The Starbucks Story: Persistance and Determination (Innovators Series)
Do you know the real Starbucks story? Grab a cup of coffee as we kick off the first in our “Innovators” series where we focus on the women and men that have reshaped business, culture and society by innovating and taking that daring leap forward.
Our first feature is Howard Schultz, the former Chairman and CEO of Starbucks. It may surprise you to learn that Schultz not establish Starbucks. But he provided that innovative spark — that critical idea that would transform Starbucks from a Seattle coffee shop into an incredibly popular global brand.
One of Schultz’s first jobs was working for a European housewares company and one of their customer was a small Seattle-based coffee named Starbucks. He soon transferred to Seattle in 1981 to work for Starbucks in the marketing department. One year later, during a business trip to Italy, he walked into an Italian café. Schultz noted the following: “I was captivated by the beverage, the barista who prepared it and the romance of the café atmosphere. At the time Starbucks stores only sold whole bean coffee and had no seating. I had a vision of creating specialty coffee stores that integrated the romance of espresso and provided a place for community” (source).
Inspired and motivated, he presented the idea of creating an Italian-style café chain in the U.S. to Starbucks’ founders when he returned to Seattle. However, they turned the idea down — they did not understand his vision and were not ready to make that innovative leap. Dejected but still determined, Schultz left Starbucks to establish his own coffee shop called Il Giornale in 1985: “I left Starbucks to open my specialty coffee stores. But I had no money. For a year, Sheri and I lived off of her salary while I tried to raise funds. I heard “no” more than 200 times, but eventually, enough people believed in my vision that they invested in me, and in the business” (source). In fact, Schultz was rejected 242 times when he tried to secure capital. He still persisted and acquired Starbucks (with investor backing) in 1987. The number of stores grew from 17 in 1987 to 33 in 1988 to 55 in 1989 to 84 in 1990 to 116 in 116. In 1992, Starbucks went public. (source: Starbucks.com).
Schulz is the perfect example of the “rags to riches” story. As a second-generation American whose “paternal grandfather arrived in the United States from Eastern Europe in 1892 with $10 in his pocket,” Schulz did not experience a luxurious suburban life. In fact, he grew up in Brooklyn’s Canarsie public housing projects — not unlike another “rags to riches” Brooklynite named Jay Z who grew up in Brooklyn’s Marcy Projects. Commenting on his upbringing, Schultz noted that ““neither of [his] parents finished high school, and after [his] father returned from World War II, he spent his life working low paid jobs as a laborer.” He further noted that: “Our family rarely had enough money to pay the bills, and there was a lot of angst in our seventh-floor apartment. I escaped the family chaos by sitting in the stairwell between floors and imagining a better life.”
The greatest entrepreneurs are driven to achieve despite the challenges. They doggedly pursue their vision and follow their passion — they do not necessarily pursue financial goals. On that note, Schultz noted the following: “I never set out to build a global business. I set out to build the kind of company that my father never had a chance to work for. One that treats all people with dignity.”
In 1985, Schultz owned just three cafes in Seattle. There are now 33,833 Starbucks stores in 80 countries around the world, 15,444 of which were located in the United States (source: Wikipedia).
EDITOR’S NOTE: TBG works with dynamic startups and entrepreneurs who are dedicated to innovation, sustainability and impact. Through TBG Capital, we work with investment partners around the world to provide solutions for business development, growth and scaling. We primarily focus on Agrifood, Energy, Infrastructure and Health. To find out more details, just email us.