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Howard Schultz & the Starbucks empire

howard schultz

Recipe for the perfect cuppa coffee: take one furiously ambitious VP, blend with three passionate academics, grind for 37 years and then inhale an aroma worth $11bn.

Starbucks began in 1971 in a tourist market known as Pikes Place, Seattle. It was the brainchild of two teachers, Jerry Baldwin and Zev Siegel, and a writer, Gordon Bowker, who all grew an initial investment of $3K into a multimillion dollar coffee franchise.

Inspired by Dutch immigrant Alfred Peet's store, these lovers of fine coffee and exotic teas believed it was possible to bring the European techniques of dark roasting coffee beans to an American market of non-coffee connoisseurs.

Enter Howard Schultz, vice-president of Hammarplast, who can be credited with driving the brand to the global heights it has reached today.

For a year Schultz pursued the Starbucks owners, persuading them that he needed to be part of the operation and expressing his vision that Starbucks could be successfully rolled out across the US and Canada.

At first the owners were perturbed, believing Schultz did not understand the core value of the company and that his plans were too high-rolling for the six-shop company

At first the owners were perturbed, believing Schultz did not understand the core value of the company and that his plans were too high-rolling for the six-shop company.

After relentless perseverance the owners gave in and offered Schultz the position of head of marketing overseeing the retail stores.

From VP to shop boy in one year, Schultz spent time on the shop floor ingratiating himself to Starbucks customers, learning the tricks of the trade and making astute observations of the customers in their environment.

The ease with which Schultz made the transition from VP to lowly shop boy impressed the owners.

Brimming with ideas after a trip to Italy observing the theatre of the Baristas, Schultz felt Starbucks was missing a trick and should be brewing the blended coffee they sold.

After much persuasion the owners allowed him to open one espresso bar, but Baldwin baulked at Schultz's next expansion plan, insisting: "We're coffee roasters. I don't want to be in the restaurant business".

Tired of meeting resistance Schultz parted company with Starbucks and went solo to pursue his idea of opening espresso bars in high traffic areas of the city.

Saddened that Schultz had left Starbucks due to frustration and a lack of unity in vision, Jerry Baldwin agreed to invest an initial $150k into his coffee-bar enterprise, kick-starting his career and espresso empire.

Schultz's ability to win friends and not alienate others helped persuade Baldwin to stump up the initial cash along with his knowledge and expertise. Schultz returned the favour by offering Baldwin and Bowker positions as director and consultant, which they accepted.

Having left the beloved Starbucks company, Schultz applied his expertise and on-floor training to his own venture. In the first 12 months he managed to open three stores from Seattle to Vancouver which would annually turn over $1.5m. Then, in March 1987, the co-founders of Starbucks decided they wanted to sell the entire operation. Schultz knew he had to buy it and went about raising the capital.

In August 1987 Schultz signed the deal with Starbucks, acquiring the company lock, stock and barrel for $3.7m. In six years, Schultz had gone from shop boy to president of the Starbucks Corporation - no mean feat for a 34-year-old in his second stint at the company.

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