Question: US entrepreneur Hamdi Ulukaya has gone from start-up to billionaire in just five years. What industry is he in?
No, the answer is not social media.
Nope, it’s not software.
No, he’s not a miner.
Ulukaya’s empire is built on a decidedly low-tech product: Greek yoghurt.
New York-based Ulukaya hit the headlines last week after Bloomberg named him as the world’s newest billionaire. He is the 40-year-old founder of Chobani, the biggest-selling yoghurt company in the United States, which began producing just five years ago.
While Ulukaya has regularly been in the media telling his story, he has taken a decidedly low-key approach to his crowning by Bloomberg.
“The real story here is the collective success of Chobani and how we as a company, through our fans and community, have left an indelible mark on the yogurt industry,” Ulukaya said in a statement.
According to Bloomberg, Chobani’s revenue more than doubled to $US745.6 million in the year ending May 13. Bloomberg says its $1.1 billion valuation is based on the average enterprise value-to-sales and enterprise value-to-EBITDA multiples of two publicly-traded dairy companies, Danone and Saputo.
Australia is a contributor to that growth. Last July, Chobani bought a Victorian company called Bead Foods for an undisclosed sum and renamed it Chobani Australia. Australian yoghurt sales are expected to rise from $65 million in 2011 to $75 million in 2012.
It remains to be seen whether Chobani can conquer Australia in the same way it has stormed the US. But in the meantime, let’s take a look at the extraordinary story of Hamdi Ulukaya and Chobani by extracting 10 lessons from his career.
1. Listen to your father
Ulukaya arrived in America in 1995 to study, learn English and go into business. A few years later his father – part of a long line of cheese and yoghurt makers from Turkey – came to visit and complained bitterly about how poor American cheese was. He also told his son Hamdi that there was money to be made from making cheese.
Ulukaya dismissed the idea initially but by 2002 he had come around and he started making feta.
2. Don’t dismiss an opportunity
One day in 2005, Ulukaya stumbled across an advertisement for a 100-year-old yoghurt factory formerly owned by food giant Kraft. He initially discarded the ad, but then he took another look.
“I was always so surprised that there was no quality yogurt in the US. I thought, I can do something here, without even knowing how,” he told The Wall Street Journal in July.
“Everybody around me thought I was nuts. Here was this huge company, Kraft, getting out of this plant. If there was value in it, why would they close it? But you just have a gut feeling you can do something.”
3. Get money from whoever will lend it to you
It took Ulukaya five months to put together the finance to buy the old Kraft plant. One of the loans he secured was backed by the US Government’s Small Business Administration, a brilliant program that has helped keep credit flowing to entrepreneurs despite the obvious difficulties in the US economy. It’s part of what makes this a great American story.
4. Don’t ignore the past
When Ulukaya got hold of the Kraft plant, his first move was to signal a new era.
“[The] first thing I said was that we were going to paint the walls, because the paint was horrible and I had no other ideas,” he told The Wall Street Journal. “And I said turn the lights off because I had looked at the electricity bill. Then I started doing some homework on specialty yogurts.”
Ulukaya might have wanted a fresh start, but he didn’t forget the past either. His first five employees were workers who had been at the factory under Kraft’s ownership and his sixth employee was a yoghurt maker, a family friend from Turkey.
5. Take your time to get it right
It was two years between when Ulukaya purchased the former Kraft yoghurt factory and when the tubs of Chobani started rolling onto shelves in 2007. These two years were spent getting the product right.
“I wanted to make sure the product was perfect because I only had one shot and it had to work,” he told the WSJ.
Ulukaya says it was a difficult time, but he survived by staying focused.
“You go from some days when you’re smiling and you’re thinking you’re going to make this thing rock – to the next day when a pipe breaks, the yogurt doesn’t taste right and your costs look too high,” he told Forbes last year.
“As a founder, you have to learn to keep your eyes on an ultimate goal. If you lose sight of that goal, you have to get out. I always saw the goal. It was always there in my head.”