Chobani’s Founder on Mission-Driven Entrepreneurship

Welcome to HBR on leadership, case studies and conversations with the world's top business and management experts. Hand selected to help you unlock the best in those around you. Chobani is a big player in the global yogurt market with more than 20% share of the US market alone. But it wasn't always a big player. It all started with one man, an abandoned yogurt factory in upstate New York, and a mission to make quality food accessible to more people. Today we bring you a conversation about mission driven entrepreneurship with our editor in chief, Adi Ignatius and Hamdi Ulukaya, the founder and CEO of Chobani. You'll learn how Ulukaya kept Chobani true to its original values even as it scaled up and competed in a sector where quality is pitted against profitability. You'll also learn how Ulukaya has adapted Chobani's mission to center his employees. If you're an entrepreneur or aspire to be one, this episode is for you. It originally aired as part of HBR's new World of Work video series in April 2022. Here it is.

Hi, welcome. I'm Adi Ignatius, the editor in chief of Harvard Business Review. And this is the New World of Work. Every week on the show we talk about how the workplace is changing, how we collaborate differently, the kind of technologies we're adopting. And each week we try to bring in an interesting guest, often CEO, to talk about how they're seeing things on the front lines. Our guest today is Hamdi Ulukaya. Hamdi is the founder, the chairman and CEO of Chobani, the US based maker of yogurt. Hamdi's story is fascinating and we'll talk a little bit about how he's built up the business and how he thinks about certain social issues, particularly the cause he has taken up very vocally, which is supportive refugees. So, Hamdi, welcome to the show.

Thank you, Adi. Good to be with you.

Yeah, it's great to see you. So you've told this 8 million times. I'd love. You know, some of our viewers don't know the story of the founding of Chobani. If you could give the short version just to set up the conversation, I'm sure people would love to hear that.

Sure. It really started in, you know, I had a small cheese factory in upstate New York. I'm from Turkey, you know, in the eastern part, in the Kurdish region. Arrived in 2000, I'm sorry, years, 1994. Learning English and all that kind of stuff. I've settled in upstate New York, worked in A farm. And, you know, never thought I would be making what my family was making for generations. You know, nomads raising sheeps and goats, making cheese and yogurt. So I end up making cheese in a small scale in upstate New York. There I saw an ad that says that fully equipped yogurt plant for sale came to it as a junk meal. And I went to visit the plant the next day and turns out that this was a very old, almost 70, 80 years old factory. It was being closed by Kraft and they were getting out of yogurt business and the price was extremely cheap. So through the SBA loan and some help from the local agencies, I bought the plant in 2005 with $700,000, hired the first four people from the previous 55 and work on the recipe that, you know, I thought, I have one shot at this. I bet that people, if they had an option of yogurt being more natural, better and more nutritious and accessible, most importantly, you know, I could make something out of this. I never knew how far this would go. But that's 2007 when we launched it. And then the first signs of product being received really well by people made me think that this is going to be really, You know, challenges that comes with making Chobani, not necessarily selling because people really have so much desire to buy. So I end up staying in that factory from 2007 to 2012. In 2012, I built a factory here in Idaho. I am Here now, about 1.4 million square feet, huge factory. And I've always had that, that image in my head that, you know, how far Chobani can go and what kind of challenges I'm going to face during this time and try to prepare myself and the company for those challenges. And of course you always hear the headlines, but there's always a lot of stories in the background when it comes to food making, especially natural food making, especially refrigerated natural food making. And if you are competing with the large multinationals and if you are independent and if you don't have a lot of resources, you know, this gets a lot harder. So we try to find a new way of building in a sizable consumer good company, not following the footsteps of all the large food or the big food, but more an entrepreneurial new way of, you know, finding ways, finding resources to compete or grow or develop the, the brand. So it's been fun so far, but I have became gray as well too. So it's been easy.

So, yeah, talk about so. So you, you know, you create this thing, you realize it's taking off, then you're scaling like crazy. And how did you, you know, you didn't have a background in business exactly. How did you cope with the challenges and opportunities of massive scale and what that does to, you know, your business, your culture? I mean, tell us about that experience.

Sure. I mean, you know, you touched, you know, most important things. You know, how do you scale and how do you keep this, the culture, you know, aligned to your beginning missions, beginning purposes, how do you attract talents, how do you get resources? You know, every single one of those are challenged by itself. I found in the food making, especially in the large scale food making there's a lot of waste and in the operational side of things I saw a lot of waste. The second part is it's really eye opening to see, you know, if you're not shopping in a big cities in a specialty store, but if you're shopping in the large, you know, mass supermarkets, the quality of food making at back then it was really bad. Today it's getting, you know, better because there's a push quality food making, one of the worst in the world. I mean, I don't know all around the world, but at least on the Europe or you know, where we grow up in Turkey or in some part of South America, the food makers really did not spend a lot of time making good food for people. So that's why they will have a lot of margins because the cheap ingredients, cheap, you know, food. So it gets harder if you try to make it better. Food with holistic ingredients, with natural ingredients, with nutrition, you know, know, dense food, if you try to make it, it gets a lot harder. I think the biggest challenge I had throughout this whole thing was the stages that you go through ADI in your company. So if you start it's a startup, it's a different company. If you are a hundred, two hundred million dollar company, it's a different company. If you are trying to distribute all across the country is a different company. If you built another plant and you have multi locations, it's a different company. And like you said, I've never done this before, I've never worked anywhere, I've never studied business. So for me it was a personal journey of figuring out how I can make moves for the company to be aligned for the new realities. And I come down to one reality. One reality is it's all about people. It really the changes that you make along the way, the people that you bring along the way. But the most important is how flexible you are as an organization to go from one thing to another thing from year to year or sometimes six months. How do you change? How do you adopt a new reality that has to be within part of the culture? So for that is I go back to the early days and say I have four factory workers and myself. None of us done this before other than four factory workers worked in that factory. I've never done retail. I don't know if this is going to go anywhere. We don't have a lot of resources. But this finding a way, finding solutions, it was a big part of Chobani's culture. So in a way is we do realize the issues and challenges and problems. But one of the best thing has happened at Chobani is we always welcome it and try to find a way to solve it or even make it even better. I think the biggest time I spend how I can grow and scale this business. But yet how do I keep Chobani whole? How do I keep Chobani committed to the earlier promises, earlier commitments? And we had moments, you know, we had some down moments and up moments. And I think that's the responsibility of the leadership is to make sure that the people side of it, culture side of it, the mission side of it, purpose side of this whole thing stays in the center and stay true to its, stay authentic. And yet the business function of those things is, you know, it becomes an engine to find solutions, to adopt the new realities and compete or go through the challenges.

When we first spoke, you know, around almost 10 years ago, you said you were very proud of the fact that you did not have outside investors that you did not have, you know, VCs telling you what to do. Now you're on track. I don't know, you don't know the exact timing, but you're on track for an IPO where suddenly you'll have a lot of outside investors and outside scrutiny. Why, why the change?

So it's, it's the journey. I didn't, I didn't say it for nothing. The, the, the understanding I realized the early days is here is the founders or really a good ideas on making food. And then you see the founders, they raise capital to get into a certain level and by the time the company or the brand becomes sizable, let's say fifty million, hundred million dollars in sales, the patient of the capital of the investors comes towards the end and the 99% of the time I have not seen many examples. Most of these great ideas, they end up being sold for the return of the investors. As much as that's the reality. Almost all the founders that I speak to, they have a pain in their stomach, in their gut that they have to do that. So the structure really pushes you to get out or sell for financial reasons. So my fight was, if I don't have investors, then nobody can force me to sell or nobody can force me to merge or do other things so I can keep this dream alive. That was my fight. It's not about how much percentage I can own. And that period is really, I would say the sign that this company can stand alone in this food or CPG world is really depends on the product or depends on category that you're in. If you pass this early stage, it could take five years, it could take ten years. Who knows? For us, it was a lot faster. Then you can be a standalone sizable company. The second reason that this happens, I was really crazy about not having investors early on, is you have a gut feeling. You're a founder. You say, I'm going to buy this plant and I'm going to launch a yogurt and I'm going to, you know, sell across the country. People will say you're crazy. You know, why would Kraft not do it if that wasn't a good idea? This kind of gut feelings or this kind of ideas will come along. You know, when you're a founder, then when you have investors, they will come from their own perspective to say, oh, no, that's not a good idea, or we shouldn't be doing this, or that that risk shouldn't be taken. I wanted to have a freedom and flexibility to be able to take those decisions and make it fast and go forward. I would say in the first five years of Chobani's time, I probably made so many decisions, and if I was wrong, it would wipe out the company. It would literally, like, I built this, this plant here in 2012. You know, it cost us more than billion now, but at that time, it was over half a billion dollars. And there was no sign that if I built this plant, that if I launch flip this sidecar yogurt, or if I launch drinks and later on and I launch different kind of products like oatmeals and creamers, people will buy. There was no sign. Nobody would prove that, but that was my strong belief. And I said, that's what we need to do, and we need to build it really fast. So we built it. And if you look at it, you know, conversation I was having that day, there was no way, if I had some kind of investor, I would prove that this would be a great idea. But today this plant became, you know, one of the powerful source of our growth. So these were the reason I was against it. Now we are in a place where, you know, companies, you know, sizable, we have, you know, greater market share. Our growth is, is really, is really, really good. And it feels like the early days, you know, the energy, the innovation, you know, things that we want to do. And there's so much long way to go. And I think the most of the work that we have done up to this level is really prepare us to make the impact in the food system in this country. I celebrate people coming and being partners and being shareholders. I think we pass those critical times, and I think the most critical proven points we already have passed. So this would be a perfect moment for us to be able to have others to come and join.

So I'm here with Hamni Ulukaya, who is the founder and CEO of Chobani. If you have questions for Hamney, put them in the chat and we'll try to get to them in a little bit. So, Hamdi, I know you talk about. I know you think a lot about relations with employees and you say that Chobani is an employee first company. What does that mean to you?

Especially in the. In our, in our field? You know, I come from, like you said, you know, rural part of Turkey. I don't come from, you know, rich or, you know, well off type of areas. We come from the villagers and factory workers, working class. And there's a disconnect. Of course, this struggle has been all around the world. But there's a disconnect when it comes to wealth, when it comes to access to, you know, even state resources. And you come set an upstate New York and you see the same thing, right? The factory gets closed, the company make a decision in, I don't know, whatever the Chicago in a tower. And the community is left behind and workers are to blame for now this is the same, same thing going on. So when it comes to manufacturing, when it comes to rural areas of the work and environment that is controlled by the large corporations, this injustice is in a level of affecting people's life in a very, very dramatic way. So when it comes to starting Chobani in that old factory, and I always wanted to say, can I start a company? Can I start Chobani? Not to follow the footsteps of the company that closed it. The second angle is when I grow up and I said, I never liked the ones that is greedy or the rational, whatever you call it, how do I Build a place where I don't become a person that I grew up hating. So that was the blueprint in that. Four factory workers and myself, we started this place. My first promise I made is the people who will built this company with me will always be center of this place and always be recognized in all dimension, including financially. And can I make an example of that? The people that left behind, people that forgotten that made things, especially in food making and manufacturing, how do I make them? The most important people in the company. So that was a work of four, five, six, seven years. And there's a steps of every single time I do it. And. But most important part of this is I remain in. Of course, my jobs change along the way. I remain a factory worker. And as long as you stay as a factory worker, doesn't matter what you do later on as a CEO, cfo, whatever that is, you bring attention to that. But that was also the. One of the most, I should say one of the smartest things that we've done. If Chobani became what it became, we broke all the records because our people always found a way to make things happen in that old factory. It is still unbelievable what we've done in that old factory. That was one small filler. Four people, 70, 80 years old. No one even knew that it could be turned back on. We end up making sales almost close to a billion dollars in that factory without raising one penny of capital. And that is just not possible in any dimension that you look at it. But it only happened because people just found a way. We just found a way. And then when we built the factory here, and then I can go on and on. So not only is the right thing to do, but it's also a smart thing to do if you really mean it, if you really authentically mean it.

All right, so I'm going to bring in an audience question now because there's somebody who wants to know kind of more detail here. So this is Ulrike from Stockholm. So she says, you know, I get that people are your biggest asset, but what is it that you're doing that other leaders aren't that are. That are making, you know, people number one and that have an effect on the company.

Sure. I mean, the number one is recognition, of course it's important, but that, you know, you cannot stop there. So in Europe especially, she's from Stockholm, the northern part of Europe, things are a lot better than compared to what we are here. So if you are in upstate New York or in Idaho or somewhere else, you know, you look at five, six, seven, eight years ago, a typical factory workers will work at minimum wage, probably not much, you know, benefits and, you know, the common things like parental leaves or, you know, family type of resources, none of those would be available. So I would. I would go back to the time that I started. And then you say, okay, pay. You look at the people's living expenses in that community and you make your own mat and say, this minimum wage is not going to work. So we have to be certain level of the. Of the income, basic income, and can they have the insurance and, you know, benefits just as mine. Whatever I use, they have the same. You know, these are the basic ones. You know, the later on we say, how come factory workers don't get, you know, parental leave, the moms and dads. And you realize that 99% of the manufacturing work in this country does not offer. Companies don't offer. At least at that time, I don't know what it is still very high, the parental leaves. So you put that kind of stuff in there. And then later on you come in, you say, okay, I feel like we made it through. How can I make everyone in the company be part of this company as a shareholder, as some kind of financial, you know, benefits from it? And we did the Chobani shares when we distributed 10% of the companies to all among the employees. You know, you can go on and on stuff like this. It's, it's. It's. Among all of that, among all of those, I think there were. We let one of the, you know, few of them were never been done before. One of the most important thing is, can I be myself, who I am, in a place without judgment, without me feeling like I'm outsider? So that means how do I get refugees, immigrants, people who have experiences or don't have experiences to be part of this and learn and share and be part of the community? So we end up leading the importance of getting diversity in the workplace and having that exchange culturally that people come from all over the world. These are the steps that you can take fundamentally in the floor. But that doesn't end there. Of course, it's endless. But if I go back and ask the people, one of the most that you love about Chobani is unanimously. I feel home. And that is a work, I think, embedded in minutes, in hours. You cannot just put in the walls and put in the papers and make that happen.

So you've been very engaged. You just mentioned in the refugee issue, and I think it feels like you've chosen that as something that it's controversial certainly. Well, almost everywhere now. You know, when you look at what's happening in Ukraine and the refugee crisis that's been triggered, you know, what's, what's, what's, what's your response or what's Chobani's response? To what extent can you try to make a difference?

Adi I was there, I think last week or week before, I lost count in the days I was in Poland, border with Ukraine, went to a couple of cities, spent a lot of time with the people in the ground there. So another border, right, another border from Ukraine to Poland, you have close to 5 million people just left displaced within weeks. But this is not the first time I see it. I saw it in Colombia and Venezuelan border. You know, you go through the bridge and flow of people. You see it in the Jordan and Syrian border or Jordan and Lebanon border or Turkey border, or you see people go from Myanmar to Bangladesh. The suffering. The general picture is the same. One thing is different, that we never thought that this would happen in heart of Europe. We never thought this would happen. When I started tent, I actually started because I saw what happened when people had a job after the settlement at Chobani and how it changed their life. It was just simple. When we started hiring refugees, we didn't hire them because it was a refugee work. We hired them because they were people in the community and we were growing and we were hiring everyone and they were in the community and we hired them. And the reason that they couldn't get a job but the refugee settlement agency would say, or they don't speak the language, they don't have cars, they don't have the trainings which for us or for anyone, these are very small obstacles to overcome. You can rent buses, you can hire translators, you can do the job training at work. And the biggest eye opening for me was when Yazidis get attacked on the Syrian war. It felt like these were the people that I grew up with. Like they felt the spaces, they smell, you know, look like our people. And I went to Switzerland, UNHCR and, and tried to understand how individually I can help the people who were fleeing from these horrible people. Okay, you can donate money, you can get tents, you can get sponsorship to camps, which we did. But in that trip I realized that the business community, entrepreneurs and CEOs are really absent from this biggest humanitarian issues that we're facing. The second one is I thought I knew something about it. I didn't even realize how big this one was. You know, you're Talking about millions, 20, 25 million people and the average they stay in a camp or a City stuck 19, 20 years. And I thought if I could bring a business community into this, with the motion of hiring, training and using their supply chain wherever they are in the world to support refugees, we could have another dimension, even getting closer to solving this or at least start the way. So I started 10th in 2016. We call it 10th partnership for refugees. You said it. This is a topic that has been used politically, unfortunately so badly all across the Western world. And I look back and it was tough, but Chobani really came up and said, let's be fair, these are our brothers and sisters. And some of them are here at Chobani. And the meaning of CEOs and companies and brands coming in, of course, hiring, most important. But also be an advocate of this injustice. I'm proud how far we have come. So we are over 220 multinational companies. I was just in Netherlands, after Poland last week, we had 13 really nice, beautiful Dutch companies committing to hire 22,000 refugees, which we've done three years ago. Before that, they end up hiring almost 30,000 refugees. We organized in Colombia, we organized in Germany, Canada and here. And looking at the last Ukrainian refugees or the before that, the Afghani refugees who are settled in the US and looking at the companies and CEOs coming forward and making commitment and looking back, and I think we came a long way, we still have a long way to go. And it's a responsibility of all of us. My last point is you go to border in Poland. Adi. You see, two and a half million Ukrainians fled into Poland. No one is on the street. There is no 10th towns or cities. All the Polish people, they take them to their home. Two and a half million people living in people's home. It's something that I've never seen before. And the same thing with Romania, same thing in Moldovia, same thing in Slovakia. So people are opening their arms, opening their homes to these children and women, mostly children and children. I saw the similar things in Colombia where people did it when people came from Venezuela. And of course the generosity of the people or something. But then you see these political things is going away. So in Poland there is no political noise that is against receiving these neighbors, people coming into their countries and be safe. So this is a sign and you say, if I can take this and apply to all refugee hosting countries and if the humanity open their arm and receive these people, you know, we talked about it. There's a great benefit to Society to companies having refugees to be part of their community. And there's so much to offer. And the studies we did, it intent proves that within few years, whatever the investment you make, whatever the expenses that you have, it pays itself and the rest is upside. So these are good signs, but we still have a long way to go.

It's interesting, we're having a conversation here at our company about how do you talk to your children about something like the Russian invasion of Ukraine? And one of my colleagues pointed out that you see evil, but then you also see this incredible good. And your example of Poland and other central European countries taking in all those refugees is inspiring. So I want to change a little bit so people are really interested in everything you're talking about, but in particular your entrepreneurial roots in your entrepreneurial ways. So this is a question from a YouTube user. Not sure where from. The question is, you know, did you ever feel like. Like quitting, like giving up on your dream and you know, what. What kept you going during the toughest times?

Yeah. No, I never thought quitting. No. I thought about, if something happens to me, how can I make this, you know, continue? You really. You really need some support system. You really do. No one can do this alone. To answer that question, I have created my community within the company. I really didn't have much of a network. Like, I didn't know when I settled in upstate New York, I didn't know many other people who has done this. I didn't know, you know, people who wrote books about this or studies or. I did not have a board. I did not have people who have done this before. So my support system was in that community in upstate New York and the people that I work with. And I would ask them to warn me if they see me, I'm going in the wrong direction. And when I did the shares, you know, I always had Chobani hat on me and one of my mother's remainings, which was this green scarf, a villager scarf. I always hold it on my hat, inside my hat, and I wouldn't tell anyone what's in there. The reason I did that is if my mother was here, she would tell me what to do. And I always knew what she would tell me. Stop smoking. Do this, do this right, do this right. But at least I carried her teachings with me during that time. And I told the people after, when we did the shares, that this whole credit goes to her. My point is, you really need a strong support system, a real authentic support system during tough times. There are A lot of people are going to be your friends. There are a lot of people going to be around you when you become successful or whatever. But how do we determine what is noise and what is the sound? I was lucky that I had in a good sound around me. Simple, attentive, good people will tell me things are going to be all right. You just keep going. And some of those people were factory workers.

So you have a little more time. Can we keep going? Okay, so here's another audience question. This is from Mert Tenderly. So the question is, what is a mistake that you see leaders make frequently?

You know, I think leaders needs to understand between. This is between being friendly and befriend. You know, I, I love my people, but I am still, you know, how should I say? I'm still the founder, I'm still the CEO. And this, this relationship you have, you know, it needs to be, needs to be a fine line. And entrepreneurs, especially startup ones often make these mistakes of we are family and you get together and you know, you, you do everything together. But how do you still maintain that line of, I don't know how to say friendliness, but not across the lines later on becomes problems. And I see that all the time. The second part is as much as it's important to be committed to all what you do, especially on the people side, the biggest problem I see, and I made that mistake because we are all human and we will make it no matter what. You get attached to people you start the company with and the company's need comes to a certain place, certain time and it's one of the hardest decision to make, is to separate your ways with some of the people or bring some new people or change the structure of the company or do whatever you need to do to support the next phase of the company. If anybody can tell you you could do everything from the beginning to all the way to the top with the same people, it's not reality. And one of the, one of the most difficult decision along the way, we just wanted to avoid it, we always do, is to realize when the time comes to make those changes and you make those changes, do not make that mistake. As painful as it might be, you have to make those changes.

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

Should be Armenian people?

People Want to know, so is this Greek yogurt or is it something else?

Yeah, I think the people caught on to that. You know, there is no Greek yogurt in Greece and there is no Turkish yogurt in Turkey. Right. It's all yogurt. Right, that's. That's the thing. It was actually that credit belongs to a company called Faya, still a yogurt maker. They used to make. I think they're one of the largest dairy company in Greece. And when they started importing it to New York and later on to larger distribution through the import they introduced as Greek yogurt and it became a category name. So it's basically a strain yogurt. What we call it is in Turkish we call it Susme yogurt. The Greeks call it. I don't know what the Greek word was, but it's the yogurt is made you use three pounds of milk or three kilos of milk and you strain it and then it becomes a £1. So that's why it's thick, it's creamy and nutritionally dense. Traditionally in Turkey we use this yogurt for our mezes, which is you make dishes, it's not consumed. The Turkish traditional yogurt is the cream on top. You know how we make it at home or industrially. And I don't think this yogurt is heavily consumed in Greece either because it's again, it's more like a used for cooking. So Fire really introduced the concept and because of the industry was category was named as Greek yogurt. With this company we followed it. The second reason is it really helped because there was a yogurt in the country. There was a set between all those large manufacturers. But if you come from where we come from, you really cannot tell this is a yogurt. It was pretty much like a candy. Some people called it traditional yogurt, but it's not really traditional yogurt. So you had to identify the new way of making yogurt. I think it was the only way you can tell people that this is not the same thing that, you know, you've been eating, thinking that this is yogurt. Could have been a cold Turkish yogurt back then. Had I started, probably I would. If you had started, you probably could have called it Armenian yogurt. I think it's not what it belongs to. It just explains is different than what everything else is, really good stuff.

But you can guarantee if you eat it, you'll live till you're 120 years old, right?

That's for sure. That's good.

Hamdi. Thanks for giving us a little extra time. Really great to see you again.

Good luck with the ipo.

Good luck with everything.

Thank you, thank you. Thank you, my friend. So good to be with you.

That was chobani founder and CEO hamdi ulukaya in conversation with adi ignatius on the new world of work. We'll be back next Wednesday with another handpicked conversation about leadership from Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you're there, be sure to leave us a review when you're ready for more podcasts, articles, case studies, books and videos with the world's top business and management experts. You'll find it all@hbr.org this episode was produced by Julia Butler, Scott Lapierre and Sani and me, Hannah Bates. Ian Fox is our editor. Music by Coma Media Special thanks to Dave Diulio, Ellie Honaine, Tristan Mejias Thompson, Andy Robinson, Dustin Brady, Karen Player, Erica Truxler, Ramsey Kaboz, Nicole Smith, Ann Bartholomew and you, our listener. See you next week.