We joke about it now, but it's true: On several occasions, he tiptoed into another room on a Wednesday night, before Thursday payroll, to call my mother, Doris (an early and major investor), to beg for just one more loan, one more investment -- while I, wise to his midnight mission, dialed her on another line and implored her to say no. In my view, this was money she could ill afford to lose. I was also haunted by the specter of possible changes, profound and subtle, that might occur in my relationship with my mother and my three brothers should Stonyfield fail: How would my mother's financial loss affect her retirement? Would my brothers blame me for jeopardizing her future? Would they blame Gary?
It's good money after bad, I'd say to my mother. The more yogurt we make, the more money we lose, I'd add, sensibly. "Meggie," she would reply, "I'm a big girl, and it's gonna work." They're both insane, I'd think. The two people I love the most are nuts.
I shared Gary's vision, but not his method or his madness. I admired -- and still do -- his passion and determination. I wanted to believe that we could expand this business and make a difference in the world, but over time my confidence faded. The level of risk that Gary and I (along with our partners) had assumed was way beyond my comfort level. We had come perilously close to losing the business dozens of times. Frankly, there were many times I wanted to lose the business -- anything to be put out of our misery.
Gary and I were bound by love and, eventually, three children. We worked all the time, had few friends locally, and were jealous of the saner lives that our old college friends seemed to enjoy. At times it seemed Gary was working as hard as he possibly could in order to lose as much money as he possibly could. We had no savings and lived paycheck to paycheck, but our personal overhead was low; in our remote neck of the woods, there wasn't much to do or buy. Each night, I'd hate to ask Gary about his day, which was always dreadful, and yet my life and those of our children depended on the success of his unlikely dream.
I was no stranger to hard work. At my old job in New Jersey, I had regularly shoveled manure. I didn't expect the white picket fence. But I had to wonder: Wasn't there a less harrowing way to save the world?
Stumbling Toward Breakeven
From 1983 to 1991, Gary raised more than $5 million for the business, all from individual investors, none from venture capitalists. He raised $1 million in 1989 alone to build the plant that he and Samuel had cost out on that car trip the previous spring. We eventually had 297 shareholders, even though we had never closed a quarter with a profit. We didn't see our first profits until 1992, when Stonyfield's revenue reached $10.2 million. You can do the math -- it took us nine years to break even. Gary and Samuel's gamble on the promised efficiency of the new facility, located in Londonderry, New Hampshire, was, in fact, the turning point.
Frankly, I was amazed that Gary was able to persuade so many investors to write a check, given the bleak history of our little company. I'm certainly grateful that none of them ever asked me about my own confidence level in our enterprise. My sense is that they were investing in Gary -- his smarts, his persistence, his commitment, and his confidence. They were also persuaded by the quality of our product (though my mother, Doris, the third-largest shareholder at the time, didn't even eat the stuff).
By 1988, when my eldest child was born, I had already begun distancing myself from the business; I quit the jobs I'd held in sales and as a yogurt maker. By 1990, I had two babies and decided that the best way I could protect my sanity and still contribute to the company was by promoting the culinary use of our product. In 1991, the first Stonyfield Farm Yogurt Cookbook was published. I wrote a second cookbook in 1999.
In 1994, with the company finally profitable, Gary and Samuel were persuaded by a slick dealmaker to set up manufacturing in Russia, with the idea that it would be cheap to backhaul the product to Europe in the trucks that carried goods from Europe into Russia but returned empty. "We had just enough free mental energy to get into trouble," Gary later explained.
Just when I had begun to think that my husband was not so crazy, I found myself begging him not to do something that was patently insane. Gary and Samuel made several trips to St. Petersburg and set up a small facility there. Everything went wrong. Finally, after someone was shot and killed in Gary's hotel while he slept, and an American colleague was briefly held hostage, Gary called it quits. "I lost half a million dollars and my innocence," he says now.
At that point, even Gary started to wonder if it was time to bring in some bigger guns to move the company to the next level. In 1997, he began to hire professional managers in sales and marketing. Corporate people from Kraft (NYSE:KFT) and Harvard M.B.A.s now started to populate the company. By and large, these new hires did not work out, and Gary and I both learned important lessons about the company's culture. I had been vastly relieved to see the infusion of what I termed "grownups" into our company, but now we both came to realize that a mission-driven business requires employees with more than flashy resumés; energy, spirit, and dedication to the work are essential.
The Only Business Riskier Than Yogurt
After the grownups failed to produce, Gary decided to redouble his focus on expanding Stonyfield. But tending to our 297 shareholders -- constantly answering questions by phone and in meetings and providing financial exits for those who needed them -- consumed too much of his time. (My family owned a fair amount of stock; in those years, our Thanksgivings were more like Stonyfield board meetings conducted over turkey. Pass the quarterlies along with the cranberries!) Gary had avoided venture capitalists (whom he likens to Venus flytraps -- attractive flowers luring entrepreneurs to their doom), but he took seriously the personal obligation he felt to his investors. It was an emotional burden for us both.
Gary started looking for a way to get the shareholders an exit, to give them a well-deserved high return on their risky investment and allow him to focus on expanding the company. He often spoke with Ben Cohen of Ben & Jerry's during this period and eventually soured on the idea of going public after Ben was forced to sell his company. In 2001, when sales were $94 million, Gary sold 40 percent of Stonyfield to Groupe Danone (owners of Dannon yogurt); it bought an additional 40 percent in 2003. The deal, finalized in 2001 after a two-year negotiation, gave our shareholders a highly profitable exit, allowed Gary to retain control of Stonyfield, and provided us with financial security.
