Schultz to employees: ‘This has been the dream of a lifetime’
SEATTLE – Howard Schultz stood before hundreds of Starbucks partners Monday afternoon as the past and the future came together. He hadn't slept much the last few nights, he said. He was too anxious about this moment.
Schultz and Starbucks ceo Kevin Johnson entered the second-floor mezzanine of the Starbucks Support Center to a standing ovation. Moments later, Johnson introduced him saying, "Rarely in a lifetime does one have the opportunity to work with a founder, and entrepreneur, a leader that created such an iconic company. Each one of us and all the partners before us have had that opportunity.”
Schultz took the floor to a second standing ovation, this one thundering on until he motioned for people to take their seats. "You're going to make me cry before I start," he said.
Over the past 40 years Schultz has been at the helm of Starbucks, he has often gathered partners together for forums or town halls at critical moments. But this day was different. This was the day he announced that he was leaving the company, stepping down from his role as executive chairman.
Schultz was emotional, as were many of the about 900 partners sitting and standing in the two-floor, 360-degree space around where he spoke. Thousands more watched from conference rooms and computers company-wide.
"I wish my parents could have witnessed what we have done together," said Schultz, who grew up in the Canarsie projects in Brooklyn. As a boy, his family had nearly become destitute when his father broke his ankle on the job and didn't have medical insurance to pay for care.
"I set out to build a company that my father, a blue-collar worker and World War II veteran, never had a chance to work for," he wrote to partners in a letter he sent out earlier Monday, announcing his departure later this month.
During Schultz's time at Starbucks, the company grew from 11 stores to 28,000 in 77 countries and stock prices increased 19,000 percent since the initial 1992 public offering. But what Schultz especially wished is that his parents could have seen the kind of the company he helped create – one that took care of its employees, giving them access to tuition free-education and health care, a company with a commitment to hire military veterans and their spouses, as well as young people who may have not had many chances in life.
As he looked out at those gathered around him, a mix of partners, board members, former colleagues and even the very first Starbucks investor, he became choked up. "We are in the business that elevates humanity," he said. "It’s about what we’ve been able to create: a unique experience around love and humanity."
As Schultz spoke, a small, framed box was being passed from hand to hand around the room, a touchstone that took him back to the company's roots. Inside was a square of one of the original cabinets from the original Starbucks at Seattle's Pike Place Market. The small piece of history had been salvaged when the store was given a refresh in 2009. "While I pass this around, maybe every one of you can touch the history and heritage of Pike Place."
It's a place of profound significance for Schultz. It was the Pike Place store where the native New Yorker tasted his first sip of Sumatra coffee in 1981, and where he scooped beans behind its worn wooden counters once he joined the company as director of operations and marketing in 1982. In the years since, the store at Pike Place is where he would mark almost all significant milestones.
It was where he went to collect his thoughts, early in the morning and letting himself in with his own key, before the company's Annual Meeting of Shareholders. It was where, in spring 2017, Schultz turned a store key over to Johnson, the newly named chief executive officer, when he left his day-to-day duties to become executive chairman.
On Monday, Johnson said, “Today we’re here to celebrate and recognize a special leader, entrepreneur, person that we all love. He is our partner, and today is his day."
'Thank you for believing’
Schultz said the most important message of all those he was about to share was gratitude.
“This whole opportunity for me is not to give a speech, it’s really a giant, giant hug for me to warmly and sincerely thank you for the levels of contribution that you have made, and the level of sacrifice your families have made to allow us to do these things together,” he said.
He continued, “Thank you for believing. Thank you for believing in each other, for believing in the company, and for believing in me,” Schultz said. “This has been the dream of a lifetime. If I took you back to where I grew up, it is impossible. And it could only happen in America. We have a responsibility to reaffirm the American dream, because I have lived it.”
Interspersed with repeated thanks – to his wife and children, employees, mentors, early investors and past leaders – Schultz spoke passionately about the importance of humility and “servant leadership,” the continued purpose of the company and the necessity of disrupting the marketplace.
“Very few companies have gotten to this scale. It’s so easy to feel entitled to success,” Schultz said. “Those of us who were around in (the economic downturn of) 2007 and 2008, we allowed a disease to enter the halls and the company. And that was hubris. And we allowed ourselves to be caught up in growth. We lost our discipline, we lost our belief in our core purpose. How easy it was to lose, (yet) how hard it was to get back.”
Schultz expressed deep confidence in partners and the Starbucks leadership team, and called Johnson, the ceo, a “true servant leader.”
“Servant leadership means simply to be in the service of others. We are in the business of being in service of others,” Schultz said. “I could not be here today and be in a position to transition out of the company if I didn’t have such confidence in the leadership team and all of you."
The world, and the marketplace, are changing dramatically, Schultz said. More and more, people are working from home and shopping online versus spending time in brick-and-mortar stores. As Starbucks examines its place in this ever-changing environment and among these routines in flux, it’s important to continue to have faith in the company’s core purpose: the experience.
“The experience must be cherished – must be elevated,” Schultz said. “Everyone in the company has the opportunity to make a contribution. Everyone has the responsibility to take it personally.”
The company should use its scale and muscle and ubiquity as a strength rather than an “Achilles heel,” and the company’s employees should be courageous about being disruptive.
“When I talk about disruption, we gotta take it down. They are waiting for us to do what we’ve done in the past. We need to break glass. Partners, we need to disrupt the hell out of this marketplace,” Schultz said, drawing applause and cheers from the room. “And I know that we can. The partners wearing the green apron – they are extraordinary.”
Schultz also spoke of the many “crucibles” the company has faced during his time, including struggles during the economic downturn in 2008, the company’s controversial “Race Together” campaign in 2015 and the recent arrest of two black men in a store in Philadelphia, which he has called reprehensible.
Starbucks responded to the arrests and subsequent protests in Philadelphia by closing more than 8,000 on May 29 for employees to participate in training and discussion around racial bias. Schultz called the companywide discussion on racial bias a “galvanizing” moment for the company.
“Three years ago we were trying to elevate the national conversation about race (with ‘Race Together’) and then ‘boom,’ the issue of racism at Starbucks hits us right in the face,” Schultz said. “We had to make a decision whether or not we were going to face it in the right way. And look at what we did.”
Schultz said there will always be mistakes and moments of imperfection. More important than the mistake is the response, he said.
“You can’t serve 100 million people a week and have 28,000 stores in 77 countries (and be perfect) – it’s impossible to be able to be perfect,” he said. “And there are going to be financial pressures all the time on whether or not we can absorb the financial pain, the price of admission to maintain the integrity, the character, the morality, the values and the guiding principles of the company. That is deeply imprinted on what we have been, who we are … and what we must maintain. The expectations of Starbucks are higher.”
This includes his expectations – and those others have of him.
“I have tried all these years to live up to the expectations all of you (have), and I have not always been perfect. I have had my moments where I have been disappointed and upset. I realize sometimes that my standards are high, and I have difficulty celebrating success,” Schultz said.
He continued, his voice becoming thick with emotion. “But I do celebrate today, and I celebrate all of you. I’m so moved – so moved by the scale of what we’ve done and the impact that we’ve had.”
One thing Schultz didn’t speak much about in the employee forum were his plans beyond June 26, but in other communications with partners Monday said he was looking forward to spending time with his family this summer and considering his range of options, from philanthropy to public service. Following his transition off the Starbucks board at the end of June, Schultz will oversee the opening of the Starbucks Reserve Roasteries in Milan and New York City. He is also writing a book about the company’s social impact work.
‘Stand By Me’
Following his address to Starbucks employees, everyone in the room stood and applauded but many did not move. It was Schultz who began to circulate, hugging employees, posing for selfies, thanking and receiving thanks. The song “Stand by Me” started to play, a cover by the band Playing for Change, a worldwide musical group with street performers from dozens of countries. The song, and the band, are favorites of his.
A swirl of partners continued to form around Schultz for more than 40 minutes after the speech, including Jordon Dean, the assistant store manager of the newly opened Starbucks Reserve store on the first floor of Starbucks Support Center. Dean said he was flooded with a host of emotions. "I just thought it was going to be a regular Monday," said Dean, who had moved from Washington, D.C., last year to work in Seattle. When the email with the news of the departure and a farewell letter from Schultz was sent a few hours before the forum, a buzz swept through the store.
“It’s cool to be here at this moment,” Dean said. “I'm excited to see what's next for us."
'Onward with love'
Monday morning, in the hours before he announced his departure from Starbucks, he returned once more to the Pike Place store. A few customers recognized him and asked for selfies. A busload of Starbucks partners from Japan and China arrived to see the store, and Schultz greeted each of them and thanked them for their commitment. Then he climbed up on a stepstool holding a Sharpie, the same pen Starbucks baristas use to write customers' names on cups, and wrote a message for the future on the wall: "This is where it all began, my dream to build a company that fosters respect and dignity and create a place where ALL come together over a cup of coffee."
He signed it, "Onward with love, Howard Schultz."
As Schultz got ready to leave the Pike Place store, a customer who recognized him approached. "I want to say thank you for creating Starbucks," she said.
He shook her hand, thanked her for her words, and walked out the door on this gray Seattle day into what was next.
Starbucks Newsroom’s Heidi Peiper and Joshua Trujillo contributed to this report.