Howard Schultz is CEO and chairman of Starbucks, the highly successful coffee company.
Who Is Howard Schultz?
Born in Brooklyn, New York, on July 19, 1953, Howard Schultz graduated from Northern Michigan University with a bachelor's degree in communications before becoming director of retail operations and marketing for the Starbucks Coffee Company in 1982. After founding the coffee company Il Giornale in 1987, he purchased Starbucks and became CEO and chairman of the company. In 2000, Schultz publicly announced that he was resigning as Starbucks's CEO. Eight years later, however, he returned to head the company. In 2014, Starbucks had more than 21,000 stores worldwide and a market cap of $60 billion.
Early Life and Career
Howard D. Schultz was born in Brooklyn, New York, on July 19, 1953, and moved with his family to the Bayview Housing projects in Canarsie, a neighborhood in southeastern Brooklyn, when he was 3 years old. Schultz was a natural athlete, leading the basketball courts around his home and the football field at school. He made his escape from Canarsie with a football scholarship to Northern Michigan University in 1970.
After graduating from the university with a Bachelor of Science degree in communication in 1975, Schultz found work as an appliance salesman for Hammarplast, a company that sold European coffee makers in the United States. Rising through the ranks to become director of sales, in the early 1980s, Schultz noticed that he was selling more coffee makers to a small operation in Seattle, Washington, known then as the Starbucks Coffee Tea and Spice Company, than to Macy's. "Every month, every quarter, these numbers were going up, even though Starbucks just had a few stores," Schultz later remembered. "And I said, 'I gotta go up to Seattle.'"
Howard Schultz still distinctly remembers the first time he walked into the original Starbucks in 1981. At that time, Starbucks had only been around for 10 years and didn't exist outside Seattle. The company's original owners, old college buddies Jerry Baldwin and Gordon Bowker and their neighbor, Zev Siegl, had founded Starbucks in 1971. The three friends also came up with the coffee company's ubiquitous mermaid logo.
"When I walked in this store for the first time—I know this sounds really hokey—I knew I was home," Schultz later remembered. "I can't explain it. But I knew I was in a special place, and the product kind of spoke to me." At that time, he added, "I had never had a good cup of coffee. I met the founders of the company, and really heard for the first time the story of great coffee … I just said, 'God, this is something I've been looking for my whole professional life.'" Little did Schultz know then how fortuitous his introduction to the company would truly be, or that he would have an integral part in creating the modern Starbucks.
Birth of the Modern Starbucks
A year after meeting with Starbucks' founders, in 1982, Howard Schultz was hired as director of retail operations and marketing for the growing coffee company, which, at the time, only sold coffee beans, not coffee drinks. "My impression of Howard at that time was that he was a fabulous communicator," co-founder Zev Siegl later remembered. "One to one, he still is."
Early on, Schultz set about making his mark on the company while making Starbucks' mission his own. In 1983, while traveling in Milan, Italy, he was struck by the number of coffee bars he encountered. An idea then occurred to him: Starbucks should sell not just coffee beans but coffee drinks. "I saw something. Not only the romance of coffee, but … a sense of community. And the connection that people had to coffee—the place and one another," Schultz recalled. "And after a week in Italy, I was so convinced with such unbridled enthusiasm that I couldn't wait to get back to Seattle to talk about the fact that I had seen the future."
Schultz's enthusiasm for opening coffee bars in Starbucks stores, however, wasn't shared by the company's creators. "We said, 'Oh no, that's not for us,'" Siegl remembered. "Throughout the '70s, we served coffee in our store. We even, at one point, had a nice, big espresso machine behind the counter. But we were in the bean business." Nevertheless, Schultz was persistent until, finally, the owners let him establish a coffee bar in a new store that was opening in Seattle. It was an instant success, bringing in hundreds of people per day and introducing a whole new language—the language of the coffeehouse—to Seattle in 1984.
But the success of the coffee bar demonstrated to the original founders that they didn't want to go in the direction Schultz wanted to take them. They didn't want to get big. Disappointed, Schultz left Starbucks in 1985 to open a coffee bar chain of his own, Il Giornale, which quickly garnered success.
Two years later, with the help of investors, Schultz purchased Starbucks, merging Il Giornale with the Seattle company. Subsequently, he became CEO and chairman of Starbucks (known thereafter as the Starbucks Coffee Company). Schultz had to convince investors that Americans would actually shell out high prices for a beverage that they were used to getting for 50 cents. At the time, most Americans didn't know a high-grade coffee bean from a teaspoon of Nescafé instant coffee. In fact, coffee consumption in the United States had been going down since 1962.
In 2000, Schultz publicly announced that he was resigning as Starbucks' CEO. Eight years later, however, he returned to head the company. In a 2009 interview with CBS, Schultz said of Starbucks' mission, "We're not in the business of filling bellies; we're in the business of filling souls."
In 2006, Howard Schultz was ranked No. 359 on Forbes magazine's "Forbes 400" list, which presents the 400 richest individuals in the United States. In 2013, he was ranked No. 311 on the same list, as well as No. 931 on Forbes's list of billionaires around the globe.
Today, no one company sells more coffee drinks to more people in more places than Starbucks. By 2012, Starbucks had grown to encompass more than 17,600 stores in 39 countries around the world, and its market capitalization was valued at $35.6 billion. By 2014, Starbucks had more than 21,000 stores worldwide and a market cap of $60 billion. The incredibly popular coffee company reportedly opens two or three new stores every day and attracts around 60 million customers per week. According to the company's website, Starbucks has been "committed to ethically sourcing and roasting the highest-quality arabica coffee in the world" since 1971.
Social Causes: Gay Marriage and Racial Sensitivity
In March 2013, Schultz made headlines and won wide applause after making a statement in support of the legalization of gay marriage. After a shareholder complained that Starbucks had lost sales due its support for gay marriage (the company had announced its support for a referendum to legalize gay union in the state of Washington), Schultz responded, "Not every decision is an economic decision. Despite the fact that you recite statistics that are narrow in time, we did provide a 38 percent shareholder return over the last year. I don't know how many things you invest in, but I would suspect not many things, companies, products, investments have returned 38 percent over the last 12 months.
"The lens in which we are making that decision is through the lens of our people," he continued. "We employ over 200,000 people in this company, and we want to embrace diversity. Of all kinds. If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it's a free country. You can sell your shares in Starbucks and buy shares in another company."
In April 2018, the company encountered another hot-button issue when two African-American men were arrested at a Philadelphia location for trespassing, after convening at the store but not ordering anything. Schultz subsequently spearheaded a racial-bias training program to help ensure that such an unfortunate incident wouldn't happen again.
Retirement from Starbucks
In early June 2018, Howard Schultz announced that he would be stepping down as chairman of Starbucks at the end of the month. At the time, the chain had grown to include more than 28,000 stores in 77 countries.
The move added fuel to the rumor that the successful businessman was considering a run for president in 2020, and Schultz did little to diffuse the speculation. "For some time now, I have been deeply concerned about our country — the growing division at home and our standing in the world," he told The New York Times, though he added that he was "a long way from making any decisions about the future."
Schultz currently resides in Seattle, Washington, with his wife, Sheri (Kersch) Schultz, and two children, Jordan and Addison.