Howard Schultz called a meeting of the seven store managers of the small coffee chain he’d just acquired. It was 1987.
He put a blue dot on the bottom of a whiteboard, drew a great arc up and to the right, and told the managers that this is where the coffee company had to go.
“We have seven years to get there, otherwise the big guys will eat us up,” Schultz said, in the recollection of an early manager in the meeting.
Schultz, who announced his retirement from Starbucks Monday, went on to fulfill that growth ambition many times over, turning the Seattle company into a food and beverage giant that spans the globe and is often embroiled in controversies stemming from Schultz’s own idealistic and contrarian view of what a modern corporation should be.
Schultz’s departure — effective June 26, or 26 years to the day since the company’s initial public stock offering — is a major milestone for the company and the man himself.
But with Schultz, the move immediately renewed speculation over his political ambitions. Schultz made his least-forceful attempt to douse that speculation in an interview with The New York Times.
“I intend to think about a range of options, and that could include public service,” Schultz said when asked if he was considering a presidential run in 2020. “But I’m a long way from making any decisions about the future.”
Schultz’s name has been mentioned as a potential candidate for at least the last three presidential cycles. In 2016, he was on a list of vice presidential candidates under consideration by Hillary Clinton.
Starbucks did not make Schultz available for an interview.
Schultz’s departure from Starbucks marks the logical next step in a ratcheting-down of responsibilities that began about a year ago when he doffed the chief executive role and informed the company’s board of directors of his intentions to step down. In the last year, he’s only been spending two to three days a week in the office when he is in Seattle.
But in other respects, the timing seems abrupt. In addition to being heavily involved in the company’s response to the arrest of two black men in a Philadelphia store in April — which delayed a planned announcement of his departure — the months ahead promise several important milestones for Schultz’s recent efforts to grow a premium brand within Starbucks, and for his long-held ambition of establishing Starbucks in one of the world’s great coffee-drinking countries.
“You don’t get to choose the timing,” said Howard Behar, who formed a leadership triumvirate with Schultz and Orin Smith, collectively known as H2O, that ran Starbucks through two decades of rapid expansion in the 1990s and 2000s. “He’s been talking about it for a long time.”
Smith died March 1 and Behar, 74, said he too has had some health problems. Schultz, 64, silver-haired and looking trim in recent appearances, deserves to spend his remaining time on other endeavors, Behar said.
“He’s an incredible guy that did an incredible job, and 36 years is enough as far as I’m concerned,” he said. “My opinion is he’s given it his all, and there’s a point in time where you’ve got to let other people run with it.”
It’s hard to imagine Schultz stepping completely away from a company to which he’s devoted so much of his life, and with which he’s so closely associated.
In a video on a personal website, Schultz, sitting in the Starbucks Capitol Hill Reserve Roastery, says, “Welcome to my new site. Yes, my new site.” (The domain for the revamped www.howardschultz.com was first registered in 1999.) He thanks supporters, comments on the importance of community and invites people to stay connected. Another part of the website allows people to join Schultz’s mailing list — which would come in handy in any future philanthropic or political endeavor.
Reaction to a potential Schultz presidential run was mixed. A spokesperson for the Washington state Democrats declined to comment. Nick Hanauer, the politically active tech investor, said in a tweet, ” Howard Schultz is a straight up Trickle-downer. A terrible idea for a president.”
At Starbucks, Schultz will adopt the honorific title of chairman emeritus, but will step down from his position on the board of directors. While he said he plans to spend the summer with family and at work on another book, he also will host two major high-end Reserve Roastery store openings later this year, each with significant personal importance that he described as fitting bookends to his time with Starbucks.
One, in New York City, evokes his childhood in the Canarsie Bayview Housing Projects in Brooklyn, New York. From there, Schultz became the first in his family to go to college.
The other new store is the company’s first outlet in Italy — a Roastery planned to open in Milan in September — that will fulfill a career-long ambition of Schultz’s.
Schultz visited Milan in 1983, where he was inspired by the “romance of espresso” and the culture in the coffee bars there to create the concept around which Starbucks would be built — the so-called “third place” where people could gather away from home and work. (This concept, of a private-public space to which all are welcome, was challenged during the Philadelphia incident, prompting Schultz to announce that Starbucks stores and bathrooms would be open even to customers who haven’t made a purchase.)
Schultz said at the company’s annual shareholder meeting in March that until recently, he didn’t feel Starbucks “had the right level of respect” to set up shop in a country with such a deep coffee culture. But as a group of opera singers belted out the triumphal lines of Nessun Dorma, Schultz seemed to be signaling that he thought the company was ready.
The original insight Schultz gleaned in Italy — about serving coffee beverages with a side of community — was not obvious at the time.
Starbucks was founded in 1971 by Jerry Baldwin, Gordon Bowker, and Zev Siegl, as a purveyor of coffee beans and coffee equipment for people to brew themselves at home.
Will Stiles, the store manager in that 1987 meeting, described the Starbucks that Schultz joined as a “quirky” company — a bunch of English majors rolling cigarettes and roasting coffee. “We were just bean-shovelers,” said Stiles, who was hired in 1982, a few months before Schultz.
“He showed up in suits and we were all wearing cutoffs and flip-flops. And he was extraordinarily dynamic,” said Stiles, who left Starbucks in 1999 to take over Home Espresso Repair on Phinney Ridge.
Stiles remembers “an incredible salesman” with a big vision.
A few years after his fateful trip to Italy, Schultz left Starbucks and founded Il Giornale — named for a daily newspaper in Milan — and went on to acquire the erstwhile bean purveyor in 1987, launching the company on a growth trajectory that would take it to heights that perhaps only Schultz himself imagined at the time.
“He could see things that people were not seeing obviously, and he also had the energy to pursue them,” Stiles said of Schultz.
Starbucks today counts some 28,000 stores in 77 countries and had sales last fiscal year of $22.4 billion.
Schultz, in his goodbye message to employees, was less focused on financial results.
He has championed a vision of Starbucks as a corporation with a conscience, touting its employee benefits — employees are called partners because even part-time workers have been compensated in part with company stock since 1991 — and taking positions on some of the nation’s most divisive issues including immigration, gun control, poverty and race.
Schultz had an estimated net worth of $2.8 billion, according to Forbes, most of which is in Starbucks stock. As of mid-December, he owned more than 35.8 million shares, or about 2.6 percent of the company, a stake worth $2.04 billion at Monday’s closing price. In after-hours trading following Schultz’s announcement, Starbucks shares lost almost 3 percent, but recovered to end the extra session down slightly to $56.65.
For local people who bought and held shares of stock in the coffee company that grew up in their hometown, the payoff was immense. The stock rose 21,000 percent since the June 26, 1992 initial public offering, Starbucks pointed out in its laudatory communications about Schultz’ departure.
(That stock performance notwithstanding, some Seattleites say they will never forgive Schultz for the sale of the city’s NBA franchise in 2006. The new owners ultimately relocated the Sonics to Oklahoma City in 2008.)
The company’s 350,000 employees need not fear for their futurein Schultz’s absence, Behar said by phone over the sound of applause Monday afternoon as Schultz appeared in the company’s Sodo headquarters for another of his famous open forums, probably one of his last.
“It won’t make one bit of difference for everybody in this room,” Behar said. “The leadership is in place and they’ve got good people here, and a commitment to the people will go on. That is ingrained in the business. That’s part of the DNA of Starbucks.”
Seattle Times political reporter Jim Brunner contributed to this story.
By Benjamin Romano, The Seattle Times
(c)2018 The Seattle Times
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