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Pure Profit : For Small Companies That Stress Social Values as Much as the Bottom Line, Growing Up Hasn't Been an Easy Task. Just Ask Ben & Jerry's, Patagonia and Starbucks.

February 05, 1995|Peter Carlin | Portland, Ore.-based Peter Carlin is co-author, with Stacy Allison, of "Beyond the Limits: A Woman's Triumph on Everest," published by Little, Brown

All of which made Starbucks' early customers a lot like the company's founders. When they first decided to go into the coffee business in 1971, Jerry Baldwin, Zev Siegl and Gordon Bowker were erudite longhairs in their late 20s whose entire enterprise was based on a shared passion for gourmet coffee and one semester of college accounting. The trio opened their first store across the street from Pike Place Market in 1971, and by the end of the '70s they had four stores, a wholesale company and a mail-order outlet selling $2 million of product a year. "We didn't know squat about business," recalls Baldwin. "But we found it difficult to say no to opportunity."

They shared this attitude with the much more business-savvy Howard Schultz. Ambitious and fast-talking, Schultz had started his career in the marketing department of Xerox, then took the helm (at 26) of the American division of Hammerplast, a Swedish housewares firm. There Schultz became acquainted with the Starbucks crew, and after the bright young exec impressed Baldwin and Bowker (Siegl had sold out in 1980) with his New York-fired intensity, they asked Schultz if he'd be interested in running Starbucks' marketing and retail operations. When they threw a small stake in the company into the bargain, Schultz signed on in 1982. "It was the first time I'd ever owned anything," he recalls.

A year later, Schultz went to Italy for a housewares fair, stopped off for an espresso and came away with a revelation. The Italians, Schultz saw, didn't drink coffee as much as revel in it. They counted on a daily visit to their coffee bar to provide a burst of light against the dull palette of the workday. "It's a relationship," Schultz says, "built on the romance and intrigue and the interaction of the beverage." Sensing the potential for espresso-driven ecstasy in his own country, Schultz returned to Seattle eager to propel Starbucks to the front of a cultural revolution. But Bowker and Baldwin were more interested in selling beans than drinks, and a frustrated Schultz left Starbucks to launch a small string of espresso bars in Seattle. When Bowker and Baldwin decided to sell Starbucks in 1987, Schultz raised $3.8 million and bought the company. "This was my chance to effect total change," Schultz says. He did not waste time doing this.

To see the change at Starbucks you need travel no further than Seattle's University Village. The cozy storefront that opened 23 years ago recently reopened as a glimmering java megalopolis. Half a dozen islands display Starbucks' new line of custom-designed espresso machines, designer mugs, imported biscotti and recipe books. An undulating bar is studded with gleaming espresso machines, glass cases of pastries, croissants and sandwiches on focaccia bread. Behind the counter, a black-aproned army of beaming servers takes intricate orders for double decaf lattes, single no-whip mochas, skinny macchiatos and half-caf Americanos, pulls them up perfectly and then hands them over with an old-fashioned niceness that girds your faith in the future. A Starbucks future. "By the year 2000," promises Schultz, "Starbucks will be the most recognized, respected coffee company in the world."

Schultz has already gone a long way toward making it happen. The regional, 11-store outfit he bought in 1987 is now a national chain, with annual sales reaching the $300 million mark. With plans to bottle a coffee-based beverage with Pepsi-Cola and with 200 new stores opening a year, Schultz aims for Starbucks to cross into the next century with annual sales of $1 billion. Pursuing such a grand vision requires a level of hubris that few businessmen can muster, but as he kicks back with a fresh cup of coffee at the intimate conference table in his office, Schultz's plan to transform the nation's coffee industry unfolds in gentle, almost humble terms. "I knew early on that I wanted to recreate the paradigm," he muses. A youthful 41, he slicks his brown hair with mousse and sports a snappy checked shirt, velvety corduroy pants and pointy wing-tips. The braces on his teeth, correcting an old football injury, complete the boyish look, and his deep brown eyes transmit a warmth that is almost immediately disarming. Schultz's triple-shot of ambition is rooted not in an upper-class sense of entitlement, but a working-man's quest for transcendence. Raised poor in the tenements of Brooklyn, Schultz grew up watching his blue-collar father struggle to keep his family afloat with bottom-rung jobs that paid little and offered even less in spiritual fulfillment. Schultz scrambled to put himself through college, sometimes selling his own blood for book money. When it was his turn to run his own company, he felt obligated to extend his own employees a little more than his father received from the jobs he worked.

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