Chobani Founder Hamdi Ulukaya on the Journey from Abandoned Factory to Yogurt Powerhouse

HAMDI ULUKAYA: Sure. I had a small cheese factory in upstate New York. I’m from Turkey, the eastern part, in the Kurdish region. Arrived in 1994. Learned English and all that kind of stuff. I’ve settled in upstate New York. Worked in a farm and never thought I would be making what my family was making for generations. Nomads raising sheep and goats, making cheese and yogurt. So I end up making cheese in a small scale in upstate New York.

There, I saw an ad that says there’s a fully equipped yogurt plant for sale, came through as junk mail. And I went to visit the plant the next day, and turns out that this was a very old, almost 70, 80 years old factory, was being closed by Kraft, and they were getting out of the yogurt business and the price was extremely cheap. So through the SBA loan and some help from the local agencies, I bought the plant in 2005 with $700,000. Hired the first four people from the previous 55, and worked on the recipe. I thought, “I have one shot at this. I bet that people, if they had an option of yogurt being more natural, better and more nutritious, and accessible, most importantly, I could make something out of this.” I never knew how far this would go, but that’s 2007 when we launched it.

And then, the first signs of the product being received really well by people made me think that this is going to be really—you know, challenges that comes with making Chobani, are not necessarily selling, because people already have so much desire to buy. So I end up staying in that factory from 2007 to 2012.

In 2012, I built a factory here in Idaho. I am here now, 1.4 million square feet, huge factory. And I’ve always had the image in my head of how far Chobani can go, and what kind of challenges I’m going to face during this time. And try to prepare myself and the company for those challenges.

Of course, you always hear the headlines, but there’s always a lot of stories in the background when it comes to food making, especially natural food making, especially refrigerated, natural food making. And if you are competing with the large multinationals and if you are independent and if you don’t have a lot of resources, this gets a lot harder.

We tried to find a new way of building a sizeable, consumer good company, not following the footsteps of all the large food or the big food, but more an entrepreneurial, new way of finding ways, finding resources to compete, or grow, or develop the brand. So it’s been fun so far, but I have become gray as well, too. So it’s not been easy.

ADI IGNATIUS: Hamdi and I were talking before we started the live broadcast, and you are the great American success story. I’m Armenian on my father’s side, you’re Kurdish. Basically our grandfathers came from the same–

HAMDI ULUKAYA: Same area.

ADI IGNATIUS: … a relatively small town in what’s western Turkey now. So it is an incredible story. So you create this thing, you realize it’s taking off, then you’re scaling like crazy. You didn’t have a background in business exactly. How did you cope with the challenges and opportunities of massive scale and what that does to your business, your culture?

HAMDI ULUKAYA: You touched the most important things, how do you scale and how do you keep the culture aligned to your beginning missions, beginning purposes? How do you attract talents? How do you get resources? Every single one of those are a challenge by itself.

I found in the food-making, especially in the large-scale food-making, there’s a lot of waste. And in the operational side of things, I saw a lot of waste.

The second part is it’s really eye-opening to see, if you’re not shopping in big cities, in a specialty store, but if you’re shopping in the large mass supermarkets, the quality of food-making, back then, it was really bad. Today, it’s getting better, because there’s a push. Quality food-making, one of the worst in the world. I don’t know all around the world, but at least in Europe, or where we grow up in Turkey, or in some part of South America, the food makers really did not spend a lot of time making good food for people. So that’s why they will have a lot of margins, because the cheap ingredients, cheap food. So it gets harder if you try to make it better food, with holistic ingredients, with natural ingredients, with nutrition dense food. If you try to make it, it gets a lot harder.

I think the biggest challenge I had throughout this whole thing was the stages that you go through in your company. So if you start, it’s a startup, it’s a different company. If you are a $100 million, $200 million company, it’s a different company. If you are trying to distribute all across the country, it’s a different company. If you built another plant and you have multi-locations, it’s a different company. And like you said, I’ve never done this before. I’ve never worked anywhere. I’ve never studied business. So for me, it was a personal journey of figuring out how I can make moves for the company to be aligned for the new realities.

And I come down to one reality. One reality is, it’s all about people. The changes that you make along the way, the people that you bring along the way, but the most important is how flexible you are as an organization, to go from one thing to another thing, from year to year, or sometimes six months. How do you change? How do you adopt a new reality? That has to be within part of the culture. So for that, I go back to the early days and say, “I have four factory workers and myself. None of us have done this before, other than four factory workers worked in that factory. I’ve never done retail. I don’t know if this is going to go anywhere. We don’t have a lot of resources.” But this finding a way, finding solutions, it was a big part of Chobani’s culture. So in a way, we do realize the issues and challenges and problems, but one of the best things to happen at Chobani, is we always welcome it and try to find a way to solve it, or even make it even better.

I think the biggest time I spent is on how I can grow and scale this business, but yet, how do I keep Chobani whole? How do I keep Chobani committed to the earlier promises, earlier commitments? And we had moments. We had some down moments and up moments. And I think that’s the responsibility of the leadership, is to make sure that the people side of it, culture side of it, the mission side of it, purpose side of this whole thing stays in the center and stays true, stays authentic. And yet, the business function of those things is it becomes an engine to find solutions to adopt the new realities and compete, or go through the challenges.

ADI IGNATIUS: When we first spoke around almost 10 years ago, you said you were very proud of the fact that you did not have outside investors, that you did not have VCs telling you what to do. Now, you’re on track for an IPO, where suddenly you’ll have a lot of outside investors and outside scrutiny. Why the change?

HAMDI ULUKAYA: It’s the journey. I didn’t say it for nothing. The understanding I realized in the early days, is here is the founders of really good ideas on making food. And then you see the founders, they raise capital to get into a certain level. And by the time the company or the brand becomes sizable, let’s say $50 million, $100 million in sales, the patience of the capital of the investors comes towards the end. And 99% of the time, most of these great ideas, they end up being sold for the return of the investors. As much as that’s the reality, almost all the founders that I speak to, they have a pain in their stomach, in their gut that they have to do that.

So the structure really pushes you to get out or sell for financial reasons. So my fight was, if I don’t have investors, then nobody can force me to sell, or nobody can force me to merge or do other things. So I can keep this dream alive. That was my fight. It’s not about how much percentage I can own. And that period is really, I would say the sign that this company can stand alone in this food or CPG [consumer packaged goods] world really depends on the product or the kind of category you’re in, is if you pass this early stage, it could take five years, it could take 10 years, who knows? For us, it was a lot faster. Then you can be a standalone sizable company.

The second reason that this happens, I was really crazy about not having investors early on is you have a gut feeling, you’re a founder. You say, “I’m going to buy this plant and I’m going to launch a yogurt. And I’m going to sell across the country.” People will say, “You’re crazy. Why would Kraft not do it if that was a good idea?” This kind of gut feeling or this kind of idea will come along when you’re a founder. Then when you have investors, they will come from their own perspective to say, “Oh no, that’s not a good idea. Or we shouldn’t be doing this, or that risk shouldn’t be taken.” I wanted to have freedom and flexibility to be able to take those decisions and make it fast and go forward.

I would say in the first five years of Chobani’s time, I probably made so many decisions. And if I was wrong, it would wipe out the company. Like I built this plant here in 2012. It’s cost us more than a billion now, but at that time it was over half a billion dollars. And there was no sign that if I built this plant, that if I launch Flip, this side-car yogurt, or if I launched drinks and later on and I launched different kinds of products like oatmeal and creamers, people will buy. There was no sign. Nobody would prove that. But that was my strong belief. And I said that’s what we need to do. And we need to build it really fast. So we built it. There was no way if I had some kind of investor, I would prove that this would be a great idea.

But today this plant became one of the powerful sources of our growth. So these were the reasons I was against it [investors]. Now we are in a place where the company’s sizable, we have greater market share. Our growth is really, really good. And it feels like the early days, the energy, the innovation, things that we want to do. And there’s such a long way to go. And I think most of the work that we have done up to this level has really prepared us to make the impact in the food system in this country. I celebrate people coming and being partners and being shareholders. I think we pass those critical times and I think the most critical proven points we already have passed. So this would be a perfect moment for us to be able to have others to come and join.

ADI IGNATIUS: I know you think a lot about relations with employees. You say that Chobani is an employee-first company. What does that mean to you?

HAMDI ULUKAYA: Especially in our field, I come from, like you said, a rural part of Turkey. I don’t come from rich or well-off type of areas. We come from the villagers and factory workers, working class, and there’s a disconnect. Of course, this struggle has been all around the world, but there’s a disconnect when it comes to wealth, when it comes to access to even state resources and you come to upstate New York and you see the same thing. The factory gets closed, the company make a decision in, I don’t know, whatever, Chicago in a tower, and the community is left behind and workers are to blame. Now this is the same thing going on when it comes to manufacturing, when it comes to rural areas of the work and environment that is controlled by the large corporations, this injustice is in a level of affecting people’s life in a very, very dramatic way.

When it comes to starting Chobani in that old factory, I always wanted to say, “Can I start a company? Can I start Chobani, not to follow the footsteps of the company that closed it?”

The second angle is, when I grow up and I said I never liked the ones that are greedy or the rich or whatever you call it, how do I build a place where I don’t become a person that I grew up hating? That was the blueprint. In that, four factory workers and myself, we started this place. My first promise I made is the people who will build this company with me will always be center of this place and always be recognized in all dimension, including financially. And can I make an example, that the people that left behind, people that were forgotten, especially in food making and manufacturing, how do I make them the most important people in the company?

That was a work of 4, 5, 6, 7 years. And there’s a step of every single time I do it. But the most important part of this is—of course, my jobs change along the way—but, I remain a factory worker. And as long as you stay as a factory worker, doesn’t matter what you do later on in the CEO, CFO, whatever that is, you bring attention to that.

But that was also one of the smartest things that we’ve done. If Chobani became what it became, we broke all the records because our people always found a way to make things happen. And that old factory—it is still unbelievable what we’ve done in that old factory, that was one small filler, four people, 70, 80 years old, no one even knew that it could be turned back on. We end up making sales almost close to a billion dollars in that factory without raising one penny of capital. And that is just not possible in any dimension that you look at it. But it only happened because people just found a way. We just found a way. And then we built the factory here and then I can go on and on. So not only is it the right thing to do, but it’s also smart thing to do if you really mean it, if you really authentically mean it.

ADI IGNATIUS: I’m going to bring in an audience question now because there’s somebody who wants to know more detail here. So this is from someone in Stockholm. She says, I get that people are your biggest asset, but what is it that you’re doing that other leaders aren’t, that are making people number one and that have an effect on the company?

HAMDI ULUKAYA: The number one is recognition. Of course it’s important, but you cannot stop there. In Europe, she’s from Stockholm, the northern part of Europe, things are a lot better than compared to what we are here. If you are in upstate New York or in Idaho or somewhere else, you look at 5, 6, 7, 8 years ago, at a typical factory, workers will work at minimum wage, probably not much benefits and the common things like parental leaves or family resources, none of those would be available.

I would go back to the time that I started and then you say, okay, pay. You look at the people’s living expenses in that community and you make your own math and say, “This minimum wage is not going to work so we have to be certain level of the income, basic income.”

And can they have the insurance and benefits just as mine? Whatever I use, they have the same. These are the basic ones. Later on you say, how come factory workers don’t get parental leave, the moms and dads. And you realize that 99% of the manufacturing work in this country does not offer it, companies don’t offer it. At least at that time. So you put that kind of stuff in there. And then later on you come in, you say, Okay, I feel like we made it through, how can I make everyone in the company be part of this company as a shareholder, as some kind of financial benefits from it?

You can go on and on, stuff like this. Among all of that, among all of those, a few of them were never done before. One of the most important things is, can I be myself, who I am, in a place without judgment, without me feeling like I’m an outsider? So that means, how do I get refugees, immigrants, people who have experiences or don’t have experiences, to be part of this, and learn, and share, and be part of the community? So we end up leading the importance of getting diversity in the workplace and having that exchange, culturally, that people come from all over the world.

These are the steps that you can take fundamentally, but that doesn’t end there. Of course, it’s endless. But if I go back and ask the people, What do you love most about Chobani?, it’s unanimously, I feel at home. And that is work, I think, embedded in minutes, in hours. You cannot just put in the words, and put in the papers, and make that happen.

ADI IGNATIUS: You’ve been very engaged, you just mentioned, in the refugee issue. It’s controversial, certainly, well, almost everywhere now. When you look at what’s happening in Ukraine and the refugee crisis that’s been triggered, what’s your response, or what’s Chobani’s response? To what extent can you try to make a difference?

HAMDI ULUKAYA: Adi, I was there, I think, last week or week before, I lost count in the days. I was in Poland, at the border with Ukraine, went to a couple of cities, spent a lot of time with the people on the ground there. So another border, right? Another border from Ukraine to Poland. You have close to five million people just left, displaced, within weeks. But this is not the first time I see it. I saw it at the Colombian-Venezuelan border. You go through the bridge and flow of people. You see it at the Jordan and Syrian border, or Jordan and Lebanon border, or Turkey border. Or you see people go from Myanmar to Bangladesh. The suffering, the general picture is the same. One thing is different. We never thought that this would happen in the heart of Europe. We never thought this would happen.

When I started Tent, I actually started because I saw what happened when people had a job after they settled, at Chobani, and how it changed their life. It was just simple. When we start hiring refugees, we didn’t hire them because it was a refugee world. We hired them because they were people in the community, and we were growing, and we were hiring everyone. And they were in the community and we hired them. The refugee settlement agency would say, “Oh, they don’t speak the language. They don’t have cars. They don’t have the trainings.” Which, for us, or for anyone, these are very small obstacles to overcome. You can rent buses, you can hire translators, you can do the job training at work.

And the biggest eye-opening for me was when Yezidis got attacked in the Syrian war, it felt like these were the people that I grew up with. Like the faces, they looked like our people. And I went to Switzerland, UNHCR, and tried to understand how, individually, I can help the people who were fleeing from this horrible people. Okay, you can donate money, you can get tents, you can get sponsorship to camps, which we did. But in that trip, I realized that the business community, entrepreneurs and CEOs, are really absent from this big humanitarian issue that we are facing.

The second one is, I thought that I knew something about it. I didn’t even realize how big this one was. You’re talking about millions, 20, 25 million people. And the average they stay in a camp or a city, stuck, 19, 20 years. And I thought if I could bring a business community into this, with the motion of hiring, training, and using the supply chain, wherever they are in the world, to support refugees, we could have another dimension, even getting closer to solving this, or at least start a way.

So I started Tent in 2016. We called it Tent Partnership for Refugees. This is a topic that has been used politically, unfortunately, so badly, all across the Western world. And I look back, and it was tough, but Chobani really came up and said, “Let’s be fair. These are our brothers and sisters. And some of them are here at Chobani.” And the meaning of CEOs, and companies, and brands coming in, hiring most important, but also to be an advocate of this injustice. I’m proud how far we have come.

We are over 220 multinational companies. I was just in the Netherlands after Poland last week. We had 13 really nice, beautiful Dutch companies committing to hire 22,000 refugees, which we’ve done three years ago. Before that, they ended up hiring almost 30,000 refugees. We organized in Colombia. We organized in Germany, Canada, and here. And looking at the last Ukrainian refugees, or before that the Afghani refugees who are settled in the US, and looking at the companies and CEOs coming forward, and making commitments. And looking back, I think we came a long way, and we still have a long way to go. And it’s a responsibility of all of us.

My last point is, you go to the border in Poland, you see two and a half million Ukrainians fled into Poland. No one is on the street. There are no tent towns or cities. All the Polish people, they take them to their home. Two and a half million people living in people’s homes. And it’s something that I’ve never seen before. And the same thing with Romania, same thing in Moldovia, same thing in Slovakia. So people are opening their arms, opening their homes to these children and women, mostly children, women and children. I saw the similar things in Colombia where people did it, when people came from Venezuela. And of course, the generosity of the people are something, but then you see this political things is going away. In Poland, there is no political noise that is against receiving these neighbors, people coming into their countries to be safe. So this is a sign.

And you say, If I can take this and apply it to all refugee-hosting countries, and if humanity opens their arms and receives these people, we talked about it, there’s a great benefit to society, to companies, having refugees be part of their community. And there’s so much to offer. And the studies, we did it in Tent, proves that within a few years, whatever the investment you make, whatever the expenses that you have, it pays for itself. And the rest is upside. So these are good signs, but we still have a long way to go.

ADI IGNATIUS: We are having a conversation here at our company about how you talk to your children about something like the Russian invasion of Ukraine? And one of my colleagues pointed out that you see evil, but then you also see this incredible good. And your example of Poland and other central European countries taking in all those refugees is inspiring.

I want to change a little bit. People are really interested in everything you’re talking about, but in particular, your entrepreneurial roots and your entrepreneurial ways. This is a question from a YouTube user. “Did you ever feel like quitting, like giving up on your dream? And what kept you going during the toughest times?”

HAMDI ULUKAYA: No, I never thought about quitting, no. I thought about, if something happens to me, how can I make this continue? You really need some support system. You really do. No one can do this alone. To answer that question, I have created my community within the company. I really didn’t have much of a network. When I settled in upstate New York, I didn’t know many other people who have done this. I didn’t know people who wrote books about this, or studies, or I did not have a board. I did not have people who have done this before. So my support system was in that community in upstate New York, and the people that I work with. And I would ask them to warn me, if they see me I’m going in the wrong direction.

I always had a Chobani hat on me. And one of my mother’s remainings, which was a green scarf, a village scarf, I always hold it on my hat, inside my head. And I wouldn’t tell anyone what’s in there. The reason I did that is, if my mother was here, she would tell me what to do. And I always knew what she would tell me, “Stop smoking, do this, do this right, do this right.” But at least I carried her teachings with me during that time.

I told the people after when we did the shares, that this whole credit goes to her. My point is, you really need a strong support system. A real, authentic, support system during tough times. A lot of people are going to be your friends. There are a lot of people who are going to be around you when you become successful, or whatever. But how do we determine what is noise, and what is the sound? I was lucky that I had a good sound around me. Simple, attentive, good people will tell me things are going to be all right. You just keep going. Some of those people were factory workers.

ADI IGNATIUS: Here’s another audience question. What is a mistake that you see leaders make frequently?

HAMDI ULUKAYA: I think leaders needs to understand between being friendly, and being a friend. I love my people, but I am still, how should I say, I’m still the founder. I’m still the CEO. This relationship you have, it needs to be a fine line. Entrepreneurs, especially startup ones, often make these mistakes of, we are family, and you get together and you do everything together. But how do you still maintain that line of, I don’t know how to say, of friendliness, but not across the lines? Later on it becomes a problem, and I see that all the time.

The second part is, as much as it’s important to be committed to all you do, especially on the people side, the biggest problem, and I made that mistake because we are all human, and we will make it no matter what: We get attached to people you start the company with, and the company’s need comes to a certain place, certain time. It’s one of the hardest decision to make, is to separate your ways with some of the people. Or bring some new people. Or change the structure of the company. Or do whatever you need to do, to support the next phase of the company. If anybody can tell you that you could do everything from the beginning all the way to the top with the same people, it’s not reality. One of the most difficult decision along the way, we just wanted to avoid it, we always do, is to realize when the time comes to make those changes, and you make those changes. Do not make that mistake. As painful as it might be, you have to make those changes.

ADI IGNATIUS: I’m going to ask you one more question. I hope you don’t think it’s a silly question, but there’s a lot of debate about what your product is exactly. People asking, is it Greek yogurt? Should it be Turkish yogurt?

HAMDI ULUKAYA: Should it be Albanian yogurt?

ADI IGNATIUS: People want to know.

HAMDI ULUKAYA: Yeah, I think the people caught onto that. There is no Greek yogurt in Greece, and there is no Turkish yogurt in Turkey, right? It’s all yogurt, right? That’s the thing. Actually, that credit belongs to a company called Fage, still a yogurt maker. I think they are one of the largest dairy companies in Greece. When they started importing it to New York, and later on to larger distribution to the import, they introduced it as Greek yogurt, and it became a category name.
It’s basically a strained yogurt. What we call it, in Turkish, we call it süzme yoğurt.

The Greeks call it, I don’t know what the Greek word for it is. But the yogurt is made. You use three pounds of milk, or three kilos of milk, and you strain it, and then it becomes one pound. That’s why it’s thick, it’s creamy, and nutritionally dense. Traditionally in Turkey, we use this yogurt for our mezes, which is you make dishes. It’s not consumed. The Turkish traditional yogurt is the cream on top. How we make it at home, or industrially. I don’t think this yogurt is heavily consumed in Greece either, because again, it’s more used for cooking. So Fage really introduced the concept. Because the industry category was named as Greek yogurt with this company, we followed it.

The second reason, is it really helped because there was a yogurt in the country. There was a set between all those large manufacturers. But if you come from where we come from, you really cannot tell this is a yogurt. It was pretty much like a candy. Some people called it traditional yogurt, but it’s not really traditional yogurt. You had to either identify the new way of making yogurt. I think it was the only way you can tell people that this is not the same thing that you’ve been eating, thinking that this is yogurt. Could have been called Turkish yogurt back then had I started? Probably I would. If you had started, you probably could have called it Armenian yogurt. I think it’s not what it belongs to. It just explains it’s different than what everything else is.

ADI IGNATIUS: But you can guarantee if you eat it, you’ll live until you’re 120 years old, right?

HAMDI ULUKAYA: Yes. For sure.

ADI IGNATIUS: That’s good. Hamdi, thanks for giving us a little extra time. Really great to see you again. Good luck with the IPO. Good luck with everything. Thank you.

HAMDI ULUKAYA: Thank you, my friend. So good to be with you.