Howard Schultz

"I always wanted to do something to make a difference."-Howard Schultz

Everyone knows Starbucks, the ubiquitous retail chain that, in the 1990s, turned coffee drinking into a national pastime. But few know Howard Schultz, the self-effacing chairman, CEO and mastermind behind Starbucks' astonishing growth. By bringing Italy's "coffeehouse culture" to the United States and packaging it for mass consumption, this maverick marketer transformed a little-known four-store chain in the leading retailer of specialty coffee in North America.

Born in 1953, Schultz was raised in the rough and tumble Bay View housing project in Brooklyn, New York. His mother worked as a receptionist and his father held a variety of jobs, none of which paid much or offered such basic benefits as medical coverage for him and his family. When Schultz was 7, his father lost his job as a diaper-service delivery driver after breaking his ankle. At the time, sick pay or even legally mandated disability assistance were luxuries to those in low-paying jobs, and in the ensuing months, the family was literally too poor to put food on the table. It was a memory that Schultz would carry with him into adulthood.

Determined to build a better life for himself, Schultz channeled his energy into high school sports and earned an athletic scholarship to Northern Michigan University. After graduating with a bachelor's degree in business in 1975, Schultz immediately began working in the sales and marketing division of Xerox Corp. Schultz excelled at Xerox, so much so that he attracted the attention of the Swedish housewares company Perstorp AB, which recruited him at the age of 26 to be vice president and general manager of their American subsidiary, Hammerplast USA.

A year later, during a vacation in Italy, Schultz had what he has described as an "epiphany." While sitting at one of Milan's many espresso bars, he realized that the coffee shop played an integral role in the social life of most Italians. It was a focal point for the neighborhood, where friends met, mingled and lingered at all hours of the day. "Seeing this, I thought to myself, 'Why not open a coffee bar in Seattle?' " Schultz recalls in an interview in The New York Times.

Returning to Seattle, Schultz shared his epiphany with his fellow Starbucks owners. Although coffee was brewed in the shops, it was done so only at the request of customers and dispensed as free samples, and Baldwin and Bowker were unwilling to move beyond the stores' core product offerings.

Convinced he had hit upon something big, Schultz left Starbucks in 1986 to open his own espresso bar called Il Giornale (The Daily). The venture was a hit. Schultz wanted to open more shops, but didn't have the funding he needed to expand. In a quirky twist of fate, a year later he learned that Baldwin and Bowker wished to sell their outlets, so after rounding up investors from the Seattle area, Schultz purchased the original Starbucks chain for $3.8 million and merged the stores with his own.

But the most radical change Schultz made was to improve the way his company dealt with its employees. Convinced that friendly, efficient service would boost sales, he instituted a training program designed to groom knowledgeable employees who would enjoy working behind a counter, an occupation considered by many to be menial labor. "Service is a lost art in America. it’s not viewed as a professional job to work behind a counter," Schultz says. "We don't believe that. We want to provide our people with dignity and self-esteem, so we offer tangible benefits." Among the benefits Schultz offers is complete health-care coverage to both full- and part-time employees, as well as stock options, practices that are virtually unheard of in corporate America. As a result of Schultz's vision, Starbucks experienced unprecedented growth throughout the 1990s, blossoming from 425 stores in 1994 to more than 2,200 stores in 1998. And the company is on target to break the $2 billion in the year 2000.

With annual sales topping $1.7 billion in 1999, Starbucks Corp. reigned as the nation's No. 1 specialty coffee retailer. Quite an impressive achievement for a blue-collar kid from the projects. But despite Starbucks' phenomenal success, what Howard Schultz seems most proud of is not how much he has earned, but the kind of company he has created. "My dad was a blue-collar worker," Schultz explains in an Inc. magazine interview. "He didn't have health insurance or benefits, and I saw firsthand the debilitating effect that had on him and on our family. I decided if I was ever in the position to make a contribution to others in that way, I would. My greatest success has been that I got to build the kind of company my father never got to work for."