Sep 28, 2017 · 48m · how-i-built-this
Live Episode! Starbucks: Howard Schultz
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Recorded live before an audience in Seattle, host Guy Raz interviews Howard Schultz on NPR's 'How I Built This,' tracing Schultz's journey from Brooklyn public housing to transforming Starbucks into a global cultural icon.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 23.9% of the talking time here. How this is scored →
Guy as informed peer 3.7 Guest teaching 1.8 Guest disagreement 1.1 Guy pushing back 1.2
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 44:48 Schultz rejects the premise of partner benefits as PR goodwill
Schultz bluntly shoots down Raz's suggestion that offering health insurance and college tuition was designed to purchase customer and employee goodwill.
Hardest push from Guy ▶ 44:35 Raz presses Schultz on the true motive behind expensive partner perksRaz directly challenges Schultz on whether extensive benefits like Arizona State tuition are motivated by public relations strategy rather than pure altruism.
Biggest teaching moment ▶ 40:18 Schultz corrects Raz on store closure counts and retraining costsSchultz corrects Raz's estimate from 600 to 900 store closures and breaks down the massive $24 million single-day cost of shutting nationwide stores for retraining.
Guy holds their own ▶ 36:25 Raz pivots to Schultz's controversial SuperSonics tenureRaz brings up the sensitive topic of Schultz's ownership of the Seattle SuperSonics in front of the local Seattle audience, leading Schultz to quickly shut down that thread.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Live Stage Welcome and Daily Coffee Habits | 4 | 1 | 1 | 1 | Guy establishes a warm rapport and sets up biographical context about Schultz's upbringing in the Bayview housing projects. Schultz willingly opens up about his family background and his father's debilitating work injury. | |
| Athletic Competitiveness and Football at Northern Michigan | 4 | 1 | 1 | 1 | Guy asks about Schultz's athletic background at Northern Michigan, playfully noting his trim frame. Schultz explains how project sports built his drive before getting injured behind future NFL coach Steve Mariucci. | |
| Sales Training and Door-to-Door Cold Calling at Xerox | 4 | 2 | 1 | 1 | Guy draws connections between Schultz's cold-calling grind at Xerox and other entrepreneurs featured on the show. Schultz shares the grit required to make 50 physical office visits per day in Manhattan. | |
| Discovering Starbucks and the Epiphany at Pike Place | 4 | 2 | 1 | 2 | Guy probes what motivated Schultz to walk away from a stable New York general manager role just to sell coffee beans. Schultz describes the Pike Place market epiphany and his year-long persistence to get hired. | |
| The Milan Epiphany and the First Espresso Bar | 3 | 3 | 2 | 1 | When Guy jokingly assumes Schultz drank Maxwell House, Schultz quickly reframes that he appreciated quality coffee earlier. Schultz explains discovering the Italian espresso culture in Milan and the resistance from Starbucks founders. | |
| Launching Il Giornale and Securing Seed Funding | 3 | 1 | 0 | 1 | Schultz explains the steep hurdles of raising seed capital for Il Giornale and acknowledges his first investor in the audience. Guy facilitates the storytelling and engages the live audience. | |
| Hostile Bid and the Intervention of Bill Gates Sr. | 3 | 1 | 0 | 0 | Schultz gives a detailed narrative account of facing an aggressive rival buyer for Starbucks and how Bill Gates Sr. stepped in to protect his acquisition deal. | |
| Mid-Show Break and Sponsor Identification | 4 | 2 | 1 | 1 | Guy resets the narrative mid-episode and asks about initial losses and expansion strategies. Schultz explains the Chicago real estate mistake and the experiential brand approach. | |
| Conquering Doubts in Tokyo: The First Global Store | 4 | 2 | 1 | 2 | Guy questions the basis of Schultz's decision to enter Japan despite consultant warnings. Schultz illustrates the immense risk, cultural hurdles, and ultimate opening day triumph in Tokyo. | |
| Retail Innovations, Diversification, and Stepping Down as CEO | 5 | 2 | 2 | 2 | Guy questions potential brand dilution across supermarket lines and brings up Schultz's contentious ownership of the SuperSonics, which Schultz politely declines to discuss. | |
| Corporate Hubris, Commoditization, and Returning as CEO | 5 | 2 | 1 | 1 | Guy brings up Schultz's famous 2007 internal memo on commoditization and Wall Street pressure. Schultz reflects candidly on corporate hubris and the loss of store essence. | |
| The Turnaround: Retraining Baristas and the New Orleans Summit | 4 | 3 | 1 | 1 | Schultz corrects Guy's figure on store closures and details the high financial cost and internal pushback of shutting down all stores for barista retraining and gathering 10,000 managers in New Orleans. | |
| Partner Benefits and Honoring His Father's Legacy | 5 | 3 | 3 | 3 | Guy challenges whether partner benefits like college tuition are primarily tools to purchase goodwill. Schultz rejects the cynical framing immediately and ties company values directly to his father's struggle. | |
| Episode Wrap-Up, Political Rumors, and Production Credits | 0 | 0 | 0 | 0 | Guy delivers the closing monologue discussing backstage rumors of Schultz's political aspirations, followed by show production credits and promotional audio. |
Statements from this episode (18)
Howard Schultz drinks four to five cups of coffee daily, none after 5 PM
“Probably four or five a day. Yeah. And no, no caffeine after five PM.”
Schultz: Xerox Trainees Made 50 In-Person Cold Calls Daily in 1976
“This was 1976, and at Xerox first I sent you to a sales training school in Leesburg, Virginia, and after that, for six months, all you do is make 50 cold calls a day. But I'm not talking about on a phone. You have to go make a physical cold call. Into an offic…”
Schultz: Starbucks Founders' Early Vision Was Only Expanding to Portland
“And their dream, and nothing against them, their dream at the time was to expand to Portland, Oregon. That was their big idea.”
Schultz: Coffee shops function as a 'third place' between work and home
“I started realizing that this is a third place between home and work. But the beverage was the draw.”
Schultz: Starbucks originally served zero cups of coffee in stores
“No, there was no service of any cup of coffee at any Starbucks So it was just pounds of coffee for home use.”
Schultz: Starbucks introduced the caffè latte to Seattle in 1985
“Overnight, we had hundreds of customers every day, and we introduced cafe latte to the city of Seattle, basically.”
Schultz pitched 242 prospective investors to raise $1.7M for Il Giornale
“The truth of the matter is that I spoke to 242 people to try and raise 1,700,000 dollars to form Il Dernali.”
Starbucks required Schultz to raise $600K before releasing $200K seed investment
“And Starbucks put a little contract in there, which was, you have to raise 600,000 dollars to use our 200.”
Schultz: Starbucks and Peet's were once a single company
“Many people don't realize that Pete's and Starbucks were one company two years prior to that.”
Schultz: Jerry Baldwin offered Starbucks for $3.8M at one-time sales
“The person who should buy Starbucks is you, and so the price is one-time sales, six stores, 3.8 million dollars, which was You know, it was fantastic news. And I'll give you a 90 day exclusive to try and come back to me with 3.8 million dollars.”
Schultz: Bill Gates Sr. forced rival bidder to withdraw Starbucks offer
“And all I remember him saying is, you should be ashamed of yourself. That you're gonna steal this kid's dream. It's not gonna happen. You and I both know this is not gonna happen. And within 10 minutes, he told them to stand down, we're walking out of this off…”
Schultz: Needing consultants means a company does not know its business
“If we have to hire a consultant, it means that we don't really know our business.”
Schultz: Legacy Coffee Giants Were Too Arrogant to See Retail Coffee Opportunity
“I think the large companies just never believed that you could build a national company and brand around selling coffee in the cup. I don't, I just think they were naive, maybe arrogant, and they gave us a lot of runway.”
Schultz: Growth Is Not a Business Strategy
“And so growth became the strategy of the company, and growth is not a strategy.”
Schultz: Starbucks closed 900 stores, 90% open under a year
“We closed 900 stores, and 90% of them had been open less than a year.”
Schultz: Store retraining shutdown cost Starbucks about $24 million
“I think we estimated about twenty-four million dollars that day, in terms of lost sales and labor.”