The gospel according to Silicon Valley has officially caught on, with upstate New York-based Chobani offering all 2,000 employees a stake in the billion-dollar yogurt company when it goes public or is sold.
Given the company’s estimated $3 billion valuation, each employee’s average stake worth around $150,000, with longer-term employees possibly cashing in up to $1 million.
“It’s been my dream” said Ulukaya, a Turkish immigrant, in an interview with NBC Nightly News. “I’d like to give back to them and say, ‘You and this community and this country have been so great to us, and I’d like to return that favor back to you.'”
The gift that keeps on giving
Ulukaya’s adaptation of the employment equity model is a drastic departure from tradition, especially in the food industry.
Until now, the practice of giving employees part ownership of a company through stock has mainly been utilized by tech startups, who use it as a marketing tool when competing for top tech talent (think: Google and Facebook).
“It’s very uncommon and rare, especially in this industry, for these kinds of programs to be rolled out,” said Jessica Kennedy in an interview with the New York Times. Kennedy is a principal at human resources firm Mercer, which helped Chobani develop the program.
But this “new school” approach to running a company definitely has its benefits.
By offering employees a stake in the company, employers are essentially linking the growth of the company to the growth of employee payout, all while strengthening company morale. If that’s not an incentive to work harder, I don’t know what is.
“It’s better than a bonus or a raise,” said Rich Lake, a lead project manager and employee number five at Chobani, to the Times. “It’s the best thing because you’re getting a piece of this thing you helped build.”
Scaling a successful business model
Ulukaya has always taken an active role in his company, but a loan from the Small Business Administration (SBA) is what ultimately jumpstarted his career as a yogurt god.
After trying his hand at the noble profession of feta cheese-making in 2002, Ulukaya decided to refurbish an abandoned Kraft yogurt plant with an $800,000 loan from the SBA in 2005.
That loan has since given rise to a successful billion-dollar corporation that employs 2,000 people across two states. As of Tuesday, that loan has turned into the gift that keeps on giving for Chobani employees, thanks to Ulukaya’s generosity.
As seen with Chobani, the SBA can ultimately fill the important role of a venture capital firm for budding companies that exist off the beaten path of Palo Alto, California. With that little boost of funding up front, entrepreneurs from all walks of life stand a chance at getting their business ideas off the ground.
If Chobani is any indication, building out a sustainable model to expand entrepreneurs’ access to capital would be a fruitful pursuit for lenders in the American economy. In some instances, it could even nurture this emerging trend in employment equity.
A company like Chobani proves that there are alternatives to minimum wage legislation when it comes to financial security for workers. While Ulukaya’s generosity may be but a diamond in the rough, the idea of applying an employment equity model across industries is definitely worth exploring.
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Header image: Andrew Burton / Getty