How I Built This with Guy Raz - Chobani: Hamdi Ulukaya

Episode Date: November 14, 2022

As a newly arrived immigrant from Turkey, Hamdi Ulukaya learned to be resourceful, determined, and even stubborn when he needed to be. All those traits would serve him well as he began to navigate the hairpin turns of building a yogurt business from the ground up. In 2005, Hamdi was running a small feta cheese business in upstate New York when he happened upon a piece of junk mail that would change his life: an ad for an abandoned yogurt factory...$700K, as is. He knew if he could get his hands on it, he could bring a new kind of dairy product to the U.S.—the thick, creamy yogurt he’d grown up eating in the mountains of Turkey. With the help of a local bank, Hamdi bought the factory, and sales grew so quickly that he could barely keep up. A few years later, some bad business decisions nearly pushed the company into bankruptcy, but today, Chobani is one of the most popular yogurt brands in the U.S; and Greek-style yogurt has become a staple of the dairy aisle.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. 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. I would open a cup. And if I see yogurt, underlit, that was a bad day. You were totally obsessed with it, as you should be, because you're trying to make a product that's so good that it's going to knock people out the first time they try it. Exactly. I have no luxury of, oh, I wish I had done that. I wish I had done that. This is one shot. If it's not successful, I'm out. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements, they built. I'm Guy Raz and on the show today, how Hamdi Ilykaya arrived in the U.S. with no money and no plan, bought an abandoned yogurt factory, and built Chobani into one of the top-selling yogurt brands in the U.S. A few years ago, I interviewed Eric Ryan on the show. Eric is the co-founder of Method soap, and one of the ways he came up with the idea for what would become Method was by simply wandering the eye.

of supermarkets. He'd walk up and down an aisle and just look at the products. And he'd ask himself two questions, which category is ripe for disruption? And do I, Eric Ryan, have the ability to make that disruptive product? He soon landed on natural and eco-friendly dish soap, and with his co-founder, Adam Lowry, they started to make soap in their kitchen. Eric felt that there was room for a beautifully designed and packaged hand soap that could compete alongside the usual suspects. And he turned out, of course, to be right. Now, there are lots of examples like this stories we've told on the show, like Dogfish Head Beer or Away Luggage or Angie's boom chick-a-pop. All of these brands saw an opportunity to offer up a better experience within

an existing category of products. Now, 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 Danin, Yoplay, and supermarket brands. And what we now call Greek yogurt was almost nowhere to be found and mainly in small specialty stores, which is kind of crazy because today, Greek-style yogurt accounts for 50% of the entire $8 billion yogurt market in the U.S. That's roughly $4 billion of Greek yogurt sold each year in America alone. And the brand most responsible for its rise?

Chabani. Chabani's founder, Hamdi Olokaya, is from Turkey, but Greek is the term Americans used to describe yogurt that has most of the water strained out of it, so it's thicker and creamier than other kinds. It's the type of yogurt that Hamdi ate when he was growing up in a remote part of eastern Turkey. And when he emigrated to the U.S. in the mid-1990s,

he had no intention of turning the thick, creamy yogurt of his childhood into a billion-dollar brand. And the story of how Hamdi came to do exactly that is one of the most improbable and yet inevitable stories we've ever told on the show. Improbable because Hamdi barely had any money when he got here. He spoke almost no English. He had no background in business.

He'd grown up in an isolated community of shepherds and farmers. But that is one of the things that makes his success, well, almost inevitable. Because those shepherds and farmers, they knew everything there was to know about cheese and yogurt. And from an early age, Hamdi learned how to make it himself. He also learned how to be incredibly resourceful and, 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.

Handi Ulukaya grew up in the 1970s and 80s near a tiny town in a Kurdish region of eastern Turkey. He lived in the mountains with his family in a semi-nomadic community. The nomads were really isolated from the everyday. life. Yeah. We kind of, we were kind of people like from Mars, really. We would come to town and buy our flowers and sugars and whatever it is. And then the second we are done, we are on our horses and mules and we are up in the mountains, right? So we don't get involved with anything. Yeah. And the only thing that we has exposed to stories outside of that little town and the mountains is the people who come back from the big cities, whether for military service that they have done or they

travel for a reason of selling the cheese or bought some grains and they will come up with stories and what they saw. But we really were very much isolated from the reality of lives. From what I've read, your dad had quite a successful cheese making business, right, in town. Yeah. So he was Aga. So Aga means he's the leader of the tribe. And my father kind of didn't want to follow that tradition, but he was kind of natural leader. Now, because your aga, you don't have other things. Like, you know, we didn't have bicycles, for example. We didn't have toys. We ate the same thing. We had the same conditions. We live under the same tents. So it didn't make it too much difference in life. But what it did is you had a reputation. People will trust you. They will value

your opinion. And usually you will buy all the other people's cheese and you combine them and you would, my father would take it to big cities and sell them. Right. So he created a little bit of business out of it, but nothing major. Like it was, I would say a small business. You know, it's interesting because when you hear like semi-nomadic, you think, I think people think like the steps of Asia or Tibet or something. But, but I mean, you, you grew, when you up when you were a boy, like you were more or less, you know, I mean, you had everything you needed from what I understand, right? Absolutely. Yeah. Yeah. You weren't living like in a dirt room sleeping on the ground. No, no, no. We had a, you know, decent life. I don't think we call

ourselves poor. We never consider ourselves poor. You know, we consider ourselves lucky. And you had like a television, refrigerators and, you know, ovens and, right? I mean, Later, yeah, later. Yeah, when it arrived to town, we would afford to be able to buy TVs and refrigerators. I remember my mom when she got the first time the washing machine. It was just fascinating. We would all watch it how it does it, you know. Gather around it.

Yeah, yeah. No, they could afford things. It wasn't, you know, very rich life, but it was, yeah, it was decent life, absolutely. You did go off to college, from what I understand, to Ankara University. Yes. And from what I gather, from what I understand, you were a student there during a particularly volatile time in Turkey, especially for people like you, for ethnic Kurds. And you became a bit of a political activist at the time.

You were, I guess, even involved with some left-wing and socialist groups, which I guess made you feel like Turkey at the time wasn't the right place for you to live. And 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. It's a person when I helped my brother in his stores, he would come every evening around 5, 36 o'clock.

this guy with a glass, serious looking guy, you know, maybe in his 50s, he would come and buy small things like eggs and tomatoes and some meat and all that kind of stuff. Yeah. That guy heard me saying to my friend that I'm going to go to Europe, he just said, don't be stupid, go to America. And I remember telling him, why would I ever go to a capitalist, imperialist? you know, a country that has done all these bad things, you know, that typical, you know, the language.

He said, you think Europe is good. Go to America and if you don't like it, you can always go to your Europe. So I dismissed them. I said, get your eggs and meet and go to your place and not 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 TVs. So I waited that day, the next day, until that guy showed up.

And I put him on the side and I said, tell me more. How do you know America? How do you go to America? What can you tell me more about it? Turns out that he studied in the U.S. And he knew a lady in the center of Ankara that had an agency that would send students to universities across the country for learning English. and he gave me her numbers and he said go to this person, go to school, try to learn some language.

If you like the land, if you like the way of living, you can stay and further study. And if you don't, you can go wherever you want to go. So you basically came to the U.S. under this program to learn English, to study. And where did you land? Where did you arrive to? So I go to this lady. and she said, okay, so you want to go learn English? I said, yes.

And she says, where do you want to go in America? I said, I don't know. So she opened this map, and she was telling me, and I remember like yesterday, oh, I have school in Boston, I have a school in Delaware, I have school in New York, and she was going on. 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. Right. So she had a school in Albany. She had a school in Manhattan. And I remember saying that, you know, those big buildings and a big town, big city, not in there, but not too far from there either. So she said, okay, I got you. And two weeks later, I had received the acceptance form.

And this whole thing happened within a month. And I went back to my hometown where I grew up. And my mom was there. And I spent a week there. with my mother and probably one of the hardest goodbye of my life. My mom was old now. She couldn't go up in the mountains anymore. This is 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 a hospital where she needed to have a chance. check up in the town and we hug and I said goodbye and I had a nephew and I was taking him to Ankara to his dad and when and I was driving this is the 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,

uncle, 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 goodbye to life of tribe. My last goodbye to my town. All the life that I had in those mountains, the tribes, the shepherds, all the conflicts, all the university,

everything that was designed to go for me in that life, I just go back to that moment and that's goodbye. 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 out at Adelphi University on Long Island. Is that right? Yeah.

It turns out that acceptance was Adolfi University in Long Island. and it was one of the most expensive English class. And I had $3,000 in my pocket. My brother gave me from Istanbul. So you arrived with $2,000. Three. $3,000. And you get to Adelphi to study English and how did it go?

Or how long did you last there? Because I don't think you were there for very long, right? A month. A month, okay. Yeah, just a month. Because the $2,000 of it was spent in the first month. You were running out of money. I was literally running out of money.

I couldn't. I had to learn. how to speak and I have to learn. I had zero, like really zero English. You had zero English. Zero. Zero. It's amazing. I mean, that's 1994. It's not that long ago. Yeah. This is October 1994. And you're like a fish out of ocean. It is, this whole life has dramatically changed in so fast. I wasn't even having mental preparation for this. Yeah. 23 years old, 22 years old. 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. So I start doing things like, you know, you hear from the other students. You do dishwashing, you know, help here and there when people hire you. And you get by. You know, you just go through it every day. 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. Well, the assignment was how to make anything? Something. Something. Just how do you make something? So with the help of someone in that place where I was living, I tried to write how to make cheese. And then a week after this amazing lady teacher, 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. 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'd grown up making cheese. I know.

It's like. Yeah. 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 that was in our part of the world. I mean, I never thought about it.

So I was having a hard time and I can't wait for the weekend to come. She tells me which bus to take and where she's going to pick me up And she wrote down everything. If I get lost, so I can ask people, and she put numbers. And she picked me up from the bus station in Albany. And then from the Albany bus station is another hour drive to the border of Vermont. You know, this beautiful. I mean, as I'm going, I'm just, I can't believe what I'm seeing in these hills and the mountains.

I feel like I'm back home. And it was a simple farm. And that they were professionals, a husband and wife, one 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 do you do? You're there for the weekend. So what did you do? How do you teach them how to make cheese? We made it from the goat's milk, which is the closest to ship milk that I grew up with. And in the evening, they made sandwiches, they made fire and we sit around the fire, which is, you know, that's what we used to do.

you know, when we were up in the mountains, I had the best time. And the end of the second day, as I was getting ready to go to the bus station, I said, 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. I don't know what she exactly said. I think there were some issues with it. But in a month or two months later, she said, you know, if you still want, you can come and stay in the farm. Huh.

So she was offering you to go move up there. Yeah. And by the way, I'm just assuming that when you got there, because your assumption was there were no farms in New York, but when you got there, it kind of took you back to where you grew up, right? Because you're like, oh, all of a sudden, I'm around farms and animals and goats and sheep and cheese. Yeah. When I came back, I made my mind there is no way. No way I'm living in the city. I'm moving somewhere up there.

Definitely, because now I know a place like that exists. You want to be around goats 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 offer. I jumped. You jumped. Oh, my God. I jumped. What we can do for, was you offering to pay you too? Or were you just going to figure that out on your... Well, I don't think they could pay me.

Yeah. But I could live and help, right? So that's kind of how it could. And until I get a job or I move out and all that stuff. But it ends up being that I lived in that farm for a year and a half. And what did you do? I did everything. I did everything in that farm.

And you're living there by yourself. in rural, New York, upstate New York on the Vermont border, just you, this kid from Turkey. That's exactly how you describe. 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 5 o'clock in the morning. I gather the cows and I put them on the lined up. I milk them.

I clean everything. I feed them. I water them. Make sure that the calves are fed. And then I will drive 60 miles to Albany to go to school in Albany, continue to learn English. Oh, wow. And you did that every few days? Every day.

Every day I drive. Wow. And then I would do it 5 o'clock in the morning, milking. And then when I come back from the school, the first thing at 6 o'clock, I would do again, same thing, milk the cows and all that kind of stuff. And by the way, Humdi, did you have any friends? I mean, you're like in your 20s, you're a young guy. were you just like milking cow, you're working on a farm, going to school,

working on a farm, going to school. In the last six months, my brother, my younger brother came and joined me. Not much friends. The everyday farmers, I interacted with farmers. And really, I think I got to know America really well

because I moved up there. And I got to interact with farmers. I got to interact with residents, real people, In New York, really, you have people from all over the world, right? So you have Turks and everybody. Up there, you know, I was probably the first person from Turkey that I've ever seen. Yeah.

All right. So your brother comes and visits you while you're there. And then I think the following year, 96, your dad comes to visit you in New York. Yes. Tell me a little bit about that visit because I think this would be kind of a pivotal visit. I mean, he was sort of presumably coming there just to kind of see you and your brother. had been there with you. And he was sort of coming there to not just to visit you,

but maybe also to find out what you're going to do with your life. The simple way of put it in is my mother sends him to say, go check them out and see what they're doing. Right. And then he comes. And I'm trying to figure out what I'm going to do with my life. I don't know. But one thing is for sure we have to work.

We have to make some kind of income. And he said, it seems like there's not good feather cheese in here. Your dad, when he visited, he noticed that the, what we might call feta cheese, right? It's not good here. And it was not good. It was pretty awful. Yeah. It was pretty awful at the time. And just to be clear, like this is something that he would just eat for breakfast every morning, right? He would have feta or and olives. Right. This is kind of a traditional Turkish breakfast.

And he tasted and says, this is. is really bad. Is there anything good? I said, no, this is it, what we can find. And I said, wow, why don't you ask your brothers to send you feather cheese? And you can sell it here. That was the big idea. Yeah. So I got to work and found an Armenian distributor who carried Middle Eastern products based in Queens. And Queens. Okay, so you found, and they were, and you called them to see if they would be interested in carrying your cheese? I called and I went to visit with him. So at that time, I got some samples and stuff from back home.

My brother sent it to me. And I went to visit and I said, we make this cheese, which would be interested buying it? And I said, well, you have to know the law. It has to be 100% sheep milk. Otherwise, it will be exposed to duty. It will be too expensive. All these worries and questions. But the answer was, yes, I will consider it.

And that was the beginning of my business journey. Until that moment, I had never been involved with business. Wow. Yeah. Can I ask you a question about the cheese? So this is cheese that your brothers were actually making back in Turkey. Yes. And was the cheese in jars?

Was it canned? I mean, how did they ship it? Was it shipped in coolers or did it not require cooling at all? How did you receive it? Oh, definitely cooler. Yeah, definitely cooler. It has to be refrigerated. Right.

And we made really good money on important. that cheese, at least compared to, you know, working here and there, right? So we don't have a lot of expenses. Right. It was just you and your brother and just making sure the cheese arrived. And that's all you were importing, just to fit up. Yeah, that's it. Yeah.

But then my mother got sick and I went to Turkey. And I came back with my mom, discovered that my mom had a very severe liver disease, that we had no idea that she had it. Then six months after she passed, I had this time of being, again, feeling like numb. It was this time of total loss. Because she was the most important person ever been in my life. And she was the most important person in the family. My father was a big shot and all that kind of stuff.

but really it was my mother the reason that I was in New York City that she made me to be that person to be independent and come here and of course my God the love that she had and caring that she had and she made us at least I can speak of my own

she made you feel like you were the most special person in the whole universe and made sure that you believed in it so she was my backbone She was everything that I was. And now she was gone. So it was a very, very massive event. And it was extremely difficult to really stand up and get out of the bed for a long, long time.

Wow. I guess you were eventually able to somewhat recover from that and get back to the business. that you were running with your brother, Bilal. Yeah. But from what I gather, you started to, maybe both of you started to think, you know, hey, we can probably make more money or grow our business if we made the cheese or we made it here in the U.S., right? Yeah. How did that, how did you start to tell me about that thought process? When did you start to think that that's what you should do?

It was another idea of my father of saying, you know, this importing 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 cheese to make. And you can even make it with the cow's milk. Why don't you find a place where you can make this cheese here? Given there were domestic fat that being made here. The problem was it was horrible, like literally awful. Like it was so bad.

and say, okay, people are buying this stuff. So if you make it a little bit better, you know, it's endless. Yeah. So this is no-brainer. The question is, okay, where do you make it? How do you make it? What kind of environment? What kind of place?

And how do you put this together? Why don't we come back in just a moment? How Hamdi starts his own cheese business but switches to yogurt after pulling a vitamin. 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. 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? Watt is this stainless steel vessel, let's say 2,000 pounds, that you can go 10,000 pounds, where you pasteurized the milk. Right. It's like, how do I afford to these equipment? And there was a local bank called MBT in Johnstone.

The gentleman there said, you know, you can get the USDA to have a loan guarantee, meaning it gives some kind of comfort to the banks, I guess that's the way to put it in place, that they will lend to the local businesses to start their business or expend their business, and if it goes wrong, then their risk is 90% removed. And they set up the meeting with a gentleman

out of Syracuse of the USDA, and he came and met with us. And then we heard back after, I don't know how long, a month or two, that we were given 90% guarantee or the banks was given 90% guarantee. It was mind-blowing. So that basically took care of that part. All I had to worry about is the 10%

and, you know, working capital and all the unthinkables. Yeah. All right. So you get the loan, right, to make this happen. And you've got two things that you have to do. You have to start making cheese and then you have to start selling it. So first of all, on the making cheese,

because I think the factory, opened in 2002. You called it, it was called Euphrates. This is the company that you and your brother started to make cheese. Exactly. And did you, so you made cheese. You had a pallet by, 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? Um, no. I, 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. Why? You know, it turns out the theory and the reality is two different things. But you knew how to make cheese. You'd been making cheese for years.

Yeah, the milk is different, right? And then you make the cheese and then how it stays and 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 and getting the consistency is hard because every shipment of milk is different. Every shipment of milk is different. Now, we made cheese with un-pasteurized milk. Now you're pasteurizing,

and so you have to fine-tune that. And you're relying on culture companies. You're relying on equipment companies to be able to make that kind of adjustments. So there's a lot of trial and error. We couldn't do all those things until we had the rats in place. Yeah.

By the way, how many people were working there, 10, 10, 12 people. Yeah, I'm making the cheese. I'm packing it. I'm salting it. I'm putting them in the palettes, you know, 10 pound pails or 20 pound pails, whatever it is. Where did you find, where did you find customers to sell all that cheese? So that's a good. I start looking at Greek distributors now because now I'm really making feta, like really feta. 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. These diners are all over the Northeast. Northeast. There's 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 is even comes even without your ordering is the Greek salad and that Greek salad has chunks of fed on it. Yeah. But I soon enough I'd realize that this is not this is not a huge marching 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. Right. They ship it all around the country and, you know, look at the diners, the quality is not the number one thing, really. I mean, it is, but it's not. You say, yeah, it says, I get it.

But I put onions in there and I put black olives. Yeah. I put them black olives and I put the olive oil and vinegar. No one cares about the feda. Yeah, who cares? Yeah, I get it. 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?

for you. Yeah, so not big, but the distributor. You can't go diner to dining. Yeah, it's not possible. You can't scale that right. Yeah. So the first eye opening for me was I called this distributor in the Syracuse. And I says, can I come and show you some fat? I said, sure, come. And I go and I show him and 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? Is. it's two pallets a week now every other month oh god i mean two pallet every other month is not a fraction of it's nothing 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 get

myself into yeah i read i read something you said you said that the years, those two years from 2002 when you started the factory, Euphrates, in 2004. So 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 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 get 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 plant. And I will go there and I will cry and cry and cry by myself. And then I will come up after I'm done into the,

inside the factory and stop 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. Yeah. That two-year period, you got through it, but you did start to turn a profit after those two years, a small profit, I think. Yeah.

So I realized that I'm not going to be able to sell the fetter amount that needed to pay all my expenses in this place to one person or two person or five person. I have to get it as much as I can. So that means that I have to go between Boston or New Hampshire or Maine to all the way down to Florida and eastwise, maybe Detroit and Chicago, and find all these small distributors that would buy one or two pallets a month. I slept on the roads with the van and met all these amazing small.

small distributors, family-owned smell distributors. Yeah. And I end up getting them hundreds of them. Wow. 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, of $2 million in sales and 40 employees.

No. I didn't think that this would make me rich or you would get rich out of this. Right. All I wanted to do is survive, you know. And two years, 2004, you get it and you say, okay, I think I survived. I think I survived. Yeah. Like middle of 2004, I felt like I could breathe, yeah.

Yeah, wow. But that year, something pretty pivotal happened. A property came up for sale, I guess, not too far from there. Tell me the story of 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 at my office and my desk.

Yeah. So once, maybe a month, maybe every couple of weeks, I decide that I'm going to organize my desk. I'm just going to go through all the documents, all the papers, all the letters, you know. Yeah. And you open the envelope. Sometimes you don't even open the envelope. You look at the, where is it coming from? And you know, this is somebody's trying to sell cars, somebody tried to sell mortgage, somebody tried to sell credit card, whatever that is.

You know those junk mails. And you just tear them off and put them in there. And every once in a while you see an interesting envelope. Yeah. So I come to this one and I open the envelope. I don't know where it comes from, of course. So 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 you can tell that it's a really, really old. I mean, the picture 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 te 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. It turns out that it's a real estate agent from Utica. And I called the person answered and said, yeah, this is a yogurt factory. It's an old one. It's craft. And they closed it. And they're selling it as is.

And I asked the price. I said, what's the price? He says $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 just because of the equipment. Yeah, because I know pretty much what things cost from the experience of putting a smaller version into our plants. It's 20,000 square feet. This one says 67,000 square feet, so it's three times bigger.

And it was owned, and it was owned by Kraft at the time. They were selling it. Yes, yes. So it was enough interest in. So I said, can I come and see it tomorrow? And I picked one of the guy 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 name is Rick Lake, Rich Lake. He says, hi, I'm the production manager. The plant manager is not here. I was told to give you a tour.

And he takes me to the plant. And it's basically every time he goes into places, he turns the lights on. It's not a working factory anymore. It was until maybe four months ago, five months ago. Yeah. So that's basically the 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 town 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 funereal feeling. Yeah. I felt like somebody died. Because they were about to lose their jobs. They were not only losing jobs. a place has been there for 70 years. It was a sign of life, really. That steam came out of that place was a sign of life. Everybody's grandfather walked there, mother walked there, father worked there.

It was just walking in that plant was walking in a cemetery. It was that kind of. And by the way, from what I understand, this was a place that made cream cheese. Philadelphia cream cheese was made there. Exactly. And yogurt, too. Yes. Brier's yogurt. Yeah.

And I'm curious because from what I understand, from what I've read, it was really old. I mean, it was like crumbling paint and it was not in great shade. It didn't look good. Yeah. And there is a smell, old smell. Like 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 keep telling me is that it is as is. we don't take any liability of anything. So you buy it, it's all as is. You can't come back and say,

oh, this doesn't work, that doesn't work. Whatever the things that you find is good and bad, it's all yours. And I left that place after a couple of hours, and then when I left, I called Mario Papa, who was my attorney in Johnstown. And I call him up and say, Mario, I find this place.

I didn't think that I would be interested walking in, but now I just left. It's a really amazing place. It's got everything. I can make yogurt there and I want to buy it. And I'm just like, you know, when you see something that 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, wait, wait, just wait, wait, hold on, hold on. Tell me what do you think. Who owns the company?

Who's closing it? What kind of place? And the guy said, Hamdi, this is the largest food company in the world. Craft. Yeah. Yeah. Wonderful. Yeah.

And they're getting out of yogurt business. They're closing the factory. Who the F are you? You think that you can make something out of this? Which is a fair question. I mean, if one of the biggest food companies is getting out of the yogurt business, at least there in that factory, why would you think you could make it work? He was asking you.

Fair question. Yeah. Makes no sense. very fair question. And I said, no, no, they don't make good yogurt. I can make good yogurt. And, 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. He said, you do not have, you do not have, $700,000. You will never have $700,000. And if anything, you haven't paid me in the last six months. I have bills.

It just basically said, and it was true. I had not. Yeah. So I said, you just made it. I know it's been painful for the last two years. You just can 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 plant barely profitable. And he knows that you're in for a, a nightmare if you try to do something new now. Yeah, he thinks that this is the stupidest thing. Yeah.

And I took his advice very seriously. He was right. Yeah. And I am in my office, maybe a few weeks after, I have this regional bank. It's called Key Bank. And, you know, they're salespeople. They go from businesses to businesses in the communities and say,

what can we do? Do you need anything? you know how they are. And there's this two gentlemen shows up. One is, Pat Mucci. 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're selling it for $700,000. And, you know, I call Mario. I think it's a stupid idea. But I thought, you know, if I get this place, I could make some really cool, yogurt out of this place. And I keep talking about it. And he says, honey, you know, we are

partnered with SBA, small business administration. And if we get their backing, we can come up with a plan. I mean, of course, I have to go look at the plant and look at the equipment and all that kind of stuff. We could make this happen. It's a small chance, but it's possible. Wow. It's worth pursuing. And says, why don't you make a business plan? And I'll send you some applications and you fill it and we can look at this. Now I said business plan, I've never not 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 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 context

with the real estate agent to tell the, to make the story short, they got you the loan. They got me the loan. Wow. Can I, can I ask you a question about the business plan for a moment. I mean, your plan clearly was to make yogurt. But what were you going to do that was different? How are you going to I mean, if

Kraft wasn't making it work, what was the thing that, like when people said to you, hey, Hamdi, what are you going to do? What did 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. Right. But compared to what it was here, the yogurt was 10 times worse. It was literally horrible. Like it was awful stuff. Right. And I thought it's milk and culture.

There's not cost side of this. It's just milking 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 then the second data point for me was, you know, if you meet with people and people ask you where are you from and you say, I'm from Turkey, the next thing they say, oh, I was in Turkey or I was in Greece. And within a few minutes, the first thing comes up is the yogurt that they had in Greece and Turkey, you know, with honey and walnut and that was one of the best thing ever. So there is a disconnect between how people are talking about. 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've got to get Maria because she knows all the vendors. You've got to get rich because he knows all the production equipment. You have to have Mike Allen. Mike is the guy, the guy knew exactly where all the pipes were,

where the lines were, because there was no drawings. This was so old. No one had, you know, the, the blueprints of the plant. So I had to convince my calendar come back, which I did. And then the wastewater side of things, that was Frank. He knew how to turn that back on. So I had those four people with me in the summer of 2005. Right.

And they're questioning me. They're looking at me. It says, like, who is this guy? How are we going to? And I can tell the way that they are interacting with me, that they're not overly excited. They are not overly, you know, drunk with it. But they're cautious.

At least they have a job. And they're looking at me and saying what kind of, you know, ideas and improvements that he's going to make. So I'm managing that human psychology at the same time while I am not saying I don't have any ideas, but at least I'm not sitting around and doing nothing. All right. One important point. And I, you know, just to, and I think a lot of people know this, which is the reason why what we call Greek yogurt is, is thicker is because it's separated from the way, right? Because milk is 99 or 97% water, right? And then when you turn it to yogurt, there's still a lot of water in there. So you've got to literally like put in 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 in that factory, right? Because this factory wasn't making Greek yogurt. It was making regular, you know, American-style watery yogurt. You're 100% right. In a commercially, this cannot be done with the cheesecloth. It 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 Chobani. Choban means shepherd in Turkish. And Toppani, in a little bit of different way of saying it, is also mean 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 world in all dimensions. Yeah. And I was so excited with the name. I couldn't wait until I get back to Chicago to go to my room and see if that chobina.com was available.

And I guess it was because you got the domain. Yeah. And so now you've got a name. and you've got a separator to make the Greek-style yogurt. So what else did you need to do? What happened next? So I spend a long as amount of time about the cups, you know, what the cups is going to look like.

The cups for your yogurt that you were going to sell. I was so convinced that if I'm 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. It used to be some European cups. but the cups are as simple as it sounds. If it goes into yogurt, it needs to be FDA approved. So 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 sleeve it for you, and we'll ship it for you. And I said that was good because none of the packaging companies here would make it for me. And this was going to be initially Chabani was just single serving. 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 then I wanted to have a foil that every flavor has his own foil design on top of it. And at that time, you know, for now it's very, very normal. It's not a big thing. But at that time, people said, why? You know, people never do those things. And don't you waste, aren't you wasting your money? aren't you making yourself competitive and all that kind of stuff?

My view was I spent so much time making this yogurt. And I think it's one of the best that I've made. And people will not, you know, see the difference if I put them in the same cups. So if I can catch their eye, have them to try it once, the yogurt will finish the work. Got it. And that will be the conversion. And the recipe is simple. It's milk and a culture.

But I guess when you talk about perfecting it, it was about how long. you sort of you heated it, you know, and how long you sort of let it kind of rest. I mean, because the basic ingredients, it's two things. It's milk and culture, right? That's exactly right. And unless you make the, you know, flavor ones, but the basic thing is very simple, milk and culture. And you don't want to use preservatives and you don't want to use any other ingredients. So it was just trial and error until you find it. It was. Yeah. And really, it was about, it was about experimenting with temperature, time and incubation.

And then you've got to blend it to make it creamy, right? Right. After you strain it, it particulates. You know, you have small particles. Yeah, there'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 mean, I used to get really upset when I see yogurt on the lid. On the lid. You didn't want to see on the lid. You wanted to be so perfectly smooth in the cup that it wouldn't touch the lid. Exactly. I would open a cup. 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 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 they look at from every dimension. This is something that they've never seen before. And probably halfway true, 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. If it's not successful, I'm out. And I'm out in a very, very, you know, very bad way. Why don't we come back in just a moment, how Chabani starts growing so quickly that Hamdi can barely keep up. And then how it almost goes bankrupt. Stay with us. I'm Guy Raz, and you're listening to Howe I built this. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2007. The yogurt factory is up and running, and Hamdi has found the first retail location for his Greek-style yogurt, a kosher grocery in Great Neck, New York. When I made that first yogurt, it took us all night. Kyle and I, one of my colleagues, who led the 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 observation?

He says, Yeah. You know, he didn't say, this is flying off the shell. 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 me some more.

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

city of Chobani. Now, in order to be able to make it to shop right, or that kind of conventional stores, you have to pay where they call it listing fee. Yeah. And every cup, I don't know what it is now, but I think at that time was $30,000 for each cup to be on the shelf. Just let me understand this. So when you go to a small kosher grocery store in Great Night New York, you just send them a pallet and that's it. But if you want to get into a big grocery store like Kroger or ShopRite, you actually have to pay them a fee to stock your products. And it's, it can be a lot. It could be tens of thousands of dollars per product that you sell. Exactly. And by the way, all grocery stores do this, right? Target, Walmart, they all do this. Most of them. And they do it because they can,

right? Basically. That's the, that's the only way. That's, that's a revenue generation for them. And for a small startup, it's a big block. If you want to play in a mass, you know, supermarket chain, you can pay, I don't know, if you have four SKUs, four products that you put it on the shelf, so four times, you know, $120,000, $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.

Right. 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 the next logical step would be to go to Whole Foods and to try to get into Whole Foods. Yeah. Which is easier in a lot of cases because there's a lot of autonomy and the buyers are regional and they don't have the high stocking fees or I think any fees.

So why wouldn't you just go down that route? So I did not have huge interest on natural channels. I wanted this product to be in a mass channel 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 up. You know, everybody was going to happy. All I needed is one example.

Yeah. And then the shop right guy said, how are you going to pay for the list MP? And this is a true story. The guy said, well, we need to get paid. And we had no money. And we said, can you take percentage off 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, what am I going to cut it from? I personally said, if it doesn't sell, I will give you the factory. Wait, so let me understand. 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 about two weeks later, I had a phone call from him. He asked Kyle to call me, and he called me. And he says, I don't know what you're putting inside this yogurt. I don't want to know, but I cannot keep it on the shelf. Wow. When he called me, that was the combination of three years of doubt, hard work, finding solution, being on the road,

trying to figure out things and all that kind of stuff hassle. That call really summarized the whole thing for me. How is that possible, Hamdi? You got, how do you just put it on the skis? The thing is, is that you put on the shelves, and you still have to get people to notice it because you go to a grocery store there are 25, 30,000 products. How did people even know about it?

It was the cup. It was just... It was just the label. It was bright. Yeah. Yeah. It was just, it's to look different. Yeah.

And then I priced it below my cost at that time. You knew you were going to lose money. Yes. I was okay to lose money for probably two months. Okay. And by the way, how many shop rights were you in? Like five, ten? No, no, it's all of them.

I think it was over 100, 120 something like this at the time. Wow. So, yeah. You get into system-wide, yeah. But I had a simple napkin calculation. If I reached the 20,000 cases, I will break even and everything after that it would be, you know, profitable. And a case is how many cups of you? 12. 12.

Okay. Yeah. So you were taking a gamble that people would just find out about this at shop rights and buy it. Exactly. And when he put it into an ordinary shelf, like a common chef where everybody shop on yogurt 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 2,500? I'm not sure. And I called Kyle.

I said, is this accurate or is they missing one zero? He says, no, that's accurate. Wow. And I said, is this for a month? Or it says, no, that's for the week. Yeah. I'm wondering, Hamdi, I mean, this is a thing, right? It sounds great.

You're selling all this yogurt, which is exciting. But then you have to actually fulfill those orders. Like, how are you actually able to make all that yogurt? So that is. So, you know, you say you get this all good news that we want 25,000 cases, the other one times cases. And then you look at your blueprint, you look at available equipment and the volume, you look at all the limitations that you can think of.

And they all cost money, right? And how are you going to meet the demand? Yeah. So you're converting, you know, cooler space into. into a filler room. We're converting toilets into the offices. 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, people were like sleeping in the factory because you literally had to fulfill these mass orders and you just did not have, I mean, the people and the facilities to actually do it unless you just operated 24 hours a day. It is, I mean, I mean, you're talking about Thanksgiving, Christmas, Fourth of July, weekends.

Anyone who has a minute to spare, they're back in the factory. And it's not even, I'm asking, they're doing it by themselves. You have to realize, guy, this is a plant that was the last factory that got closed, right? So you have a large corporation closed and left. 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, is this ever possible that this could happen?

So everyone went from complete disastrous mindset or soul set to exciting place where everyone gets 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 taking Tylenol-Advil 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 is an office, I guess, on chairs. We're eating pizza every day. I mean, it's pretty horrible lifestyle. 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 New York. Yeah. And they had people who just needed work. And you were like, great, 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 in South Edmiston. And I lived in Utica. Utica, New York, yeah. Yeah, I lived in Apartment, in Utica. And I hear that people are settling in Utica as refugees from around the world, and they're having a hard time to find a job. Yeah.

And I called the refugee center, and I said, what is the problem? And she said, these are people have a right to work, legally settled, and they don't speak the language. They don't have, you know, transportation or people don't want to touch it because it's an unknown and, you know, all the other social issues. I immediately said we can solve these problems. I drive from Utah County 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 going to take this? I said, I'm pretty sure. I know my people. And that started very slow, and the people who started working there brought their brothers, their sisters. It became a community.

And I never thought that was a refugee work. It was people in the community and an opportunity for them to participate as much as everybody else participated. So you had the people, right, and you've got this plant. by 2010, so just three in three years, you're doing $260 million in revenue. That's like, by my calculation, that's more than 150 million cups of yogurt that you're selling. How do you go from like, you know, maybe hitting 200,000 to 150 million cups? How are you doing that? Well, one of the best thing that I had is the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the.

price architect that I put it in place, it was giving me enough profit to be able to invest back into the company. So you could finance the growth entirely through the sales of the yogurt. You could finance, like, because 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 micro attention on the cost,

keeping it extremely simple. You know, at that time, you know, not only $250 million, until $600 million, I run that company and 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, Humdi, 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 U.S.

Here you are now, okay? So a couple things I'm assuming start to happen. First of all, the big, big brands, the Danans and, you know, of the world start to see this and are like, we got to get into the Greek yogurt business. But the second thing that I imagine is you've got people coming up to you and saying, hey, Hamdi, you're going to get crushed by Danin and you'll play the General Mills soon. You've got to bring in outside capital. You've got to blitz scale this thing. You've got to bring in a professional team to run it because you are not equipped to do this. You don't have the experience. You're going to get crushed. And I have to imagine people are saying that to you. They are. And I'm getting a lot of phone calls from private equity people, venture capitalists and all that kind of stuff. I'm getting calls from the ordinary banks.

But this is the blessing I had. I was isolated in that small town upstate New York. I have no previous network of people in business. I don't know anyone. And I am kind of unreachable. I have no board, I have no advisor, I have no investors. And the people in the company is factory workers and salespeople and, 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, do you want to sell? And in that is a hidden another information. If you don't sell, I'll make the same thing. Yeah, I'll crush you. I mean, you're big food companies that 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, we'll do it on our own. And, you know, we've got massive marketing budgets. We've got a huge distribution network. Like, you're going to be, in trouble. Yeah. That's very scary.

And all this time, I'm betting on, they're going to be very slow. And they were slow. So by the time they wake up, really, I was at $500, $600 million sales area. Wow. And they did come and they said, what about selling? And the numbers were with billions. Wow. They were offering you.

And you could have just, because you owned the company, who's yours. Yeah. It's a great, great offer. So now, so imagine this guy, you know, working in the factory 24-7, living in one-bedroom apartment in Utica, that the bed hasn't been, you know, fixed maybe. Chain smoking, not taking care of himself, drinking a lot of coffee, eating pizza slices, okay. Exactly. And then somebody says you can be a billionaire. And I can't even spell billion, you know, really, literally. I didn't know how to spell billion. So now, that's you, yourself, having this real moment, right?

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 these things in front of me. So there must have been a pull to just do it, take the plunge. Hi, imagine. I am in option.

state in New York. I am mid-30s, right? Maybe at that time. I don't know, close to 40. And I have offered this huge amount of money. And there's endless what you can do with this money. Yeah. And I said no to it. And I said no a few times. And why? I was more excited about the journey, the, these things was happening than the value. was generating from it. And it felt like I'm in this soccer game, am I in the middle of the soccer game, and I love it, and I'm into this game in such a massive way,

and I'm completely elevated. First time in my life, I feel like things are coming out of my being that I didn't even realize it existed. And I feel alive. Like the childhood I used to be is like, I'm wondering what is behind that mountain, what is behind that mountain.

I have this enormous amount of, curiosity. And I wasn't going to stop it for anything that in the world, that desire to see where this was going to go. Yeah. But you clearly had enough confidence that your brand at that point, because I think by 2011 you were the number three yogurt brand in the country after Yoplin Danin. But at that time, you knew that there was going to be an explosion of competitors. Absolutely. And you weren't worried.

I was very worried. I was very worried. And when I said no to those things, I knew that I needed to build another factory out west. To make more, well, to produce more, obviously, yeah. To produce more and de-risk it, you know, be in one location and bring more innovation to it. When people will copy the first thing I do,

I would be on my way to the second thing and third thing. Yeah. And I built the factory in Idaho, which I went to Idaho first time. I said, we need to build this factory really fast. This is a million square foot plant. Yeah. I think now it's a 1.4.

At that time, it was close to 1 million square feet plant. Wow. And with 14 lines, we built it less than one year. Wow. So that really, it was in a borderline stupidity. meaning I underestimated how complex that was going to be and underestimated how crucial would that be on the health of the company if I was wrong and if I did something not right.

Yeah. And one plant or one location or, you know, early company's, 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, this is in 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 that came to our plant in Idaho.

He said, Hamdi, 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. 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 than I would have done in stages. I wouldn't do it in as fast. I would be more cautious. I would put more, you know, team members in place, make some changes. Right, because the mold issue came from that manufacturing plant in Idaho. Exactly. Right. Right.

And there was a time that I will 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 was that damaging you'd gone from? It wasn't that damaging. But what it is is the banks got really nervous and they wanted their loan to be paid back.

Yeah. And that loan was used to build a factory supported by EBIT. Now you have a enormous amount of losses because of that factory. Yeah. So the recall happens. All the loans get called in. Yeah. And you've got to basically come up with a cash.

And so you're thinking, we're done. We got to file bankruptcy. Well, there's cash. Yeah. But people want the world. They want so much from it. Yeah. And the people who are showing interest,

looking at your situation, and they start acting opportunistic. So they offer less money? They offer more money, but they want more. They want more equity, right? Exactly. And then they use different, different reasons to come up with those things. A time came,

and I remember the gentleman called me, and he said, here's the amount that you will get here is the percentage of the company that you have to give away which was almost majority at the time and you will be out of the company and I take this I said okay what will happen if I take this

I'll probably regret every day going forward you are an entrepreneur you build things and you make one misstep and then someone comes with the money and say hey take you or leave it or this is our conditions for you to do it. And I look at this and I say, I must say no to you. And I tell you why. Because if I'm 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 you say, 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. 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, you can also be sometimes not a good quality. Yeah, ask my wife about that. Yeah. So she was very safe. 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. Yeah. 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, it's, it's hard. It's hard that you are about to bury something that you give 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? A night before. A night before.

Wow. 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 going to make us look so bad. I think they were also acting really out of ordinary at that time forcing me to do something. And he says, well, why don't we give you so much money and six months as long as you 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's what's 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. If you had filed bankruptcy, it doesn't necessarily.

mean the brand would shut down, right? I mean, you could restructure it, but it was unclear what would have happened. I don't know. I mean, but the one thing is, how do you go become one of the fastest growing company in the history? Because we literally went from zero to billion in cells in five years without taking a penny from outside in that factory. It's not. It shouldn't have happened. It's a story that should never have happened. It should have been buried by the big yogurt makers within a year. Yeah. No.

Humdy, you know, I'm curious because when in, after that crisis, right, in 2014, TPG, this private equity firm comes in, makes an investment. And part of that agreement is that a man named Kevin Burns would become the interim president and C.O. 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. At the time, there was an article in the Wall Street Journal. I'm sure it was not easy for you to read, but it was critical of you. It said, you know, he's in over his head. You know, there's not, the operations are scattered and blah, blah, blah, blah, blah. I'm sure that must have been difficult for you to read, but I also wonder whether a part of you was able to say, you know, look, I've done this, I've made this, maybe we should have a different CEO in here. I think you come to a realization in a certain time and you say, okay, I'm good at certain things, but I'm not good at this and this and this. I was very convinced that I knew how to start things, how to scale things, but not necessarily put the

infrastructure in place to be able to run the company day 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 kind of or I was tired or I didn't want to do it. I was questioning myself if I'm capable of taking this company from what it is to the next level because I had never done this before. Yeah. And you should be, and by the way, you should be asking yourself that question. A hundred percent. 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 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. 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 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? I can't say I had that state of mind in 2009, 2010, 2008. No. Right. Because you, in the last sort of seven, seven, eight years really very much publicly turned, kind of made Chobani into a company that was, you know, big advocate of immigration reform to hire, hiring refugees, you know, supporting refugee, you know, admissions into the United States, things like that that are risky, right? Because a lot of companies don't want to, for understandable reasons, don't want to take stances on. on hot button issues because they just want to focus on their brand. And oftentimes that's a good decision, right? You just, like, we just want people to buy Coke and Pepsi.

Like, don't ask me what our politics are. But you decided we're going to actually stand for these things that there's lots of people in America aren't happy about. So why? I mean, it's risky. I look at from the human perspective side of it. I said, why can't we do things that is good for the society and community? And yet, I can prove the only reason,

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

22 percent of the yogurt market in the U.S. It's a, you know, massive company with lots of different brands. There, you know, there's talk about eventually taking the company public, which may happen next year or maybe beyond. When you think about the story of this young guy who was like grew up, you know, helping his family for their flock of sheep and goats to, you know, how you kind of made it to the U.S. and, you know, all those people in New York who brought you their farms and let you kind of live there. And then you built a company 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 to make sure that the next generation, my children and the children's 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 there, it's in an enormous amount of stress and we cannot take

this as, you know, as like granted. We just have to make it work. We need to work harder to sure that this stays alive. That's Hamdi Ulachaya, founder and CEO of Chabani. By the way, would you agree with me that raw milk, as someone who drinks raw milk, would you agree with me that it tastes better than pasteurized milk? I grew up raw ship milk, right? We never pasteurized it. It's very good.

But I wouldn't give it to my kids. You wouldn't give it to your kids? No. Risk is too high. Risk is too high. Yes, I know. I know, I know, but it's delicious. Totally, yeah.

I won't serve it to you if you come over. I want you to die. If you drink it, I'll drink it. I'm sure you know what you're doing. Hey, thanks so much for listening to the show this week. If you want to contact our team, our email address is hivt at ID.wondery.com. If you want to follow us on Twitter or Instagram,

our account is at How I Built This. And mine is at Guy Raz on Twitter and on Instagram. at guy. ros. This episode was produced by Josh Lash with music composed by Rumptine Arableu. It was edited by Neva Grant with research help from Claire Murashima. Our production staff also includes J.C. Howard, Liz Metzger, Alex Chung, Carrie Thompson, Catherine Seifer, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.