Pour Your Heart Into It (5 page)

When Peet moved to the United States in 1955, he was shocked. Here was the world’s richest country, the undisputed leader of the Western world, yet its coffee was dreadful. Most of the coffee Americans drank was
robusta,
the inferior type that the coffee traders of London and Amsterdam treated as a cheap commodity. Very little of the fine
arabica
coffees ever got to North America; most went to Europe, where tastes were more discriminating.

Starting in San Francisco in the 1950s, Alfred Peet began importing arabica coffee into the States. But there was not much demand, for few Americans had ever heard of it. So in 1966, he opened a small store, Peet’s Coffee and Tea, on Vine Street in Berkeley, which he ran until 1979. He even imported his own roaster, because he thought American companies didn’t know how to roast small batches of fine arabica coffee.

What made Alfred Peet unique was that he roasted coffee dark, the European way, which he believed was necessary to bring out the full flavors of the beans he imported. He always analyzed each bag of beans and recommended a roast suited to that lot’s particular characteristics.

At first only Europeans or sophisticated Americans visited his little shop. But gradually, one by one, Alfred Peet began educating a few discerning Americans about the fine distinctions in coffee. He sold whole-bean coffee and taught his customers how to grind and brew it at home. He treated coffee like wine, appraising it in terms of origins and estates and years and harvests. He created his own blends, the mark of a true connoisseur. Just as each of the Napa Valley winemakers believes his technique is best, Peet remained a firm proponent of the dark-roasted flavor—which in wine terms is like a big burgundy, with a strong, full body that fills your mouth.

Jerry and Gordon were early converts. They ordered Peet’s coffee by mail from Berkeley, but they never seemed to have enough. Gordon discovered another store, in Vancouver, Canada, called Murchie’s, which also carried good coffee, and he would regularly make the three-hour drive north to get bags of Murchie’s beans.

One clear day in August 1970, on the way home from one of those coffee runs, Gordon had his own epiphany. Later he told the
Seattle Weekly
that he was “blinded, literally, like Saul of Tarsus, by the sun reflecting off Lake Samish. Right then it hit me: Open a coffee store in Seattle!” Jerry liked the idea right away. So did Zev, Gordon’s next-door neighbor and a tea drinker. They each invested $1,350 and borrowed an additional $5,000 from a bank.

It was hardly a promising time to open a retail store in Seattle. From Day One, Starbucks was bucking the odds.

In 1971 the city was in the midst of a wrenching recession called the Boeing Bust. Starting in 1969, Boeing, Seattle’s largest employer, had such a drastic downturn in orders that it had to cut its workforce from 100,000 to less than 38,000 in three years. Homes in beautiful neighborhoods like Capitol Hill sat empty and abandoned. So many people lost jobs and moved out of town that one billboard near the airport joked, “Will the last person leaving Seattle—turn out the lights?”

That famous message appeared in April 1971, the same month that Starbucks opened its first store. At that time, also, an urban renewal project was threatening to tear down the Pike Place Market. A group of developers wanted to build a commercial center with a hotel, convention hall, and parking lot in its place. In a referendum, Seattle’s citizens voted to preserve Pike Place as it was.

Seattle in those days was just beginning to shed its image as an exotic, isolated corner of America. Only the adventurous moved here, thousands of miles from family in the East or Midwest or California, sometimes on their way to the mines and mountains and fishing grounds of Alaska. The city had not acquired the veneer and polish of the East Coast. Many of the leading families still had ties to the logging and lumber industries. Heavily influenced by the Norwegian and Swedish immigrants who came early in this century, Seattle people tended to be polite and unpretentious.

In the early 1970s, a few Americans, especially on the West Coast, were starting to turn away from prepackaged, flavor-added foods that were too often stale and tasteless. Instead, they chose to cook with fresh vegetables and fish, buy fresh-baked bread, and grind their own coffee beans. They rejected the artificial for the authentic, the processed for the natural, the mediocre for the high quality—all sentiments that resonated with Starbucks’ founders.

A market study would have indicated it was a bad time to go into the coffee business. After reaching a peak of 3.1 cups a day in 1961, coffee consumption in America had begun a gradual decline, which lasted till the late 1980s.

But the founders of Starbucks were not studying market trends. They were filling a need—their own need—for quality coffee. In the 1960s, the large American coffee brands began competing on price. To cut costs, they added cheaper beans to their blends, sacrificing flavor. They also let coffee cans stay on supermarket shelves until the coffee got stale. Year after year, the quality of canned coffee got worse, even as advertising campaigns made claims for its great taste.

They fooled the American public, but they didn’t fool Jerry and Gordon and Zev. The three friends were determined to go ahead and open their coffee store, even if it appealed only to a tiny niche of gourmet coffee lovers. Only a handful of American cities had such stores until well into the 1980s.

Gordon consulted with his creative partner, artist Terry Heckler, about a name for the new store. Gordon had pressed to call it
Pequod
, the name of the ship in Melville’s
Moby Dick
. But Terry recalls protesting, “You’re crazy! No one’s going to drink a cup of Pee-quod!”

The partners agreed that they wanted something distinctive and tied to the Northwest. Terry researched names of turn-of-the-century mining camps on Mt. Rainier and came up with
Starbo
. In a brainstorming session, that turned into
Starbucks.
Ever the literature lover, Jerry made the connection back to
Moby Dick
: The first mate on the
Pequod
was, as it happened, named Starbuck. The name evoked the romance of the high seas and the seafaring tradition of the early coffee traders.

Terry also pored over old marine books until he came up with a logo based on an old sixteenth-century Norse woodcut: a two-tailed mermaid, or siren, encircled by the store’s original name, Starbucks Coffee, Tea, and Spice. That early siren, bare-breasted and Rubenesque, was supposed to be as seductive as coffee itself.

Starbucks opened its doors with little fanfare in April 1971. The store was designed to look classically nautical, as though it had been there for decades. The fixtures were all built by hand. One long wall was covered with wooden shelving, while the other was devoted to whole-bean coffee, with up to thirty different varieties available. Starbucks did not then brew and sell coffee by the cup, but they did sometimes offer tasting samples, which were always served in porcelain cups, because the coffee tasted better that way. The cups also forced customers to stay a little longer to hear about the coffee.

Initially, Zev was the only paid employee. He wore a grocer’s apron and scooped out beans for customers. The other two kept their day jobs but came by during their lunch hours or after work to help out. Zev became the retail expert, while Jerry, who had taken one college course in accounting, kept the books and developed an ever-growing knowledge of coffee. Gordon, in his words, was “the magic, mystery, and romance man.” It must have been obvious to him from the start that a visit to Starbucks could evoke a brief escape to a distant world.

From the opening day, sales exceeded expectations. A favorable column in the
Seattle Times
brought in an overwhelming number of customers the following Saturday. The store’s reputation grew mostly by word of mouth.

In those early months, each of the founders traveled to Berkeley to learn about coffee roasting at the feet of the master, Alfred Peet. They worked in his store and observed his interaction with customers. He never stopped stressing the importance of deepening their knowledge about coffee and tea.

In the beginning, Starbucks ordered its coffee from Peet’s. But within a year, the partners bought a used roaster from Holland and installed it in a ramshackle building near Fisherman’s Terminal, assembling it by hand with only a manual in German to guide them. In late 1972, they opened a second store, near the University of Washington campus. Gradually, they created a loyal clientele by sharing with their customers what they had learned about fine coffee. Seattle began to take on the coffee sophistication of the Bay Area.

To Starbucks’ founders, quality was the whole point. Jerry, especially, imprinted his strong opinions and uncompromising pursuit of excellence on the young company. He and Gordon obviously understood their market, because Starbucks was profitable every year, despite the economy’s ups and downs. They were coffee purists, and they never expected to appeal to more than a small group of customers with discriminating tastes.

“We don’t manage the business to maximize anything except the quality of the coffee,” Jerry Baldwin told me that evening at the restaurant. By then we had finished our main course and begun dessert. The waiter poured us each a strong cup of coffee, and Jerry proudly announced that it was Starbucks.

I had never heard anyone talk about a product the way Jerry talked about coffee. He wasn’t calculating how to maximize sales; he was providing people with something he believed they ought to enjoy. It was an approach to business, and to selling, that was as fresh and novel to me as the Starbucks coffee we were drinking.

“Tell me about the roast,” I said. “Why is it so important to roast it dark?”

That roast, Jerry told me, was what differentiated Starbucks. Alfred Peet had pounded into them a strong belief that the dark roast brought out the full flavors of coffee.

The best coffees are all arabicas, Jerry explained, especially those grown high in the mountains. The cheap robusta coffees used in supermarket blends cannot be subjected to the dark roasting process, which will just burn them. But the finest arabicas can withstand the heat, and the darker the beans are roasted, the fuller the flavor.

The packaged food companies prefer a light roast because it allows a higher yield. The longer coffee is roasted, the more weight it loses. The big roasters agonize over a tenth or a half of a percent difference in shrinkage. The lighter the roast, the more money they save. But Starbucks cares more about flavor than about yields.

From the beginning, Starbucks stayed exclusively with the dark roast. Jerry and Gordon tweaked Alfred Peet’s roasting style and came up with a very similar version, which they called the Full City Roast (now called the Starbucks roast).

Jerry picked up a bottle of beer, a Guinness. Comparing the Full City Roast of coffee to your standard cup of canned supermarket coffee, he explained, is like comparing Guinness beer to Budweiser. Most Americans drink light beers like Budweiser. But once you learn to love dark, flavorful beers like Guinness, you can never go back to Bud.

Although Jerry didn’t discuss marketing plans or sales strategies, I was beginning to realize he had a business philosophy the likes of which I had never encountered.

First, every company must stand for something. Starbucks stood not only for good coffee, but specifically for the dark-roasted flavor profile that the founders were passionate about. That’s what differentiated it and made it authentic.

Second, you don’t just give the customers what they ask for. If you offer them something they’re not accustomed to, something so far superior that it takes a while to develop their palates, you can create a sense of discovery and excitement and loyalty that will bond them to you. It may take longer, but if you have a great product, you can educate your customers to like it rather than kowtowing to mass-market appeal.

Starbucks’ founders understood a fundamental truth about selling: To mean something to customers, you should assume intelligence and sophistication and inform those who are eager to learn. If you do, what may seem to be a niche market could very well appeal to far more people than you imagine.

I wasn’t smart enough to comprehend all of this that first day I discovered Starbucks. It took years for these lessons to sink in.

Although Starbucks has grown enormously since those days, product quality is still at the top of the mission statement. But every so often, when executive decision making gets tough, when corporate bureaucratic thinking starts to prevail, I pay a visit to that first store in Pike Place Market. I run my hand over the worn wooden counters. I grab a fistful of dark-roasted beans and let them sift through my fingers, leaving a thin, fragrant coating of oil. I keep reminding myself and others around me that we have a responsibility to those who came before.

We can innovate, we can reinvent almost every aspect of the business except one: Starbucks will always sell the highest quality fresh-roasted whole-bean coffee. That’s our legacy.

On the five-hour plane trip back to New York the next day, I couldn’t stop thinking about Starbucks. It was like a shining jewel. I took one sip of the watery airline coffee and pushed it away. Reaching into my briefcase, I pulled out the bag of Sumatra beans, opened the top, and sniffed. I leaned back, and my mind started wandering.

I believe in destiny. In Yiddish, they call it
bashert
. At that moment, flying 35,000 feet above the earth, I could feel the tug of Starbucks. There was something magic about it, a passion and authenticity I had never experienced in business.

Maybe, just maybe, I could be part of that magic. Maybe I could help it grow. How would it feel to build a business, as Jerry and Gordon were doing? How would it feel to own equity, not just collect a paycheck? What could I bring to Starbucks that could make it even better than it was? The opportunities seemed as wide open as the land I was flying over.