Howard Schultz, The Coffee Bar Enthusiast
“My greatest success has been that I got to build the kind of company my father never got to work for.”
Today, Starbucks is the leading specialty coffee powerhouse in the world. But who is the man behind the modern-day success of Starbucks? Through his resolute vision of providing specialty coffee with old-world charm, Howard Schultz, Chairman and CEO of Starbucks Corp, turned his dream into reality.
Howard Schultz was born in Brooklyn, New York in 1953 and was raised in the Bay View housing projects. Growing up, Schultz’s parents worked blue-collar jobs which often didn’t pay much and did not offer any benefits for him or his family. When his father broke his ankle while Schultz was a young boy, he lost his job as a delivery driver. With no disability or medical coverage, the family could barely afford to put food on the table.
Schultz excelled in high school sports and was awarded an athletic scholarship to Northern Michigan University in 1971 where he earned a bachelor’s degree in Communications. Upon graduating, Schultz took a sales position at Xerox Corporation. In 1979 he took a management job at Hammarplast, a Swedish drip coffee maker manufacturer.
At Hammerplast, Schultz noticed a small coffee company based in Seattle, Starbucks, which was buying more and more of Hammerplast’s espresso machines. He was so intrigued that he flew to Seattle to see the stores for himself. Starbucks was founded in 1971, selling freshly roasted gourmet coffee beans, teas, spices and coffee-making accessories. When Schultz met the company’s founders, Jerry Baldwin, Gordon Bowker and Zev Siegl, he was captivated by their passion for great coffee. Schultz remembers the first time he came to Starbucks saying, “When I walked in the store for the first time—I know this sounds really hokey—I knew I was home. I can’t explain it. But I knew I was in a special place, and the product kind of spoke to me.”
A year later, Schultz was hired on at Starbucks as director of retail operations and marketing. In 1983, while on a buying trip in Milan, Italy, Schultz had an epiphany at one of the many coffee bars. He was struck by the connection people had to coffee, and to the coffee bars which served as a meeting place for people in the community and wanted to replicate the coffee bar at Starbucks stores. He was eager to share this new idea with the creators and was convinced it was the way of the future. But when Schultz told the owners about his new idea, they didn’t share his enthusiasm. After much persistence, the owners allowed Schultz to open a coffee bar in one of the new stores opening in Seattle. Although the coffee bar was an overnight success, the founders were convinced it was not the direction they wanted to go in.
Schultz then left Starbucks in 1985 to follow his dream and open a coffee bar chain, which he called Il Giornale (The Journal). His shop was a hit, however he lacked the funding needed to expand his reach. Two years later, Baldwin and Bowker were selling the original Starbucks chain to focus on other ventures. With the help of investors in the Seattle area, Schultz purchased Starbucks for $3.8 million. He merged the stores with his own, calling it the Starbucks Coffee Company.
At the time, coffee was not that popular in America let alone high-grade coffee beans, but still Schultz pressed on. He expanded the menu, offering basic brewed coffee along with espresso, cappuccinos, café lattes, iced coffee and café mochas. He worked to create a pleasant atmosphere where customers could relax, meet with friends and enjoy their coffee in style.
As Starbucks grew, Schultz was adamant about one thing—that employees should be treated with dignity and respect, and offered proper benefits. Recalling his own childhood when his father had no health insurance or benefits, and witnessing the debilitating effect it had on his family, he wanted to make a contribution so others wouldn’t experience the same thing. He extended health benefits to all employees and offered a stock-option plan, creating a more dedicated work force and promoting a high level of customer service. Starbucks has achieved a turnover rate less than half of most fast-food businesses and Schultz credits part of the company’s dramatic growth to the benefits it offers its employees.
Through its rapid growth in the 1990’s, Schultz maintained that his main goal was “to serve a great cup of coffee, and to build a company with soul.” Today, Starbucks is the largest coffeehouse company in the world, with 20,891 stores in 62 countries. Despite his success, Howard Schultz tries to stay grounded in his values, treat employees and communities with dignity and to maintain the distinct company culture of Starbucks.