How Starbuck’s CEO Rose From ‘Rags To Riches’

Starbuck’s chairman and CEO Howard Schultz is a talented, tenacious businessman. But he owes his billions to more than skill and hard work. Passion and timing were key to his success.

In 1981 Schultz was a sales manager with a Swedish coffee machine maker. Impressed by the volume of filter purchased by a customer Seattle, Schultz went to visit the owners of Starbucks, a small coffee shop near the city’s famous Pike Place market. He was impressed with the owner’s knowledge and passion for coffee and, one year later, joined Starbucks as director of operations.

During a vacation to Italy, Schultz became enamored of the European coffee house experience and tried to convince Starbuck’s owners to adopt a similar model; to become a place where people socialized over coffee. When the company rejected the idea, Schultz left to start his own Italian-style coffee shop. But two years later, in 1988, the owners of Starbuck’s decided to focus on their other business, Peet’s Coffee and sold Starbucks to Schultz for $3.8 million.

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The rest is highly caffeinated history.

It’s easy now to look back and think that Schultz’s vision for Starbucks was a no-brainer.

How many times have you been to Starbuck’s this month? But when Schultz was pressing his vision of serving top quality coffee in a social setting, coffee was, well, in bit of a slump. As late as 1990, Americans were drinking just 1.75 cups of coffee per day, down from 3.2 cups in 1962. Check out this 1983 TV advertisement from the National Coffee Association designed to make coffee cool again. (Yes, that is David Bowie!)

The resurgence of coffee in the 1990’s was likely fueled by many factors – a desire for more authentic food experiences, the trend towards treating ourselves to “affordable luxuries,” increased disposable income. And Howard Schultz. True, Schultz’s timing was exquisite. He rode the rising tide of coffee’s popularity to fame and fortune. But his passion for bringing quality coffee to the mainstream pushed that tide faster and higher than it might otherwise have gone.

That’s one definition of business genius.

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