Howard Schultz on Corporations

Starbucks CEO; independent candidate for President until July 2019


Achieve profit with humanity & pathway to middle class

I became the CEO of Starbucks when the company had just six stores. By the time I left last year, it had almost 30,000 stores in 77 countries--and over the years, Starbucks has provided a job for nearly 3 million people. Along the way, I sought to build a different kind of American company: one that would achieve profit with humanity. We provided first jobs for tens of thousands of young people. We hired more than 20,000 veterans and military spouses. We provided our front-line baristas a pathway to the middle class. We offered all of our employees, even part-timers, healthcare and stock ownership. At each juncture, people said that these kinds of investments shouldn't and couldn't be done in a for-profit company. That it would not work. But we refused to listen to the skeptics. Instead, we put our people first and found a way to give them access to healthcare, ownership and education while building a profitable company.
Source: 2020 Presidential Campaign website HowardSchultz.com , Mar 13, 2019

Rich should pay higher taxes, and corporations too

Q: What about taxing the wealthy more?

A: I should be paying more taxes. And people who are in the bracket of making millions of dollars, or whatever the number might be, should be paying more taxes. I was very vocally against President Trump's corporate tax. Corporate tax rate of 21 percent should have never happened.

Q: What's the appropriate top tax rate?

A: I don't know what the number is, but what I'm suggesting is, I should be paying higher taxes. And I think people across the country are willing to pay higher taxes, but there's a caveat there. When you ask people to pay more taxes, we have to make sure that there is an agreement that your additional tax dollars are going to be spent wisely by the government.

Source: CNN Town Hall: 2020 presidential hopefuls , Feb 12, 2019

Cafes in Italy are welcoming; Starbucks brings that here

I walked into an espresso bar in Milan. I couldn't walk a block before passing another coffee bar. I spent the next week exploring more throughout the city--nothing like those clanky, fluorescent New York diners.

The workers making the espresso were called "baristas." "Pulling" shots of espresso requires just the right combination of water flow, temperature, pressure, and time to extract the fullest, strongest flavor from just the right amount of finely ground coffee beans. The performance takes place just inches from discerning customers, one small cup at a time.

Italians understood the emotional relationship that people could have with coffee and had built a vibrant culture around it, elevating a commodity into an art and creating warm, welcoming spaces. They drew out of me old feelings I'd left behind in my youth: the sense of belonging. The thrill that met this epiphany was visceral. I became convinced that translating that experience in America was the next step for Starbucks.

Source: From the Ground Up, by Howard Schultz, p. 15-6 , Jan 28, 2019

1991: "Bean Stock" gives all employees ownership share

In September 1991, I made the next big decision about the relationship between the company and its workers. Starbucks became the only privately-owned company we knew of to issue equity in the form of stock options, not just to full-time employees, but to part-time employees, too. We called the program Bean Stock, and because it gave each employee part ownership of the company, we began referring to our employees as "partners."

"No matter where you are in the company--the roasting plant, the stores, the office--every person will have a stake in the success of the company."

It had never been done before. For a start-up that was not yet making money to do it was rarer still. The first stock options were granted at $6 a share. Since then, Bean Stock has generated $1.5 billion in pre-tax gains for baristas and shift supervisors. From June 1992nto November 2018, Starbucks total shareholder return was 21,826 percent. In other words, $10,000 invested at the IPO was worth $2,182,620.

Source: From the Ground Up, by Howard Schultz, p. 27-8 , Jan 28, 2019

Transformational Agenda: Starbucks is heart of neighborhood

We referred to [2007] in Starbucks' history as "the transformation." I have always said that Starbucks is at its best when we are fostering personal connections--in our stores, in communities, in our offices.

Few of these things directly flow to the revenue or earnings of the business, but they combine to create what we have referred to internally as the "Starbucks Experience" for customers. We articulated a new vision, a "Transformational Agenda" summarizing seven priorities:

  1. be recognized as the undisputed coffee authority;
  2. engage and inspire our partners with better training and new benefits;
  3. reignite the customers' emotional attachment to our brand;
  4. expand our stores around the world, but try to make each one feel like the heart of the local neighborhood
  5. be a leader in ethical sourcing and environmental impact efforts;
  6. create new, relevant products to help grow revenue;
  7. operate a more efficient and profitable business model.
    Source: From the Ground Up, by Howard Schultz, p. 41-2 , Jan 28, 2019

    American Dream can't be accessible only in right zip code

    Schultz, one of the most politically outspoken corporate leaders in America, has been rumored before as a potential Democratic candidate.

    He started at Starbucks in 1982 and served as chief executive from 1987 to 2000 and again from 2008 to 2017. He is leaving at a tumultuous moment in Starbucks' history [where Starbucks has ordered racial sensitivity training for all staff].

    In a speech to Starbucks shareholders in 2016, Schultz said he feared that the opportunities that allowed him to achieve his American Dream--he grew up in subsidized housing in Brooklyn--have escaped the grasp of too many people. "The American Dream can't be only accessible to people of privilege who are white and live in the right zip code," he said.

    Source: CBS Boston on 2020 presidential hopefuls , Jun 4, 2018

    Support worthy causes in countries where our coffee is grown

    As CEO, my primary responsibility is to the people of Starbucks: partners, customers, and shareholders.

    To me, "corporate responsibility," the term President Clinton used for a conference of CEOs in May 1996, means that management must take good care of the people who do the work and show concern for the communities where they live.

    So what about "social responsibility," the term used by companies that give a percentage of their earnings to charity, or sell organic products, or try to save the rain forest? We don't use that term to describe Starbucks' approach, though "contributing positively to our communities and our environment" has long been part of our mission.

    Some shareholders think companies should not make any charitable contributions. But I have a different view. To reflect the collective values of our partners, we believe Starbucks as a company should support worthy causes in both the communities where our stores are located and the countries where our coffee is grown.

    Source: Pour Your Heart Into It, by Howard Schultz, p.292-293 , Jan 6, 1999

    Build a big business on small business values

    If you asked people in a focus group, "Tell me what Big Business means," you'd almost certainly get a series of negative statements.

    And what's small business? Ask the same focus group, and they may well give you a set of completely opposite reactions. Small business means hard-working people struggling to earn a living. Small-business owners are often well-intentioned and care about their customers.

    Finally, if you ask: "How many big businesses act like small ones?" most people would answer: "Not very many." When we tell people that we're trying to build a big business on a foundation of small business values, many don't believe it. Either they assume we're incurable optimists or they begin looking for hidden agendas that would explain our REAL intentions.

    One of Starbucks' greatest challenges is to try to break the mindset that big can't be good. If we don't, we'll lose the very values that attracted people to us in the first place.

    Source: Pour Your Heart Into It, by Howard Schultz, p.276-277 , Jan 6, 1999

    People worry that national chains homogenize neighborhoods

    We channel our competitive energy against rivals far larger than ourselves, like the big packaged food companies, not against local mom-and-pop coffeehouses.

    The criticisms leveled against us crystallize a deeper issue: the growing fear about the homogenization of neighborhoods and towns. Most of the opposition we've encountered has been in close-knit urban areas or small towns, where people are highly protective of their distinctive character. They worry that national chains will displace locally owned stores and that fast food restaurants will elbow out the corner diner. A few groups have even prevented us from opening a store, by passing some ordinance or claiming insufficient parking.

    We've noticed that whenever several coffee businesses locate near one another, customers flock there. In the end, all of us benefit. We want people to feel delighted and excited that we're in their neighborhood, not put upon. Our goal is to find communities that eagerly welcome us.

    Source: Pour Your Heart Into It, by Howard Schultz, p.278-280 , Jan 6, 1999

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    Page last updated: Apr 30, 2021