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Chobani Founder: Growing Your Start-Up Without Outside Investors

Chobani Founder - Hamdi-Ulukaya

Please, Sir, may I have some more?

The Idea: The author’s passion for the yogurt of his boyhood in Turkey—and the serendipitous availability of an old yogurt factory in upstate New York—combined to produce Chobani. Within three years it was the top-selling U.S. brand.

I’ve always loved yogurt—the thick kind I grew up eating in Turkey, where my mother made it from scratch on our family’s dairy farm. When I moved to the United States, in 1994, I found American yogurt to be disgusting—too sugary and watery. If I wanted yogurt, I usually made it myself at home. So when I came across a piece of junk mail advertising a fully equipped yogurt factory for sale, in March 2005, I was curious. The factory was about 65 miles west of the feta cheese company, Euphrates, that I’d started in upstate New York a few years earlier. In 2005 Euphrates had fewer than 40 employees and about $2 million in sales; it was barely breaking even.

Slotting Our Cups

To buy the yogurt factory, I obtained a bank loan backed by the U.S. Small Business Administration. I learned about SBA loans from two loan officers at KeyBank. I spent two days writing a business plan, offered a personal guarantee, and put up 10% of the purchase price. The bank and the government put up the other 90%, with a low interest rate and a 10-year term. The loan was sufficient to create a small amount of working capital in addition to the purchase price. The process took about five months, and on August 17, 2005, I had the keys to the factory.

I immediately hired a master yogurt maker from Turkey, and we spent the next two years perfecting our recipe. I hired four employees who’d worked at the Kraft plant, and because we had nothing to produce, I kept them busy repainting and repairing the factory for a few months. By early 2006 we’d begun making private-label American-style yogurt as a contract manufacturer for other companies, just to bring in some revenue.

Read more at Harvard Business Review.

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This entry was posted on October 14, 2013 by in Uncategorized and tagged , , , .
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