[00:00:00.

190] - Speaker 1
For every single one of us, there are a handful of defining moments in your life. The Howard Schultz, the
Mastermind behind Starbucks's Empire. One of those moments came at just seven years old. His father
had just been fired from his delivery job after falling on ice and breaking his hip and ankle. The family had
no medical insurance, no savings, and in that moment, no hope. Flash forward to today, and Howard
Schultz is a multi billionaire and is responsible not just for transforming the coffee industry, but several
other industries most people might not realize. But to understand how a simple coffee store can become a
global empire, we need to look at the four stages of Starbucks. And it all begins way back in the 60s. This
is Gordon Bowker. While traveling across Europe, he ordered a cappuccino from a small cafe in Rome,
and it tasted different, better, much better. You see, at the time, most Americans only drank cheap instant
coffee or low quality coffee from diners. When he returned from his trip, Gordon told two friends about this
experience, and they decided to try and bring higher quality coffee to the American market.

[00:01:28.490] - Speaker 3
This is the Original Starbucks, a small store with no big plans. It opened in 1971 on Seattle's seafront.

[00:01:37.320] - Speaker 1
However, it wasn't like you're imagining. The Original Starbucks store sold bags of high quality coffee
beans along with the equipment needed to make coffee at home, but they didn't actually make or serve
drinks in the actual store. With this business model, growth was slow but steady. By 1981, they had four
stores, all based in Seattle, and the coffee was selling well. So so well, in fact, that they caught the
attention of Howard Schultz. Now, despite growing up very poor and with the difficulties with his father
losing his job, through hard work, Howard had managed to build a career for himself. It hadn't been easy.
He'd even had to sell his blood to afford to get through College. But by 1981, Howard was the vice
president of a company, and that company just happened to be one of Starbucks's suppliers. This is how
Howard Schultz first heard about Starbucks. He was intrigued by the amount of orders this little coffee
company was making, and went down to one of their Seattle stores one day to check it out for himself. He
tried their coffee and was immediately hooked, so much so that he decided he wanted to be a part of
Starbucks, and it reached out to the three guys who'd founded the company to see if they'd hire him.

[00:02:51.590] - Speaker 1
But the only person who thought Howard joining Starbucks was a good idea was Howard himself. The
three founders of Starbucks were reluctant to let someone else join, and even Howard's own mom told
him, You're doing well. You have a future. Don't give it up for some small company nobody's ever heard
of. Despite this, Howard was persistent. He was unfulfilled in his current job and could see the huge
potential for Starbucks. He kept writing to the Starbucks founders, and after over a year of convincing,
Howard joined the Starbucks team. Little did anyone know that decision would change everything.

[00:03:30.270] - Speaker 3
When people say you're an evil empire bent on world domination, you said I hate that.

[00:03:36.690] - Speaker 2
I hate that.

[00:03:52.740] - Speaker 1
Now it was Howard's turn to visit Italy. Very similarly to Gordon, the original Starbucks founder, he loved
the way the Italians did things. But whereas Gordon had loved the taste of the coffee and the way it was
brewed, Howard fell in love with something different, the experience. During his trip, Howard noticed in
Italy that with many coffee shops, the staff seemed to know the customers and called them by name
when their drink was ready. He also noticed that people would go to these coffee shops not just to grab a
quick drink, but to relax, to chat to people, some even to get work done. For example, someone ordered a
cafe latte, and when he tried the drink for himself, he thought, No one in America knows about this. I've
got to take it back.

[00:04:37.740] - Speaker 2
With me. I was captured emotionally by the Italian coffee bar, the sense of community, the third place
between home and work. I raced back to America thinking, This is what I'd like to try and do and
transform the Italian coffee experience into the American society.

[00:04:58.340] - Speaker 1
That trip to Italy was a revelation for Howard. He later wrote in his memoirs that originally Starbucks had
sold great coffee beans, but they didn't sell it by the cup. They treated coffee as produce, something to be
bagged and sent home with the groceries. But to Howard, he felt they were missing the heart and soul of
what coffee was really about. He felt that just like Italy, they needed to make coffee, not a product, but an
experience. Howard was excited. Right up until the moment, he told the Starbucks founders about this
idea, who quickly shut him down. They argued Starbucks was a retailer, not a restaurant or bar, and they
couldn't just completely switch up their business model and start making drinks in the actual store. They
felt things were going quite well as they were, so why risk all that to try and become a cafe? Howard
became increasingly depressed. Eventually, he realized that his vision of bringing the full coffee
experience to America just wasn't going to happen with Starbucks. In 1985, Howard left Starbucks to start
his own company, Il Giardale, the Italian word for newspaper. He wanted the high quality coffee of
Starbucks, but with the atmosphere of the Italian coffee he loved.

[00:06:16.360] - Speaker 1
Once again, pretty much everyone told him it was a bad idea and a stupid move to leave a promising
company like Starbucks. Over the next year, Howard spoke to 242 people about his idea, and 217 said
no. The most common problem with his idea that he heard was that Americans would never spend that
much money on coffee. Howard's business plan revolved around him selling coffee at three dollars per
cup. At this time, coffee generally sold for around 50 cents per cup. You want people to pay six times
more just for the experience? Yeah, right.

[00:06:52.090] - Speaker 2
I came to you in 1987 and I said to you, I want to build a company with Italian saying words that no one
could pronounce for three dollars a cup of coffee. Would you invest?

[00:07:05.550] - Speaker 3
Absolutely not.

[00:07:08.230] - Speaker 1
But if there's one thing you should have picked up on by now, it's that Howard Schultz is a very persistent
man. And after speaking with hundreds of investors, he finally raised enough capital to launch his own
Italian style coffee shop. But hold up a second, I thought this was meant to be the story of Starbucks.
What's going on here? Well, you see, within two years of Howard starting his own coffee shop, the
Starbucks founders decided they wanted to sell up. And because they were still on great terms with
Howard, they told him if he could get the money together, he could buy Starbucks.

[00:07:43.000] - Speaker 2
I was thrilled. And the purchase price was $3.8 million for six stores. But I had no money, nothing.

[00:07:51.920] - Speaker 1
So Howard, once again, sat out on a mission to raise money from investors. Of course, after trying to
raise money for his own coffee shop, he had a lot of investor contacts, and he went to all of them to tell
them about this opportunity with Starbucks. Then disaster strikes. One of those investors liked the idea of
buying Starbucks so much that he tried to cut Howard out of the deal completely and told the Starbucks
owners he'd buy it from them directly. Howard was devastated. He was so close to finally owning
Starbucks himself and it was snatched away at the last second. Deflated and depressed, he told one of
his friends about the situation.

[00:08:35.520] - Speaker 2
He says to me, Come to our office tomorrow morning and meet our senior partner. I said, Okay, who is it?
He said, Bill Gates senior. I walk into his office and he says, We're going to go for a walk. I said, Where
are we going? He said, We're going to go see the man. We walked in. I don't know if he called him. I don't
know if there was an appointment. I don't know anything. Bill Gates, all 6'7, 6'8 towers over his desk and
says, You should be ashamed of yourself. This is not going to go down. You are going to stand down and
this kid is going to realize his dream.
[00:09:10.900] - Speaker 1
It worked. Thanks to Bill Gates's dad, the other investor backed down and Howard Schultz raised the $3.8
million needed to buy Starbucks himself. Once he was CEO, Howard immediately transformed Starbucks
from being just a shop to buy coffee beans to a place where they actually made and served you the drinks
in store. He also rebranded his Ill'Giardali cafes as Starbucks stores, so everything was united under one
name. Finally, Howard's vision of bringing the Italian coffee shop experience to America was a reality.
When you zoom out and look at the timeline, you realize what a few years it had been. In 1981, Howard
discovered Starbucks. A year later, he joined the team. By 1985, he'd left the team to start his own coffee
company. Now in.