Before yoghurt made him a billionaire, Hamdi Ulukaya hated business. Growing up in a family of semi-nomadic shepherds in Turkey, he blamed capitalism for the suffering of the poor.
Even now — aged 46, sitting in a slick SoHo loft and having helped take “Greek”, or strained, yoghurt from 1 per cent to more than half of the US market — Chobani’s founder does not call himself a capitalist.
“I’m still having an issue with the word ‘capitalism’, simply because of the old days,” he says, “but I love the word ‘entrepreneurship’.”
Mr Ulukaya, whose untamed hair seems to fit his impassioned manner, elaborated on his objections to the corporate norm in a TED talk in April, tying the story of Chobani’s beginnings to his argument that his peers are following a “broken” playbook.
Like Hollywood anti-heroes who do the right thing unconventionally, he told his audience, “we need anti-CEOs”.
Working just to maximise profits for shareholders was “the dumbest idea I’ve ever heard,” he charged, issuing a call for “noble” business leaders to lift up struggling communities and make the financial and personal sacrifices to “stand shoulder to shoulder with employees”.
With no business mentors before starting his company, he tells the FT, “I created my own way and that was literally a fight not to become the one that I grew up hating”.
The lecture starts with how his unexpected career began. Mr Ulukaya had come to New York at 22 with $3,000 and a plan to study English. A teacher heard about his background and invited him to her farm upstate, where he moved and began milking cows.
A family visit prompted his first venture: finding nothing to match the cheese they ate at home, his father suggested he imported some from his brothers’ dairy business. Before long he had his own feta cheese company, Euphrates.
In 2005, he heard that Kraft was closing a nearby factory that had made the thin yoghurt that American palates knew. Already behind on his bills, he secured loans and grants to buy the site and hire four former employees.
For two years he obsessed over every detail of the recipes and packaging until he sold his first pot. Despite this meticulous start, what marked Mr Ulukaya out was speed. Working intensely to outpace bigger brands’ efforts to enter his growing category, he built sales to $1bn in five years. When Chobani outgrew its first plant, he built a second in Twin Falls, Idaho, in under 12 months.
“It was crazy what I did there,” he says now, admitting that in his haste he tripped up. In 2013, reports started coming in of customers falling ill, and after mould was found in its new plant Chobani was forced into a costly nationwide recall. One former colleague says it took almost a year to convince retailers and consumers that the quality control failings had been fixed.
The crisis exposed the fact that Chobani’s systems had not kept up with its breakneck growth. Mr Ulukaya accepted a costly lifeline from TPG, the private equity group, in the form of a $750m high-interest loan and warrants that could convert into a third of Chobani’s equity.
TPG brought in new executives and systems, and earnings were soon rising again. But there was friction between the founder and TPG, and Mr Ulukaya does not hide the fact he bristled at having to share control.
“Oh my God, you want to enter that area?” he exclaims with a groan and loud laughter when asked about TPG. “TPG who?” he asks with mock innocence as a spokeswoman hurriedly insists he can say no more.
Mr Ulukaya is happier hailing the “supportive” Healthcare of Ontario Pension Plan, which replaced TPG as his only minority investor last year. But TPG did not prevent him from taking the employee-friendly decisions he now wants other chief executives to take.
Chobani already offered above-average wages and benefits when in 2016 Mr Ulukaya handed his 2,000 employees 10 per cent of the company. Without a public listing or change of control, staff cannot trade the stock.
Mr Ulukaya says he is still working out how to resolve this but sees the scarcity of models to encourage private companies of Chobani’s size to give employees a financial stake as another flaw in capitalism.
An initial public offering would solve the problem, but he says he is still trying to figure out whether it would be compatible with the independence he has enjoyed as a private owner. For now, he shows little appetite for surrendering control.
There are upfront costs to a “return on kindness” model, Mr Ulukaya adds, but the improvement in employee engagement has “a massive effect” of reducing expenses such as waste. A similar gamble on a longer-term payback drove his decision to employ refugees as 30 per cent of his workforce.
It was a commercial initiative that inspired a humanitarian commitment through Mr Ulukaya’s Tent Foundation, which encourages other businesses to invest in refugees. In a country divided over immigration, it also triggered a backlash, but Mr Ulukaya says he does not regret wading into the polarised topic.
“I think we as a business community . . . [hear] a lot of opinions from the lawyers, a lot of opinions from the PR people,” he says: “We lost being human. I think it’s extremely important for brands and businesses to stay human because [business] is made of human beings.”
It is also made of balance sheets and battles for market share, and an indebted Chobani now faces intense competition from established rivals and newer brands. Mr Ulukaya says Chobani is still growing, but the Greek-style yoghurt market is not. The risk of a tougher climate stretching its already high leverage ratios is one reason both Moody’s and Standard & Poor’s have speculative credit ratings on Chobani.
Mr Ulukaya no longer tastes each new recipe, but has no plans to dial back his CEO — or anti-CEO — commitments. “Building sales is the easiest thing to do,” he says: “Building companies is very hard. And building companies that have values, have standards, have cultures and blueprints is work, and that requires a leader’s time and effort.”
Three questions for Hamdi Ulukaya
Who is your leadership hero?
My father was not a businessman but he was a very respected community person . . . My opinion of a leader is [someone who] serves and that comes from my tradition [where] if you’re a leader you serve tea, you serve coffee. You serve the people who look up to you, you make sure that they are safe, you make sure that they are respected and they are recognised.
If you were not a leader, what would you be?
Farming probably . . . I really could have been a good farmer. I could have been a really good football player, I was very good at it, but I gave up. Growing up I had an option to go to a team but I ended up going to university, so I gave up that one. That was very, very painful. I loved that game. I still do.
What was the first leadership lesson you learnt?
My mother always made me feel that I was this person, even though I hadn’t done anything, and I realised that as a parent how we make our children feel, truly feel, is important. I came to that old factory, and . . . I think that was the turning point, that I could see things that others might not see, and that probably comes from my previous life.