A
Starbucks (with Howard Schultz)
@ Acquired
06/04/24
Takeaways
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Howard Schultz
06/04/24
@ Acquired
Starbucks started as a small chain selling only coffee beans, not beverages, and was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971.
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Howard Schultz
06/04/24
@ Acquired
I became interested in Starbucks after visiting their store in Pike Place Market, where I was captivated by the experience and the romance of coffee.
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Howard Schultz
06/04/24
@ Acquired
In 1982, I joined Starbucks as the head of marketing when they were preparing to open their fourth store, still focused solely on selling coffee beans.
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Howard Schultz
06/04/24
@ Acquired
The coffee culture in America during the early 1980s was dominated by low-quality instant coffee, and Starbucks aimed to educate customers about high-quality coffee.
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Howard Schultz
06/04/24
@ Acquired
After a trip to Italy in 1983, I realized that Starbucks needed to transition from selling just beans to offering espresso beverages to create a community experience.
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Howard Schultz
06/04/24
@ Acquired
Starbucks' success is rooted in creating a community space where people connect over coffee, which was a novel concept in the U.S. at the time.
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Howard Schultz
06/04/24
@ Acquired
I faced significant challenges raising $3.8 million to buy Starbucks, including competition from investors who wanted to take over the company without due diligence.
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Howard Schultz
06/04/24
@ Acquired
Bill Gates Sr. helped me secure funding after I shared my vision for Starbucks, which was crucial for the company's future.
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Howard Schultz
06/04/24
@ Acquired
Bill Gates warned that Howard Schultz would acquire Starbucks Coffee Company and that he would never hear from Sam Strum again.
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Howard Schultz
06/04/24
@ Acquired
I raised the money to buy Starbucks Coffee Company with the help of Bill Gates and my son.
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Howard Schultz
06/04/24
@ Acquired
When I acquired Starbucks, we had six stores and ended the year with eleven stores and 100 employees.
HS
Howard Schultz
06/04/24
@ Acquired
Starbucks was originally a small-time Seattle roaster that only sold beans before I took over and expanded it.
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Howard Schultz
06/04/24
@ Acquired
The original Starbucks founders had transitioned to Peet's Coffee, which opened coffee bars many years later.
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Howard Schultz
06/04/24
@ Acquired
I faced rejection from 242 investors when raising $1.6 million for Starbucks, with 2117 saying no.
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Howard Schultz
06/04/24
@ Acquired
Starbucks had a 6:1 debt-to-equity ratio, which limited our ability to innovate due to high debt service payments.
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Howard Schultz
06/04/24
@ Acquired
When we first opened Starbucks, we were focused on no debt because of my childhood experiences with financial struggles.
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Howard Schultz
06/04/24
@ Acquired
Starbucks had an 80% gross margin due to our ability to source and roast coffee effectively.
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Howard Schultz
06/04/24
@ Acquired
Customers began customizing their beverages, which increased the average ticket price and customer loyalty.
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Howard Schultz
06/04/24
@ Acquired
The introduction of the name on the cup was a response to the growing busyness of stores, enhancing customer connection.
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Howard Schultz
06/04/24
@ Acquired
Starbucks became the first experiential brand at scale, relying on customer experience rather than traditional marketing.
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Howard Schultz
06/04/24
@ Acquired
The iconic Starbucks cup became a badge of honor, contributing to brand visibility and customer pride.
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Howard Schultz
06/04/24
@ Acquired
I envisioned Starbucks as a brand that would be accessible to everyone, from CEOs to blue-collar workers.
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Howard Schultz
06/04/24
@ Acquired
The quality of coffee and the experience of drinking it were key to positioning Starbucks as an affordable luxury.
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Howard Schultz
06/04/24
@ Acquired
Starbucks pricing was linked to rising labor costs and the responsibility to shareholders, especially as a public company.
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Howard Schultz
06/04/24
@ Acquired
Maintaining intimacy and trust with customers was crucial as Starbucks grew, ensuring we didn't lose our core values.
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Howard Schultz
06/04/24
@ Acquired
I wanted to create a company that provided respect and dignity to employees, reflecting my father's struggles.
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Howard Schultz
06/04/24
@ Acquired
I proposed giving stock options to every employee, which was a groundbreaking idea at the time, and we announced that we would give 14% of everyone's base pay in stock options, which changed the culture of Starbucks and made everyone partners.
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Howard Schultz
06/04/24
@ Acquired
The healthcare benefits for part-time workers were introduced 25 years before the Affordable Care Act, reflecting my personal experience growing up without health insurance.
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Howard Schultz
06/04/24
@ Acquired
In 1988, Starbucks rolled out health benefits to part-time employees, including same-sex couples in domestic partnerships, which was groundbreaking at the time.
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Howard Schultz
06/04/24
@ Acquired
The initial employee stock grant, called 'beanock', had a strike price of $6 per share, which has since increased to $77, representing an 800x return for employees.
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Howard Schultz
06/04/24
@ Acquired
Starbucks' approach to employee retention mirrors Costco's, emphasizing that it's more cost-effective to retain existing employees than to train new ones.
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Howard Schultz
06/04/24
@ Acquired
Starbucks' decision to sell coffee in Costco significantly increased brand awareness and drove more customers to Starbucks stores.
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Howard Schultz
06/04/24
@ Acquired
We strategically partnered with United Airlines to become their official coffee, which provided exposure and delighted customers who had never experienced good coffee before.
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Howard Schultz
06/04/24
@ Acquired
Starbucks built its reputation primarily through word of mouth, without spending on traditional marketing, by surprising customers in unexpected places.
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Howard Schultz
06/04/24
@ Acquired
The introduction of Starbucks in grocery stores was a key strategy to capture additional revenue and build brand awareness beyond our coffee shops.
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Howard Schultz
06/04/24
@ Acquired
When we launched the Frappuccino, it was a significant departure from our coffee-focused offerings, but it quickly became a bestseller.
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Howard Schultz
06/04/24
@ Acquired
The success of Starbucks in Japan was unexpected; we opened our first store there in August, and it became an instant hit, leading to 2,000 locations.
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Howard Schultz
06/04/24
@ Acquired
The iconic reputation of Starbucks created a strong anticipation in Japan, where customers were eager to experience something they believed was unique and proprietary.
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Howard Schultz
06/04/24
@ Acquired
In 1999, Starbucks aimed for 2,000 stores by the year 2000 and achieved that goal a year early, opening its first store in Beijing during that time.
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Howard Schultz
06/04/24
@ Acquired
When entering China, we partnered with a local company, but it didn't align with our values, leading us to buy them out and operate company-owned stores instead.
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Howard Schultz
06/04/24
@ Acquired
We struggled in China for nearly a decade, facing significant financial losses until Belinda Wang joined and changed the course of Starbucks in that market.
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Howard Schultz
06/04/24
@ Acquired
In 2008, I returned to Starbucks amidst a financial crisis, where the market cap had plummeted from $30 billion to less than $7 billion, and we faced negative sales growth for the first time in our history.
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Howard Schultz
06/04/24
@ Acquired
I had to make tough decisions, including closing a thousand underperforming stores and laying off employees, which was emotionally challenging for me.
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Howard Schultz
06/04/24
@ Acquired
Starbucks was seven months away from insolvency, and I had to communicate the gravity of our situation to employees, emphasizing that we were trying to save the company.
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Howard Schultz
06/04/24
@ Acquired
The mobile app created convenience for customers but also led to dissatisfaction as it became the primary vehicle for order confusion and delays in stores.
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Howard Schultz
06/04/24
@ Acquired
The mobile app generates significant cash flow for Starbucks, acting as an interest-free loan from customers, which is a unique advantage in our business model.
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Howard Schultz
06/04/24
@ Acquired
Starbucks transformed a commodity business into a premium product brand, but we need to monitor disruptive innovations to ensure they enhance rather than detract from the customer experience.
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Howard Schultz
06/04/24
@ Acquired
I believe we should have slowed the rollout of the mobile app to better understand its impact on the customer experience before making it available 24/7.
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Howard Schultz
06/04/24
@ Acquired
Starbucks focuses on enhancing the taste of their coffee rather than owning the real estate or manufacturing their own products like cups and beverages.
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Howard Schultz
06/04/24
@ Acquired
Every company needs professional accounting to avoid risks, even though it doesn't directly impact the product or customers.
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Howard Schultz
06/04/24
@ Acquired
Pilot manages the entire financial stack for startups, including accounting, tax, and CFO services, allowing companies to focus on their core business.
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Howard Schultz
06/04/24
@ Acquired
Starbucks strategically selects urban corner locations with high pedestrian traffic to maximize visibility and customer flow.
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Howard Schultz
06/04/24
@ Acquired
I decided early on not to franchise Starbucks because I believed it would compromise the company's culture and ability to maintain quality.
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Howard Schultz
06/04/24
@ Acquired
Starbucks aims to elevate the coffee experience, avoiding a transactional approach to coffee sales.
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Howard Schultz
06/04/24
@ Acquired
The success of Starbucks in different countries is due to a universal desire for opportunity, respect, and dignity among young people.
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Howard Schultz
06/04/24
@ Acquired
Starbucks has expanded significantly in China, growing from 500 stores in 2011 to nearly 7,000 today, with a new store opening every 15 hours in 2017.
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Howard Schultz
06/04/24
@ Acquired
Belinda, a key employee, played a crucial role in establishing Starbucks in China, adapting the business model to fit local culture.
HS
Howard Schultz
06/04/24
@ Acquired
Starbucks provides health insurance to the families of its partners in China, a move that impressed the Chinese government.
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Howard Schultz
06/04/24
@ Acquired
Starbucks has become an institution, facing higher expectations for success compared to smaller, disruptive organizations.
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Howard Schultz
06/04/24
@ Acquired
Starbucks' culture is built on compassion, empathy, and love, which are essential for the company's success and are not commonly taught in business schools.
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Howard Schultz
06/04/24
@ Acquired
Starbucks waited to enter the Italian market until they could present themselves in the best possible way, respecting the local coffee culture.
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Howard Schultz
06/04/24
@ Acquired
The Roastery concept was developed to create a unique and elevated experience for customers, showcasing the brand's creativity and commitment to quality.
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Howard Schultz
06/04/24
@ Acquired
Espresso has become the number one beverage at Starbucks in Italy, indicating acceptance and preference from local customers rather than just tourists.
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Howard Schultz
06/04/24
@ Acquired
Starbucks has successfully created a coffee culture that attracts consumers who may not have engaged with coffee otherwise, expanding the market.
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Howard Schultz
06/04/24
@ Acquired
The experience created around coffee consumption at Starbucks is as important as the product itself, contributing to customer loyalty, and Starbucks has achieved a level of customization in its mobile app that no other food company has, allowing customers to personalize their orders significantly.
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Howard Schultz
06/04/24
@ Acquired
The Starbucks Barista deserves immense credit for managing countless beverage variations, often creating drinks for the first time, which is a challenging task.
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Howard Schultz
06/04/24
@ Acquired
Starbucks has built a unique brand identity that elevates the role of baristas, making it more respected compared to other food service jobs, like flipping burgers.
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Howard Schultz
06/04/24
@ Acquired
The relationship between baristas and customers at Starbucks is intimate, with baristas often knowing their customers' names and preferences, creating a magical experience.
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Howard Schultz
06/04/24
@ Acquired
Starbucks faces the challenge of maintaining intimacy in customer experiences despite its ubiquity, ensuring that the brand does not become commoditized.
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Howard Schultz
06/04/24
@ Acquired
Starbucks has a responsibility to innovate and improve continuously, as success is not an entitlement but a challenge that requires ongoing effort and adaptation.
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Howard Schultz
06/04/24
@ Acquired
The letter I wrote, 'The Soul of the Brand,' was meant to express my concerns about the company's direction and the need for a renewed focus on its core values and mission.
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Howard Schultz
06/04/24
@ Acquired
Starbucks is not merely a beverage company; it is a coffee company serving people, and it must focus on enhancing the customer experience rather than just executing transactions.
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Howard Schultz
06/04/24
@ Acquired
The essence of Starbucks is not just about coffee; it's about creating a human connection and providing an experience that transcends mere transactions.
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Howard Schultz
06/04/24
@ Acquired
The company must ensure that its mobile app enhances rather than dilutes the Starbucks experience, emphasizing the importance of human connection even in digital interactions.