Rags-to-Riches Story
Thirty years ago, Howard Schultz got into the coffee business with one goal in mind: to strengthen the personal relationship between people and their coffee. He’s now responsible for Starbucks, one of the world’s most beloved brands, and worth at least $3 billion as chairman and CEO of the Fortune 500 company. But it wasn’t an easy path to the top. How did Schultz, who came from a working family, overcome misery and grow a small Seattle coffeehouse into the largest coffee chain on Earth?
Schultz was born on July 19, 1953, in Brooklyn, New York. When Schultz was 7 years old, his father broke his ankle while working as a truck driver delivering diapers. At the time, his father had no health insurance or worker’s compensation, and the family was left with no income. In high school, Schultz played football and earned an athletic scholarship to Northern Michigan University. To pay for school, the communications major took out student loans and took up various jobs, including working as a bartender and even occasionally selling his blood.
After graduation in 1975, Schultz spent a year working at a ski lodge in Michigan waiting for inspiration. He finally landed a job in the sales training programme at Xerox. The work didn’t come up to his expectations, so after three years he left to take a job at Hammarplast, a housewares business, where he became vice president and general manager. It was at Hammarplast that he first encountered Starbucks. The coffee shop had a few stores in Seattle and caught his attention when it ordered an unusually large number of coffeemakers. Intrigued, Schultz travelled to Seattle to meet the company’s owners, Gerald Baldwin and Gordon Bowker. He was struck by the partners’ passion. A year later, Schultz persuaded Baldwin to hire him as the director of retail operations and marketing. At the time, Starbucks only had three stores, selling coffee for home use.
Schultz’s career — and Starbucks’ fate — changed forever when the company sent him to an international show in Milan. While walking around the city, he encountered several espresso bars where owners knew their customers by name and served them drinks like cappuccinos and cafe lattes. Schultz realised the power of the personal relationship that people could have to coffee.
In 1985, Schultz left Starbucks after his ideas to cultivate an Italian-like experience for coffee-lovers was rejected by the founders. Schultz spent two years away from Starbucks, focused on opening his own coffee company Il Giornale replicating the coffee culture he’d seen in Italy. In 1987, Il Giornale bought Starbucks for $3.8 million, and Schultz became CEO of Starbucks Corporation. At the time, there were six stores. America swiftly took a liking to Starbucks. In the last 28 years, Schultz has grown the coffeemaker to include more than 21,000 stores in 65 countries.
Throughout his career at Starbucks, Schultz has always prioritised his employees, who he calls “partners.” Largely because of his father’s experience when he was injured, Schultz offers all his employees (including part-time workers) complete health-care coverage as well as stock options. Last year the company announced it would pay for employees’ college tuition. Schultz also announced that Starbucks would hire 10,000 military veterans and their spouses.
What does the author say about Howard Schultz’s treatment of his employees?
AHe makes his employees arrange medical insurance.
BHe offers his employees loans to go to college.
CHe prefers having former military men as his employees.
DHe believes his employees to be a crucial part of his business.