Pour Your Heart Into It (27 page)

In 1992 and 1993, we refined our real estate strategy, creating a three-year expansion plan based on a matrix of regional demographic profiles and an analysis of how best to leverage our operations infrastructure. For each region, we targeted a large city to serve as a “hub,” where we located teams of professionals to support new stores. We entered large markets quickly, with the goal of rapidly opening 20 or more stores in the first two years. Then from that core we branched out, entering nearby “spoke” markets, including smaller cities and suburban locations with demographics similar to our typical customer mix.

To supply so many new stores, we also had to build a new roasting plant. Just after Christmas 1992, we realized we couldn’t get through another holiday season with our existing plant, although it had been planned to last ten years. In February 1993, we asked Howard Wollner, our vice president for administration, to do the impossible: find a new site, assemble a team to build a far larger roasting plant, and start operations in only seven months. In September of 1993, roasting began in a new 305,000-square-foot plant in Kent, Washington, just south of Seattle.

The old plant eventually became dedicated to roasting for our mail-order group, headed by Buck Hendrix since mid-1993. Buck grew that business from $6 million to more than $20 million by 1997, which, though representing a small percentage of our overall sales, served as a visible showcase for our products and an important link to customers all over the United States.

In October 1993, we outgrew our old offices as well. Howard Wollner found us space in a building a few blocks away, still in the light industrial area south of Seattle, an area called SODO because it is
SO
uth of the King
DO
me, the stadium where the Mariners and Seahawks play. We rented several floors in a building that once served as the Northwest warehouse for Sears’ catalogue division. It’s nothing like the high-rise buildings or sprawling corporate campuses other companies inhabit. Each one of its nine floors has the equivalent square footage of six stories in a typical office high-rise. The old warehouse used to be so large that people moved around it on bicycles and roller skates to fulfill orders. We created a space centered around a “commons area” with food service, espresso kitchens, and rest rooms, to encourage people to interact. Industrial lighting and exposed pipes and ducts create a mood that’s far from the stylish image some might expect of us.

I hated the idea of moving away from the roasting plant, so I insisted on elements that would remind us of our roots. Just inside the main door is a mock store, showcasing our latest products. Posters on the walls throughout the office display our newest marketing materials. Coffee plants grow in pots. And once we expanded into the top floor, we installed a small antique coffee roaster, retrofitted with modern technology, to use for demonstrations and sample batches and, most importantly, to tie us all the more closely to coffee.

From the window of my office, a modest one by CEO standards, I look out over the cranes of Seattle’s port, where our coffee beans arrive, and the towers of the city where the company was born. Yet I still miss the days when my office overlooked the roasting plant.

By 1994, we could see that our aim of becoming the leading retailer and brand of specialty coffee in North America was within reach. So we framed a bigger goal: to become the most recognized and respected brand of coffee in the world. There were still many American and Canadian cities we hadn’t entered, but since the Starbucks model and logo were already being copied—sometimes blatantly—around the world, we knew we needed to act quickly to lay plans to go global.

But it wasn’t enough simply to speed up and spread ever farther afield. Just as I had changed the paradigm for Starbucks once, selling coffee beverages as well as coffee beans, I wanted to shift it again. I wanted to jump to a new level, with a move that would be truly innovative and daring. The Starbucks brand was gaining favor so quickly that I figured we could leverage it for new coffee products that could be sold far beyond our stores. I began to imagine a Starbucks that was more than coffee and larger than the four walls of our stores.

In 1994, Starbucks exploded into a whirlwind of activity. We invented Frappuccino. We signed a far-reaching joint venture with Pepsi. Orin Smith became president of the company. We formed Starbucks International, and Howard Behar became president of that. We moved to our new offices. We upgraded our mail-order computer system. We chose a site in York, Pennsylvania, for a huge $11 million roasting facility that could ultimately grow to 1 million square feet, to supply our East Coast stores. And we faced our first major crisis: a 300 percent rise in coffee prices.

They were all major moves, many taking place simultaneously, and I’ve devoted entire chapters of this book to some of them. And the pace of change hasn’t slowed more recently: 1995 and 1996 found us facing challenges of growth and ubiquity, conflicts over ethics and style, and fantastic new opportunities with risky downsides that made the debates of the late 1980s seem minor by comparison.

F
AST
G
ROWTH
T
AKES
I
TS
T
OLL

What kept us balanced during this storm of activity was our values and our commitment to each other. Yet as we ran ever faster, those values came under more and more strain. Within the company, people who had helped me grow Starbucks in the early years became fearful and threatened, as professional managers came in over their heads. I no longer knew everyone’s name, even though we worked in the same building. The same pace and passion that made us great also at times burned people out. And while we were winning thousands of new customers a week, I heard reports of some who defected.

Nowhere were these conflicts more intense than inside my own head. Whenever someone came to my office upset about some new change, I felt personally responsible. I had thought my job would get easier as the company expanded, but it grew more difficult instead.

The issues became far more complex. Can a company double and even triple in size but stay true to its values? How far can you extend a brand before you dilute it? How do you innovate without compromising your legacy? How do you create widespread trial and awareness without losing control? How do you stay entrepreneurial even as you develop professional management? How do you keep pushing through on long-term initiatives when short-term problems demand immediate attention? How do you continue to provide customers with a sense of discovery when you’re growing at the speed of light? How do you maintain your company’s soul when you also need systems and processes?

Most of these questions, I discovered, do not have answers you can find in books. The best guidance comes from observing how other admired enterprises act. Only a few, unfortunately, have openly grappled with the difficulties of sustaining high standards and values during rapid growth.

With no easy answers, I explored every avenue I could. I’ve always been a voracious reader, but now I began to read even more widely. I consulted experts. I got to know other CEOs and entrepreneurs. I hired managers who had done it before. I picked the brains of everyone I met: reporters, analysts, investors, store managers, baristas, customers.

With growth, the daily pace of my life intensified as well. On any given day, I might have up to a dozen meetings, dealing with an extremely wide range of subjects. Sometimes, I’d have very little time to mentally prepare and would have to quickly shift gears between discussion of the company’s strategic vision, the following month’s sales promotion, a new blend of coffee, profit margins, an employee’s personal worries, a major investment opportunity, a policy change, and a board member’s objection. Sometimes my brain would almost literally ache.

In the middle of that, I’d sometimes get a call from Sheri or one of my kids. I always try to make time for family and friends; I couldn’t stand the pressure if I didn’t. But keeping up those personal relationships is stressful, too. Sheri has been able to gauge the pressures on me as the business matured, and during times I was distracted she somehow managed to keep the family on an even keel. I can’t imagine that I could have built Starbucks, that I could have managed the tensions and conflicts involved and still feel as good about it as I do, without having a strong, secure wife like Sheri.

Still, it’s always a struggle for me to pursue my dreams at the office without impinging on family time. I try never to travel on weekends. We always make an effort to have dinner at home together, whenever I’m not on the road. For us, that time is sacrosanct, and though we may eat a little later than most families, my kids look forward to it. I coached my son’s Little League team for two years, planning my travel schedule around his games. I take the kids to see the Sonics and Mariners, and they always attend the Starbucks annual picnic.

The balancing act has never been an easy one. I’ve struggled to harmonize the needs of the family, the needs of the business, the needs of my marriage, and my individual needs, too. I sometimes wonder:
When is there time for me? What do I get out of this?
It’s a relief to get out on the basketball court every Sunday morning and play a fast, running, sweaty game. For two and a half hours, I concentrate on that ball, and all of the work world melts away.

T
HE
E
NTREPRENEUR’S
B
IGGEST
C
HALLENGE:

R
EINVENTING
Y
OURSELF

Nobody has a greater need to reinvent himself than the successful entrepreneur. Think of it: How many entrepreneurs have founded a company and then managed to grow successfully along with it, even as it reaches and surpasses $1 billion in sales?

Bill Gates of Microsoft has done so, as has Phil Knight of Nike. But far more entrepreneurs can’t adjust to the transition into professional management. Most are better at creating start-ups than at guiding mature businesses. As the companies beneath them balloon ever larger, the odds diminish that their skills will grow fast enough to maintain control.

Sometimes I feel like one of those cartoon characters who some-how winds up straddling two jet planes. I’ve got one foot on one jet and one foot on the other, and both are racing faster and faster ahead. I have to decide:
How long can I hang on? Should I jump off? Am I going to break my legs?

I figure I’ve had to reinvent myself at least three times, each time at top speed.

I started off as a dreamer. That was the thirty-two-year-old who knocked on every investor’s door in Seattle looking for money to realize his business plan.

Then I moved to entrepreneur, first founding Il Giornale and then taking over Starbucks and re-creating it as a fast-growth company. Then I had to become a professional manager, as the company grew larger and I needed to delegate more and more decisions. Today, my role is to be Starbucks’ leader, its visionary, cheerleader, and keeper of the flame.

For me, dreamer is the most natural role, and one I still enjoy. Growing up in the 1950s and 1960s has a lot to do with that. It was the era of the Kennedys and the Peace Corps, when capitalism meant opportunity, not oppression. The prevailing mood was optimism, and I absorbed it deep in my bones.

But being a dreamer isn’t enough. If you want to achieve something in life, you need a different set of skills to set those dreams in motion.

Once you cross the divide where your dream begins to take shape, you graduate from being a dreamer to being an entrepreneur. The entrepreneurial stage of a young business is probably the most exciting one.

I didn’t realize it at the time, but I’m now convinced that one of the greatest responsibilities of an entrepreneur is to imprint his or her values on the organization. It’s like raising children. You start with love and empathy, and if you’ve imprinted the right values on them, you can trust them to make reasonable decisions when they become teenagers and young adults. Sometimes they will disappoint you, and sometimes they will make mistakes. But if they have absorbed good values, they will have a center line to return to.

In building a business, you’ll often come to forks in the road. Intel CEO Andy Grove calls them “inflection points.” You may not even be aware of it at the time, but the decisions you make at these junctures have repercussions for years to come. You may realize, for example, that you’ve discovered an opportunity to create a much larger, more meaningful business. But in order to take advantage of that chance, you will have to make a dramatic change in the way the business is managed.

It is precisely at points like this when a lot of entrepreneurs cut and run. Some are intimidated by the new opportunity and reject it. Others who do accept the challenge often can’t develop the skills to handle it.

At a certain stage in a company’s development, an entrepreneur has to develop into a professional manager. That often goes against the grain. Early on, I realized that I had to hire people smarter and more qualified than I was in a number of different fields, and I had to let go of a lot of decision-making. I can’t tell you how hard that is. But if you’ve imprinted your values on the people around you, you can dare to trust them to make the right moves. You have to build a foundation strong enough to support the pressures, the anxieties, and the fears of growing to the next level.

If you’re a creative person, an entrepreneur at heart, introducing systems and bureaucracies can be painful, for they seem like the antithesis of what attracted you to business in the first place. But if you don’t institute the right processes, if you don’t coordinate and plan, if you don’t hire people with MBA skills, the whole edifice could crumble. So many companies do.