How a Poor Kid from Brooklyn Made Starbucks

decades ago few Americans knew what coffee was and some thought it came from a can but a small retailer from Seattle changed that and later became the biggest coffeehouse chain in the world Starbucks while the company was founded by three friends it wasn't them who transformed Starbucks into a hundred billion dollar company it was an outsider a poor kid from Brooklyn who had just graduated from high school teacher that Starbucks was born in 1962 Gordon Bowker was a student at the University of San Francisco and was travelling across Europe at a cafe in Rome he ordered a cappuccino immediately he was taken back by the taste it was different amazing and unforgettable at the time most Americans drank instant coffee at home or over cooked coffee and diners when he returned to the US he dropped out a USF and moved back to his hometown Seattle to feed his habit he would drive from Seattle to Vancouver BC to visit Murch ease a shop that sold and roasted coffee beans in 1970 Gordon was on his way home from a coffee run and came up with the idea of opening up a shop in Seattle he told his two friends Jerry Baldwin and Steve Segal about the idea the three of them decided to go into business together and visited Pete's coffee in Berkeley it was owned by Alfred Peet the son of an Amsterdam coffee trader Alfred roasted his coffee dark the European Way because it brought out the full flavors of the beans within weeks Alfred taught Gordon Jerry and seve how to run the business and roast coffee the European way the same year Howard Schultz just graduated high school and was enrolling in Northern Michigan University he was the first person in his family to go to college through an athletic scholarship during his first season he got injured and had to quit football to pay for school he took out loans worked as a bartender and sometimes sold his blood after graduating from college he got a job in Xerox his sales training program and became a successful salesman but eventually he started to feel Restless and wanted something more challenging so he end up working for Hammer class a Swedish company that sold kitchen equipment and housewares he worked his way up to becoming a vice president and general manager he was given a $75,000 salary a company car and expense accounts and unlimited travel still he felt like something was missing in 1981 Howard noticed a small retail are placing unusually large orders for a trip coffee maker Starbucks Starbucks had only four stores then yet it was buying products in quantities larger than Macy's one of the world's largest department stores he had never been to Seattle before but decided to visit to see what was going on at their original store in Pike Place Market they only sold coffee beans but sometimes offered tasting samples Howard tried a sample and was hooked he felt like he discovered a whole new continent on his plane ride back to New York he couldn't stop thinking about Starbucks and described it as a shining jewel so he reached out to Jerry and asked if there was any way that it could fit into Starbucks while the idea appealed to Jerry his partners were nervous about bringing in a high-powered New Yorker some days Howard couldn't even believe he was entertaining the idea his mother would say you're doing well you have a future don't give it up for a small company nobody's ever heard of after one year Jerry and Gordon invited Howard to San Francisco to meet their silent partner Steve Donovan Howard was convinced that he would fly back to New York would an offer in his hand he was wrong Jerry's partner didn't want to hire him because it was too risky but he couldn't accept no as an answer and called Jerry he told him that who's making a terrible mistake and that the destiny of Starbucks was at stake the next day Jerry called him and told him he got the job and asked when he could come to Seattle in his memoir he wrote no great achievement happens by luck in 1983 Howard had been at Starbucks for a year and was sent to Milan to attend an international housewares show during his walk to the show he noticed several espresso bars and was fascinated by the ritual and romance as he watched the ED of Revelation Starbucks sold great coffee beans but they didn't serve coffee by the cup in his memoir he wrote they treated coffee as produce something to be bagged and sent home with the groceries they stayed one big step from the heart and soul of what coffee has meant throughout the centuries one day Howard took a train to Verona and mimicked someone's coffee order a cafe latte he described it as the perfect balance between steamed milk and no one had ever mentioned this drink to him before he thought to himself no one in America knows about this I've got to take it back with me when Howard returned to Seattle and told his bosses about his revelation they saw him as an overexcited marketing director they argued that Starbucks was a retailer not a restaurant or a bar he later learned that the reason why his idea didn't appeal at the time jerry was considering an opportunity that excited him more in 1984 Starbucks bought Pete's the acquisition left them deeply in debt and deprived them of trying out new ideas it took Howard nearly a year to convince a jury to test the idea of serving espresso he didn't consider it a high priority but agreed to do it at the opening of Starbucks his six store in downtown Seattle even though business grow Jerry felt the success of that store was wrong and said that they were too deeply in debt to continue Howard was depressed for months and felt torn between his loyalty to Starbucks and his vision for Italian espresso bars around that time Howard went to a downtown Athletic Club to play basketball where he was paired with a lawyer named Scott Greenberg he occasionally met Scott for beers and over time shared some of his frustrations when he told Scotty was thinking of going independence Scott said he thought investors might be interested after talking about his idea with Scott and his partner sherry he thought to himself this is my moment if I don't seize the opportunity if I don't step out of my comfort zone and risk it all if I let too much time take on my moment will pass in 1985 he finally made the move and left Starbucks to start his own company eel Jordan Ali the Italian word for newspaper when he was planning on how to approach investors to raise money for his company Jerry surprised them he called him into his office and offered to invest a hundred fifty thousand of Starbucks's money Howard was off to a great start with Jerry and Gordon's support he thought he could attract all the money he needed within six months Howard and Gordon even flew to Italy to research coffee bars and meet with Amy a producer of espresso machines in Milan he expected to return to Seattle with a 1 million dollar investment buffet me turned him down they insisted that Americans could never enjoy espresso the way Italians do by January 1986 Howard raised the initial seed capital that he needed security lease and started building the first store he spent every single minute of his day asking for money racing from one meeting to another he told investors that his plan was to reinvent a commodity at the time Nike was the only other company that did something comparable in his memoir he wrote sneakers were certainly a commodity cheap and standard and practical and generally not very good Nike strategy was first to design world-class running shoes and then create an atmosphere of top-flight athletic performance and witty irreverence around them many of the investors that he approached saw high tech as a more attractive industry to invest in and bluntly told him he was selling a crazy idea Neil Jordan alley you can't pronounce that name how could you leave Starbucks what a stupid move why on earth do you think this is going to work Americans are never going to spend a dollar and a half for coffee over a year Howard spoke to 242 people and two hundred and seventeen of them said no it was a very humbling time for him in April 1986 Howard finally opened the first ield Jordan alley store in the beginning they made lots of mistakes by recreating an authentic style coffee bar they only played Italian opera the baristas wore white shirts and bowties and there is no seating area it wasn't appropriate for Seattle and people started complaining so they varied the music added chairs and offered takeout cups while sales exceeded expectations there were times he wasn't sure if he could meet payroll or pay the rent months later Howard decided to tap into three of Seattle's most prominent leaders Jack Benaroya Herman sakowski and Sam strong after meeting with Herman's son Steve Herman agreed to let Howard make a presentation to the three of them while they made stiff demands a lower price options board seats they ended up investing seven hundred and fifty thousand dollars as a group in 1987 Howard's luck got even better Jerry and Gordon decided to sell Starbucks to buy Starbucks Howard would need to find 3.8 million dollars his investors were impressed with the progress that iljin Ali made within a short time so he was confident that some of them would invest more money but one day and nearly fell apart Howard almost lost Starbucks before he ever had it one of his investors a business leader in Seattle was planning to buy Starbucks he was sure that this man would reduce him from a major shareholder to an employee and that he would unfairly treat some of his early investors so Howard and Scott prepared a strategy and arranged to meet with the investor Scott senior partner Microsoft founder Bill Gates agreed to go with him the investor told Howard that if he didn't take his deal he'd never work again in Seattle will never raise another dollar and will be dogmeat when the meeting ended Howard cried in the lobby bill tried to reassure him that everything would turn out all right I was shocked by the outbursts two days later Howard met with other investors and presented a proposal every investor in ildren alley would have a chance to invest in Starbucks they saw that his plan would be fair to them and admired his integrity for refusing to agree to a plan that benefitted big investors at the expense of smaller ones within weeks Howard managed to raise 3.8 million dollars he needed and on August 18th of 1987 the modern Starbucks was born in his memoir he wrote many of us face critical moments like that in her lives where our dreams seemed ready to shatter you can never prepare for such events but how you react to them is crucial it is important to remember your values be bold but be fair don't give in if others around you have integrity - you can prevail

Channel: Hook

Views: 563,669

Rating: 4.920022 out of 5

Keywords: how starbucks coffee is made, the story of starbucks, the rise of starbucks, starbucks, starbucks founder, starbucks founder story, starbucks story, starbucks storytime, starbucks success story, how did starbucks get so big, the rise and fall of starbucks

Id: 8-N3VqOmqPA

Length: 11min 3sec (663 seconds)

Published: Mon Mar 02 2020