Pour Your Heart Into It Read online

  Pour Your Heart Into It

  Dedication

  This books is dedicated with love to my wife, Sheri, to my mother, to the memory of my father and to all my partners at Starbucks, especially Mary Ciatrin Mahoney, Aaron David Goodrich, and Emory Allen Evans. You live on in our hearts.

  Contents

  Dedication

  Prologue

  PART ONE REDISCOVERING COFFEE THE YEARS UP TO 1987

  CHAPTER 1 - Imagination, Dreams, and Humble Origins

  CHAPTER 2 - A Strong Legacy Makes You Sustainable for the Future

  CHAPTER 3 - To Italians, Espresso Is Like an Aria

  CHAPTER 4 - “Luck Is the Residue of Design”

  CHAPTER 5 - Naysayers Never Built a Great Enterprise

  CHAPTER 6 - The Imprinting of the Company’s Values

  PART TWO REINVENTING THE COFFEE EXPERIENCE THE PRIVATE YEARS, 1987–1992

  CHAPTER 7 - Act Your Dreams with Open Eyes

  CHAPTER 8 - If It Captures Your Imagination, It Will Captivate Others

  CHAPTER 9 - People Are Not a Line Item

  Starbucks Mission Statement

  CHAPTER 10 - A Hundred-Story Building First Needs a Strong Foundation

  CHAPTER 11 - Don’t Be Threatened by People Smarter Than You

  CHAPTER 12 - The Value of Dogmatism and Flexibility

  PART THREE RENEWING THE ENTREPRENEURIAL SPIRIT THE PUBLIC YEARS, 1992–1997

  CHAPTER 13 - Wall Street Measures a Company’s Price, Not Its Value

  CHAPTER 14 - As Long As You’re Reinventing, How About Reinventing Yourself?

  CHAPTER 15 - Don’t Let the Entrepreneur Get In the Way of the Enterprising Spirit

  CHAPTER 16 - Seek to Renew Yourself Even When You’re Hitting Home Runs

  CHAPTER 17 - Crisis of Prices, Crisis of Values

  CHAPTER 18 - The Best Way to Build a Brand Is One Person at a Time

  CHAPTER 19 - Twenty Million New Customers Are Worth Taking a Risk For

  CHAPTER 20 - You Can Grow Big and Stay Small

  CHAPTER 21 - How Socially Responsible Can a Company Be?

  CHAPTER 22 - How Not to Be a Cookie-Cutter Chain

  CHAPTER 23 - When They Tell You to Focus, Don’t Get Myopic

  CHAPTER 24 - Lead with Your Heart

  Index

  Acknowledgments

  About the Authors

  Copyright

  On a cold January day in 1961, my father broke his ankle at work.

  I was seven years old at the time and in the midst of a snowball fight in the icy playground behind my school when my mother leaned out our seventh-floor apartment window and waved wildly in my direction. I raced home.

  “Dad had an accident,” she told me. “I have to go to the hospital.”

  My father, Fred Schultz, was stuck at home with his foot up for more than a month. I’d never seen a cast before, so it fascinated me at first. But the novelty quickly wore off. Like so many others of his station in life, when Dad didn’t work, he didn’t get paid.

  His latest job had been as a truck driver, picking up and delivering diapers. For months, he had complained bitterly about the odor and the mess, saying it was the worst job in the world. But now that he had lost it, he seemed to want it back. My mom was seven months pregnant, so she couldn’t work. Our family had no income, no health insurance, no worker’s compensation, nothing to fall back on.

  At the dinner table, my sister and I ate silently as my parents argued about how much money they would have to borrow, and from whom. Sometimes, in the evening, the phone would ring, and my mother would insist I answer it. If it was a bill collector, she instructed me to say my parents weren’t at home.

  My brother, Michael, was born in March; they had to borrow again to pay the hospital expenses.

  Years later, that image of my father—slumped on the family couch, his leg in a cast, unable to work or earn money, and ground down by the world—is still burned into my mind. Looking back now, I have a lot of respect for my dad. He never finished high school, but he was an honest man who worked hard. He sometimes had to take on two or three jobs just to put food on the table. He cared a lot about his three kids, and played ball with us on weekends. He loved the Yankees.

  But he was a beaten man. In a series of blue-collar jobs—truck driver, factory worker, cab driver—he never made as much as $20,000 a year, never could afford to own his own home. I spent my childhood in the Projects, federally subsidized housing, in Canarsie, Brooklyn. By the time I was a teenager, I realized what a stigma that carried.

  As I got older, I often clashed with my dad. I became bitter about his underachievement, his lack of responsibility. I thought he could have accomplished so much more, if he had only tried.

  After he died, I realized I had judged him unfairly. He had tried to fit into the system, but the system had crushed him. With low self-esteem, he had never been able to climb out of the hole and improve his life.

  The day he died, of lung cancer, in January 1988, was the saddest of my life. He had no savings, no pension. More important, he had never attained fulfillment and dignity from work he found meaningful.

  As a kid, I never had any idea that I would one day head a company. But I knew in my heart that if I was ever in a position where I could make a difference, I wouldn’t leave people behind.

  My parents could not understand what it was that attracted me to Starbucks. I left a well-paying, prestigious job in 1982 to join what was then a small Seattle retailer with five stores. For my part, I saw Starbucks not for what it was, but for what it could be. It had immediately captivated me with its combination of passion and authenticity. If it could expand nationwide, romancing the Italian artistry of espresso-making as well as offering fresh-roasted coffee beans, I gradually realized, it could reinvent an age-old commodity and appeal to millions of people as strongly as it appealed to me.

  I became CEO of Starbucks in 1987 because I went out, as an entrepreneur, and convinced investors to believe in my vision for the company. Over the next ten years, with a team of smart and experienced managers, we built Starbucks from a local business with 6 stores and less than 100 employees into a national one with more than 1,300 stores and 25,000 employees. Today we are in cities all over North America, as well as in Tokyo and Singapore. Starbucks has become a brand that’s recognized nationally, a prominence than gives us license to experiment with innovative new products. Both sales and profits have grown by more than 50 percent a year for six consecutive years.

  But the story of Starbucks is not just a record of growth and success. It’s also about how a company can be built in a different way. It’s about a company completely unlike the ones my father worked for. It’s living proof that a company can lead with its heart and nurture its soul and still make money. It shows that a company can provide long-term value for shareholders without sacrificing its core belief in treating its employees with respect and dignity, both because we have a team of leaders who believe it’s right and because it’s the best way to do business.

  Starbucks strikes an emotional chord with people. Some drive out of their way to get their morning coffee from our stores. We’ve become such a resonant symbol of contemporary American life that our familiar green siren logo shows up frequently on TV shows and in movies. We’ve introduced new words into the American vocabulary and new social rituals for the 1990s. In some communities, Starbucks stores have become a Third Place—a comfortable, sociable gathering spot away from home and work, like an extension of the front porch.

  People connect with Starbucks because they relate to what we stand for. It’s more than great coffee. It’s the romance of the coffee experience, the feeling of warmth and community people get in Starbucks stores. Th
at tone is set by our baristas, who custom-make each espresso drink and explain the origins of different coffees. Some of them come to Starbucks with no more skills than my father had, yet they’re the ones who create the magic.

  If there’s one accomplishment I’m proudest of at Starbucks, it’s the relationship of trust and confidence we’ve built with the people who work at the company. That’s not just an empty phrase, as it is at so many companies. We’ve built it into such ground-breaking programs as a comprehensive health-care program, even for part-timers, and stock options that provide ownership for everyone. We treat warehouse workers and entry-level retail people with the kind of respect most companies show for only high executives.

  These policies and attitudes run counter to conventional business wisdom. A company that is managed only for the benefit of shareholders treats its employees as a line item, a cost to be contained. Executives who cut jobs aggressively are often rewarded with a temporary run-up in their stock price. But in the long run, they are not only undermining morale but sacrificing the innovation, the entrepreneurial spirit, and the heartfelt commitment of the very people who could elevate the company to greater heights.

  What many in business don’t realize is that it’s not a zero-sum game. Treating employees benevolently shouldn’t be viewed as an added cost that cuts into profits, but as a powerful energizer that can grow the enterprise into something far greater than one leader could envision. With pride in their work, Starbucks people are less likely to leave. Our turnover rate is less than half the industry average, which not only saves money but strengthens our bond with customers.

  But the benefits run even deeper. If people relate to the company they work for, if they form an emotional tie to it and buy into its dreams, they will pour their heart into making it better. When employees have self-esteem and self-respect they can contribute so much more: to their company, to their family, to the world.

  Although I didn’t consciously plan it that way, Starbucks has become a living legacy of my dad.

  Because not everyone can take charge of his or her destiny, those who do rise to positions of authority have a responsibility to those whose daily work keeps the enterprise running, not only to steer the correct course but to make sure no one is left behind.

  I never planned to write a book, at least not this early in my career. I firmly believe that the greatest part of Starbucks’ achievement lies in the future, not the past. If Starbucks is a twenty-chapter book, we’re only in Chapter Three.

  But for several reasons, I decided that now was a good time to tell the Starbucks story.

  First, I want to inspire people to pursue their dreams. I come from common roots, with no silver spoon, no pedigree, no early mentors. I dared to dream big dreams, and then I willed them to happen. I’m convinced that most people can achieve their dreams and beyond if they have the determination to keep trying.

  Second, and more profoundly, I hope to inspire leaders of enterprises to aim high. Success is empty if you arrive at the finish line alone. The best reward is to get there surrounded by winners. The more winners you can bring with you—whether they’re employees, customers, shareholders, or readers—the more gratifying the victory.

  I’m not writing this book to make money. All my earnings from it will go to the newly formed Starbucks Foundation, which will allocate the proceeds to philanthropic work on behalf of Starbucks and its partners.

  This is the story of Starbucks, but it is not a conventional business book. Its purpose is not to share my life’s story, or to offer advice on how to fix broken companies, or to document a corporate history. It contains no executive summaries, no bulleted lists of action points, no theoretical framework for analyzing why some enterprises succeed and others fail.

  Instead, it’s the story of a team of people who built a successful enterprise based on values and guiding principles seldom encountered in corporate America. It tells how, along the way, we learned some important lessons about business and about life. These insights, I hope, will help others who are building a business or pursuing a life’s dream.

  My ultimate aim in writing Pour Your Heart into It is to reassure people to have the courage to persevere, to keep following their hearts even when others scoff. Don’t be beaten down by naysayers. Don’t let the odds scare you from even trying. What were the odds against me, a kid from the Projects?

  A company can grow big without losing the passion and personality that built it, but only if it’s driven not by profits but by values and by people.

  The key is heart. I pour my heart into every cup of coffee, and so do my partners at Starbucks. When customers sense that, they respond in kind.

  If you pour your heart into your work, or into any worthy enterprise, you can achieve dreams others may think impossible. That’s what makes life rewarding.

  There’s a Jewish tradition called the yahrzeit. On the eve of the anniversary of a loved one’s death, close relatives light a candle and keep it burning for twenty-four hours. I light that candle every year, for my father.

  I just don’t want that light to go out.

  CHAPTER 1

  Imagination, Dreams, and Humble Origins

  It is only with the heart that one can see rightly. What is essential is invisible to the eye.

  —ANTOINE DE SAINT-EXUPÉRY,

  THE LITTLE PRINCE

  Starbucks, as it is today, is actually the child of two parents.

  One is the original Starbucks, founded in 1971, a company passionately committed to world-class coffee and dedicated to educating its customers, one on one, about what great coffee can be.

  The other is the vision and values I brought to the company: the combination of competitive drive and a profound desire to make sure everyone in the organization could win together. I wanted to blend coffee with romance, to dare to achieve what others said was impossible, to defy the odds with innovative ideas, and to do all this with elegance and style.

  In truth, Starbucks needed the influence of both parents to become what it is today.

  Starbucks prospered for ten years before I discovered it. I learned of its early history from its founders, and I’ll retell that story in Chapter Two. In this book, I will relate the story the way I experienced it, starting with my early life, because many of the values that shaped the growth of the enterprise trace their roots back to a crowded apartment in Brooklyn, New York.

  HUMBLE ORIGINS CAN INSTILL

  BOTH DRIVE AND COMPASSION

  One thing I’ve noticed about romantics: They try to create a new and better world far from the drabness of everyday life. That is Starbucks’ aim, too. We try to create, in our stores, an oasis, a little neighborhood spot where you can take a break, listen to some jazz, and ponder universal or personal or even whimsical questions over a cup of coffee.

  What kind of person dreams up such a place?

  From my personal experience, I’d say that the more uninspiring your origins, the more likely you are to use your imagination and invent worlds where everything seems possible.

  That’s certainly true of me.

  I was three when my family moved out of my grandmother’s apartment into the Bayview Projects in 1956. They were in the heart of Canarsie, on Jamaica Bay, fifteen minutes from the airport, fifteen minutes from Coney Island. Back then, the Projects were not a frightening place but a friendly, large, leafy compound with a dozen eight-story brick buildings, all brand-new. The elementary school, P.S. 272, was right on the grounds of the Projects, complete with playground, basketball courts, and paved school yard. Still, no one was proud of living in the Projects; our parents were all what we now call “the working poor.”

  Still, I had many happy moments during my childhood. Growing up in the Projects made for a well-balanced value system, as it forced me to get along with many different kinds of people. Our building alone housed about 150 families, and we all shared one tiny elevator. Each apartment was very small, and our family started off in a cramped two-bedroom un
it.

  Both my parents came from working-class families, residents of the East New York section of Brooklyn for two generations. My grandfather died young, so my dad had to quit school and start working as a teenager. During World War II, he was a medic in the Army in the South Pacific, in New Caledonia and Saipan, where he contracted yellow fever and malaria. As a result, his lungs were always weak, and he often got colds. After the war, he got a series of blue-collar jobs but never found himself, never had a plan for his life.

  My mother was a strong-willed and powerful woman. Her name is Elaine, but she goes by the nickname Bobbie. Later, she worked as a receptionist, but when we were growing up, she took care of us three kids full time.

  My sister, Ronnie, close to me in age, shared many of the same hard childhood experiences. But, to an extent, I was able to insulate my brother, Michael, from the economic hardship I felt and give him the kind of guidance my parents couldn’t offer. He tagged along with me wherever I went. I used to call him “The Shadow.” Despite the eight-year age gap, I developed an extremely close relationship with Michael, acting like a father to him when I could. I watched with pride as he became a good athlete, a strong student, and ultimately a success in his own business career.

  I played sports with the neighborhood kids from dawn to dusk every day of my childhood. My dad joined us whenever he could, after work and on weekends. Each Saturday and Sunday morning, starting at 8 A.M., hundreds of us kids would gather in the school-yard. You had to be good there, because if you didn’t win, you’d be out of the game, forced to watch for hours before you could get back in. So I played to win.