The Exchanges

Q And what about cows? How many cows did you have at that point?

A Well, at that point, we were up to 19, but Um, one night, in this same era, Samuel was out milking. He had milked the first of the 19 cows, and the power went out. Samuel came in and said, uh, you know, I need help, uh, because he has these electric milkers. So, Louise and I went out and started milking. Well, you know, it was freezing. The cows hated it. If you haven't hand-milked, uh, let me tell you, they, they didn't. It was, it was a nightmare. The cows were kicking over the buckets. We had these kerosene lanterns in this fire trap barn. You know, every once in a while, the cow would kick one over, and the milk would spill on the lanterns, and we, we finished milking the last cow at about three a.m. in time to start milking the first one, and that was the night when we realized, you know what, we gotta sell the cows.

AI assessment note: “Well, at that point, we were up to 19”

Q So this, like, major change in your life happens at the age of 14, which, of course, is going to have an impact and influence on you. Did you Did you start to think about, about business, about being a businessman that early? I mean, you saw your parents, they were both entrepreneurial.

A No, I, I started to think about running as far as I possibly could away from it. You know, I, obviously the bankruptcy didn't happen overnight. It was a result of a steady decline, and my, my grandfather, my father, and my uncle were all in the business, and I used to sit or work there, and I would listen to them screaming at each other. You know, they were arguing, you know, uh, um, passionately, uh, about what to do about this downturn. And so to me, business was this thing where people got, people yelled at each other, people hung up phones on each other, people were stressed, uh, employees lost their jobs, and it, and on top of that, serious, uh, pollution. So it led to my deciding that business was the worst thing on the planet, the last thing I wanted to do, and led me to really pursue a career in the sciences, environmental sciences.

AI assessment note: “No, I, I started to think about running as far as I possibly could”

Q Okay, so you go out and you start raising money, and, and did you and, and, and Samuel sit down and say, okay, how are we gonna, uh, structure this business, like, I, I, we are co-owners, this is a, uh, joint venture, like, how did you, did you ever do that?

A Well, we did, because, um, one of the things I did was I hired a lawyer, because I knew we didn't know what we were doing, and the first thing this lawyer said to me was, he said, Gary, um, what percentage of the rural education center's revenue is coming from the yogurt? Well, at that point, it was getting close to 75%, and he said, well, guess what? You've got to spin it off, because under IRS rules, that What makes you a business, not a nonprofit? So Samuel and I realized we're gonna have to buy this from the rural education center. So we agreed, uh, to a split in the company, essentially fifty-fifty, and then I, uh, went out to our lenders of the 125 K, and I said, uh, look, um, will you take stock in this company? And we did our first private placement, you know, threw a dart at the wall, figured out the value of the business.

AI assessment note: “So we agreed, uh, to a split in the company, essentially fifty-fifty”

Q So the nineties are, this is just the growth period. You guys are, are, are on this trajectory. And when do you know that you are now sustainable and that things are, are looking up?

A We hit forty four million dollars in around 95. Now we've got stability and cash flow. And this gave us the courage to go back to our roots and Initially with one farmer, and eventually now with 1750 farmers, begin buying organic milk again. And of course organic has evolved at this point. Whole Foods has become a reality. I mean, the organic sector is real. Yeah. So, in 95 we converted back our plain whole milk quarts to organic. Uh, 96 we converted our small cups. 97 we launched drinks. 98 we're at seventy-eight million in sales. 99. We're at a hundred million in sales. Uh, and that's when I, um, began negotiating with Danone, uh, to have them come in.

AI assessment note: “We hit forty four million dollars in around 95. Now we've got stability and cash”

Q So, I mean, how did the yogurt system start? I mean, it was being, being, being sort of put into jars, and how did you, how did you get it to customers? How did you sell it? How did you put a shingle out and say, yogurt for sale?

A Well, we started with one cow. Sammy used the money to buy six more cows. So now he's milking seven. He finances this little tiny factory in a tiny little room that you could only really describe as a closet in a 1792 barn with a wood, wood fired boiler, and the way it worked was he put in a 50 gallon stainless steel tank. We bought plastic cups, and Samuel was a very Charming and persuasive guy. 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. So he started producing April ninth, 1983 and took his first six packs of yogurt and drove down to the local supermarket to Harwood's and said, would you guys sell this stuff? Well, they didn't know what the heck this was. And Sam, they said, what price should we sell it at? And Sam said, I don't know, whatever, whatever price you think. I mean, we were not business people. So we started selling at a dollar 49 a quart, which is the same price Dannon was selling for. By the way, he was only making quarts, six packs of plain cream on top yogurt. It was like Ambrosia guy. It was the most incredibly perfect product. Still the best thing we make.

AI assessment note: “took his first six packs of yogurt and drove down to the local supermarket”

Q And, and this is right around the time you meet Meg, who would become your wife, right?

A Yeah. So a month after that fateful meeting with Bread and Circus, we had our summer NOFA conference, Northeast Organic Farming Association conference, and I, I, as it turned out, I was the keynote speaker. And so I started talking about this enterprise, this business that was now a year old, and you know, all of the dreams of organic farmers, we were sort of like, I didn't talk about our financial problems, I just showed the, that this is possible, that if you build it, they will come. And, ah, right after I finished my speech, this very adorable, ah, organic farmer from New Jersey, Who was running her own nonprofit farm down there, uh, waited patiently to ask me a question. Well, that turned out to be what is now my thirty-one-year wife, Meg. And, uh, we began courting, and, uh, Thanksgiving that year, in 84, Meg introduced me to her family, and, uh, her mom had been the deputy commissioner of agriculture for New York State. So she had a kind of an ag orientation, um, At one point she kind of whispered to me that she'd be okay with, uh, if I needed some money, with lending me some. Well, of course I needed money. So she loaned us, uh, 50,000 dollars. And now we're heading into 1985. We've now launched small cups of flavored yogurt. Um, I now needed to raise about 500,000. Cause we needed to buy more cups, more fruit, you know, people expected us to pay. So, Doris had loaned u…

AI assessment note: “Well, that turned out to be what is now my thirty-one-year wife, Meg.”

Q So this, like, major change in your life happens at the age of 14, which of course is going to have an impact and influence on you. Did you, did you start to think about, about business, about being a businessman that early? I mean, you saw your parents, they were both entrepreneurial.

A No, I, I started to think about running as far as I possibly could away from it. You know, I, obviously the bankruptcy didn't happen overnight. It was a result of a steady decline, and my, my grandfather, my father, and my uncle were all in the business, and I used to sit or work there, and I would listen to them screaming at each other. You know, they were arguing, you know, uh, um, passionately, uh, about what to do about this downturn. And so, to me, business was this thing where people got, people yelled at each other, people hung up phones on each other, people were stressed, ah, employees lost their jobs, and it, and on top of that, serious, ah, pollution. So, it led to my deciding that business was the worst thing on the planet, the last thing I, I wanted to do, and led me to really pursue a career in the sciences, environmental sciences.

AI assessment note: “No, I, I started to think about running as far as I possibly could”

Q These were the, the funders for the farm that you had run back in Massachusetts?

A Right. Well, Samuel had a handful of, ah, folks who had been his funders. Like I said, he, he raised a 125,000 a year, so they were, they were probably 20 or 30 wealthy individuals, and then I had raised a million dollars a year, so I had, you know, high net worth individuals out there, and I, look, what I told them was very simple. I said, you know, the first 10 years of our work, It was all about proving that you can grow food organically. 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. And we're gonna have to build a model enterprise that will show that you can avoid the use of pesticides, avoid the use of hormones with cows, support family farmers, not depend on fossil fuels, Et cetera, et cetera. All the things that we were doing in the nonprofit context. I said, you know, this is, I, I'd like to ask you to join us in the next phase, which is helping us to, uh, build a successful business. And, and instead of asking for a grant, I'm asking you for a loan. And I wound up borrowing a 125,000 dollars.

AI assessment note: “Right. Well, Samuel had a handful of, ah, folks who had been his funders.”

Q And what about cows? How many cows did you have at that point?

A Well, at that point, we were up to 19, but Um, one night, in this same era, Samuel was out milking. He had milked the first of the 19 cows, and the power went out. Samuel came in and said, uh, you know, I need help, uh, because he has these electric milkers. So, Louise and I went out and started milking. Well, you know, it was freezing. The cows hated it. If you haven't hand-milked, uh, let me tell you, they, they didn't. It was, it was a nightmare. The cows were kicking over the buckets. We had these kerosene lanterns in this fire trap barn. You know, every once in a while, the cow would kick one over, and the milk would spill on the lanterns, and we, we finished milking the last cow at about three a.m. in time to start milking the first one, and that was the night when we realized, you know what, we gotta sell the cows.

AI assessment note: “Well, at that point, we were up to 19”

Q Gary, you know, it's always a trade off. How much do you put on the label and how much do you leave off? You know, the, is there value? Do you think there'd be value in these guys putting just a line there? So it's like, um, made by Michelin trained chefs or something like that at the top.

A Yes. But even better would be if, uh, I see you worked for Danny Meyer, maybe, uh, my old friend, Danny, maybe a quote from Danny. I mean, maybe Tom Colicchio, maybe a peer chef out there with a quote that sort of implies, says it all right there. You know, a must have for every meal, but I will say less about the package and more about the website, because this is, you're not really as much of a retail play as you are a direct, right, to consumer, and so I think having your site dimensionalized with, like I say, chefs talking, hikers talking, active people talking, and again, I think, gosh, you know, for me, the thought that There's a lot of commodity products out there, but you're not a commodity. You're chefs who want to have something great for yourself. Well, that's what I want to have.

AI assessment note: “Yes. But even better would be if, uh, I see you worked for Danny”

Q I mean, did your lifestyle change overnight? Because I have to imagine, as a kid, you were probably a pretty prosperous family, affluent family.

A Yeah, there, we were certainly comfortable. I was a ski racer. I, you know, wasn't ever worrying certainly about the next meal or, and, and, and, you know, we traveled up north on weekends for skiing. We had a home on a lake, but yeah, it, you know, the world, I mean, I, I think everybody at 14, any conscious being, uh, starts to, uh, that your life undergoes changes, but in my case, they were kind of expedited. I, um, My father got, uh, began drinking, um, and so I had to, uh, sort of confront all of that, and, you know, watched, uh, sort of all the rocks just suddenly turn to mush. You know, my mom became a single mom with five kids. I was the oldest.

AI assessment note: “we were certainly comfortable... watched, uh, sort of all the rocks just suddenly turn to mush.”

Q If you want to get business knocked out of you, that's where you would have gone, right?

A Yeah, but stick with it, because 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 individual professors who take you on as their essentially apprentice. And, and in many cases, the funding of, of work. I mean, I wound up diving deep into ecology and environmental sciences. And, um, turns out I was, uh, though hating business still and thinking, You know, again, now I thought getting educated, I realized, my God, we're warming the planet, we're toxifying, we're depleting water, we're disturbing, you know, biodiversity everywhere. It's all because of industry. So I was sort of radicalizing in my environmental beliefs, but, but actually getting business skills all the while.

AI assessment note: “turns out that it was probably the best training for an entrepreneur that there is”

Q And this is just in, in New Hampshire or all over New England?

A Well, by 84, we were starting to push the boundaries. We're selling to about 20 stores, and eventually we started selling to a, an independent grocer who had seven stores. Uh, called Alexander's Supermarket. It's now part of Hannaford in the Northeast. And, um, This will give you the real flavor for this, uh, what was going on here. So one Sunday night, we were having dinner at the Caymans after milking, and, uh, the phone rings, and, uh, Jack Demoulis, the nephew of the owner of the Demoulis market basket chain, calls and says, Samuel, uh, why are you selling to my competitor, this little seven-store chain of Alexander's, and not to me? Now, he had 34 stores at the time, and Samuel said, well, Uh, to be honest, Mr. Demoulis, we don't have enough cows. He said, well, get some more goddamn cows, and he slammed the phone down. And we took that as very good business advice, so we went out and grew our herd even further.

AI assessment note: “by 84, we were starting to push the boundaries. We're selling to about 20 stores”

Q But what about your shareholders? I mean, how did you end up dealing with them?

A I stayed in constant touch with every single shareholder. I was in constant contact with my creditors. I couldn't pay fruit suppliers. I couldn't pay, you know, our fruit supplier had lost 75,000 dollars when that dairy went chapter seven. And somehow they had not been paying attention and they continued to ship us fruit back up at the farm. So they, they figured it out, you know, three months later that they were now into us for 125,000. And I, I said, look, I can't pay it, but can I come out and talk to you? And I borrowed a credit card from a friend and flew out, because we certainly had no credit, flew out to Cleveland and met with the fruit people, and I said, look, here's the bad news. We owe you a 125,000, but here's the good news. They said, at our current growth rate, if we can meet orders, we will be a 250,000 dollar a year customer for you. Within six months. So here's what I'm prepared to do. I would like to see if you would advance us another 125,000 dollars of fruit. I will pay you back starting in six months at your interest rate, whatever you want to charge, which is a joke because nobody, no commercial bank would even lend to us. I said, I will pledge my stock as collateral, which was a joke because it was a liability, not an asset. And finally, I said, and I will pledge that I will buy exclusively from you, not from anyone else. Well, that was a joke because n…

AI assessment note: “I stayed in constant touch with every single shareholder. I was in constant contact with my creditors.”