Why That Worked #11: Starbucks—The Brand that Changed How the World Drinks Coffee

Summary

Summary of "Why That Worked #11: Starbucks—The Brand that Changed How the World Drinks Coffee"

Presented by StoryBrand AI on March 19, 2025

In the eleventh episode of the “Why That Worked” podcast, hosts Donald Miller and Kyle Reed delve into the remarkable success story of Starbucks—a brand that revolutionized coffee consumption worldwide. Through an engaging conversation filled with personal anecdotes and critical analysis, the hosts unpack the strategies, leadership, and cultural shifts that propelled Starbucks to its iconic status.

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1. Overcoming Initial Challenges

Donald Miller opens the discussion by highlighting the seemingly insurmountable obstacles Howard Schultz faced when attempting to scale Starbucks in America. He elaborates on the five primary challenges:

• Lack of Leisure Time: [03:40] Miller states, “Americans don't have leisure time... so it doesn't translate.”

• Non-Walkable Cities: [05:04] The emphasis on car-centric lifestyles hindered the traditional European coffee shop model.

• Competition with Churches for Community: [05:04] In Europe, coffee shops often serve as community hubs, a role churches fulfilled in the U.S.

• Unfamiliarity with Coffee Culture: [05:04] At the time, coffee was seen merely as a beverage, not an experience.

• Price Perception: [05:28] Starbucks priced their coffee significantly higher than the standard, posing a financial barrier.

Despite these hurdles, Schultz’s vision transformed these challenges into opportunities, setting the foundation for Starbucks' expansive growth.

2. Visionary Leadership of Howard Schultz

A central theme of the episode is Howard Schultz’s role as the visionary leader who steered Starbucks through its early struggles and subsequent success. Donald Miller emphasizes, “the number one reason it worked is one dude”—Howard Schultz.

Miller and Reed discuss Schultz’s decision to embrace the “third place” concept—creating a space between home and work where customers can relax and socialize. This innovative idea addressed the lack of communal spaces in American cities, fostering a sense of community akin to European coffee shops.

3. Standardization and Operational Excellence

To ensure consistency across its 35,000 global locations, Starbucks implemented standardized processes for coffee preparation and barista training. [27:06] Miller likens this strategy to that of McDonald's and Burger King, ensuring a uniform customer experience regardless of location. This meticulous attention to detail guaranteed that each cup of Starbucks coffee met the brand’s high standards, reinforcing customer trust and loyalty.

4. Employee Experience and Benefits

Starbucks pioneered progressive employee benefits, referring to their staff as “partners.” This approach included offering healthcare, education benefits, and tuition assistance. [19:31] Reed points out, “They call them partners. And then the last thing was his strategic mind in looking at places that weren't working well and just moving on, shutting them down.”

By prioritizing employee satisfaction, Starbucks fostered a motivated and dedicated workforce, which translated into superior customer service and operational efficiency.

5. Technological Adaptation and Innovation

Embracing technology early on, Starbucks launched its mobile ordering app in 2009—“which is so ahead of their game”—allowing customers to order and pay ahead, enhancing convenience. Additionally, their rewards program incentivized repeat business, encouraging customer loyalty. These innovations streamlined operations and catered to the evolving consumer preferences for efficiency and personalization.

6. Cultural Impact and Changing Coffee Culture

Starbucks didn't just sell coffee; it sold an experience. By creating inviting spaces, offering high-quality beverages, and fostering a community environment, Starbucks fundamentally changed how Americans perceive and consume coffee. [30:45] Reed remarks, “As much as I can maybe rag a little bit on the coffee, you cannot deny the popularity and the vision and the great culture they've created.”

The brand's ability to monetize community spaces effectively turned coffee consumption into a lifestyle, making Starbucks a staple in daily routines across the globe.

7. Comparisons to Other Companies and the Role of Visionary Leadership

The hosts draw parallels between Howard Schultz and other iconic leaders like Steve Jobs. [21:20] Miller reflects, “Howard Schultz is the number one reason. It's the exact personality that built Starbucks.”

They argue that visionary leaders are crucial for driving innovation and maintaining the momentum of a company's growth. Without such leaders, even successful companies risk stagnation, as illustrated by Apple’s evolution under Tim Cook compared to Steve Jobs.

8. Personal Anecdotes and Reflections

Throughout the episode, Miller and Reed share personal stories that underscore Starbucks' impact. From writing books in local coffee shops to unforgettable interactions at Starbucks locations, these anecdotes highlight the brand's pervasive presence in both personal and professional lives. [32:36] Reed humorously captures the essence: “Don, give me the 32nd version. Why does Starbucks work?"

9. Conclusion: The Power of One Visionary

Donald Miller concludes that Howard Schultz's unique combination of visionary leadership, strategic innovation, and unwavering commitment to quality and community were the key drivers behind Starbucks' success. [32:36] “Number one reason it worked is one dude,” reinforcing the pivotal role Schultz played in shaping the brand’s destiny.

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Key Takeaways:

• Visionary Leadership: Howard Schultz’s clear vision and determination were instrumental in overcoming cultural and operational challenges.

• Standardization and Consistency: Implementing uniform processes ensured a reliable customer experience globally.

• Employee-Centric Approach: Treating employees as partners with substantial benefits fostered loyalty and high-quality service.

• Technological Innovation: Early adoption of mobile apps and rewards programs enhanced customer convenience and loyalty.

• Cultural Transformation: Starbucks redefined coffee consumption by creating community-centric spaces and elevating the coffee experience.

• Strategic Adaptation: Continual adaptation to market trends and customer preferences kept Starbucks relevant and thriving.

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Notable Quotes:

• Donald Miller: “The number one reason it worked is one dude—Howard Schultz.” (32:36)

• Kyle Reed: “We sell two addictions and one habit.” (31:29)

• Donald Miller: “They call them partners.” (19:31)

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This episode offers a comprehensive analysis of Starbucks' ascent to global dominance, attributing its success to strategic vision, operational excellence, and cultural adaptation. By examining Starbucks through various lenses—leadership, employee relations, technology, and community—the hosts provide valuable insights applicable to marketers and business leaders aiming to replicate similar success in their endeavors.

Transcript

[Bobby Richards]

Hey, hero makers, it's podcast producer Bobby Richards. I'm jumping in to share with you a new episode of our brand new podcast, why that worked, presented by StoryBrand AI with Donald Miller back in the host seat. Now, since we launched Marketing Made simple, we've been so grateful to have everybody tune in each week to learn how to make your marketing easy and make it work. Which is exactly why we're sharing new episodes of the why that Worked podcast here. In the old Marketing Made simple feedback, but only for a limited time. Each episode of the new show is gonna deliver actionable insights and key takeaways that are all designed so you can implement them to help make whatever you're working on work. Now, here's the deal. Like I said, this is only for a limited time. If you wanna catch new episodes early, you can watch or listen every Monday. To watch the show, just go subscribe to the StoryBrand YouTube channel. And to listen, go follow why that worked, presented by StoryBrand AI wherever you enjoy your podcasts. All right, that's it for me. So grateful you're here. And enjoy this week's episode of why that worked, presented by StoryBrand AI. You're listening to the why that Work podcast presented by StoryBrand AI. If you've ever wondered why certain brands, trends, or cultural phenomena find success while others don't, you're in the right place. Every week we unpack why something worked, then give you actionable insights that you can use in your own life. Now let's dive in with your hosts, Donald Miller and Kyle Reed.

[Kyle Reed]

At what point in your day, Don, do you have to stop drinking coffee?

[Donald Miller]

It's a great question. That's an.

[Kyle Reed]

Is there a moment?

[Donald Miller]

That's an old guy question.

[Kyle Reed]

It is?

[Donald Miller]

Yeah.

[Kyle Reed]

Well, I didn't want to imply that I was going to let you infer that and figure that out, because I can't imply that you're old. But what day do you stop?

[Donald Miller]

Not put. Not much past 10:00am yeah, if I. If I'm after 10:00am, it's going to do two things. It's going to affect my sleep and it's gonna make me anxious. Like, I'll have this feeling that I didn't pay my taxes.

[Kyle Reed]

Oh, that's a bad feeling.

[Donald Miller]

And my mind will try to find why I'm feeling that. It's not. There's no reason for it. It's just a feeling. And the feeling tries to find something.

[Kyle Reed]

It's the coffee.

[Donald Miller]

Yeah, it's the coffee now, however, I've switched coffee and I don't have that anymore. I switched to a freeze dried packet of coffee. What's your. Well, let's go with your coffee ritual. What's your coffee? Let me share mine. What I do, I get this organic freeze dried coffee that I bought off Amazon that a friend of mine, David, who runs a company making, what are they called, supplements. He's brilliant. And Mara Labs, by the way, he makes broccoli and all this kind of stuff. There you go, Dave, there's your plug. And he told me about this. And so I bought it off Amazon. I literally. They're single packets. I cut three of them open, put them in the bottom of a cup, pour oat milk in it.

[Kyle Reed]

Okay.

[Donald Miller]

Little bit of Splenda, two scoops of ice, stir it up.

[Kyle Reed]

So you cold? No, hot.

[Donald Miller]

I don't do hot coffee.

[Kyle Reed]

Okay.

[Donald Miller]

And so at Stay golden coffee shop across the street, my order is iced oat milk Xylitol.

[Kyle Reed]

So you so. And your cough's 10. Okay, now next question. When did you, how old were you when you started to drink coffee? And do you remember?

[Donald Miller]

Gosh, I don't remember. I mean, I would have been probably like 17, 18, right in there when I was old enough to like go down to a coffee shop and sit there.

[Kyle Reed]

Yeah.

[Donald Miller]

You know, like post driver's license.

[Kyle Reed]

How many books have you written in a coffee shop?

[Donald Miller]

Man, that is a great question.

[Kyle Reed]

All of them.

[Donald Miller]

All of them, yeah. What people don't understand about Starbucks. Let's just get to Starbucks, because this episode is about Starbucks. But I'm going to come back to your question about writing in coffee shops.

[Kyle Reed]

Yeah.

[Donald Miller]

If you said to me in 1997 that you were going to do a franchise of coffee shops and take it all across America, I would give you five reasons that ain't gonna work. Of course I'm wrong, but I would give you five reasons. One, Americans don't have leisure time. Your European coffee shop, Howard Schultz went over to Italy in France and wanted to bring the European coffee shop back here. That was Starbucks. Now, Starbucks already existed. He was our marketing guy, but he left and came back and said, I'm going to franchise this and take it all over. America won't work because there's so many miscalculations that you have. One is Americans don't have leisure time. They're not sitting around anywhere other than deadbeats in a pub. And not even a pub. A bar. Like a dark bar with a dartboard. So that doesn't exist. So people don't have time to sit around. Cities are not walkable in the United States. So everybody's driving in a car. So it doesn't work, it doesn't translate. Church doesn't exist as strongly in Europe. So the community itch is not being scratched in Europe. Therefore people go to coffee shops. It is being scratched here at church on every Sunday morning. So they're stealing your market. Those pesky churches and specialty coffees. Coffee was just coffee. It wasn't a latte.

[Kyle Reed]

The idea of going to a coffee shop when Starbucks came out was so foreign because people bought their.

[Donald Miller]

Well, maybe a college town. Right?

[Kyle Reed]

Yeah.

[Donald Miller]

Where people could sit around. But think about it. In a college town, walkable, leisure time. Need to study, need caffeine. But even then they weren't serving lattes.

[Kyle Reed]

Yeah, yeah.

[Donald Miller]

And real quick, the fifth would be price.

[Kyle Reed]

Oh yeah.

[Donald Miller]

$5 for a cup of coffee. Cup of coffee is 50 cents.

[Kyle Reed]

Crazy, right?

[Donald Miller]

There's no way I would sit Howard Schultz down and say, no way anybody's investing in this. It is not going to work. Mr. Schultz, you're crazy.

[Kyle Reed]

Which is something I want to get into later. Is this idea of this visionary. Yeah, but so for me, I'm a coffee snob. Self admitted.

[Donald Miller]

Yes, you are. You have changed our culture here at Story.

[Kyle Reed]

I'm a coffee snob. I will also get this out of the way because it will come out and you can read between lines. So I'm just going to address it. I hate Starbucks. I refuse. I love coffee.

[Donald Miller]

Hate no redemptive value at all.

[Kyle Reed]

Yeah, yeah, you got me there. I strongly dislike Starbucks to the point I drink multiple cups of coffee today, every day. I could not make it throughout the day with coffee.

[Donald Miller]

What's your latest, what's the latest you can drink to ask your.

[Kyle Reed]

The latest. Like 11:30. Okay. A.m. yeah.

[Donald Miller]

So you're getting older.

[Kyle Reed]

I envy those people who like 9pm at night. We have friends that come over to our house and again, coffee snob. I roast my own coffee. I do the whole thing.

[Donald Miller]

You roast your own beans?

[Kyle Reed]

I roast my own beans.

[Donald Miller]

All right, we got to. I'm going to put a pin on that cuz I want to come back.

[Kyle Reed]

So they, when they come over they're like, we make us some coffee. And I'm like, it's 8, 8 o'clock. And they're like, yeah, but you know, I'm like looking. I'm like, you guys are crazy. I'll make you some. I'm not drinking that. So 11:30am is the latest. I can probably go without getting jittery and kind of you know, wondering if. If my taxes are.

[Donald Miller]

I'm gonna. You're gonna try this freeze dried stuff. I don't know the name of it. I'm not plugging the coffee. I can't remember what it's called, but I'll try it. What David told me, the guy at Marlapse, what he told me was he doesn't get jittery, he. He doesn't get anxious, and he doesn't get headaches when he uses this coffee. And I have found that to be true.

[Kyle Reed]

I'll try it. But the reason I strongly dislike Starbucks is I just don't think it's good. I don't like the taste of.

[Donald Miller]

Did it used to be.

[Kyle Reed]

I don't know.

[Donald Miller]

So before it was sort of industrialized.

[Kyle Reed]

Of when I started drinking coffee. I was a freshman in college and everybody around me was drinking coffee. I wanted to try it. And Starbucks helped me start with their frappuccinos. They had them in these bottles.

[Donald Miller]

That's not coffee, that's a milkshake. But I remember when I weighed 400 pounds, I was sucking down frappuccinos.

[Kyle Reed]

Man, they're good.

[Donald Miller]

Oh, they are.

[Kyle Reed]

There's a little fat in the bottles.

[Donald Miller]

You know what's good to finish off a Frappuccino with a blizzard from Dairy Queen.

[Kyle Reed]

I mean. Yeah.

[Donald Miller]

When you thought I was cold with sugar. Try this.

[Kyle Reed]

Let's go do that now. That sounds awesome.

[Donald Miller]

Well, you got to dip your fries in it.

[Kyle Reed]

That's true. Really good. Next level. Just keep going.

[Donald Miller]

We're doing an episode on £400. Why does £400 work? It doesn't.

[Kyle Reed]

It doesn't. It doesn't. Not very long. But, you know, one of the. One of the times in my life the most pain I've ever been in was when I just started drinking coffee and I went to Starbucks and I got a Venti, you know, Americana or whatever.

[Donald Miller]

Do you say Venti when you order?

[Kyle Reed]

No. Heck no.

[Donald Miller]

I refuse.

[Kyle Reed]

Yeah. Again, another reason. Yeah. So I walked in, I got the coffee again, maybe the third cup of coffee in my life, and just immediately went to drink it. The pain. Now, how old were you? 19. The pain of the hotness of drinking that I thought I was.

[Donald Miller]

You mean like you burned your tongue?

[Kyle Reed]

Oh, my gosh. Yeah, because it was so hot. I had no idea. So that was my introduction to Starbucks. Back to your question. Do I think that Starbucks has always tasted terrible? No. I think that they realize to mass.

[Donald Miller]

Produce they have to have.

[Kyle Reed]

You have to have the same taste.

[Donald Miller]

Yeah.

[Kyle Reed]

Consistency across consistency. They Also follow to Howard Schultz going to Milan and getting this experience. It's a very Italian style of coffee. So it's that deeper, kind of more burnt. So when you're roasting coffee, there's this expression called first crack. It sounds a lot like popcorn when the bean is really. Yeah. And so it sounds like popcorn popping. So right on the other side of first crack is kind of the. That's where you get your light roast. If you take it to second crack, there's a. It's about two or three minutes later where that coffee is still being roasted.

[Donald Miller]

Yeah.

[Kyle Reed]

So being that's that dark burnt Italian, that's so.

[Donald Miller]

Doesn't take much longer to get there.

[Kyle Reed]

No. And it. And I, I can smell it like.

[Donald Miller]

When I. Yeah, you can smell. Burn coffee's not good.

[Kyle Reed]

Oh, I can't.

[Donald Miller]

I have a buddy lives in Portland, Oregon. He, he started, he got a popcorn roaster and he started roasting coffee in his basement. Now he has like six or eight coffee shops in Portland, Oregon. He's doing extremely well.

[Kyle Reed]

It's actually super easy to roast coffee. You just need heat and it needs to be moving. You're just consistently moving it over heat until it cracks.

[Donald Miller]

That's all you do, actually put a timer on it.

[Kyle Reed]

Yeah. Yep. It's usually if you're doing a pound, it's like 16 to 17 minutes before first crack.

[Donald Miller]

Is it better for you because it doesn't have like pesticides or what's the.

[Kyle Reed]

Maybe because, I mean, you're sourcing it from the farmers, you know, in different regions. Yeah, I like it. I originally did it because my wife and I were spending $20 for a pound of coffee and going through it in two days. So it was my way to go. Let's make this a lot cheaper. It used to be $5 a pound to get it like if you bought the green beans of it. And so now coffee's gone up, but used to be incredibly cheaper.

[Donald Miller]

75% saving on your coffee. Plus it tastes a lot better.

[Kyle Reed]

Yeah. And I can walk around and I.

[Donald Miller]

Remember, I have fond memories of Starbucks. I have fond feelings about Starbucks. It has become a fast food chain. Let's just be honest.

[Kyle Reed]

Yes.

[Donald Miller]

But living in Portland, Oregon, before there was ever a Starbucks there. So Portland was the first place it, it shipped to outside of Seattle.

[Kyle Reed]

Okay.

[Donald Miller]

I think, you know, maybe Boise, maybe Vancouver, whatever. But you know, so I remember Starbucks coming in and Portland is a European style city. People want to knock Portland and it deserves to be knocked because of how crazy they got in the last 10 years in terms of like, just basically, it's just like a controlling, you know, environment of wokeness and liberalness, which I'm no fan of far left or far right, but far left took over that city. However, when it was just a center left city, it was perfect. It was so amazing. Walkability, the ability to get on trains, the ability. I wrote. I don't know. I read and wrote I don't know how many books in the coffee shop at Powell's Bookstore at the time, the largest bookstore in the world pre Amazon. Amazon was also coming up out of Seattle, and these coffee shops started popping up. Starbucks, and I have the. And they were awesome. The coffee was good. The environment was amazing. It was novel, it was new. I lived on Northwest 23rd for several years in somebody's attic in Portland, Oregon, and would go down to all the local Italian coffee shops, and I would get writing done there. I mean, blue light jazz wouldn't exist if it weren't for the coffee shop culture in Portland, Oregon. And it was. It was phenomenal.

[Kyle Reed]

I'm with you too. I, you know, I, I. When I was freelancing, I worked a ton in Starbucks early on, actually, not to brag, but Nicole Kidman and I locked eyes in a Starbucks and she smiled at me.

[Donald Miller]

Wow.

[Kyle Reed]

That's a memory that I don't share often, but.

[Donald Miller]

What's his name? Stoler, from you.

[Kyle Reed]

Yeah, that was. We don't talk about that.

[Donald Miller]

All because he can play guitar.

[Kyle Reed]

Yeah, I mean, I get it, but I have fond memories of Starbucks. I think, you know, the, the moment now in the greatest coffee shop in the entire world. Crema here in Nashville has ruined me and has now made me.

[Donald Miller]

Man, that is a good tasting cup of coffee.

[Kyle Reed]

Yeah, that's my. It's the best.

[Donald Miller]

Stay golden is where I wear good citizen coffee. Yeah, Stay Golden. That, that. Yeah, that's my go to. I'm on their coffee plan.

[Kyle Reed]

Yeah. Which is awesome.

[Donald Miller]

Bucks a month.

[Kyle Reed]

Okay, so why did it work?

[Donald Miller]

Let's analyze why this worked. And so let me. I know you're gonna go with Howard Schultz, and I've got some stories about him too. But I think the reason that Howard Schultz specifically was able to overcome the five challenges. Lack of leisure time in America, lack of walkable cities, church as a competition for community specialty coffees, being unfamiliar and fricking price. Right. Those five things would be impossible to overcome. And one man did it. And you have to understand, like, European culture is not American culture. It's very, very different. Betsy and I and Emmeline spent a month in London last summer. And every day at about 4 o'clock there would be 150 people standing in the alley beneath our apartment in Mayfair. And they were all there drinking a beer in the streets from a pub. And then you'd go about, I mean, 50 yards and 150 people standing around this other pub, you know, I would equate the pub and the coffee shop is similar, that they get together and meet. They get together. It is amazing.

[Kyle Reed]

When are we opening the Story Brand UK office? Because I'll go do that because that's what's happening.

[Donald Miller]

Well, but think about it. It's a walking city, right? So you're walking by your pub where you're meeting with your friends in a routine. And tradition does not exist in the United States. He brought that here. He brought. It wasn't coffee. He brought what he called, Howard Schultz called the third place. Not home, not work, somewhere else. And that didn't exist. You didn't sit around at the diner for more time than it took you to eat, Right? And most people didn't sit around in bars either.

[Kyle Reed]

Yeah, well, it's like, when did you get kids?

[Donald Miller]

You can't go to a bar.

[Kyle Reed]

And when did the concept of, like, now it's commonplace. But when it was like, hey, let's go grab coffee, right? That's such a new phenomenon. Even in the last, let's call it 20 years.

[Donald Miller]

He scratched an itch that he saw that nobody else really saw.

[Bobby Richards]

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[Kyle Reed]

It's fascinating to me as I was looking at this about Starbucks, like why it worked. You know, it starts in the night in the 70s with three guys, Starbucks, actually the actual brand, two teachers and a writer. And Hart Schultz is an operations Kind of marketing guy.

[Donald Miller]

Two teachers.

[Kyle Reed]

Two teachers and a writer. Interesting enough.

[Donald Miller]

And they just started a coffee shop together.

[Kyle Reed]

Yes. Have you heard of Pete's Coffee? Yeah. So they were inspired. They had a mentor and his last name was Pete. And he was the kind of guy who inspired them. When Howard Schultz bought Starbucks from these three guys, they went and started Pete's Coffee shortly after.

[Donald Miller]

I didn't know.

[Kyle Reed]

Based off of his name.

[Donald Miller]

Yeah.

[Kyle Reed]

So Howard Schultz, though, to your point, and buy. Comes in, works for them, buys Starbucks.

[Donald Miller]

So he was their marketing person first though, right?

[Kyle Reed]

Yes. But they had expanded, I think into the 80s and 90s to like seven locations in Seattle. Not massive. It's still pretty good for Seattle. Catch up.

[Donald Miller]

European, South Seas, very walkable, Lots of districts and neighborhoods. If you've never lived in Portland, Seattle or Vancouver, bc, One thing to understand is perhaps New York is also similar. But there were at least 20 districts in Portland and there still are. But when I lived there, there were 20 districts or so, maybe more than that. Every one of them had a coffee shop, a pub, and a single screen or very few screen movie theater.

[Kyle Reed]

Okay.

[Donald Miller]

So you would actually walk down to a mom and pop movie theater. Owned, that's not a franchise. And you'd watch a movie. You go next door to the pub, independently owned restaurants, all of it walkable in your neighborhood. It was heaven.

[Kyle Reed]

Yeah, I can see why.

[Donald Miller]

Absolutely heaven.

[Kyle Reed]

Absolutely loved living there.

[Donald Miller]

I loved it. The food was amazing. Everything was amazing. Bringing that to Houston, Texas, you know, in a strip mall. I don't know how that worked, but he did it.

[Kyle Reed]

Which again, we get into this a little. I think we'll get into this a little bit. But the geniusness there, I think that's the thing. I'm straight.

[Donald Miller]

The visionary leadership.

[Kyle Reed]

Well, but even. Okay, you know, so he comes in, he comes and starts working for them in. In 1982. 1983 was when he goes over to Italy, sees their culture, he brings that back. 1987, he purchases Starbucks. Did you.

[Donald Miller]

He already understood coffee and making coffee and all that. Then he goes to.

[Kyle Reed]

Well, and he. He goes away. He actually launches his own coffee house chain, which in my research was successful in that area that competed with Starbucks. Yes. But he comes back to him. Did you see how much he bought Starbucks?

[Donald Miller]

No.

[Kyle Reed]

In 1987, $3.8 million, which at the time. That's a lot of money.

[Donald Miller]

$8 million now.

[Kyle Reed]

That's a lot of money. But then he very quickly expanded and he starts taking it all across America with what you talked about earlier. This idea of the third place concept. And then he goes international. And what's crazy, as I was reading this today, they now operate across the entire world. 35,000 locations. 35,000 locations.

[Donald Miller]

Think about opening, like, multiple locations a day somewhere in the world is what that. That pace is. And also shutting some down. Right. That don't work.

[Kyle Reed]

Yeah, well, and that was one. I think that was one of the reasons why it worked. He. He realized that we need to give a great experience to our customers. The other principle I was reading about him was he realized he needed to have a great experience for his employees. They don't even call them employees, by the way.

[Donald Miller]

Partners.

[Kyle Reed]

They call them partners. And then the last thing was his strategic mind in looking at places that weren't working well and just moving on, shutting them down. It's interesting, too.

[Donald Miller]

He probably followed numbers. He just looked at the stats. This isn't working. This isn't working. I'm not gonna get emotionally tied to anything.

[Kyle Reed]

Well, I think it's true, though, because he stepped away in 2000 and came back in 2008 because they were struggling so bad.

[Donald Miller]

Yeah. And he turned them around immediately.

[Kyle Reed]

Turned him around immediately.

[Donald Miller]

Well, I think part of it, when you ask, why does Starbucks work? Part of it is he industrialized the whole thing. He created processes and systems, standardized processes for coffee preparation. There were training programs. The baristas were trained. It ensured consistency. It ensured speed across all locations. Everything was the same. He did what Burger King did. He did what McDonald's did.

[Kyle Reed]

Even crazier, in 2009, they launched the Starbucks app, which is. That's so ahead of their game.

[Donald Miller]

Yeah.

[Kyle Reed]

2009 had that.

[Donald Miller]

So innovative to the innovative, streamlined, visionary. Employee development is a big part of their success plan. Right. They're paying for healthcare and education and all that kind of stuff. Really effective marketing and branding. Now, the number one reason I know you and I both are going to come to this, so those would be, you know, you talk about streamlined production processes, employee development, marketing and branding, visionary leadership, but all of it. When you look at something that has succeeded so quickly, like Starbucks, like Apple, like so many other brands, there's a person. There's a person. And the reason that that succeeded is what the person did. But don't discount the person. And I think Howard Schultz is the number one reason. It's not actually money this time. It's Howard Schultz. Absolutely. Bulldog, obsessive personality.

[Kyle Reed]

So let's talk about that a little more, because I'm wondering. This might be a generalization, but. But look at Big companies or look at companies in general, can they thrive? Yes, they can. They can thrive without a visionary leader. But can they?

[Donald Miller]

But once it's created, yeah.

[Kyle Reed]

Kick do you need a visionary leader for a company to thrive?

[Donald Miller]

You need a visionary leader for a company to not decline. Let's look at what you have. Steve Jobs, absolute visionary leader. Absolute visionary leader. Now Tim Cook takes over. Not a visionary. Tim is an operator. He's an extremely good operator. You say, well, the company hasn't declined. It's actually gotten bigger under Tim Cook. No radical new products that have taken off. You've got whatever the eyeglass thing is, whatever that is, hasn't taken off. We haven't seen anything new from Apple. Instead what you basically see are squeezing more money out of consumers on what they already have. So I would say I don't know that I'd be bullish on Apple stock right now without new products and innovative products because they don't have that. Visionary Jony Ives has now left. I would say a non visionary can come in and manage what is, but I don't know that they can innovate and change. And I'm not saying Apple hasn't innovated and changed at all. They have, but not at the pace that Steve Jobs was doing. It was his obsessive compulsive personality. In fact, Howard Schultz and Steve Jobs very similarly wired, both of them thin skinned. They're egomaniacs. Like crazy crazy egomaniacs who associated their identity with their brand. And so I have a friend who served Starbucks from early on, from the very beginning at their restaurant in Seattle and made a decision 20 years ago or whatever when it was, you know, when Starbucks had become basically a fast food franchise, which is not how it started. They said we, we don't feel like we can serve this coffee anymore. We're going to go with the different boutique coffee brand. But these guys are really solid guys. So they went down to Starbucks headquarters, wrote a letter to Howard Schultz explaining why this restaurant was no longer going to serve Starbucks. Grateful appreciation for him. He of course wasn't able to meet with them. Hands the note to the secretary, would you please deliver this to Howard Schultz. They take the elevator down, they're walking across the lobby and running across the lobby is Howard Schultz and he's holding the letter in his hand and he just cusses them out, just chews them out. How dare you. Blah, blah, blah, blah. You know this whole thing, it was an offense, right? Yeah, yeah. Well what that tells you, of course that's A bit unhinged. And a lot of people said the reason he would never be able to be elected president because he wanted to be president. Yeah, I remember that was thin skinned. He just, he like, he takes everything personally and he can't, you know. Well, that's a downside. It's a liability of a personality. It's also the exact personality that built Starbucks. It's the exact personality that became a billionaire. It's the exact personality that's created hundreds of thousands of jobs all over the world. Not only that, a third place for us to meet. And I don't care if you have a local boutique coffee shop that you like more than Starbucks. That coffee shop wouldn't exist without Starbucks.

[Kyle Reed]

Yes, agreed.

[Donald Miller]

Right. They taught that, that those people how to do that and that it can even be done.

[Kyle Reed]

And that's the thing inside of this. For me it's like I might not like the taste, but boy, just what.

[Donald Miller]

You sure have a respect for it.

[Kyle Reed]

Yeah. With him, with the experience, with as much as I love coffee, like I do have to thank Starbucks for making me love coffee.

[Donald Miller]

Yeah.

[Kyle Reed]

What I find so fascinating too with Howard Schultz is when he came back in 2008, I'm obsessed with these visionary leaders who come back and go, here's the three things we're going to do.

[Donald Miller]

Yeah, he simplified and then he lives it out. What were the three things for him? Did you find that?

[Kyle Reed]

So for him he was consumer experience. He always, they always focused on consumer.

[Donald Miller]

Isn't that amazing? You look at successful company after successful company and somebody stopped thinking about themselves and started thinking about the freaking coffee.

[Kyle Reed]

What's that quote of like we're going to be obsessed with people drinking coffee? Not coffee of people. I'm butchering that quote. But there's something along the lines where he says that he's like, we're going to focus on the people who drink coffee, not the coffee to sell to people. And there's something.

[Donald Miller]

He kept the whole experience.

[Kyle Reed]

Yeah, he kept that at the front. So I think that was the first thing. The other one was working conditions. So they, they were so revolutionary. And I remember I have friends who started out working there because health insurance. Yeah, they, they were great with health insurance. They paid your college tuition if you work for them. It was a great place to work.

[Donald Miller]

And yeah, for a company that has that many employees, they definitely have their flare ups every once in a while with employees not being satisfied. But it could be so much worse.

[Kyle Reed]

Absolutely. Well, how many companies out there that say like we care about Our employees. And then they're doing nothing to demonstrate that they truly live that out. And that's.

[Donald Miller]

That's one of the reasons a cup of coffee costs $7, because you're buying a cup of coffee. And that guy's tuition, which, you know.

[Kyle Reed]

That I don't mind that too much to some degree.

[Donald Miller]

I think it's a good thing.

[Kyle Reed]

And then the other side of it is just what you.

[Donald Miller]

I'd rather have that handled in the private market than the government does.

[Kyle Reed]

Yeah, true, Agree.

[Donald Miller]

I mean, just personally, because the government doesn't do as good of a job.

[Kyle Reed]

But the. The logistical side, they even like little fascinating things. They locked in their wholesale pricing of coffee beans. And so as the. Right.

[Donald Miller]

Right now, similar to Southwest Airlines with fuel.

[Kyle Reed]

Yes. Coffee beans are very expensive right now. They've gone through the roof in coffee. They locked in their wholesale price a long time ago. So no matter the rise of how much coffee cost, they have fixed costs. They have fixed cost. So just the logistical side of what he did just coming back in 2008 just blew.

[Donald Miller]

Well, you know what else he did in 2008 when he came back to the company to turn the company around? He shut these stores down for a full day.

[Kyle Reed]

Yes.

[Donald Miller]

And he trained all the baristas on how to actually make a good cup of coffee, because they weren't making good coffee. That is an obsessive, compulsive. I don't care how much this is going to cost us. It's not about milking the consumer. It's about excellence and distribution of excellence.

[Kyle Reed]

Well, and again, it's like, you know, this is not an episode to pick on Tim Cook because he's also done an amazing job.

[Donald Miller]

Tim Cook has done an amazing job. He's incredibly good.

[Kyle Reed]

But it shows you the difference, honestly.

[Donald Miller]

Tim Cook would be a great president.

[Kyle Reed]

Yeah.

[Donald Miller]

Because when you're president of the United States, you're not reinventing a system, although we do need some turnover of tables here. But he would be very good at managing what already exists and squeezing everything he can out of it.

[Kyle Reed]

And that's what actually sets him up as being great at what he does. Because I think Starbucks in 2000, they went that direction. They tried to systemize it, and they lost that mission of what they really started out. So Howard Schultz comes back and immediately gets them back on track and moves them to that direction. Interesting enough, Disney kind of went through this a little bit when Bob Iger left. They really struggled and then brought him back to kind of right the ship because they kind of got away from what made them successful. That story's still out there. We still have yet to see if Bob Iger. It's kind of fresher to move it around. But it's interesting when these guys come back to the thing they started and then immediately bring in new life to that business.

[Donald Miller]

Jason Jobs goes to Pixar and comes back. Comes back, but he comes back with what you pointed out. Clarity, clarity and simplicity.

[Kyle Reed]

Yeah, that's right.

[Donald Miller]

Here's the three things we need to do and this is what we're going to focus on. And remember, Steve Jobs, like got rid of most of the products Apple sold. He said, we're gonna sell. We're gonna build the biggest company in the world on products you can put on this little table. That's what we're gonna do. Fan. I mean, just amazing. Amazing.

[Kyle Reed]

The other interesting thing too, I think, is their adaption of technology. So they went through the, you know, kind of the recession of 2008 and there was a lot of consumer worry about spending. So they adapted through that. I think the other thing they adapted through was with technology as far as they had a Starbucks in every key strategic location across America. They realized, much like Chick Fil a does, how do we make this as convenient as possible, that even though you pull up and you see eight cars ahead of you, you know you're going to be out of there pretty quick. Less than 10 minutes.

[Donald Miller]

Yeah.

[Kyle Reed]

The mobile ordering side, that's a whole other world to me that people just can walk in, grab it really quick, get out of there. Convenience movement.

[Donald Miller]

They moved on that quick.

[Kyle Reed]

Yes.

[Donald Miller]

Also the rewards program. My wife loves the Starbucks app and she's like, well, I got to buy one to keep my points up. I'm like, what do you get with these points? She didn't know.

[Kyle Reed]

Yeah.

[Donald Miller]

I'm like, hun. I don't think she goes, I'm not gonna lose my status.

[Bobby Richards]

Well, I mean, what do you get with the status?

[Donald Miller]

Nothing.

[Kyle Reed]

Nothing.

[Donald Miller]

Now don't sue a Starbucks. I'm sure there's something. We just don't know what it is.

[Kyle Reed]

Yes. Yeah.

[Donald Miller]

Have you ever had the experience, speaking of, like, ease of ease of use and consumer availability? I remember standing in a Starbucks in downtown San Francisco and there were two other Starbucks across the street.

[Kyle Reed]

Yeah.

[Donald Miller]

Literally the closest two businesses to Starbucks were Starbucks.

[Kyle Reed]

Starbucks. Yes.

[Donald Miller]

That's an. I'm sure they did it just to flex.

[Kyle Reed]

I think there's that. There's a Simpson episode where he's part of the. Everything is Starbucks. That's What? Making me think. Yeah, yeah. You know, I think that as much as I can maybe rag a little bit on the coffee, like, you cannot deny the popularity and the, the vision and the great culture they've created. As far as when you walk in, you can work there, you can grab coffee, grab food, you can sit, you can hang with a friend, or you can leave. It has changed America changed.

[Donald Miller]

Yeah, it changed America in some ways for the better. Because now we do have European style coffee shops and college town style coffee shops everywhere. And I've written every book I've ever written. I've written majority in a coffee shop. I want to hit the one last reason that Starbucks is successful. They sell two addictions and one habit. They sell two addictions and one habit. Caffeine is an addictive substance and sugar is an addictive substance. Arguably, they're selling more sugar than caffeine. Not just the pastries, but the drinks themselves are loaded in addictive substances. And then community is healthy and habit forming, and they sell all three.

[Kyle Reed]

Yeah, it's interesting. They figure out a way to monetize community.

[Donald Miller]

That's right, Interesting. So when you talk about the coffee being cracking, pun intended, there's cracking that coffee.

[Kyle Reed]

I see what you did there.

[Donald Miller]

I mean, they're using twice the butter and twice the sugar in those pictures. I mean. But I still have the fondest remember memories. I remember Kurt Heischmidt was a buddy of mine in Portland, Oregon. And every day, I would say 300 days out of 365 days, every day for two years, we got together at Starbucks and we played chess, and we'd play chess for hours. And it was just the best. It was a European style of living, and it was absolutely fantastic. It was so healthy, so good. Sitting there with a buddy, catching up. All right, your move. Oh, you're going to do that? All right, well, here you go. Take this. And we were also just evenly matched. He probably won 60%, I won 40%, which for me is pretty good. Starbucks, man.

[Kyle Reed]

Don, give me the 32nd version. Why does Starbucks work?

[Donald Miller]

Howard Schultz. I mean, everything is under that. Because a lot of people are selling addictive substances. A lot of people are selling sugar and caffeine. Howard Schultz putting the thing on his back and changing the way Americans live is the reason. The number one reason it worked is one dude. And that's not always true, but it's the number one reason it worked. And I would say that's true with Steve Jobs, too. You can say, well, the technology is better this and that. But it's one person with a bunch of different characteristics happening at the same time. The vision, the ability to simplify strategy and then simplify message and get hundreds of thousands of employees around. That helps that the substances are addictive, helps that community is healthy and habit forming. But I would say without Howard Schultz, it doesn't happen. Number one reason.

[Kyle Reed]

Yeah, what a great kind of wrap to the conversation. As always, if you're listening to this, whether you're listening or watching this, do us a favor, hit, subscribe, hit the download. But really, most importantly, I think for me, Don, I think for you would be true as well. We want to hear from people listening to this.

[Donald Miller]

Yeah, what do you want us to talk about?

[Kyle Reed]

Yeah, what do you want to know? What works? But also we want to hear your reasons. Why do you think Starbucks works? You know, this is our opinion, but why do you think it works? So share that with us in the comments. Send us a message on Instagram or something like that. Thanks for listening and we'll be back next week.

[Bobby Richards]

Thanks for listening to the why that Worked podcast presented by StoryBrand AI. If you like the show, follow wherever you get your podcasts. And if you're Enjoying this on YouTube, hit that subscribe button and leave a comment letting us know what you think and what you want the guys to talk about in a future episode. Curious about how StoryBrand AI can help you create clear, effective messaging? Well, you can try it out right now and create a free customized tagline for your business. Just go to storybrand AI. Thanks for listening and we'll see you next time.