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The competitor extraordinaire: Howard Schultz

One of the original founders of Starbucks mulls the famous Schultz memo and offers his thoughts on world coffee hegemony.
Wow. The chairman of the largest gourmet coffee company in the world is re-examining decisions from the past that made the company an unparalleled success. Not many leaders out there would dare to reveal that. Starbucks is a stellar company. They built a super-mega brand. They maximized the financial side, which enabled them to build sales to more than $1 billion. They introduced millions to carefully brewed coffee. They super-sized the scale of the entire coffee industry. They built thousands of reliable coffee bars that are located just about everywhere you want one. And for folks who prefer a little self-validation with their coffee, they created a prestigious identity that you can rent anytime you want to for a few bucks. Where's the wrong in any of this? Based on his words in the now-famous Valentine's Day memo, Starbucks chairman Howard Schultz might have recently seen the inside a Peet's Coffee & Tea store. Peet's brand isn't commoditized. You have a direct line of sight to their baristas as they make your coffee. Their customer experience is still rooted in the soul of the past and their customers can easily tell that Peet's is wedded to its coffee heritage. Maybe that's what made the chairman write his internal memo. But Howard Schultz is upset that other companies steal customers from Starbucks once in a while. He's right about that. Who is the thief? Starbucks has 13,500 stores. Peet's has only 140, so it must be those thousands of pesky independent coffee businesses that are doing most of the damage. The chairman has already led his company to greatness, but clearly he obviously still has plenty of competitive drive. Now he wants to eradicate the possibility of further defections. Is that competitive thinking, or what? Here's a recipe for total annihilation of the competition. First, build thousands of coffee bars, each with its own name and distinctive look. Then hire people who wanted to start their own place to manage them. Recruit a wide range of baristas and indulge their love for tattoos, exotic hairstyles, and facial jewelry. Offer darker roasts in some places and latte art-foam in others. Let real, live artists hang canvases on the walls. Sell no CDs or videos. Have different offerings of baked goods and lunch items in every location. Buy no advertising – live on word of mouth. Focus on certain types of customers; don't try to appeal to all of humanity. Never mention the words "brand" and "management" together in a sentence. Make these moves and eradication is just around the corner. But of course there's a much smarter and easier way to continue growing the largest gourmet coffee company in the world. Build lots more Starbucks stores and appreciate Peet's and the independents for the spice they add to life. One is not for all. Onward coffee lovers.

Zev Siegl is a co-founder of Starbucks Coffee Co., where he worked from 1971-1980. Today he's at the publicly funded Small Business Development Center in Seattle, where he applies his passion for small and medium-sized companies to help them grow. He drinks straight espressos and he's real picky about how they're made. You can e-mail him in care of editor@crosscut.com.


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Comments:

Posted Tue, Apr 3, 2:03 p.m. Inappropriate

Email Never Dies: Okay, with all the email chains floating around before Schultz's V-Day email snaffu, hadn't the Starbuck's Exec heard "email never dies?" Maybe nextime, he'll read his memo over before hitting "send." It's just good email ettiquette.

Siegl can't be too happy that his orginal vision of the neighborhood coffee shop's turned into the McD's of coffee.

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