Super Soul Special: Howard Schultz: Pouring Your Heart into Your Business
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I'm Oprah Winfrey. Welcome to Super Soul Conversations, the podcast. I believe that one of the most valuable gifts you can give yourself is time, taking time to be more fully present. Your journey to become more inspired and connected to the deeper world around us starts right now.

Fortune magazine calls Howard Schultz one of the greatest entrepreneurs of our time. But this self-made billionaire has never forgotten where he came from. Howard was born in 1953 in Brooklyn, New York, to Fred and Elaine Schultz. Raised in the housing projects, he says he watched his father struggle to hold down a series of blue-collar jobs, never able to find meaning or fulfillment in his work.

The family's financial struggles became even worse when Howard's father was injured on that job. He had no health insurance and received no workers' compensation. Unable to work, the company let his father go.

That made a lifelong impression on Howard, who says he never imagined he would one day be in a position to run a company a very different kind of way. But he knew that people deserve more respect than his father had received. Here we go. Here we go.

I've absolutely talked a lot over the years about following your calling and honoring that calling. And this show, Super Soul Sunday, that's a main part of the conversation that we have weekly about honoring that passion. And I'm always fascinated by the myriad of callings or passions that people have. And yours was coffee. How do you honor the calling of coffee? And did you know that it was coffee or was it your desire to serve?

I did not know it was coffee. But I think it could have been many other things, as long as I had a passion and a love for it. I grew up in the projects in Brooklyn. My dad was a blue collar worker, never made more than $20,000 a year, had a series of very bad jobs. In 1960, he was a delivery driver, delivering and picking up, before the invention of Pampers, cloth diapers.

Fell on a sheet of ice in March of 1960. I walked into the apartment coming from school. He's in a cast from his hip to his ankle. And subsequently, we find out, or I observe as a young seven-year-old boy, no health insurance, no workman's compensation, and he's fired out of the job.

And I guess what I saw was the fracturing of the American dream and what happened as a result of that was the shame and the scars of feeling as if something was really wrong, watching my parents go through terrible times.

And I think that galvanized me early on to realize that there has to be something better. And along the way, not the calling of coffee, but the calling to try and build something that in a sense would be the kind of company my father never got a chance to work for. - To create a culture that would honor the people in a way that your father was never honored or respected. - So when we began Starbucks, what I wanted to try and do

was create a set of values, guiding principles and culture in which no matter who you were or where you came from, you would feel as if the company shared the success with you. And that was the, Starbucks was the first company in America to give comprehensive health insurance and ownership to every single employee who worked more than 20 hours, becoming the first company to give those benefits to part-time workers. - It is a fascinating story how all this came to be.

By his late 20s, Howard was heading up the sales force for a kitchenware company when he noticed a small shop in Seattle was ordering an unusually large number of European drip coffee makers. It was called Starbucks Coffee Tea and Spice. And Howard was intrigued by this little shop that was doing such big business, so he went to see it for himself.

He could smell the coffee even before stepping foot in the door. And once he did, Howard says, he instantly felt like he was home. He was so enthralled, he convinced the company's owners to hire him as their marketing director. And he moved cross-country to Seattle. And then the turning point. A business trip took Howard to Italy, where coffee is an art.

There he discovered espresso bars and watched groups of friends gather connecting over tiny cups of coffee.

You are in these, like, cute little espresso shops, and you see the guy behind the counter with a... They were called baristas. Baristas. Yeah, called baristas. And at the time, you had your... Did you have your coffee shop yet? No, no. I was an employee of Starbucks. Okay. So I didn't... People think I'm the founder of Starbucks, but I was an employee of Starbucks when they had four stores. Yes. I was sent to Italy to do a trip for Starbucks and came back with this...

feeling that the business that Starbucks was in was the wrong business. Because at the time that you were employed by Starbucks, they just sold coffee beans. Yes. And they actually did not sell a cup of coffee. That's correct. Yeah. And so what I wanted to bring back was the daily ritual and the sense of community and the idea that we could build this third place between home and work in America. Can you take me back to that little coffee shop and the feeling that you had there?

In Italy? Yes. Absolutely. When I was reading it, it felt like... An epiphany. I was out of my mind. Had you gone in for a coffee? Yeah, like anyone else. But I walked in and saw this...

symphony of activity and the romance and the theater of coffee. Meaning people gathered around. And also coffee being at the center of conversation, how social it was, and the sense of community. And that is what spoke to me, and that's what I wanted to bring back to America. Okay. So then you go back to your... I go back. I'm so excited. I can't wait to tell the founders of the company of Starbucks, who are great people, who gave me a chance, but they said no.

They said, "No, we're going to sell it." We don't want to change the business model of Starbucks. So I was frustrated and over a period of a year or two, I decided to leave. But you started your own coffee. Yeah, I left. I left and started an Italian coffee bar business called Il Giornale, named after the Italian newspaper in Milan. I had no money. So I had to raise money from investors. I talked to anyone I would meet

Nobody would give me money and they would say, "Wait a minute, you want people to pay two, three dollars for a cup of coffee with Italian names that no one could pronounce in a paper cup and you want to give benefits to the employees. You want me to invest in that company? No." No. But Howard would not give up. He started going door to door pitching his coffee bar concept to potential investors.

And though he was turned down, listen to this, SuperSolars, more than 200 times, he kept pressing on and finally raised enough money to open the first Il Giornale in 1986.

I knew that the equity of Il Giornale at the time was not going to be advertising and marketing. It was going to be the people who served the coffee. And how did you know that? Because you'd seen that in Italy with the guy in the hat. I just instinctively knew that. Okay. You know, I don't have a business degree, by the way. I didn't go to business school. I graduated with a degree in communications. So this was all new to me. But it was passion, love, and desire.

Okay, so the passion was what? You felt a passion for... Passion was unbridled enthusiasm, desire, and the fact that

I must do this. To create that atmosphere that you felt in that coffee shop. So then I got lucky. Yeah. But you don't believe in luck, nor do I. No, I don't. Okay. But I did get lucky. But we don't believe in luck. But okay, you were ready in that moment. But luck is the residue of design. That's right. But also, you're prepared for that moment when something shows itself. Okay, so the founder of Starbucks, who...

I have great respect for, even today. Yeah. And you had worked for. Yeah. He came to me and said, I've decided to sell the company. And he said, I'm going to sell Starbucks for $3.8 million. That was the good news. The bad news is, Oprah, I did not have one dime

The consummate salesman Howard drummed up investors, impressing them with his vision for the next chapter in Starbucks history. Within a few weeks, he'd raised all the money he needed. And as he says, life would never be the same. So we merged Starbucks and Il Gennale in August of '87 with 11 stores

and a dream to create a different kind of company. A company that had a purpose, a company that achieved this balance I talked about, and a company that would, in a sense, as managers and leaders, we would put our feet in the shoes of our people. That's beautiful. Well, it's true. It's true.

With Howard Schultz at the helm, the Starbucks brand took off. What began in 1987 with six stores and a roasting plant quickly grew to more than 650 stores in less than 10 years. Howard's intention was to create a community, a destination between work and home, and his dream was coming true. Business was booming, profits were rising, and by 2000, Starbucks was opening seven new cafes a day.

You were doing store after store after store. You were riding that wave. Oh my God. What did that feel like? We were on a magical carpet ride. Yeah. Was that success dazzling? It was unnerving.

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Join their 19 million customers today at Empower.com. Not an Empower client paid or sponsored. The success was unnerving, Howard says, because he felt a shift. He began to feel bored, unchallenged, and at times even depressed. After much soul searching, in April of 2000, he decided to step down as CEO while remaining chairman of the board. As he watched the company's startling growth, he says he felt like an outsider looking in.

By 2007, he sensed something was missing though. And in the fall of that year, Howard began to seriously consider returning as CEO to bring the company back to its roots. But just as Howard resumed that role, the recession hit and the company found itself in trouble. For the first time in the history of Starbucks, sales were down and the stock price dropped.

Howard says he had a sobering realization that his company had stepped away from its core values.

the bloom was off the rose a little bit and we were doing wrong, the wrong thing. And we were measuring and rewarding wrong behavior. And in a sense, how so wall street and the, the pursuit of profit became in a sense, our reason for being, and that's not the reason that Starbucks is in business that you started it originally. Yeah. And so I, I felt we were compromising our, our purpose, our behavior. And I wrote this memo,

In Valentine's Day 2007, an internal memo. And I sent it out, and about an hour later, someone knocked on my door and said, Howard, you should put it on the TV. I said, what do you mean? Put it on CNBC. And I was watching my life unfold on television. Because that memo was leaked. Was leaked. Did you feel betrayed? Yeah, I did. I did.

But the memo was not self-critical because I put myself in the mix and said, even though I was not the CEO at the time, I'm as culpable as anybody else. Something's wrong. The memo was saying something's wrong and we need to turn it around. But it was admitting to the rest of the world that something was wrong because you had all your critics. We all have all of our critics. But we had lost our way. You'd lost your way. Had Starbucks lost its soul? No.

I wouldn't say it lost its soul, but if things continued, we were not going to recognize the company anymore. And in a sense, the growth and the success of the company was covering up mistakes. Okay. And that can happen very easily. Yeah. Especially when you've had so much success, so much success. And wasn't it at the time when it started to lose its way, your vision was, your vision got bigger and bigger and you wanted 40,000 stores all around the world. Yes. Yeah.

There were certain things that we said and certain things that we did that was measuring growth as a reason for being, and we got into trouble. Would you say that Starbucks was in a spiritual crisis? Yes, I would. And I would say that, and I will also say that most of the problems we had were self-induced mistakes. And I stood in front of the entire employee base of the company, our partners, and said, I apologize for as leaders that we had let them and their families down.

but we were going to return the company back to its glory days okay so in those days where you knew the company had lost its way yes was in its own spiritual crisis did you debate whether or not you should jump back in or not i know i know i know i first of all i never planned to come back to starbucks but again this is about love because you'd step down as ceo i did this is about love this is about passion is about responsibility and it's about leadership and there was no

second thought whatsoever. I came back to lead the company back, but I also needed help from others and I needed people to believe.

And we started doing things that were quite unorthodox, uncharacteristic of a company that was in trouble, especially during the financial crisis. And I just couldn't believe that all of the years that we put in place to imprint the values of the company were being compromised by yield and profit. So I asked our people to close the stores, to retrain people, not on training of service, but retrain people on making coffee. How could that be?

But it was a galvanizing event and it was truthful. And I think we were doing things that were profit driven. That's not why we're in business. We're in business to exceed the expectations of our customers. And the only way we can do that is to exceed the expectations of your people first. And I think the currency that I would say about leadership today and building a company of any size or industry is transparency and truth. And once I saw that,

I couldn't ignore it. I had to say to our people, we have to start over. Okay, so the book is called Onward, How Starbucks Fought for Its Life Without Losing Its Soul. And I learned so many things about you, about business, about tenacity, about hanging in, about rebuilding. And I suspect...

that, you know, I guess until I read this, I was thinking, I never thought of a company that has a soul. I don't think every company has a soul. I think to build a great, enduring company, a company must have a conscience. You must have a core purpose beyond making a profit.

The success of Starbucks the last 40 plus years is the achievement of the balance between profitability and a social conscience. That's the soul of the company, having that conscience. OK. So how do you maintain a sense of soulfulness with 19,000 stores and 247,000 employees? Because-- The critics say it's become a corporate empire. How do you maintain the soul of it?

The challenge we have is how do you get big and stay small? How do you maintain the intimacy with our people and our customers? And the brand of Starbucks was not built in a traditional way through traditional marketing or advertising. It was built literally through the experience and through the lens of our people. Okay, I love this. This is my favorite. Go ahead.

When you talk about success, you say success is not sustainable if it's defined by how big you become, which is like amazing when I'm reading that, that you who has 247,000 employees, large numbers that once captivated me, 40,000 stores are not what matter. The only number that matters is one, one cup, one customer, one partner, one experience at a time. We had to get back to what mattered most.

So if I can build on that, I would say in anything we do, any endeavor, it's not what you do, it's why you do it.

It's not what you do, it's why you do it. Ain't that the truth. So when you ask me how do you keep it going this big, it's conveying to people why we're doing the things we're doing. Why do we give health care to our people at a cost of $250 million a year when I have institutional shareholders saying, if you cut that out, you'd be much more profitable. But it would fracture the trust and culture of the company.

We recognize that we are not going to be a great, enduring company if we turn our back on what's going on in America. And there's things going on in America that really concern me. 42 out of 50 states today are in a budget crisis. Significant cuts in social services, the likes of which we haven't seen in 30, 40 years. And we're in every community in America, and I think we've got to stand up for people.

the role and responsibility of a corporation today and the future of America are tied together. I also read that you were kind of offended by the fact that the culture, people in the culture were using Starbucks as sort of the poster child for excess. Yes, I was. Put down that $4 latte. Let me say this.

I take everything about Starbucks very personally. Too personal. Yeah, like when you see other people with a cup of coffee from someplace else. When you chase them down and say, why didn't you go to Starbucks? Well, I don't chase them down anymore because I might get arrested. But it bothers me. And I think you can't build something unless you're going to take it personally. And I want our people to take it personally. So can I talk about New Orleans? Yeah, let's talk about New Orleans. Okay, so we're in the middle of the crisis.

the financial crisis in America, Starbucks sales are awful, our stock prices... You're looking at those comps every week and you can't even believe it. I can't even... I don't even want to open up my email in the morning because they were so bad. And the truth is, if it continued at the rate we were going at, Starbucks was not going to make it. With stock prices and employee morale at an all-time low, Howard knew he needed to take action. And he had a plan. Believing his managers were the heartbeat of the company,

He gathered 10,000 of them from around the globe in New Orleans for four days of intense team building. The goal? To inspire his people to fight for the future of their company. So I stood up in front of 10,000 people and I shared with them that if we continue like this, we're not going to make it. And our families aren't going to make it.

And so the question is, can we and can you take it personally? What does it mean not to be a bystander? And what does it mean to be personally accountable for everything that happens in your store? Now, New Orleans was not the reason we turned things around. But we left New Orleans with a tidal wave, a tidal wave of energy. The company was so galvanized. It never got any worse than that.

And now the last two years for Starbucks, record revenue, record profit, and record stock price. So it's so interesting that at that time, so many people would have been paralyzed by the fear of what could happen to their business. A lot of people watching feel that. You're paralyzed by fear, but you seem to be a person. Actually, you say in the book, you're motivated by fear.

Well, I have a... What I also say in the book is that even today, as successful as I've become, I still have a fear of failure. I'm still this kid from Brooklyn who has the scars and the shame of being a poor kid from the projects. Yeah. But I'm motivated by it. And I'm driven by it. And humbled by it. Well...

I think the key element of the culture of Starbucks is to be a performance-driven company through the lens of humanity and to be humble and hungry at the same time. Was there a moment, though, Howard, where you thought you might not be able to turn it around? Honestly? Yeah. Never. Never? No. Because I believed so much in our people. No, there wasn't. There wasn't. And I had to convey that.

I mean, the self-doubt come in, of course, but I believe so much in the human experience of Starbucks people that they were the ones who built the company and they were the ones who would turn it around.

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So when you go into a Starbucks store and you see that vision that you held when you were in Milan at the espresso store, and you see the community there, and you see people there on their computers, and they're there with their kids, and they're there with their friends, what does that feel like to you? I think about my parents. I'm gratified beyond ways that I could describe it. I'm obviously very proud.

But I also feel like I'm a humble servant of people throughout the company who are relying on me and the responsibility we have to keep this thing going in the right way. Yeah. Do you all have regular meetings where, you know, where you teach people how to be as friendly, as happy, as connected? Because one of the things that moved me the most was the story of the woman in the book who has such a connection to the customer that she serves that she ends up giving her kidney? Yes.

Now, I think if I told that story without the context, you would think, A, it's not true, and if it is true, it's weird. Yeah. It's not weird because the frequency that people come into a Starbucks store and the relationship they end up having with the person who makes the coffee is one of great intimacy. And when I heard that story, I rushed to Tacoma, Washington to meet her and said, I've never seen anything like this. She was a match, and she gave her kidney. It was just incredible.

I have lots of stories that, but this is not, it's not prescribed. It's the culture and values of the company. But it's also important, I'm sitting here saying how good we are. We're not a perfect company. We have issues, challenges, we make mistakes. But we have to solve these things through the lens of doing things the right way and telling the truth.

Transparency. Yes. And I know that you're guided by your own values and your own set of principles. There are four that you talk about that I love. Don't be threatened by people smarter than you. Can you speak to that? You can't build any kind of organization if you're not going to surround yourself with people who have experience and skill base beyond your own, only as if those people have like-minded values. That's the key to starting anything. That's the key. And I think when you discover perhaps that these people do not have those values,

then you have to have a very quick conversation. And if they don't demonstrate that kind of behavior, not everyone deserves to be on the team. Compromise anything but your core values. That's what you say. Short-term success is not going to build long-term value for anyone. And

We live in an age where everything is based on the short term. And I think what we're trying to do and what we've demonstrated is very... You had to fight that in your own culture. We did. It's hard to do. I love this one. I love this one. Everything matters. You're in a business where I think that is very true.

And I think once you compromise that, it's not one thing. It's like a thread. You just keep pulling it from the sweater and all of a sudden, longer and longer, everything matters. And I think imprinting that in the organization, that discipline, that process, and that belief that everything matters becomes a way in which the company is now organized.

So you've instilled within your people, your company, this is like your, this is, first of all, you are a partner. So this is your business and you treat everything from the counter to the way people are served to how they're served as if it were your own. Yes. Now that's not easy to do. No. But I think when I'm pressed and people say, what is the secret to Starbucks success?

We're sourcing the best coffee in the world. We have great real estate, great design, but it's human behavior, human condition. And they have brought this to life. How do you define true leadership? Leadership is creating a vision and creating followers because you're not pushing people to come with you. You're bringing them along on the journey because they think there's something in it for them and you are committed to that.

I would agree with that. And what was surprising to me is something that I'd learned a long time ago, because I've actually made a whole living out of vulnerability. And Brene Brown, who wrote the book "Darren Greatly," you know, we've done life classes together. But you say it's important as a leader to be vulnerable. Where'd you learn that? Well, when I stood up in front of people and I apologized, I started crying that first week.

Which is not what CEOs do. Especially men. I think we're taught as men to, you know, but I think vulnerability is transparency. And what I said earlier is I think the currency of leadership is transparency and you've got to be truthful. So I don't think it's, I don't think you should be vulnerable every day. Right. But there are moments where you've got to share your soul and your conscience with people and show them who you are and not be afraid of it.

OK. Your success comes with great wealth, too, and I know you feel a sense of responsibility. How do you raise ambitious, kind, and gracious children when they have had access to everything? How do you keep them grounded?

Well, first off, I'd say the honesty and the truthfulness that I talked about in raising a business, I think it's more important at home than it is in the corporate world. So our kids have understood from day one that this is a privilege and a responsibility, and you have to earn it.

And nothing is going to be given without service and responsibility. And both our kids are working. Both our kids are contributing to society. And I think that is probably the proudest thing I can say. And I give their mother, Sherry, all the credit in the world because it's her is the glue in all this. So you're known to, obviously, to the world as CEO and chairman of Starbucks. Without that title, that label, who are you?

I'm this kid from Brooklyn. You know, it never leaves me. I want to honor my parents who are both gone. We lost my mother just five weeks ago. I'm sorry. But she got to see your success. She did. Feel it and live it. I think we want to make our kids proud. I want to make a significant difference in the lives of people who are being left behind. What would your father...

He wouldn't believe it. OK. What would he say about your success? Because he died, what-- He died in '87. Oh, yeah. So he didn't see any of it. He didn't see any of it. I think he would have been absolutely blown away, astonished, and he would not have understood it. He would have been amazingly proud, don't you think? Yes. Yeah. My father would have-- yeah. Been amazingly proud. So what matters to you most now? I mean, first of all, what's next? And then what matters?

I'm not going anywhere in the short term. So I've told the board that I'm here for the next few years, so there's nothing immediately next. I'm deeply concerned about the direction of the country. I'm deeply concerned about the polarization. I'm deeply concerned about the fracturing of leadership in the country. I'm deeply concerned about the American dream and the American promise, the cuts in social services and all the people being left behind.

and how this is all going to play out. How do you think it's going to play out, really, sitting where you are right now? I think America needs a transformation, honestly. I mean, I have great faith in the idea of America. I have great faith in the future of America. But faith is not a strategy. Yeah. If Washington continues to fight over things that are so trivial and de minimis when we are facing such structural problems,

Things are not going to go well. Are you frustrated by the polarization? Yes, it's awful. So here's the thing. Martin Luther King 50 years ago called people to the mall. He called them. America's waiting to be called. People are waiting to be called. Somehow we've allowed the power and responsibility to be given to people who are not walking in our shoes. And we have to get that power back.

And I think that the answer is people are waiting to be called. I love that. I love that. And the question is, who will call them? Well, we'll see. We'll see.

All right. I have to ask you this. Yes. You've talked about what matters and making change in America and being dissatisfied with what's going on in Washington. I know where this is going. You know where it's going. Yeah. Yeah. Have you thought about running for some kind of office, stepping into politics, or is the Starbucks platform enough? You know, over the last couple of years, as I've

put myself in the middle of certain conversations, this question has come up. Not because I intended it to come up, but people have naturally asked me that. And the truth is, I think I can do a lot more in the position I'm in, but I'm going to continue to be in the mix in a way that will be respectful and civil. And I don't know where it's going to go. I don't know. But as I said, I'm at Starbucks for the next couple of years, but I'm

I am a concerned, passionate citizen. We'll see. I like that. So, what is the lesson that took you the longest to learn? Where do you get these questions from? On Super Soul Sunday. Come on. Success is best when it's shared. Absolutely. And not only did I have to learn that, but I had to teach it to others.

And I have multiple constituencies. So in the heart of the crisis, when a shareholder, a large shareholder, got on the phone with me and said, Howard, I want you to cut out the health care benefit. Because you'd save money. You'd save money. And this is a time in America where every company is doing it. And I said to him respectfully, I'm not going to do that. And if you feel we must, you probably should sell your stock. Whoa. I wouldn't do it.

And if I did it, we would... Because if you cut out the health benefits of your employees, then that would have cut out the foundation for your belief system. And we wouldn't be here today because the reservoir of trust in the entire company would have been broken. And I think when you're really tested, that, I mean, it's very easy to be a leader when you've got the wind at your back. It's very difficult to lead when it's not convenient. And that was an inconvenient time to stand up for our people. What's the best piece of advice you've ever received?

do not let anyone, no matter who it is, even if it's your parents, tell you your dreams cannot come true. And I think-- - 'Cause your parents wouldn't believe this. - No, but when I speak to young people on college campuses, I always end with believe in your dreams and dream big, and then after you've done that, dream bigger.

And I think America is still this unbelievable place of extraordinary entrepreneurial stories that could only happen here. So do you have a favorite quote? Well, the quote I would think about is going back to Churchill. And, you know, at the height of Europe being conquered and at the height of England perhaps being taken over by Germany, he gave this extraordinary speech. And he was an amazing orator. And it was, "Never give in.

Never give in. Never give in. Never. There it was. There it is. Finish this sentence. The world needs... The world needs authentic, truthful leadership. I believe in... America. Love is... Family. Coffee is... Coffee is Starbucks. Oh, that's good. That's good, of course. Of course it is. Innovation is...

Not embracing the status quo ever. That's a good one. I'm imprinting that. Okay, my job is? My job is to serve others. It's been a pleasure. I love it. I love it. Good. Thank you. Thank you. I loved it. That was great.

I'm Oprah Winfrey, and you've been listening to Super Soul Conversations, the podcast. You can follow Super Soul on Instagram, Twitter, and Facebook. If you haven't yet, go to Apple Podcasts and subscribe, rate, and review this podcast. Join me next week for another Super Soul Conversation. Thank you for listening. Hey, Fidelity. What's it cost to invest with the Fidelity app?

Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm, that's music to my ears. I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Sell order assessment fee not included. A limited number of ETFs are subject to a transaction-based service fee of $100. See full list at fidelity.com slash commissions. Fidelity Brokerage Services LLC, member NYSE SIPC. Come tonight, they got it.

Next on Metro's Nadiata Island podcast. I almost fainted when the four new bombshells arrived. Four free Samsung Galaxy A16 5G phones at Metro. No way. And finding out the fourth line is free. Things got heated. That's wild. Join Metro and get four free Samsung 5G phones. Only at Metro. Plus tax. Bring four numbers and an ID and sign up for any MetroFlex plan. Not available currently at T-Mobile or been with Metro in the past 180 days.