Aug 19, 2019 · 58m · how-i-built-this
Stonyfield Yogurt: Gary Hirshberg (2017)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, Gary Hirshberg recounts how he and Samuel Kaymen transformed Stonyfield Farm from an impoverished rural educational project into a leading organic yogurt empire through extraordinary persistence and unconventional financing.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 21.7% of the talking time here. How this is scored →
Guy as informed peer 1.1 Guest teaching 1.5 Guest disagreement 0.3 Guy pushing back 0.2
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 42:35 Gary rejects the Vermont dairy predatory buyout
Gary forcefully describes storming out of predatory contract negotiations after discovering the manufacturer intended to seize the company and demote the founders.
Hardest push from Guy ▶ 31:26 Guy questions why Gary persisted despite his wife's lack of faithGuy directly challenges Gary on why he refused to abandon the venture when his wife had zero confidence in it and actively tried to stop loans.
Biggest teaching moment ▶ 7:23 Gary corrects Guy on Hampshire College's business utilityWhen Guy suggests Hampshire College was meant to purge business ambition, Gary corrects him by showing how self-directed contractual learning is the ideal preparation for entrepreneurship.
Guy holds their own ▶ 50:20 Guy highlights Greek yogurt market shiftGuy demonstrates command of the dairy market timeline by challenging Gary on how the sudden industry-wide explosion of Greek yogurt impacted Stonyfield.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Live Show Announcements and Episode Preview | 1 | 1 | 0 | 0 | Guy introduces the episode and sets up Gary Hirshberg's background, asking about his father's large shoe manufacturing business in New Hampshire. | |
| Family Bankruptcy and Disdain for Corporate Business | 1 | 2 | 1 | 0 | Gary explains how the sudden collapse of his family's shoe business and subsequent domestic turmoil turned him completely against the concept of business. | |
| Independent Studies at Hampshire College | 1 | 3 | 1 | 0 | Guy assumes Hampshire College was meant to knock business ambition out of Gary, but Gary reframes it as the ultimate entrepreneurial training ground. | |
| Reagan Budget Cuts, Lily Bell, and the Sisters of Mercy | 1 | 1 | 0 | 0 | Gary describes how federal budget cuts forced the Rural Education Center to explore commercial yogurt production funded by a grant from Catholic nuns. | |
| The Barn Operation and First Supermarket Sales | 1 | 1 | 0 | 0 | Gary recounts the crude initial setup in a drafty barn with seven cows, selling yogurt to local stores at arbitrary price points matching commercial brands. | |
| Day One Deficits and Emergency Fundraising | 1 | 2 | 0 | 0 | Gary arrives to find a $75,000 deficit and immediately raises $125,000 in emergency loans by convincing environmental patrons that proving commercial viability is key. | |
| Legal Spinoff and Meeting Market Basket Demand | 1 | 2 | 0 | 0 | Gary explains having to formally spin off the business from the non-profit to comply with IRS rules, followed by explosive demand from Market Basket. | |
| Mid-Episode Break and Sponsor Message | 1 | 1 | 0 | 0 | Gary details using his Ultimate Frisbee teammates to generate artificial consumer demand at Bread and Circus in Cambridge to secure regional distribution. | |
| Courting Meg and Securing Family Capital | 1 | 1 | 0 | 0 | Gary describes meeting his wife Meg and securing crucial seed capital from his mother-in-law Doris to modernize their barn facility. | |
| The 3 AM Milking Disaster and Abandoning Organic | 1 | 2 | 1 | 1 | Guy presses Gary on whether abandoning organic milk compromised his core values when they were forced to sell the cows following a grueling 3 AM milking emergency. | |
| Thursday Payroll Panic and Desperation Loans | 1 | 2 | 1 | 2 | Guy probes why Gary continued when even his wife thought the venture was insane, followed by a disastrous dairy supplier foreclosure that halted production. | |
| Reopening the Barn and Compounding Debt | 1 | 1 | 0 | 0 | Gary describes reviving the abandoned barn operation around the clock and accumulating millions of dollars in debt across nearly 300 individual investors. | |
| Negotiating with Fruit Suppliers in Cleveland | 1 | 1 | 0 | 0 | Gary explains flying to Cleveland on a borrowed credit card to pitch insolvent fruit suppliers on extending further credit based on future growth. | |
| The Vermont Takeover Ambush and Blizzard Retreat | 2 | 2 | 1 | 0 | Guy notes the unusual persistence of crisis at this stage, leading into Gary's dramatic story of an ambush hostile takeover attempt by a Vermont dairy. | |
| Designing Londonderry and Stone Soup Financing | 1 | 2 | 0 | 0 | Gary recounts sketching a new plant design in a snowstorm and orchestrating a high-stakes financing chain between the SBA, Bank of New England, and shareholders. | |
| Turning Profitable and Returning to Organic Roots | 1 | 1 | 0 | 0 | Gary details reaching profitability in 1992, transitioning fully back to organic sourcing, and structuring an unusual acquisition deal with Danone. | |
| Greek Yogurt Disruption and Reflections on Luck | 2 | 1 | 0 | 0 | Guy notes the industry disruption of Greek yogurt, and Gary reflects on luck, skill, and honoring the trust of his late mother-in-law. | |
| How You Built That: SIA Scotch and Corinne Luna Ostaseski | 1 | 1 | 0 | 0 | In the How You Built That segment, Corinne Luna Ostaseski shares her journey of receiving 80 rejections in Scotland before launching SIA Scotch. |
Statements from this episode (27)
Self-Directed Colleges Are the Best Entrepreneurial Training
“It turns out that it was probably the best training for an entrepreneur that there is, because this is a school... That has no credits, no requirements, no grades. You only pass, matriculate through by contracting and making progress with, ah, individual profe…”
Stonyfield Launched With a $25,000 Grant From Catholic Nuns
“So Samuel was able to get some Catholic nuns to provide a 25,000 dollar grant.”
Stonyfield Received Five Months of Cup Shipments Without Paying
“And after paying for his first shipment of cups, he managed to somehow get, continue to get shipments for five months without paying for any more.”
Stonyfield Matched Dannon's $1.49 Quart Price at Launch
“So we started selling at a dollar 49 a quart, which is the same price Dannon was selling for.”
Stonyfield Was $75,000 in Debt on Hirshberg's First Day
“And by 11 a.m. That morning, my first day, I calculated that we were 75,000 dollars in the red.”
The Organic Revolution Requires Proving Profitability
“But if we're gonna be successful with this revolution, I said to the funders who had gotten us there, then we're gonna have to prove that you can actually make money doing it.”
Stonyfield Sales Reached $250,000 in 1984
“By then, in 1984, our sales were up to around 250,000 a year.”
Stonyfield Became Bread & Circus's Top Yogurt Within a Month
“About a month later, we were her number one selling yogurt. She took us in the other two Bread and Circuses, and off we went.”
Hirshberg: 'The Last 18 Inches' Drive Consumer Food Demand
“I, you know, I always say we can ship the yogurt 3000 miles, it's the last 18 inches that makes all the difference. You get it in people's mouths, and then they're gonna ask for it.”
Stonyfield Raised $500,000 After Mother-In-Law's $100,000 Loan
“My mother-in-law, excuse me. And I started raising, and I got to about two 75, 300. This is sort of a month or so later, she said, well, I think we can increase, and so she increased to a hundred, and eventually I got across the finish line, got the 500.”
Stonyfield Briefly Abandoned Organic Dairy Sourcing To Survive
“At this moment in Stonyfield's life, we briefly departed from organic.”
VCs Want Friends-and-Family Capital So Founders Cannot Walk Away
“Venture capitalists the reason they want what they call F and F money first, friends and family money, is because they know that you might, as an entrepreneur, if things get rough, you might just get up and walk away if it's, you know, some Harvard MBA, you kn…”
Stonyfield Frequently Had Zero Cash Before Thursday Payrolls
“In this farmhouse, I always had payroll on Thursday mornings, and by this point, it was a half a million dollar business, and I never had cash in the bank that night before payroll. Never.”
Stonyfield Needed $100K in Hours to Recover Co-Packer Inventory
“Worse than that, I had to come up with a 100,000 dollars to take my in, get my inventory out of the building. Because again, we owed them co-packing fees. Now the bank's the owner. And so I had to go, call my shareholders and find a 100,000 dollars within hour…”
Stonyfield's Debt Reached $2.7 Million by Christmas 1989
“Well, by the, by Christmas of 87, you know, running this factory for two months, I can tell you we were already 600,000 dollars in debt. By Christmas of 88, we were 1.9 million dollars in debt. By Christmas of the next year we were 2.7 million dollars in debt.”
Stonyfield Was Funded by 297 Angel Investors After VC Rejections
“What you have to know at the punchline of this story is that I wound up by the end of this period with 297 individual investors. There was no way to find common ground with an institutional investor, right? A venture capitalist. Believe me, I knocked on every …”
Desperation Eliminates Shame and Founders Must Ask for Help
“If you don't ask, you don't get. And desperation, you know, breeds this thing where you just have no shame anymore. You have to ask.”
Stonyfield Bought $300M of Fruit From an Early Creditor Over 30 Years
“Those guys have sold us in the 30 years since they've sold us probably 250 or three hundred million dollars worth of fruit.”
Stonyfield Borrowed Over $1 Million From Hirshberg's Mother-In-Law
“And, of course, I've got now, I now have over a million dollars of her mother's money. Okay? Like money she could never afford to lose. Everything they had.”
Stonyfield Raised $2.5M and Opened a New Factory
“All told, including paying off the debts, two and a half million dollars, and opened our new factory nine months later in Londonderry, where we are today.”
Stonyfield Co-Founders Were Diluted Down to 10% Each
“By then, Samuel and I were down to 10% each in the company.”
Stonyfield Turned Profitable in 1992 After Heavy Factory Losses
“The business is now doing 3.4 million dollars in sales, but we lost 1.4 million that year.
The next year, we did 6.5 million in sales, and we lost 900,000.
The following year, the second full year in the new factory, we did 10.1 million, and we made 125,000 do…”
Stonyfield Reached $100M Revenue Before Negotiating With Danone
“98 we're at seventy-eight million in sales.
99, we're at a hundred million in sales and that's when I began negotiating with Danone to have them come in.”
Danone Bought 80% of Stonyfield But Left Hirshberg in Control
“The original head of M&A who came to see me said Gary, do you mean to tell me we're going to buy 80% of your company and you'll still be in control? And I said, yes. And the banker and the lawyers and everyone laughed. And, you know, two years later, that's th…”
Greek Yogurt Makes Up 50% of the Total Yogurt Market
“Well, Greek is now 50% of the yogurt category.”
Stonyfield Holds Roughly 80% of the US Organic Yogurt Market
“And, you know, while we're not the leader in Greek, we are the leader in organic. I mean, I think we're something like 80% of organic yogurt in the U.S., so.”
Danone Sold Stonyfield to Lactalis for $875 Million in 2017
“By the way, back in 2017, the same year we first spoke to him, Danone sold Stonyfield to another company called Lactalis, one of the biggest dairy companies in the world. And the amount Lactalis paid for Stonyfield? Eight hundred and seventy five million dolla…”