Howard Schultz

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Howard Schultz born July 19, 1953 is an American businessman, author, and philanthropist. He served as the chairman and chief executive officer (CEO) of the Starbucks Coffee Company from 1986 to 2000, and then again from 2008 to 2017. He remained at the company for another year to oversee the firm’s philanthropic and charitable giving arm before formally retiring as the longest-serving head of the coffeehouse.

On December 1, 2016, Schultz announced his resignation as CEO of Starbucks, taking an executive chairman position, effective April 2017. He was replaced by the new CEO Kevin Johnson. On June 4, 2018, Schultz announced his retirement as executive chairman, effective June 26, 2018, at which time he will become chairman emeritus a title given to him by the board to commemorate his 37-year tenure. He also owned the Seattle SuperSonics from 2001 to 2006, a basketball franchise that he sold for US$350 million to Clay Bennett. He was a member of the Board of Directors at Square, Inc. In 1998, Schultz co-founded Maveron, an investment group, with Dan Levitan. 

As of April 2020, Forbes magazine ranked Schultz as the 680th richest person in the World, with a net worth of $3.9 billion.

Schultz was born to a Jewish family on July 19, 1953 in Brooklyn, New York to a lower middle class family, the son of ex-United States Army trooper and then truck driver Fred  and wife, Elaine Schultz. With his younger sister, Ronnie, and brother, Michael, he grew up in the Canarsie Bayview Houses of the New York City Housing Authority. As Schultz’s family was poor, he saw an escape in sports such as baseball, football, and basketball, as well as the Boys Club. He went to Canarsie High School, from which he graduated in 1971. Schultz was very good at sports and was awarded an athletic scholarship to Northern Michigan University where he studied communications – the first person in his family to go to college. A member of the Theta-Iota chapter of Tau Kappa Epsilon, Schultz received his bachelor’s degree in speech communication in 1975.

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After graduating, Schultz worked as a salesman for Xerox Corporation and was quickly promoted to a full sales representative. In 1979 he became a general manager for Swedish drip coffee maker manufacturer, Hammarplast, where he became responsible for their U.S. operations with a staff of twenty. In 1981, Schultz visited a client of Hammarplast, a fledgling coffee-bean shop called Starbucks Coffee Company in Seattle, curious as to why it ordered so many plastic cone filters. He was impressed with the company’s knowledge of coffee and kept in contact over the next year, expressing interest in working with them.

In 1982, the founders of Starbucks onboarded him, aged 29, as the director of retail operations and marketing. On a buying trip to Milan, Italy, for Starbucks, Schultz noted that coffee bars existed on practically every street. He learned that they not only served excellent espresso, they also served as meeting places or public squares; the 200,000 cafés in the country were an important element of Italian culture and society.

On his return, he tried to persuade the owners (including cofounder Jerry Baldwin) to offer traditional espresso beverages in addition to the whole bean coffee, leaf teas and spices they had long offered. After a successful pilot of the cafe concept, the owners refused to roll it out company-wide, saying they did not want to get into the restaurant business. Frustrated, Schultz decided to leave Starbucks in 1985 and open a store of his own. He needed $400,000 to open the first store and start the business. He simply did not have the money and his wife was pregnant with their first baby. Jerry Baldwin and Starbucks cofounder Gordon Bowker offered to help. Schultz also received $100,000 from a doctor who was impressed by Schultz’s energy to “take a gamble”. 

By 1986, he had raised all the money he needed to open the first store, “Il Giornale”, named after the Milanese newspaper of the same name. The store offered ice cream in addition to coffee, had little seating, and played opera music in the background to portray an Italian experience. Two years later, the original Starbucks management decided to focus on Peet’s Coffee & Tea and sold its Starbucks retail unit to Schultz and Il Giornale for US$3.8 million.

Schultz renamed Il Giornale with the Starbucks name, and aggressively expanded its reach across the United States. This type of market strategy received mix reception from both customers and competitors. The firm’s relations with independent coffeehouse chains were strained, while some owners credited Starbucks with educating customers on coffee. Schultz’s keen insight in real estate and his hard-line focus on growth drove him to expand the company rapidly. Schultz did not believe in franchising, and made a point of having Starbucks retain ownership of every domestic outlet. Schultz was a very generous employer. He initiated some practices that really helped increase the loyalty of his employees. He said that although the main goal of the company was to ‘serve a great cup of coffee’, he wanted to ‘build a company with a soul’. He wanted his employees to work 20 hours a week and get complete health coverage and a stock-option plan.

Schultz redoubled his efforts to position Starbucks as a “third place”, outside of work and home, that people could gather and socialize. He cultivated his coffeehouse as “social yet personal” space, dubbing it interchangeably as the “Starbucks Experience” or “third-place experience.” Schultz’s positioning of Starbucks as a social hub is widely seen as introducing the second wave of coffee culture in the U.S., particularly in Seattle.

On June 26, 1992, Starbucks had its initial public offering (IPO) and trading of its common stock under the stock ticker SBUX. The IPO raised $271 million for the company and financed the doubling of their stores. On June 1, 2000, Schultz stepped down as CEO of Starbucks, moving to the new position of chief global strategist to help the company expand internationally. He was succeeded by Orin Smith, who worked closely with Schultz as his chief financial officer during the 1990s. After coordinating the first store opening in China in January 1999, Schultz took the following year to develop a customer base for coffee in the region. His aggressive expansion in Chinese markets has been credited with reconciling the country’s tea-culture with coffee consumption in China.

Throughout the late-2000s and early-2010s, Schultz directed the company to plan one to two store openings a day in mainland China. Back in the firm’s U.S. market strategic mistakes in various coffee wars with McDonalds and Dunkin’ left Starbucks’ marketshare damaged and the stock price down 75% from 2006 to 2008. While revenue was growing broadly, it was largely dependent on new store openings creating a revenue bubble. This slide in economic performance as well as a departure from the company culture that Schultz instated promoted his return.

On January 8, 2008 Schultz returned as CEO of Starbucks after an eight-year hiatus. Although the company was growing, that growth was largely dependent on opening new stores, while same-store sales were declining. He fired many executives, closed down hundreds of weak stores, hired the company’s first Chief Technology Officer, introduced the Starbucks Reward Card, and temporarily closed all US locations to retrain employees in making espresso. The company soon returned to organic growth and investor favor. At this time, Schultz was earning a total compensation of $9,740,471, which included a base salary of $1,190,000, and options granted of $7,786,105.

Schultz again stepped down as CEO in December of 2016, assuming the position of executive chairman. On June 4, 2018, Schultz announced that he would leave all positions at Starbucks, considering amongst other options a campaign for President amid concerns about income inequality.

Schultz is known for pioneering Starbucks’ partnership with Arizona State University, which allows all employees at Starbucks working 20 or more hours a week to qualify for free tuition through ASU’s online courses.

On the first of November 2013, it was announced that Schultz had stepped down from the board of Square, to be replaced by former Goldman Sachs executive David Viniar.

Schultz is a significant stakeholder in Jamba Juice.

Schultz is the former owner of both the NBA’s Seattle SuperSonics and the WNBA’s Seattle Storm. During his tenure as the SuperSonics team owner, he was criticized for his naïveté and propensity to run the franchise as a business rather than a sports team. On July 18, 2006, Schultz sold the team to Clay Bennett, chairman of the Professional Basketball Club LLC, an Oklahoma City ownership group, for $350 million, after having failed to convince the city of Seattle to provide public funding to build a new arena in the Greater Seattle area to replace KeyArena.

Schultz wrote the book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time with Dori Jones Yang in 1997. His second book Onward: How Starbucks Fought for Its Life Without Losing Its Soul, co-written with Joanne Gordon, was published in 2011. His third book For Love of Country, co-written with Rajiv Chandrasekaran, was published in 2014.

Howard Schultz has been given several awards for his superb achievements. He was given the ‘Israel 50th Anniversary Tribute Award’ in 1998 for playing a significant role in the promotion of a close alliance between the U.S and Israel. Schultz was awarded the 1999 National Leadership Award for philanthropic and educational efforts to battle AIDS, and the 2004 International Distinguished Entrepreneur Award from the University of Manitoba. In 2007, he received the FIRST Responsible Capitalism Award.  On March 29, 2007, Schultz accepted the Rev. Theodore M. Hesburgh, C.S.C., Award for Ethics in Business at the Mendoza College of Business at the University of Notre Dame, delivered the Frank Cahill Lecture in Business Ethics.

Schultz was named Fortune magazine’s 2011 Businessperson of the Year for his initiatives in the economy and job market.

Schultz spoke at the 2017 Arizona State University commencement ceremony and was presented with an honorary Doctor of Humane Letters degree.

In November 2017, the NAACP Legal Defense and Educational Fund presented Schultz with the National Equal Justice Award.

In 1982, Schultz married Sheri Kersch; they have two children: Jordan and daughter Addison Schultz. In 1996, Howard and Sheri Schultz co-founded the Schultz Family Foundation, which currently supports two national initiatives. Onward Youth is aimed at promoting employment for young people between the ages of 16 and 24 who are not in school and not working. Onward Veterans aims to support post-9/11 military to successfully transition to civilian life.