HowardSchultz
trip to Italy in 1983 changednot only the life
of Howard Schultzbut alsothe way millions
\of Americansstart and end each day. Not
I
long ago,many Americansgrabbeda cup of cheap
coffeefrom the corner storeon their way to work
and gulpedit as they hurried to the office.Today,
many of theseAmericanshavetraded their cheap
coffeefor higher-priced,
freshlybrewedspecialtycoffeedrinks.Although most still hurry to work, they
may alsoreturn afterwork to meetfriendsand linger
over anothercup of their favoritebeverageat a comfortableneighborhoodcoffeehouse.
Howard Schultzis chairmanand chiefexecutive
officerof StarbucksCorporation,the most successful
retail chainsellingspecialtycoffeesand teasin North
'Sfhen
America.
he traveledto Milan, Italy, in 1983,
he was directorof retail operationsand marketing
for StarbucksCoffee,Tea,and Spices-a l2-yearold,
Seattle-based
firm specializingin selling freshly
roastedcoffeebeans,teas,and spicesin bulk. Sitting
in one of Milan's many hundredsof espresso
bars,
Schultzsaw coffeedrinking in an intriguing new
Schultz
is chairman
andchiefexecutive
officerof
light. For the Italianssittingaroundhim chattingand Howard
Starbucks
Corporation,
the
most
successful
retail
chainselling
laughingwith friends,this pastimewas a key part of
specialty
coffees
and
teas
in
North
Ameilca,
their sociallife and includednot only goodcoffee,but
alsoan inviting placein which to sit and drink it,
1,500storesand morethan 25,000workersthroughFillinga Need
out the UnitedStates,in Singapore,
in Japan,and in
Coffee drinking had been declining in the United the Philippines.
States.This drop in coffeesalesdid not worry Schultz.
Innovation
Yearslater,he told an interviewer:
A
A
Schultz has also been innovative in his management
practices. The company offers all of its workers health
insurance and the chance to buy stock in the company.
According to Schultz, these benefits have "paid for
themselvesin increased productivity and commitment
to the .business."Starbucks has one of the lowest
employee turnover rates in the service industry.
Schultz sayshis concern for his employeescomes
In 1985 Schultzopenedhis own chain of coffee- in part from his own experiencesgrowing up. The
housesin the Seattlearealhe purchasedthe Starbucks oldest of three children, he was raised in a federally
chain a year Iater.The popularity of the Seattlecof- supported housing project in Brooklyn, New York.
feehouses
provideda basefor Schultz.By the early His father, a high school dropout, held jobs as a cab
1990s,Starbuckshad openedstoresin other West and truck driver and as a factory worker. The family
Coastcities,aswell asin Denverand Chicago.By the never had medical insurance. Schultz was the first
end of 1994, the company had coffeehouses
in person in his family to complete college. "I've tried,"
lfashington, D.C., New York, and Boston.By 1998 says Schultz, "to make Starbucks the kind of comStarbuckshad becomea billion-dollarempirewith
pany Iwish my dad had worked for."
Customers don't always know what they want. The
decline in coffee-drinking was due to the fact that
most of the coffee people bought was stale and they
weren't enjoying it. Once they tasted ours and experienced what we call 'the third place'-a gathering
place between home and work where they were
treated with respect-they found we were filling a
need they didnt know they had.
Chapter
4 HowardShultz
C
o
T
o
C
E