Howard Schultz is an American Businessman, born in Brooklyn, U.S. He served as CEO (1987–2000, 2008–17) of Starbucks, a coffeehouse chain that he helped transform into a worldwide presence. Howard Schultz was the first one to incorporate healthcare for all employees in his company, Starbucks. It was also the first in retail to offer healthcare to employees and part-time workers that revolutionized the industry.
Schultz started his life with humble beginnings. He resided in a small apartment in one of Brooklyn’s public housing projects in Canarsie, “which really was the last stop on the “L” train from New York City” Schultz recalls. His father worked as a low paid labourer, moving from one job to the next to support his family.
When he was seven years old, his father fell on a patch of ice and broke his hip and ankle. He was soon fired from his job since he could not do any work; he had no health insurance, no workers compensation, and no savings. “My father was lying on our couch in a cast, distraught, helpless and that stuck with me,” said Howard Schultz. Unaware at that point, this episode would significantly impact the choices Howard would make in the future.
His mother, Bobbi, had a dynamic personality and was a fierce believer in the American Dream. She gave him the confidence to believe that one day he could break free from the cycle of poverty and become a person of significance.
In high school, he played football and saw the sport as an opportunity to attend college through a football scholarship. In 1971, he went to Northern Michigan University. However, his dreams were crushed when his football scholarship did not come through, and he ended up paying his way through college, paved with student loans and part-time jobs. When things got rough financially, he even found himself selling his blood for a couple of extra bucks.
In 1975, Schultz became the first in his family to graduate college. He did several jobs as a salesperson after graduating and realized he had exemplary skills as a salesperson. In 1982, he became the Marketing Head for Starbucks, a small coffee company located in Seattle. In 1982, Schultz packed all their belongings in his car, with his wife, Sherri and their dog, Jonas and relocated to Seattle to be closer to his new job.
In 1983, Schultz was on a business trip to Italy where he tasted his first expresso from an Italian cafe. The experience made a lasting impression on him; he was captivated by the cafe’s charm, the beverage’s aroma, and even by the barista himself. At the time, the Starbucks stores only sold whole bean coffee, and no seating was provided. “I had a vision of creating specialty coffee stores that integrated the romance of espresso and provided a place for the community. The founders of Starbucks, however, weren’t interested in my idea,” mulled Howard Schultz.
He soon embarked on his journey to open a cafe of his own. For a year, they lived off his wife’s salary while he tried to raise funds for his project. “I heard “no” more than 200 times, but eventually, enough people believed in my vision that they invested in me, and in the business. It was an incredibly challenging and exciting time! By 1987 we had 3 espresso bars named Il Giornale.” recalled Howard Schultz.
Two years later, the original Starbucks Management Team sold its Starbucks retail unit to Schultz and Il Giornale for US$3.8 million. Schultz rebranded Il Giornale with the Starbucks name and expanded across the United States. This type of market strategy received mix reception from both customers and competitors. Schultz did not believe in franchising and made Starbucks retain ownership of every domestic outlet. Schultz’s positioning of Starbucks as a social hub was widely seen as introducing the second wave of coffee culture in the U.S., particularly in Seattle.
After his father passed away, in 1988, Starbucks became one of the first companies in America to give health insurance to all its employees, including part-time workers. A novel benefit at that time in the retail sector. Howard Schultz said, “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 1991, Schultz’ company, Starbucks, was deeply rooted in the values that he was instilled with. He was the first to give employees stock ownership, called Bean Stock. Since its inception, Bean Stock has generated more than $1.5 billion in pre-tax gains for the company’s baristas and managers, that has dramatically helped many employees pay their dues and put down payments on homes and cars, and even helped some pay for their weddings.
Howard Schultz even offered to provide education for his employees, since he had to struggle his way through college. He introduced the Starbucks College Achievement Plan. In 2014, Starbucks and Arizona State University created the first-of-its-kind program to give employees a tuition-free college education. By the spring of 2019, more than 3,000 Starbucks employees (or instead partners as they call them at Starbucks) had graduated. Twenty percent of employees that participated in the program were the first in their families to go to college.
Schultz stepped down as CEO in 2000 but retained the position of Chairman. By 2007, the chain boasted more than 15,000 locations worldwide but soon found itself sinking, and in January 2008, Schultz returned as CEO to revive the company. He made some tough decisions to close over 900 stores and implemented an ambitious strategy to identify and establish new avenues of growth, including several acquisitions of retail stores and even the introduction of an instant-coffee brand. He updated the menu offerings at Starbucks stores. These moves were mostly successful, and by 2012 Starbucks was back on track financially. Five years later Schultz again stepped down as CEO, though he continued to be active in the company, serving as Executive Chairman until 2018.
Howard Schultz also wrote several books including Onward: How Starbucks Fought for Its Life Without Losing Its Soul (2011; with Joanne Gordon). In 2019, Schultz had the idea of running for President as an independent. However, later in the year, he announced that he would not enter the race.
Howard Schultz transformed the business with sustainable growth and profit while sticking to his core values. Growing a business takes teamwork, and there were always tough decisions and challenging periods. In 2018, Starbucks ranked fifth on Fortune’s list of the World’s Most Admired Companies 2018 & 2019.
“I believe life is a series of near-misses. A lot of what we ascribe to luck is not luck at all, it’s seizing the day and accepting responsibility for your future. It’s seeing what other people don’t see and pursuing that vision.” –Howard Schultz.
