SEATTLE, WA – MARCH 22: CEO Howard Schultz pauses while speaking during the Starbucks annual meeting of shareholders. (Photo by Stephen Brashear/Getty Images).
As you walk down the street today, take a minute to look up from your phone (unless you’re reading an…
As you walk down the street today, take a minute to look up from your phone (unless you’re reading an amazing article from the team at 101 Network! Then, by all means, keep reading) and notice the fascinating landscape of life all around you.
The seasonally affected trees; the children playfully skipping down the street grasping their mother’s hands…
The birds, patiently waiting to defecate upon yet another unsuspecting head.
And if you are in one of over 31,000 neighborhoods across the planet, take a gander at the Starbucks up ahead.
No, not that one, the other one. Or the one behind you.
To be honest, you are likely reading this from inside of a Starbucks right now.
So, how in the heck did we get here? How did something as simple as a cup of coffee become the basis for such an internationally renowned brand?
In order to understand, we need to go back to where it all began.
Full-bodied and full of promise
Howard Schultz, a name most recently associated with his failed presidential bid and his piss-poor decision to betray the city of Seattle and sell their beloved SuperSonics, was born in the hometown of Biggie Smalls, Brooklyn.
He put himself through college on government grants, and in 1979, at the age of 26, was named general manager of Swedish-based drip coffee machine manufacturer Hammarplast. Stop! Hammarplast!
Schultz’s duties took him to Seattle to meet with a struggling young coffeehouse named after a Moby-Dick character, Starbucks.
Starbucks wasn’t thriving by any means, but they did know a thing or two about beans, and roughly a year later, Schultz saw enough potential in them to move to the Northwest.
Here, he became their marketing director. This is where things get interesting.
While working for the nascent coffee chain, which at the time primarily sold whole-bean coffee at only three Seattle-area locations, Schultz took a trip across the pond to Italy to sniff some exotic beans.
In Milan, he noticed that nearly every street had a coffee bar, coffeehouse, coffee deck, or coffee lounge … you get the drift.
They liked their coffee and they liked it communally! Back in the States, people were slowly grinding their beans and turning on their percolator while wiping the crust from their eyes, terrified of the idea of anyone glancing at them.
But in Milan, it was more than just an occasional social activity, it was a way of life.
These cafes also had something else Americans were not yet terribly familiar with: espresso.
Schultz came back to the States hopped up on new ideas and espresso. Mostly espresso. But that helped the ideas to flow.
He successfully talked two of the three Starbucks founders, Jerry Baldwin and Gordon Bowker, into letting him open a test store of this new lounge style, and despite it being a success, they opted not to pursue the idea chain-wide at the risk of “getting into the restaurant business.” Good call.
“After Milan, I flew back to the United States, excited to share what I experienced,” Schultz wrote in his autobiography Onward, a copy of which is given to every barista upon beginning their employment. “But my bosses, the first founders of Starbucks, for whom I had tremendous respect, did not share my dream of re-creating the coffee bar experience in Seattle. I was crushed.”
A splash of breve
Schultz decided he still wanted to give this crazy idea a go, and opened a cramped little 700-square-foot cafe named “Il Giornale,” at the base of Seattle’s Columbia Center (which, until 2017, was the tallest building west of the Mississippi! Thanks, elementary school trivia!).
ll Giornale (which means “the newspaper” in Italian, presumably) quickly became known for whipping up espressos, serving ice cream, and playing opera music, making it the perfect spot to go on a first date (or to break up with someone).
Their staff was so small and funds were limited, so Schultz and other shareholders in the small store were often seen hopping behind the bar to steam milk and pour shots. Mamma mia!
But he wouldn’t have been able to open it alone. Strapped for cash and with his first child on the way, Schultz received financial assistance from the two still-believing Starbucks founders, Baldwin and Bowker, as well as an area doctor who respected Schultz’s penchant for taking a gamble.
A few years later, the OG Starbucks decided to ditch the Northwest in order to pursue a new venture, small-time Bay Area coffeehouse Peet’s Coffee & Tea and sold their Starbucks chain to Schultz for a crisp $3.8 million bucks.
That might not seem like boatloads of money now, but I still wouldn’t know how to count that high.
In 1987, Schultz opened new stores in Chicago and Vancouver, British Columbia, bringing their total count to 17.
This would have been enough for a lazy schlub like me! But Howard liked pushing on and wouldn’t stop in the measly double digits.
By the dawn of the ’90s (quite a popular time in Seattle), Schultz had opened 84 stores, cut the ribbon on an official headquarters in Seattle, and began offering health insurance to employees both part-and-full-time, a practice many other businesses of the like still haven’t caught up to.
In 1992, the company went public, and in 1996, they hit their 1,000th privately owned location — less than 10 years after Schultz first acquired the brand.
And that is one of the things that makes their story of growth so remarkable.
While many neighborhoods have two or three dozen Subway sandwich shops on their block, that is because they are inexpensively franchised with little-to-no corporate oversight or zoning restrictions.
Contrastingly, all Starbucks locations are, by design, non-franchised and placed at the sole discretion of ownership.
You can’t just buy yourself a Starbucks. They choose you.
So when you see one Starbucks across the street from another Starbucks, it isn’t shoddy planning, no matter how invasive and gross it might appear; it’s very intentional and strategic.
They’ve looked at the numbers and found that the east side of the street has more than enough customers to satisfy another on the west side. Maybe even two.
By the dawn of the millennium, Starbucks had over 3,500 stores in 19 countries and had cemented Howard Schultz’s Italian fever dream of a “third place.”
But what is that, exactly? What are the other two places?
Like many before him, Schultz realized that people usually only have a few places they truly feel a calling to be at home and work.
Ideally home is No. 1, but for many of us, we see our offices and break rooms more than our couches and living rooms.
“When I first discovered in the early 1980s the Italian espresso bars in my trip to Italy, the vision was to re-create that for America — a third place that had not existed before,” said Schultz. “Starbucks re-created that in America in our own image; a place to go other than home or work. We also created an industry that did not exist: specialty coffee.”
He saw the need for a third place, and he wanted Starbucks to be that venue. A place people could stop by and relax between necessary visits to the other two.
A place where businessmen could rub elbows with college students and secretaries could borrow pens from others all while swigging down their favorite overpriced caffeine Slurpees (the first Frappuccino, by the way, was sold in 1995, which lines up nicely to coincide with childhood obesity skyrocketing from 5% in 1980 to 15% in 2000. Coincidence?).
A most satisfying conclusion
In recent years, Starbucks has come under scrutiny for pushing out mom and pop coffee shops, expanding too aggressively, trying too hard to reinvent the wheel (do you remember the Unicorn Frap?), and encouraging their baristas to *ahem* proactively engage with customers in forced conversations about race. Oy.
But through it all, the chain has rarely faltered, even when stock prices may have.
While some groups try to use the coffee shop as a social barometer (let’s see what is on their Christmas/holiday/Festivus cups this year and then get outraged by it), by and large, they’ve stayed consistent with their values: expensive, burnt coffee and novelty drinks that, try as you might, you can’t avoid.
Howard Schultz stepped down from the company in 2000, before returning in 2008 to revive a brand that had begun to feel watered down, prior to leaving again in 2017.
Just a year later in 2018, Starbucks was able to do something it never had in its prior 47 years of existence: It opened cafés in Italy.
And yes, you’ll need a code to use their bathrooms.
A deeper dive — Related reading on the 101:
Learn more about the intriguing history of the birthplace of Starbucks.
Many of us use coffee as a way to get going in the morning — but it has plenty of other effects, too. Read more here!