Disclosure
Schultz: Childhood trauma led to strict zero-debt rule at Starbucks
“No, it was totally my childhood. My parents were always in debt. Bill collectors were always calling. And no, there was, we never had any debt the entire time. Never.”
Assertion Partly supported
Schultz: Starbucks beverage retail achieved roughly 80% gross margins early on
“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.”
Assertion Supported
Schultz: Starbucks store model targeted 2:1 sales-to-investment and 20% operating profit
“The model basically was a sales to investment ratio of two to one. And a operating profit of 20%.”
What-if
Schultz: Starbucks should have secured an exclusive on the modern sip lid
“Howard Schultz should have said to them, I want an exclusive on that lid. Because that lid became the standard for the world. If I would have just understood that.”
Assertion Partly supported
Schultz: Starbucks spent zero dollars on marketing in its early days
“We didn't spend any money on marketing. Zero. It was no money for market in 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”
Assertion Partly supported
Schultz: Starbucks Granted 14% of Base Pay in Stock Options Pre-IPO
“Ultimately we gave 14% of everyone's base pay in the form of stock options at the end of the year based on the strike price. And I had to do it the year before the IPO.”
Assertion Supported
Schultz: Costco Co-Founder Jeff Brotman Invested in Starbucks' 1987 Buyout
“First, Jeff Brotman invested in Starbucks in the round to buy Starbucks.”
Assertion Not publicly verifiable
Schultz: Goldman Sachs rejected leading Starbucks' 1992 IPO for being too small
“We got turned down by Goldman Sachs.”
Assertion Supported
Schultz: Starbucks and Pepsi launched bottled Frappuccino via 50/50 JV
“Subsequently, Craig Weatherup and I, on a napkin, I swear, shook hands and created a multi-billion dollar business For Pepsi and Starbucks and a fifty-fifty JV and bottle Frappuccino.”
Opinion
Schultz: Belinda Wong is Starbucks' most valuable person
“Maybe the most valuable person in the company, from my view.”
Assertion Not checkable as stated
Schultz: Consulted daily with Michael Dell before returning as Starbucks CEO
“On that holiday, a friend of mine
Not, I didn't know he was there, but it was Michael Dell was there. And I must've talked to him almost every day about the transformation of Starbucks. And he was going through a similar thing at Dell almost at the same time. …”
Assertion Not checkable as stated
Schultz: 10-11 daily customers per store could reverse negative comps
“And then I had this economic formula of how many customers it would take per store to turn comps around. And the number was low. It's like less than 10 per day or 11 per day.”
Assertion Partly supported
Schultz: Starbucks secured China approval to insure employees' parents and grandparents
“Belinda decided that she could go to the government and go to an insurance company and come back to Starbucks and get government approval for Starbucks to do the first, do something had never been done before and provide health insurance to the parents and gra…”
Opinion
Schultz: Third-wave coffee competitors expanded the market rather than taking Starbucks' business
“There has always been stories that all these competitors were going to steal business from Starbucks, but from. 1983 to all the way today, the consumption, especially coffee is still a small amount relative to the macro opportunity. So all those people have ex…”
Assertion Not checkable as stated
Schultz: Starbucks baristas consistently make 100,000 different beverage variations
“I think I, the number that people use inside the company is a 100,000 different variations of beverages that are being made consistently. A 100,000 different beverages.”
Assertion Not checkable as stated
Schultz: McDonald's and fast-food coffee copycats expanded the total coffee market
“Well, not only that, but every food company, every retail food business from McDonald's on, took a page out of Starbucks, went to school on us, put espresso machines in their stores, and started doing coffee beverages. That also expanded the market.”
Assertion Partly supported
Schultz: Starbucks Employee Tenure Is Double the Industry Average
“It's a two x is what I believe.”
Assertion Supported
Schultz: Starbucks sold no prepared coffee beverages until around 1985-1986
“Starbucks coffee company from 1971 until around 8586, only sold pounds of coffee. There was no beverage.”
Assertion Not checkable as stated
Schultz: Starbucks has only sourced the highest tier of Arabica coffee since 1971
“There's mainly two types of agricultural coffee grown for commercial use. Robusta beans, low-end coffee, primarily in instant coffee, and high-grade Arabica coffee. But even within the Arabica coffee, there's significant segments of quality and integrity, and …”
Assertion Not checkable as stated
Schultz: Starbucks' first espresso pilot reached 500 daily customers within a week
“On the corner of Fourth and Spring in Seattle, and it was the sixth Starbucks store, and out of about 1200 square feet, I got a hundred feet, and I designed and opened the coffee bar, worked behind the counter as a barista, and Starbucks probably had two to 30…”
Assertion Partly supported
Schultz: Starbucks had 11 stores and 100 employees at end of 1987
“August of 87. We bought the six Starbucks stores. We had the three old Eldranales, and there were two stores under construction. So at the end of the calendar year, we had 11 stores And a hundred employees in 1987.”
Assertion Supported
Schultz: Gloria Jean's Once Had More Stores Than Starbucks via Franchising
“That was Gloria Jeans out of Chicago. And at one point, I think they had more stores than we did because of the franchising opportunity.”
Disclosure
Schultz: Starbucks uses lowercase employee job titles out of respect
“No, everyone was lowercase from the beginning. Out of respect. Everyone's lowercase.”
Assertion Supported
Schultz: Starbucks never paid for product placement in movies
“First of all, Starbucks never paid for placement.”
Howard Schultz