Many Americans believe that coffee from Starbucks is the most delicious. Howard Schultz, an entrepreneur, billionaire and founder of a coffee empire from New York, proposed to sell it in cafes. He popularized this drink, extending its distribution from 11 cafes in the USA to 30,000 outlets across the world. Many years have passed, but millions of people continue to visit these cafes. What is the secret behind Howard Schultz’s success? How did he build a popular coffee business and make over 200 million dollars from it? Learn more at newyork1.one.
What was the childhood of the Starbucks founder like?
Howard Schultz was not always as successful and wealthy as he is known today. He faced many challenges in his early years. He was born on July 19, 1953, into a poor family and lived in Brooklyn, which was a deprived neighborhood at that time. Poor infrastructure, high crime rates and lack of quality education left a negative imprint on his memory.
In addition, the parents of the future entrepreneur did not have a stable job. They barely had enough money for food, let alone entertainment, traveling or quality education. That is why, as a teenager, Schultz had to look for a part-time job to make ends meet. Hard work and a strong desire to earn money had a positive impact on him. Unlike his peers, the poor boy had leadership potential, ambitions and an entrepreneurial mindset.
Many years later, he changed his life and became a leader in the American coffee industry despite having a troubled childhood. Howard became a bright example for many Americans, showing how one can achieve great heights through hard work and self-belief.
After finishing school, Howard entered Northern Michigan University. His father insisted on him pursuing higher education, even though the institution itself was not prestigious. In 1975, the graduate got a bachelor’s degree in communications but never worked in that field.
First attempts to build a career and introduction to the Starbucks company
After graduating from university, Schultz refused to return home to New York. His first job was at a ski resort in Michigan, where he worked for a year. Initially, he wanted to earn money in the tourism business but soon realized there were better options. He then was employed at Xerox as a sales specialist. He handled his duties well, but at the same time, he wanted more than this.
Howard aspired to create something new, lead a team and organize a company’s activities. However, a new job at Xerox was prospectless for him because there were no opportunities for such career growth. He soon started working at a subsidiary of the Swedish household appliance manufacturer Hammarplast. At that time, Starbucks used to order big coffee grinders from there. Schultz became interested in this company and tried to employ there for a year.
Starbucks existed long before Schultz started working there. The company was rapidly growing but had a niche specialization. From its founding in 1971, its employees were engaged in selling coffee beans and processing them. However, the company’s concept did not include selling ready-made coffee in cups with a logo and opening coffee shops.
Back then, coffee was not as popular as it is now. Americans usually drank it at home or work. But their attitude towards coffee changed over the years and they began to consume it more frequently. Coffee advertising, the active lifestyle of Americans and the development of the Starbucks business concept led to a new trend of drinking coffee in public places and outdoors.
The New York entrepreneur Howard Schultz had a great influence on this. He was so impressed with the Starbucks concept that decided to dedicate the rest of his life to its development. He worked with great enthusiasm and truly believed in the successful future of the company. In his opinion, it was only necessary to expand its activities and change the work process.
Working at Starbucks: How Howard Schultz built a coffee empire
In 1982, Starbucks was looking for new employees. Schultz was among the lucky ones to be accepted into the staff. The ambitious and smart entrepreneur impressed the company’s management with his ideas and expressed his intention to scale up the coffee sales business.
Howard worked with clients and performed marketing duties. He also tried several times to persuade Starbucks executives to create new things and broaden the work concept. Although he was repeatedly rejected, he did not want to give up. He was confident that by selling coffee, a successful and profitable business could be built. Once, he had a chance to do it.
A trip to Milan changed everything. In 1983, he set off to Italy, where he studied the local traditions of coffee making, learned Italian recipes and fell in love with espresso. It was there that he got the idea to open his own shop selling hot coffee and coffee beans. According to his financial calculations, he required $400,000 for this venture. He had his savings, however, most of the money had to be raised from investors.
Only 25 of 242 investors, who were approached by Howard, agreed to invest in his new venture. Starbucks founders Jerry Baldwin and Gordon Bowker were among them. They invested $150,000. Another $100,000 was given by Dr. Ron Margolis. The total amount of investments was $4 million.
Inspired by his business idea, Howard Schultz organized the opening of a cafe and immediately introduced several innovations in its operation. Firstly, besides selling coffee beans, they had to prepare coffee for visitors in the shop. In addition, pastries and ice cream were to be offered as well. As a result, the number of customers constantly increased, as did Howard’s business profitability.
A turning point in his activities occurred in 1987. The Starbucks management decided to sell the company. Schultz raised funds from investors and bought the company to continue scaling his business.
In 1992, Schultz conducted an IPO (initial public offering). Thus, he attracted nearly $300 million in investments, making his company even more lucrative. Schultz also refused franchising agreements, which increased the costs of servicing coffee shops but gave him full freedom in developing his business. Moreover, he was one of the first entrepreneurs to broaden the range of coffee. For example, in the 90s, Starbucks cafes offered cups of warm espresso, which was not widely known at the time.
The demand for Starbucks hot coffee and beans steadily grew. Soon, Schultz opened several cafes in New York and then across America. This is how one of the largest and most profitable companies of the 90s appeared. The initial $4 million investment brought Howard and his employees $273 million in four years.
Success secrets of New York entrepreneur and billionaire Howard Schultz
- Work and be active in any situation. Schultz says that there will be problems in every business, but instead of obstacles, it gives the opportunity for growth. Don’t get caught up in what has been achieved. Work persistently and always look for fresh approaches to tackle the issue.
- Be bold and take risks. If Howard had not bought Starbucks at its early stage of development, perhaps his coffee shop would have closed long ago. This proves that pursuing your dream is worth taking a risk.
- Do not be scared of emergency situations. Every business experiences tough times. The most important thing is to find more effective solutions for changing the business concept and determinedly move forward.
- Take care of your employees. In many interviews, Schultz mentioned that while heading Starbucks, he cared about the needs of his employees. Providing cash bonuses, benefits, medical care and other advantages helped Schultz earn their trust and respect.
- Establish and maintain profitable partnerships. Starbucks coffee is sold not only in coffee shops but also in bookstores, McDonald’s and pizza restaurants across America and abroad. This allowed Howard Schultz to significantly increase the company’s profit.