Pour Your Heart Into It (15 page)

Our little management team didn’t examine our motives for wanting to grow fast. We set out to be champions, and speed was part of the equation. When I looked into the future, I saw a bold, vividly painted landscape—not a still life in subtle muted colors.

Now that we had merged with Starbucks, our Il Giornale goal of opening 50 stores in five years no longer seemed so farfetched. That’s why I promised investors in 1987 that Starbucks would open 125 stores in five years. We would go public, someday. Customers would respect our brand so much that they would talk of “a cup of Starbucks.” Long lines would form out the doors of newly opened stores in cities far from Seattle. Perhaps we could change the way Americans drank coffee.

It was a stretch, and plenty of people told me it was impossible. But that was part of the appeal, for me and for many other people at Starbucks. Defying conventional wisdom, achieving against the odds, offers a thrill that’s hard to top.

But my view of a successful business wasn’t just measured in number of stores. I wanted to create a brand name respected for the best in coffee and a well-run company admired for its corporate responsibility. I wanted to elevate the enterprise to a higher stan-dard, to make our people proud of working for a company that cared for them and gave back to their community.

In those early days, as I worked to build trust, I began to envision the kind of company I ultimately wanted to create. Fostering an atmosphere in which people were treated with respect wasn’t something I considered an intriguing option; it was essential to the mission of Starbucks. We could never accomplish our aims unless we shared a common vision. To attain that ideal, we needed to create a business that valued its people, that inspired them, that shared its rewards with those who worked with us to create long-term value.

I wanted to build a company that would thrive for years because its competitive advantage was based on its values and guiding principles. I wanted to attract and hire individuals who worked together with a single purpose, who avoided political infighting and loved reaching for goals others thought impossible. I wanted to create a culture in which the endgame was not only personal gratification but a respected and admired enterprise.

Instead of a small dream, I dreamed big.

If you want to build a great enterprise, you have to have the courage to dream great dreams. If you dream small dreams, you may succeed in building something small. For many people, that is enough. But if you want to achieve widespread impact and lasting value, be bold.

Who wants a dream that’s near-fetched?

C
HOOSING
AN
I
DENTITY

After the acquisition, I had to make a critical decision about our identity: Should we keep the Il Giornale name, or should we consolidate under the name Starbucks?

For most entrepreneurs who have founded their first company, giving up its name is like throwing away their baby. I certainly felt attached to Il Giornale, which I had created out of nothing. But the Starbucks name was so much better known, and I knew in my heart that it was the right choice. Still, I owed it to the original Il Giornale team to carefully weigh the pros and cons.

To confirm my instincts, I went back to Terry Heckler, who had helped name Starbucks years before. He has since named several other successful products in Seattle, including Cinnabon, Encarta, and Visio software. I decided to hold two meetings—one with major investors and another with employees—to debate the issue. I asked Terry to present his recommendations at both meetings.

His opinion was unequivocal. The name Il Giornale, he said, is hard to write, spell, and pronounce. People find it obscure. After less than two years of operation, it was too new to have widespread recognition. Italians were really the only ones with a legitimate claim to espresso, and none of us was Italian.

The name Starbucks, in contrast, has magic. It piques curiosity. Around Seattle, it already had an undeniable aura and magnetism, and, thanks to mail order, it was beginning to be known across America, too. Starbucks connoted a product that was unique and mystical, yet purely American.

The hardest part was convincing the original Il Giornale employees, who loved the Italian name because it captured the romance of the authentic espresso experience. The small Il Giornale team had grown as tight-knit as a family and was afraid of losing what they had worked so hard to build, swallowed up by what they perceived to be a giant with a fifteen-year tradition.

After much soul-searching, we finally opted to take the Il Giornale name down from the espresso bars and replace it with Starbucks. Throughout the process, I knew I had to leave my ego at the door. I wanted everyone involved to make the best choice for the long-term value of the business and select the name that would best differentiate us from the competition. Having a name that people could recognize and remember, a name people could relate to, would provide enormous equity. That name, clearly, was Starbucks, not Il Giornale.

To symbolize the melding of the two companies and two cultures, Terry came up with a design that merged the two logos. We kept the Starbucks siren with her starred crown, but made her more contemporary. We dropped the tradition-bound brown, and changed the logo’s color to Il Giornale’s more affirming green.

One by one, we also transformed the look of the original Starbucks stores, from brown to green, from Old World traditional to Italian elegance. In the process, we also remodeled and remerchandised them so that all were equipped to sell both whole-bean coffee and espresso drinks. That combination created a new type of store, more than retail but not restaurant, that has been Starbucks’ signature pattern ever since.

It’s a marriage that has lasted.

A V
ITAL
S
HOW
OF
C
ONFIDENCE

By December 1987, as new stores prepared to open in Chicago and Vancouver and the quality of the coffee remained high, initial doubts some employees had about my intentions began to fade. Trust began to build.

I wanted people to feel proud of working at Starbucks, to believe in their hearts that management trusted them and treated them with respect. I was convinced that under my leadership, employees would come to realize that I would listen to their concerns. If they had faith in me and my motives, they wouldn’t need a union.

Fortunately, one employee in a retail store also questioned the need for the union. As a college student, Daryl Moore had started at Starbucks in 1981 as a part-time clerk in our Bellevue store. He later worked for six months in the warehouse and voted against unionization in 1985. Although he comes from a blue-collar family, Daryl didn’t see the need for a union as long as Starbucks managers were responsive to employee concerns. He had left Starbucks to try his hand at starting a business but returned in late 1987 to work as a barista in our Pike Place store. When he saw the changes I was making, he began philosophical debates with his colleagues and with the union representative, whom he knew. He did some research on his own and began an effort to decertify the union. He wrote a letter and carried it to many stores in person to get signatures of people who no longer wished to be represented by the union. When he had a majority, he presented the letter to the National Labor Relations Board in January. As a result of Daryl’s efforts, the union no longer represented our store employees, although it did continue to represent our warehouse and roasting plant workers until 1992.

When so many of our people supported decertification, it was a sign to me that they were beginning to believe I would do what I had promised. Their distrust was beginning to dissipate and their morale was rising. Once I had their full support, I knew I could count on them to work as a team and imbue them with the enthusiasm they would need to spread the word about Starbucks coffee around the country.

CHAPTER 8
If It Captures Your Imagination, It Will Captivate Others

Whatever you can do,
or dream you can, . . . begin it.
Boldness has genius,
power and magic in it.

—G
OETHE

For five years, from 1987 to 1992, Starbucks remained a privately held company. I was able to learn my job and grow into it outside the glaring spotlight that is cast on publicly traded companies. With the support and approval of my investors, and ultimately the confidence of employees, we pushed ahead on many fronts at once: national expansion, employee benefits, investing in the future, and management development.

The following chapters describe what we accomplished on each of these fronts and recount the important lessons we learned during Starbucks’ formative years, when our culture was being shaped. It was a time of many debates, of honing our core values, of standing firm on some issues and learning to compromise on others.

S
PECIALTY
C
OFFEE
IN
A

M
EAT
-
AND
-P
OTATOES
T
OWN

Perhaps the gutsiest, and possibly the riskiest, move we made during this period was our entry into the Chicago market. In hindsight, it’s hard to believe we took on such a challenge so early in the development of Starbucks.

The idea had actually originated at Il Giornale, even before the marriage to Starbucks. Even though at that point we had only two coffee bars in Seattle and one in Vancouver, British Columbia, I was eager to prove the idea could work in cities across North America. A crucial test would be to see if people in other cities would be receptive to the taste of Starbucks coffee, which was stronger, richer, and more robust than they were used to. Would our retail stores become daily gathering places like those I had seen in Italy? If this combination was going to catch on nationwide, we were going to have to test the idea far from home, and the sooner the better.

It probably would have been more prudent to delay the expansion when the Starbucks acquisition opportunity came up. But even when I was absorbed in raising money for that deal, I refused to drop the Chicago plan. Once Starbucks and Il Giornale merged, it would be even more critical to establish that growth would be feasible outside Seattle. My objective was a national company, and I needed to know what the barriers were to attaining it.

A number of business experts made various arguments against opening stores in Chicago. Tiny Il Giornale didn’t have the infrastructure to support such a major move. As Chicago was 2,000 miles away, it was logistically hard to supply with a perishable product like fresh-roasted coffee. And how could we guarantee the appeal of top-quality coffee in the heartland of Folger’s and Maxwell House? Chicagoans, I was told, would never drink dark-roasted coffee. For take-out, they preferred the coffee they got at the White Hen Pantry, the local convenience store chain.

If I had listened to the prevailing wisdom, I would have waited till the acquisition was complete, built up a strong home base in Seattle, and then gradually expanded to nearby cities, specifically Portland and Vancouver, where there was a demonstrated appetite for specialty coffee.

But I wanted to go to Chicago. It’s a city with a cold climate, great for hot coffee. The downtown area is much bigger than Seattle’s. It’s a city of neighborhoods, which usually welcome local gathering places. Before 1971 Seattlites didn’t know anything about dark-roasted coffee, either. Why couldn’t Chicagoans learn to love it even more quickly?

As it happened, an enthusiastic real estate broker in Chicago had three or four locations to show us, and Jack Rodgers and I went to check them out. An early investor in Il Giornale, Jack was a veteran in the franchising and restaurant business, and also a native Chicagoan. With his fatherly affection and sentimental heart, he had become a friend and adviser, a consultant we could pay only in what seemed to be worthless stock. He was an early member of the Il Giornale board of directors and became an executive of the company when we purchased Starbucks. He remained a valued member of our executive management team for ten years.

Because Il Giornale had little money, Jack and I shared a hotel room. We had not yet completed the Starbucks acquisition. The next day, as we made our way through Chicago’s crowded streets on our way to look at sites, I said, “Jack, five years from now, every one of these people is going to be walking around holding a Starbucks cup.”

He looked at me and said, laughing, “You’re crazy.”

But I could just see it.