Howard Schultz serves as CEO of Starbucks, which boasted revenue of nearly $10.4 billion. Below is an article by Ingrid Abramovitch for the April issue of SUCCESS.

As the sun rises over Puget Sound, executives from Boeing and Microsoft head for their nearest coffee shop. They fall into line, mull over the Dow Jones average and advance swiftly to the front. Over the hiss of espresso machines, a server with a java-charged smile takes their orders. “One double-tall skinny latte with 2 percent foam. Next. One decaf mocha java in a grande cup. Next…” Without even thinking, the suits each hand over about $2, and wander off into Seattle’s world of big business. By the time they’ve settled into their desks, Howard Schultz has sold more than $140,000 worth of Starbucks coffee.

Yet, only six years after buying Starbucks from its founders, Schultz has transformed the gourmet-coffee company into one of the fastest-growing businesses in North America. Starbucks’ sales exceeded $93 million last year and, some analysts project, may surpass $1 billion by the end of the decade.

Schultz envisions a nation of Starbucks zealots, their coffee palates as discerning as those of wine connoisseurs. He sees a Starbucks in every North American neighborhood, anchoring each community like an Irish pub, and a pound of Starbucks’ house blend in every kitchen. In short, Howard Schultz wants the coffee craze he created in Seattle to extend across the nation.

Dreaming of a “Latteland”
The Starbucks Coffee Co. dates back to 1971, when three entrepreneurs in their 20s started selling whole-bean coffee in Seattle’s Pike Place Market. They named the store Starbucks, after the first mate in Moby Dick. By 1982, the trio had built a solid retail business in Seattle: five stores, a small roasting facility and a wholesale business that sold coffee to local restaurants.

Meanwhile, Schultz left the housing projects of Brooklyn, N.Y., for Northern Michigan University. In 1975, with a degree in business, he set out on a marketing career, working for Xerox and later as vice president of U.S. operations for Hammarplast in New York, where he met Starbucks’ owners Jerry Baldwin, Zev Siegal and Gordon Bowker.

In 1982, Baldwin and Bowker asked Schultz to manage retail sales and marketing for the company. (Siegal had already left Starbucks.) Schultz was 29, just married and anxious to leave New York City. He and his wife packed their belongings and drove 3,000 miles west to Seattle.

About a year later, Schultz visited Italy on a buying trip. As he wandered through the piazzas of Milan, he was overcome with a vision. “I saw the relationship Italian culture has with coffee and the romance of the beverage,” he says. “The Italian starts his day at the coffee bar and sees his friends there later on. It struck me that this was also possible in America. It had never been done—and we could do it because the quality of Starbucks coffee is unsurpassed.”

Schultz became obsessed. He was determined to build a national chain of Starbucks cafes based on the Italian coffee bar, but his bosses were reluctant. Frustrated, Schultz left Starbucks and wrote a business plan for a new company. He returned to Italy to visit hundreds of coffee bars and document his findings on videotape.

In April 1986, Schultz opened his first coffee bar in the Columbia Seafirst Center, the tallest building west of Chicago. He called it Il Giornale, after the Italian newspaper, and served Starbucks coffee. It was an immediate success. Schultz soon opened another in Seattle and a third in Vancouver.

The following year, he made an offer to buy out his old bosses at Starbucks for about $4 million. By then, Bowker wanted out. Baldwin decided to sell, but stayed on as president of the Starbucks subsidiary, San Francisco-based Peet’s Coffee & Tea Inc. In August 1987, Schultz dropped the name Il Giornale and merged his stores with Starbucks.

Adhering to a Vision
The response on Wall Street has been even more enthusiastic. Starbucks went public last July with a stock price of $17 and, at last report, the stock has climbed to more than $40 a share.

“I think Starbucks could easily top a billion dollars in sales by the end of the decade,” says Christopher E. Vroom, a retail analyst with securities firm Alex Brown & Sons. Vroom says Starbucks has created a powerful brand franchise in every market it has penetrated. He sees in the company’s formula a potent brew of superior customer service, product perfectionism and marketing. “Starbucks is single-handedly changing the way consumers think about coffee,” Vroom says.

Schultz’s motto has always been “underpromise and overdeliver.” From the start, Schultz built his business around cautious growth. After buying Starbucks, he began “by taking many steps backward,” he says. His first move, after a careful audit of his newly acquired company, was to write a new business plan. He laid out a vision— one he has faithfully adhered to ever since.

Starbucks would become the leading North American retailer of specialty coffee. It would be the Kleenex or IBM of gourmet coffee. Starbucks would grow carefully, entering one city at a time and dominating the market before moving on to the next.

Apart from his family and Starbucks, Schultz has two great passions: baseball and movies. The two merged in Field of Dreams, and Schultz often quotes from that movie, in which a man, Kevin Costner, builds a baseball field after a voice tells him, “If you build it, they will come.”

That was Schultz’s philosophy all along: If you build a solid infrastructure, hire an all-star management team and serve the fi nest product, the customers will come.

Schultz was determined to manage his company’s growth. Once Seattle was converted, Starbucks spread cautiously through the West to cities like Vancouver, British Columbia; Portland, Ore.; Los Angeles; and Denver. Schultz ventured to Chicago and, after one false start, succeeded grandly even in the face of a fierce local competitor, Gloria Jean’s Gourmet Coffees. Everywhere Starbucks sprouted, the company had phenomenal sales.

In a moment of reflection, Schultz admits Starbucks’ growth has been personally taxing. To spend more time with his children, ages 3 and 7, he takes them on weekend visits to Starbucks stores.

“It’s hard for me to celebrate success,” he says. “I’m always feeling: I want more, the next market, the next site. We must maintain a voracious appetite to succeed. The adulation is very fleeting. We must stay focused and refined.”