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Rags to Riches Story of Starbucks Howard Schultz

by Team Tenangles
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Howard Schultz

Who Is Howard Schultz?

Born in Brooklyn, New York, on July 19, 1953, Howard Schultz was an American Business and CEO of Starbucks from 1986–2000 and again from 2008–2017 and executive chairman from 2017 to 2018. As of February 2022 with a net worth of $4.3 billion, Howard Schultz ranked 212th richest person in America according to Forbes magazine.

Early Life

Howard Schultz was born in a Jewish family living in Brooklyn, New York. His mother’s name is Elaine, and his father’s name is Fred Schultz, an ex-US Army trooper and then a truck driver. He grew up in the Canarsie Bayview Houses of the New York City Housing Authority with younger brother Micheal and sister Ronnie.

As his family was poor, young Schultz saw an escape in sports. Schultz was a natural athlete; he loved playing basketball and football during his school days. He was awarded an athletic scholarship to Northern Michigan University; at that time, he was the first person in his family to go to college.

Career

After graduating from the university with a Bachelor of Science degree in communication in 1975, Howard Schultz started working as a salesman for Xerox Corporation. He was later promoted to a full sales representative. In 1979 he changed his job and joined Swedish coffee maker manufacturer Hammarplast as a general manager responsible for their United States operations with twenty staff.

In 1981, during his visit to Seattle, Schultz visited a fledgling coffee-bean shop called Starbucks Coffee Company. He was very impressed with the company’s knowledge of coffee and expressed his interest in working with them soon. A year later, Schultz joined Starbucks as director of retail operations and marketing.

Interestingly, Starbucks only sold coffee beans, not coffee drinks.

The Idea of the Modern Starbucks

After joining Starbucks, Schultz in 1983 went on a buying trip to Milan, Italy, where he noted that coffee bars existed on almost every street. He liked that they not only served excellent espresso but also served as a meeting place for people, and these cafes were an important part of Italian culture and society.

While in Milan, he thought that Starbucks should start selling coffee drinks, not just coffee beans. During one of his interviews, Schultz recalled that he thinks that he saw the future and can’t wait to get back to Seattle to discuss this with the founders of Starbucks.

Negative Response From Starbucks Founders

The company’s founders did not share Schultz’s enthusiasm for opening the coffee shops in Starbucks stores. He tried to persuade the owners until finally, the owners let him establish a coffee bar in their new store opening in Seattle. The New Starbucks store was an instant success, bringing in hundreds of people per day, but the Starbucks owners refused to roll it out company-wide.

Company founders did not want to go in the direction Schultz wanted to take them and were not interested in the restaurant business. Frustrated and disappointed, Schultz decided to leave Starbucks in 1985 to open a coffee bar chain of his own, II Giornale.

Starbucks Coffee Company

Schultz’s new venture Il Giornale quickly garnered success as the store offered an ice cream in addition to coffee and played opera music in the background. Within two years, with the help of investors, Schultz purchased Starbucks for US$3.8 million and merges it with Il Giornale. After becoming CEO and chairman of Starbucks Coffee Company, Schultz aggressively expanded its reach across the US and rapidly grew.

Schultz did not believe in the franchising model, and that is why he made a point of having Starbucks retain ownership of every domestic outlet. In 2000, Schultz announced that he was resigning as Starbucks’s CEO and moving to a chief global strategist position to help the company expand internationally. However, eight years later, in January 2008, Schultz returned as CEO of Starbucks.

Continued Success

Today, no company in the world sells more coffee drinks than Starbucks. The popular coffee company reportedly opens two or three new stores every day and attracts around 60 million customers per week. As of February 2022, Starbucks had grown to more than 34,317 stores worldwide, and its market capitalization was valued at $107.81  billion.

Retirement from Starbucks

In June 2018, Howard Schultz announced that he would be stepping down as chairman of Starbucks. This move added fuel to the rumor that he was considering a run for the United States presidential election in 2020, and Schultz did little to diffuse the speculation. Howard Schultz currently lives in Seattle, Washington, with his wife, Sheri, and two children, Jordan and Addison.

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