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Starting an organic food company looked a lot different in the early 1980s. Here are some of the lessons I learned along the way.
April 16, 2019
This April marked the 36th anniversary for Stonyfield Farm, which is now the world’s largest organic yogurt company. Like most of the pioneering brands in the natural products world, Stonyfield began in a far different era than today’s robust marketplace. There really was no organic or natural market back in the early ‘80s, nor were there many willing investors, consumers, suppliers or peers. Companies like Stonyfield and their entrepreneurial founders had to navigate countless challenges and learn many lessons just to survive, let alone grow sustainable enterprises.
As Stonyfield’s co-founder, longtime CE-Yo and chief organic optimist, I am deeply empathetic with the challenges entrepreneurs face in growing their businesses, and for the last 19 years I’ve led annual entrepreneurship institutes to help earlier stage entrepreneurs gain helpful insights from veterans like me. On June 6-7, 2019, the Hirshberg Entrepreneurship Institute is returning to Boulder, Colorado, where in partnership with New Hope Network, Naturally Boulder and Giannuzzi Group, LLP, panelists and participants will learn from real world cash flow, finance, marketing, organizational and life balance cases and challenges.
In advance of the event, I offer my top eight lessons learned throughout my Stonyfield journey.
When it comes to building your business, you must have some kind of unique selling proposition. Especially in today’s marketplace, product or service superiority is an absolutely prerequisite to success. Any existing competitors will have existing customers, a following and probably more capital than you.
How I learned it: The creator of Stonyfield’s yogurts and my business partner, Samuel Kaymen, was always a perfectionist when it came to our products. Many of our employees found his dedication to flawless products intimidating at times. But looking back at those fragile early years, I have no doubt that Samuel’s unwavering dedication to the quality of our products was the single most essential factor in helping us to survive and grow. I came to this realization in our first year when an Iranian-American woman tried our yogurt and recommended we name it, “Taste of Iran,” as she thought it tasted just like it did back home in Iran—a country where yogurt was a dietary staple. I knew then and ever since that Samuel’s recipe was truly special and deserving of a shot in the marketplace.
To be successful, entrepreneurs simply cannot afford to be shy or timid about getting their needs met. You absolutely must take risks and be willing to put yourself on the line for your business and, therefore, you must become comfortable asking for things—whether asking for a bank loan, negotiating with your landlord on rent or your suppliers for cost breaks, or asking your investors for more money.
How I learned it: During our early days, we were constantly asking for help to keep our business alive. In 1984, we had been trying to get our yogurt into a legendary Cambridge, Mass., natural foods store called Bread & Circus (now Whole Foods Market). We made many visits and pitches to the buyer, but time after time she rejected our pitch, explaining that she already had organic yogurts from other New England hippie farms.
At my 30th birthday party, after a year of repeated rejections, I told a group of family and friends that the best birthday present they could give me would be to ask Bread & Circus to carry our yogurts. Three days later I got a call asking me to make a delivery because requests for our yogurts had gone through the roof. We drove down that first shipment that afternoon and we have been the top selling yogurt there for the 34 years since.
The punchline is simply this: never leave any stones unturned in asking for what you want or need.
Of course, the corollary of, “if you don’t ask, you don’t get,” is that you must believe in yourself, even if people (including family and friends who love you) think you’re crazy. There is zero chance of others believing in you if you don’t believe in yourself.
How I learned it: On the Thursday night preceding the infamous October “Black Monday” stock market crash of 1986, we found out the commercial banker for the dairy producing our yogurts was likely to pull its loan and thus shut down the factory the next day. We spent the next six months struggling to stay alive. We negotiated an arrangement with a much larger and well-established dairy, only to realize they were trying to steal our company. We didn’t submit to their extortion.
We were fairly sure that we’d exhausted our options but decided to go for a “hail mary” instead. I summoned up all the confidence I could muster and went to the U.S. SBA office in our state capital. We convinced them to provide a loan guarantee for us to borrow the needed funds to build a factory, despite not having any assets other than our Stonyfield stock, which at that point was a liability. We successfully built our factory 11 months later and became profitable a year after that. None of this would have been possible without believing in ourselves.
One lesson I learned quickly as an entrepreneur is that you can be unprofitable for a long time, but you won’t be able to last a day if you don’t have cash. That is why it is so important to create and manage a cash-flow forma that you constantly update.
How I learned it: In our darkest days, when we were losing ridiculous amounts of money, I created a daily cash flow so I could understand what was financially coming in and out each day. Every night before I went to sleep, I would update that day’s actual receipts and expenditures and reforecast the next day so I knew exactly what had to come in and what could go out that next day. I hate to admit it, but I operated this way for six months! This was absolutely necessary to our survival.
I also learned during this period that we entrepreneurs are pathological optimists and thus most of us, including yours truly, initially tend to minimize expenses and maximize revenues when putting together pro formas. I learned to cut whatever cash income I was expecting by 30-50 percent and conversely to increase my projected expenses and outflows by 30-50 percent. In this way, I built a kind of insurance policy to balance my optimism, and I cannot tell you how many times that saved me from making potentially fatal commitments.
This advice seems obvious, but many entrepreneurs fail to communicate effectively with vendors, customers, shareholders, employees and other stakeholders. I have learned that it always pays to not hold back from letting people know what is going on. No matter how tough the news, those who have a stake in your success always appreciate getting the full story.
How I learned it: There was a period in our business when it took us over three years to pay off our $250,000 debt to our fruit supplier. I made it a point to talk with the supplier every single week about our business and how we were working to pay back our debt. I was always upfront and honest and, as a result, we managed to keep the company as a long-term supplier to Stonyfield and they kept us in business.
We also resisted the urge to sugarcoat information when communicating with our shareholders. Even during the nine years before we became profitable, I sent out monthly updates about what was going on in the business, and once a year I invited them to let me know if they wanted out. Thankfully, for them and for us, most of our 297 shareholders stuck with us and did not panic. They may not have been happy about the difficult years, but they were grateful that I was transparent. In turn, this saved us a lot of headaches as we could concentrate on the business instead of worrying about them.
Many of us entrepreneurs assume that we are immune to stress and can handle whatever is thrown our way. Obviously, this is not the case—stress, not properly eating, sleeping or exercising takes a real toll. Taking care of yourself before all else seems counterproductive, but it enables you to take care of your business.
How I learned it: In the early days of Stonyfield, our days were long—we were milking cows and making yogurt both morning and night, seven days per week. We were exhausted and broke. Fortunately, our local tennis club offered free court time every night at 10 p.m. I seized the chance and played three to four times per week. Even though I was exhausted, I knew I needed exercise and the mental break that came with it.
Many nights my then-fiancée Meg would be unhappy that I went off to play instead of staying with her. But I knew, and eventually she agreed, that I would have been a miserable partner for her without having this outlet. I also learned that I was better able to solve nagging business problems on the tennis court or when taking a hike. Just that little bit of distance and distraction paid huge dividends.
It is imperative to put yourself first and be selfish in your business. A lot of people feel that it’s weird to be selfish and demand things. But being selfish helps the survival and success of your business long term. You are useless if you are not healthy. You need to eat well and break away from time to time.
How I learned it: My marriage and my business survived because I prioritized taking vacations. I came back better and more ready to re-engage every time. I coached my kids’ sports teams, which was necessary to be a good father, necessary for my mental health and helpful for me to shut off business when I needed to. Building a business is a marathon and you need to be emotionally, mentally, spiritually and physically healthy to succeed.
If you follow all seven bits of counsel above, you still won't necessarily be successful. I believe that having a strong social or environmental mission can provide an added boost in helping to ensure success.
How I learned it: At Stonyfield, we support 1,800 organic family farmers operating chemical-free farms. In our production processes, we prevent millions of toxins from being used. We have given millions of dollars to support environmental and climate change initiatives. This overarching commitment to mission is what has always gotten me out of bed each morning, keeps retention high in our company, and keeps my family, employees and consumers excited about Stonyfield.
This in turn helps to keep our customers interested, too. If you look at the history of consumer products, one can see that capitalism has always been about taking from one source to benefit another. At Stonyfield, we have proven a commerce model whereby everyone wins. This all-around winning situation is in large part the result of unwavering dedication to our mission. I sit on several company boards. Every one of them is driven by a mission that is about more than making money. When you stand behind a mission, people respond emotionally which leads to loyalty—the holy grail for any brand.
These issues and others will be explored at the upcoming Hirshberg Entrepreneurship Institute on June 6-7. Learn more and register here.
Chairman, Stonyfield Farm & Just Label It
Gary Hirshberg is the husband of writer Meg Hirshberg and the father of three yogurt eaters. He is chairman of Stonyfield Farm, the world’s leading organic yogurt producer, and the author of Stirring It Up: How to Make Money and Save the World (Hyperion, 2008). Gary frequently speaks on topics including sustainability, organic agriculture and the profitability of green business.
Gary has overseen Stonyfield’s growth, from its 1983 infancy as a seven-cow organic farming school to its current $360 million in annual sales. Stonyfield has enjoyed a compounded annual growth rate of over 23 percent over 21 years, by consistently producing superior products and using innovative marketing that blends the company’s social, environmental, and financial missions. Stonyfield partnered with Danone in 2001, and Gary is now managing director of Stonyfield Europe, with organic brands in Ireland, and France.
Gary serves on several corporate and non-profit boards including Applegate Farms, Honest Tea, Peak Organic Brewing, Late July, The Full Yield, SweetGreen, RAMp Sports, Glenisk, the Danone Communities Fund and the Danone Livelihoods Fund. He is the chairman, CEO and co-founder of Chelsea’s Table Cafés, a natural and organic fast casual restaurant firm. In 2011, President Obama appointed Gary to serve on the Advisory Committee for Trade Policy and Negotiations. He is a co-chair of AGree, an agricultural policy initiative formed by the Ford, Gates, Kellogg, Rockefeller, Walton and other leading foundations.
He is chairman and a founding partner of Just Label It, We Have the Right to Know, the national campaign to label genetically engineered foods and is co-author of Label It Now – What You Need to Know About Genetically Engineered Foods (New Word City, 2012). All proceeds from the e-book benefit Just Label It.
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