When in 1982 Howard Schultz went to Italy he took note of the coffee bars that existed on practically every block. He learned that they not only served excellent espresso, they also served as meeting places or public squares; they were a big part of Italy's societal glue, and there were 200,000 of them in the country. But back in Seattle, the Starbucks owners resisted Schultz's plans to serve coffee in the stores, saying they did not want to get into the restaurant business.
Frustrated, Schultz quit and started his own coffee-bar business called Il Giornale. “If I came to you in 1987 and I said to you, 'Even though coffee consumption in America is down, I wanna build a company that was gonna sell coffee not in a porcelain cup, but in a paper cup, with Italian-saying words that no one could pronounce, for $3 a cup of coffee,' would you invest?” asks Howard Schultz. Most of us would answer “No”. He heard the same answer many times trying to find investments for building the Starbucks empire. His first investors were Starbucks’s owners that gave him $150 000. But to realize his dream he needed $400 000 for start-up and $1.25 million for opening next 8 espresso-bars. During one year he talked to 242 potential investors and 217 of them said “no”. They didn’t believe that his project could have commercial success. It was the hardest time for him but he didn’t stop. Schultz remembers: “In 1986 with my wife pregnant with our first child, her father asked to come over and see me and he went for a walk and this is in the early stages of the kernel of the idea and I was not drawing a salary and we were really struggling, and we were trying to raise money and having a hard time. And we were going for a walk and he said let's sit down. We sat down on a park bench and he said to me with my daughter seven-eight months pregnant and she working and you not bringing in a salary I want to ask you to do something and that is to give up this dream and hobby and get a job. And I remember I started to cry because I was so embarrassed. But I couldn't do it”.
And after all his passion and faith helped him to find private investors that believed in his idea and gave him enough money. Il Giornale was successful, and a year later Schultz bought Starbucks for $3.8 million. Starbucks experienced astronomical expansion during the '90s, going public in 1992 and growing at a rate of 25 percent to 30 percent a year. During the new corporation's first year, expansion amounted to 15 additional stores; by 1992 there were nearly 150 Starbucks locations.
Howard Schultz, Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time, Hyperion, 1999 Kai Ryssdal, Interview with Howard Schultz, American Public Media
