We may never know the identity of the “titan” who tried to steal Howard Schultz’s dream.
Like the subject of Carly Simon’s “You’re So Vain,” only a certain circle of people know the name of the Starbucks board member who tried to hijack the company before he was chewed out by Bill Gates, Sr. (“You should be ashamed,” Gates told him, according to Schultz.) Gates then proceeded to help Schultz raise the $3.8 million he needed to make Starbucks his.
But Schultz shared many other things Thursday night at Benaroya Hall, when he was interviewed by Guy Raz for the popular NPR podcast “How I Built This.” The show focuses on the journeys of some of the country’s most successful innovators and entrepreneurs, and the companies and movements they built.
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The live recording was the last of a three-city tour for Raz, who raved about the beauty of Seattle and then told the audience, “You don’t deserve to live here.”
For starters, Schultz — now Starbucks’ executive chairman — drinks “four or five” cups of coffee a day, and none after 5 p.m. He has an espresso macchiato on his way to work and then a French press of aged Sumatra when he gets there.
Raz then turned the interview to Schultz’s childhood in the Canarsie section of Brooklyn, where he shared a bedroom with his brother and sister and honed his athletic skills on the playground.
In 1960, his father — a diaper deliveryman — slipped on a sheet of ice and broke his hip and leg, and couldn’t work.
“I witnessed the fracturing of the American Dream,” Schultz told Raz. “He became very bitter and angry at the system. What I witnessed scarred me. In many ways, the values and culture of Starbucks came from that. It’s the company my father never had a chance to work for.”
After college at Northern Michigan University, where he played football, Schultz worked for Xerox, making 50 cold calls a day, selling word processors on commission, and sending half of his $1,000 monthly salary to his mother.
But, he said, “I had an entrepreneurial zest for something different.”
On a business trip to Seattle, he walked into the Starbucks store at Pike Place Market and “had an epiphany. The coffee, the romance, the passion that people had.'”
It took a year, but the company hired him and in 1983 sent him to Milan, Italy, where he went into a coffee bar and saw “the theater, the romance, the nectar of the gods, the sense of community.” When Starbucks moved into a new space at Fourth and Spring streets in Seattle, Schultz convinced the owners to give him space for a new coffee bar, which he named Il Giornale, after the newspaper in Milan.
That grew into three stores. Starbucks now has 27,000 stores in 70 countries.
One of his biggest challenges, he said, was finding the “fragile balance between profit and conscience.”
His father’s experience informed his decision to give employees health coverage and stock. (“Health care is not an expense; it’s an investment.”) He chose not to franchise to preserve the culture of the company. (The company does have licensed stores in airports, grocery stores and the like.)
“That was not in our DNA, then or today,” Schultz said of franchising. “We focused on us and controlling our destiny.”
At 47, he stepped down (“I felt like I was repeating myself. I wasn’t having fun.”) and bought The Seattle SuperSonics before selling the team to Clay Bennett in 2006.
“Not proud of that,” was all Schultz would say.
Meanwhile, Starbucks continued to open stores at a near-frantic pace, a time Schultz referred to in a memo as “years of hubris.”
“Our growth and success was covering up a lot of mistakes,” he said. “I began to go into stores and not recognize what we had built.”
The breaking point was a grilled-cheese sandwich that, once heated, overwhelmed the smell of the coffee in the stores. It helped to drive Schultz to return to the company, which at the time, he said, only had about six more months to live.
He ordered the closure of some stores and flew 10,000 store managers to New Orleans for “a $30 million pep talk,” then closed all stores in the U.S. for a three-hour training that cost the company $24 million in sales.
But it was worth it, he said: “If we didn’t correct this situation, we were not going to be able to feed our families. Within a year, it was a memory.”
So what has he learned?
You have to imprint your business with a set of values and self-esteem, Schultz began. Things will take longer and cost more, so you have the long view.
“And one of the most undervalued characteristics is being vulnerable and asking for help,” he said.
When he has to make a decision, Schultz imagines two other people in the room with him: a customer and a partner (Starbucks’ term for employee). Would they be proud?
It’s not just about money, he said: “There has to be a divine purpose.”
To that end, he has committed to hiring veterans and immigrants, and instituted a program that pays for employees’ college tuition.
“I’m an American. I’m living proof of the American Dream. I want to insure that American Dream is still alive and well.”
Last month, Schultz spoke at a CEO summit at Microsoft, where founder Bill Gates, Jr. was sitting in the front row. After Schultz told the “titan” story, Gates approached.
“Who was it?” the younger Gates asked, and when Schultz told him, “He was shocked,” Schultz told the Benaroya crowd.
“Every time I see Bill Gates, Sr., I thank him,” he said. “I never got a bill from him. All he did was help.”