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Starbucks Success Story
Starbucks Success Story
Coming from a poor working class family- Howard D. Schultz, the CEO of Starbucks transformed his life by establishing his company into the world’s biggest coffeehouse company.
Schultz was born on July 19, 1953, in Brooklyn, New York, in a poor family. His father was a former US Army trooper and then a truck driver.
His childhood was spent around poverty, Schultz lived in a neighbourhood with low-income families. Schultz witnessed his father struggling for money. At the age of seven, his father injured his leg at work and had no medical insurance, so the financial strain on the family left Howard scarred with terrible memories of his childhood. “I saw my father losing his sense of dignity and self-respect. I am sure that this was caused mostly by the fact that he has been treated as an ordinary working man.” – Howard Schultz recalls.
In high school, Howard played football that earned him an athletic scholarship for Northern Michigan University.
Upon starting college, Schultz realised he did not want to play football and chose to major in communications. To pay for school he took out student loans, worked as a bartender and also sold his blood for money a couple of times.
After graduation, the future entrepreneur spent three years working as a sales manager at Xerox, then joined Hamamaplast a Swedish company.
The company sold various home appliances that included selling coffee machines to Starbucks.
Starbucks caught Howard’s attention when it placed an order for a large number of coffee machines, this led him to fly to Seattle to meet the owners, Gerald Baldwin and Gordon Bowker.
After a year of constant persuasion, the Starbucks owners hired Howard as the director of retail operations and marketing. At the time there were only three Starbucks stores.
The trip that changed Starbucks and Schultz’s career was his trip to Milan to attend an international housewares show. While exploring the place he came across small coffee shops, where the owners developed personal relationships with their customers, even calling them by their given names while serving them cappuccinos and cafe lattes.
In 1985, Howard quit Starbucks as his Italian based coffee experience idea was rejected by the two founders. He then went on to create his own coffee company called ‘Il Giornale’ Italian for ‘The Daily.’
Howard Schultz remarks, “Only those who go by unexplored roads, creating new industries and new products, can build a strong, long-lasting company and inspire others to achieve great results.”
Over $1.6 million was required to get Il Giornale up and running. Schultz describes his struggle “In the course of the year I spent trying to raise money, I spoke to 242 people, and 217 of them said no,” he wrote. “Try to imagine how disheartening it can be to hear that many times why your idea is not worth investing in. … It was a very humbling time.”
He spent two years replicating the coffee culture he had experienced in Italy, at Il Giornale. In August 1987, Starbucks was purchased by Il Giornale for $ 3.8 million.
Starbucks became a public company in the year 1992. In June of the same year Starbucks sold its shares on the New York Stock Exchange for $ 14 a share, the price rose up to $ 33 in just one day.
To retain the quality and to give customers perfect coffee, in 2008, Schultz closed over 7,100 Starbucks stores to retrain the baristas on how to make the perfect espresso. The next two years the company did a massive turnaround, in 2010 the profits tripled from $ 315 million to $ 945 million.
Starbucks now has an annual sales of over $16 billion. Schultz net worth also rose to $ 3 billion. Once Schultz said, “I cannot offer you any specific secret recipe for success, the perfect plan, how to reach the pinnacle of success in the business. But my own experience suggests that starting from scratch and achieving much more than what I dream about is quite possible”.Starbucks now has an annual sales of over $ 16 billion. Schultz’s net worth also rose to $ 3 billion.
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