Chairman, President and CEO, Stonyfield Farm, Inc., Londonderry, N.H.
May 23, 2009
Durham, New Hampshire
Graduates, and parents and family of graduates, I know that many of you overcame incredible odds to be here today—you have juggled family, jobs, money and time to make this day possible.
I am here to honor you.
And I come here to honor a school that can use a little honoring. UNH is an amazing place, one that is largely unappreciated by the citizens of our great state. Whenever I have had the opportunity to visit this or your other campuses, I have been truly stunned by the caliber of your faculty, administration and staff, and the seemingly bottomless wells of ingenuity and excellence despite a political environment that perpetually favors cutting spending over investing. In business terms, a UNH degree is an amazingly high value product, and that is testament not to the dollars invested, but to the quality and spirit of the dedicated people who make this place work. UNH is one of NH’s true jewels.
But my primary agenda today is to honor you graduates.
We have a lot more in common than our affection, gratitude and appreciation for this school.
In fact, in reflecting on your situations and on my 26-year business career, I recognize that you are beginning your journeys, exactly as I began my business: Broke, clueless about the future and in debt.
And since you are graduating into the worst economy and jobs picture since the Great Depression, I think it is reasonable, as you leave the security of your dorms and apartments and your relatively predictable schedules, for you to be completely terrified.
And parents and family members, it is no less a day for you. Mixed in with your justified pride over your child’s achievement are a wide range of emotions:
* Disbelief that he or she made it
In short, for perhaps the first time in your recent memory, graduates and family actually can agree on something: the future is scary as heck. Let me offer up a couple of other sobering reports about the world that awaits you.
The scariest part of the current economic malaise is that, while it has many names, it is certainly not just a credit crisis and in fact economists really can’t agree on the root causes. But what we know is that we allowed ourselves to believe in a sort of modern day mythology about the infinite resilience of our finance system, and to allow greedy, short-term thinking to get the upper hand. In a nutshell, we borrowed money we didn’t have, to buy stuff we didn’t need. We and our regulators have lived in a fantasy land, but we all allowed our better judgments to take a back seat. It will likely take a long while for us to get back to a system of placing real monetary value on real material value and hard work, and purging the recklessness from our systems of commerce.
But the challenges we face are not just economic, they are also deeply and profoundly ecologic. Indeed, we are seeing signs of failure in every single aspect of our relationship to the planet.
For instance, let’s check in with what we now know about climate change.
There is now global consensus that we are warming the planet at an alarming rate that will spell catastrophe for generations to come. 400,000 years of ice core records confirm that we have entered a zone that is unprecedented in human history in terms of atmospheric CO-2 concentrations. Hurricane Katrina is widely understood to have been a global warming event, and we’ve got more coming.
And this spells special challenges for the 42% of our fellow humans who already don’t have access to clean water, the 20% of who live at or near sea level, and indeed all aspects of agriculture and public health.
In fact, if we stopped all fossil fuel burning this afternoon, the Earth’s fever would continue to mount for 40 more years before it began to break. Moreover, necessary efforts to reduce our fossil fuel burning through efficiency and conservation will still leave our atmosphere at levels of greenhouse gasses twice as high as has ever been recorded. So we need to go much, much farther, into a whole new technological wave of renewable energy.
The climate change that is resulting from our well-intended but unconscious behaviors of releasing carbon, methane and other global warming gasses is just a metaphor for the deeper “cul de sac” in which we have found ourselves as a society and as a species. I say “cul de sac” because it is most definitely not a dead end. That is, we can come back out of this place, but we will not emerge into a more sustainable, healthful and hopeful world until we become humble and wise about how we got here in the first place. In other words, our relationship to the planet requires the same medicine that is needed to get back to a stable economy.
Another example is how reckless we’ve been with toxic chemicals resulting from a 70-year chemical spree.
Informed estimates place the number of manmade chemical compounds in our everyday lives as high as 104,000. And while they are at trace levels, nobody has seriously looked at the synergistic impacts of how they interact, since it represents some 3 billion potential combinations. Only a fraction have ever been tested for toxicity in adults, let alone children. Yet we walk around with somewhere between 200-400 toxins in each of our bodies and a baby born in Durham, Des Moines or Dallas this morning will have 287 toxins in her cord blood, traced to pesticides, stain removers, wood preservatives, heavy metals, industrial lubricants, flame retardants.
Or we could talk about hypoxias, the result of excess nitrification that is killing off 400 of the largest estuaries on earth.
The truth is that every aspect of humanity’s connection to the planet reveals the same pattern of denial and delusion:
• a failure to recognize that we are part of nature and must understand and respect her laws
(Recycling is nice, but the wrong end of the problem. Through source reduction by using lighter weight plastic resins, Stonyfield has avoided the production of many thousands of tons of plastics that never have to be reused, let alone recycled, which takes energy. But success will be when you finish eating the yogurt, you will eat the cup)
And the idea of a mythological place called “away” where we can send our waste.
At Stonyfield, 5 years ago, we exceeded the local waste water treatment capacity and had to build our own pretreatment plant for the residues of our yogurt making and cleaning. We knew that the traditional approach to biological waste treatment followed another flawed myth that the solution to pollution is dilution. In our case, the net result of traditional wastewater treatment would have yielded a truckload of sludge every single week. When we asked the town officials what we would do with that sludge, they had a simple answer—send it to Vermont. I had images of Ben and Jerry’s sending their waste to NH, and did not want to be any part of that. So we did something much better, which I’ll mention in a minute.
Anyhow, we’ve got some big problems out there waiting for you. Now aren’t you glad that you invited this really depressing guy to come address you?
So, in the face of these challenging circumstances, what useful words can I offer you?
First, I know the feeling. When I look back on 26 years in business, I cannot remember ever feeling assured about what the future held, especially today.
My career is best summed up by two quotes by Winston Churchill:
• Success is the ability to move from failure to failure with no loss of enthusiasm.
So since I began my journey as you are beginning yours, I thought I would offer you as a couple of lessons I’ve learned that might come in handy for you.
Always Endeavor for Superior Quality
I have learned that, whatever you choose to do, there is no point in producing the same quality as anyone else. In fact, that is likely a strategy for failure, for you are almost certain to be out-competed by someone who is better capitalized. So we have always prided ourselves in making yogurts, including our new organic greek Oikos, that simply taste better than anything that is out there.
Confirmation of our superior quality came to us early. We started our company shortly after the Iranian hostage crisis of the early 1980’s when every front page had a picture of Ayatollah Khomeni cursing the US. An Iranian refugee had settled in our town and one day she drove up the hill to tell us that she had not tasted a yogurt this good since she left the old country. She strongly urged us to rename it “ A taste of Iran”. We were honored, but chose to pass on her marketing advice.
Even when the chips are down, you must believe in yourself
When we began, we had 7 cows, 2 families and my partner Samuel Kaymen’s amazing yogurt recipe and a struggling organic farming school. We knew nothing about business, but we knew a lot about the coming perils of climate change and the importance of growing and eating organic foods that avoid adding toxins to our soil, water, air and bodies, and supports family farmers.
But talking about this stuff was pretty lonely.
Actually we had a wonderful business, the only problems were that we had no supply and no demand. But we stuck with it and today have produced over a billion dollars of business.
Make sure your decisions are evidence-based
We have met more than our share of “experts” and advisors who would have led us right to, and over some cliff, charging us big daily consulting fees as we plummeted to our death. There were venture capitalists who smoothly spun sticky webs to trap us in their attractive sounding, but ultimately (we learned later) deadly wrong strategies. We followed one such guy to Russia where we made yogurt and ice cream for a while until he called me to help come over and get him released from a gymnasium where he had been taken hostage by thugs with uzi’s. I wrapped up that business pretty quickly leaving behind $450,000 in losses, but at least getting away with our lives.
The lesson I took away from this experience is to be sure that we always base our decisions on facts and not take lazy short-cuts based on hopes, promises or fantasy. For instance, right now, everyone has seized upon the idea of cutting down on food miles and eating “local” food whenever possible as a solution to climate and other challenges. And while Stonyfield and I certainly embrace the idea of supporting local farmers whenever we can, we know through a rigorous carbon measurement process that we use to guide our decision making that food miles, how far an item travels, is actually a very minute percentage of the footprint of an apple, yogurt or bottle of beer. The far larger footprint is in how the product is grown, that is the type of agriculture accounts for more like 50-60% of the carbon footprint. In other words, buying organic from a long distance may be far more carbon-friendly than buying non-organic locally. The point is, we need to be sure our brains are as engaged as our hearts when making big decisions.
Be Determined and Take Risks
Albert Einstein once said: "Anyone who has never made a mistake has never tried anything new."
In 1984, we had been trying to get our yogurts into Bread and Circus (now Whole Foods) in Cambridge for about a year to no avail. They already had a half dozen organic or natural yogurts made by some nice hippy in NH or Vermont and they did not feel they needed another. So one July afternoon, about 20 of my Boston area friends came to the farm to celebrate my 30th birthday, and when I blew out the candles, I thanked them for coming, but told them that if they really wanted to give me a great birthday gift, they should go to Bread and Circus and ask for our yogurt. That was a Sunday. On Wednesday of that week, the buyer called from Bread and Circus and told us that “demand for Stonyfield yogurt had suddenly gone through the roof and would I please make a delivery at once?” Naturally, we made our first delivery that day, and soon after became their number one selling yogurt and we have been ever since, for 25 years.
Challenge the Conventional Wisdom (ask Why Not)
A key tenet of our success has been to question authority, which is often over-rated. Lily Tomlin says that “Reality is the leading cause of stress for those who are in touch with it,” so we have always found that reality needs to be challenged.
One morning in the 1980’s a couple of morning talk show guys named Joe and Andy mentioned us on air. Joe, an athletic healthy guy had been lecturing Andy, who was most definitely not into healthy eating, that he ought to try eating Stonyfield. Andy replied that he would rather eat camel manure than yogurt. Now most reasonable companies would have tried to duck down and stay under the radar screen until the camel manure reference had dissipated from the public’s consciousness, but we saw this as an opportunity to strut our stuff. Bensons Animal Farm was still operating in nearby Hudson, and they had camels. So one wintry morning, Meg and I drove over to Bensons and filled a large yogurt container with frozen camel “nuggets” and drove to the studios in Boston with yogurt for Joe and camel manure for Andy. Of course by the time we got to Boston, the manure had thawed and the odors leaking out of the cup were especially noxious. We won our first endorsement as Andy, faced with a menu choice, agreed that Stonyfield did taste better than camel dung.
Questioning conventional authority is a powerful way to succeed in business and in life. A couple of guys from UPS once asked “why not try to avoid left-hand turns,” with their 95,000 big brown trucks.
Now you might ask what is wrong with a left-hand turn? Well, when you are turning left, you have to wait for the on-coming traffic to pass by before you can turn, and this burns a lot of gas while idling. By the way, I tried to explain this in a speech in London last winter and no one understood. But UPS found that by avoiding left hand turns with 95,000 trucks, they could save 3.1 million gallons of fuel in a year, or at that time, around $12 million dollars. Now that is a powerful reward for thinking differently.
When the Demoulas Market Basket chain agreed to start selling our yogurts in the 1980’s, their first question was what we were going to do for advertising to help excite consumer interest. Needless to say, we had no money for advertising, but at the time we did have our then 19 cows (our herd had grown). So we decided to put cows up for adoption. Consumers could send in 5 yogurt lids and receive a photo of “their” cow, a certificate naming them the co-owner of “their” cow and then twice per year their cow would send them letters about life on the farm. That was then. Today, these carbon-conscious cows send out 4 emails per year thus avoiding paper. Some of the cows are twittering. Anyhow, hundreds of thousands of people have adopted cows.
At a societal scale, those of you who question conventional thinking will be in the best positions to seize the next wave of jobs and economic opportunities. Consider for instance, that with the amount of sunlight that strikes the US each day, we would need only 10 million acres of land—or only 0.4% of the area of the United States—to supply all of our nation’s electricity using solar photovoltaics.
When you consider that the US Governmentt pays to idle 30 million acres of farmland per year, you can see how confused our priorities have become.
Solar isn’t just for Arizona anymore, either; right now in New Hampshire there are homes powered completely off the grid – built at competitive costs. For less than half the normal garage roof space, you can power your house with no fuel, no pollution, and no ice storm outages. Soon it’ll be down to one-quarter of that garage roof. And we haven’t even talked about solar hot water, which is even cheaper than solar cells, or wind power, which is cheaper too. Best yet, these power sources are built, installed, and maintained locally, right here in America, unlike the billion dollars per day we “export” out-of-country for oil, for example.
And renewable technology isn’t just a energy issue, it’s a global competition. We don’t have a natural monopoly on sunlight or wind, and the Danes, Germans, and increasingly, the Chinese “get it.” They aim to be the energy technology vendors to the world, and—having paid more attention to it than we have—they’re as good or better than we are. We now have states competing to site foreign-owned wind and solar plants to produce technologies that we originally invented and then ignored. So renewables are here, working today in my business, and with greater demand will come dramatic drops in cost. And if we don’t get equally aggressive in every business and home, we’ll be technology buyers instead of technology builders.
Never underestimate the value of performing service and doing “good”
The question we asked ourselves when we started the company in 1983 was: is it possible to create a business that could help be part of the solutions to our planet’s ecological challenges while also making money? The answer today is a resounding yes.
Today, we are partnered with 1400 organic dairy farms who currently earn 3X what they would receive for non-organic milk.
Stonyfield purchases more than 300 million pounds of organic ingredients annually, which in turn supports more than 60,000 chemical-free acres of farmland. Our solid waste management program has kept more than 20 million pounds of waste from landfills and incinerators
Over the past 12 years, we’ve offset 100 percent of its CO2 emissions from our Londonderry facility but have also shown businesses large and small how to save millions of dollars through conservation and efficiency measures. For instance, last year alone, despite producing 12 percent more yogurt, we actually reduced energy use by 8%.
Instead of building the wastewater plant I had mentioned and start shipping sludge by night to Vermont, we built a facility that generates a burnable biogas that replaces propane in our plant, uses 40% less energy, 50% lower costs and generates essentially no sludge.
Indeed, what we discovered from doing good is a new business formula that is now being mimicked by the largest companies on earth.
Simply put, the usual formula for producing consumer products is to make items as cheap as possible. For instance, nothing in the food industry is cheaper than gelatin, artificial stabilizers, colors and dyes. These companies then generate a higher margin which they use to purchase lots of advertising to blast us consumers with lots of messages that will hopefully lead us to become aware, try the products, purchase them and hopefully repeat purchase them, and possibly eventually become loyal.
What we discovered is that when you make a better, higher quality product, you leap all the way to loyalty without having to spend as much on advertising. Let me illustrate this with an example.
A year and half ago, I was standing in a Florida supermarket holding a competitor’s cup as I was reading an ingredient I still can’t pronounce. A little older woman came up to me, tapped me on the elbow and said “young man, someone your age really should be eating the Stonyfield instead.”
When I asked her why, she told me that this company gives away 10% of its profits to environmental causes, offsets its carbon emissions, supports family farmers, etc. I interrupted her to ask how she knew all of that.
She told me that her husband had recently died from colon cancer and that she and “the girls” from her local bridge foursome all had lost their spouses and all decided that they want to stick around to see their grandchildren, so they go to the websites of companies to learn which brands to support, and Stonyfield had passed the test.
In that one incident, I learned all one needs to know about business. When you make it better, you get loyalty. And with loyalty comes the most powerful purchase incentive in commerce—word of mouth.
So how is all of this relevant to you?
I hope that you will take away four key messages:
First, I know for certain that if we hadn’t baked our environmental and sustainability mission into our DNA, I wouldn’t be here talking to you. Be a force for positive change—it will pay off. The graduate sitting here who can promote alternatives to many of the societal myths I mentioned stands to create incredible opportunity, both financial and societal. I can assure you that there will be more jobs in renewable energy, energy efficiency, preventative health care, organic/non-toxic agriculture, textiles and cleansers (I have yet to meet the consumer who prefers to eat the yogurt with more pesticides or synthetic hormones than in the traditional fields.)
Second, the whole notion of service is very attractive to smart employers. From a practical perspective, those of you who volunteer and give your time and energy to work on positive change are exactly who we CEO’s want to hire.
Third, be clear, as you reflect on your educations, that the true measure of your achievement here is not the facts you have absorbed and what you know, but whether you have learned to learn, to adapt to new realities. Einstein said: “Education is what remains after one has forgotten everything he learned in school."
Fourth, be relevant. The world needs those of us who’ve had the blessings of an education to attend to its needs. It doesn’t matter where you set down a stake; it only matters that you contribute. But don’t forget that as consumers, we wield enormous power to choose the polluting, consumptive and failed ways of the past or the renewable and sustainable ways of the future too. When we purchase anything, we are voting for the kind of communities, society and planet we want. And I have learned that corporations spend billions of dollars to tally those votes.
Personally, I feel there is no greater societal priority than to embrace the conversion to renewable energy and organic food production with all of the climate, ecological and health benefits. When people tell me that organics is not proven, I respond that it is the chemicals that are not proven, but the early results are poor as we face an epidemic of cancers and preventable disease. The same is true of our energy policy, which has been driven by generations who have grown up in the oil and coal business and believe that mining the earth’s crust is the only way to fuel our needs.
Humanity has always progressed through waves of innovation. From harnessing wind for transportation to water power to steam power to internal combustion engines, petrochemicals, aviation, space travel and digital technology.
I believe that we stand at the edge of the next wave, the sustainability revolution in which we use green chemistry which leaves behind no toxic residue, cradle to cradle technology which generates no waste, renewable energy with no carbon footprint, industrial ecology with waste from one process being the food for another, will be the norm. We will use new language as we learn from nature through the emerging science of biomimickry in which we can learn about mollusks pulling carbon from their environment to build calcium carbonate shells that hold hundreds of times their weight. This is how we will build buildings, I am sure.
So whether as producers in the new economy or consumers, as you graduate into the “real world”, this now becomes your moral obligation, but also your opportunity.
Lilly Tomlin tells us that we’re all in this alone.
I don’t know what the future holds and neither do you. But I do know WHO holds the future.
But I do know that anyone who feels that they are too small to make a difference has never been in bed with a mosquito.
And by the way, there is one last piece of advice. Have fun, take time for yourselves and your family, and enjoy life. A friend of mine says “don’t take life too seriously, it is just a temporary condition.” The work is never done. Be sure to smell the flowers along the way.
So, graduates, go forward, do good work. But for today, celebrate your success. You’ve earned it.