Howard Schultz grew up in the Brooklyn housing projects. His father was a truck driver who never made more than $20,000 a year and had no health insurance. When his father broke his ankle and lost his job, seven-year-old Howard watched his family struggle. He escaped through education, becoming the first in his family to attend college. After graduation, he joined a small Seattle coffee company called Starbucks as marketing director in 1982. It had six stores. On a trip to Italy, he discovered espresso bars and had a vision: bring Italian coffee culture to America. But Starbucks’ owners refused. They wanted to sell beans, not beverages.
The Turning Point
Frustrated, Schultz left Starbucks in 1985 and started his own coffee chain, Il Giornale. He raised money by pitching 242 investors—217 rejected him. He finally scraped together $1.65 million. In 1987, Starbucks’ original owners decided to sell. Schultz bought the company for $3.8 million and merged it with Il Giornale. But expanding nearly killed the company. By the late 1990s, Starbucks was growing too fast, losing its soul. Schultz stepped down as CEO in 2000. By 2008, the company was in crisis—stock down 75%, losing money, closing stores. The board begged Schultz to return. He did, and immediately closed 7,100 stores for a day to retrain baristas, costing millions.
The Strategy
Schultz’s strategy was built on experience, not just coffee. He created ‘third places’—spaces between home and work where people could gather. He offered health insurance to part-time workers, unheard of in retail. He obsessed over store design, music, and atmosphere. When he returned in 2008, he refocused on quality, slowed expansion, and invested in innovation like mobile ordering and loyalty programs. He also took bold social stances, supporting veterans, refugees, and offering college tuition to employees. He built Starbucks into a values-driven brand that customers believed in.
The Results
Today, Starbucks operates 38,000+ stores in 80+ countries, generating over $35 billion in annual revenue. The company is valued at over $100 billion. Schultz’s net worth exceeds $3.5 billion. He transformed coffee from a commodity into an experience and built one of the world’s most recognized brands. More importantly, he proved that companies can be profitable while treating employees well. His journey from the projects to building a global empire is one of the greatest rags-to-riches stories in American business.
