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The story behind the rise of Starbucks' Howard Schultz, who just gave a raise to every US employee of his $82 billion coffee companyhttps://www.businessinsider.in/the-story-behind-the-rise-of-starbucks-howard-schultz-who-just-gave-a-raise-to-every-us-employee-of-his-82-billion-coffee-company/schultz-was-born-on-july-19-1953-in-brooklyn-new-york-in-an-interview-with-bloomberg-he-said-growing-up-in-the-projects-loosely-described-as-the-other-side-of-the-tracks-exposed-him-to-the-worlds-wealth-disparity-/slidelist/53163064.cms2021-07-26T12:46:12+05:30

The story behind the rise of Starbucks' Howard Schultz, who just gave a raise to every US employee of his $82 billion coffee company

Jul 26, 2021, 12:46 IST

Schultz was born on July 19, 1953, in Brooklyn, New York. In an interview with Bloomberg, he said growing up in the projects — "loosely described as the other side of the tracks" — exposed him to the world's wealth disparity.

He experienced poverty at an early age. When Schultz was 7 years old, his father broke his ankle while working as a truck driver picking up and delivering diapers. At the time, his father had no health insurance or worker's compensation, and the family was left with no income.

In high school, Schultz played football and earned an athletic scholarship to Northern Michigan University. But by the time he started college, he decided he wasn't going to play football after all.

After graduation in 1975, Schultz spent a year working at a ski lodge in Michigan waiting for inspiration. He finally landed a job in the sales training program at Xerox, where he got experience cold-calling and pitching word processors in New York.

The work didn't fulfill him, so after 3 years he left to take a job at Hammarplast, a housewares business owned by a Swedish company called Perstorp. There, Schultz ascended the ranks to vice president and general manager, leading a team of salespeople out of the US office in New York.

It was at Hammarplast that he first encountered Starbucks. The coffee shop had a few stores in Seattle and caught his attention when it ordered an unusually large number of drip coffeemakers.

A year later, the then 29-year-old finally persuaded Baldwin to hire him as the director of retail operations and marketing. At the time, Starbucks only had 3 stores, but they were selling pounds of coffee for home use, Schultz said.

Schultz's career — and Starbucks' fate — changed forever when the company sent him to an international housewares show in Milan.

In 1985, Schultz left Starbucks after his ideas to cultivate an Italian-like experience for coffee-lovers was rejected by the founders. He soon started his own coffee company: Il Giornale (Italian for "the daily").

In order to get Il Giornale off the ground, Schultz had to raise more than $1.6 million.

Schultz spent two years away from Starbucks, wholly focused on opening Il Giornale stores that replicated the coffee culture he'd seen in Italy. In August 1987, Il Giornale bought Starbucks for $3.8 million, and Schultz became CEO of Starbucks Corporation. At the time, there were six stores.

America swiftly took a liking to Starbucks. In 1992, the company went public on the NASDAQ; its 165 stores pulled in $93 million in revenue that year.

Starbucks' success made Schultz rich, and in 2001 he demonstrated his growing love for Seattle when he bought the NBA's SuperSonics for $200 million.

Running Starbucks came with setbacks, too. When Schultz returned as the company’s CEO in 2008 (he stepped back to serve as chairman during an 8-year hiatus) he spent a few years leading Starbucks' massive turnaround, tripling profits from $315 million to $945 million by 2010.

Throughout his career at Starbucks, Schultz has always prioritized his employees, who he calls "partners." Last year, the company announced it would pay employees' full four-year college tuition through Arizona State University's online degree program.

In July 2016, Schultz went even further in enhancing employee benefits by raising wages by at least 5% for more than 150,000 US employees. The move positions Starbucks as a leader, yet again, among corporate giants, specifically in the services economy where the competition for labor is increasing.

The company is already more than halfway to its goal of hiring 10,000 military veterans and their spouses by 2018. And as part of the "100,000 Opportunities Initiative" — an employer-led alliance helping launch the careers of underprivileged youth — the company will hire 10,000 16- to 24-year-olds over the next three years.

Schultz's ultimate goal for Starbucks is to use its global platform to better the world.

In the last 28 years, Schultz has grown the company to include more than 22,500 stores in 70 countries bringing in an annual revenue of $19.2 billion.

As Starbucks has continued to grow, so has Schultz's fortune. His net worth is estimated by Wealth-X to be at least $2.5 billion.

In his 2015 letter to shareholders, Schultz said he hopes Starbucks is "showing the world what’s possible when for-profit public companies go beyond what is expected and also do what is right — and what is in their hearts."

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