Creating a Market with a Cup of Coffee

Thursday, July 16, 2009

Howard Shultz was a poor Brooklyn kid struggling to make his way through college, and because he believed he could create a need for caramel macchiatos and chai lattes, he is now the head of a 30-something billion dollar multinational string of coffee shops. After interviewing Shultz, 60 Minutes reporter, Scott Pelley decided the entrepreneur is "creating his own subculture and intends to take the whole world along."

Shultz first became interested in Starbucks when as a plastic salesman he was intrigued by the volume of plastic drip-brewing thermoses it was buying from the plastics manufacturer that employed him. Shortly after coming on board with Starbucks he found himself in a love affair with the pulsating coffee culture of Italy. He suddenly was struck with the idea that U.S. patrons would be receptive to elegant gathering places with a spirit of community exchange, all the while sipping on connoisseur coffees to their heart's content.

In 1987 when Starbucks when up for sale, his inspiration swayed investors to fork over $3.8 billion and he eventually exceeded his goal of 125 outlets in 5 years with 165 stores by 1992. By 2008 there were approximately 11,000 stores in the U.S., with another 4,000 - 5,000 in foreign countries. With fiscal 2009 Q1 net earnings down to $63.3 million, the hot beverage mogul will be making some changes to streamline the operation and increase profitability.

Shultz is a firm believer that the success his empire is based on the philosophy behind the operations - that he created a place for humanity to meet and make human connections. It's an alternative environment to work and home. He says the reason Starbucks stores are opened across the street from each other is to cut back on the lines where something like 40 million people a week wait to imbibe 300 million plus gallons of brew each day.


Some Things About Business. 2008 One Winged Angel.Bloggerized by : GosuBlogger