This story was updated from June 2018.
With a portentous tweet and a “60 Minutes” appearance, Howard Schultz has all but declared his candidacy for president.
What’s less clear is how he will do it. The former Starbucks CEO said he plans to run as a centrist Independent, describing both political parties as broken. But public reaction to that idea hasn’t been so welcoming. Schultz is a lifelong Democrat who would probably pull votes from whoever the Democratic nominee turns out to be. Splitting the center-left vote could give an edge to President Trump, assuming he runs for reelection in 2020. That has generated outrage among some Democrats, along with threats of a Starbucks boycott and other forms of protest.
However it shakes out, Schultz has a long and successful business career as his leading credential. He built and ran Starbucks for 31 years, stepping down as chairman last June. “He’s clean. He’s serious. He believes in America,” says Harvard Business School historian Nancy Koehn, who has studied Starbucks’s business model and co-authored a Harvard case study on Schultz’s leadership at the company. “He understands how to speak in a voice that a lot of people can relate to.”
Here are some of Howard Schultz’s other credentials:
Blue-collar upbringing. Schultz grew up in public-housing projects in Brooklyn, New York, with a father he described in his biography “Onward” as “an uneducated war veteran [who] never really found his spot in the world, [and] held a series of really rough blue-collar jobs to support our family.” Schultz put himself through college and went to work for Starbucks, then a small Seattle coffee chain, as head of marketing in 1982.
Business innovator. Schultz bought the small Starbucks chain with some other investors in 1987, well before coffee culture was a thing in the United States. One key insight was his desire to turn an otherwise dull counter operation into a community portal where people would linger and socialize, as he had noticed people do in Italian coffee shops in the 1980s.
Genius for marketing. Schultz describes himself as an entrepreneur fascinated by the “magic of the merchant’s art,” as Koehn and colleagues write in their Harvard case study of Starbucks. Schultz made baristas the performers in his stores and encouraged employees to connect with customers. As Starbucks CEO, he insisted the company couldn’t just sell coffee; it needed a compelling narrative that would draw people in and keep them coming back (and persuade them to spend $5 for a cup of coffee). It worked: Schultz built Starbucks from a local chain with 11 outlets into a global giant with more than 28,000 stores in 77 countries, 300,000 employees, nearly $25 billion in revenue and $3.5 billion in profits.
Familiarity with health policy. Unlike many companies, Starbucks offers health coverage to both full- and part-time workers, “at a considerable cost to the company,” Schultz acknowledges in his book. Schultz is motivated by recollections of his father, who got hurt on the job in 1960, without health insurance, and was simply fired. “Everyone deserved more respect than my parents received,” he wrote.
Knowledge of the global economy. Starbucks earns 21% of its revenue in foreign markets, with more than 1,500 stores in China, 1,200 in Japan and 1,000 in Canada. Those nations have been direct targets of new trade barriers under the Trump administration, making Starbucks a potential target of retaliation.
Political ambition. Schultz has been one of the most politically active CEOs in the United States. In 2011, he persuaded more than 140 other CEOs to join him in penning an open letter urging Congress to end a budget standoff that threatened a default on U.S. debt. In 2015, Schultz launched the controversial “Race Together” campaign meant to encourage more open discussion of racial-justice issues, which Starbucks suspended after a rash of criticism.
Schultz was a confidante of Hillary Clinton during her 2016 presidential campaign, and private advice he gave to the candidate leaked when hackers published hundreds of emails from the account of John Podesta, who was chairman of Clinton’s campaign. “The campaign feels ‘yesterday,’” Schultz wrote in one email to a top Clinton aide. “It’s too packaged and prescribed… Her inner circle and the powers to be need to… understand how brands (and she is a brand) in the world we now live in are built. It requires a vision for the future that is steeped in truth and authenticity and builds an enduring emotional connection with the voters.”
In another email, Schultz wrote to a Clinton aide, “We are seeing a seismic shift in consumer behavior and in the attitudes of the American people. We’ve seen it … in our core Starbucks business … and, it certainly is acutely present in this political presidential primary season.” He was certainly right about that. Now we’ll see if he’s able to do something about it.
Confidential tip line: rickjnewman@yahoo.com. Click here to get Rick’s stories by email.
Read more:
3 problems with Elizabeth Warren’s wealth tax
Trump is about to clobber the auto industry
Those Trump bankruptcies are starting to make sense
We’ll never again have a 70% tax rate
How Elizabeth Warren wants to remake capitalism
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman
