11 ms·

At Chobani, Now It’s Not Just the Yogurt That’s Rich

175 points by ahmad19526 10y ago

abc_lisper 10y ago
Tippin my hat, nicely done...
amalag 10y ago
>TPG has warrants to buy 20 percent or more of Chobani’s shares, depending on targets set in the original deal it struck. But that percentage would now be calculated from the 90 percent of the remaining shares, after the 10 percent given to the employees, essentially diluting TPG’s potential stake. How did that happen? How would the 10 percent given to the employees not be included in the 20% of the TPG contract?
- r00fus 10y ago
  > How did that happen? How would the 10 percent given to the employees not be included in the 20% of the TPG contract? From TFA: "He said that giving his employees a stake in the company’s success was among the terms he demanded when the deal with TPG was struck."
  - BlackjackCF 10y ago
    God damn. What a great employer and a decent human being. This is how businesses should be run.
dimino 10y ago
Congrats, but I'm always blown away at the size of some companies. Do you really need 2000 people to make yogurt? Airplanes are big complex systems, so I get that, but yogurt? Edit: Apparently I rubbed some folks the wrong way. I didn't mean to think I could do better, I just meant it's a wild thought that something so "simple" as yogurt could require so many people to make. You guys probably know about "I, Pencil", but it's a good read if you haven't heard of it: http://www.econlib.org/library/Essays/rdPncl1.html http://www.econlib.org/library/Essays/rdPncl1.html
- wnevets 10y ago
  what is the right amount of people for a company with a market share as large as them?
- cloudjacker 10y ago
  Do things that don't scale. Thats what working capital is for.
  - dimino 10y ago
    Is "hire many people" one of the things that falls under "things that don't scale"? I kind of thought that meant more like the opposite. In any event, I wasn't maligning Chobani, just expressing my surprise.
    - CydeWeys 10y ago
      I'm just surprised that you're surprised that a large number of people are involved in the manufacturing and distribution of a physical good. If you think 2,000 employees is a lot, wait until you see how many employees a company like Ford has. I think your mind is a little bit stuck in the SF bubble.
      - BinaryIdiot 10y ago
        > a large number of people are involved in the manufacturing and distribution of a physical good. Manufacturing per product is typically limited to few locations (likely 1 location for this company as far as I can tell). Yeah it's a lot of work but I'm curious as to what their make-up is as far as employees go. Reading up on a lot of logistics it seems like they could get away with 1,000 so I'm curious as to what those 2,000 do :) > If you think 2,000 employees is a lot, wait until you see how many employees a company like Ford has Seems like an apples to organges comparison. Ford does R&D on vehicles which include a vast amount of complex parts but they also do manufacturing all across the world, various offices to manage this and work with partners, dealer inspectors, etc. Ford has multiple products that all are incredibly high in complexity next to yogurt.
deleted 10y ago
[deleted]
temuze 10y ago
That's a bold move by this Curdish founder. I think it's a good whey to promote a positive company culture. Possibly reduce employee churn as well.
- aaron-santos 10y ago
  Please don't.
- pj_mukh 10y ago
  I'll allow it. Edit: Just found HN's hatred for puns. Got it.
ae_keji 10y ago
Honestly I'm surprised this doesn't happen more. While yes, it was a very kind gesture by Ulukaya to give his employees partial ownership, it also makes each of them much more involved in the long term success of the company. Putting a company on the stock market is selling it to people who are only interested in earnings for a few quarters at most, while employees will have interest in not only the growth of the company, but the sustainability of the operation. At least that's my impression of employee owned businesses, it seems like a smart economic move.
- taneq 10y ago
  Not to mention that hiring and training an employee is a significant investment. Losing a bunch of employees at once, probably each with some irreplaceable domain-specific knowledge, will cost the company in the long run.
spir 10y ago
Thinking back to the fellow who gave all of his employees a raise to $70K, parts of that ended up going badly for him. As a thought experiment, I wonder what might go well or poorly in this case? The publicity is great. Employee loyalty from gratitude and vesting. It may afford a near-term competitive advantage from capabilities like increased willingness to work overtime or rallying together during an opportunity/crisis. Real information may flow more freely as employees feel a safety/pride of ownership and connection to management. How will new employees feel about working alongside someone with much greater compensation? Existing employees may immediately face this - since shares were dolled out by tenure, employees with several years' tenure may see themselves as rich vs. newer folks and vice versa. As vesting completes, experienced employees may depart as they become financially independent. Or perhaps the windfall will inspire lifetime loyalty. Will there be problems at competitors, whose employees are marginally less satisfied, knowing their counterparts at Chobani are treated so well? Overall an inspiring and kind program. I'm excited to see it play out.
- morgante 10y ago
  I suspect that this is a much smarter way of rewarding employees than the minimum $70k salary. Profit sharing and employee ownership aren't really new concepts. Lots of different companies have been providing such opportunities for a long time, especially for senior employees, so it's unlikely to be controversial.
dominotw 10y ago
Chobani is poison. Insane amount of added sugar. Stay away from it.
- BinaryIdiot 10y ago
  I'm not a fan of the taste of texture but I don't think I'd call it "poison". Besides this is irrelevant to the conversation at hand as it's about the company's stock redistribution not its product.
- 55555 10y ago
  If you buy the large containers for home use, you can easily find ones with zero added sugar. They have a great natural sweetness. https://www.dropbox.com/s/u6y7uwkf62r8q8a/Screenshot%202016-04-27%2022.44.01.png?dl=0 https://www.dropbox.com/s/u6y7uwkf62r8q8a/Screenshot%202016-...
mjfern 10y ago
It's great to see a founder CEO (Hamdi Ulukaya) making a bold ethical move like this to support his employees. It's not flashy or earth shaking, but it's very real and it will definitely change many lives for the better. This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs. Once HP recovered, I'm assuming they reinstated previous salary levels and then some. HP then benefited from a highly committed and skilled workforce who deeply respected their leaders and company. Unfortunately, these stories reflect the (very rare) exception and not the rule. Today, we're much more likely to see CEOs and executive teams earning (multiple) millions in salary and options, all the while they are outsourcing jobs, implementing layoffs, converting full-time jobs to contract and part-time jobs, and so on. These CEOs are extracting as much wealth as they can, at the expense of their employees. We desperately need more ethical, bold leaders like Ulukaya, Hewlett, and Packard who are going to shape the future of business; a future that is kinder, compassionate, and community-minded.
- subpixel 10y ago
  Interestingly, I recall reading a story suggesting that the CEO was on his way out of the company less than a year ago, when the whole Idaho plant expenditure looked like a failure. The turnaround is a nice reminder that running a business sometimes requires ignoring the people whose job is to second guess and critique your every move.
- existencebox 10y ago
  I agree, however, I don't see the incentives that would motivate change to the current system. Where is the mass employee outrage and "voting with our feet" for the wage suppression some of our largest employers supported? We can all have high minded ideals but at the end of the day our options are often VERY limited, as few would willingly take a massive pay cut for their ideals, especially given the inherent commons problem in that many people would need to do so simultaneously for the powers that be to "Feel" it. How do we actively motivate this change when most of the power and incentive dynamics are _not_ in the employee's favor? (I mean this as an honest question, I don't see any easy answers)
- 10y ago
andrewfong 10y ago
> But unlike many of those tech companies, Mr. Ulukaya is giving his employees a piece of the company after its value is firmly established. I wonder how they set this up tax-wise. Stock grants are income, even before you sell. In tech companies, you typically get the stock when it's super cheap, so the tax hit is minimal. But here, since the value's pretty firmly established, the employee is potentially on the hook for quite a bit. And depending on the details of the grant, it may not be possible for employees to sell off their stock to pay taxes. There are several ways to solve this. The employees could be getting options (set up so taxes are deferred until they exercise). Or the company could just eat the tax themselves. But kind of curious which route they took.
- rhc2104 10y ago
  It sounds like the employees don't actually get the shares until a liquidity event. (This is how RSUs work at startups.)
  - superuser2 10y ago
    The liquidity event for employees is months to years after the IPO (lockup period).
- fiatmoney 10y ago
  "Stock grants are income, even before you sell" Just to be clear, RSUs are taxable as income at the value & tax year they vest, not the grant date.
nwah1 10y ago
I heard that the founder is Kurdish. Pretty interesting company.
- 55555 10y ago
  He is indeed Kurdish, from Turkey.
williesleg 10y ago
Hello?? Mark?? Mark Zuckerberg? Bill Gates??? Hello???
enlightenedfool 10y ago
"The number of shares given to each person is based on tenure, so the longer an employee has been at the company, the bigger the stake." which is nice compared to the usual class-based allocation.
3327 10y ago
Hamdi is an example ceo, Here is some background information - don't grt me wrong the move is great but as any great move there are a few more implications: 1) tpg loaned 750mn to bail out idaho plant to Ulukaya. 2) as part of the deal tpg has warrants against hamdi's own stock. 3) tpg try to oust hamdi once, the gidt cements his role as a ceo as employee love and support to him is boosted. 4) tpg's warrants are diluted since hamdi gave out 10% of his own stock. Essentially now the options can address 90% of hamdi's stock. AGain a great chess move. Your move tpg. Edir: typos due to mobile.

175 points by ahmad19526 10y ago

Tippin my hat, nicely done...

>TPG has warrants to buy 20 percent or more of Chobani’s shares, depending on targets set in the original deal it struck. But that percentage would now be calculated from the 90 percent of the remaining shares, after the 10 percent given to the employees, essentially diluting TPG’s potential stake. How did that happen? How would the 10 percent given to the employees not be included in the 20% of the TPG contract?

r00fus 10y ago
> How did that happen? How would the 10 percent given to the employees not be included in the 20% of the TPG contract? From TFA: "He said that giving his employees a stake in the company’s success was among the terms he demanded when the deal with TPG was struck."
- BlackjackCF 10y ago
  God damn. What a great employer and a decent human being. This is how businesses should be run.

dimino 10y ago

Congrats, but I'm always blown away at the size of some companies. Do you really need 2000 people to make yogurt? Airplanes are big complex systems, so I get that, but yogurt? Edit: Apparently I rubbed some folks the wrong way. I didn't mean to think I could do better, I just meant it's a wild thought that something so "simple" as yogurt could require so many people to make. You guys probably know about "I, Pencil", but it's a good read if you haven't heard of it: http://www.econlib.org/library/Essays/rdPncl1.html http://www.econlib.org/library/Essays/rdPncl1.html

wnevets 10y ago
what is the right amount of people for a company with a market share as large as them?
cloudjacker 10y ago
Do things that don't scale. Thats what working capital is for.
- dimino 10y ago
  Is "hire many people" one of the things that falls under "things that don't scale"? I kind of thought that meant more like the opposite. In any event, I wasn't maligning Chobani, just expressing my surprise.
  - CydeWeys 10y ago
    I'm just surprised that you're surprised that a large number of people are involved in the manufacturing and distribution of a physical good. If you think 2,000 employees is a lot, wait until you see how many employees a company like Ford has. I think your mind is a little bit stuck in the SF bubble.
    - BinaryIdiot 10y ago
      > a large number of people are involved in the manufacturing and distribution of a physical good. Manufacturing per product is typically limited to few locations (likely 1 location for this company as far as I can tell). Yeah it's a lot of work but I'm curious as to what their make-up is as far as employees go. Reading up on a lot of logistics it seems like they could get away with 1,000 so I'm curious as to what those 2,000 do :) > If you think 2,000 employees is a lot, wait until you see how many employees a company like Ford has Seems like an apples to organges comparison. Ford does R&D on vehicles which include a vast amount of complex parts but they also do manufacturing all across the world, various offices to manage this and work with partners, dealer inspectors, etc. Ford has multiple products that all are incredibly high in complexity next to yogurt.

deleted 10y ago

[deleted]

temuze 10y ago

That's a bold move by this Curdish founder. I think it's a good whey to promote a positive company culture. Possibly reduce employee churn as well.

aaron-santos 10y ago
Please don't.
pj_mukh 10y ago
I'll allow it. Edit: Just found HN's hatred for puns. Got it.

ae_keji 10y ago

Honestly I'm surprised this doesn't happen more. While yes, it was a very kind gesture by Ulukaya to give his employees partial ownership, it also makes each of them much more involved in the long term success of the company. Putting a company on the stock market is selling it to people who are only interested in earnings for a few quarters at most, while employees will have interest in not only the growth of the company, but the sustainability of the operation. At least that's my impression of employee owned businesses, it seems like a smart economic move.

taneq 10y ago
Not to mention that hiring and training an employee is a significant investment. Losing a bunch of employees at once, probably each with some irreplaceable domain-specific knowledge, will cost the company in the long run.

spir 10y ago

Thinking back to the fellow who gave all of his employees a raise to $70K, parts of that ended up going badly for him. As a thought experiment, I wonder what might go well or poorly in this case? The publicity is great. Employee loyalty from gratitude and vesting. It may afford a near-term competitive advantage from capabilities like increased willingness to work overtime or rallying together during an opportunity/crisis. Real information may flow more freely as employees feel a safety/pride of ownership and connection to management. How will new employees feel about working alongside someone with much greater compensation? Existing employees may immediately face this - since shares were dolled out by tenure, employees with several years' tenure may see themselves as rich vs. newer folks and vice versa. As vesting completes, experienced employees may depart as they become financially independent. Or perhaps the windfall will inspire lifetime loyalty. Will there be problems at competitors, whose employees are marginally less satisfied, knowing their counterparts at Chobani are treated so well? Overall an inspiring and kind program. I'm excited to see it play out.

morgante 10y ago
I suspect that this is a much smarter way of rewarding employees than the minimum $70k salary. Profit sharing and employee ownership aren't really new concepts. Lots of different companies have been providing such opportunities for a long time, especially for senior employees, so it's unlikely to be controversial.

dominotw 10y ago

Chobani is poison. Insane amount of added sugar. Stay away from it.

BinaryIdiot 10y ago
I'm not a fan of the taste of texture but I don't think I'd call it "poison". Besides this is irrelevant to the conversation at hand as it's about the company's stock redistribution not its product.
55555 10y ago
If you buy the large containers for home use, you can easily find ones with zero added sugar. They have a great natural sweetness. https://www.dropbox.com/s/u6y7uwkf62r8q8a/Screenshot%202016-04-27%2022.44.01.png?dl=0 https://www.dropbox.com/s/u6y7uwkf62r8q8a/Screenshot%202016-...

mjfern 10y ago

It's great to see a founder CEO (Hamdi Ulukaya) making a bold ethical move like this to support his employees. It's not flashy or earth shaking, but it's very real and it will definitely change many lives for the better. This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs. Once HP recovered, I'm assuming they reinstated previous salary levels and then some. HP then benefited from a highly committed and skilled workforce who deeply respected their leaders and company. Unfortunately, these stories reflect the (very rare) exception and not the rule. Today, we're much more likely to see CEOs and executive teams earning (multiple) millions in salary and options, all the while they are outsourcing jobs, implementing layoffs, converting full-time jobs to contract and part-time jobs, and so on. These CEOs are extracting as much wealth as they can, at the expense of their employees. We desperately need more ethical, bold leaders like Ulukaya, Hewlett, and Packard who are going to shape the future of business; a future that is kinder, compassionate, and community-minded.

subpixel 10y ago
Interestingly, I recall reading a story suggesting that the CEO was on his way out of the company less than a year ago, when the whole Idaho plant expenditure looked like a failure. The turnaround is a nice reminder that running a business sometimes requires ignoring the people whose job is to second guess and critique your every move.
existencebox 10y ago
I agree, however, I don't see the incentives that would motivate change to the current system. Where is the mass employee outrage and "voting with our feet" for the wage suppression some of our largest employers supported? We can all have high minded ideals but at the end of the day our options are often VERY limited, as few would willingly take a massive pay cut for their ideals, especially given the inherent commons problem in that many people would need to do so simultaneously for the powers that be to "Feel" it. How do we actively motivate this change when most of the power and incentive dynamics are _not_ in the employee's favor? (I mean this as an honest question, I don't see any easy answers)
10y ago

andrewfong 10y ago

> But unlike many of those tech companies, Mr. Ulukaya is giving his employees a piece of the company after its value is firmly established. I wonder how they set this up tax-wise. Stock grants are income, even before you sell. In tech companies, you typically get the stock when it's super cheap, so the tax hit is minimal. But here, since the value's pretty firmly established, the employee is potentially on the hook for quite a bit. And depending on the details of the grant, it may not be possible for employees to sell off their stock to pay taxes. There are several ways to solve this. The employees could be getting options (set up so taxes are deferred until they exercise). Or the company could just eat the tax themselves. But kind of curious which route they took.

rhc2104 10y ago
It sounds like the employees don't actually get the shares until a liquidity event. (This is how RSUs work at startups.)
- superuser2 10y ago
  The liquidity event for employees is months to years after the IPO (lockup period).
fiatmoney 10y ago
"Stock grants are income, even before you sell" Just to be clear, RSUs are taxable as income at the value & tax year they vest, not the grant date.

nwah1 10y ago

I heard that the founder is Kurdish. Pretty interesting company.

55555 10y ago
He is indeed Kurdish, from Turkey.

williesleg 10y ago

Hello?? Mark?? Mark Zuckerberg? Bill Gates??? Hello???

enlightenedfool 10y ago

"The number of shares given to each person is based on tenure, so the longer an employee has been at the company, the bigger the stake." which is nice compared to the usual class-based allocation.

3327 10y ago

Hamdi is an example ceo, Here is some background information - don't grt me wrong the move is great but as any great move there are a few more implications: 1) tpg loaned 750mn to bail out idaho plant to Ulukaya. 2) as part of the deal tpg has warrants against hamdi's own stock. 3) tpg try to oust hamdi once, the gidt cements his role as a ceo as employee love and support to him is boosted. 4) tpg's warrants are diluted since hamdi gave out 10% of his own stock. Essentially now the options can address 90% of hamdi's stock. AGain a great chess move. Your move tpg. Edir: typos due to mobile.