Starbucked Page 5

  Today, the Pike Place Starbucks — a seatless, wood-paneled space the size of a stretched-out one-car garage — is one of Seattle’s main tourist attractions. One sunny winter day not long ago, chattering customers jostled around inside, snapping pictures of each other in front of the giant original Starbucks logo and listening to the black gospel quartet that often performs outside. Steam wands hissed, and grinders rumbled. To the bafflement of many visitors, the air overhead was thick with flying paper cups. (There’s no room for them by the espresso machine, so the cashier has to toss the cups diagonally across the room to the barista.) The employees were unfazed by the constant bustle; they’re used to the spotlight. “Only the pretty people get to work here,” a brunette barista with an orthodontically flawless smile told me — to which she hastened to add that she was kidding.

  Particularly perceptive visitors to this Starbucks might notice two peculiar things. First, the place looks and feels nothing like a Starbucks. The dark wood floors and counters are dimpled and well-weathered; rows of cream-colored industrial lamps hang from the unfinished ceiling; clean light flows in off Puget Sound through plate-glass windows; and, crucially, Kenny G is nowhere to be heard. The shop seethes with old-world authenticity, and there’s a good reason why: the first Starbucks was more or less a Peet’s. With the Dutchman’s blessing, Baldwin and company closely emulated the Peet’s store design. Just like their Berkeley-based forebear, the original Starbucks stores offered sample cups of the thirty-odd whole-bean coffees on offer, but their true purpose was to sell coffee by the pound for home brewing.

  The second oddity about the shop is this: despite the abundant sign-age declaring this the original Starbucks, including a waist-high commemorative brass post that reads “First Starbucks Store, Established 1971,” this actually isn’t the first Starbucks. As the framed newspaper clips on the walls show, that store had a different address. The rundown building that housed the first store was knocked down in 1974, so they built a new one a couple of blocks away, right across from the public market. But in the meantime, the three founders had opened new stores near the University of Washington and on Capitol Hill in 1972 and 1973 — making what’s now called the “original” the fourth store by chronology.

  Like with Peet’s, business was slow at first as customers got used to the dark-roasted beans, but as the three friends learned their individual roles, Starbucks matured into a local coffee force. “Each one contributed something very different,” explained Jean Mach, an early Starbucks employee who is now an English professor in the Bay Area. “Gordon was the advertising mind. I think Gordon would have characterized himself — to himself, mind you, not to others — as the most sophisticated. Jerry was the business brain and the electrician — literally. We built the stores ourselves at first and Jerry wired them. Zev was the people person. With customers in the stores, he was always chatty and funny.”

  Baldwin soon became the roasting expert as well. After Starbucks began moving far more coffee than anyone had anticipated, the exasperated Peet told the partners he couldn’t keep up; they’d have to learn to do it on their own. With only a manual in German to guide them, the three put together a used roaster in a building by Fisherman’s Terminal and began experimenting with even darker Full City and French roasts, creations that eventually inspired the company’s infamous nickname, “Charbucks.” “The thing about French roast is it’s roasted about as dark as you can get it without it actually catching on fire,” said Gary Talboy, a former competitor in nearby Portland. (He’s not exaggerating; if they’re roasted a minute too long, the superheated beans can ignite when they fall into the cooling tray and hit oxygen.) The dark roast was an acquired taste, but Starbucks didn’t care to make concessions to its critics. “People’s heads would snap back and they’d say, ‘God, this is really strong,’ ” Baldwin recalled. “It was absolutely a revelation for people.” Alfred Peet offered to give the trio roasting lessons, but the curmudgeonly Dutchman later distanced himself from the company and its ultra-dark beans. “Baldwin never learned anything from me,” Peet grumbled. “What is he, an English major?”

  For most businesses, an unwillingness to adapt to customer feedback equals financial suicide, but in Starbucks’s case, the attitude only made their coffee seem more desirable. People were proud to drink Starbucks coffee; the cultivated, uncompromising demeanor of the proprietors gave customers a feeling of validation and refinement. Other roasters in the Pacific Northwest saw the Starbucks trio as snooty and cocksure. “Starbucks has always been successful by saying, ‘You’re lucky if we allow you to buy our coffee,’ ” said Talboy.

  But maybe they were just jealous; Seattle was getting addicted to Starbucks coffee. On Saturdays in the 1970s, a Starbucks store might have six people behind the counter frantically shoveling beans. Terry Heckler, the designer, drank sixteen cups a day. “All of us were drinking that much,” Heckler told me. “Driving home at night, I would see deer and dogs and stuff crossing the road. I’d think I was going to hit them, but nothing was there.” The company was profitable every year, and it established a reputation for beyond-the-call-of-duty customer service; when the partners ran out of coffee at the height of the Christmas rush in 1972 because a Peet’s shipment hadn’t arrived, they pledged to hand-deliver every order as soon as the beans came in. They even caved in to social norms and gave the siren back her public dignity. “When it came time to put the logo on a truck, I had to redraw her hair down,” Heckler said. “It was too much even for us to handle.”

  The employees were just as devoted as the customers. Something about Starbucks made people believe they were serving the greater good by selling decent coffee, and they were willing to work for pennies. “There was this sense that we were doing something very different, that we were pioneers,” said Mach. “It felt like a worthy cause, with these three guys embarking on this great adventure, just making it up as they went along.” When Starbucks first opened in 1971, Seattle was stuck in an economic quagmire known as the Boeing Bust; after the aerospace company failed in its quest to build a supersonic passenger jet, the city lost more than a hundred thousand jobs, and so many people moved away that a local sign company erected a billboard asking, “Will the last person to leave Seattle please turn out the lights?” But by 1982 Seattle was back on the ascent, establishing a reputation as a high-tech mecca and a livable city. With its five thriving gourmet stores, Starbucks epitomized Seattle’s promising future.

  As far as the original partners were concerned, those five stores were plenty. Gourmet coffee was still a niche business, limited to a few lefty cities, and the three considered themselves lucky for their modest success. Rumors floated around town that the local coffee cart operators who sold a concentrated coffee drink called espresso were earning six-figure incomes, but Baldwin and his friends preferred to focus on home brewing and stay out of a field as volatile as the foodservice business. And so it would have stayed, if a driven young vice president at a New York house-wares corporation hadn’t noticed that some small Northwest coffee company was selling a phenomenal number of his drip coffeemakers. When Howard Schultz flew out to Seattle to investigate, everything changed.

  2

  A Caffeinated Craze

  On a wintry Wednesday morning in downtown Seattle, a capacity crowd of several thousand waited inside McCaw Hall, the city’s elegant new glass-fronted auditorium, not knowing exactly what to expect. When the twinkling scarlet curtain lifted, the hum of the audience gave way to a collective gasp: onstage, a full choir stood bathed in purple light, bellowing the fiery opening bars of “O Fortuna,” from Carl Orff ’s tempestuous Carmina Burana. Timpani drums thundered. A grand piano surged and crashed. With this maelstrom roaring before them, the spectators exchanged bemused, astonished glances; this was, after all, a legally mandated meeting of shareholders.

  While some corporations just hold their annual public meetings in the lunchroom at headquarters, Starbucks — a company whose business model relies on creating h
ysterical enthusiasm about something that amounts to roasted beans steeped in water — has always approached the task with flair. Every February, Starbucks rents out a Seattle auditorium and stages a hugely popular three-hour-long ode to itself, complete with staged antics and surprise celebrity cameos. For this, the 2006 meeting, McCaw Hall’s twenty-nine hundred seats proved insufficient to accommodate the five thousand shareholders who came from all over the country to take in both the spectacle and the free Starbucks swag. (A pair of elderly women on the scene declared this year’s loot woefully inadequate, however: “It’s just bags of coffee . . . that’s it!”) Not many corporate meetings are enticing and entertaining enough to require huge swaths of overflow seating, but this one is; anticipation about which star will appear leaves the crowd rapt. Just like Starbucks itself, it’s coffee theater.

  As the singers chanted their way through Orff ’s rousing piece, slides of Starbucks-related scenes flashed faster and faster on a giant screen behind them. Even the sign language interpreter at stage right gesticulated with ever-increasing ferocity. And as the stirring final notes resounded to jubilant applause, out walked Howard Schultz.

  This was an oddly theatrical introduction for someone who has long maintained the image of a selfless public servant, even while building a globe-straddling, multibillion-dollar coffee goliath. A tall, exceptionally poised man with wavy chestnut hair and an impeccable wardrobe, Schultz possesses a gift for making people see in him exactly what he wants them to see. Today, striding coolly across the stage in a dark gray pinstripe suit, he projected a balance of relaxed confidence and embarrassment at the ovations being heaped on him. In his college days, Schultz was a student of communications and public speaking; this was his element.

  “As I was coming out, I was handed a note that with our stock price at its all-time high —” he began, but cheers from the audience quickly drowned him out. The promise of celebrity sightings and free coffee makes for effective bait, but the spectators also came to celebrate the profits they had reaped from their investment in Starbucks — in just the last two years, the company’s shares had doubled in value, and they were soaring again even as Schultz spoke. One might think that after fifteen years of the company’s explosive growth, the onlookers would be a bit bored with their double-digit capital gains. But no; when Schultz reminded everyone that a $10,000 investment in Starbucks in 1992 would be worth nearly $650,000 that day, the audience stoked itself into a sort of financial rapture.

  Given this euphoric response, Schultz could have just lobbed some more figures at the crowd and relied on the mystery guest to provide the pizzazz. But because of his charisma and his unique, touchy-feely management style — not to mention the astronomical success of his company — the Starbucks chief is now something of a star in his own right. In 2000, Schultz traded in his CEO title for the loftier “Chief Global Strategist” tag, so imparting his “vision” is now his primary job; “inspiration” is his stock in trade. To Schultz, Starbucks is more than a mere money-making enterprise. Instead of talking about financial targets and cold numbers, he spoke earnestly of Starbucks as a balm for our “secular existence” and told the crowd how honored he felt to be able to “share with you the dreams and aspirations we have for the future.” He even mentioned the human condition. (The company’s investors are happy to indulge the New Age–speak as long as Schultz’s most important vision, the one of a forty-thousand-store coffee megalith, keeps inching closer to reality.) Schultz sometimes looks vaguely smug in photos, but in person he seems the model of the self-effacing, nonthreatening leader striving to be genuine — the kind of guy you might like to chat with over a venti chai latte.

  The day was no soul-searching retreat, however; the people were there for a show, and Schultz gamely led the festivities. On the giant screen behind him, a recent Late Show with David Letterman stunt began playing: from a spigot at the desk in Letterman’s Manhattan studio, the show’s staff had strung 550 feet of clear plastic tubing all the way to a Starbucks down the street. The attending barista, Brad, hit the switch on a pump, and a jet of decaf Sumatra shot down Broadway, arriving ice-cold in the host’s mug. When Letterman declared that “One day, every house in America will have their own private plumbing to Starbucks,” the shareholders roared. Schultz promised a “Seattle-style” interpretation of the feat, and everyone cheered as they watched coffee spiral down the nearby Space Needle and into McCaw Hall, culminating with Schultz raising a triumphant mug to the audience. For those who hadn’t yet grasped the message that this company was God’s crowning commercial achievement on earth, a slew of pro-Starbucks television clips played next — including one of Oprah Winfrey exclaiming, seemingly at random, “Yay, Starbucks!” And later, on came the special guest at last: Tony Bennett, who sang a few standards and told the crowd they were beautiful.

  Before the festivities began, though, Schultz presented his yearly reminder that the success of Starbucks didn’t come easily — indeed, on a number of occasions the company nearly failed altogether. “Not only was it not an overnight success, but I laugh sometimes when I hear Starbucks partners [aka employees] talk about the good old days, the glory days,” he said. “I gotta tell ya, they weren’t that good.” In a sense, Starbucks never should have worked. Twenty years ago, a national chain of stylish cafés selling coffee at unheard-of prices seemed as likely to succeed as a designer corn-on-the-cob vendor or a luxury thumbtack company — and Schultz knows this as well as anyone. This is the mystique of Starbucks. “People weren’t drinking coffee,” he explained to Larry King in 1997. “So the question is, how could a company create retail stores where coffee was not previously sold, . . . charge three times more for it than the local doughnut shop, put Italian names on it that no one can pronounce, and then have six million customers a week coming through the stores?”

  Actually, that weekly customer number was at forty million and counting as of 2006, making Starbucks one of the most-trafficked retail companies in the world. But the question remains: How did this niche phenomenon take hold on such a massive scale? And why would urban epicures and blue-collar mainstreamers alike form a fierce daily need for decadent, expensive, European coffee drinks? Common sense expected Schultz’s multithousand-store fantasy to fail, but the mood in McCaw Hall — the sheer intensity of the crowd’s ardor for a company that isn’t selling anything that innovative — gives us a clue about why the opposite happened. Without doubt, coffee itself was (and still is) a certifiable craze. It tastes good, it boosts energy, and in a pinch, you can even use it to exterminate frogs. * Yet how excited can people really get about coffee and milk? Starbucks’s worldwide explosion was about more than coffee; it was about the way the company was selling it. As we’ll see, coffee-houses provided something society needed: a place to just be. But no one had any idea how badly we needed it.

  The Idea Strikes

  Setting foot in Milan for the first time, one is tempted to characterize the city as being “functional” or “culturally robust” in the same way that a tactful person might describe a female friend as having a “good personality” — that is, they’re each exceptional in their own right, but you wouldn’t quite want to hang a picture of either one on the wall. This is no city of sunlit piazzas and elegantly dilapidated terraces; with its vaunted high-fashion industry and its legendary opera house, La Scala, Milan is cosmopolitan and culturally vital, but homely. As Italy’s commercial and industrial hub, the city exudes efficient sturdiness and overwhelming gray.

  There is one way in which the Milanese live a more beautiful life than their compatriots to the south, however. Take a stroll through the heart of the city, and every twenty yards — virtually without fail — you will pass a bustling espresso bar. In fact, Milan’s 1.3 million citizens have their pick of more than fifteen hundred of them, a figure that puts Seattle’s measly 650-odd coffee-houses to shame.

  Enter a busy one, and a blur of activity soon engulfs you. From wall to wall, a mass of business-suited, cigarette-smoki
ng humanity waits to be served, as Top 40 radio competes with the buzz of conversation and hundreds of clattering dishes for auditory supremacy. Behind the marble bar, baristas — typically male and clad in navy slacks, matching vest, and collared white shirt — greet each customer with a “Prego.” The standard order is a simple espresso shot; almost no one requests a milk drink, and if they do, it’s a small cappuccino. Preparing the same order every fifteen seconds has made each barista into a kind of coffee ninja. In a whirl of lightning-quick motions, he grinds and tamps down the coffee, locks in the portafilter, and slams a demitasse down below. Within seconds, he sets a white porcelain cup and saucer in front of the customer, along with a tiny spoon. (He’d sooner hand the customer an old shoe than serve the drink in a paper to-go cup.) Since there are no seats, everyone stands and sips at the bar, chatting with others for a moment before paying the tab and moving on. The entire experience takes less than five minutes.

  When Howard Schultz first witnessed this spectacle in the spring of 1983, the experience literally made him tremble with excitement — not because he loved the feel of the viscous espresso trickling over his tongue, but because he immediately knew he had found the idea that would make him rich. At the time, Schultz was in the opening months of his new job as Starbucks’s director of marketing, and the company had sent him to Milan to attend a house-wares exhibition. One morning, while walking from his hotel to the convention center, Schultz happened to duck into a coffee bar; soon, he was visiting them all over Milan, his heart aflutter. Here was an entirely different take on coffee: whereas Starbucks offered it by the pound in retail stores, these places were social hubs, like all-day cocktail parties. And instead of coming in once a week for beans, the Italians visited espresso bars several times a day. According to his 1997 autobiography, Pour Your Heart into It — which has more than three hundred thousand copies in print — these insights sparked an epiphany for Schultz.