Friday, December 28, 2012

Pour Your Heart Into by Schultz

I don't drink coffee. As such, I've never quite understood the draw Starbucks has on people. Until I read this book, that is. The founder of Starbucks tells the story of how Starbucks came to be in Pour Your Heart Into It, which I recently had the pleasure of reading.

You're not likely to get an unbiased view of a company when you read about it from the company's founder, and this book is no different in that regard. The propaganda did get a bit heavy at times, as Schultz went into a ton of detail about how Starbucks gives back to communities and has helped improve the lives of its most successful employees (which is the case in every company, of course).

But if you don't let the propaganda distract you, there is quite a bit to learn from Schultz' journey in taking Starbucks from a small bean-only retailer to an international, multi-channel coffee distributor.

The coffee-shop industry was considered mature even when Starbucks was a tiny operation that didn't even serve cups of coffee. This made it difficult for Schultz to raise expansion money, as much like today, VC firms would much rather invest in the hottest new sectors rather than firms in stodgy industries. But Starbucks revolutionized this industry with a focus on quality that was hard to find elsewhere.

Before Starbucks, coffee at retailers was often not fresh, used low-quality beans (that are more abundant and cheaper), used light-roasted beans (as regular quality beans are ruined under intense roasting conditions) and had inconsistent brewing procedures, leading to volatile and relatively poor results. Starbucks' focus on quality (more expensive beans, more thorough roasting, procedures for consistent brews, fresher grinds and fresher brews) garnered it a loyal customer following that allowed it to grow successfully at an incredible rate. Schultz describes the core principles on which the company focused that he believes led it to lead the industry through this transformation.

Schultz' personal journey is just as interesting. Schultz grew up poor, and disregarded the advice of much of his family to leave a relatively cushy job in order to join this tiny company with an uncertain future. For three years, as Starbucks implemented its plan to expand into one which matched Schultz' vision, the company lost money while positive results were far from certain. A few times, Starbucks was close to running out of money, forcing Schultz to pound the pavement to look for new investors.

Schultz gives some credit to the role of luck in the success of Starbucks, but not a whole lot. At many points in the book, though, it did look as though luck played a rather dominant role. For example, if the aforementioned last minute financing had not come through, a tiny, young Starbucks' future would have been very much in question. Some of Starbucks' early expansion mistakes also caused losses that could have cost Schultz his job at a crucial time for the company, which could have jeopardized both his future and that of the company. At the same time, however, there is no question that Schultz has obviously put systems in place that put Starbucks in a position to succeed even in the face of a great deal of competition.

If the stories of how great companies are made interest you, in my opinion there is no better place to read about them than from the founders themselves. If you can put aside the hindsight bias and the propaganda, this story of Starbucks offers great insight into how a company was taken from thousands to billions.

1 comment:

Anonymous said...

sounds a lot like "the four seasons of isadore sharpe", which was a great book for a lot of the same reasons.

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