Chobani & Patagonia CEOs break down where values meet profit

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0:40Get up to$100 ,000 in AWS credits and a free SOC2 consult at startups.aws. What you might describe as speaking out, I just think is telling the truth about what's going on in the world right now. A healthy planet, thriving communities depends on a functioning democracy. and I have real concerns about the future of something I took for granted for the vast majority of my 53 years. We got debt threats and, you know, boycotts. You've got to do the right thing, regardless of, you know, what lawyers and communication experts will say. Every challenge we face, we don't want it. But when that happens, it's an opportunity to make things better than ever before.

1:28And that excites me.

1:36That's Patagonia CEO Ryan Gellert and Chobani CEO Hamdi Yulukaya, recorded live at the Masters of Scale Summit in San Francisco on October 8th. In this special episode, Ryan and Hamdi talk about the intersection of values and commerce, moderated deftly by New York Times reporter and author David Gellis. The two CEOs share their different strategies for dealing with an activist White House, the pressure for what David calls anticipatory compliance, and how they grow their businesses while also prioritizing causes like environmental conservation and immigration. Along the way, there are personal stories, advice, and yes, even a few F-bombs.

2:16So let's get to it. I'm Bob Safian, and this is Rapid Response.

2:30Patagonia and Chobani are two companies that have long been defined by their purpose as much as their products. But both of your companies are showing up in very different ways at a moment when it can be hard or even dangerous to say what you really think. So we're going to get into all that and more. And I want to start with you, Hamdi. Chobani, you've always cared about more than just profits. For almost 20 years now, the company has been doing this work and been committed to more than just making great dairy products and all the other expansions you've done, but to taking care of refugees, immigrants, farmers.

3:07And at a moment when many companies are running away from anything that has a whiff of politics, you're looking for common ground, including with this administration at a very divisive time. You've worked with the White House. You've co-authored an op-ed with Ivanka Trump. You're working on initiatives there. Take us inside this moment. How do you think about staying true to your values at a moment when the country can seem so divided? Yeah, David. You know, starting from Turkey and in the hills of eastern part of Turkey as a nomad family to making myself to this country and age of 22 and finding myself in upstate New York, you know, working on a farm.

3:51I have gone on, you know, this long journey. Yeah. And where I come and where I end up, into this old yogurt factory was shut down and closed and left. Yeah. And finding that similarity between where I come from in the mountains of Kurdish, you know, Kurdish mountains of Turkey, to this, you know, upstate valley where the small town and seeing the people and communities left behind by the businesses and the people in power and the ordinary people suffering. Yet, we are thousands of miles away from each location where I grew up in when I live. So when you look at it from that perspective, you cannot react daily politics or four years of politics.

4:42There are timeless truths and there are timeless challenges that we face as humanity. And in there, I grew up as someone who hates business, literally, and I hate the rich. And the reason I left the country, because I got into trouble, because I was kind of borderline, you know, criminal, politically. And I end up being in jail for days and lucky to get out and find myself here. And we don't want to get into that journey right now. I think we do. I think we just don't have enough time. We just don't have enough time. I found a dimension of the business that is so powerful. And I've been into NGOs.

5:30I've been into political activities. I've been into all kinds of stuff. and seeing that old factory close down and I say, if I can bring this back, if I can fix it with the way that not go against the kid that grow up and still make it work, and there could be some solution here. So then I come back to this. I cannot follow every other playbook. I have to follow my instincts, my way of doing things, and I have no other choices anyway. So in that, David, I found that if you go employee first, if you go community first, if you create an environment where everybody's welcome, if you embody and realize what makes this land so special that everybody wants to come and make something out of it.

6:18And if you can look from a lens of not the city activist and country conservative eyes, but through united human dimensions, then you find a lot more similarities and differences. And if we can look on that perspective of similarities, understand that there are some differences, but respectfully disagree. I think that's what I try to practice, and that's what the tribal knowledge I have. That's beautiful. And I think we could all use a lot more of that in this country this day. Ryan, Patagonia is a very different sort of company. This company has been meddling in politics, sometimes quite loudly, for more than 50 years now.

7:05Meddling is a strong word. Meddling, that's a gentle word. Oh, okay. Yvonne Chouinard has been donating to grassroots environmental activist campaigns for more than 50 years. In 2017, Patagonia sued President Trump and his cabinet. That's meddling. That's meddling. And you still, even at a moment when most CEOs are afraid to say anything about this administration, you're still out there raising the alarm almost every single week, it seems. When your business is selling clothes, why do you spend so much time talking about politics and policy? Yeah, it's well, first of all, it's super interesting being on the stage with you, Hamdi, and with you, David.

7:47I think you made reference to it. You wrote a book that's just come out in the last month about our founder and our 52-year history. You and I have gotten to know each other quite well over recent years. And I think there's a lot that we have spiritually in common as companies. And then I think to the nature of your question to each of us, there's a lot that's actually quite different in how we navigate that. I think for us to now answer your question, we are focused on protecting the natural world, period. That's why we exist. It's not about making money. It's not about being the biggest player in outdoor apparel and equipment.

8:17It's about protecting the natural world. And so that's what we do. And we exist in a world right now here in America where the threats are absolutely unprecedented. And I think that, you know, what you might describe as speaking out, I just think is telling the truth about what's going on in the world right now.

8:40You said no F4 before. Yeah, that's right. But we also said no baseball caps.

8:47There was a whole long list of things we weren't supposed to do. It's the end of the day. We'll get to all of them here. So, you know, climate's at risk. Yeah. Pollution and polluters. The regulations are coming off and conservation, particularly public lands here in America. I mean, it is one goddamn threat after another every single day. And so what are we speaking up on? Those things that matter. Same things we've spoken up on for 52 years. As the CEO of a company and as an individual, do you ever worry about the fact that this is a moment and an administration that has shown a willingness to be retributive?

9:25Yeah, of course. And how do you navigate that? Is there any, I mean, the word is anticipatory compliance. Are you holding back at all? I think we have to be very strategic. I think we have to be very considered. I think what we talk a lot about is where do we have authenticity to offer an opinion on something? And where can we be truly additive? If it's performative and we're just offering an opinion to offer an opinion, that's not a space we're going to play in right now. I don't think the times benefit from that. I think where we can be truly authentic are two places. One is we're a business.

10:02And so we can speak from the business sector. and the other is on environmental and climate issues. We've got a 52-year history. We work our asses off to minimize our footprint. As you made reference to, we've supported grassroots activism for 40 years and counting. And so that's who we are, what we do, and I think we've earned the right to offer opinions on that. Okay. You get a sense of the different approaches to really a very similar and consequential set of issues. We're going to talk about more than politics, I promise, but I do want to come back to this issue of, Khamdi, how you navigate a moment like this and when you decide even to work with Ivanka Trump, even when you decide to work with the White House, it can seem like a no-win situation.

10:42You work with someone, you piss one side off. You say something, you piss the other side off. How do you think about engaging in these partnerships where you are trying to find common ground without alienating any of your consumer base? Yeah, like what I do and what we do at Chobani is, You know, really, we have the known instinct or reflex that we react, regardless of what the world thinks and all that kind of stuff. Ivanka actually is not started now. I worked with her in Idaho after President Biden got into the White House, actually. And what we did is we made boxes of food from the farmers and we delivered to people in need in communities at that time.

11:28Yeah. And later on, before even the election, she and her partner, they create this organization called Planet Harvest. And it says, do you realize that in California, 40 % of all the fruits and vegetables are wasted and left in the land because they don't look good and there's no buy? And I couldn't believe it. I am aware of these things. I didn't even realize. And I went to the land and I saw and partnered with her, her and her partners that were studied quite knowledgeable that I didn't realize. Absolutely will do it. Absolutely will do it. I'll invest with it and I'll lead it and improve the concept.

12:08So to me, when I said we're going to hire refugees during the first, I don't know how many years ago, we got death threats and boycotts. The first time I wrote about the company. You wrote it in New York Times and we got death threats. The stuff is we all have to react as human beings who we are. And businesses are a combination of people. You've got to do the right thing regardless of what lawyers and communication experts will say.

12:42I love that. On the advisor council stuff right now. I'm getting texts from your communication expert right now. I want to invite everybody to... We have some serious, serious issues that we have to bring everybody to the table. We really do. I do see some egocentric reaction, just anger, because the other person. Okay, there are enormous about the differences. I don't know. I was invited to White House because I was announcing huge investment in Idaho and another one in Rome and New York and being part of Invest in America. I don't have any working relationship with White House. But my view on immigration and refugees is the same.

13:28I have an organization called Tent. I just came from Mexico. I'm meeting all those people that are encouraging people to hire refugees and train refugees. These are timeless truths. Yeah. You know, these are timeless truths. People are going to move and we have to make a system that works for every single person. And we proved it in our factories, in our communities. And today you will not have farm workers or you will not have functioning farms and agriculture without immigration. Everybody knows that. Amen. There you go.

14:03Timeless truths do make a difference, especially in times of disruption. So to discourage, which Hamdi and Ryan both demonstrate as day-to-day leaders and in their willingness to be blunt publicly about operating in such politicized times. So how much do they each prioritize growth versus values? And what most gives them hope for the future? We'll hear about that more after the break. Stay with us.

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16:25It's what happens when you don't. Project Management Institute. Empower your people. Turn potential into performance. Find the answers at PMI.org. Before the break, Patagonia's Ryan Gellert and Chobani's Hamdi Yulukaya talked with David Gellis of The New York Times live at the Massachusetts Scale Summit about how they've expressed their values in the face of an historically activist Trump administration. Now, Ryan explains why Patagonia doesn't always equate business growth with impact, and Hamdi explains how independent ownership structure can enable freedom of action. They also each share personal stories of key decision points for them and their companies, and they share what most gives them hope for the future.

17:13Let's dive back in. A lot of people in this audience are looking to grow and grow fast. I think, Ryan, it's an incredible point of distinction that Patagonia is a company that over the years has deliberately restrained its growth. You made reference to it earlier. You said we are not trying to be the biggest apparel company. And I think that mentality can just be like anathema to a lot of founders. And I wonder when you think about all the things that I've written about, stopping distribution in retail partners where you have ideological differences, not selling on Amazon, all these decisions.

17:49How do you keep a sense of forward momentum and keep your team motivated when you're sort of stepping on the brakes at the same time? I think we're stepping on the brakes in that we're still growing. We're growing modestly in this environment, but we're still growing for the most part. And I think having a dynamic organization, one that has a reason for being and Ford momentum, I think the whole concept of growth is quite a reductive definition of, or the concept of revenue being the defining element of growth and momentum, I think is a reductive idea. I think - Say just a bit more of that. Well, I would - Because I can feel it in the energy.

18:30People want to know more. Let me say this. I am as big a proponent of growth as there is in this room. It's growth and impact that I think is most important for us. I think growth in revenue can allow for some of that. And so I think it's some ways necessary evil. I think when we're taking it from competitors who we think might be making lesser product or think about business differently, I'm unapologetic about that. But we don't have our foot mashed on the accelerator trying to chase every distribution opportunity, partnership opportunity, collaborative opportunity or entering new markets. This is not how we think about it.

19:09That's a refreshing take at a moment when I think so many companies, you get the sense, are just mashing it on the gas. Hamdi, you've been able to grow extraordinarily well over almost 20 years now. I think 18 years since you sold your first cup of yogurt. I think publicly reported just shy of$3 billion in revenue recently. An amazing American success story. I wonder, though, as you've hit those inflection point moments, those years, I mean, even I think recently you had a 17 % growth in one year. When you're growing that fast, how do you work to maintain quality and make sure the product and the service and the integrity, not only of the products, but the company, doesn't slip?

19:52Yeah. I started in the wrong place. I should have started here. Where I started business is country, where the cows are, where the land are, and no bars and no restaurants, nothing. So you'll sleep in the factories. And my first five years, David, I never left the factory. And then when I built a factory in Idaho, I never left for, I don't know, six months, seven months in the factory. So these are commitments. You've got to make those kind of commitments. Unless you make those kind of commitments, things will go, especially in a high-growth environment, will go down. It will go south really fast.

20:28Today, we grow 25 % to 30%. We add a billion in sales almost every year. I have to build infrastructure. we make 100 % every single product that we sell. And we have one single line. Anything that I would not, or we would not feed to our own children, we would not make it. So if it's, if we can't - You just bought beer. You just bought Ankerstein beer. That's not part of Chobani, no, no. Well played. So, why, I, You're just taking this from all sides. There's non-alcohol beer things we can do. All right. This is breaking news, the category announcement. So the food is a little different. Food is especially fresh food, the type of food that we make.

21:13We said everyone deserves good food, right? And we know what the challenges are. You have a lot of options and small formats and specialty stores and that stuff. But how do you make products that can go all across the country, right? And that is one of the hardest things to crack. It's almost impossible. Every small startup getting to a certain level will be part of large, big CPG. And you know what they do with it. You never see to the next level. So we might be one of the few companies, if not the only one, in that space or grocery space that not only stayed independent, grew and took the number one position.

21:52And when you are in that dimension, like you kept what makes you so special, but you expand and you grow, you maintain your independency, then it gets some kind of good position, like what we are today. 18 years, coming back to your question, 15 years of it, I am either in the factory or in the field. I mean, that's what it takes, that kind of commitment. It's important to note both of these companies, Giovanni and Patagonia, real legacies of independent ownership, which I posit gives both of your organizations the freedom to really stay true to your values in a way that would be much more challenging with a bigger, more diverse set of stakeholders.

22:37I'm happy to be with Ryan here and this stage with him and be mentioned with Patagonia. There are only few corporate examples. You wrote the book. Congratulations, by the way, the book that you just wrote about Patagonia. There is only few examples of this story. There is not such thing. And Patagonia has passed every single test that there is in a corporate. and still maintains absolutely. And there are a lot of teachings for us. We haven't gone that far. We follow the other path, which is every single employee of Chobani is a shareholder of Chobani. Isn't that interesting? Including every single line workers, factory workers, refugees, immigrants, everybody.

23:22These are the stuff that is going to make a difference tomorrow. Ryan, Hamdi was just talking about ownership and the fact that he has included employees in ownership. Patagonia made the absolute opposite choice. Three years ago, Yvon Chouinard and his family gave away the company. We don't have time to get into the details, but you were a part of that process. And I'm curious, as a relatively new CEO at the time, when he came to you and he said, I want you to help me give away the equity of this company and create a new situation by which all the profits that aren't reinvested in the company go out the door to charity, what was your response and how did that change how you think about your role as a leader you said i was a relatively new ceo i think i it was the first time or second time i had seen yvonne and his family um after moving over from europe in this role so i couldn't have been newer it was in the depths of covid yeah they were not as specific as you just said what they said is we want to sort out the future ownership of this company and take it away yeah and a week after them saying that, I went over to meet with the Schnards again, and they said, how's that going?

24:31And I said, God, you got to be kidding me. I've ignored you the whole week intentionally. I thought you, I can't believe you're asking me to do this right now in the middle of COVID. So we started putting a process together. And what we started to understand was, what are all the things you want to be true? What are the things you wouldn't accept? And we landed really on two central elements. One was ensure that Patagonia will continue to exist in the world, imbued with the values that we have created within it. And the other is cash flow the environment in much bigger ways right now. So that was the nature of the reorganization.

25:01Hamdi, very briefly, you referenced earlier your deep commitment to refugees, your own experience as an immigrant. When you see what's happening on the streets of this country right now, how does that make you feel about this country that has given you so much, to which you have given so much. And I invite everyone to, you know, focus on that line. This country is a very special country. It has given us, all of us, so much. And I'm lucky. I'm one of the lucky. And I find it's my responsibility to be part of whatever the future looks like and do my part right now. But I come back to this one particular picture.