Chobani: Hamdi Ulukaya

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.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 1:32Guy Raz?

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• 5:12Speaker 01

  I used to get really upset when I see yogurt on the lid.

• 5:15Guy Raz?

  On the lid. You didn't want to see it on the lid. You want it to be so perfectly smooth in the cup that it wouldn't touch the lid.

• 5:21Speaker 01

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

• 5:27Guy Raz?

  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.

• 5:38Speaker 01

  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.

• 5:53Guy Raz?

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

• 6:05Guy Raz?

  I'm Guy Raz, and on the show today, how Hamdi Al-Akaya arrived in the US with no money and no plan, bought an abandoned yogurt factory, and built Chobani into one of the top-selling yogurt brands in the US.

• 6:24Guy Raz?

  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 aisles 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

• 7:08Guy Raz?

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

• 7:52Guy Raz?

  Which is kind of crazy, because today, Greek-style yogurt accounts for 50% of the entire $8 billion yogurt market in the US. That's roughly $4 billion of Greek yogurt sold each year in America alone. And the brand most responsible for its rise? Chobani. Chobani's founder, Hamdi Ulukaya, is from Turkey. But Greek is the term Americans use to describe yogurt that has most of the water strained out of it, so it's thicker and creamier than other kinds. It's the type of yogurt that Hamdi ate when he was growing up in a remote part of eastern Turkey.

• 8:34Guy Raz?

  And when he emigrated to the US in the mid-1990s, he had no intention of turning the thick, creamy yogurt of his childhood into a billion-dollar brand. And the story of how Hamdi came to do exactly that is one of the most improbable and yet inevitable stories we've ever told on the show. Improbable because Hamdi barely had any money when he got here. He spoke almost no English. He had no background in business. He'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

• 9:19Guy Raz?

  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. Hamdi 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.

• 9:55Speaker 01

  The nomads were really isolated from the everyday life.

• 10:01Guy Raz?

  Yeah.

• 10:02Speaker 01

  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're done, we had our horses and mules and we're up in the mountains, right? So we don't get involved with anything.

• 10:16Guy Raz?

  Yeah.

• 10:17Speaker 01

  And the only thing that we had 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 would come up with stories and what they saw. But we really were very much isolated from the reality of lives.

• 10:40Guy Raz?

  From what I've read, your dad had quite a successful cheesemaking business, right? In town?

• 10:48Speaker 01

  Yeah, so he was Aga. So Aga means he's the leader of the tribe. And my father kind of didn't want to follow that tradition, but he was kind of natural leader. Now, because you're Aga, you don't have other things. Like, you know, we didn't have bicycles, for example. We didn't have toys. We ate the same thing. We had the same conditions. We live under the same tents. So it didn't make it too much difference in life. But what it did is you had a reputation. People will trust you. They will value your opinion. And usually you will buy all the other people's cheese and you combine them.

• 11:31Speaker 01

  And you would, my father would take it to big cities and sell them.

• 11:35Guy Raz?

  Right.

• 11:35Speaker 01

  So he created a little bit of business out of it, but nothing major. Like, it was, I would say, a small business.

• 11:42Guy Raz?

  You know, it's interesting, because when you hear like semi-nomadic, you think, I think people think like the steppes of Asia or Tibet or something. But, I mean, you grew, when you grew up, when you were a boy, like you, you were more or less, you know, I mean, you had everything you needed, from what I understand, right?

• 12:00Speaker 01

  Absolutely, yeah.

• 12:01Guy Raz?

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

• 12:05Speaker 01

  No, no, no. We had a, you know, decent life. I don't think we called ourselves poor. We never, we never considered ourselves poor. You know, we considered ourselves lucky.

• 12:17Guy Raz?

  And you had like a television, refrigerators and, you know, ovens and, right?

• 12:22Speaker 01

  Later, yeah, later. Yeah, when it arrived to town, we would afford to be able to buy TVs and refrigerators. I remember my mom, when she got first time the washing machine, it was just fascinating. We would all watch it how it does it, you know?

• 12:36Guy Raz?

  Gather around.

• 12:37Speaker 01

  Yeah. No, they could afford things. It wasn't, you know, very rich life, but it was, yeah, it was decent life, absolutely.

• 12:45Guy Raz?

  And you did go off to college, from what I understand, to Ankara University?

• 12:49Speaker 01

  Yes.

• 12:50Guy Raz?

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

• 13:22Speaker 01

  Yeah, exactly. I thought, OK, I'll go to Europe just because everybody else did at the time. And I had a passport, luckily. So I was thinking like I would go to France, I would go to Germany or somewhere around in Europe. And I was talking to my friend, a stranger, who, I shouldn't say a stranger, it's a person. When I helped my brother in his stores, he would come every evening around 5:30, 6 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.

• 13:59Guy Raz?

  Yeah.

• 13:59Speaker 01

  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, country that has done all these bad, 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 Europe. So I dismissed him. I said, get your eggs and meat and go to your place and I'll see you tomorrow. That night, I couldn't sleep. I thought about what that guy said.

• 14:41Speaker 01

  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 US and he knew a lady in the center of Ankara that had an agency that would send students to universities across the country for learning English. And he gave me his, her, her, her numbers. And he said, go to this person, go to school, try to learn them some language.

• 15:23Speaker 01

  If you like the land and if you like the way of living, you can stay and further study. And if you don't, you can go wherever you want to go.

• 15:31Guy Raz?

  So you basically came to the US under this, on this program to learn English, to study, and where did you land, where did you arrive to?

• 15:42Speaker 01

  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. So she had a school in Albany, she had a school in Manhattan. And I remember saying that, you know, those big buildings in a big town, big city, not in there, but not too far from there either.

• 16:27Speaker 01

  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, you know, summits of the mountains in a, and you know, this is the time that the families are coming back.

• 17:08Speaker 01

  And, and I dropped her in a hospital where she needed to have a checkup 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 one of the few times that I started to learn to 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.

• 17:50Speaker 01

  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, all the life that I had in those mountains, in the tribes, the shepherds. All the conflicts, all the university, everything that was designed to go on for me in that life. I just go back to that moment and that goodbye. And within two weeks, I was, I was in New Jersey. That was the last Turkish Airlines landing in New Jersey.

• 18:32Guy Raz?

  Wow. And I think you ended up starting at Adelphi University on Long Island, is that right?

• 18:38Speaker 01

  Yeah. Turns out that acceptance was Adelphi University in Long Island. And it was one of, one of the most expensive English class. And I had $3,000 in my pocket my brother gave me from Istanbul.

• 18:50Guy Raz?

  You had two, so you arrived with $2,000?

• 18:52Speaker 01

  Three.

• 18:53Guy Raz?

  $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, for very long, right?

• 19:02Speaker 01

  A month.

• 19:03Guy Raz?

  A month, okay.

• 19:03Speaker 01

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

• 19:08Guy Raz?

  You, you're running out of money?

• 19:10Speaker 01

  I was literally running out of money. I couldn't, I had to learn how to speak. I have to learn, I had zero, like really zero English.

• 19:18Guy Raz?

  You had zero English?

• 19:19Speaker 01

  Zero, zero.

• 19:20Guy Raz?

  It's amazing, this is 1994, it's not that long ago.

• 19:23Speaker 01

  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 have a mental preparation for this.

• 19:35Guy Raz?

  Yeah.

• 19:36Speaker 01

  23 years old, 22 years old. Um, you know, it's not easy.

• 19:40Guy Raz?

  It it must have been incredibly lonely.

• 19:43Speaker 01

  Very, very. But I have other worries. What do I do for a living? What do I? How do I pay for the school? How do I? Where do I work? Um, am I allowed to work? How do I survive? Who do I trust? Who do I talk to? And all that kind of stuff.

• 19:58Guy Raz?

  Yeah.

• 19:59Speaker 01

  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 you just go through this every day.

• 20:13Guy Raz?

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

• 20:19Speaker 01

  Yeah.

• 20:19Guy Raz?

  In Manhattan and and you were still studying English there? Is that right?

• 20:23Speaker 01

  Yes, exactly. And few months in, a teacher at the Baruch College gave a homework for for language. And she asked us to write something in English, how to make.

• 20:39Speaker 01

  And I understood that part. And I wanted to write how to make cheese.

• 20:45Guy Raz?

  Well, the assignment was how to make anything?

• 20:47Speaker 01

  Something, something.

• 20:48Guy Raz?

  Something, just how do you make something?

• 20:50Speaker 01

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

• 20:59Speaker 01

  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

• 21:10Speaker 01

  passionate voice. I don't know if she's angry at me with what I wrote or if she's trying to tell me something. I don't understand. So I brought another Turkish student from the other class and and 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.

• 21:41Guy Raz?

  Wow, because you of course knew how to make cheese because you grew up making cheese.

• 21:45Speaker 01

  I know, it's like.

• 21:46Guy Raz?

  Yeah, and she had happened to have the the raw materials but just didn't know how to use them.

• 21:51Speaker 01

  Yeah, and actually the the the part that shocked me that in New York there was farms. I mean, I never even imagined that there were farms or the animals. I mean, I thought that was in our part of the world. I mean, I never I never thought about it. 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.

• 22:33Guy Raz?

  Yeah.

• 22:34Speaker 01

  I feel like I'm back home.

• 22:36Guy Raz?

  Hmm.

• 22:36Speaker 01

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

• 22:47Guy Raz?

  And it was their weekend, like their weekend home?

• 22:49Speaker 01

  Yeah, they would come for the weekend.

• 22:51Guy Raz?

  So, all right, so you get up there and so what what do you do? I mean, you're there for the weekend. So what did you do? How do you teach them how to make cheese?

• 23:00Speaker 01

  Um, we made it from the goat's milk, which is the closest to shipment that I grew up with.

• 23:04Guy Raz?

  Yeah.

• 23:05Speaker 01

  And in the evening, they they made sandwiches, they made fire and we sit around the fire, which is, you know, that's what we used to do. You know, when we were in up in the mountains, I had the best time. And the end of the second day, as I was getting ready to go to the bus station. I said, um, what would take, like in that line, I don't know how I said it, for me to stay in the farm and work in the farm and go to school from here? Um, she, I don't know what she exactly said. I think there were some issues with it. Um, but in month or two months later, she said, you know,

• 23:50Speaker 01

  if you still want, you can come and, and stay in the, in the, in the farm.

• 23:54Guy Raz?

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

• 23:58Speaker 01

  Yeah.

• 23:59Guy Raz?

  And, and by the way, I'm just, I'm just assuming that you, when you got there, because your, your assumption was there were no farms in New York. But when you got there, it kind of took you back to, to where you grew up, right? Because you're like, oh, all of a sudden I'm around farms and animals and

• 24:13Speaker 01

  Exactly.

• 24:14Guy Raz?

  goats and sheep and cheese.

• 24:16Speaker 01

  Yeah. When I came back, I, I made my mind, there is no, no way, no, no way I'm living in the city. I'm moving somewhere up there, definitely, because now I know a place like that exists.

• 24:30Guy Raz?

  You want to be around goats and sheep?

• 24:31Speaker 01

  Exactly.

• 24:32Guy Raz?

  And trees and rivers?

• 24:33Speaker 01

  Yeah.

• 24:33Guy Raz?

  I, I, I get it. I totally get it. So, so, so she offers you to move up there? And, and you took the, we know you took the offer.

• 24:41Speaker 01

  I jumped.

• 24:42Guy Raz?

  You jumped.

• 24:42Speaker 01

  Oh my God, I jumped.

• 24:44Guy Raz?

  What, what were you gonna do for, for, was she offering to pay you too? Or were you just gonna figure that out on your?

• 24:48Speaker 01

  Well, I don't think they could pay me.

• 24:50Guy Raz?

  Yeah.

• 24:50Speaker 01

  Um, but I could live and help, right? So that's, that's kind of how it could and I, till I get a job or I, I move out and all that stuff. But it ends up being that I lived in that farm for a year and a half.

• 25:02Guy Raz?

  And what did you do?

• 25:04Speaker 01

  I did everything. I did everything in that farm.

• 25:07Guy Raz?

  And you're living there by yourself in rural?

• 25:10Speaker 01

  Yes.

• 25:10Guy Raz?

  Uh, New York, upstate New York, on the, on the Vermont border, just you, this like, this kid from Turkey.

• 25:16Speaker 01

  That's exactly how you describe. This kid from, you know, the Kurdish kid from eastern part of Turkey, living in a farm. And what do I do? So I wake up five o'clock in the morning. I gather the cows and I put them on the 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.

• 25:43Guy Raz?

  Oh, wow. And you did that every few days?

• 25:45Speaker 01

  Every day, every day I drive. And then I would do it five o'clock in the morning, milking, and then when I come back from the school, the first thing at six o'clock, I would do again, same thing, milk the cows and all that kind of stuff.

• 25:58Guy Raz?

  And, and by the way, Hamdi, did you have any friends? I mean, you're like in your twenties, you're a young guy. Were you just like milking cows, you're working on the farm, going to school, working on the farm, going to school?

• 26:10Speaker 01

  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. Not in New York, really, you have people from all over the world, right? So you have Turks and everybody. Up there, you know, I was probably the first person from Turkey that I have ever seen.

• 26:44Guy Raz?

  Yeah. All right, so your brother comes and visits you while you're there. And then I think the, the following year, 96, your dad comes to visit you in New York.

• 26:53Speaker 01

  Yes.

• 26:54Guy Raz?

  Tell me a little bit about that visit, because I think this would be a kind of a pivotal visit. I mean, he, he was sort of presumably coming there just to kind of see you and your, and your brother had been, had been there with you. And, 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.

• 27:11Speaker 01

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

• 27:15Guy Raz?

  Right.

• 27:17Speaker 01

  And then he comes and I'm trying to figure out what I'm going to do with my life. I don't know. And but one thing is for sure, we have to work, we have to make some kind of income. And he said, um, seems like there's not good feta cheese in here.

• 27:36Guy Raz?

  Your dad, when he visited, he he noticed that the what we might call feta cheese, right?

• 27:43Speaker 01

  Is not good here, and it was not good. It was pretty awful. Yeah, it was pretty awful at the time.

• 27:47Guy Raz?

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

• 27:55Speaker 01

  Olives.

• 27:55Guy Raz?

  Olives, right? This is kind of a traditional Turkish breakfast.

• 27:59Speaker 01

  Right. And he tasted and says, this is really bad. Is there anything good? I said, no, this is it, what we can find. And so, wow, why don't you ask your brothers to send you feta cheese? Then you can sell it here. That was the big idea.

• 28:14Guy Raz?

  Yeah.

• 28:15Speaker 01

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

• 28:24Guy Raz?

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

• 28:31Speaker 01

  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.

• 28:40Speaker 01

  And I went to visit and I said, we make this cheese. Would you be interested buying it? And he says, wow, 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.

• 29:05Guy Raz?

  Wow.

• 29:05Speaker 01

  Yeah.

• 29:07Guy Raz?

  Can I ask you a question about the cheese? So this is cheese that your brothers were actually making back in Turkey.

• 29:12Speaker 01

  Yes.

• 29:12Guy Raz?

  And was the cheese in jars? Was it canned? I mean, how did you? How did they ship it? Was it shipped in coolers or did it not require cooling at all? How did you receive it?

• 29:24Speaker 01

  Definitely cooler. Yeah, definitely cooler. It has to be refrigerated.

• 29:27Guy Raz?

  Right.

• 29:28Speaker 01

  And we made really good money on importing that cheese, at least compared to, you know, working here and there, right? So we don't have a lot of expenses.

• 29:39Guy Raz?

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

• 29:45Speaker 01

  That's it.

• 29:46Guy Raz?

  Yeah.

• 29:47Speaker 01

  But then my mother got sick and I went to Turkey.

• 29:53Speaker 01

  And I came back with my mom, discovered that my mom had a very severe liver disease, that we had no idea that she had it. Then, then six months after she passed, I had this time of being, again, feeling like numb. It was this time of total loss.

• 30:12Guy Raz?

  Yeah.

• 30:13Speaker 01

  Because she was the most important person ever been in my life. And she was the most important person in the family. She, you know, my, my father was a big shot and all that kind of stuff. But really, it was my mother, the reason that I was in New York City. That she made me to be that person, to be independent and come here. And of course, my God, the love that she had and caring that she had. And, and, and then she made us, at least, I, I can speak on my own. She made you feel like you were the most special person in the whole universe and, and made sure that you believed in it. So she was my backbone. She was everything that I was.

• 30:58Speaker 01

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

• 31:12Guy Raz?

  Wow.

• 31:15Guy Raz?

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

• 31:27Speaker 01

  Yeah.

• 31:28Guy Raz?

  But, but from what I gather, you started to, maybe both of you started to think, you know, you know, hey, we can probably make more money or, or grow our, our business if we, if we made the cheese or, or we made it here in the US, right? Is?

• 31:43Speaker 01

  Yeah.

• 31:44Guy Raz?

  How did that, how did you start to? Tell me about like that thought process. When did you start to think that that's what you should do?

• 31:53Speaker 01

  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 feta 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.

• 32:28Guy Raz?

  Yeah.

• 32:29Speaker 01

  So this is no brainer. The question is, okay, where do you make it? How do you make it? What kind of, what kind of environment? What kind of place? And how do you put this together?

• 32:42Guy Raz?

  Why don't we come back in just a moment? How Hamdi starts his own cheese business, but switches to yogurt after pulling a vital piece of junk mail out of the garbage? Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 33:09Guy Raz?

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• 33:51Guy Raz?

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• 34:36Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 35:21Guy Raz?

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• 36:25Speaker 03

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• 36:37Speaker 04

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• 36:46Guy Raz?

  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.

• 37:07Speaker 01

  How do I afford to bring the vats? Vat is this stainless steel vessel, let's say 2,000 pounds, they can go 10,000 pounds, where you pasteurize the milk.

• 37:18Guy Raz?

  Right.

• 37:19Speaker 01

  It's like, how do I afford to these equipments? And there was a local bank called MBT in Johnstown. The gentleman there said, you know, you can get the USDA to have a loan guarantee. Meaning?

• 37:35Guy Raz?

  Right.

• 37:35Speaker 01

  It gives some kind of comfort to the banks, I guess that's the way to put it in place. That they will lend to the local businesses to start their business or expand their business. And if it goes wrong, then 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 working capital and all the unthinkables.

• 38:19Guy Raz?

  Yeah. All right. So you get the loan, right, to make this happen? And you've got two things that you have to do. You have to start making cheese, and then you have to start selling it. So was, first of all, on the making cheese, because I think the factory opened in 2002. It was called Euphrates. This is the company that you and your brother started to make cheese.

• 38:38Speaker 01

  Exactly.

• 38:38Guy Raz?

  And did you, so you made cheese. You had a pallet by that year for sale. So I'm assuming the making the cheese part of it was not that hard. It was the, everything else that was hard? Or am I wrong?

• 38:53Speaker 01

  Um, no. I, I, you know, in theory, it should have worked. You know, you have the milk.

• 38:59Guy Raz?

  Yeah.

• 39:00Speaker 01

  You have the culture and it should work.

• 39:05Speaker 01

  I had one of the worst time making the cheese.

• 39:08Guy Raz?

  Why?

• 39:10Speaker 01

  I, you know, it turns out the theory and the reality is two different things.

• 39:14Guy Raz?

  But you knew how to make cheese. You've been making cheese for years.

• 39:18Speaker 01

  Yeah, the milk is different, right? And then you make the cheese and then how it stays in after two months or a month or two weeks. The, the texture is not right. I mean, it's close, but it's not perfect.

• 39:31Guy Raz?

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

• 39:37Speaker 01

  Every shipment of the milk different. Now, we made cheese with unpasteurized milk. Now you're pasteurizing and so you have to fine tune that. And you're relying on culture companies, you're relying on, you know, equipment companies to be able to make that kind of adjustments. So there's a lot of trial and error. We couldn't do any of those things until we had the vats in place.

• 39:58Guy Raz?

  Yeah. By the way, how many people were working there? Five, 10?

• 40:01Speaker 01

  10, 12 people. Yeah, I'm making the cheese, I'm packing it, I'm salting it, I'm putting it in the pallet, pails. You know, 10 pound pails or 20 pound pails, whatever it is.

• 40:11Guy Raz?

  Where did you find, where did you find customers to sell all that cheese?

• 40:15Speaker 01

  So that's a, I started 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, you know, these diners are all over the.

• 40:45Guy Raz?

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

• 40:49Speaker 01

  Yeah, it's to go, to go places, right? So in these diners, one of the most popular thing that is even comes even without you ordering is the Greek salad. And that Greek salad has.

• 41:01Guy Raz?

  Chunks of feta on it.

• 41:02Speaker 01

  Yeah. But I, soon enough, I realized that this is not.

• 41:08Speaker 01

  This is not a huge margin thing.

• 41:11Guy Raz?

  Yeah.

• 41:11Speaker 01

  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.

• 41:23Guy Raz?

  Right.

• 41:23Speaker 01

  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.

• 41:36Guy Raz?

  Black olives.

• 41:37Speaker 01

  In there and I put on black olives and I put the olive oil.

• 41:41Guy Raz?

  No one cares about the feta.

• 41:42Speaker 01

  By the time, yeah, who cares?

• 41:45Guy Raz?

  Yeah, I get it. I get it. And but, but so, and were you going literally from diner to diner? Or were you working with like a big distributor who would then do that for you?

• 41:54Speaker 01

  Yeah, so not big, but the distributor, you can't go diner to diner.

• 41:57Guy Raz?

  Yeah, it's not possible. You can't scale that, right?

• 41:59Speaker 01

  Yeah. So the first eye opening for me was I called this distributor in Syracuse. I says, can I come and show you some feta? He says, sure, come. And I go and I show him, he says, okay, I'll buy it from you. And I'm like, wow, you know, I feel like, dude, this is cool. I said, how much you buy? It's two pallets a week? No, every other month? Oh, God, I mean, two pallet every other month is not.

• 42:33Guy Raz?

  It's nothing.

• 42:34Speaker 01

  Fraction of, it's nothing, basically. So how many of these people I have to have to be able to even pay for my expenses? It is, at this point, I'm saying, what an F I did now, like what I got myself into.

• 42:49Guy Raz?

  Yeah. I read, I read something you said. You said that the years, those two years from 2002, when you started the factory, Euphrates, and 2004, so the first two years, you said, was the most difficult time of my life.

• 43:03Speaker 01

  Yes, it was literally most difficult times of my life. And I have gone through some difficult life before that. But this was really, really hard. There was no way I could survive. There's no way this could make it to the other side. There's no way, every day, this, this business was gonna die.

• 43:20Guy Raz?

  Every day?

• 43:21Speaker 01

  Every day, every day. I don't have resources, I don't know the knowledge, I don't have experience. I'm new to the country, I got myself into this. I'm already not complete since my mother's dad. I mean, it's, it's a lot of emotions. And I remember there was a little creek next to the, you know, plant. And I would go there and I would cry and cry and cry by myself. And then I would come up after I'm done into the, inside the factory and start making cheese. But it was that two years made me who I am today. But also it was one of the most difficult times of my life.

• 44:03Guy Raz?

  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.

• 44:13Speaker 01

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

• 44:54Guy Raz?

  Yeah.

• 44:55Speaker 01

  And I end up getting them, hundreds of them.

• 44:59Guy Raz?

  Wow.

• 44:59Speaker 01

  Yeah.

• 45:00Guy Raz?

  Because I think your, your sales were, I think you hit about $2 million in sales by 2005, but you had like 40 employees. So no one is getting rich, you know, for $2 million in sales and 40 employees.

• 45:12Speaker 01

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

• 45:17Guy Raz?

  Right.

• 45:17Speaker 01

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

• 45:25Guy Raz?

  Yeah.

• 45:26Speaker 01

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

• 45:29Guy Raz?

  Yeah, wow. But that year, something pretty pivotal happened. A property came, came up for sale, I guess, not too far from there. What, tell me the story of, of, what, how'd you find out about this property? What was it?

• 45:43Speaker 01

  So here's the thing, I'm really a messy person, even today, I'm pretty messy in my office and my desk.

• 45:49Guy Raz?

  Yeah.

• 45:50Speaker 01

  So, once, maybe a month, maybe every couple of weeks, I decide that I'm going to organize my desk. I'm just gonna go through all the documents, all the papers, all the letters, you know.

• 46:03Guy Raz?

  Yeah.

• 46:03Speaker 01

  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.

• 46:21Guy Raz?

  Yeah.

• 46:22Speaker 01

  So I come to this one, and I open the envelope, I don't know where it comes from, of course, it's interesting, I open it, I look at it. It's literally an ad. It says, "Fully equipped yogurt plant for sale."

• 46:35Guy Raz?

  Wow.

• 46:36Speaker 01

  And you can tell that's really, really old. I mean, the picture is also says nineteen twenty, you can tell it's 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 twenty, thirty 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, tea, tea cup that is also in there. And, and I look at that picture again, and I'm staring at it, and there's a big number on top, top.

• 47:18Speaker 01

  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 are selling it, as is." And I asked the price, I said, "What's the price?" He says, "$700,000."

• 47:45Guy Raz?

  For a yogurt factory?

• 47:46Speaker 01

  Yeah.

• 47:47Guy Raz?

  Okay.

• 47:47Speaker 01

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

• 47:54Guy Raz?

  What, you mean it was it was underpriced?

• 47:56Speaker 01

  So cheap. It's very cheap. So I thought he meant $7 million.

• 48:02Guy Raz?

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

• 48:09Speaker 01

  Yeah, because I know pretty much what things cost.

• 48:13Guy Raz?

  Yeah.

• 48:13Speaker 01

  From the experience of putting a smaller version into our plant. Yeah. It's 20,000 square feet. This one says 67,000 square feet. So it's three times bigger.

• 48:22Guy Raz?

  And it was owned and it was owned by Kraft at the time they were selling it?

• 48:25Speaker 01

  Yes, yes. So it was enough interesting. 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 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 how next to the next to the highway.

• 48:45Guy Raz?

  Yeah.

• 48:46Speaker 01

  And I saw it from a distance. This old place. And I get there and you go up. And then someone named Rick Lake, Rich Lake, says, hi, I'm the production manager. The plant manager is not here. I was told to give you a tour. And he takes me to the plant. And it's basically every time he goes to places, he turns the lights on. It's not a working factory anymore. It was until maybe four months ago, five months ago.

• 49:20Guy Raz?

  Yeah.

• 49:21Speaker 01

  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.

• 49:36Guy Raz?

  Yeah.

• 49:39Speaker 01

  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.

• 50:00Guy Raz?

  You felt that when you got to the town?

• 50:02Speaker 01

  You felt it, yeah, you felt it.

• 50:04Guy Raz?

  Wow, like like a funereal feeling. It's.

• 50:07Speaker 01

  Yeah, I felt like somebody died.

• 50:11Guy Raz?

  Because they were about to lose their jobs.

• 50:14Speaker 01

  They were not only losing jobs, they're losing a place that's been there for 70 years. It was a sign of life, really. The steam came out of that place was a sign of life. Everybody's grandfather worked there, mother worked there, father worked there. It was just, walking in that plant was walking in a cemetery. It was that kind of.

• 50:36Guy Raz?

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

• 50:45Speaker 01

  Exactly.

• 50:46Guy Raz?

  And yogurt, too.

• 50:47Speaker 01

  Yes, Breyer's yogurt, yeah.

• 50:50Guy Raz?

  And I'm curious, because from what I understand, from what I've read, it was really old. I mean, it was like crumbling paint and it was not in great shape, it didn't look good.

• 51:00Speaker 01

  Yeah, and there's a smell, old smell.

• 51:03Guy Raz?

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

• 51:06Speaker 01

  Yeah.

• 51:07Guy Raz?

  Old cheese smell?

• 51:08Speaker 01

  Yeah, everything is old. The biggest important things that the real estate agent kept telling me is that it is as is. We don't take any liability 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, whatever the things that you find is good and bad, it's all yours.

• 51:31Guy Raz?

  Yeah.

• 51:31Speaker 01

  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 like, I'm just like, you know, when, when you see something and you just call and you don't make sense, you throw all the words that you know into it and you're excited and all that kind of stuff. This guy's like, wait, wait, wait, wait, wait, just wait, hold on, hold on.

• 52:11Speaker 01

  Tell me what you think. Who, who owns the company? Who's closing it? What kind of place? And the guy said, "Honey, this is the largest food company in the world."

• 52:22Guy Raz?

  Kraft.

• 52:23Speaker 01

  Yeah.

• 52:23Guy Raz?

  Yeah, yeah.

• 52:24Speaker 01

  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?

• 52:33Guy Raz?

  Which is a fair question. I mean, if the biggest, one of the biggest food companies is getting out of the yogurt business, at least there, in that factory, why would you think you could make it work? He was asking you. Fair question.

• 52:45Speaker 01

  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, "Seven hundred thousand, right?" I said, "Yeah, it's cheap, seven hundred." I said, "You don't have seven hundred thousand dollars."

• 53:02Guy Raz?

  He said that to you. He said, "You do not have, you do not have seven hundred thousand dollars."

• 53:06Speaker 01

  You will never have seven hundred thousand dollars. And if anything, you haven't paid me in the last six months. I have bills. He just basically said, and it was true, I had not.

• 53:14Guy Raz?

  Yeah.

• 53:15Speaker 01

  So he said, "You just made it. I know it's been painful for the last two years. You just, you just can breathe now. Don't do this to yourself. I know you get excited about things, but just breathe."

• 53:28Guy Raz?

  Which is very good advice. I mean, it's good advice because he's trying to look after you. He knows what a grind it was the previous two years to make the cheese factory, the cheese, you know, plant barely profitable. And he knows that you're in for a nightmare if you try to do something new now.

• 53:48Speaker 01

  Yeah, he thinks that this is the stupidest thing.

• 53:51Guy Raz?

  Yeah.

• 53:52Speaker 01

  And I took his advice very seriously. He was right.

• 53:55Guy Raz?

  Yeah.

• 53:56Speaker 01

  And I am in my office, maybe a few weeks after. I have this regional bank, it's called Key Bank.

• 54:07Speaker 01

  And you know, they're salespeople, they they go from businesses to businesses in the communities and say, what can we do? Do you need anything? And you know how they are? And there's this two gentlemen shows up. One, his name is Pat Buchi. 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 I called Mario, Mario thinks it's a stupid idea, but I thought, you know, if I get this place, I could make some really cool yogurt out of this place. And I keep talking about it. And he says, Hamdi, you know, we are partnered with SBA, Small Business

• 54:51Speaker 01

  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.

• 55:07Guy Raz?

  Wow.

• 55:07Speaker 01

  It's worth pursuing. And says, why don't you make a business plan? And, you know, I'll send you some applications and you fill it and we can look at this. Now, I said, business plan, I've never done a business plan. How do you make a business plan?

• 55:20Guy Raz?

  Yeah.

• 55:21Speaker 01

  Uh, in the last couple of weeks, I put a business plan together, a couple of pages. He helped me how to do it. And then a few weeks later, we went to, a few days later, we went to the plant and see it. And we kept in contact with the real estate agent. To tell the, to make the story short.

• 55:38Guy Raz?

  They got you the loan?

• 55:39Speaker 01

  They got me the loan.

• 55:40Guy Raz?

  Wow. Can I, can I ask you a question about the 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 gonna, I mean, if if if Kraft wasn't making it work, what was the thing that, like, when people said to you, hey, Hamdi, what are you gonna do? What'd you say?

• 56:01Speaker 01

  Um, so here's the little bit of background. You know, I don't know if I, I mentioned, we eat so much yogurt in Turkey, right? So.

• 56:11Guy Raz?

  Yeah.

• 56:11Speaker 01

  Breakfast, lunch, dinner. I mean, you can't imagine a meal or time or occasion that you don't somehow consume yogurt.

• 56:17Guy Raz?

  Right.

• 56:18Speaker 01

  But compared to what it was here.

• 56:21Speaker 01

  The yogurt was ten times worse. It it it was literally horrible, like it was awful stuff.

• 56:29Guy Raz?

  Right.

• 56:29Speaker 01

  And I thought it's milk and culture. There's not cost side of this. It's just milk and culture. It's just knowing how to make it. And I thought people will love it. Why would it not? If there is a better yogurt that is made, I thought people will love it. If they are buying this shit, they could buy that stuff. If they're buying that stuff.

• 56:46Guy Raz?

  Yeah.

• 56:47Speaker 01

  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 you're from and you say from you're from Turkey, the next thing they say, oh, I was in Turkey or I was in Greece. And within few minutes, the first thing comes up is the yogurt that they had in in in Greece and Turkey.

• 57:06Guy Raz?

  Yeah.

• 57:07Speaker 01

  You know, with honey and walnut, and that was one of the best thing ever. So there is a disconnect between how people are talking about it and how the market conditions are.

• 57:16Guy Raz?

  So you have the confidence that this can can work. You you get the the money to buy the factory. And from what I understand, that summer of two thousand and five, you spent a lot of that time just getting the factory like cleaned and painted and repaired.

• 57:33Speaker 01

  Yeah, exactly. So within that, I have four factory workers that I hired. Actually, the the manager, who was the plant manager, who was closing the factory, I I I asked him, I said, if one day I wanted to bring this factory back, who are the people you would recommend for me to hire? And he recommended, he says, you gotta get Maria because he knows she knows all the vendors. You gotta get Rich because he knows all the production equipment. You have to have Mike Allen. Mike is the guy. The guy knew exactly where the all the pipes were, where the lines were, because there was no drawings. This was so old. No one had, you know, the the the blueprints of the plant.

• 58:16Speaker 01

  So I had to convince Mike Allen to come back, which I did. And then the wastewater side of things, that was Frank. He knew how to turn that back on. So I had those four people with me in the summer of two thousand and five.

• 58:28Guy Raz?

  Right.

• 58:29Speaker 01

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

• 59:02Guy Raz?

  All right. One important point, and I, you know, just to, and I think a lot of people know this, which is the reason why what we call Greek yogurt is thicker is because it's separated from the whey, right? Because milk is 99 or 97% water, right? And then when you turn it to yogurt, there's still a lot of water in there.

• 59:19Speaker 01

  Yeah.

• 59:20Guy Raz?

  So you've got to literally like put it in a centrifuge, like spin the yogurt, right? Really quickly to get the water out. But, 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, what, you know, American style watery yogurt.

• 59:38Speaker 01

  You're 100% right. In a commercially, this cannot be done with a cheese cloud. It needs to be centrifuge separator. And these separators are, you know, I would say, you know, close to a million dollars by the time.

• 59:49Guy Raz?

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

• 59:55Speaker 01

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

• 1:00:01Guy Raz?

  Yeah.

• 1:00:01Speaker 01

  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. Chobani means shepherd in Turkish. And Chobani, 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.

• 1:00:44Speaker 01

  You know, someone who helps, someone who leads, someone. It's a very beautiful word in all dimensions.

• 1:00:51Guy Raz?

  Yeah.

• 1:00:51Speaker 01

  And I was so excited with the name. I couldn't wait until I get back to Chicago to go to my room and see if that chobani dot chobani dot com was available.

• 1:01:03Guy Raz?

  And I guess it was because you got the domain.

• 1:01:05Speaker 01

  Yeah.

• 1:01:06Guy Raz?

  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?

• 1:01:16Speaker 01

  So I spent a enormous amount of time about the cups, you know, what the cups is gonna look like.

• 1:01:21Guy Raz?

  The cups for your yogurt that you were gonna sell.

• 1:01:23Speaker 01

  Cups of my yogurt. I was so convinced that if I am going to make this yogurt, then it's going to make it in the shelf. It cannot be in the cups that is available in this country. It needs to be some Europeans cups. But the cups are as simple as it sounds. If it goes into yogurt, it needs to be FDA approved. So you can't just get the cups from anywhere. It needs to be FDA inspected plant. And I found out that there is a plant in Bogota, Colombia, that I went and they said, we will make it for you. We will 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.

• 1:02:02Guy Raz?

  And this was gonna be initially, Chobani was just single serving yogurt. It wasn't like it in the big tubs that you buy it in now. Initially, it was just a small cup.

• 1:02:12Speaker 01

  Exactly, small cups, yeah. And I wanted to have a foil that every flavor has its own foil design on top of it. And at that time, you know, for now, it's very, very normal. It's not a big thing. But at that time, people said, why? You know, people never do those things. And don't you, don't you waste, don't you, aren't you wasting your money? Aren't you making yourself competitive and all that kind of stuff? My view was, I spent so much time making this yogurt.

• 1:02:42Speaker 01

  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't catch their eye, have them to try it once, the yogurt will finish the work.

• 1:02:56Guy Raz?

  Got it.

• 1:02:56Speaker 01

  And that will be the conversion.

• 1:02:58Guy Raz?

  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?

• 1:03:15Speaker 01

  That's exactly right. And unless you make the flavor ones, but the basic thing is very simple, milk and culture.

• 1:03:22Guy Raz?

  Yeah.

• 1:03:22Speaker 01

  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.

• 1:03:29Guy Raz?

  Yeah. And really, it was about, it was about experimenting with temperature, time and incubation.

• 1:03:35Speaker 01

  Exactly.

• 1:03:36Guy Raz?

  And then you've got to blend it to make it creamy, right?

• 1:03:38Speaker 01

  Right. After you strain it, it particulates, you know, you have small particles.

• 1:03:43Guy Raz?

  Yeah, there's lumps.

• 1:03:44Speaker 01

  Yeah, there'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.

• 1:03:56Guy Raz?

  On the lid? You didn't want to see on the lid. You wanted it to be so perfectly smooth in the cup that it wouldn't touch the lid.

• 1:04:02Speaker 01

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

• 1:04:07Guy Raz?

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

• 1:04:20Speaker 01

  Exactly. I wanted to make it something that, that they look at from every dimension, this is something that they've never seen before. And probably halfway through, it would have made the job because this is huge standards I'm going.

• 1:04:34Guy Raz?

  Yeah.

• 1:04:35Speaker 01

  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.

• 1:04:49Guy Raz?

  When we come back in just a moment, how Chobani 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 How I Built This.

• 1:05:13Speaker 05

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• 1:05:52Guy Raz?

  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.

• 1:06:08Speaker 01

  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 1:00 or 2:00 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 show me some observation." He says, "Yeah." You know, he didn't say, "This is flying off the shelf." He didn't say, "This is amazing." He said, "Well, it looks like people are buying it."

• 1:06:52Speaker 01

  And some people came back and bought again. So yeah, send it me some more." And that was encouraging.

• 1:06:58Guy Raz?

  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?

• 1:07:16Speaker 01

  Yes. That is the biggest event in the history of Chobani. Now, in order to be able to make it to ShopRite... Or that kind of conventional stores, you have to pay what they call it listing fee.

• 1:07:29Guy Raz?

  Yeah.

• 1:07:30Speaker 01

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

• 1:07:36Guy Raz?

  Just let me, just let me understand this. So when you go to a small grocery, kosher grocery store in Great Neck, New York, you just send them a pallet and that's it. But if you want to get into a big grocery store like Kroger or ShopRite, you actually have to pay them a fee.

• 1:07:50Speaker 01

  Yeah.

• 1:07:51Guy Raz?

  To stock your products. And it's, it can be a lot. It could be tens of thousands of dollars per, per product that you sell.

• 1:07:58Speaker 01

  Exactly.

• 1:07:59Guy Raz?

  And by the way, all grocery stores do this, right? Target, Walmart, they all do this.

• 1:08:03Speaker 01

  Most of them.

• 1:08:04Guy Raz?

  And they do it because they can, right? Basically.

• 1:08:07Speaker 01

  That's, 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 on the mass, you know, supermarket chains, you can pay, I don't know, if you have four SKUs, four products that you put on the shelf, so four times, you know, 120, 150,000 dollars.

• 1:08:28Guy Raz?

  Yeah.

• 1:08:29Speaker 01

  And 150,000 dollars massive money. And if it doesn't work, within three to six months, it comes off the shelf. So he has to perform to stay. There's no obligation.

• 1:08:39Guy Raz?

  So it's a huge, it's a huge risk.

• 1:08:41Speaker 01

  It's a huge risk.

• 1:08:42Guy Raz?

  But, 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.

• 1:08:48Speaker 01

  Yeah.

• 1:08:49Guy Raz?

  Which is easier in a lot of cases because there, there's a lot of autonomy and the buyers are regional and, and, and they don't have the, the high stocking fees or I think any fees. So why wouldn't you just go down that, that route?

• 1:09:02Speaker 01

  So I did not have huge interest on natural channels. I wanted this product to be in a mass channels where ordinary people shop.

• 1:09:14Guy Raz?

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

• 1:09:17Speaker 01

  Exactly. I was very convinced, once I can make this to the main channel and people tasted it, this is going to go up, you know, everybody was going to happy. All I needed was one example.

• 1:09:27Guy Raz?

  Yeah.

• 1:09:28Speaker 01

  And then the ShopRite guy said, How are you going to pay for the for the list MP? And this is a true story. The guy said, well, we need to get paid. And we had no money. And we said, can you take percentage of that 150,000 from each invoice when we ship it to you? And the guy said, yeah, that's fine. But what if it doesn't sell? You know, I have no invoice. I have no. What am I going to cut it from? I personally said, if it doesn't sell, I will give you the factory.

• 1:09:59Guy Raz?

  Wait, so Hamdi, so he's saying, well, what if it doesn't sell? You're saying my factory is the guarantee?

• 1:10:05Speaker 01

  Yeah, I said, I'll I'll give it back. And the guy laughed. And I think he found out that this is pretty crazy and bold. And he made a decision to take it. And then, and about two, two weeks later, I had a phone call from him. He asked Kyle to call me and he called me and he says, I don't know what you're putting inside this yogurt. I don't want to know. But I cannot keep it on the shelf.

• 1:10:31Guy Raz?

  Wow.

• 1:10:32Speaker 01

  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.

• 1:10:52Guy Raz?

  How is that possible, Hamdi? You got, how do you just put it on the shelf? The thing is, is that you put on the shelves and you still have to get people to notice it. Because you go into a grocery store, there are 25, 30,000 products. How did people even know about it?

• 1:11:09Speaker 01

  It was the cup. It was just.

• 1:11:11Guy Raz?

  It was just the the label. It was bright.

• 1:11:13Speaker 01

  Yeah.

• 1:11:14Guy Raz?

  Yeah, it was just it's to look different.

• 1:11:16Speaker 01

  Yeah. And then I priced it.

• 1:11:21Speaker 01

  Below my cost at that time.

• 1:11:23Guy Raz?

  You knew you were gonna lose money?

• 1:11:25Speaker 01

  Yes, I was okay to lose money for probably two months.

• 1:11:30Guy Raz?

  Okay, and by the way, how many shop rights were you in? Like five, 10?

• 1:11:35Speaker 01

  No, no, it's all of them. I think it was over 100, 120, something like this.

• 1:11:38Guy Raz?

  Wow, so.

• 1:11:39Speaker 01

  Yeah, you get into system wide, yeah. But I had a simple napkin calculation. If I reached the 20,000 cases, I would break even. And everything after that, it would be profitable.

• 1:11:53Guy Raz?

  And a cases is how many cups of yogurt?

• 1:11:55Speaker 01

  12.

• 1:11:55Guy Raz?

  12, okay.

• 1:11:56Speaker 01

  Yeah.

• 1:11:57Guy Raz?

  So you're taking a gamble that people would just find out about this at shop rights and buy it?

• 1:12:01Speaker 01

  Exactly. And when he put it into an ordinary shelf, like a common shelf 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 there missing one zero? He says, no, that's accurate. And I said, is this for a month? Or he says, no, that's for the week.

• 1:12:30Guy Raz?

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

• 1:12:47Speaker 01

  So that is.

• 1:12:51Speaker 01

  So, you know, you say you get this all good news that he wants 25,000 cases. The other 1,000 cases. And then you look at your blueprint, you look at available equipment and the volume. You look at all the limitations that you can think of and they all cost money, right? And how are you going to, how are you going to meet the demand?

• 1:13:12Guy Raz?

  Yeah.

• 1:13:12Speaker 01

  So we're converting, you know, cooler space into a filler room. We're converting toilets into the offices. We, whatever needs to be done outside of jeopardizing the quality of the food, we're trying to find.

• 1:13:29Guy Raz?

  I read that you were, you were like, every people were like sleeping in the factory. Because you, you literally had to fulfill these mass, 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.

• 1:13:45Speaker 01

  It is, I mean, you're talking about Thanksgiving, Christmas, Fourth of July, weekends. Anyone who has a minute to spare, they're back in the factory. And it's not even, I'm asking, they're doing it by themselves. You have to realize, Guy, this is a plant that was the last factory that got closed, right? So you have a large corporation closed and left. 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.

• 1:14:30Speaker 01

  We were just high, in a way.

• 1:14:33Guy Raz?

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

• 1:14:37Speaker 01

  Yeah. And I was, I was, I was taking Tylenol, Advil, like nuts. I was, I was.

• 1:14:47Guy Raz?

  Wow. Not, you were not taking care of your health?

• 1:14:50Speaker 01

  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, it's pretty, pretty horrible lifestyle.

• 1:15:04Guy Raz?

  Yeah. All right. So you, obviously, this thing is taking off. And then you start to get more accounts and there's BJ's and then, 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, you did was there was a, I guess, like a, this refugee resource center, like in that part of upstate New York.

• 1:15:30Speaker 01

  Yeah.

• 1:15:30Guy Raz?

  And they had people who just needed work. And you were like, great, we need, we need, we need people to work. Tell me how you, like, connected with them.

• 1:15:41Speaker 01

  So this is how it happened. Utica is about 30 minutes drive from where the plant is in South Edison. And I lived in Utica.

• 1:15:48Guy Raz?

  Utica, New York, yeah.

• 1:15:49Speaker 01

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

• 1:15:59Guy Raz?

  Yeah.

• 1:15:59Speaker 01

  And I called the refugee center and I said, what is the problem? And she said,

• 1:16:05Speaker 01

  Uh, these are people have 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. Um, I drive from Utica to plant every day, so why don't we get some cars and buses that people can come with and we will hire some translators and we will train them at the work and we will make this work. And people had concern and said, why, are you sure, you know, how people are going to take this? I said, I'm pretty sure. I know my people. And that was started very slow and, and the people who started working there brought their brothers, their sisters. It became a community.

• 1:16:49Guy Raz?

  Yeah.

• 1:16:50Speaker 01

  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.

• 1:17:01Guy Raz?

  So you have 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 two, you know, maybe hitting 200,000 to 150 million cups? How, how do, how were you doing that?

• 1:17:30Speaker 01

  Well, one of the best thing that I had is 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.

• 1:17:41Guy Raz?

  So you could finance the growth entirely through the sales of the yogurt? You could finance, like, is making more yogurt means buying more milk, means buying more containers, like, you gotta 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?

• 1:18:05Speaker 01

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

• 1:18:12Speaker 01

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

• 1:18:19Guy Raz?

  Wow.

• 1:18:20Speaker 01

  And everything, everything in Chobani was internally financed. We never had an outside investors.

• 1:18:30Guy Raz?

  Right.

• 1:18:30Speaker 01

  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.

• 1:18:44Guy Raz?

  Yeah.

• 1:18:45Speaker 01

  Yeah.

• 1:18:46Guy Raz?

  But here's a question, Hamdi, right? You're this guy from a village in rural Turkey, right? And it's Kurdish village. You barely spoke English when you came to the US. All right, here you are now, okay? So a couple of things I'm assuming start to happen. First of all, the big, big brands, the Danans 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 Danan 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.

• 1:19:31Guy Raz?

  You don't, you're going to get crushed. And I have to imagine people are saying that to you.

• 1:19:35Speaker 01

  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.

• 1:19:52Guy Raz?

  Yeah.

• 1:19:53Speaker 01

  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.

• 1:20:16Guy Raz?

  Right. You just had your head down, just working all the time. You weren't.

• 1:20:20Speaker 01

  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, you want to sell.

• 1:20:41Speaker 01

  And in that is a hidden another information. If you don't sell, I'll make the same thing.

• 1:20:46Guy Raz?

  Yeah, I'll crush you. I mean, you're, you're, you're, I mean, big food companies must be coming to you and saying, "Look, sell to us, we can make this bigger. You'll make a lot of money, but if you don't do it, let's do it on our own." And, you know, we've got massive marketing budgets. We've got a huge distribution network. Like, you're gonna be in trouble.

• 1:21:02Speaker 01

  Yeah, yeah. That's very scary. And all this time, I'm betting on they're gonna be very slow, and they were slow. So by the time they wake up, really, I was at five, six hundred million dollar sales area.

• 1:21:15Guy Raz?

  Wow.

• 1:21:16Speaker 01

  And they did come, and they said, "What about selling?" And the numbers were with billions.

• 1:21:21Guy Raz?

  Wow. They were offering you, and you, you could have just, because you owned the company. It was yours.

• 1:21:26Speaker 01

  Yeah.

• 1:21:27Guy Raz?

  It's a great, great offer.

• 1:21:30Speaker 01

  So now, imagine this guy, you know, working in the factory 24/7, living in a one-bedroom apartment in Utica, that the bed hasn't been, you know, fixed maybe.

• 1:21:44Guy Raz?

  Chain smoking, not taking care of herself, drinking a lot of coffee, eating pizza slices. Okay.

• 1:21:50Speaker 01

  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.

• 1:22:11Guy Raz?

  Yeah.

• 1:22:12Speaker 01

  No one can stop you what to do. I have done no promise to anyone. I have no partners. It's just, this thing is in front of me.

• 1:22:21Guy Raz?

  So there must have been a pull to just do it, take the plunge.

• 1:22:26Speaker 01

  Guy, imagine, I am in upstate New York, I am mid-thirties, right? Maybe at that time, I don't know, close to forty. And I have offered this huge amount of money, and

• 1:22:39Guy Raz?

  Yeah.

• 1:22:40Speaker 01

  There's endless what you can do with this money.

• 1:22:43Guy Raz?

  Yeah.

• 1:22:43Speaker 01

  And I said, "No" to it.

• 1:22:47Speaker 01

  And I said no a few times.

• 1:22:49Guy Raz?

  And why?

• 1:22:50Speaker 01

  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 the soccer game, I'm in the middle of the soccer game and I love it. And I'm into this game in such a massive way and I'm completely elevated. First time in my life, I feel like things are coming out of my being that I didn't even realize it existed. And I feel alive, like the childhood I used to be is like I'm wondering what is behind that mountain? What is behind that mountain? I have this enormous amount of curiosity.

• 1:23:30Speaker 01

  And I wasn't going to stop it for anything that in the world, that that that desire to see where this that where this was gonna go.

• 1:23:40Guy Raz?

  Yeah, but you clearly had enough confidence that your brand at that point. And because I think by 2011, you were the number three yogurt brand in the country after Yoplait and Danin. But at that time, you knew that there was gonna be an explosion of competitors.

• 1:24:00Speaker 01

  Absolutely.

• 1:24:01Guy Raz?

  And you weren't worried?

• 1:24:03Speaker 01

  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.

• 1:24:11Guy Raz?

  To make more, well, to produce more, obviously, yeah.

• 1:24:13Speaker 01

  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.

• 1:24:23Guy Raz?

  Yeah.

• 1:24:24Speaker 01

  And I built a factory in Idaho, which I went to Idaho first time. I said, we need to build this factory really fast.

• 1:24:33Guy Raz?

  It's a million square foot plant.

• 1:24:35Speaker 01

  Yeah, yeah. It's one, I think now it's a 1.4. At that time, it was close to 1 million square feet plant. And with 14 lines, we built it less than one year. So that really.

• 1:24:50Speaker 01

  It was it was in a borderline stupidity. Meaning I underestimated how complex that was going to be. And I underestimated how crucial would that be on the health of the company if I was wrong and if I did something not right.

• 1:25:08Guy Raz?

  Yeah.

• 1:25:08Speaker 01

  And one plant or one location or, you know, early companies, you know, journey is completely different than the second phase. And if you don't make that transformation, it's it's going to be extremely damaging. And it became almost. The problem with that is you do not know how to make separation with your people that you started with when the company grows.

• 1:25:32Guy Raz?

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

• 1:25:41Speaker 01

  Exactly.

• 1:25:41Guy Raz?

  But you had to you had to make some changes.

• 1:25:44Speaker 01

  Yeah, we made changes after we hit the wall, right? We had a quality issue with with mold.

• 1:25:49Guy Raz?

  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 you you don't use preservatives and, you know, and you had some containers that got spoiled.

• 1:26:03Speaker 01

  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 it was a recall and, as you said, it was very damaging. But we came out, we 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 in stages. I wouldn't do it in as fast. I would be more cautious.

• 1:26:48Speaker 01

  I would put more, you know, team members in place, make some changes.

• 1:26:53Guy Raz?

  Right, because the the the mold issue came from that manufacturing plant in Idaho.

• 1:26:57Speaker 01

  Exactly.

• 1:26:58Guy Raz?

  Right.

• 1:26:59Speaker 01

  And there was a time that I will never forget, which is another. You know, moment that I will always go back to.

• 1:27:09Speaker 01

  You're about to file bankruptcy.

• 1:27:12Guy Raz?

  You were about to file bankruptcy.

• 1:27:14Speaker 01

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

• 1:27:16Guy Raz?

  You were, so that that recall was that damaging? You'd gone from.

• 1:27:19Speaker 01

  It wasn't that damaging.

• 1:27:21Guy Raz?

  Yeah.

• 1:27:21Speaker 01

  But what it is, is the banks got really nervous and they wanted their loan to be paid back.

• 1:27:27Guy Raz?

  Yeah.

• 1:27:27Speaker 01

  And and that loan was used to build a factory supported by EBITDA. Now you have enormous amount of losses because of that factory.

• 1:27:35Guy Raz?

  Yep. So the recall happens, all the loans get called in.

• 1:27:39Speaker 01

  Yeah.

• 1:27:39Guy Raz?

  And you've got to basically come up with a cash. And so you're thinking, we're done. We got to go, we got to file bankruptcy.

• 1:27:45Speaker 01

  Well, there's cash.

• 1:27:46Guy Raz?

  Yeah.

• 1:27:46Speaker 01

  But people want the world. They want so much from it.

• 1:27:50Guy Raz?

  Yeah.

• 1:27:50Speaker 01

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

• 1:27:58Guy Raz?

  So they offer less money.

• 1:27:59Speaker 01

  They offer more money, but they want more.

• 1:28:02Guy Raz?

  They want more equity, right?

• 1:28:04Speaker 01

  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, you know, percentage of the company that you have to give away, which is what was almost majority at that time. And and you will be out of the company. And I take this, I said, okay, what will happen if I take this? I'll probably regret every day going forward. You are an entrepreneur, you build things and you make one misstep. And then someone comes with the money and say, hey, take it or leave it, or this is our conditions for you to do it.

• 1:28:49Speaker 01

  And I look at this and I say, I must say no to you. And I tell you why. Because if I'm gonna die, I'm gonna die now, I'm gonna die one time. I'm not gonna die every day rest of my life. So I said, I'll take this company to bankruptcy.

• 1:29:05Guy Raz?

  Wow.

• 1:29:06Speaker 01

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

• 1:29:12Guy Raz?

  Yeah.

• 1:29:13Speaker 01

  Right? And I'm not expecting that, accepting that. And I said, okay, it's fine. I built it, I'll bury it. And.

• 1:29:20Guy Raz?

  It's a very, I mean, you're very stubborn, right? And I mean, that's a good quality, but it can also be, it can also be sometimes not a good quality.

• 1:29:29Speaker 01

  Yeah, I asked my wife about that, yeah. So she would say the same.

• 1:29:35Speaker 01

  You have a way, you have a way to make me say things that I've never said before. But I love that this conversation because, because we come close to making decisions like that, that people normally don't know. It is hard that people make decisions.

• 1:29:50Guy Raz?

  Yeah.

• 1:29:52Speaker 01

  But I had no doubt at that moment. I remember walking from my apartment, at that time I had an apartment in New York, to an office where I was meeting one of my colleagues and a lawyer and a financial person. And next to the park, I cried. And I saw the tears coming because it's, it's, it's, it's hard. It's hard that you are about to bury something that you gave your best to and you built. And the options were not good enough for you to be able to.

• 1:30:23Guy Raz?

  Yeah.

• 1:30:24Speaker 01

  You know, save it.

• 1:30:25Guy Raz?

  Yeah.

• 1:30:27Guy Raz?

  Clearly, you didn't file for bankruptcy. You didn't. But how did you get out of that?

• 1:30:31Speaker 01

  A night before, a night before.

• 1:30:34Guy Raz?

  Wow.

• 1:30:34Speaker 01

  Yeah. One night before, before we filed, the banker called and said, Hamdi, we hear that you're going to do this, it's gonna make us look so bad. I think they were also. Acting, 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 deleverage yourself in a certain things. I said, yeah, sure. But I had no idea this was going to come. I knew this was a road, that we were going to end up, and this company was going to be a bankrupt and maybe wouldn't exist later on.

• 1:31:10Guy Raz?

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

• 1:31:17Speaker 01

  Totally.

• 1:31:18Guy Raz?

  But, but it was unclear what would have happened.

• 1:31:21Speaker 01

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

• 1:31:29Guy Raz?

  Yeah.

• 1:31:29Speaker 01

  Because we literally went from zero to billion in sales in five years without taking a penny from our side.

• 1:31:33Guy Raz?

  It's crazy.

• 1:31:34Speaker 01

  In that factory.

• 1:31:35Guy Raz?

  It's nuts. It shouldn't have happened. This is, this is a story that should never have happened. It should have been buried by the big yogurt makers within a year or two.

• 1:31:43Speaker 01

  Yeah, no, no.

• 1:31:44Guy Raz?

  Hamdi, you know, I'm, I'm curious because when, in, in, after that crisis, right? In, in 2014, TPG, this private equity firm, comes in, makes an investment. And part of that agreement is that a man named Kevin Burns would become the interim president and COO.

• 1:32:03Speaker 01

  Yeah.

• 1:32:03Guy Raz?

  You were the CEO, you had founded this company from nothing. You built it from a cheese place in upstate New York into what it was. So the achievement at this point was enormous. Now, there was pressure for a new CEO, to bring in a professional CEO. There was, at the time, there was an article in the Wall Street Journal. I'm sure it was not easy for you to read.

• 1:32:26Speaker 01

  Yeah.

• 1:32:27Guy Raz?

  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, I've done this. I've made this.

• 1:32:43Speaker 01

  Yeah.

• 1:32:44Guy Raz?

  Maybe we should have a different CEO in here.

• 1:32:47Speaker 01

  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.

• 1:32:56Guy Raz?

  Right.

• 1:32:57Speaker 01

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

• 1:33:09Guy Raz?

  Yeah.

• 1:33:10Speaker 01

  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 or that kind of stuff, 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.

• 1:33:26Guy Raz?

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

• 1:33:30Speaker 01

  A hundred percent.

• 1:33:31Guy Raz?

  Yeah.

• 1:33:31Speaker 01

  The problem with the, the, the, the CEO things is through this journey of my, from 2009 to 2011, I probably interviewed five, maybe six candidates for CEO. And every time I, I interviewed a 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, it would not be a good working relationship with me, whatever that might be.

• 1:34:05Guy Raz?

  Yeah.

• 1:34:06Speaker 01

  I was extremely worried about the culture and what I want this company to be. Now it's coming to a place that business can be really, really powerful force and it is not about, you know, money, it's not about this, but what is the role the company can play in society?

• 1:34:25Guy Raz?

  Yeah.

• 1:34:26Speaker 01

  I can't say I had that state of mind in 2009, 2010, 2008, no.

• 1:34:30Guy Raz?

  Right, right. Because you, in the last sort of seven, seven, eight years, really.

• 1:34:39Guy Raz?

  Very much publicly turned, kind of made Chobani into a company that was, you know, big advocate of immigration reform to hiring refugees, you know, supporting refugee, you know, admissions into the United States, things like that, that are risky, right? Because a lot of companies don't want to, for understandable reasons, don't want to take stances on hot-button issues because they just want to focus on their brand. And oftentimes, that's a good decision, right? You just like, we just want people to buy Coke and Pepsi, like, don't, 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.

• 1:35:21Speaker 01

  I look at it from the human perspective side of it. I said, why can't we do things that is good for the society and community? And yet, I can prove the only reason Chobani is extremely successful, if it is, is because of those angles. I didn't follow the craft route. I followed the kid from, you know, from Kurdish mountains, I believe, mixed with the farmers in that community and say, you know what? Let's open the doors, let's open the windows, let's open the walls, the people can come in and participate and be part of the success that you built. But never, ever, in my statements, I have said something that I have not implemented into my own place for years and proved that this works before I have a credential to go out and talk about it.

• 1:36:05Guy Raz?

  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 Chobani. Today, you know, roughly, Chobani's got about 20, 22% of the yogurt market in the US. It's a, you know, massive company with lots of different brands. There, you know, there's talk about eventually taking the company public, which may happen next year or maybe beyond. When you think about the story of this young guy who was like, grew up, you know, helping his family, their, for their flock of sheep and goats, to, you know, how you kind of made it to the US and, you know, all those people in New York who brought you their

• 1:36:50Guy Raz?

  farms and let you kind of live there, and, 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, how much do you think has to do with how lucky you got?

• 1:37:06Speaker 01

  I guess a combination of all. I don't know. I sometimes pinch 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.

• 1:37:31Guy Raz?

  Yeah.

• 1:37:32Speaker 01

  And my, I have three kids now, a girl and two boys. And that's, I feel like it's my biggest responsibility to make sure that the next generation, my children and the children's and children's and everybody's children, find the land the way that we found it and if anything is improved. But I think it's in there, it's in an under a enormous amount of stress. And we cannot take this as, you know, as like granted. We just have to make it work. We need to work harder to make sure that this stays alive.

• 1:38:03Guy Raz?

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

• 1:38:09Guy Raz?

  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?

• 1:38:18Speaker 01

  I grew up raw sheep milk, right? We never pasteurized it.

• 1:38:21Guy Raz?

  So good.

• 1:38:22Speaker 01

  It's very good, but I wouldn't give it to my kids.

• 1:38:24Guy Raz?

  You wouldn't give it to your kids?

• 1:38:26Speaker 01

  No. Risk is too high. Risk is too high.

• 1:38:29Guy Raz?

  Yes, I know. I know, I know. But it's delicious.

• 1:38:32Speaker 01

  Totally, yeah.

• 1:38:32Guy Raz?

  I won't serve it to you if you come over. I don't want you to die.

• 1:38:36Speaker 01

  If you drink it, I'll drink it. I'm sure you know what you're doing.

• 1:38:41Guy Raz?

  Hey, thanks so much for listening to the show this week. If you want to contact our team, our email address is h i b t at i d dot wondery dot com. If you want to follow us on Twitter or Instagram, our account is at howibuiltthis and mine is at Guy Raz on Twitter and on Instagram, at guy dot raz. This episode was produced by Josh Lash with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Claire Murashima. Our production staff also includes J C Howard, Liz Metzger, Alex Chung, Kerry Thompson, Catherine Seifer, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz and you've been listening to How I Built This.