Getting There: A Book of Mentors (2015)
STONYFIELD FARM CHAIRMAN AND CO-FOUNDER
My father and grandfather were shoe manufacturers, and their factory was located on the banks of the Suncook River in Pittsfield, New Hampshire. As a little kid, I loved to visit them at work. I would look out the windows and watch the pretty colors from the dyes and chemicals flow out back and swirl around in the river. To me, it was mesmerizingly beautiful. Only later did I realize that they were major polluters. The Merrimack, into which the Suncook River emptied, was the tenth most polluted river in the United States.
They were good people, but were blinded by a society-wide ignorance of what we now call externalities. It was as if waste were sent off to some mythological place no one had to worry about.
I witnessed my beautiful, clean, and rural New Hampshire change right before my eyes. When I was young, we got our chickens and lamb from the next town over, our eggs from down the street, and our milk delivered to our doorstep from neighboring farms. As the years passed, these small family farms slowly disappeared. I also noticed changes in the environment. Throughout my childhood, I was a ski racer and spent a lot of time in the mountains. On a clear sunny day you could see the Atlantic Ocean from the top of Mount Washington. By the early seventies, that view was gone. By the time I was sixteen, I had realized that we were really screwing things up. I saw business and commerce as the source of all things bad and became determined to undo the damage they had created.
I went to Hampshire College and I focused on environmental studies. I learned that we were burying toxic waste everywhere, polluting and depleting water systems, and worsening global warming (the resulting droughts, famines, floods, forest fires, and storms that we now take for granted are climate events resulting from putting too much heat and energy into the atmosphere). It became clear to me that if humans’ egocentric behaviors persisted, subsequent generations would be prevented from having viable, healthy futures. We were endangering ourselves by disrespectfully trashing the only planet we’ll ever have.
I also began to understand that we were changing the way food was made—for the worse. We were injecting our animals with hormones and antibiotics, spraying our fields and produce with toxic pesticides, and using chemical fertilizers, all with no real knowledge of what would happen to kids who grew up on a diet containing these things. I began to wonder if we were exacerbating the occurrence of cancer and other lethal diseases. Now we have scientific evidence that the chemicals in our food do indeed contribute to incidences of cancer. In addition, there is a direct correlation between pesticide usage and brain development—and even increased ADHD diagnoses.
I graduated in 1976 and wrangled an internship at the New Alchemy Institute, a nonprofit research and education center dedicated to organic farming, aquaculture, and renewable energy. This eventually led to a full-time job as a water-pumping windmill specialist. I built many windmills, wrote a book on wind power, and edited another on organic farming. In 1980 I also started to lead ecological tours to China and worked as an environmental educator with the U.S. Fish and Wildlife Service.
But it was during Christmas of 1982, while visiting my mother, who worked at Disney’s Epcot Center in Florida, that I had a life-changing epiphany. Kraft Foods had sponsored an exhibition called the Land Pavilion that showcased its vision of how produce would be grown in the future. Needless to say, their vision was very different from mine. The Land Pavilion demonstrated how food could be grown with rivers of chemical fertilizers, herbicides, and pesticides swirling past the naked roots of plants grown hydroponically in plastic tubes. This process may have produced food, but it was clear to me that this approach would lead to severe negative repercussions for both the environment and us.
The most startling thing I discovered, though, was that Epcot had 25,000 people paying to visit the exhibit every single day. That’s more people than visited my New Alchemy Institute in an entire year—and that was free! Deeply disturbed, I blurted out to my mother, “I need to become Kraft Foods!” I still thought that their approach was flawed, but I realized that if I wanted to help prove that organic and sustainable food production could be every bit as viable, I had to stop resenting big businesses and harness such economic power to reach and influence large numbers of people. In order to transform the way that companies behaved, I needed to demonstrate that operating in an environmentally and socially responsible manner could be very profitable.
At the time, I was also a trustee of a little organic farming school in New Hampshire, The Rural Education Center (TREC), run by my friend Samuel Kaymen. The goal of TREC was to help family farms survive and prosper, to keep food and food production healthy, and to help protect the environment. Samuel had a handful of cows and made delicious yogurt that he’d serve at our board meetings. He had enormous talents and strong principles, but handling the economic side of running a business was really not his passion. Plus, federal budget cuts had squeezed the amount of private philanthropic support that was available for efforts like this. As a result, TREC was in dire financial straits and virtually bankrupt. One day, the trustees and Samuel decided to try selling his yogurt locally to help fund the school. Samuel threw himself into the project and was able to borrow $35,000 from a group of Catholic nuns called the Sisters of Mercy to get things started.
Samuel and his wife, Louisa, named the yogurt business Stonyfield Farm and it launched in April of 1983. Samuel was phenomenal at making yogurt, but the business quickly got to be too complex for him to manage. Exhausted, he asked me to come on board full time and partner with him. The plan was that I would run TREC and help Samuel with the financial oversight while he would manage production and sales. Figuring that Stonyfield could be my “Kraft,” I agreed to quit my other jobs and start in September. As soon as Samuel heard this news, he stopped paying any postponable bills, figuring that I would take care of such matters when I arrived. On my first day at work I discovered that we were more than $75,000 in debt and slipping further behind every day—and our electricity was about to get shut off.
So from the minute I got there I had to figure out how to raise money and get us out of our ditch. Initially, we thought $125,000 would cover us. We then realized we needed $200,000, then $500,000. As the business grew, I became more and more involved in operations on the farm. We were milking cows twice a day seven days a week, and during one especially difficult phase, every other night Samuel or I would have to stay awake to make yogurt. We were both perpetually on call and sleep deprived. It was a painful and often unhappy time.
Despite the hardships, we had a wonderful company and made an amazing product. However, garnering shelf space was a constant challenge. At that time, few Americans were eating yogurt and practically nobody knew what organic meant. When I talked to retailers to try to get them to carry Stonyfield, which was a little more expensive than the nonorganic brands, they’d say, “What does organic mean? Does it have dirt in it?” The few who did know what organic was thought it meant that you had to chew a little more. They associated it with heavy, doughy breads and dingy-looking broccoli.
In 1984, we exceeded our farm’s capacity, so we decided to sell our cows and purchase milk elsewhere. Unfortunately, we couldn’t find anyone to supply us with organic milk, so we focused instead on securing grass-fed, all-natural milk free of synthetic hormones and antibiotics. But we were not the only people out there attempting to sell an all-natural yogurt brand. When we started, Brown Cow, made in Ithaca, New York, had already been in business for five years—so we also had to persuade those few retailers already familiar with natural products to carry our yogurt instead of theirs. We went to a Purity Supreme supermarket in Massachusetts the very same day that Brown Cow presented to them. Purity Supreme explained that they were going to carry only one all-natural yogurt and that it would be from whichever one of us gave them the best deal. Unfortunately, Brown Cow’s terms were better than what we could afford to offer. Samuel and I sat in the parking lot after our meeting and decided that we had to go back in and match Brown Cow’s terms anyway. It turned out to be one of the most pivotal decisions in the history of the company. Purity Supreme went with us because we were a local company, and before we knew it, Stop&Shop, Roche Bros., and other local grocery stores followed Purity Supreme’s lead. With that one decision, we prevented Brown Cow from entering the New England grocery market, and thus eliminated our most serious competitor.
Because we couldn’t afford advertising, we had to think up alternative ways to get to customers. Giving out free samples was our main method. For the first four years, we probably gave away about one cup of yogurt for every cup we sold. We constantly had to persuade people to taste it—but when they did, we frequently got them as a customer. We also discovered that amusing, outrageous behavior was a sure ticket to media coverage. One day, on Boston’s number one radio morning talk show, the two hosts, Joe and Andy, mentioned Stonyfield. Joe suggested that Andy could get healthier by eating our yogurt. Andy replied that he would rather eat camel manure. While many businesses might see this as some kind of attack, we viewed it as an opportunity to strut our stuff. My wife, Meg, and I promptly drove to the nearby Benson’s Wild Animal Farm where they had camels and filled a large yogurt container with camel manure. We showed up at the studios with noxious odors leaking out of the cup and offered Andy a choice of camel manure or our yogurt. Faced with the choice, he tried Stonyfield and admitted that it tasted better than camel manure. It was our first celebrity product endorsement and got us on-air mentions for about three months!
Despite us gaining some momentum here and there, making Stonyfield profitable was still very much an uphill battle. I produced dozens of business plans but none of them panned out. Something would always go wrong and set us back. For our first shipment to California, we hired a contract carrier to drive our yogurt across the country. As you can imagine, that was a big expense. Suddenly, the driver was out of touch and remained so for three days. No one had any idea where he was. Turns out he had parked his truck behind a Motel 6 in Nevada, went on a three-day bender, shot and killed a guy in a bar fight, and landed in jail. We had to fly someone out there to pick up the truck and finish the trip—a week late. Fortunately, it was winter, so even though the engine refrigerator had died, the yogurt was still cold!
In 1987 we partnered with an organic dairy in western Massachusetts. They had a factory with a lot of capacity, which we needed. We were in such a hurry to get into a new space that we weren’t very diligent in assessing the fiscal condition of our new partner. About five months after we moved in, they went bankrupt. Suddenly faced with no production and a business doubling every three to four months, we had no choice but to bring everything back our original New Hampshire dairy. Our inefficiency there caused us to lose $25,000 a week for about fifteen months. And that was not money we had in the bank, so I had to constantly raise funds. It was a nightmare.
I would put on a suit, travel around to investor conferences, and try to borrow money or negotiate deals that would save us. A lot of people didn’t want to invest because they thought our company would never work. Others had no interest in investing in something “weird” like yogurt. Many simply tried to take advantage of us. I got dozens of usurious offers from arrogant Wall Street guys. One of them even clipped his fingernails during our meeting! I was on a very steep learning curve, but I got to understand what was fair and what wasn’t.
For every one person who invested with us, there were at least fifteen who turned us down—but we eventually wound up with 297 individual shareholders. Many of my family members invested. When my father-in-law died, he left Meg about $30,000 that I ended up borrowing to buy fruit, and my mother-in-law was actually one of our biggest investors.
For quite a few years, Meg and I lived on the farm in an apartment right next to Samuel and Louisa. Many nights, thinking Meg was asleep, I would tiptoe from our bedroom down the hall to my office and call her mother to see if she could lend us another $5,000 for payroll. I would often hear the click-click of call waiting. It was Meg on the other line saying, “Mom, don’t do it!” It got to the point where my mother-in-law and I had secrets between us that we couldn’t share with Meg because it was too stressful for her. Meg refers to that period as “the bad old days.”
For many years, Stonyfield shareholders got a lot of yogurt and not much else. Most were quite patient, but some became very agitated and wanted out. Each year at Christmas, I would send everyone a note with the company news and I would write: “If you are interested in selling some or all of your stock, let me know.” This ensured that no one felt trapped, but it also meant that I had to spend a big part of each year finding new shareholders to replace departing ones.
Samuel and I feared going under the whole time, but quitting and failing was never an option for me. There were several things that kept me going.
First, Samuel and I really believed in our mission and wanted to continue working for healthy food, healthy people, and a healthy planet. We had to succeed because if a company like ours couldn’t make it, then what hope was there going to be for commerce to change paths?
Next, we got positive feedback—in the form of letters, phone calls, and visits—from people expressing how amazing Stonyfield yogurt was. I can’t possibly emphasize enough how much this encouraged us. An Iranian refugee once drove forty-five minutes to the farm just to tell us she had not eaten anything this good since she had escaped from Iran. And they’ve been making yogurt there for about one thousand years.
Most important, I was driven by a feeling of obligation to my investors. I had convinced these people to place their faith in me, and I was prepared to do everything humanly possible to not let them down.
For the first nine years, Stonyfield didn’t make a nickel—but, finally, something shifted in the early nineties. Doctors started recommending that people eat organic, and when I went into supermarkets to talk to the buyers about organic food, they no longer looked puzzled. They actually needed the yogurt because consumers were demanding it.
Margaret Mead said, “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.” I have seen this happen firsthand with the organic industry. When consumers insist upon something, retailers provide it. When we purchase anything, we’re voting for the kind of world we want.
In 1997 Stonyfield was able to pass Kraft in yogurt sales and in 2003 we bought Brown Cow. We are currently the world’s largest organic yogurt maker and have also branched out into smoothies, soy yogurts, frozen yogurts, milk, and cream. We’re still located in New Hampshire, but we now purchase our ingredients from a huge network of organic food producers. We’ve also maintained our devotion to planet-friendly business practices—from offsetting our emissions to making containers from plants instead of petroleum and generating our own renewable energy.
We have succeeded in proving that businesses don’t have to choose between doing good and doing well—but the best reward for our persistence is that we’ve actually seen the world begin to change. Demand for organic food has won over the biggest names in retailing and every large manufacturer in the food space now has an organic product line. Plus, all the major food companies effusively describe their commitments to sustainability. While this may not always be 100 percent authentic, it certainly indicates that we’ve come a long way.
Think on your own and question authority. Authority is a short-lived phenomenon. It’s who is in charge now, but that doesn’t mean that they are right. So-called experts are often wrong. Also, just because something has been done one way for many years doesn’t mean that it can’t be altered. Challenging conventional wisdom can be scary, but most major changes happen because someone asked: “Why not do it differently?” If you don’t ask, you don’t get.
Don’t compromise on the qualities that make your business unique. It’s often tempting to do so because what makes you unique is frequently also costly—but the moment you’re competing only on price, you’ve lost control of your venture. I’m not just referring to the attributes of your product; I’m also talking about the overall mission of your business. From the beginning, Samuel and I produced delicious and healthy yogurt. In hindsight, I realized everything that followed was made possible by our commitment to this. If we had lowered our price by using cheaper and lower-quality ingredients, we would just be one of many brands out there. Because we didn’t, retailers had a reason to keep us on their shelf.
When you invest in an entrepreneurial venture, you’re really investing in the people behind it. Take time to get to know their character. Look not at how they deal with success but at how they deal with adversity. When things are going well, everybody appears to be on top of their game. How they do when things are rough is the real question.
Determination is the most important ingredient for success. A superior product, a good business plan, creativity, and good instincts only get you on the game board. It all comes down to the moments when you either wave a white flag and give up or say, “I am going to keep fighting.” The successful people are those who got back up after being knocked down, often repeatedly.