Started from the Bottom.
Now we here.
Welcome to Hustle and Grind’s 0 to 100 series, where we will cover a number of bonafide hustlers, entrepreneurs, and inventors on a (hopefully) weekly basis. The ‘here’ may change, whether it’s the Forbes list, heading Fortune 500 Companies or pure financial independence but the drive and the innovation are constants through and through.
There are two numbers that can perfectly sum up the career and ascent of Howard Schultz.
And in this article, you’re going to learn exactly why.
The first, 217, is the number of investors who turned down Schultz after he left Starbucks in frustration to start his own coffee shop called “Il Giornale” (Italian for ‘The Daily’). Schultz’s frustrations came from a difference in business strategy with Starbucks ownership in 1985. Schultz wanted to develop the storefront into a chain of coffee shops while ownership wanted to focus on sales of their coffee beans, which were doing quite well.
Schultz set out on his own with a little more than a dream and very little money to his name to see his business through, he set out to convince others of the viability of his vision.
Out of 242 people, banks, investors, and friends, Schultz looked to for investments in his company – 217 said no. This was in 1985 when rejection wasn’t a cold email going unreturned. Howard had to hear “no” on the phone and to his face over 200 times.
“Try to imagine how disheartening it can be to hear that many times why your business is not worth investing in”
– Howard Schultz
Safe to assume a number of people in the same situation may have given up after 50 or 100 maybe even 200 rejections. However, Schultz through a combination of determination, motivation and, yes, a little bit of craziness (hey, it helps) kept searching.
Despite a 90% failure rate, Schultz was able to raise enough money to open his own shop in his own image, the same that Starbucks had rejected. Schultz’s goal was to focus more on the in-house cafe and restaurant than selling beans for home brewers. Schultz saw success from his storefronts, then, in 1988, Starbucks ownership went full tilt into home tea and coffee products and sold their Starbucks retail stores to Schultz for $3.8 million. Schultz kept the name and converted his shops to Starbucks.
Which brings us to that second number used to classify Schultz – $3.1 billion. That is Schultz’s estimated net worth as of 2016.
If you want a good way to fathom that number, try dividing it by, say, 217. For those without a calculator, the quotient is $14.2 million. Which means that for every “no” that Howard Schultz heard trying to get his vision for a coffee shop off the ground back in 1985, he now has $14.2 million in net worth. While that will never take the sting out of all those no’s – it has to help.
Luck is the Residue of Design
– Howard Schultz
Upon taking the helm, Schultz’s business plan for Starbucks around aggressive expansion, forgoing franchising and seeing an opening in a market that no one else had – a national chain of higher-end coffee shops. In 2016 it seems so obvious, in 1988, it only seemed obvious to Shultz.
With such success in Starbucks brand, Schultz left in 2000, only to return in 2008 to once again run the company with had begun to falter. It seems Starbucks wasn’t the same without Shultz, nor was Schultz the same without Starbucks.
In Forbes ranking of the world’s billionaires, Schultz was number 595, which means the world has a lot of billionaires if Schultz is that low on their list. However, Forbes’ newly introduced “self-made score” ranks Howard as a 10 out of 10.
In life, you can blame a lot of people and you can wallow in self-pity, or you can pick yourself up and say, ‘Listen, I have to be responsible for myself.’
– Howard Schultz
Meaning that Schultz went from not only growing up poor but overcame significant obstacles to build his business, make his dream a reality and, yes, make billions in the process. Yet Schultz knows that his story is a rare one. While his childhood tribulations helped make him who he is, he also wants to help those who would be in a similar position by introducing Starbucks College Achievement Plan. Aiding employees of his company who could not otherwise afford to get an education.
A $3.1 billion net worth does not have to be built through greed. Schultz realizes the value of a strong workforce.
Starbucks has been relatively ubiquitous the last 15 to 20 years. It can seemingly be found on nearly every corner of every city in North America. So ubiquity means success. With over 23,000 locations (both owned by Starbucks as well as licensed) worldwide, over 190,000 employees and a steadily growing annual revenue, up to nearly $15.2 billion in 2015.
From 217 rejections came one coffee shop, from that coffee shop came an acquisition and from that acquisition came Schultz’s grand goal that has grown to something bigger than even he could have imagined in 1985.
In anything we do, any endeavour, it’s not what you do, it’s why you do it.
– Howard Schultz
Schultz believed in his vision, kept his cards close to his chest by avoiding franchising his chain and reaped the benefits through a strong workforce, strong branding, and a quality product.