Tim Adams discovers whether Howard Shultz’ plans are good deeds, or just froth
Howard Schultz, the founder, chairman, president and chief executive of the Starbucks Coffee Company, has a way with parables. This morning at the American embassy in Kigali, the capital of Rwanda, he is telling, to a group of young Rwandan entrepreneurs, the various stories by which he makes sense of the phenomenal success that is his life.
Those of us who have been travelling with Schultz for a day or two among the subsistence coffee farmers of the world’s 15th poorest country have heard most of the stories before, but they are told with such a conviction, both humble and zealous, that each time is like the first.
The stories include the one about Schultz’s dad, a truck driver who used to distribute and collect nappies in Brooklyn; one time his dad got sick and lost his job; they had no health insurance and the family and his father went on the rocks.
(Schultz vowed that day that if he ever owned a business, health insurance for all employees would be a priority.
“I often ask people,” he says, “what is the biggest item on the Starbucks balance sheet?” Everyone answers coffee. In fact it is health: a $300m a year premium for American employees.)
Another story describes the evening that Schultz - who, at 55, has retained some of his college quarterback good looks - went, as a teenager, to take a wealthy girl out on a date; all was going well until her father asked Schultz where he lived. He explained he lived in the Projects - in public housing - in Brooklyn, and the girl’s father winced as if he had been struck. Schultz has never forgotten that wince.
The intent of these stories, today and every day, is to let his audience know, and to remind himself, that Howard Schultz once had nothing, that he was nobody; that he has known your despair and frustration; that he is the living embodiment of the American dream.
It works.For this morning’s talk, given to the packed room of young businessmen and women, the stars of Rwanda’s slowly emerging middle class, Schultz adds a few stories that he has picked up from his time in the country.
The first is about a woman we had met at a coffee co-operative the day before. Schultz had sat with her and asked if she could have anything in the world, what would it be?
The woman had answered quietly that she dreamt of owning a cow. The answer seemed so prosaic to Schultz that he was momentarily stunned. He still seems so now, as he describes it. A cow?
The other story that Schultz cannot get out of his head he heard at a charitable refuge called Project Rwanda. A woman he met there had been among the girls who had been raped during the Rwandan genocide of 1994, and when she had become pregnant she had been abandoned by what was left of her family.
She was HIV positive and lived in a one-room hut with the daughter she had carried to term, now 15, and the five children of her murdered brothers and sisters, whom she had adopted.
She supported her children by getting up at dawn and buying onions from a wholesaler and then sitting all day at the market, trying to sell them.
Once again, Schultz asked her his question. What did she most need to make her life easier? Two things, the woman told him; first, access to microfinance so she could buy more onions and get her business on a sounder footing; second, some glass for the windows of her hut to keep out the termites. Once again Schultz was stopped in his tracks.
He helped the woman with some money. “We must be,” he says, “responsible for what we see and hear.” It is a favourite Schultz mantra. Another is: “Don’t be a bystander.”
The stories present each of us in the room with a question. It is, I guess, the question that has been nagging at me since I came out here with Schultz and several other Starbucks executives, including the UK managing director Darcy Wilson-Rymer and their man in Africa, Chris von Zastrow, two days before.
The question is a supplementary to Schultz’s mantra - “We must be responsible for what we see and hear” - and it is this: where exactly should the responsibility of a company like Starbucks begin, with its 17,000 stores and its 50m cups of coffee sold every week, and where should it end?
And how much should a man like Schultz, worth $386,868,731 at Forbes magazine’s last count (down from more than a billion two years ago), be prepared to do himself when confronted, as he has been, by the stories he has told?
There are a couple of people in this room who have a clear answer to the first part of that question. Harriet Lamb is the irrepressible chief executive of Fairtrade in the UK, and Rob Cameron is director of the world standards agency FLO (the Fairtrade Labelling Organizations).
To them a company’s desire not to be a bystander should begin with a commitment to the principles of Fairtrade. In the case of coffee, a commitment directly to pay farmers who are organised into democratic co-ops more than the Fairtrade minimum price for their coffee ($1.25 per pound of arabica) and to add a premium of 10 cents per pound to the co-operative for investment in community projects.
It’s certainly a start. Howard Schultz has come out here to meet with some of those co-operatives and to announce a commitment that by the end of this year all of the espresso coffee - which goes into cappuccinos and lattes and the rest - sold in Starbucks’ 747 English shops will comply with those standards and bear the Fairtrade stamp.
The commitment will make Starbucks far and away the biggest buyer of Fairtrade coffee in the world (and will go some way, Schultz hopes, to restoring some of the damaged image of his ubiquitous brand).
He ends his talk this morning with a final parable. It is a story he heard from a rabbi in Israel, and it is about the Holocaust. When the transports arrived at concentration camps, Schultz explains, and unloaded their desperate and naked human cargo, one of the ways the Nazis tried to destroy their prisoners’ spirit was to randomly offer just one person, freezing and broken by the journey, a blanket.
The blanket would be a symbol of the arbitrary divisiveness of the death camps; it was given to undermine any collective feeling. In every case, the first thing the person did was to attempt to share it with his fellow prisoners, make it stretch around four or five bodies.
This is Schultz’s message to his audience, who know something about genocide first hand. “Share your blanket,” he says. Schultz has wide, staring eyes when he talks, and he fixes them now on the room.
“Share your blanket.”
When he has finished, he invites questions from the floor. A young man gets to his feet and announces boldly: “Mr Schultz, I am disappointed.
You have brought us here today on false pretences. I had come as a young businessman, in the hope that you would share the secret of how you made your millions; I work in the hotel trade and I was waiting to hear how I might create a great hotel chain across Africa, but what I hear is not the speech of an entrepreneur, not the speech of an American corporate giant, but the speech of a pastor.” The young man pauses for a few beats. “On behalf of everyone in this room and from my heart I would like to thank you!”
There is great applause. Schultz smiles. His work here is done.
What Schultz does not spell out to his questioner is that in fact he has, over the course of his talk, not only spoken like a preacher but in doing so demonstrated exactly how he has made his millions, how he has grown Starbucks from “one small shop in a small city called Seattle, Washington” into the biggest retailer of hot drinks in the world.
He has done it by evangelising, by spreading his word about coffee.
In the beginning, in 1985, Schultz explained to his investors that America had never understood what coffee was. He told them about coffee shops in Milan, and how he believed he could build a chain of shops that incorporated the passion he had seen there - to let Americans in on the Italian secret of espresso and cappuccino and latte (albeit in bucket-sized cups).
Schultz initially planned 100 stores; after his original round of storytelling he crossed out that number and wrote down 75.
When his idea began to work, he told more stories to the people who were employed in his shops and at his roasting plants (“partners”, he insisted on calling them, because he gave each of them the opportunity to have a small stake in his enterprise, paying a proportion of salary in stock options).
The gist of these stories was about how “Starbucks was not a coffee company serving people, but a people company serving coffee”.
These stories took hold, too, and became woven into the atmosphere of each of Starbucks’ exponentially rising number of stores.
Starbucks held no patents, it did no advertising, but it learned how to incorporate the essence of Schultz’s storytelling - that coffee was the ultimate communal drink, that it could bring people together from across the world in an enlightened “ecosystem” - in everything it did.
No matter that the story could only be partly true, it was what Starbucks customers - 50 million a week - bought into every time they ordered a mug of coffee.
It was the “experience” that kept them coming back for more.