Starbucks

#1In 1983, Howard Schultz was in Milan when he started noticing the same little scene everywhere.

#2A customer walked into an espresso bar. The barista made the coffee, but then they talked. Regulars recognized each other. Someone stopped for five minutes. Someone stayed a little longer.

#3The coffee was almost the excuse.

#4What caught Schultz was the little social world around it.

#5And that was odd, because he already worked for a coffee company.

#6Starbucks.

#7It just wasn't a place where people typically settled into a chair with a latte. The business was still built mainly around selling high-quality beans for customers to take home.

#8So Schultz left Milan with a question he couldn't shake.

#9What if Starbucks sold the place around the coffee too?

#10Starbucks had been founded in Seattle in 1971 by Jerry Baldwin, Gordon Bowker, and Zev Siegl.

#11And if you trace their coffee education back, you run into Alfred Peet.

#12Peet opened Peet's Coffee in Berkeley in 1966. At a time when a lot of American coffee was mass-produced and forgettable, he obsessed over better beans, darker roasting, and freshness. The Starbucks founders learned from him, and in the early days they even bought roasted coffee from Peet.

#13So the old Starbucks wasn't sitting around waiting for Schultz to teach it what good coffee was.

#14It already cared about good coffee deeply.

#15The difference was where it put the center of the business.

#16For the founders, the star was the bean.

#17Schultz came from somewhere else entirely.

#18He'd been selling housewares and coffee equipment for Hammarplast when one account started looking strange. A tiny Seattle company was ordering an unusually large amount of coffee gear.

#19Starbucks.

#20That made him curious enough to visit.

#21He met the founders, saw how seriously they took coffee, and wanted in. In 1982, Schultz joined the company. He and Sheri moved from New York to Seattle.

#22Then, roughly a year later, Milan showed him something his new employer wasn't really built around.

#23Back in Seattle, Schultz pushed the company to serve espresso drinks and build coffee bars.

#24Starbucks tested the idea in 1984.

#25Customers responded.

#26But Baldwin and Bowker still didn't want to rebuild the whole business around it.

#27From the future, that can look like an obvious mistake. Starbucks would eventually become famous for exactly the kind of drinks and spaces Schultz was talking about.

#28But at the time, the founders weren't asking, "Will anyone buy a cappuccino?"

#29They were asking something bigger.

#30What is Starbucks supposed to be?

#31Their answer was a company that sold great arabica beans.

#32Schultz's answer was moving toward a company that made the drink, served the customer, and owned the experience around it.

#33Those aren't quite the same business.

#34The founders were also dealing with the financial strain around their acquisition of Peet's. Expanding heavily into a restaurant-like operation didn't feel like the company they wanted to run.

#35By 1985, the disagreement had gone as far as it could.

#36Schultz left.

#37But then the story took a turn that doesn't fit a clean founder-versus-rebel narrative.

#38Schultz founded a new company called Il Giornale.

#39It sounds like revenge: Starbucks wouldn't take his idea, so he quit and built a competitor.

#40Except Starbucks became an early investor in Il Giornale.

#41Il Giornale used Starbucks beans too.

#42The old leadership's position wasn't necessarily "This will never work."

#43It was closer to, "We don't want Starbucks to become this."

#44So Schultz could try it himself.

#45First, though, he had to convince other people to give him money.

#46By his later recollection, he approached 242 potential investors while trying to raise about $1.7 million.

#47217 turned him down.

#48It's not hard to imagine why the pitch sounded risky then. He was asking Americans to pay several dollars for Italian-style coffee drinks with unfamiliar names, inside a business with an unfamiliar Italian name.

#49And Schultz also wanted to spend money on employee benefits.

#50So he kept pitching.

#51Explain the idea. Hear no. Find the next person.

#52Before Starbucks, he'd been a salesman.

#53Now he was selling something harder than coffee equipment.

#54He was selling a company that didn't exist yet.

#55Il Giornale opened its first store in Seattle in April 1986.

#56People showed up.

#57For a moment, it looked like Schultz had simply been right all along.

#58Then you look at the actual store.

#59Opera played. The menu leaned heavily into Italian words. Employees wore bow ties.

#60And there was hardly anywhere comfortable to sit.

#61That worked in the kind of Italian espresso bar Schultz had admired. You could stand, drink quickly, and leave.

#62American customers didn't behave the same way.

#63They wanted chairs. Some found the menu confusing. Not everyone wanted opera all day.

#64The bow ties weren't especially practical for people working around espresso machines either.

#65So Il Giornale changed.

#66Seats came in. The music changed. The store loosened up.

#67And that revealed something more interesting than "Schultz copied Milan."

#68He hadn't brought back a finished answer.

#69He'd brought back a question.

#70How do you build a social place around coffee in America?

#71Customers and employees were helping him answer it.

#72Then, just as the experiment was working, Schultz heard that Starbucks was for sale.

#73In 1987, the original Starbucks owners decided to concentrate on Peet's.

#74They were willing to sell the Starbucks name, roasting operation, and Seattle stores.

#75Price: $3.8 million.

#76For Schultz, the opportunity was almost absurd.

#77This was the company he'd tried to change. The company that had chosen a different future. The company he'd left so he could build his idea somewhere else.

#78Now he could buy it.

#79There was just one problem.

#80He didn't have $3.8 million.

#81So Schultz went fundraising again.

#82And according to his later recollections, the deal nearly disappeared while he was doing it. A much more powerful investor moved to buy Starbucks separately.

#83Schultz later described coming home devastated, thinking the opportunity might be gone.

#84Then Bill Gates Sr. got involved.

#85He was a prominent Seattle lawyer and the father of future Microsoft co-founder Bill Gates.

#86In Schultz's later account, Gates Sr. confronted the competing investor and helped clear the way for Schultz to raise the money. The precise conversation comes from Schultz's memory, not a surviving transcript, so the details need that caveat.

#87The result doesn't.

#88Schultz assembled the financing.

#89In August 1987, the deal closed.

#90And this is where the company names make the story easy to get backward.

#91Il Giornale bought Starbucks.

#92The startup Schultz had founded after leaving acquired the old Starbucks stores, roasting operation, and name.

#93Then Il Giornale dropped its own name.

#94It kept Starbucks.

#95So the employee who'd left because his vision didn't fit the company really did come back a few years later and buy the company he'd left.

#96But that still wasn't today's Starbucks.

#97The combined business had only about 11 stores.

#98Now came the much harder problem.

#99Could the feeling of a small Milan café survive across dozens of stores?

#100Hundreds?

#101Thousands?

#102Schultz wasn't solving that alone.

#103Dave Olsen brought deep coffee and espresso experience. Early operators such as Dawn Pinaud helped train staff and shape what actually worked inside the stores.

#104Even some of the language people now associate with Starbucks emerged through that operating culture.

#105short. tall. grande.

#106The customer experience kept changing because real customers kept using the stores in ways the company had to respond to.

#107They wanted places to sit. Employees changed things that didn't work. Menus shifted. Music shifted. Service shifted.

#108Starbucks wasn't simply importing Milan.

#109It was slowly turning the question Schultz found there into something that worked in American life.

#110And Schultz kept looking at another part of the room too.

#111The people making the drinks.

#112When Schultz was about seven, he came home and found his father, Fred, on the couch with his leg in a cast.

#113Fred had been injured while working a delivery job.

#114In Schultz's telling, his father had little protection once he couldn't work, and the family's finances suffered.

#115Schultz kept that image with him.

#116Years later, when he talked about the kind of company he wanted to build, he repeatedly connected it to the kind of employer his father had never had a chance to work for.

#117In 1988, Starbucks extended health coverage to eligible part-time employees.

#118In 1991, it introduced Bean Stock, giving eligible employees the chance to receive equity in the company.

#119Starbucks increasingly called employees partners.

#120Those policies weren't some magic explanation for the company's rise. And Starbucks's relationship with its workforce would not stay uncomplicated forever.

#121But Schultz himself kept making the connection.

#122The customer was part of the coffeehouse.

#123So was the person behind the counter.

#124Starbucks had about 11 stores after the 1987 deal.

#125By 1992, it had 165 and went public. In 1996, it expanded beyond North America. By 2000, it had 3,501 stores worldwide.

#126The tiny Seattle coffee business had turned into an international chain.

#127It looked as if the Milan idea had won.

#128Except a small café and a company with thousands of stores don't live by the same rules.

#129At scale, drinks need to come out faster. Quality needs to stay consistent. Stores need to run efficiently. Coffee needs to travel farther without going stale.

#130Every one of those decisions can be sensible.

#131Put enough of them together, though, and something else can happen.

#132Schultz started worrying that Starbucks was becoming less like Starbucks.

#133In 2007, Schultz sent a memo to Starbucks's senior leadership.

#134The title was "The Commoditization of the Starbucks Experience."

#135His fear was right there in the name: something that had once felt distinctive was becoming ordinary.

#136Take the espresso machines.

#137More automation made drinks faster and more consistent.

#138Good for operations.

#139But the machines were tall.

#140They blocked the sightline between barista and customer.

#141Part of the tiny bit of theater—watching the drink get made, catching the barista's eye—started disappearing.

#142Packaging created another tradeoff.

#143Better sealing helped keep coffee fresh as the company distributed it farther.

#144But there was less scooping and grinding in the store, less of that smell spreading through the room.

#145Standardization made Starbucks recognizable anywhere.

#146It also risked making every Starbucks feel like every other Starbucks.

#147The systems that had made the company scalable were starting to wear away at some of the things that had made the experience matter.

#148The original question had flipped.

#149It used to be:

#150How do we build a place people want to stay?

#151Now it was:

#152After we've replicated that place thousands of times, can it still feel like a place?

#153Schultz returned as Starbucks CEO in January 2008.

#154A month later, he made a choice that would look bizarre for almost any retail chain.

#155On February 26, at 5:30 p.m., roughly 7,100 company-operated Starbucks stores across the United States closed.

#156Not forever.

#157Just for a few hours.

#158Inside, more than 135,000 store employees were training.

#159Pulling espresso. Steaming milk. Going back over the basics.

#160One of the world's biggest coffeehouse companies willingly gave up several hours of sales to teach its baristas coffee fundamentals again.

#161Twenty-five years earlier, Schultz had stood in Milan watching baristas.

#162Now he was running thousands of stores and trying to put his own baristas back at the center of the experience.

#163Starbucks had never really found a formula it could solve once and copy forever.

#164Growth changed it.

#165Sometimes growth damaged it.

#166Then the company had to go back and repair what it had scaled away.

#167In 2024, Starbucks got another CEO, Brian Niccol.

#168The name of his turnaround strategy was telling.

#169"Back to Starbucks."

#170Not a new Starbucks.

#171Back to it.

#172The company started emphasizing the coffeehouse and the "third place" again—the idea of a social place outside home and work where people can spend time and connect.

#173Schultz wasn't walking around Milan in 1983 using that phrase. Ray Oldenburg's "The Great Good Place", which helped popularize the third-place concept, came out in 1989.

#174But later, the term became one of the clearest ways Starbucks described what it wanted its stores to be.

#175In 2025 and 2026, the company began putting more attention back into the room itself.

#176Softer seating. Warmer lighting. Communal tables. Ceramic mugs.

#177Not just a place optimized to hand over a drink.

#178A place with reasons to stay.

#179Then, in April 2026, Starbucks unveiled a new chair in one particular city.

#180Milan.

#181It was called Viola.

#182Inspired in part by the purple lounge chairs associated with Starbucks in the 1990s, it was meant to make sitting and lingering feel inviting again.

#183The company also showed a ceramic mug influenced by Italian café culture.

#184Forty-three years earlier, Schultz had walked those streets as an employee. He didn't own Starbucks. He didn't know whether his idea would even survive inside the company.

#185It didn't.

#186So he left. Investors rejected him. Then customers showed him that copying Milan exactly wouldn't work either.

#187He kept changing the idea.

#188Eventually, he bought the company he'd left.

#189That company grew to thousands of stores, then grew large enough to start losing pieces of the experience it had been built around.

#190At one point, thousands of stores had to lock their doors so baristas could relearn the basics.

#191And in 2026, Starbucks was back in Milan.

#192One of the things it had brought with it was a chair designed to make people stay a little longer.

#193The question Schultz started asking there in 1983 still wasn't finished.