How did Starbucks Begin? Description, History, & 3 Facts

Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world’s largest coffeehouse chain. In this article will tell you about the history of how Starbucks began in detail. 

How did Starbucks Begin?

Starbucks, headquartered in Seattle, is a global business that retails and wholesales its name-brand coffee products, as well as other goods and beverages, to places worldwide.

Before the first Starbucks shop debuted in Seattle’s Pike Place Market in 1971, most Americans drank cheap, low-quality coffee that was scooped out of a can and badly prepared in home percolators.

How did Starbucks Begin?

Jerry Baldwin (b. 1942), Gordon Bowker (b. 1942), and Zev Siegl (b. 1942) were the three initial Starbucks founders (b. 1942). Their commitment to quality and passion for coffee transformed how people thought about and enjoyed their morning cup.

Initially, they sold coffee beans roasted by Peet’s of Berkeley, California, but they later began roasting their own. Due of the enormous demand for quality coffee beans, the few Starbucks stores that sold solely beans for 10 years enjoyed significant success.

The first Starbucks establishment to sell brewed coffee opened in 1982. Later that year, Starbucks hired Howard Schultz (born 1953), and the firm opened its first espresso bar the following year, in 1984, at his request.

In 1987, Baldwin and Bowker sold Starbucks to a group of investors led by Schultz (Siegl having sold his interests in 1980).

The Three Founders

Gordon Bowker, Jerry Baldwin, and Zev Siegl founded Starbucks on March 30, 1971, in a rented shop in Seattle’s Pike Place Market, with little money and no prior business experience.

They were confident, though, that once Seattleites experienced it, they would get addicted to fine coffee. They were very accurate!

The most amazing part of the narrative is the sheer amount of chance involved in the founding of Starbucks. It’s incredible that the three founders were eventually able to connect. Baldwin grew up in California, as were Siegl and Bowker, who both relocated there from the San Francisco Bay Area.

The fact that they come from various backgrounds and bring complimentary abilities to the table is what will ensure the success of this collaboration.

How did Starbucks Begin?

In 1956, his father, violinist Henry Siegl (1911-1997), became concertmaster of the Seattle Symphony, and the family moved from New York.

Henry previously worked as the concertmaster for George Balanchine’s New York City Ballet and with the NBC Symphony under Arturo Toscanini. Zev’s mother, Eleanor Siegl (1917-1996), was not only a talented classical pianist but also a trailblazing educator and the founder of Seattle’s The Little School.

Gordon Bowker’s father, Gordon Albert Bowker (1918-1943), perished in World War II when Gordon was just three months old. The submarine and its crew were never found after it went down in the St. George Straits off the coast of Papua New Guinea.

Gordon’s mother, Hazel Ringseth Bowker (1915-1991), traveled to Seattle with her newborn infant to live with her parents, Norwegian immigrants who had participated in the Alaska gold rush and finally settled in Seattle’s Ballard area.

Jerry Baldwin grew up in an unstable circumstances since his parents, milkman Rowland Baldwin (1914-1989) and data processor Patricia Brodeur Baldwin (b. 1923), divorced and his mother remarried while he was a teenager.

Jerry transferred high schools three times due to familial turbulence before settling at UC San Francisco.

Creative Aspirations

He and Bowker chance to meet while waiting in line for their sophomore year housing assignments. The dormitory was already full, and neither had pre-registered or paid a deposit. They exchanged eyes and said, “Would you want to go look for an apartment?” (Interview with Bowker)

Siegl was thrown into the mix by another unusual incident. He served as a summer intern at the Century 21 World’s Fair in Seattle in 1962, when he advertised a road trip from Seattle to New York City via San Francisco.

Bowker, who was in Seattle for the summer, wanted to get to New York City so he could travel to Europe in the fall. He made the decision to join Siegl’s squad. They made a detour in San Francisco, where Siegl met Baldwin for the first time.

The three guys reconnected in Seattle after Baldwin’s discharge from the service. He was merely passing through, but he ended up staying. Fortunately, he was able to find work at Boeing. Siegl was a schoolteacher.

Bowker worked as a writer and editor for the first Seattle magazine (published April 1964 through December 1970). Everyone in the room seemed to want to do something artistic.

They dabbled with writing screenplays for KING-production TV’s corporation and creating classical music for radio broadcasts. Baldwin, Bowker, and a third buddy had the idea to make movies about American music genres such as jazz, blues, and folk.

How did Starbucks Begin?

They named their company the Pequod after the ship from Moby Dick. And they were keen to point out that, like the Pequod, that venture vanished without a trace. They were still interested in starting a business together.

Why Not Start a Coffee Company?

Bowker was eating lunch and a bad cup of coffee when inspiration struck. He’d driven all the way from Vancouver, British Columbia, to Murchie’s, a coffee and tea store. After they tried it and became addicted, many of his friends began placing orders with him.

Seattle is an excellent location for establishing a coffee shop. It was a good strategy, according to both Baldwin and Siegl. “We didn’t have a prenup or anything; it was pretty informal,” Baldwin explained. “We jumped straight in” (Baldwin interview).

Siegl was the group’s go-to man for research prior to the Internet. He searched the phone book and newspaper records at the local library for a company similar to the one they described and discovered Peet’s, a gourmet coffee shop in Berkeley.

He first contacted the late Alfred Peet (1920-2007), who was quite helpful and informed, and then traveled to visit him.

There was instant camaraderie between the two males. Peet, an old-school European, grew up in the Netherlands helping out in the family coffee shop and was intrigued by Siegl’s father’s position as concertmaster of the Seattle Symphony.

Siegl was especially pleased with Peet’s marketing acumen. “Nobody in the nation understood anything about coffee like he did. In his specialty, he has no peers ” (Siegl interview).

Siegl remembered visiting Peet in December 1970 and remarking that “his shop was booming” (Siegl interview). Later that month, Baldwin and Bowker both flew to Berkeley to serve as interns at Peet’s for a few days each.

Peet agreed to supply them with freshly roasted coffee beans for their new business. Meanwhile, the Seattle partners had chosen a location: a corner store in the historic Harbor Heights Hotel on Western Avenue (2000 Western), just north of Pike Place Market.

Rent was rather expensive at $137.50 per month. Each investor contributed $1,500, and the group was successful in obtaining a $5,000 bank loan.

Starbucks

Bowker founded Heckler Bowker alongside designer Terry Heckler when Seattle Magazine shuttered its doors. Heckler suggested to Bowker, Baldwin, and Siegl that they use names beginning with the letters “ST” since they are powerful and unique.

Bowker came upon Starbo while examining a framed mining map at his company’s seaside office. “I remembered Starbucks from Moby Dick and screamed the word out loud. That was the watershed moment; it became known as Starbucks from then on.

How did Starbucks Begin?

It wasn’t difficult to persuade Zev and Jerry ” (Bowker interview). Heckler created the store’s logo, which shows a voluptuous bare-breasted mermaid with two tails.

The partners envisioned the insignia as an appealing siren to entice passing consumers inside, as well as an icon to represent maritime experiences without directly referencing Moby Dick.

(The logo was changed in 1987, 1992, and 2011.) To save money, Siegl and Bowker built the store’s outside signage themselves, but they had to pay an expensive company to place it on the building’s decaying brick front.

The store’s opening was delayed due to the time it required to build the appropriate fixtures, paint the inside, and get the necessary permits. A mutual acquaintance, Daniel Jack Chasan, would regularly stop by on his way to the Market on the eve of its opening. He eventually noticed the sandwich board on March 30th.

He triumphantly selected a pound of Sumatra beans and whatever else was on offer, wrote a $5.36 check, and lingered to enjoy the white wine that a friend had brought in. Starbucks’ doors were open for business.

Initially, only Siegl was compensated, while Baldwin and Bowker worked for other firms. You three ran the business on Saturdays. The contributions of partners to business management varied.

Bowker was a “background power figure” who organized the company’s public relations activities (Baldwin interview). Baldwin, who had studied accounting in college, was promptly assigned to manage all financial concerns.

He also had a keen sense of coffee and was at ease when it came to sampling and purchasing. Siegl drank tea and tackled that portion. According to Baldwin, “One of the remarkable things is how we unintentionally chose people with complementary skills.

There was very little overlap in skill sets, which I believe has a significant influence “(Interview with Baldwin) (Baldwin interview).

Starbucks’ early outlets were not like the present espresso cafés that provide the company’s hallmark menu and drinks. The business sold tea, coffee, and spices in bulk amounts. Except for a few extra options for preparing coffee and tea, that was it. Only brewed coffee samples were supplied.

Siegl went on to say: “People who came through our door were invited to chat with us over coffee…. To inquire, “Would you want a sample?” “Oh sure,” they’d say, and then they’d be stuck in the shop. We’d take a scoop of coffee and push it up their noses…” According to an interview with Siegl.

Thus far, so good. It spread via word of mouth. Bowker was skilled at capturing the attention of the media, having worked in both journalism and advertising.

With the tempting fragrance of freshly roasted coffee, he attracted Don Duncan, a notable columnist for the Seattle Times, to visit the shop, try enough of the product, and feel stimulated enough to write a good review.

Peet’s roasted beans did not arrive on time on a very hectic Saturday. One probable recall is that the car was delayed due to snowfall. According to those who claim Peet was not paid and was holding up the goods.

To avoid disappointing customers, the proprietors collected orders from everyone who came in. When the coffee shipment arrived the next week, everyone jumped in their cars and drove around the city distributing the one-pound bags to various spots.

Starbucks earned $46,832 in its first nine months of operation. After paying all of the bills, only a tiny sum remained. Despite this, the partners were planning to open a second store the following year, with Baldwin now on staff.

A perfect location was located in the University Village retail area, near to QFC’s gourmet food section. They had to borrow money from relatives and friends to launch the store because they didn’t have any.

Learning to Roast

Alfred Peet advised them that they could begin roasting their own coffee beans. He took them to a used machine and showed Baldwin how to make Starbucks’ distinctive dark roast. The company has set up business in a trendy warehouse near Fishermen’s Terminal.

How did Starbucks Begin?

Starbucks hired two crucial professionals to help the business develop. Jean Mach, the pioneer in 1972, deserves this accolade.

She quickly progressed through the ranks, beginning as a retail employee, then as a manager, and eventually as the wholesale sales director, in charge of increasing Starbucks’ restaurant business.

Mach wrote the first employee manual, in which he evaluated and described how to utilize every item of product available. “My heart was entirely, totally in it,” she remembered on those early days, reflecting the deep emotional involvement that distinguished those times (Mach interview).

Following that, in July 1973, coffee expert Jim Reynolds was appointed as the company’s coffee roaster. After the shop in University Village opens, a third site in Edmonds, north of Seattle, will open soon.

The shelves and coffee tins were built by Reynolds, the floor was polished and stained by Mach, and the entire area was wired by Baldwin.

In an effort to attract more customers, this business began carrying a new brand of high-end cookware at Siegl’s request. In those early days, the company’s future was bright, and everything seemed possible.

When a sudden frost wiped off Brazil’s coffee harvest in 1975, the illusion was broken. Coffee prices immediately increased.

As prices rose, sales decreased. Starbucks has discontinued the distribution of complimentary brewed coffee samples. Starbucks roasted barley for a company that marketed it as a coffee substitute for a while to supplement its profits.

Reynolds encountered difficult conditions because to the barley’s frequent explosions. Baldwin eventually chose to cancel the deal. To make matters worse, the Surgeon General has warned that caffeine-rich drinks, such as coffee, may increase one’s risk of acquiring cancer.

By 1976, when this photograph was shot, the corporation was already in financial trouble. Edmonds, it turned out, was not a successful market for our cookware. Mach, the shopkeeper, began making personal purchases of kitchenware in order to boost sales.

She went on to say that the isolated Arctic fortress had been blasted (Mach interview). The lease was acquired, and a new Starbucks location in Bellevue was established.

To make matters worse, the old retail structure was planned for destruction. The company’s headquarters would have to be relocated.

They spotted an empty store space half a block south, at 1912 Pike Place, in the center of Pike Place Market. Visitors snap photos of themselves in front of what they think to be the “first” Starbucks, and the business remains open.

While coffee costs rose and retail sales plummeted by 25%, the firm acquired a $95,000 line of credit from Rainier Bank to remain functioning.

Bowker stated in the company’s annual report that partners were “cautiously optimistic,” beginning with “Fellow Capitalists:

The world has continued to expand and evolve since our last official communication with you, to develop and stay unknown, and people have mourned and smiled (annual report, August 12, 1977).

The annual meeting of Bowker’s private firm’s shareholders will be held “aboard the Washington State ferry Hyak, Walla Walla, Yakima, or whatever vessel departs Seattle for Bremerton at 7:15 p.m. on Tuesday, August 30th” (annual report, August 12, 1977).

Starting to Take Off

Starbucks was able to lower its retail prices after coffee bean costs began to plummet. In May, Baldwin traveled to Germany to boost his coffee roasting capacity and consult with possible suppliers in anticipation of rising demand.

How did Starbucks Begin?

When he left town, he delegated duty for fetching coffee to Reynolds, and he never took it back. “Cash flow was terrible, we couldn’t buy much,” Reynolds said (Reynolds interview). When he discovered that the firm had not been paying its vendor bills, he felt guilty.

However, as company grew, Starbucks moved its roasting plant and administrative offices to a larger building in 1978, covering 6,000 square feet at 2010 Airport Way. During that time, Siegl was developing strategies to broaden and diversify the company’s services.

Starbucks launched the Blue Anchor brand for supermarkets in addition to launching Pike Place Teas as a separate company and importing industrial coffee grinders.

He described his coworkers as “understanding, passionate admirers” (Siegl interview). To make place for the new ventures, the business reorganized, with Siegl in command of the roasting factory.

Reynolds was the plant manager, head roaster, and coffee buyer, while Linda Grossman supervised retail marketing and Steve Ramsey oversaw plant operations. Mach is currently the sales vice president. Baldwin opted to focus on financial and strategic strategy.

However, the side businesses became unproductive over time. Baldwin eventually drew the line: it was fine to do all of that as part of Starbucks, but not as part of Pike Place Teas, which had to close at a huge loss.

That meant Siegl had to either become a manager of a fast developing firm or, as he put it, “a start-up person” (Siegl interview).

Starbucks repurchased his 2,541 shares when he departed the company in May 1980. Starbucks’ basic operations were improving throughout this time. During the 1980-1981 fiscal year, sales increased by 49 percent to $4.4 million.

A Pivotal Year

Later, the company experienced a milestone year. In May 1982, Starbucks launched its fifth store at 4555 University Way NE. There was Starbucks’ initial coffee shop, which included a bar selling brewed coffee and was created by Seattle architect George Suyama.

Mr. Jim Reynolds was promoted to the post of vice president. Bowker, who has been elevated to director, is also the company’s advertising guru, and he has transferred his office to the Airport Way building.

He helped start Red Hook Brewery in the Pacific Northwest the same year (after selling his interest in Heckler Bowker).

Along with the installation of the company’s new Ultimate computer, director of finance Ken Dayton and his team relocated across the street to 2015 Airport Way S. Baldwin was an authorized distributor of the Blue Anchor range of grocery items.

Because profit margins in the grocery store market were poor, he decided to simplify his operations and establish a more strategic expansion approach.

In September of that year, a New Yorker named Howard Schultz was appointed to head Starbucks’ marketing. The decision drew a lot of criticism.

Schultz first met Starbucks while working as a salesperson for Hammerplast, selling drip-brew thermoses. After visiting the Pike Place Market shop, viewing the roasting plant, and meeting Bowker and Baldwin, he fell in love with Seattle.

The young company’s quest for innovation and values pleased him. Later, he would write, “I had arrived,” describing the location as “my Mecca.” (Pour …, 28). Schultz wanted in on the activity, so he set about convincing the company’s executives.

Baldwin and Bowker first met Schultz in the New York restaurant Donatello, and then again a few days later at a San Francisco restaurant. Schultz presented his argument to the more casually dressed members of Starbucks’ board of directors in one of his best suits:

How did Starbucks Begin?

We were three: Baldwin, Bowker, and Steve Donovan, a business strategy guru. “I could see I had charmed them with my youthful enthusiasm and energy,” Schultz remarked on the encounter (Pour …, 42).

Starbucks management examined Schultz’s offer and finally opted to hire him. Disappointment and a final rejection mirrored similar worries. Schultz was stunned and enraged when he heard that and refused to accept the response.

“Jerry, you are making a terrible mistake,” Schultz stated over the phone before launching into an impassioned defense of his concept (Pour …, 42). Baldwin informed his business partners about Schultz’s request.

The veto was withdrawn after further deliberation, and we eventually agreed to hire him (Bowker interview).

Schultz distinguished out among his more casual and low-key friends at the Starbucks warehouse offices as a tall, eager, confident man dressed for success. His tyrannical approach heightened the tension in the office for everyone.

During their phone chat, Schultz told Jerry, “You are making a terrible mistake,” before vehemently defending his notion (Pour …, 42). Schultz’s request was sent to Baldwin’s business contacts. As a result, “we discussed further, the veto was lifted, and we recruited him” (Bowker interview).

Potential for Espresso Bars

When Starbucks sent Schultz to an industry gathering in Italy in 1983, he sipped his first latte. He returned to Seattle after being impressed by the future of espresso bars. His future vision includes espresso:

“It was totally obvious to me. We sold great coffee beans at Starbucks, but we didn’t serve it by the cup “(Pour …, 52).

Schultz’s interpretation of events was challenged by Baldwin. “It’s as though Howard body-slammed Gordon and myself… but that’s not the case,” he asserted in 2016, dismissing the narrative as “apocryphal” before explaining its falsity (Baldwin interview).

Starbucks sold coffee by the cup long before it opened a coffee shop in the U District. Nonetheless, Baldwin believed that coffee bean sales should continue to be a key focus. He was aware that Peet’s chic Berkeley coffee shop contributed just around 10% of earnings.

Baldwin also expressed regret for missing up on the great possibility afforded by espresso beverages. And Schultz was determined to prove it.

While Schultz began his war within the business, Baldwin was concerned with other concerns. He was fascinated with the potential of Starbucks acquiring Peet’s, the biggest West Coast speciality coffee business and Starbucks’ founder’s “alma mater.”

Because Baldwin had declined to sell flavored coffee at Starbucks shops, the company was creating a wholesale brand named Caravali to service this market.

Starbucks introduced an espresso bar at Schultz’s request to its sixth shop, which opened in May 1984 on 4th Avenue and Spring Street in downtown Seattle. By opening at 7 a.m., the business stated it was “extremely effective” in attracting local office personnel (annual report, May 20, 1985).

A Starbucks opened in the center of San Francisco in August of that year. The purchase of Peet’s for $3.8 million was completed on October 1 of that year. At the time, Peet’s had four Bay Area stores plus a roasting plant. The San Francisco store was renamed after quickly adopting the Peet’s name.

After a slow start, sales boomed when the location took the now-famous Bay Area trademark as its moniker. Reynolds relocated to Berkeley to better oversee things. Former Eddie Bauer president Jim Casey has joined him on Starbucks’ board of directors.

Starbucks’ sales climbed to $6.5 million at the conclusion of the 1984 fiscal year, up from $5.6 million the previous year. Peet also made $5.5 million in sales in 1984-1985.

Tectonic Shifts

As a result of the rapid rise, the corporation, which had taken on enormous debt to purchase Peet’s, experienced tectonic upheavals. After the restructure, Baldwin remained president, albeit Casey was appointed to COO.

How did Starbucks Begin

As a consequence of a unionization ballot held in March 1985, UFCW Local 1001 was founded. Furthermore, Starbucks sold its Caravali brand through talks.

In January 1986, Schultz left Starbucks to start his own coffee firm, Il Giornali Coffee Company. Starbucks owns at least a 20% stake in the company owing to a $150,000 cash and service investment, as well as Bowker’s half-time involvement for a year. Starbucks would provide Il Giornali with roasted coffee beans.

Bowker was already operating on a shoestring budget. Aside from his work with Starbucks, he co-founded the successful Red Hook Brewery and the real estate development business Apanage, as well as producing Olympic ski movies.

Bowker elected to sell his Starbucks shares in 1987 for a variety of reasons. Baldwin was already stressed by the company’s tight finances, and this aggravated issues.

“The truth is that I didn’t know what to do. Following discussions with many investment banks and venture capital firms, I have decided that it is in my best interest to sell off one of my businesses ” (Baldwin interview).

After careful consideration, Jerry and Jane decided that he would be best served by joining Peet’s, the undisputed leader in the specialty coffee sector and the model for Starbucks.

When Howard Schultz learned that Starbucks was up for sale, he and a group of investors moved quickly to raise the $3.8 million necessary.

Postscript: The Schultz Years

After the acquisition, Schultz wasted little time getting Starbucks ready for growth, and the firm quickly grew nationally and internationally. Thirty shops appeared in 1990, 32 in 1991, and 53 by 1992, when the company went public at $17 per share.

Several books, including two written by Schultz, document Starbucks’ subsequent ups and downs in its quest for worldwide coffee domination.

Schultz rose to prominence as a foresighted business leader through his initiatives to raise workers’ salaries and access to healthcare, and subsequently through his use of Starbucks’ clout to advocate for more equitable trade policies.

Leaving his position as CEO in 2016, he shifted his focus to the company’s high-end Roastery. By the end of November, the company had 25,085 outlets in 75 countries and over 300,000 employees. Ask Schultz, and he’ll tell you, “Enough is never enough” (Pour …, 23).

Reason For Starbucks’ Success

Starbucks’ success can be traced in part to the wide variety of meals and drinks available. In addition to the espresso drinks, the menu includes a selection of non-espresso beverages, sandwiches, pastries, and salads.

Starbucks has become a cultural phenomenon due to its ability to cater to both individuals seeking quiet reflection and bigger groups of friends mingling in close proximity.

The variety of comfortable seating options and friendly staff make it an appealing alternative to working from home or lazing on the couch.

Implications Of Starbucks

Starbucks is politically relevant because it represents globalization. Starbucks’ monopolistic position has been the topic of various websites that operate only to criticize the firm. During WTO negotiations in 1996, many Seattle Starbucks locations were spray-painted with the anarchist letter A.

This outcry led to Starbucks being the largest consumer of Certified Fair Trade coffee beans in the world, which led to the company expanding into selling Certified Fair Trade coffee in over 23 countries.

Customers may have faith that farmers weren’t mistreated since Certified Fair Trade coffee must meet rigorous international standards.

Starbucks is adjusting to a shifting cultural and political environment. Starbucks purchased the retail music startup Hear Music in 1999 to cater exclusively to the demands of its consumers.

Concord Music Group now manages the day-to-day activities of this subsidiary after they were moved there in 2008 as part of a company-wide restructure. Even Starbucks, the colossal coffee chain, is getting into the movies.

How did Starbucks Begin

Due to the company’s involvement in the production of the 2006 film Akeelah and the Bee, the picture was promoted extensively at all of its offices.

Conclusion

Starbucks is a coffeehouse franchise with outlets all over the world. Founded in 1978 to sell coffee beans, the firm was bought out by Howard Schultz in 1987 and has since become synonymous with its emblem, a siren with two tails.

Herman Melville’s fictitious character Starbuck served as the basis for the name of the coffee brand Starbucks.

Starbucks, which was formerly primarily linked with expensive coffee, is now widely known as part of popular culture throughout the world.

A person in Washington, DC can have a cup of coffee while knowing that others in Qatar, Japan, Korea, India, France, and other countries are doing the same thing.

5/5 - (1 vote)
Pat Moriarty
Follow me

Leave a Comment