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Howard Schultz    

Chairman, President & CEO of Starbucks

Starbucks Chairman Howard Schultz: "In 1987, we had 11 retail stores and 100 employees. And a dream. Today, there are 1,300 Starbucks stores".

For those who enjoy real-life, modern-day Horatio Alger stories, here's a good one - about how a fellow named Howard Schultz came up with the outlandish notion that Americans would gladly stand in line and pay premium prices for fresh-brewed espresso.

In 1981, Schultz was 27 and riding high. He owned a great apartment in Manhattan and was pulling down 75 grand a year plus wonderful perks as vice president in charge of U.S. operations for Hammarplast, a Swedish company that makes housewares and kitchen equipment. He'd come a long way, having grown up in public housing in Brooklyn, the son of working-class parents, and the first in his family to earn a college diploma. Yet despite his success with Hammarplast, he was restless, unsettled, vaguely aware that he hadn't really found whatever he was looking for. That indefinable something would appear soon enough through a pair of epiphanies that would not only change his life but also alter the tastes and habits of many Americans.

As Schultz writes in his recent book, "Pour Your Heart Into It: How Starbucks Built A Company A Cup At A Time," the first revelation came in 1981 as he checked Hammarplast's sales records and noted "a strange phenomenon: a little retailer in Seattle was placing unusually large orders for a certain type of drip coffeemaker." The name of the business was Starbucks Coffee, Tea and Spice. Curious, Schultz flew to Seattle and met Starbucks' two owners, who acquainted him with the history of their five stores, which sold high-quality coffee beans and the accoutrements to grind and brew them. The two had been college roomies in San Francisco, where they had discovered the wonders of top-grade dark-roasted coffee from Alfred Peet, the son of a Dutch coffee trader who had started his own company after moving to this country in 1955 and being horrified to find how bad our coffee was. The reason, the Starbucks duo explained, was that U.S. companies bought the inferior robusta beans, as opposed to the first-class arabica beans that Europe preferred. Then they prepared Schultz his first cup of fine espresso. Voila! Schultz had found his destiny. By 1982, he'd joined Starbucks and was helping it expand its reach to other cities.

A year later came Epiphany II. Schultz had flown to Milan for a housewares show, where he spent a day sampling the city's numerous espresso bars. He loved the ambience, the aromas, the sense of community. A lightbulb flashed on. Selling coffee beans was too limiting. Indeed, he thought: "Starbucks had missed the point - completely missed it...what we had to do was unlock the romance and mystery of coffee, firsthand, in coffee bars".

Presto. Now at least a million Americans each day form queues in more than a thousand Starbucks stores to enjoy a pricey jolt of espresso in a variety of concoctions and sizes, familiarizing themselves with the strange vocabulary necessary to effect the transaction and dutifully learning to put the words in the proper sequence. The regulars, who average 18 visits a week, know not to say, "Give me a latte. And make it a big one. Uh, with skim milk." Oh no. They do it the right way: "Grande skim latte." Or maybe "Decaf tall mocha," or "Doppio macchiato," or even the prosaic "Short C.O.D.(coffee of the day)."

Schultz is now Chairman and Chief Global Strategist of Starbucks, having bought out the two founders in 1987 and taken the company public in 1992. Some early investors have reaped more than a 100-to-1 return on their outlays and the Starbucks stock has been a solid winner.

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Onward: How Crisis & Conviction Transformed Starbucks

When Howard Schultz reclaimed the role of Starbucks' CEO in 2008, his morning cup of coffee had gotten pretty complicated. He had 13,000 of his stores to choose from, many unwittingly stealing business from each other. And he knew his customers were increasingly getting their own morning cup of Joe from McDonald’s and Dunkin Donuts. Starbucks had lost much of its sheen. Schultz had watched largely from the sidelines as his company's core values began to deteriorate. Taking the reins, he once again provided the values-based leadership and initiatives that the company needed in order to transform its business.

He also dedicated significant focus to the values and character of Starbucks, which were deeply ingrained in community and volunteerism. When Starbucks Coffee Company posted its third quarter fiscal gains in July 2009, President Barack Obama himself called Schultz to offer his congratulations. Though Schultz had created phenomenal success during Starbucks’ inception and ultimate rise, this time around, he transformed himself into a leader for today's times. In his bestselling book, Onward Schultz provides the blueprint for how to sustain growth and nurture employees during one of the most difficult economic periods in American history.


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