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Yet sitting two floors up in a rather desolate meeting room above one of Starbucks’s City of London branches — part of its 370-strong UK chain — he barely seems the plutocrat type. Tall, rangy, handsome, with hair swept straight back above a thin face, he is dressed in well-pressed, plain shirt and neat slacks, and makes a big deal of being self-effacing.
He is really pleased I could come along. It’s an honour to meet me. Yeah, he’s just over for a few days, celebrating Starbucks’s fifth birthday in Britain, thank you so much for sparing the time. Only when he grins do you see he has two rows of large, sharp, shiny teeth. This man didn’t build up a vast, global business on humble charm alone.
In fact Schultz did it with verve, vision, resilience, mind-numbing attention to detail and all the other qualities of driven entrepreneurs, but in interview at least, he hides it well.
He is not the founder of Starbucks — that was three coffee addicts with a literary bent (Starbucks is named after the first mate in Herman Melville’s Moby Dick) who set up a small chain of Seattle-based coffee-bean stores in 1971. Schultz was the New York boy from a blue-collar background whom they hired to do the marketing and who had the idea of selling coffee in cups rather than bags.
They thought he was nuts, so he left and opened his own coffee bars, bided his time, then went back and bought out Starbucks in 1987. He put the two operations together, using the Starbucks name and has since rolled it out across America and the world, seemingly doubling its size every year.
It has become one of the most extraordinary tales in business. Even Schultz is surprised at how fast Starbucks has grown. “The size and scale of what Starbucks is today was never originally planned,” he says, with an aw-shucks grin. “In 1987 we had 11 stores and 100 employees. Now we have 7,000 stores and 70,000 employees. When we floated the company in 1994 it had a market value of $200m, now it’s $11 billion. I guess we kinda underestimated the opportunity initially.”
Not for long. Schultz was a Rank Xerox salesman before joining Starbucks — “50 cold calls a day, that teaches you how to get over rejection” —- he had tasted big-company life. And though coffee shops had been ten a penny for decades, he had the genius to reinvent the wheel: create a contemporary environment that appealed to customers on a host of emotional levels, tie it in with a sudden surge of interest in gourmet foodstuffs, and execute the package with his trademark, methodical exactness.
Hence his management catchphrase: “Everything matters”. This includes not just the dark roasted coffee and the cheery staff but the stores’ lighting, the colour of the decor, the kind of wood used, the food served, the smells (no egg sandwiches), the sounds and the visuals. The aim of Starbucks is to achieve an ambience that attracts and soothes, creating a Third Place (note the New Agey capitals) where people can gather and interact and bond. Then roll it all out with a ruthless efficiency that leaves most competitors gasping in its wake.
Everything in the organisation, according to Starbucks UK’s managing director, Cliff Burrows, is focused on getting the cup of coffee to the consumer. “Howard is obsessively passionate about coffee, but he is also a visionary. He values the connections with customers and with communities. That’s what singles him out, his passion and ability to connect with people at all levels.”
Not everyone is so enthusiastic about Starbucks — a point we will get to later — but it’s hard not to admire what Schultz has built, especially as he has underpinned it with a commitment to worker-friendly employment practices and an interest in fair-trade issues that tend to get drowned out in the clatter of rapid growth.
He is, as he will tell you, immensely proud of his firm’s environmental and social awareness policies, its drive to integrate its stores into local communities and, especially, its innovative share-option scheme for employees, Bean Stock. “When we created that, it was the first time in the history of America that a programme like that was created for part-time workers, and we’ve brought it here to the UK.”
He is also proud that it pays off. Starbucks has, he says, the lowest rate of employee attrition (leaving for other jobs) of any retail company in the world. “Many retailers like to use churn and attrition as an opportunity to keep wages and health benefits down. We don’t.”
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