Pour Your Heart Into It

How Starbucks Built A Company, One Cup At A Time

- Howard Schultz

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

Introduction
Starbucks coffee is an example of turning a passion for coffee into a successful
business. What started as a small coffee shop in Seattle is now a global marketing
phenomenon that covered the globe with over sixteen hundred stores and with more
opening each day. In this book, the principles behind the success of Starbucks Coffee are
discussed including the importance of passion for an excellent product, and the need to
infuse tradition, and imagination as a part of the business venture. Transforming coffee
drinking into a whole new experience is just as important as serving it. By combining
several of the principles, managers, marketers, students and aspiring entrepreneurs can
discover why passion is just as important as capital & marketing savvy are in a business.

Over 1600 stores across the globe and still counting !

Howard Schultz wasnt the first person to be carried away by the aroma of a well
roasted coffee bean. But the Starbucks coffee company leader was undoubtedly the first to
turn that reverie into a Billion dollar retail operation.
Pour Your Heart Into It recounts Schultzs adventure; which started in 1981 when he
travelled from New York to Seattle to check out a popular coffee bean shop called
Starbucks that had been buying many of the Hammarplast Swedish Drip Coffeemakers he
was selling.
It took Schultz an entire year to finally convince the Starbucks owner to hire him. As
the company began to expand rapidly in the 90s, Schultz always said that the main goal
was to serve a great cup of coffee. But attached to this goal was a principle: Schultz said
he wanted to Build a company with a soul.
Asked the secret of his success, Schultz recounts four principles: Dont be
threatened by people smarter than you. Compromise anything but your core values. Seek
to renew yourself even when you are hitting home runs. And everything matters.

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

Part 1
Rediscovering Coffee : The Years Up to 1997
Humble Dreams & Beginnings

By educating its customers on the

Spanning across chapters One to Six of the

different blends of coffee, Starbucks

book, this part recounts the authors

made

humble

mainstream companies.

beginnings

from

Project

itself

different

from

the

Housing to a successful career as a

Eventually after almost a year of

General Manager of Hammarplast a

courtship Schultz joined Starbucks with a

Swedish

small equity to handle its marketing with

company

selling

kitchen

components in the United States.

In the years that followed, Starbucks

the vision of making Starbucks as a

national company in Northern America.

grew from a single store to five stores in

What made Starbucks so famous

Seattle serving a growing number of niche

today however is Schultzs insight from

customers despite a struggling economy.

his trip to Italy. Coffee drinking should be

The passion of its founders and

a part of communitys social life . it is an

sharing their knowledge about coffee with

extension of the home, where one can sit,

customers made Starbucks a hit with the

sip coffee and interact with people,

local customers.

strangers and friends alike.

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

Upon his return from his trip to Italy,

adequately supported by investors. All of

Schultz presented his ideas to the founders

his investors, Schultz admitted, invested

His vision of expanding Starbucks as a

in him and not in his ideas. It was his

coffee shop that served freshly made

drive to succeed and his own belief in the

coffee especially cafe Latte was not

coffee business that always won over the

acceptable. Starbucks to the owners was a

investors.

shop selling roasted coffee beans. it was

The investors though not being

not a restaurant. For months, Schultz, as

confident about the business plan, they

was typical of his character persisted in

were absolutely confident about Schultz

presenting the same idea again and again

and that is where lay another ingredient

to Gerard Baldwin, only to be rejected at

for successful business; honesty and

every turn.

integrity are important while handling

Typical of company cultures, conflict

is the driving force behind any change. in

other peoples money because your

reputation is at stake.

the end Schultz decided to start his own

David Olsen, an owner of cafe

company and put up coffee espressos

Allegro, teamed up with Schultz in

across Seattle.

expanding operations of Il Giornale &

Baldwin, together with the rest of

later on with Starbucks.

Starbucks staff was very supportive of him

Perhaps the most important turning

and even allowed him to stay a few

point in Schultz life was to foresee the

months while he organised everything.

future and believe in destiny. No-where

Baldwin even helped Schultz with

was this more evident than when he

the capitalisation by providing him with

grabbed the opportunity to buy Starbucks

$150,000 as seed money.

Coffee when it was up for sale. Through

Schultz opened his own coffee

sheer determination and belief, Schultz

company call Il Giornale

was finally able to buy the company that

while bringing in a
new
experience

he truly loved!

coffee
from

Italy. Selling espresso

coffee and setting up
espresso coffee bars in
the United States is a novel
phenomenon that Schultz thought would
be a successful venture. It took him four
years

to

make

it

viable

venture

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

Part 2
Reinventing the Coffee Experience (the private years)
1987 - 1992
Changing the company however proved
to much more difficult than anticipated for
Schultz. In the 20 months since he had left
Starbucks, employee morale had gone
down to an all time low. When Schultz
addressed the companys employees for
the first time his grand plans for
transformation were met with a lot of
skepticism.
His first order of the day was to establish
the trust between the managers and
employees. The principle of giving due
recognition paid of later as employees
were motivated and driven for a company
which showed that it cared for them.
Opening stores all over the U.S. for the
next five years became a challenge that
was overcome because of redesigning
Starbucks from an old idea into a fresh
new concept of drinking coffee.
When something new however comes out
and grabs the imagination of customers,
the business is a guaranteed success.
Starbucks offered the following benefits as
attractive and seductive as the coffee itself:

A Taste of Romance

An Affordable Luxury

An Oasis

And Casual Social interaction

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

The most important lesson that Schultz

however imparted with regards to
business was the People are the most
important ingredient when it comes to a
successful business. Treating people like
family will make them loyal and
encourage them to give their all.
Without people who share the same
passion and belief, an organisation is
bound to fall. as also, without customers
who believe not only in the product but
also for what the company stands, an
organisation will again fall.
More importantly Schultz believe that a
company has to have the heart to listen
and care for its people and not only look
after its bottom line. When a company
cares, it somehow rubs on its customers
who will gladly return and keep on
coming back for more Starbucks coffee.
A Hundred Story Building First Needs a
Strong Foundation - Chapter 10
Starbucks had a losing streak from 1987-89
with only 20 stores operating at that time.
Schultz presented a growth plan to his
board of directors that would attract a
management team that would go well
beyond Starbuckss expansion plans, build
a world class roasting facility and a
computerised
information
system
sophisticated enough to keep track of sales
in hundreds and hundreds of stores.

His Board patiently listened to him and

wholeheartedly supported his plans.
The rest is history.
From 1987 to 1989 Schultz laid a solid
foundation by hiring key managers and by
investing early in facilities Starbucks
might eventually need.
By the time Starbucks went public in 1992,
its revenues were hitting 80% a year
doubling its number of stores annually.
Dont be threatened by people smarter
than You - Schultz hired people who
were not only smarter than him but who
had the experience to help him during the
early years of Il Giornale and also during
the expansion of Starbucks. He let go
people who failed to rise to the challenge
during those growth years.

From then on Starbucks became strongly

customer oriented by adopting a
snapshot program that involved
unannounced visits to each store to
monitor customer service. Behar trained
Starbucks employees to go out of their
way and to take heroic measures to meet
customer demand.
Eventually,
Behar,
after
years
of
spearheading Starbucks retail operation
and expansion, did something that few
executives talk about but seldom do. He
hired and trained his own successor in the
person of Deidra Wager from Taco Bell
who proved to be a skilful manager who
knew information systems that Starbucks
needed to systematise its retail operations.
Without romance and vision, a business
has no soul, no spirit to motivate its
people to achieve great things.
Many businesses failed because its leaders
could not execute. A solid foundation of
processes and systems and discipline and
efficiency are needed before creative ideas
can be implemented and entrepreneurial
vision realised.

He learned to accept frankness as a

valuable critique on the philosophy of
how Starbucks operate. Howard Behar
who joined Starbucks in 1989 made the
opinion that Starbucks was product
oriented when it should be people
oriented. He said that, We are not filling
bellies. We are filling souls.

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

To succeed, every business must strike a

balance between bureaucracy, being
process-oriented, too narrowly focused on
specific functions and the need to achieve
great things.
Behar also taught Starbucks employees to
speak their minds by holding Open
Forums each quarter.

Deciding

when

to

make

compromises to please its customers is one

losing its culture and core values while

giving up control.

of the trickiest questions any business

faces. At Starbucks, its two article of faith
says that at the core of its business is an
authentic product that is better than most
of its customers: while it also believes to
just say yes to customer requests.
Schultz gradually learned the need
to compromise without compromising the
core values of Starbucks.
It took Howard Behar to make
Schultz rethink letting its customers who
clamour for healthier nonfat milk in their
coffee instead of whole milk. Schultz
initially resisted this idea until he went to
a Starbucks store in Seattle where a young
female health aficionado ordered coffee
latte with non-fat milk. With non-fat milk
unavailable, the customer simply went to
a competitor who has.
Likewise, with the tie-up with Host
Marriott operating out of international
airports in the United States, Starbucks
gained experience in letting non-company
owned stores operate Starbucks with the
same quality and zest of service.
There were initial difficulties during
the first year of this partnership but it
disappeared with the training of Host
Marriott employees on the processes,
quality,

and

being

customer

service

oriented.
This gained experience opened the
eyes of Schultz to reconsider accepting
franchising of Starbucks globally without

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

Part 3
Renewing the Entrepreneurial Spirit (the public years)
1992 - 1997
With Starbucks decision to go public

be careful what we wish for. We might get

in 1992, it selected an investment banker

it.

who has a passion and commitment on

As long as you are reinventing, How

about reinventing yourself? - Chapter 14

what Starbucks stood for.

It

had

successful

debut

at

Now

that
on

all

specialty
over

coffee
the

was

NASDAQ on June 26, 1992 when it opened

catching

country,

at $21 per share while Starbucks target

competition was also heating up. Coffee

was $14 to $16 per share range. The IPO

stores were adapting to the Starbucks

raised $29 million for the company $5

model. Starbucks was never threatened by

million more than expected. By closing

mom-and-pop coffee stores but coffee

bell, Starbucks market capitalisation stood

companies seeing Starbucks success made

at $273 million just five years after Schultz

aggressive expansion plans.

bought it for $4 million.

The share price never went below
the opening price and three months after it
hit $33 per share making Starbucks worth
$420 million.
With the successful IPO, it had its
downsides like exposing the business to a
high degree of scrutiny and the sudden
loss of privacy. It also imposes more
to

For instance, Seattles Best Coffee

shareholders and the burden to meet Wall

announced that it will franchise 500 stores

Streets expectations.

in five years. Brothers Gourmet Coffee

weight

on

the

responsibility

Short sellers who believed that

Starbucks is over-valued were proven
wrong over time.

bought Gloria Jeans and planned to open

80 Starbucks styled stores.
Schultz and his Starbucks team

Schultz admits that running a public

embarked on an aggressive expansion

company is an emotional roller coaster. He

plan to the East Coast accelerating their

suggests focusing on running the business

planned execution to open more stores to

and maintaining a controlled calm during

stem competition.

both the heady days and the sickening

lows. He also cautions us by telling us to

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

By year-end, Starbucks entered the

Texas panhandle.

After

detailed

product

development and market taste testing

Starbucks redesigned its processes

and systems to handle efficiently opening
of its hundreds of stores per year.

with Starbucks customers, Frappuccino

became an instant hit nationwide.
Starbucks

went

into

the

music

By June 1994, Schultz decided to

business in 1994 by selling compilations of

reinvent himself by letting Orin Smith

jazz music artists under a Blue Note label

handle

owned

most

of

his

day-to-day

by

Capitol

records.

When

responsibilities taking on the titles of

customers heard the music played on

President and Chief Operating Officer.

Starbucks stores, they want to buy the CD

Schultz had now the time to

on

the

concentrate on the Pepsi joint

venture, brand building,

spot.

the design of the Store

Jazz

of the Future, and new

a n d

product development.
In

his

java

soul

Schultz considers himself

a

dreamer

and

an

entrepreneur in spite of turning

seemed

himself into a professional manager and a

to fit Kenny Gs Miracles CD flew off the

corporate leader.

counters at Starbucks when it was offered.

Frappuccino, a cold beverage drink

While

jazz

music

became

with a coffee base for warm climates, is

successful foray with Starbucks enabling it

one of the best mistakes that Schultz did

to support schools music programs and

not make. He

boosting sales, Schultz felt that Starbucks

customers are ready for more surprises

entrepreneurs

and delight them with more unique

fall into a trap

products they never find to expect in a

wherein

coffee store.

an

employee who
comes up with
an

idea

especially one
that does not seem to fit the original
vision, they are then tempted to quash it.

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

Schultz

says

that

every

year

Schultz said that Starbucks started

competition heats up, managers change,

with

customers needs and taste change, and

romance of coffee drinking. Starbucks

shareholders change. If things are going

built up brand loyalty one customer at a

well, changing the winning formula is a

time through their company-owned stores.

necessity since nothing stays the same

Starbucks success proves that a

forever in business or in life. Counting on

multi-million dollar advertising program

the status quo can lead to grief.

is not a requisite for building a national

Schultz says that sustainability for

Starbucks

is

directly

linked

to

self-

renewal. Starbucks went into joint venture

educating

customers

about

the

brand.
Also authenticity makes brands last.
Starbucks partnered with United

with Pepsi to market Mazagran, a cold

Airlines

to

serve

its

coffee

to

its

coffee drink to Pepsis broad distribution

passengers. After some bad starts and fear

system. It failed.

that United Airlines flight attendants may

Schultz did not stop but instead

not be able to serve Starbucks coffee

decided to put into cans its successful

properly, Starbucks threw a lot of people

Frappuccino. Pepsi was overwhelmed

to solve the problem.

with repeat orders. It was a runaway hit.

Today, United Airlines considers

Starbucks went into coffee flavoured

ice cream in 1996 by joining up with

serving Starbucks coffee as one of its best

moves. The risks paid off.

Dreyer. Again it became a runaway hit

beating Haagen Dazs as the number one
premium coffee ice cream brand in the
United States.
Schultz said that Starbucks was able
to cash in on its brand equity by putting
the Starbucks brand only on best-of-class
products.
Schultz believed that strong brands
create a powerful personal connection.
It started with his people not with
consumers.

Most

national

brands

in

America are marketing driven. Starbucks

is product driven, people driven, and
values driven.

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

10

To Conclude - Lead With You Heart

Schultz on hindsight believed that the head of a company should not always be the
cheerleader or should communicate directly to its people its weaknesses and fears.
The weaknesses and pain can be seen only by the employees as long as they
understand them in the context of the companys greater accomplishment.
When the chips are down it is wrong to give rhetoric when people need guidance
instead. People wanted to know the plan, how it will be implemented and they want to be
given the responsibility to help solve the problem and the authority to act on it.
Schultz encourages leading with ones heart, the passion, commitment, and the
enthusiasm of a dedicated group of people. It is no longer about money but pursuing the
dreams others dont think is achievable and finding a way to give something back to the
employees, customers, and the communities where Starbucks operate.
Victory is much more meaningful when it comes not just from the efforts of one
person but from the joint achievements of so many. As a parting word, Schultz said that
success is sweetest when it is shared.

Presented By Anant Pawar (124), Sujal Shah (150), Aneeket Vare (176)

POUR YOUR HEART INTO IT - HOWARD SCHULTZ

11