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What is not known is that when Starbucks opened in the Pike Place Market in 1971, they were using Pete's Coffee. They were not roasting coffee, they were bringing coffee from San Francisco to Seattle. They were not calling it Pete's, they were calling it Starbucks. So it was Pete's Coffee in Starbucks bags

Starbucks Coffee Company from 1971 until around 85’, 86’ only sold pounds of coffee. There was no beverage

I walked into the Starbucks store, and I was blown away by the experience, the romance of coffee, the education

I kind of maneuvered my way into a job for Starbucks. Sherry and I drove to Seattle, Washington, on Labor Day weekend in our old Audi car with a golden retriever and we came here because I was offered the job as the head of marketing for Starbucks when they were getting ready to open their fourth store in 1982

Starbucks was a true pioneer where they were educating customer after customer about what good coffee tastes like

This was a small business, but the equity of the brand even back then was much larger than the size of the business. And the opportunity that I saw even when we had four or five stores was well beyond Portland, Oregon, and I was always kind of pushing “we can do so much more”

Generally, in America coffee was terrible. It was instant coffee, stale coffee, and primarily robusta beans which is the low-grade coffee that Starbucks was never involved in

There's mainly two types of agricultural coffee grown for commercial use: robusta beans [low-end coffee primarily instant coffee] and high-grade arabica coffee but even within the arabica coffee there's significant segments of quality and integrity. And Starbucks has always played from 1971 to today at the highest level

Xerox job taught me incredible amounts about not only selling but humility because the rejection every day was so sign significant

I knew after a couple of years that if I stayed at Xerox for a longer period of time, I was going to be locked in there

The humility which came with rejection, the shame I had as a poor kid, all of that I think crystallized in me, and I give my wife so much credit in realizing that. Together we wanted to build a different kind of life and she gave me the courage, the conviction, and the drive to try and do something

I was really insecure about not succeeding and I didn't view what I was doing as the success

I was just blown away with my Italian trip and I raced back to America, sat down with Jerry and Gordon, and said “Holy, what we got happening in Italy is the business that Starbucks has to be in”

For the people who were seeking high-risk business investments, this is the late 80s, it's time to look at tech. We're now 12 years into Microsoft. Apple, four years past the Macintosh. And you're trying to raise money for a coffee house chain with names that people couldn't pronounce and serving it in a paper cup to go

For the initial 1.6 million that you raised, you talked to 242 investors, 217 of which said no

I don’t want any debt again because of my childhood. My parents were always in debt, bill collectors were always calling, and we never had any debt at Starbucks the entire time

We had the stores, we had the brand name, and we had a roasting facility on Airport Way in Seattle, the ability to source and roast coffee and put that through the supply chain of a beverage gave us probably at the time an 80% gross margin

There was a time in the Northwest when we were really at our peak where the average customer was coming 18 times a month

The model basically was a sale to investment ratio of 2:1 and an operating profit of 20%. If the sales were a million dollars, the investment was 500,000

The standard cup in the world was that terrible Styrofoam cup that is used in diners in New York City. That cup… I put boiling water into that cup, five minutes later the cup started to turn like a golden color because of the chemical. That can't be good for your insides or the taste of the coffee. So, we had to find the cup. This was such a smart move in retrospect, but we were just trying to figure it out. No one in America that is in the paper business had any kind of cup or lid that was compatible with what I was trying to do. In fact, they didn't understand it, why not just use the cup that exists. Because it doesn't taste good, and it doesn't feel right. Why go to the trouble of this perfected roasted coffee, of these beautifully sourced to arabica beans from all these farmers if you're going to pour it into Styrofoam

We got to get the language right. We got the cup, now we got to get the language, and we just started talking about changing it from the pedestrian words of small, medium, large to what it became which was – short, tall, and Grande. People made fun of it but they loved it

So much of Starbucks’ success came from customers asking for things we weren't doing, and Starbucks employees who became partners in 91’ understanding the business better than me

The intimacy with the customer and the barista became a very powerful component of the equity of the experience. And I’ve always thought that Starbucks became the first experiential brand at scale. We spend no money on marketing, zero. There was no money for marketing, and the cup, the iconic cup became a badge of honor, because people were doing something that was new, and novel, and walking in the street with it and people were asking “what is that.” It's your free billboard

You were using all the same language that you use today back in 1988. We focus on our people. Delight the customer. Then the customer delights the shareholder, or then satisfies the shareholder. I think we had 11 stores, and I was thinking “you have no idea what we have here, we are on top of something that is going to change America and this thing can become America's Coffee House”

Nothing else matters if we aren't people first

When we went to LA, it just exploded because celebrities embraced Starbucks

I think the pricing of Starbucks was directly linked to the economic model that I alluded to earlier, and the rising cost of labor, rent, and the fiduciary responsibility that we all felt to achieve the promise we had to our shareholders. And as a public company there certainly was a fair amount of discussion all the time about the sensitivity of the price points, and in later years maybe in the last couple years given the consumer inflationary time, it's become a bit of a problem

We started talking about exceeding the expectations of our people, so they can exceed the expectations of the customer

I was proposing something that had never been done before, and that was I wanted to give equity in a form of stock, options, to every single employee in the company

It's so expensive to train a new employee, it's not expensive to keep an existing employee, and so you can just pay people more if you keep them for longer

The reputation of the company was built basically with Word of Mouth

We were not expanding to multiple markets until we had enough evidence in the existing market that we had success. And we weren't going to compound the growth in another market with problems that we're having in the existing one

I was always fighting that we're not a restaurant, we're a hybrid retailer, I never referred to us as a café, it was always a store, we are a store, we are merchants

We wake up one day, and someone says that Starbucks is in a movie. We said what movie “You've Got Mail”. That wasn't coordinated, first of all Starbucks never paid for placement. Someone must have approved it, I knew nothing about it, and then someone said “you got to see this movie, Starbucks all over it, Tom Hanks, “You've Got Mail” with Meg Ryan. I knew nothing about it. It was just another thing like a little fairy dust on the brand

We had a theory of the case that any international market that we opened that didn't speak English we needed a partner

There were a lot of unperformed stores that should have never been opened that we needed to close, I think we closed a thousand stores at that time

Of all the things that I could point to that demonstrate what Starbucks has been and needs to be, it's the humanity and the people of the company. The company was built on being a performance-driven company through the lens of humanity, that's how it was built, and whenever we've lost our way, we've lost our way because people in power didn't understand that equation. So I just said that I need to be in front of every store manager. I need a meeting with 10,000 people

The third day was my speech in the basketball Coliseum to 10,000 people. I'm about an hour before, I was really feeling the burden of how important what I was going to say is, and the CFO at the time who subsequently resigned a week later asked me “what I'm going to say” and I said “I'm going to tell them the truth” and he says “you can't possibly do that, you're going to scare them.” I went up there and I laid it out, because we had seven months left, we were going to be insolvent

If you reduce it to the lowest common denominator: one store, one cup of coffee, one customer, one partner, and what if all of that works, then the company works

Scale and ubiquity create complexity. Complexity demands efficiency. But we are in a business where that touch point between the customer and the barista has to be protected and has to be elevated

I stayed CEO from 2008 until 2017. Then I left and there were no bad people, and no one had bad intentions, but the heritage and tradition of what I’ve described which is so vital to the nurturance was lost

In terms of velocity, about 4 billion dollars a year gets loaded onto gift cards that's unbelievable

We took a commodity business, and we transformed it into a premium product brand and experience

I'd be more than willing to sacrifice economics to go back to ways to enhance the experience, but I'm not in charge anymore

I never believed that we could build, maintain, and elevate the culture of the company in a franchise system

Young people around the world, they all want the same thing, they want opportunity, they want to be respected, they want dignity, they want to make their parents proud, they want to work for a company that they believe in, and when I see what we've done around the world I'm moved emotionally because the humanity I speak of is universal. That's why when I came back from China, I see that we have so much more in common than we have differences and that should be the theme of the world right now

If you don't believe you have a better product, who does

You couldn't put a price on the hundreds of thousands of people that come into this roastery and have an experience of a lifetime

I can't state enough over the last two decades what customization meant to the company and how customers created a personal beverage well beyond what the menu was

Every food company, every retail food business from McDonald’s on took a page out of Starbucks, went to school, and put espresso machines in their stores and started doing coffee beverages

It's so clear that Starbucks created an industry that did not exist

Our intent was not to build a global business

The worst thing that a company can do. like a sports team. is start playing defense because you're afraid to fail

We're an agricultural buyer, we are a manufacturer, we are a retailer, we are a wholesaler, we are managing joint venture relationships in 80 countries, we have joint ventures with two behemoth companies [Nestle and Pepsi-Cola], and above all else we are in the people business, managing the behavior, the motivation, and the opportunity creation for almost 500,000 people, and we're a public company in which the expectation is based on our success

When you have success, it gets harder because the bar keeps getting higher

We're not a beverage company serving coffee, we are a coffee company serving people, and we need to be much more coffee forward, and we cannot continue to allow the mobile app to be a runaway train. That is going to consistently lute the Integrity of the experience of Starbucks. We're not in the transaction business. We have to execute transactions but that has to go through the lens of being an experience business

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