A friend recently asked when I was going to add another article to our series of “Little-known Facts about Well-known Leaders and Businesses.” He shares these articles with the students in the high school class he teaches.
When I informed him that I was currently writing an article on Howard Schultz, he asked me two questions. The first was “Who is Howard Schultz?” The second question was “Why Howard Schultz?” I found both interesting and had to admit that many people might very well ask the same questions. In fact, the more I thought about it, the more it made sense to begin this article by answering those questions.
Why Howard Schultz?
Once you know who this man is and what he has accomplished in a relatively short period of time, I would think you’d automatically want to know more about him, how he did what he did, and what he may be capable of in the future.
I’m sure you’ve heard of Starbucks, but how much do you really know about them?
- Starbucks is a dominant multinational coffeehouse chain based here in the U.S.
- Named after the first mate in the novel Moby-Dick, Starbucks is the largest coffeehouse company in the world!
- Boasting 7,521 company-owned and 5,647 licensed stores in 41 countries, worldwide locations total 13,168.
- Industry experts predict a future of 50,000 stores, trumping even McDonalds. Think about that for a moment.
- Last year they registered revenues of $7.786 BILLION!
- They are currently opening coffee shops at the rate of 3½ a day worldwide and that figure is expected to increase soon!
- They currently employ over 147,436 employees!
- They are currently hiring 250 people a day!
- Their subsidiaries include Starbucks Coffee Company, Tazo Tea Co., Seattle’s Best Coffee, Torrefazione Italia, Hear Music, and Ethos Water.
- Starbucks brand ice cream and coffee are also sold in grocery stores, and they have ventured beyond refreshments into books, music, and film.
- Here’s the most amazing fact. At a time when this country is facing financially challenging times, this company bases its success on the fact that they are selling a product that averages $12.88 a gallon while consumers are complaining about $3.00 a gallon gasoline!! More power to them.
Hopefully, I’ve answered the question of “Why Howard Schultz?” This man is the Wizard behind the Coffee Curtain.
Now let’s tackle “Who is Howard Schultz?”
He’s an American businessman and entrepreneur most widely known as the Chairman and Chief Global Strategist of Starbucks and former owner of the Seattle Supersonics.
Howard was born in 1952 and grew up in a subsidized public housing project in Brooklyn, New York as the eldest of three children. A football scholarship to faraway Northern Michigan University was his ticket out of the projects, and he became the first in his family to earn a degree.
After graduating, Howard worked at a variety of jobs for six years before becoming the manager of U.S. operations for Hammarplast, a Swedish maker of stylish kitchen equipment and housewares.
In 1981, he traveled from New York to Seattle to check out a popular coffee bean store called Starbucks that had been buying many of the Hammarplast drip coffeemakers he was selling. He immediately fell in love with not only that great smell but with the care the Starbucks owners put into choosing and roasting the beans. He was also very impressed with the owners’ dedication to educating the public about the wonders of coffee connoisseurship.
He walked away from that visit saying, “God, what a great company, what a great city. I’d love to be a part of that!” The rest is history. What a fantastic story! What serendipity! What inspiration! This is a perfect example of why we chose to share these stories!
Determined as he was to become part of this organization, it took Howard a year to convince Starbucks owners to hire him. As their Director of Marketing, he traveled to Italy in 1982 where he had still another epiphany. He couldn’t help but notice that coffee bars appeared on almost every block. After investigating this phenomenon, Howard discovered that there were over 200,000 coffee houses in Italy, and they did much more than serve espresso. They served as meeting places or public squares … they were a critical piece of the Italian culture.
Inspired by what he had witnessed, he hurried back to the U.S., resolved to create a similar experience. Shocking long story short. Starbucks leadership said they simply weren’t interested in getting into the restaurant business. Schultz responded by quitting to start his own company, ll Giornale. It was a small, friendly café which soon became a popular gathering place for Seattle sophisticates. As it grew more popular, Schultz planned to expand his chain. That’s when he heard a rumor that the Starbucks leadership team had decided to focus on Peet’s Coffee & Tea. In 1987, he bought out the Starbucks partners for $3.8 million and hasn’t looked back since.
Taking great pride in his knack for “Thinking Outside the Cup,” Schultz developed a series of practices that were unprecedented in retail. He insisted that all employees working at least 20 hours a week get comprehensive health coverage, including coverage for unmarried spouses. Then he introduced an employee stock-option plan. These moves boosted employee loyalty and led to extremely low employee turnover, even though salaries were fairly low. To this day, leaders in every industry claim these benefits simply aren’t feasible.
- 13,168 stores!
- 3½ new stores daily!
- 147,436 employees!
- 250 new employees per day!
- Revenues of almost $8 billion!
Starbucks has managed to blossom without national advertising.
Last year, Forbes Magazine ranked Schultz as the 354th richest person in the U.S., with a net worth of $1.1 billion!
Despite their tremendous success, they have less than 6% market share of coffee consumption. They are in the infant stages of growth in this business! Maybe more leaders should be “Thinking Outside the Cup.”
Asked the secret of his success, Schultz shared his four major principles:
- Don’t be threatened by people smarter than you.
- Compromise anything but your core values.
- Seek to renew yourself even when you are hitting home runs.
- Everything matters!
To discover more about the man, the company, and the industry, check out the following books:
- Pour Your Heart into It : How Starbucks Built a Company One Cup at a Time by Howard Schultz and Dori Jones Yang
- The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary by Joseph Michelli
- How Starbucks Saved My Life: A Son of Privilege Learns to Live Like Everyone Else by Michael Gates Gill
- My Sister’s a Barista: How They Made Starbucks a Home Away from Home (Great Brand Stories series) by John Simmons