Does the name Howard Schultz ring a bell? It didn't for me and I bet it didn't for you either - unless you are a coffee officiando, a resident of Seattle or a shareholder in Starbucks. Yes, when you pay $4.75 for that venti latte with chocolate, soy milk and whip cream, you can thank Mr. Schultz for it. Here is his story:
The Early Days...
Howard Schultz was a 27 year old salesman with Hammarplast, a Swedish plastics company. After looking at sales reports, he discovered that a small Seattle roasting company called Starbucks Coffee, Tea and Spice sold more plastic coffee filters than the entire Macy's Department Store chain. So, he started thinking "What is so special about Starbucks?" He visited the store in the Pike Place Market, met the owners, visited the roasting company, tasted the best coffee ever and was sold. He then spent the next 12 months trying to convince the Starbucks owners to hire him. At age 28, he joined Starbucks as they were planning their sixth store and first store outside of Seattle as their director of retail operations and marketing.
Tip #1: Find a job that you love in an industry where that company is the best.
The First Cup of Coffee...
At the time, Starbucks was a coffee roasting and coffee supply company. There was no cup of Joe to be found in their stores. No espresso... no lattes... no iced coffee. Then, in 1983, Mr. Schultz visited Milan, Italy, and discovered the espresso bar. He noted that people were lined up and standing up drinking coffee. He tasted his first espresso and his first latte on this trip and was sold on the idea. At the time, Italy had approximately 1/5 of the population of the United States and had over 200,000 espresso bars. So, the idea that would transform the coffee drinking habits of Americans was born. However, it was a struggle from the beginning. It took Mr. Schultz 12 months to convince the owners of Starbucks to sell coffee by the cup at their stores. As the sixth store was launched in 1984, the owners relented and allowed the installation of a single espresso machine. The store soon was a hit averaging 800 customers per day compared 250 customers per day at the other Starbucks stores. Still, the owners of Starbucks refused to roll out coffee by the cup at their other stores.
Tip #2: Explore your industry for new and unique ideas to meet a customer demand and to distinguish yourself from your competition, test the market and then roll it our new innovative products.
The Expresso Bar...
By the fall of 1985, Mr. Schultz knew that he had hit on something big. Customers loved the "third place" which was outside of the home and outside the workplace where people could hang out and enjoy coffee just as if they were in Italy enjoying the Italian espresso bar experience. However, faced with owners who didn't want to expand into the "restaurant business", he left Starbucks and started a poorly named express chain Il Giornale named after an Italian newspaper. In 1987, the owners of Starbucks decided to sell Starbucks to focus on their new venture Peete's Coffee and Tea. Schultz then raised over $3.8 million from investors and decided to purchase Starbucks, its six stores, and the roasting plant. Based on the advice of friends and family, he changed the name of his expresso bar chain to Starbucks. In 1990, Starbucks had 55 locations. The company went public in 1992 an has 1412 stores in 1997, 5800 stores in 2002 and 7569 stores in 31 countries. At one point, Starbucks was opening 1 new store for every 8 hour barista shift. Although it has since slowed, it has an amazing run.
Tip #3: Don't let corporate inertia get in the way of innovation and your dreams.
So, how did this poor kid from the public housing projects become the 354th richest person in America? Well, he attributes it to hard work, following your dreams, and a commitment to selling a product you love. When you plunk down $4.75 for that cup of black liquid gold, you can either bless or curse the name Howard Schultz. Personally, I love ya Howard.
Comments(0)