Chobani: Hamdi Ulukaya (2022)

0:06 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. My conversation with Hamdi Ulakia, the founder of Chabani, 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.

0:44 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 want it to be so perfectly smooth in the cup that the 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

1:00 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 gonna be Knock people out the first time they try it.

1:09 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.

1:25 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 Handy Ukaya arrived in the US with no money and no plan. But an abandoned yogurt factory? And built Shibani into one of the top selling yogurt brands.

1:50 In the US. Mm. If you were to walk up and down the yogurt aisle in American supermarkets in the nineteen eighties or even the early nineties, Your options were pretty slim. You'd see Danon, Yoplay, and supermarket brands.

2:09 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 fifty percent of the entire eight billion dollar yogurt market in the US. That's roughly four billion dollars of Greek yogurt sold each year in America alone. And the brand most responsible for its rise? Chabani.

2:40 Shibati's founder, Hamdi Ulekaia, 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 nineteen nineties,

3:03 He had no intention of turning the thick, creamy yogurt of his childhood into into a billion dollar brand. And a 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.

3:21 Improbable because Hamdi barely had any money when he got here. He spoke almost no English. He had no background in business. 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.

3:39 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

3:53 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. Habi Ulikaia grew up in the 1970s and 80s near a tiny town in a Kurdish region of eastern Turkey.

4:17 He lived in the mountains with his family. In a semi nomadic community. The nomads were really isolated from the everyday life. Yeah. We kinda we we were kinda 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're done, we are on our horses and and mules and we're up in the mountains, right? So we don't get involved with anything.

4:41 Yeah. 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 s reason of selling the cheese or bought some grains and they will come up with stories and what they saw. But we really were

5:01 very much isolated from the reality of life. Hm. From what I from what I've read, your dad uh had a quite a successful She's making business. Right, in in town.

5:13 Yeah. So he was Aga. So Aga means he's the leader of the tribe. Um and my father kinda didn't want to follow that tradition, but he was kinda natural leader. Um Now, because you're Agar, 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

5:36 We had the same conditions, we live under the same tents, um, so it didn't make a too much difference in life. But what it did is you had a reputation, people will trust you, they will value your opinion Um buy all the other People's sh Cheese and you can combine them

5:56 And you would my father would take you to big cities and sell them. You know, it's interesting'cause when you hear like semi nomadic, you think m I think people think like the steps of Asia or t or Tibet or something, but Um, but I mean you you you grew when you grew up, when you were a boy, like you you were m 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.

6:22 Um sleeping on the ground. No, no, no. We we had a you know, this in life. Um I don't think we call ourselves poor. We never this we never Consider ourselves poor. You know, we consider ourselves lucky. Um and and you had like a uh television refrigerators and and you know, ovens and right? I mean, neither. Yeah, neither. Yeah. When it arrived to town we would afford to be able to buy T Vs and refrigerators. I remember my mom when she got first time the uh washing machine. It was just fascinating. We were all

6:52 Watch it how it does it. Gather around. Yeah. Yeah. Uh yeah, it was decent life, absolutely. Um, you did go off to college, um, from what I understand to Ankara University. Yes. And Fr from what I gather, from what I understand, you were you were a student there during a particularly Uh volatile time.

7:10 in Turkey, especially for for for people like you for ethnic Kurds. And and you became a bit of a of a political activist at the time. You you were, I guess, even involved with some uh left wing and and socialist groups. Which I I guess made you feel like Like Turkey at the time wasn't the right place for you to live and and so you

7:33 Decided to leave? The country? Yeah. Exactly. I thought, okay, I'll go to Europe just because everybody else did at the time.

7:43 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 that stranger. It's this person when I helped my brother in his stores, he would come every evening around five thirty, six o'clock

8:01 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. Hm.

8:11 And I remember telling him Why would I ever go to a capitalist imperialist you know country that has Done all these bad things. Um

8:28 He said, You think Europe is good? Go to America and if you don't like it you can always go to U your Europe. So I dismissed him. 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 But

8:43 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.

8:56 And I put'em on the side and I said Tell me more. Um, 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

9:09 Ankara that had an agency that would send students to universities across the country for learning English. And he gave me his her her numbers and he said, Go to this person Go to school, try to learn them some language. If you like the land, 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 uh on this program

9:39 to learn English, to s to study a and you and Where did you 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 then she says, Where do you want to go in America? I said, I don't know. So she opened this map.

9:56 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. 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

10:22 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

10:33 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

10:46 I spend a week there. With my mother. And Probably One of the hardest

10:54 Goodbye of my life. um my mom was old now he she couldn't go up in the mountains anymore. That it this is the time Where you start seeing snow up in the you know, the summits of the mountains in a in a and you know this is the time that the the families are coming back. And

11:12 Um And I dropped her in the hospital where she needed to have a checkup in in the in the town. And uh we hug and and and I said goodbye. And I had a nephew

11:25 And I was taking him to Ankara to his his dad. And when And I was driving, this is the f one of the few times that I started to learn drive, and I was driving from town to Ankara And When I'd left, I saw my mother on the rear mirror.

11:42 And That picture I remember. Always my life. And she's having that. Motherly walk.

11:49 And the streets towards the Hospital. And my My my nephew tells me Uncle, why are you crying?

11:57 And I say, I'm not crying, it's raining and it was raining, you know, from the window. That was my last Goodbye to life. Of tribe. My last goodbye to

12:10 My town. Uh uh all the All the life that I had in those mountains, in 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's goodbye.

12:29 And within two weeks I was I was in New Jersey. Um that was the last Turkish airlines landing in New Jersey. Well. And I think you end up uh starting out at Adelphi University on on Long Island, is that right? Yeah.

12:41 Turns out that Uh acceptance was at Up University in Long Island. And it was one of One of the most expensive English class. And I had three thousand dollars in my pocket my brother gave me from Istanbul. You had two thous you so you arrive with two thousand dollars. Three. Three thousand dollars and you get to Adelphi to study English and uh h how did it go? Or how long did you last there?'Cause I don't think you were there for very for very long, right?

13:04 A month. Come on, okay. Yeah, just month. Because the two thousand dollars of it was spent in the first month. You r you're running out of money. I was literally running out of money. I couldn't I had to learn how to speak, I have to learn I had zero

13:19 Like really zero English. You're zero English. Zero. Yeah. It's amazing. I mean this nineteen ninety four, it's not that long ago. Yeah, it's this is October nineteen ninety four. Um and you're like a fish out of ocean. It is

13:32 His whole life has dramatically changing so fast I wasn't even having mental preparation for this. Yeah. twenty three years old, twenty two years old. Um, you know, it's not easy. It it must have been

13:44 Incredibly lonely. Very. Very But I have other worries. What do I do for a living? What do I how do I pay for the school? How do I where do I work? Um, am I allowed to work? How do I survive? Who do I trust? Who do I talk to? And all that kinda stuff.

14:01 Yeah. And I think at at this point you had transferred to uh to Baruch College in Manhattan and and you were still studying English there, is that right? Yes. Exactly. And Few months in

14:15 uh teacher at the Burk College uh gave uh homework. For And she asked us to write something in English how to make.

14:27 And I understood that part. And I wanted to write how to make cheese. Well the assignment was how to make Anything? Just something. How do you make something?

14:38 So With the help of s someone in that You know. place where I was living, I tried to write how to make cheese. Um

14:47 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

14:59 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

15:12 She was trying to tell me. It turns out She had a farm in upstate New York. She had goats and cows.

15:22 And she loved my paper, and she was inviting me to her farm. For a weekend so we can make some cheese together. Wow. Cause you of course knew how to make cheese'cause you'd grown up making cheese. I know. It's like and she had to happen to have the uh the raw materials but just didn't know how to uh use them. Yeah, and it actually the the the 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.

15:53 So I was having a hard time and I can't wait for the weekend to come. 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 then 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 in these hills and the mountains.

16:22 I feel like I'm back home. And it was a simple form. And that they were professionals, husband and wife, one and teacher and one was uh engineer. And they wanted to have a farm. And it was their weekend like their weekend home? Yeah.

16:38 They would come for the weekend. And Uh so w ha wha what do you do? I mean you're there for the weekend. So what did you do? How how do you teach them how to make cheese? Um We made it from the goat's milk, which is the closest to ship milk that I grew up with.

16:53 Mm. 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.

17:02 You know, when we were in up in the mountains. Uh I had the best time. And the end of the second day as I was getting ready to go to the bus station Okay. I said.

17:14 Um What it 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.

17:24 And go to school from here. Um She I don't know what she exactly said, I think there was some Issues with it. Um But in month or two months later she said.

17:37 You know. If you still want, you can come and and stay in the in the in the farm. Huh. So she was offering you Yeah. When I came back.

17:48 Th I I made my mind. There is no No way. No No way I'm living in the city, I'm moving somewhere. Up there.

17:56 Definitely, because now I know a place like that exists. You wanna be around goats and sheep? Exactly. And trees and rivers. Yeah. I I get it. I totally get it. So so y so she offers you to move up there. And And you took the o we know you took the offer.

18:11 I jumped. You jumped. Oh my God. Well what we can do for for was she offering to pay you too, or were you just gonna figure that out on your on your own? Well, I don't think they could pay me. Yeah. Um but I could live and help, right? So that's that's kinda how it could, and I till I get a job or I 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

18:39 Uh New York upstate New York on the On the Vermont border, just you. This like this kid from Turkey. This kid from the you know, the Kurdish kid from eastern part of Turkey living in a And what do I do?

18:54 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, uh continue to learn English. Oh wow.

19:10 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 in your twenties, you're a young guy

19:20 Were you just like Milking cow you're working on the farm, going to school. Working on the farm, going to school. In the last six months, my brother My younger brother came and joined me.

19:30 Um not much friends, um 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. Now in New York really you have people from all over the world, right? So you have Turks and everybody.

19:55 Up there. You know, I I was probably the first Yeah. All right, so your brother comes and visits you

20:04 while you're there. And then I think the the following year, ninety six, your your dad comes to visit you in New York. Yes. The simple way of put it in is my mother sends him to say, Go check them out and see what they're doing. And then he comes.

20:19 And I'm trying to figure out what I'm going to do with my life. Um I don't know. And but one thing is for sure we have to work. We have to make some kind of income.

20:29 And he said um Seems like there's not good feta cheese in here. Your dad when he visited He he noticed that that the

20:43 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 feta or And and I mean olives, right? This is tr kind of a traditional. Turkish breakfast. And he tastes it and he says, This is really bad. Is there anything good? I said, No, this is it, what we can find.

21:05 And so wow, why don't you ask your brothers to send you feather cheese? Then you can sell it here. That was The big idea. So I got to work. and found an Armenian distributors who carried Middle Eastern products.

21:21 Base 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.

21:31 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. Yeah. I said, We make this cheese, would you be interested Buying it. I says well, you have to know the law, if has to be hundred percent sheep milk, otherwise it will be

21:50 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. No. Yeah. Can I ask you a question about the cheese? So th this is cheese that your brothers were actually making back in Turkey. Yes. Um and was the cheese in jars? Was it canned? I mean how did you how did they ship it?

22:17 Was it shipped in coolers or did it r not require cool cooling at all? How did you receive it? Yeah, definitely cooler. It has to be refrigerated. Right. And we made really good money on importing that cheese. At least compare to So

22:36 Um 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 all you were importing, just the just the feta. That's it. Yeah. But then my mother got sick. And I went to Turkey. Mm. 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.

23:00 Then then six months after she passed, I had this time of being again feeling like numb. U it was this time of Total Loss. Yeah. 'Cause she was the most important person.

23:15 ever been in my life. Um and she was the most important person in the family. She you know My f my father was a big shot and all that kinda stuff, but really It was my mother.

23:29 The reason that I was in New York City. That she made me to d be that person to be independent and come here and and of course my God the love that she had and caring that she had and and then she made us This I I can speak on my own. She made you feel like you were the most special person in the whole universe and

23:51 And make sure that you believed in it. So she was my backbone. She was everything that I was. And and now she was gone. So it was Mer very, very massiv event. Um and it was extremely difficult to to really stand up and and get out of the bed for a long, long time.

24:11 Well. Um I I I guess you were you were eventually able to to somewhat

24:19 Uh recover from that and And get back to the business that you w you were running with your brother Uh Balal. Yeah. But

24:27 But From what I gather, um you started to m maybe both of you started to think You know, uh you know, hey, we could probably make more money or or grow our business if we if we made the cheese or or or we made it here in the US, right? Tell me about like that thought process. When did you start to think that that that's what you should do?

24:52 Um It was Another idea of my father of saying You know, this importing thing is you know, with the

25:04 And it's not a very hard cheese to make, and you can even make it with the sh with the cow's milk. Why don't you find a place where you can make this cheese here? Hm. Given there were domestic feta be made here. The problem was it was horrible. Like literally awful.

25:19 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 the it's endless. Yeah. So This is no brainer. Uh the question is, okay, where do you make it, how do you make it, what kind of in what kind of Environment, what kind of place?

25:38 Uh And how do you put this together? Why don't we come back in just a moment. How Hamdi starts his own cheese business. But switches to yogurt?

25:49 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. Hey, welcome back to how I built this.

26:18 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 vets?

26:39 What is this? Stale steel vessel, let's say two thousand pounds, they can go ten thousand pounds, where you Right. There was a local bank called MBT. Um in Jamstown.

26:57 The gentleman there said, You know You can get the USDA to have a loan guarantee. Meaning. It gives some kind of

27:10 uh 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 ninety percent Remove. Mm-hmm. And they set up the time meeting with a gentleman out of Syracuse of the US TA. And he came and met

27:27 Uh with us. And then We heard back after I don't know how long, a month or two. that we were given ninety percent guarantee, or the banks was given ninety percent guarantee. It was It was mind blowing.

27:40 So that basically took care of that part. All I had to worry about is the ten percent and You know, working capital and all the unthinkables. Yeah. All right. You get the loan.

27:52 Right. um to m 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 on the making cheese,'cause I think you the factory opened in two thousand two. You called it it was called Euphrates. This is the company that you and your brother started to make cheese. And did you uh so you made cheese, you had a pallet by you know, that year for sale. So I'm assuming the making the cheese part of it was

28:17 Not that hard. It was the Everything else that was hard. Or am I wrong? Um No

28:25 I I You know, in theory it should have worked. You know, you have the milk. You have the culture. And it should work. Um

28:35 I had one of the worst time. Making the cheese. Wha why? I you know, turns out The theory and the reality is two different things. But you knew how to make cheese. You had been making cheese for years. Yeah, the milk is different, right?

28:50 And then you make the cheese and then how it stays in after two months or a month or two weeks. Um the 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 'Cause every milk uh every shipment of milk is different. Every symmetry of them is different. Now

29:09 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 you know, equipment companies to be able to make that kind of adjustments. Um so there's a lot of trial and error. We couldn't do all of those things until we had the rats in place. Yeah. By the way, how many people working there? Five, ten? Ten twelve people. Yeah. I'm making the cheese, I'm packing it, I'm salting it, I'm putting in the palate b uh pails

29:37 Yeah, ten pound pails or twenty 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

29:54 Really fat up. 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. Um Who are the buyers of this cheese are the Greek distributors.

30:08 And what they do is they deliver to diners. You know these diners are all over the North. Uh everywhere in the north east. Yeah. Yeah, it's it's the to go to go places, right? So in these diners the one of the Most popular thing that is

30:26 even comes even without your ordering is the Greek salad. And that Greek salad has chunks of fat on it. Yeah. But I I soon enough I realized that this is not 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.

30:48 That make Millions of pounds. They ship it all around the country. Um You know, you look at the diners, the quality is not the number one thing, really. It is, but it's not. No one cares about it. By the time you

31:12 Yeah. 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 down it too. Yeah, it's not possible. You can't scale that, right? Yeah. So the first eye opening for me was I call this distributed other Syracuse.

31:35 I says, Can I come and show you some father? He says, 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 Dude, this is cool. Um I said.

31:50 How much you buy is It's two pallets. A week no. Every other month? Uh God. I mean

32:02 Fraction of nothing. Yes, basically. So how many of these people I have to have 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 I read I read something you said. You said that the years those two years

32:22 From two thousand two when you started the factory Euphrates. In two thousand four. So the first two years you said It 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 time before that. But this was

32:39 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 p this business was gonna 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 cut into myself into this. I'm already Not complete since my mother's death. I mean it's it's a lot of emotions.

33:04 And I remember There was a a a little creek next to the uh Yeah, plant. And I will go there and I will cry and cry and cry by myself

33:16 And then I will come up after I'm done into the inside the factory and start making cheese. But it was that two years. Uh Made me who I am today. Um But also it was one of the most difficult times of my life. Yeah.

33:32 That two year period um We got through it. But um you did start to turn a profit after those two years, a small profit, I think. Yeah. So

33:43 I realize that I'm not going to be s I'm not going to be able to sell. The feta amount needed to pay all my expenses in this place. to one person or two person or five person. I I have to get it as much as I can. Uh so that means that I have to go between

34:01 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 I slept on the roads with the van I meet all these

34:18 Amazing small distributors, family owned small distributors. Yeah. And I end up getting them Uh hundreds of them. Wow. Yeah.'Cause I think your s your sales were I think you hit about two million dollars in sales by two thousand five, but you had like forty employees, so

34:35 No one is getting rich, you know. No. I didn't think that this was this would make me rich or you would get rich out of this. Right. All all I wanted to do is survive, you know, and Two years, two thousand four, you get it and you say, Okay, I think I survived. I think I survived. Yeah.

34:53 Like middle of two thousand four I felt like I could breathe, yeah. Yeah. Wow. But that year something U pretty pivotal happened. A property came came up for sale, I guess, not too far from there. What tell me the story of of h what what how did you find out about this property? What was it? So here's the thing. I'm

35:13 Really a messy person. Even today I'm pretty messy in my office and my desk. Um So Once Maybe a month, maybe every couple of weeks, I decide that I'm going to organize my desk. I'm just gonna go through all the documents, all the papers, all the letters, you know. Yep and you open the envelope Sometimes you don't even open the envelope, you look at the

35:36 Where is it coming from? And you know this is somebody's trying to sell cars, somebody try to sell mortgage, somebody try to sell credit cards, whatever that is. You know those junk males. 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, uh it's it's interesting. I open it, I look at it. It's literally an ad. Um

35:59 It says fully equipped yogurt plant for sale. You can tell that's a really, really old. I mean the picture is also says nineteen twenty, 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

36:19 And you're going through like twenty, thirty minutes and I still don't know why. I went back to that garbage and I picked up that page. Now my T remaining is in there, my You know, my secret that it was

36:34 Put it into the T T T cup that is also in there. And And I look at that picture again. And I'm staring at it and there's a big number on top top. Uh it turns out that it's a real estate agent

36:49 from Utica. Mm. And I called it. Yeah, this is a yogurt factory. It's an old one. Uh it's craft and they closed it. Um

37:03 And They're selling it, um as is. Hm. And I asked the price. I said, What's the price? He says seven hundred thousand dollars. For a yogurt factory.

37:14 Yeah. Okay. And I'm looking at this whole thing. And you say even if it's the worst condition How could this be seven hundred thousand dollars? What you mean it was it was underpriced? So cheap. It's very cheap.

37:26 Um So I thought he meant seven million dollars. You thought based on the play based on the photo you saw on the postcard. that it was seven million dollars because the just because of the equipment. Yeah, because I know pretty much what things cost from the experience of the

37:42 putting a smaller version into our plants. Now it's twenty thousand square feet. This one says sixty seven thousand 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 pick one of the guy from the plant who was working in the uh in the production

38:03 And It took us two and a half hours to find it. It was just back roads and

38:11 Next to the highway. I'm I saw it from the distance. This Old place.

38:21 And I get there. And you go up. Uh and then s the someone named Rick Uh lake, rich lake. says hi, I'm the production manager, the plant manager is not here.

38:33 I'm 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, he turns the lights on, it's not a working factory anymore. It was until maybe four months ago, five months ago. Yeah. Um

38:49 So that's Basically the last week of the plant All employees are Fifty five people in the last Six months there's just

38:59 I guess. Closing down, slowly bringing down, shutting things off. Yeah. Um I am not seeing the buildings anymore. I'm seeing

39:10 I'm reminding this Sad feelings um that only would come to our town where I grow up if somebody died in the Euphrates River. Forman for віx

39:24 Like there was this heavy feeling. All over the town. Like people You felt that when you got to the town. You felt it. Yeah, you felt it like this. Like a funereal. Feeling it's Yeah.

39:36 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 seventy years. It was a sign of life, really. That steam came out of that place. Was a sign of life.

39:54 Everybody's grandfather worked there, mother walk 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 The the from what I understand. This was a place that made uh

40:09 Cream cheese. Philadelphia cream cheese was made there. Exactly. And yogurt too. Yes. Prior to your good.

40:16 Yeah. And I'm curious because from what I understand, from what I've read, it was a really old. I mean it was like crumbling paint. And it was not in great Shade didn't look good. Yeah.

40:27 And there's a smell. Old smell. Like old just kind of stale or you know, kind of. Old cheese smell. Yeah, everything is old. The the biggest Important things that the real estate agent keep telling me is that it is as is. We don't take any liability

40:45 Whatever the But that were 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

40:54 When I left I called Mario Papa, who was my attorney in Johnstown. And I call him up and say Mario I find this place. I didn't think that I was be interested walking in, but now I just left. Is it

41:09 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 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's like, Wait, wait, wait, wait, wait, wait, wait, just wait. Hold on, hold on. Tell me what you think. Who who owns the company? Who's closing it? What kind of place

41:35 And the guy said, Hunty This is the largest food company in the world. Craft. Yeah. Yeah. Getting out of your good business They're closing the factory.

41:48 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 yoga business. At least there in in in that factory. Why would you think you could make it work, he was asking you. Fair question.

42:03 Makes no sense. Very fair 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 kinda stuff. And he said seven hundred thousand, right? I said yeah it's cheap, seven hundred I said you don't have seven hundred thousand dollars. He said that to you said you do not have seven dollars. You will never have seven hundred thousand dollars, 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

42:33 So I 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

42:51 What a grind it was the previous two years to make the cheese factory. The cheese, you know, plant. Barely profitable. And uh He he knows that

43:01 Y you're in for Uh Okay. A nightmare. If you try to do something new now.

43:06 Yeah, it's he thinks this is the stupidest thing. Um 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

43:22 Regional bank is called Key Bank. And you know, they're salespeople, they they go from businesses to businesses in the communities and say, What can we do? Do you need anything? And all you know how they are. And there's this two gentlemen shows up. One is name is Pat Bucci. And then he has another person next to him, his name is John Ryder.

43:44 And I said Pat, I just Yogurt Factory. And They're selling it for seven hundred thousand dollars.

43:54 And you know, I've I call Mario Mario thing is 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 Hampty. You know, we are partner with SPA small business administration

44:11 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. Hm.

44:23 It's a small chance, but it's possible. Wow. It's worth pursuing. I says, Why don't you make a business plan? And And I'll send you some applications and you fill it and we can look at this. Now I said

44:36 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 a business plan together, a couple of pages. He helped me how 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 keep in contact with the uh real estate agent. To tell the

44:55 To make the story short. They got you the loan. They got me along. Well. Can I can I ask you a question about

45:02 the the business plan for a moment. I mean Your plan clearly was to make yogurt. But what were you gonna do that was different? How are you gonna I mean I if if if craft wasn't making it work, what was the thing that

45:16 Like when people said to you, Hey Hamdi What are you gonna do? W what'd you say? Um so here's the little bit of background. You know I don't know if it's uh I I mentioned we eat so much yogurt in Turkey, right? So breakfast, lunch, dinner. I mean you you can't imagine a meal or time or occasion that you don't

45:34 Somehow consume your good. Right. But compared to what it was here. The yogurt was ten times worse. It it it was. Literally horrible.

45:45 Like it was Awful stuff. Right. And I thought It's milk and culture. There's not 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 yoga that is made. I thought people will love it. If they are buying this shit, they could buy that stuff. If they're buying that stuff, they would buy that thing.

46:07 That was my data point. And then the second data point for me was Yeah, if you meet with people and people ask you where you're from and you say from you I'm 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 in in Greece and Turkey. Yeah. 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.

46:34 So you have the confidence that this can can work. You you get the m the money to buy the factory. And From what I understand that summer of two taus. You spent A lot of that time.

46:46 Just Getting the factory like cleaned and painted and Repair. Yeah, exactly. So within that I have four factory workers that I hired Uh actually the

46:57 The manager who was The plant manager who was closing the factory, I I 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 and he recommended he says, You gotta get Maria because he knows she knows all the vendors, you gotta get Rich because he knows all the production equipment You have to have Mike Allen.

47:20 Mike is the guy The guy knew exactly where the all the pipes were, where the lines were, because there was no drawings. This was so old. No one had You know the the the blueprints of the plant. So I had to convince my calendar come back.

47:37 Which I did. And then the base water side of things, that was Frank he knew how to turn that back on. So I had those four people with me. Uh in the summer of two thousand five. Right. and they're questioning me, they're looking at me, 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

47:57 Excited, they're not overly You know drunk with it. Uh but they're cautious. But 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

48:11 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 one th important point and I you know I 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, right, go'cause'cause milk is ninety nine or ninety seven percent water, right? And then when you turn it to yogurt, there's still a lot of water in there. So

48:38 You've got to literally like put in a centrifuge, like spin the yogurt right really quickly to get the water out. But f but you did not have Like that's a very expensive piece of equipment. I don't think it was in that factory, right?'Cause this factory wasn't making Greek yogurt. It was making regular what you know, American style.

48:55 Watery yogurt. You're a hundred percent right. In a commercially this cannot be done with the cheese clot, it needs to be central food separator. And these separators are Yeah, I would say

49:06 Yeah, close to million dollars by the time dollars. And by the way, you just spent Seven hundred thousand dollars buying this. Production facility. Yeah. So there's there's no

49:16 No way in hell I have million dollars to buy something like this. Yeah. I only have maybe 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.

49:37 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 Miss Wisconsin. And in that drive basically I came up with the name Chobani. Choban means shepherd in Turkish. And

49:52 So Pani 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 you know, someone who helps, someone who leads, someone it's it's a very beautiful world in in in all dimensions. Yeah.

50:10 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 Chobane that Chobine dot com.

50:20 And I guess it was because you got the domain. Um so now you've got a name and and you've got a separator. The the Greek style yogurt. So so what else did you need to do? What

50:33 What happened next? So I spend a limited amount of time about the cups, you know, what the cups is gonna look like. The cups for your yogurt that you were gonna sell. I was so Convinced. That if I am going to make this yoga, then it's going to make it

50:49 uh in this shelf. It cannot be the in the cups that is available in this country. 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 F T inspected plant, and I found out that there is a plant in Bocotta, Colombia.

51:11 Did 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 gonna be initially Chabani was just single serving yogurt. It wasn't like it in the big tubs that you could you buy it in now. Initially it was just w uh a small cup. Exactly. S small cups, yeah. And then I want to have a foil that every flavor has its own foil design on top of it.

51:38 And At that time. You know, it for now it's very n very normal, it's not a big thing. But at the time people said Why? You know People never do those things.

51:48 Don't you Don't you waste don't you aren't you w wasting your mu your money, aren't you making yourself um competitive and all that kind of stuff. My view was I spent so much time making this yogurt. Um And I think it's it's one of the best that I've made.

52:04 And people will not you know, see the difference if I put them in the same cups. So if I can catch their eye. And the recipe is simple. It's it's milk and a culture. But I guess when you talk about perfecting it, it was about how long you sort of

52:24 I mean, I'm not going to be able to Because the the basic ingredients it's two things. It's it's milk and a and culture, right? That's exactly right. And unless you make the uh flavored ones, but the basic thing is very simple, milk and culture. Yeah. And you don't wanna use preservatives and you don't wanna use any any other uh ingredients. So it was just trial and error until you find it. It was Yeah. And really it was about

52:50 It was about experimenting with temperature, time and incubation. And then you've gotta blend it to make it creamy, right? Right. After you strain it the it's it's it it particulates, you know, you have small particles. Yeah, it's lumps. And you need to smooth that without

53:06 Breaking the texture. Right, so yeah, that's that's extremely important as well. I'm I used to get really upset when I see Yoghurt on the lid. Yeah. On the lid. You didn't want to see it on the lid. You want it to be so perfectly smooth in the cup 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.

53:26 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.

53:35 That it's gonna knock people out the first time they try it. Exactly. I wanted to make it something that That

53:42 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 that. This is one shot.

53:59 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.

54:10 How Tabani starts growing so quickly. that Hamdi can barely keep up. And then Now it almost goes bankrupt. Stay with us, I'm Guy Raz, and you're listening to how I built this.

54:37 Hey, welcome back to How I Built This. I'm Guy Rise. 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 Um Kyle and I, one of my colleague who led the sales side of things, we were in the plan

55:03 Probably until like one or two o'clock in the m in the morning. And We made four flavors each about fifty, sixty cases.

55:15 And we shipped it to this. Yeah. And I'm waiting for the uh for some kind of response, how is that gonna come? And when I received the second order

55:25 I called a person and I said What do you see if you could show 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, Okay 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

55:45 Uh Pretty soon after you were you got into that Kosher store in Great Neck, and the U.S. Uh you got into your first grocery chain, which was ShopRite. uh which is a a chain of stores on the east coast.

55:58 And that's that's a That w that must have been a pretty big deal, right? Yes. That is the biggest event in the history of Chapani. Now In order to be able to make it to shop right.

56:09 conventional stores. You have to pay But they call it listing fee. Yeah. And every cup, I don't know what it is now, but I think at that time was thirty thousand dollars for each cup to be on the shelf. Just let me just let me uh understand this. So when you go to a small gro kosher grocery store in Great Knight, 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

56:32 or shop right, you actually have to pay them a fee to stock your products. And it's it can be a lot. It could be Tens of thousands of dollars. Hm. per product that you sell. Exactly.

56:44 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? But that's the that's the only way. That's the that's a revenue generation for them. And for a small startup

56:59 It's a big block if you wanna play in the mass you know, supermarket chains. You can pay, I don't know, if you have four SQUs, four products that you put on the shelf, so four times, you know, hundred and twenty, hundred and fifty thousand dollars. Yeah. And

57:14 Hundred and fifty thousand dollars 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, it there's no obligation. So it's a huge it's a huge risk. It's a huge risk. But but here's the thing. 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'cause there there's a lot of autonomy and the buyers are regional and

57:39 And uh and they don't have the the high stocking fees and or I think any fees. So why wouldn't you just go down that that route? So I did not have huge interest on natural channels. I wanted this product to be in a mass channels but ordinary people shop.

57:59 You didn't want this to be like an elite product. Exactly. I was very convinced once I can make this to main channel. And people tasted it.

58:08 This is going to go up, you know. All I needed was one example. Then the shop light guy said How are you going to pay for the for the list MP? And this is a true story. The guy said Well, we need to get paid. And we had no money.

58:24 M B said Can you Take percentage of that hundred and fifty thousand from each invoice when we ship it to you. And the guy said, Yeah, that's fine, but what if it doesn't sell? Yeah, I have no invoice, I have no what am I gonna cut it from? I personally said if it doesn't sell I will give you the factory.

58:44 Wait, so hold on. He's saying Well what if it doesn't sell? You're saying My factor is the guarantee. Yeah. I said I'll I'll give it back.

58:54 laughed. And I think he found out that this is And he made a decision to take it and then And About two two weeks later.

59:05 I had a phone call from him. He asked Kyle to call me and he called me. Then 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

59:20 That was the Combination of three years. Of Doubt. Hard work.

59:28 Finding solution, being on the road, trying to figure out things and all that kinda 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 sh the thing is is that you put on the shelves

59:44 And you still have to get people to notice it'cause you go into a grocery store, they're twenty five, thirty thousand products. How did people Even know about it. It was the cup.

59:55 It was just it was just the the label, it was bright. Yeah. Yeah. It was just it's

1:00:01 Yeah. And then I priced it. below my cost at that time. You knew you were gonna lose money. Yes.

1:00:10 I was okay to lose money for Probably two months. Okay. And by the way, how many shop rights were you in? Like

1:00:19 Five, ten? No, no, it's all of them. I think it was over hundred and hundred and twenty, something like this at the time. Yeah, you you get into system wide, yeah. But I had a simple napkin calculation. If I reach to twenty thousand cases I will break even.

1:00:34 And everything after that it would be um, you know, profitable. And a case is is how many cups of beer? Twelve twelve. Twelve, okay. Yeah. So you were taking a gamble that people would just find out about this at Shop Rights. And buy it. Exactly. And

1:00:49 When he put it into an ordinary shelf like a Common share with everybody shop. uh on on Yogurt Isle. I received an order And it said twenty five thousand cases.

1:01:00 And I'm looking at this order and I'm saying, Is this twenty five thousand or is it two thousand five hundred? I'm that I'm not sure. And I called Kyle, I said Is this accurate or is the They're missing one zero. He says No that's accurate. Yeah. And I said, Is this for a month? Or he says no, that's for the week.

1:01:15 Yeah, I'm wondering, Hamdi, I mean th this is a thing, right? It's a gr it sounds great. You're selling all this yogurt, which is exciting, but then you have to actually fulfill those orders Like how how are you actually able to make all that yogurt.

1:01:32 So that is So you know, you say it you get this all good news that Yeah. And then you look at your blueprint, you look at available Equipment and the volume.

1:01:49 You look at all the limitations that you can think of and they all cost money. Right. And how you're going to how you're going to meet the demand. Yeah. So you're converting You know cooler space into a filler room, we converting toilets into the offices. We uh we whatever needs to be done.

1:02:08 Jeopardizing the quality of the food? Uh we're trying to find. I read that you were You were like Every people were like sleeping in the factory.

1:02:18 Because you You literally had to fulfill these massive. Mass orders and you just did not have mean the people and the facilities to actually do it unless you just operate it twenty four hours a day. I mean you're talking about Thanksgiving, Christmas.

1:02:35 twelve fourth of July weekends. Anyone who has a minute to spare They're back in the f factory and it's not even I'm asking. They're doing it by themselves. You have to realise guys this is a plant That was the last factory that got closed, right? So you have a large corporation closed and left.

1:02:53 you know, 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? Like

1:03:03 possible that this could happen. So everyone went from complete Disastrous. mindset or soul set to exciting place where Everyone gets so Elevated.

1:03:17 High in a way. Right. And you were chain smoking. Just to get through the day. Yeah. And I was I was

1:03:25 I was taking Tylenol Advil. Like uh nuts. I was my I was Wow. Not ha you were not taking care of your health.

1:03:35 No, I was physically mass. most of the nights I'm sleeping on the floor, and on my office. There there is an office, I guess, and chairs. We're eating pizza every day. I mean it's it's pretty Lifestyle. Yeah.

1:03:50 Um Alright, so you obviously this thing is taking off and then you start to get more accounts and there's B J' and then And then Costco, um But you had to I mean now you really have to

1:04:03 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

1:04:13 That part of upstate 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.

1:04:23 Tell me how you Like Connect with them. So this is how it happened. Utica is about

1:04:29 Thirty minutes drive from where the plant is in South Edmost. And I lived in Utica. Utica, New York, yeah. Yeah, I I lived in an 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

1:04:50 Uh These are people. 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 s social issues.

1:05:04 I immediately said we can solve these problems. Um I drive from you to cut a 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, you know, how people are gonna take this? I said I'm pretty sure. I know my people.

1:05:25 And that was started very slow and 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

1:05:42 an opportunity for them to participate as much as everybody else participated. So you have the people, right, and you've got this plant. By Two thousand ten.

1:05:54 Three years. You're doing two hundred and sixty million dollars in revenue, that's like By my calculation, that's more than a hundred and fifty million Cups of yogurt.

1:06:06 that you're selling you how do you go from like Two you know, maybe hitting two hundred thousand to one hundred fifty million cups. How how do how were you doing that? Well, one of the best thing that I had is the m the the the price architect that I put it in place It was giving me enough profit.

1:06:25 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'cause making more yogurt means buying more milk means Buying more containers. you gotta pay for all that and and that is usually when a business goes out to investors or private equity.

1:06:44 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. Yeah, at that time. You know, not only two hundred and fifty million.

1:07:01 Until six hundred million dollars. I run that company on QuickBooks. Wow. And everything. Everything in Chobani was Internally.

1:07:11 um finance. We never had a a an outside investors. Right. So I had over a billion in sales. in in five years and making really, really good margin, 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.

1:07:31 But here's a question, Hamdi, right? You're this guy from a village in rural Turkey, right? In Kurdish village. Yeah. barely spoke English when you came to the US. Or here you are now, okay. So a couple of things I'm assuming start to happen. First of all

1:07:47 The big big brands, the Dan's and, you know, of the world start to see We got to get into the y uh Greek yogurt business, but the second thing that I imagine is you've got people coming up to you and saying, Hey, Hamdi,

1:08:01 You're gonna get crushed by Dan and You'll play the general mill soon. You gotta bring in Outside capital, you've got to 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 don't you're gonna get crushed.

1:08:17 And I 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 fenture capitalists and all that kind of stuff. I'm getting calls from the uh ordinary banks. But this is the blessing I had. I was

1:08:34 Icelated in That's small town upstate New York. Yeah. I have no previous network of people in business. I I don't know anyone. And

1:08:45 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 You know, that kind of stuff. So we are Kind of from Mars.

1:09:01 Right. You weren't. I don't think it thinks at me that what I have just made it. I don't even realize what it is. Um until like you just touched it a little bit That this is how it is.

1:09:18 you build something, the big food is going to come with two things. One. Um do you want to sell? And in that is a hitting another in information. If you don't sell I'll make the same thing. Yeah, I'll crush you. I mean you're you're uh your I'm big food companies are must be coming to you and saying, Look, sell to us, we can make this bigger. You'll make a lot of money

1:09:39 But if you don't do it, we'll just do it on our own. And y you know, we've got massive marketing budgets. We we've got a huge distribution network. Like you're gonna be In trouble. Yeah. That's very scary. And

1:09:51 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 five, six hundred million dollar sales area. And they did come and they said But about sell it. And the numbers were with billions. They were offering you and you you could have just'cause you owned the company.

1:10:10 Who's yours? Yeah. It's great. Great offer. Yeah. So now he s so imagine this guy.

1:10:18 Um You know. Working in the factory twelve four seven seven, living in a b one bedroom apartment in Utica That is The bet hasn't been you know.

1:10:28 Fixed maybe. Not taking care of himself, drinking a lot of coffee. Eating pizza slices. Okay. Exactly. And then somebody says you can be a billionaire. And I can even spell billion. Uh you know, really literally I didn't know how to spell billion. So now That's you

1:10:49 Yourself. having this real moment Right. Um No one

1:10:55 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 an a pull to just

1:11:10 Do it. Take the plunge. Guy, imagine I am In upstate New York, in I am mid thirties, right, maybe at the time, I don't know, close to forty. And I have offered this huge amount of money and yeah, there's endless what you can do with this money.

1:11:28 Yeah. And I said. Not to it. And I said no a few times. And why?

1:11:36 I was more Excited about The Journey These things was happening.

1:11:43 than the value was generating from it. And It feels like I'm in this 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.

1:12:04 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 mountain. I have this enormous amount of Uh curiosity. And I wasn't going to stop it.

1:12:19 For anything. Uh that in the world. Yeah. that that desire to see where this that where this was gonna go. Yeah. But

1:12:28 you clearly had enough confidence that your brand at that point I mean because I think by twenty eleven you were The number three yogurt brand in the country after the You're playing Danon. But at that time You knew that there was gonna be an explosion of competitors.

1:12:45 Absolutely. And you were worried. I was very worried. I was very worried. And

1:12:52 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 Um I built the factory in Idaho which

1:13:14 I went to Idaho first time. I said we need to build this factory really fast. This is a million square foot plant. Yeah. Yeah. It's a one I think it's now it's a one point four. At that time it was close to one million square feet plant. Wow. And with fourteen lines we build it less than one year. Wow. That

1:13:33 Really Um It was It was in a borderline stupidity. Meaning I underestimated how complex that was going to be.

1:13:44 And are under 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

1:13:58 Yeah, early Companies. you know, journey is completely different than the second phase. And if you don't make that transformation is it's gonna be of extreme damage in and it became almost Uh

1:14:10 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 you had to basically get rid of some people and you

1:14:21 It's hard to do that when because they were the loyal uh people who helped you start it. Exactly. But you had to You had to make some changes. Yeah, y we made changes after we hit the wall, right? We had a quality issue with with mold.

1:14:34 Well this is in tw twenty thirteen you guys I think you had a a recall which really was very damaging, right? It was actually quite damaging for you because you you don't use preservatives and you know, 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

1:14:54 This is mold. Mold is in the rooms, in the bread, it's everywhere. You know, you open the car and you see green mold and it's not nice. And it was 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 people's and all that kind of stuff.

1:15:18 But to my bone, to myself, I knew the investment in Idaho was the right thing. But I would question now. Is The way that I did it. Right? I would 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

1:15:34 But more. You know, team members in place and make some changes. Right, because the 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

1:15:48 You know, moment. That I will always Go back to Um You're about to

1:15:56 File bankruptcy. You were about to file bankruptcy. Exactly. I've never talked about this anywhere before. It wasn't that damaging. But what it is is Um The banks got really nervous and they wanted their loan to be paid back.

1:16:13 And and that loan was used to built a factory supported by Ibida now you have enormous amount of losses because of that factory. So the recall happens, all the loans get called in and you've gotta basically come up with a cash and so you're thinking We're done. We gotta go we gotta file bankruptcy.

1:16:32 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.

1:16:45 Ah, 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 when

1:16:56 And I remember the gentleman called me. And he said, Here's the amount that you will get It is the Yeah, percentage of the company that you have to give away, which is about was almost majority at the time.

1:17:09 And 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

1:17:20 Regret. Every day going forward. You are entrepreneur, you build things, and you make one miss step. 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.

1:17:34 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.

1:17:42 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 uh to Uh bankruptcy. Wow. And you say how do you go from the top of the mountain?

1:17:56 In within three to four months. Yeah. You right? And I'm not expecting that, accepting that. And I said, Okay, it's fun. I built it, I'll bury it and

1:18:05 And it's a very I mean you're very stubborn. Right, and I mean that's of good quality, but it can also be Can also be uh sometimes not a good quality. Yeah, asked my wife about that, yeah. So she would say the same.

1:18:20 Do you have a way You have a way to make me say things that 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. But I had no doubt at that moment. I remember walking from my apartment at the time I had an apartment in New York.

1:18:43 to an office where I was meeting one of my colleague and a lawyer and a and a financial person And uh next to the park I cried. And I I saw the tears coming because it's it's it's It's hard. It's hard that you are about to Bury something that you give your best to and you build.

1:19:04 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? A night before. A night before.

1:19:19 Well. Yeah. One night before before we file at the banker called and said Hamdi We hear that you're going to do this, it's gonna make us look so bad. I think they were also Acting

1:19:31 acting really out of ordinary at that time, forcing me to do something. And he said, Well 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 deleverage yourself in a certain things. I said, Yeah, sure. But I had no idea that's was gonna come. I knew this was a at road that w we were gonna end up and this company was gonna be a bankrupt that maybe wouldn't exist later on. Yeah. If you had filed bankruptcy, it doesn't necessarily mean the the brand would shut down, right? I mean you you you could restructure it. But um But it was unclear.

1:20:05 What would have happened. I I don't know. I mean but the the one thing is How do you go become uh one of the fastest growing companies in the history Because we literally went from zero to billion in sales in five years without taking a penny from our side in that factory. You should have been buried by the big

1:20:25 Yogurt makers within a year or two. Yeah. No. Yeah. Humdie you know. I'm I'm curious because when in in

1:20:33 after that crisis, right, in in twenty fourteen. Um TPG. This um private equity firm comes in, uh, makes an investment and part of that Agreement is that the other thing is that the other thing is that the other thing is that the other thing Uh

1:20:44 A man named Kevin Burns would become the interim president and C O O you were The CEO um 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.

1:21:01 Now There was pressure. for a new CEO to bring in a professional CEO. There were us 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, you know, he's in over his head. Um 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

1:21:25 Look, I I 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 a certain time and you say, Okay, I'm good at Certain things but I'm not good at this and this and this. Right.

1:21:42 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, day out without You know, being involved in the floor every single day. Yeah. So that I saw that value.

1:21:57 And that's not because we were not growing, that's not because there was a lack of opportunity, all that kinda 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 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. A hundred percent. Yeah. The problem with the

1:22:19 The the the the the CEO things is Through this journey of my from two thousand nine to two thousand eleven, I probably interviewed Five? Maybe Six. Candidates for CEO?

1:22:35 And every time I I I interview the person And I would see a dimension that would not fit Chobani. I would see a dimension that it would be risky. I would see a dimension that it would not Whatever that might be, I was extremely worried.

1:22:53 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.

1:23:03 And It is not about You know, 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 two thousand nine, two thousand ten, two thousand eight. No. Right. You

1:23:18 In a last sort of Seven s seven eight years really very much publicly turn kind of m made Chabani into a company that was, you know, big advocate of immigration reform to hire uh hiring refugees. Um

1:23:35 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 don't ask me what our politics are. But you decided We're gonna actually stand for These things that we're gonna do.

1:24:01 There's lots of people in America aren't happy about it. So Why why? I mean it's risky. Um, I look at from the humane 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 Chopin is extremely successful if it is, is because of those angles. I didn't follow the craft route, I followed the the kid from

1:24:23 you know, uh from uh Kurdish Mountains uh belief mix 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.

1:24:44 own place for years and prove that this works before I come I have a credential to go out and talk about it. Yeah. Hamdi that There's so much we can talk about and obviously we're not gonna be able to get to everything um in the story of Chabonny today, you know, roughly Chabani's got about twenty twenty two percent of the yogurt market in the US. It's it's a you know massive company with

1:25:05 there you know, there there's talk about um eventually taking the company public, which may happen next year or or maybe beyond Um When you think about

1:25:17 the story of this young guy who was like grew up, you know helping his family their For their flock of sheep and goats to, you know How you kind of

1:25:30 made it to the US and and Yeah. all those people in in New York who d brought you their farms and let you kinda live there and And then you built a company that, you know with a a multi billion dollar valuation

1:25:43 How much of that do you think has to do with just how hard you worked in America and how how much do you think has to do with H you got. Uh I guess combination of all. Um Um

1:25:55 I don't know. I sometimes Pitch myself. Mm. I always say I brought a seed. Maybe it was loaded with a lot of Traditional.

1:26:08 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

1:26:18 Three kids now, a girl and two boys. And that's I feel like is my biggest responsibility to make sure that the next generation, my children and the children's children's and everybody's children. find the land the way that we found it and it's if anything it's improved. But I think it's in there it's in an under an enormous amount of stress. And

1:26:38 We cannot take this as um you know as Like granted, we we just have to make it work. And we need to work harder to make sure that this stays alive. That's Hamdi Ulekia. Founder and CEO.

1:26:51 of Chabani. About a year after we ran this interview, Chabani 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. Chabani 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. twenty years ago.

1:27:22 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 guyroz.com or on Substack. This episode was produced by Josh Lash with music composed by Ramteen Erablui. It was edited by Neva Grant with research help from Claire Murashima. Our production staff also includes Alex Chung, JC Howard, Carla Esteves, Sam Paulsen, Casey Herman, Catherine Seifer, Carrie Thompson, Andrea Bruce, and Elaine Coates. I'm Guy Raz, and you've been listening. to how I built this.

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