever the, whatever the things that you find is good and bad, it's all yours. Yeah. 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 was being interested in walking in, but now I just left. It's a really amazing place. It's got everything. I can make yogurt there and I want to buy it." And I'm like, I'm just like, you know, when you see something and 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 said, 'Where, where, where, where, where, where, just wait, hold on, 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, 'Hanthi, this is the largest food company in the world.' Craft. Yeah, yeah, wonderful. Getting out of your good 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 the biggest, one of the biggest food companies. The company 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. Makes no sense. Very, very question. And I said, 'No, no, they don't make good yogurt, I can make good yogurt.' And, you know, I know how to make good yogurt in Turkey. And, you know, 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. I said, you don't have 700,000 dollars.' He said that to you, he said, you do not have 700,000 dollars. He said, 'You will never have 700,000 dollars.' And if anything, you haven't paid me in the last six months. I have bills. It just basically said, 'He was true, I had no.' So he said, 'You just made it, I know it's been painful for the last two years. You just can't breathe now. Don't do this to yourself. I know you get excited about things, but 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 things that this is the stupid 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, there are 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 chendermen shows up. One is named Pat Mochie. 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 factory.' And they are selling it for $700,000. And, you know, I call Mario, Mario thinks 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 cheap talking about it. And he says, 'Handy, 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. It says, 'Why don't you make a business plan?' And 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. In the last couple of weeks, I put a business plan together, a couple of pages. He helped me out to do it. And then a few weeks later, we went to a few days later, we went to the plant and see it. And we kept in contact with the real estate agent to tell the story short. They got you the loan. They got me the loan. Wow. 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 going to do that was different? How are you going to, I mean, if craft wasn't making work, what was the thing that, like when people said to you, 'Hey, Humdy, what are you going to do? What'd you say?' 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, breakfast, lunch, dinner. I mean, you can't imagine a meal or time or occasion that you don't somehow consume yogurt. But compared to what it was here, the yogurt was 10 types. It was literally horrible, like it was awful stuff. And I thought it's milk and culture. There's not cause 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're buying this shit, they could buy that stuff. If they're buying that stuff, they would buy that thing. That was my data point. And the second data point for me was, you know, if you meet with people and people ask you where you're from and you say, from Turkey, the next thing they say, oh, I was in Turkey or I was in Greece. And within few minutes, the first thing comes up is the yogurt that they had in Greece in Turkey, you know, with honey and walnut. And that was one of the best thing 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 manager, who was 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 got to get Maria because she knows all the vendors. You 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, you know, the blueprints of the plant. So I had to come in with Mike Allen to come back, which I did. And then the wastewater side of things, that was Frank, who 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, says, like, who's 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 drunk with it. But they're cautious, but at least they have a job. And they're looking at me and saying, what kind of ideas and improvements that he's going to make. So I'm managing that human psychology at the 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 just, 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 way. Right? So 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 put in a centrifuge, like spin the yogurt, right? Really quickly to get the water out. But you did not have, like that's a very expensive piece of equipment. I don't think it was an affectory, right? Because this factory wasn't making Greek yogurt. It was making regular, you know, American-style watery yogurt. You're 100% right. And commercially, this cannot be done with the cheesecloth. There needs to be centrifuge separator. And these separators are, you know, I would say, you know, close to 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. Yeah. 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 a 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 Trabani. Huh. Trabani means shepherd in Turkish. And Trabani in a little bit of a different way of saying it is also means shepherd in Greek. But the meaning of the word is always pure, simple, you know, someone who helps, someone who leads, someone, it's a very beautiful word in all dimensions. 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 Chobain, that Chobain, that was available. And I guess it was because you got the domain. And so now you've got a name and you've got a separator to make the Greek style yogurt. So what else did you need to do? What what happened next? So I spent a lot 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 in this shelf, it cannot be in the cups that is available in this country. You need to be some Europeans cups. But the cups are as simple as it sounds if it goes into yogurt, it needs to be FDA-approved. So you can't just get the cups from anywhere. It needs to be 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 leave 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 Chabani was just single serving yogurt. It wasn't like it in the big tubs that you buy it in now. Initially it was just a small cup. Exactly, small cups, yeah. And I want to have a foil that every flavor has its 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 waste, don't you waste 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 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 was about how long you sort of you heated it and 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. Yeah. 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, it particulates. You know, you have small particles. Yeah, it's lumps. Yeah, it's lumps. And you need to smooth that without breaking the texture. Right? So that's extremely important as well. I'm I used to get really upset when I see yogurt on the lid. You know, on the lid. I didn't want to see on the lid. I didn't 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. This is one shot. And I'm out in a very, very, you know, very bad way. When we come back in just a moment, how Chobani starts growing so quickly that Handy can barely keep up. And then how it almost goes bankrupt. Stay with us. I'm Guy Roz and you're listening to how I built this. Hey, welcome back to how I built this. I'm Guy Roz. So it's 2007. The yogurt factory is up and running. And Handy 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 let the sales 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, look, well, looks like people are buying it. And some people came back and bought again. So yeah, send it me some more. And that was encouraging. Yeah. And then I guess, pretty soon after you were, you got into that kosher store in Great Neck. You got into your first grocery chain, which was shop right, which is a chain of stores in these coast. And that's, that's a, that must be 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 shop right, or that kind of conventional stores, you have to pay what they call it listing fee. And every cup, I don't know what it is now, but I think at that time was $20,000 for each cup to be on the shelf. Just let me just let me understand this. So when you go to a small, good kosher grocery store in Great Neck, 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 Shop Right, you actually have to pay them a fee to stock your products. And it's, it could be a lot. It could be tens of thousands of dollars per, 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 that's a revolutionary generation for them. And for a small startup, it's a big block. If you want to play on the mass, you know, supermarket chains, you can pay, I don't know, if you have four SKUs for products that you put on the shelf. So four times, you know, $1200, $150,000. Yeah. And $150,000 massive money. And if it doesn't work within three to six months, it comes off the shelf. So he has to perform to stay. There's no obligation. So it's a huge, it's a huge risk. It's a huge risk. But here's the thing. It seems to me that 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 and they don't have the high stocking fees and 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 where ordinary people shop. You didn't want this to be like an elite product. Exactly. I was very convinced once I can make this to a main channel and people tasted it, this is going to go, you know, everybody was going to happy. All I needed was one example. Yeah. And then the shoplight guy said, how are you going to pay for the for the list in P? 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? You know, I have no invoice. I have no, but I can't 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 is 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, Humdy? You got, how do you just put it on the shelf? The thing is that you put on the shelves and you still have to get people to notice it because you go to grocery store, there are 25, 30,000 products. How did people even know about it? It was the cup. It was just the label. It was bright. Yeah. It was just It's just, it's to look different. - Yeah. And then I priced it below my cost at that time. - You knew you were gonna lose money. - Yes. I was okay to lose money for probably two months. - Okay. And by the way, how many shopwrites were you in? Like five, 10? - No, no, it's all of them. I think it was over 127 with this. - Wow, so yeah, you get into system wide, yeah. But I had a simple napkin calculation. If I reached 20,000 cases, I would break even and everything after that it would be profitable. - And the cases is how many cups of you? - 12, 12, okay. So you're taking a gamble that people would just find out about this as shopwrites and buy it. - Exactly. And when he put it into an ordinary shop, like a common shop where everybody shop on your goto aisle, 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 2500? I'm not sure. And I call Kyle, I said, is this accurate or is it missing one zero? He says, no, that's accurate. - Wow. - And I said, is this for a month? Or is this 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. It's like, how are you actually able to make all that yogurt? - So that is, (laughing) So you know, you say it, you get this all good news that he wants to buy another case. - One more stuff. - It's the other one, the other one, the other case is, 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 meet the demand? - Yeah. - So we're converting, you know, cooler space into a filler room. We're converting toilets into the offices. We, whatever it needs to be done, outside of jeopardizing the quality of the food, we're trying to find. - I read that you were like, every people are 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 operate it 24 hours a day. - It is, I mean, you're talking about Thanksgiving, Christmas, George Fortogelai, 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, guys, this is a plant that was the last factory they got closed, right? So you have a large corporation closed and left, you know, they're looking at me, it says, "What are the chances?" And then they see the orders are coming and this is like, what the hell is going on? Like, is this ever possible that this could happen? So everyone went from complete disastrous mindset or salsa 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 taking Tylenol ad vol, like nuts, I was, I was, - Wow. - 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. We're eating pizza every day. I mean, it's pretty, pretty whole life stuff. - All right, so you obviously, this thing is taking off and then you start to get more accounts and there's BJs and then Costco. But you had to, I mean, now you really have to bring lots of people in. And one of the things that you did was, there was a, I guess like this refugee resource center like in that part of upstate in New York. - Yeah. - And they had people who just needed work and you were like, great, we need, we need, we need people to work. Tell me how you like connected with them. - So this is how it happened. Utica is about 30 minutes drive from where the plant is inside the atmosphere. And I lived in Utica. - Utica, New York, yeah. - Yeah, I lived in the apartment in Utica. And I hear people are settling in Utica as refugees from around the world and they're having a hard time to find the job. And I called the refugee center and I said, what is the problem? And she said, these are people have right to work legally settled and they don't speak the language, they don't have transportation or people don't want to touch it because it's an unknown and 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 transdaiders and we will train them at the work and we will make this work. And people had concerns and said, well, are you sure, how people are gonna take this? I said, I'm pretty sure. I know my people. And that was 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 participated. - So you had the people, right, and you've got this plant by 2010, so just three years, you're doing 260 million dollars 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 thing that I had is the price architect that I put it in place, it was given 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, like, as making more yogurt means buying more milk means buying more containers. Like, you've 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 microattention on the cost, keeping it extremely simple, you know, at that time, you know, not only 250 million, until 600 million dollars, 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 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, I just put it back into the company and invest in equipment. - Yeah. - Yeah. - But here's a question, Humdy, 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. All right, here you are now, okay? So a couple of things I'm assuming start to happen. First of all, the big brands, the Danens 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, Humdy, you're gonna get crushed by Dan and you'll play the General Mills soon. You've got to bring in outside capital, you've got a blitz scale this thing, you've got to bring in a professional team to run it 'cause you are not equipped to do this. You don't have the experience, you're gonna 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, I've seen 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 people in the company is factory workers and salespeople and, you know, 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. - And I don't even, 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, we want to sell. And in that is a hitting 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, yeah. That's very scary. And all this time I'm betting on, they're gonna be very slow and they were slow. So by the time they wake up, really, I was at $500, $600 million. I'll say it. And they did come and they said, "What about selling?" And the numbers were with billions. They were offering you, and you could have just, because you owned the company. Who's yours? Yeah. It's 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 fixed maybe. And smoking, not taking care of yourself, drinking on a coffee, eating pizza slices. Okay. Exactly. And then somebody says, "You can't be a billionaire." And I can't even be a spelled billion, you know, really, literally. I didn't know how to spell billion. So now, that's you yourself having this real moment, right? No one can tell you what to do. 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 poll to just do it, take the plunge. Hi, imagine. I am in upstate New York. I am midterly, 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, few times." And why? I was more excited about the journey. These things was happening than the value was generating from it. And it felt like I'm in the soccer game. And when 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. The 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 month and what is behind that month. And I have this enumous 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. But you clearly had enough confidence that your brand at that point. And because I think by 2011, you were the number three yogurt brand in the country after you're playing Dan in. 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. Yeah. I was very worried. 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 the risk it, you know, being one location and bringing more innovation to it. When people will copy the first thing I do, I would be on my way to the second thing and the third thing. And I built the factory in Idaho, which I went to Idaho first time. I said, we need to build this factory really fast. Because a million square foot plant. Yeah. It's a one. I think now it's a 1.4. At that time, it was close to 1 million square feet plant. And with 14 lines, we built it less than one year. So that really, it was in the border line 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, you know, early companies, you know, journey is completely different than the second phase. And if you don't make that transformation, it's going to be extreme 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 when 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, listen, 2013, you guys, I think you had a recall, which really was very damaging, right? It was actually quite damaging for you because you don't use preservatives. And, you know, and you had some containers that got spoiled. Yes. I will never forget that gentleman who came to our plant in Idaho. He said, "Humdi, this is mold. Mold is in the rooms, in the bread. It's everywhere. You know, you open the cup and you see green mold and it's not nice." Yeah. 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 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 been more prepared and I would have done in stages. I wouldn't do it in that fast. I would be more cautious. I would put more, you know, team members in place, make some changes. Right. Because the mold issue came from that manufacturing plant in Idaho. Exactly. Right. And there was a time that I would never forget, which is another, you know, moment that I will always go back to, you're about to file bankruptcy. You were about to file bankruptcy. Exactly. I've never talked about this anywhere before. So that recall is that damaging you'd gone from? It wasn't that damaging. But what it is is the banks got really nervous and they wanted they long to be paid back. Yeah. And that loan was used to build a factory supported by EBITDA. Now you have a loan, some 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, we got to file bankruptcy. Well, there's cash. Yeah. With people want the world. They want so much from them. 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. At 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 is what was almost majority at that time." And you will be out of the company. And I said, "Okay, what will happen if I take this? I'll probably regret every day going forward. You are an entrepreneur, you built 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. Then I'll tell you why." Because if I'm going to die, I'm going to die now. I'm going to die one time. I'm not going to 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 fun. I built it. I'll bury it." And. 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, ask my wife about that. So she was very sad. You have a way to make me say things that I've never said before. But I love that conversation because we come close to making decisions like that. The people normally don't know. It is hard that people make decisions. But I had no doubt at that moment. I remember walking from my apartment at the 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. Yeah. Clearly you didn't file for bankruptcy, you didn't. But how did you get out of that? And night before. And night before. Well. Yeah. One night before we filed, at the banker called in Sellehandi, 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 for me to do something. And it says, "Why don't we give you so much money and six months as long as you promise you're going to do an event that you're going to deliver yourself in certain things?" I said, "Yeah, sure." But I had no idea that 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 it wouldn't exist later on. Yeah. file bankruptcy 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? - Yeah. - Because we literally went from zero to billion in sales in five years without taking a penny from our side in that factory. And how do you show from this? - It's a story that should never have happened. - Yeah. - You've been buried by the big yogurt makers within a year or two. - Yeah. - I'm curious because after that crisis, 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 CEO. - Oh, yeah. - 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. There was, 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, he's in over his head. There's not, the operations are scattered and 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. - Yeah. - Maybe we should have a different CEO in here. - I think you come to a realization in 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 and day out without, you know, being involved in the floor every single day. - Yeah. - So that I saw that value and that's not because we were not growing, that's not because there was a lack of opportunity, all that I can say, or I was tired, or I didn't want to do it. I was questioning myself, if I'm capable of taking this company to from what it is to the next level, because I had never done this before. - Yeah, and you should be, and by the way, you should be asking yourself that question. - 100%. - Yeah. - The problem with 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 interviewed the person, and I would see a dimension that would not fit Giovanni. 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, I was extremely worried, about the culture and what I want this company to be. Now it's a coming to a place that business can be really, really powerful force, and it is not about money, it's not about this, but what is the role the company can play in society? - Yeah. - I can't say I had that state of mind in 2009, 2010, 2008. - No. - Right, right. - Because you, in the last sort of seven, seven, eight years, really very much publicly turned kind of Vey Giovanni into a company that was big advocate of immigration reform to hiring refugees, supporting refugee admissions into the United States, things like that that are risky, 'cause 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 want people to buy Coke and Pepsi. Don't ask me what our politics are, but you decided we're gonna actually stand for these things that 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, you know, 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, the 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, there's so much we can talk about. And obviously we're not gonna be able to get to everything in the story of Chobani today. Roughly, Chobani's got about 22% of the yogurt market in the US. It's a massive company with lots of different brands. They're, you know, there's talk about eventually taking the company public, which may happen next year or maybe beyond. When you think about the story of this young guy who has 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 US 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 that, you know, 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 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. Make sure that the next generation, my children and the children and children and everybody's children find the land the way that we found it and if anything is improved. But I think it's in an under, an enormous amount of stress. And we cannot take this as, you know, as like granted. We just have to make it work. We need to work harder to make sure that this stays alive. - That's Humdy, Ulekaya, founder and CEO of Chobani. About a year after we ran this interview, Chobani acquired the ready to drink coffee company La Colom for $900 million. In 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. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And please sign up for my newsletter at gyros.com or on Substack. This episode was produced by Josh Lash with music composed by Runtine Ereblui. It was edited by Niva Grant with research help from Claire Marishima. Our production staff also includes Alex Chung, JC Howard, Carla Estevez, Sam Paulson, Casey Herman, Catherine Cipher, Carrie Thompson, Andrea Bruce Andaline Coats. I'm Guy Raaz and you've been listening to How I Built This. (upbeat music) [Music]