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The Founder's Notes

Founder index · Starbucks · 1982–2000, 2008–2017, 2022–2023

Howard Schultz

The lesson that travels

“The product is rarely the thing being bought. Schultz's contribution was identifying that Americans lacked a place to sit between home and work, and pricing coffee as rent on that place.”

Schultz did not found Starbucks. He was hired in 1982 as director of retail operations at a Seattle company that sold roasted beans and equipment and served no drinks. A 1983 buying trip to Milan, where he counted espresso bars operating as neighbourhood living rooms, convinced him the company was selling the wrong thing. The founders declined to follow him, so he left, built his own chain, and came back in 1987 with $3.8 million to buy the company that had turned down his idea.

What followed was one of the fastest retail expansions in history and a set of labour policies that were unusual for their industry — health coverage for part-time workers from 1988, equity through Bean Stock from 1991, later tuition support. Schultz built the moral story of the brand around those policies as deliberately as he built the stores.

That story is also where his record is most contested. From 2021 the same company faced a nationwide unionisation campaign, and Schultz — back for a third stint as interim CEO — opposed it publicly and personally, appearing before a Senate committee in 2023 to defend the company's conduct. The National Labor Relations Board issued numerous complaints against Starbucks during the period. The consistent reading is not hypocrisy exactly, but paternalism: Schultz believed benefits should be granted by a company that cared, not bargained for by workers who did not trust it, and that belief did not survive contact with a workforce that disagreed.

§01 — The hard calls

  1. 1985

    Leave rather than compromise — quit Starbucks to open Il Giornale when the founders refuse to sell drinks.

    Raised roughly $1.7M from local investors, proved the café format worked, and was in a position to buy Starbucks outright two years later.

  2. 1988

    Extend full health benefits to employees working 20 hours a week, in an industry that offered none.

    Raised costs materially and cut turnover sharply. Became the centre of the brand's story about itself for thirty years — and the standard it was later judged against.

  3. 2008

    Close all 7,100 US stores simultaneously for three hours of espresso retraining, during a financial crisis.

    Cost millions in lost sales and signalled — internally and to the market — that quality had slipped on the previous management's watch. Widely cited as the moment the turnaround became credible.

  4. 2015

    Launch Race Together, instructing baristas to discuss race with customers.

    Abandoned within a week under widespread criticism. A clear case of a founder mistaking his own conviction for a customer need.

  5. 2022

    Return as interim CEO and campaign against the Starbucks Workers United unionisation drive.

    Slowed but did not stop unionisation; drew NLRB complaints and a Senate hearing. Damaged the progressive-employer positioning Schultz had spent three decades building.

§02 — Around this founder