“I always wanted to do something to make a difference.”
Growing Up
Howard Schultz was born to a blue-collar family from Brooklyn in 1953. At the age of seven, when his father lost his job due to a broken ankle at a time when disability assistance was uncommon, Schultz experienced the difficulties of poverty and hunger.
He worked hard at sports and got himself a scholarship to Northern Michigan University. He earned his degree in business and graduated in 1975. An outstanding employee in his first job working in marketing for Xerox, Schultz was headhunted by the Swedish company Perstorp AB. He became the houseware firm's vice president at twenty-six and oversaw their American subsidiary, Hammerplast USA.
As with Ray Kroc, founder of McDonald’s, who took an interest in the original McDonald’s buying up so many milkshake mixers, Schultz’s interest was piqued by the large number of espresso machines that a company called Starbucks was buying from Hammerplast. He got on a plane and flew to Seattle to find out more.
Starting the Business
Gerald Baldwin and Gordon Bowker, the founders of Starbucks, had opened their first store in 1971 close to the eclectic Pike Street Market. They sold gourmet coffee beans and sundry coffee-related accessories. When Schultz met them, Baldwin and Bowker were operating four stores. They asked Schultz to join them as a part owner to fill in the gaps of their knowledge of business with his deft understanding of marketing.
Schultz accepted and began work for Starbucks in 1982. It was during a trip to Italy that Schultz came to the realization that Europeans treated coffee houses and cafes as a social hub, central to their community. Schultz set out to do the same in Seattle.
Since Starbucks was not in the business of making coffee unless customers asked to try a sample, Baldwin and Bowker resisted the changes Schultz proposed of turning their retail store into a coffee bar. Schultz left Starbucks in 1986 and attempted to realize his vision by opening the coffee bar, Il Giornale.
Building an Empire
Il Giornale was a great success and Schultz went in search of investors in order to expand. Some time later, Schultz learned that Baldwin and Bowker had put Starbucks up for sale. Seeing this as an excellent opportunity to expand, he found the required $3.8 million and became the new owner of Starbucks. Schultz was finally able to implicate his formula for success in his old company.
Now in charge, Schultz introduced other coffee based beverages like espresso, cappuccino, and iced coffee. He also worked to improve on the bright and comfortable atmosphere of his stores. However, it is to the importance Schultz placed on looking after his employees that his success can be attributed.
In an attempt to build the self-respect of his employees working in the often-looked-down-upon area of the service industry, Starbucks offers benefits like stock options and heath care coverage to all employees. The result has been greater loyalty to the company, with a lower staff turnover rate, and employees desiring to provide high quality service. In making the staff at every level feel invested in the company, Schultz has attempted to make the employees give their best in return.
With the realization of Schultz's vision came extraordinary growth. Starbucks went from 425 stores in the early 1990′s to over 2,200 by the end of the decade, and was making more than $2 billion by 2000.
Having seen all of the struggles that his father endured working without company benefits, Schultz expressed in an interview for the magazine Inc. the value of his accomplishments with Starbucks in these terms: “My greatest success has been that I got to build the kind of company my father never got to work for.”
Evan Carmichael
