Insiders reveal why Starbucks’ former CEO Howard Schultz is willing to ruin his life to run for president (SBUX)

Hollis Johnson/Skye Gould/Business Insider

Starbucks’ former CEO Howard Schultz has met waves of backlash since announcing he is "seriously considering" running for president as a centrist independent.
Coming from humble beginnings and achieving revolutionary success at Starbucks, Schultz is driven by a conviction that he is called to save the world, people who have worked with him say.
According to some who spent time with Schultz at Starbucks and during his disastrous tenure with the Seattle SuperSonics, this conviction can be dangerous and verge on arrogance.
"He has convinced himself he is our savior," said a former Starbucks employee who worked with Schultz for years. "He wants to be our gentle, gentle savior," the person continued, adding that Schultz thinks "he knows best for all of us."

For years rumors of presidential ambitions have followed Howard Schultz. From Starbucks baristas gossiping on Reddit to his penchant for spearheading progressive social projects, the longtime Starbucks leader’s interest in politics is well known.

But one question remained: Why would Schultz, a billionaire beloved by most people within the Starbucks community, want to risk erasing much of the goodwill he’s built up by running for president?

After three decades of leadership at Starbucks, Schultz is in a position where he can make millions of dollars doing whatever he wants. In 2018, Schultz’s salary was just $1 at Starbucks, but he received more than $30 million in bonuses, stock, and options. He could have continued to lead Starbucks’ social efforts as chairman or invest more time into the Schultz Family Foundation, which works with underserved youth and veterans.

Instead, he decided to announce he was "seriously considering" running for president as an independent centrist.

At the best of times, a presidential campaign is expensive and exhausting, with candidates surrendering privacy and independence. But by running as an independent, Schultz provoked instant fury from progressives — typically his supporters — because of concerns he would draw more votes away from Democrats than from Republicans, thereby helping reelect President Donald Trump.

Schultz said in an interview on MSNBC’s "Morning Joe" last Wednesday that he did not anticipate the degree of backlash. Even without it, however, a presidential run would be a major departure from his cushy role as Starbucks’ chairman. Why, then, did he make the very public announcement and media blitz?

Through more than a dozen interviews, as well as from Schultz’s own recollections in his newest book, a picture emerges of Schultz as someone who has worked to improve workers’ lives, engaging with social issues out of a sense of duty and — at times — a hunch that doing so would be the right business decision. The belief that he has been tasked with improving the world has massively shaped his career, from success at Starbucks to failure with the Seattle SuperSonics.

Business Insider granted anonymity to two former Starbucks corporate workers as well as nine in-store employees to allow them to speak frankly without fear of professional repercussions. From these interviews, as well as from those with three other people who have worked with or know Schultz, a common narrative emerged.

While Schultz has fought against inequality, he has also repeatedly overestimated his abilities, something these people called a dangerous result of the cocoon of admiration he developed at Starbucks.

Schultz’s humble beginnings

Howard Schultz was born in 1953 and raised in a housing project in Brooklyn, New York. His new book, "From the Ground Up," makes it clear that he still carries the weight of several traumatic childhood events, including his grandmother’s verbal abuse, constant calls from bill collectors, and his mother’s severe depression.

Schultz’s father, Fred Schultz, is described as an angry and unapproachable parent who struggled to pay the bills. In his book, Schultz recalls an incident in which his father beat him so violently in the shower that Schultz did not attend school for a few days.

In "From the Ground Up," Schultz ties his father’s shortcomings to trauma stemming from his service in World War II and from economic abandonment by his employer. Fred Schultz was fired from his job as a truck driver without workers’ compensation, severance, or health insurance after he broke his hip and ankle on the job.

"I never shook off the indelible image of my father immobile on the couch after he slipped on the ice, helpless and abandoned by the company he was working for when the accident occurred," Schultz wrote. "Workers deserved a different relationship to the companies they helped to build, one based on trust, mutual care, and honesty."

Schultz seems to have spent years coming to terms with his childhood, drawing from it a conviction that he needed to create a company — or a country — where his father could have succeeded. He was a bit less forthcoming, however, about how his later wealth may have affected his perspective.

"I must say that writing about my own experience with money as a wealthy adult is less comfortable for me than writing about life as a child with my struggling father," Schultz wrote. "But like my father, it’s part of who I am."

Starbucks’ core of progressivism

AP Photo/Koji Sasahara

Schultz attended Northern Michigan University on an athletic scholarship, taking on a series of odd jobs after graduation.

When Schultz discovered Starbucks — then a coffee roaster — in the early ’80s, he became obsessed with the idea of turning the chain into an Italian espresso bar with European drinks and a strong sense of community. In 1986, Schultz acquired Starbucks, setting out to transform the 17-store chain into an international phenomenon that would fundamentally change how America understood coffee.

From the beginning of his time at Starbucks, Schultz faced skepticism. Why would Americans want the experience of an Italian coffee shop? Why did Starbucks need to provide health insurance for part-time employees when few other companies did? And, what the hell was a latté?

Schultz pushed for his vision. And, over and over again, his controversial decisions were successful, says the Harvard Business School professor Nancy Koehn, who has studied Starbucks since the mid-1990s and done extensive interviews with Schultz.

"From the beginning, almost from the get-go of when he owned the company, he said, ‘We’re going to provide health insurance, we’re going to provide stock options, we’re going to provide career paths into management,’" Koehn said. "That was heresy at the time."

Schultz’s sticking to his convictions paid off. In 1992, Starbucks went public with fewer than 200 stores and a $250 million valuation. Starbucks hit 1,000 stores in 1996; it reached 10,000 in 2005. At the end of 2018, Starbucks had 29,324 stores around the world and a market cap of $85.6 billion.

‘Uncle Howard’

China Photos/Getty Images

Starbucks’ success and its investment in employees helped make Schultz a beloved figure at the company, from corporate staff members to in-store baristas.

Koehn recalls witnessing Schultz walking into a meeting of Starbucks employees and having the room "erupt like a rock concert." One barista who has worked at the chain for 20 years told Business Insider that she cried when Schultz left Starbucks in 2018. Numerous workers affectionately referred to him as "Uncle Howard," and Schultz himself wrote in "From the Ground Up" that he loved Starbucks "almost as much as my family."

One former executive who worked at Starbucks under Schultz’s leadership for more than a decade told Business Insider that the former CEO was widely respected, well-liked, and trusted within the company. Schultz, the person said, was "willing to make difficult decisions."

Typically, his decisions proved to be the right ones.

"There’s a saying at Starbucks: We’re not in the coffee business serving people, we’re in the people business serving coffee," a Starbucks in-store worker who has been at the chain for roughly 13 years said.

"That mind-set really speaks to me and is largely why I have so much pride in the company," she continued, adding: "The focus has always been on human connection, from the very beginning."

The dark side of Starbucks’ Schultz worship

Schultz, however, was far from perfect. According to two former corporate Starbucks employees who worked with Schultz for years starting in the late 1990s, the flipside of Schultz’s empathy and intelligence is his difficulty responding to criticism.

"He has a truly unfortunate resemblance to Trump in that he cannot brook any sort of defiance," said the former Starbucks corporate worker who worked closely with Schultz in the early 2000s. "He demands loyalty. And he demands that his way be the way."

Privately, Schultz would implode when faced with criticism or questions, the two corporate workers independently told Business Insider.

Both said Schultz was obsessed with control. One former corporate worker recalled Schultz micromanaging details down to the colors that should be used in reports. Once, Schultz took vocal offense to a young employee wearing an Intelligentsia Coffee shirt in the Starbucks office, the executive said. Another time, Schultz refused to stand next to Seattle’s mayor at an event because of a perceived slight against Starbucks related to a single store’s lease, the other corporate worker said.

Schultz’s personal reputation is deeply important to him, both said, adding that he is extremely sensitive to any perceived threats to it. At the same time, Schultz was willing to take massive risks at Starbucks, even when cautioned against them.

"His impatience will, at times, make him impetuous," the former longtime executive said. "He can just have such a desire to win."

"He’s a competitor," the person added. "So his nature is to always be pushing very hard."

A representative for Schultz did not respond to Business Insider’s request for comment on or provide confirmation of these specific incidents. Starbucks also did not respond to a request for comment.

Despite the missteps, Starbucks insiders trusted Schultz because he had earned that trust, leading the company to enormous economic success while providing benefits. He demanded loyalty, and most Starbucks insiders were happy to pledge their allegiance to Schultz.

Outside Starbucks was another story.

Schultz versus skeptics

AP Photo/Ted S. Warren

Schultz’s highest-profile professional failure was in leading the acquisition of the Seattle SuperSonics with a group of investors in 2001. Schultz had recently stepped down as Starbucks’ CEO, assuming the role of chairman, and he said he viewed coming on as the largest investor in the team as a "public trust. "

It was a disaster that ended with Schultz selling the Sonics to a group of Oklahoma businessmen led by Clay Bennett in 2006 — and with the team leaving Seattle in 2008.

"People who recognized me would shout expletives, sometimes cursing me out in front of my kids," Schultz wrote in "From the Ground Up." "Selling the Sonics as I did is one of the biggest regrets of my professional life."

Many Seattleites, including those who worked for the Sonics, continue to blame Schultz’s missteps for the loss of the team, which became the Oklahoma City Thunder. Jeremy Repanich, who worked in guest relations at the time and wrote a definitive feature on the period for Deadspin in 2012, is one of them.

"He got in the ring, he tried to do it, he got really frustrated, and then he took his ball and went home," Repanich told Business Insider.

According to Repanich, the then-Starbucks chairman’s romantic notions of acquiring the team failed to live up to the expectations of Schultz or of Sonics fans. The city of Seattle and Schultz were unable to reach a deal to share the costs of building the new arena Schultz believed to be necessary, something Repanich blames, in part, on Schultz’s failure to build coalitions or invest in lobbying. Accustomed to his position as a respected No. 1 at Starbucks, Schultz alienated players like the star Gary Payton, to the detriment of the team.

"He just was horrified that he couldn’t control [players] and make them be the kind of people he wanted them to be," the corporate staffer who worked with Schultz in the early 2000s said.

Schultz’s thriftiness also had bizarre consequences, such as when the billionaire reportedly gave front-office employees Starbucks gift cards for $3.50 as a holiday present, a total so small the cards had to be custom made. Far from living up to his "Uncle Howard" reputation, Schultz’s gift led to Sonics fans and employees — many of whom were initially thrilled about Schultz’s acquisition — resenting the billionaire, according to Repanich.

At Starbucks, Schultz was a widely respected leader with a massive amount of control. His romantic notion of what a coffee chain could be helped him create a revolutionary multibillion-dollar business. His focus on profitability paid off, and employees reaped the rewards. His success convinced him that he could take on any challenge and prove critics wrong.

When "you’re the visionary, you’re afforded a level of legitimacy to the decisions you make," Repanich said.

At the Sonics, Schultz was one of many powerful people with different agendas, from players to politicians. His romanticism of what owning a sports team would be like blinded him to reality, leaving him unprepared. Focusing on financials paralyzed the team.

Eventually, Schultz squandered away any legitimacy he had, sources say. He is only beginning to make amends a decade later, with his first formal apology to Sonics fans appearing in "From the Ground Up."

"His reputation is most important to him — he’s super sensitive about it," the former Starbucks executive said. "And yet, he would do something like the Sonics sale — whether he knew if they would move it or not, that was a giant decision and a huge risk — and yet, it bothers him that people still hold that against him."

Schultz’s political awakening

Starbucks

Five years after Schultz sold the Sonics, he developed a new obsession: politics.

While recovering from a surgery to fix a hairline fracture in 2011, Schultz was drawn into the around-the-clock cable-news coverage of the debt-ceiling crisis. Schultz was exasperated by politicians’ inability to compromise for the good of Americans who were set to lose benefits and paychecks with the government shutdown.

Schultz began to speak out, both internally at Starbucks and to the country as a whole. In December 2012, Washington, DC-area baristas wrote "Come Together" on cups to encourage bipartisan action. In October 2013, Starbucks provided customers with a chance to sign a petition to reopen the government.

Starbucks’ and Schultz’s political activity only escalated from there.

In 2013, Starbucks lobbied on behalf of same-sex marriage in Washington state, with Schultz speaking out to support marriage equality at Starbucks’ annual shareholder meeting. In 2014, the company announced a commitment to hire 10,000 veterans and military spouses by 2018. In 2015, the year of the doomed "Race Together" campaign, Schultz wrote a New York Times op-ed article celebrating bipartisan leadership, in which he said he wasn’t running for office "despite the encouragement of others."

Samantha Lee/Business Insider

According to those who have observed and worked with Schultz, his dedication to social and political change is motivated by the same thing that drove him to provide benefits for employees: a genuine sense of duty.

"There’s this real calling within him to have an impact that’s larger than delivering to the stakeholders and Starbucks in a traditional way," Koehn said.

Mike Haynie, the executive director of Syracuse University’s Institute for Veterans and Military Families, said he had been impressed by Schultz’s commitment to taking time to understand the realities of veterans’ lives and by what Haynie had perceived as a lack of a hidden agenda.

"There is only a handful of folks on this level who are as committed to this population as Howard and Sheri," Haynie told Business Insider, referring to Schultz and his wife, who is president of the Schultz Family Foundation.

Haynie is incentivized to speak positively of his years working with Schultz, as the foundation recently donated $7.5 million to fund veterans’ education and career-preparation programs.

Even Schultz’s critics say the former CEO’s efforts are rooted in a genuine desire to improve the world. For example, Repanich said he believed that Schultz’s decision to acquire the Sonics was driven by a "naive" and perhaps arrogant notion that he could save the team.

"He has convinced himself he is our savior," the former Starbucks corporate employee said. "He wants to be our gentle, gentle savior, and he [thinks] he knows best for all of us."

The Trump tipping point

Mary Altaffer, File/AP

Even before 2011, Schultz was personally intrigued by politics.

Since the early ’90s, Schultz and his wife have donated $193,000 to Democratic candidates and organizations, according to Open Secrets. According to the former Starbucks staffer, Schultz is close to the Clintons and is connected to other Democratic players. He was reportedly set to be Hillary Clinton’s pick for secretary of labor if she won the 2016 election.

After Trump’s win, Schultz told Starbucks workers he was "stunned." In January 2017, Starbucks announced it planned to hire 10,000 refugees worldwide in the next five years in response to Trump’s attempt at barring refugees from entering the US.

"The world is screwed up. People are unsettled," Schultz said during a meeting with Starbucks employees in Seattle in February 2017. "There is a tremendous amount of pressure and anxiety in America."

"We have a president that is creating episodic chaos every single day and that is no doubt affecting consumer behavior," Schultz said in a video of the meeting obtained by Business Insider.

Schultz is a man who, when he sees something he thinks is wrong, takes action — even if that means overstepping the boundaries of what a CEO is expected to do, sources say. With the lack of civility on the 2016 campaign trail and Trump’s election, Schultz said he was convinced that something was rotten in American politics. And, as he had done many times before on a wealth of different issues, he decided he needed to take action.

In late 2016, Schultz announced plans to step down as CEO. In July, he left the company altogether. Finally, his political career was set to take off.

Schultz 2020

Hollis Johnson/Skye Gould/Business Insider

So, why is Schultz considering running for president?

Essentially, because he wants to save America. And, he has experienced enough success at Starbucks that he genuinely — and perhaps arrogantly — believes he can.

"I don’t think this is primarily about the gas tank of an unsheathed ego at all," Koehn said, adding: "He is very frustrated by what’s going on in the country, and he wants to do something. Again, he’s gone from Starbucks as the landscape to the American electoral landscape as a possibility."

"I believe he does it genuinely with good intention," the Starbucks staffer from the early 2000s said. "But the intention is around making himself the hero. Like, he does think he is the only one who could solve our problems."

Schultz faced a massive backlash the week after he announced he was considering running, with people slamming everything from his economic policies to his disconnect from the average American. The vast majority of Democratic strategists have expressed fear that Schultz’s run would mostly serve to draw votes away from a Democratic nominee, ultimately helping reelect Trump. Repanich dismissed Schultz’s "West Wing-y" fantasies as reminiscent of the big promises he made to the SuperSonics.

Even some of the most loyal Schultz fans are not convinced. Many current and former Starbucks in-store workers are coming out against Schultz’s plans to run as a centrist, including those who previously respected and trusted the former CEO.

"Before he announced considering a run, I had as high an opinion of him as one could have of a billionaire," said one Santa Cruz, California-based Starbucks employee who says he is now considering quitting the company.

"It felt as though he was running Starbucks in a somewhat unique way, what with all the benefits and programs the corporation offers its partners, and because of this I felt that he perhaps at least had a finger on the pulse of everyday Americans’ needs," he continued. "However, my opinion has changed considerably."

Schultz rarely acts rashly or airs grievances publicly.

"Here’s a guy who spent years carefully curating his reputation. It is deeply, deeply important to him — how he’s viewed," the former executive said, adding that in just three or four days Schultz had "effectively seen that reputation dinged in many, many ways, in ways that I don’t think he could have anticipated.

"It’s not who he thinks he is," he continued. "So, there’s part of him that’s probably saying, ‘You know, wow I really miscalculated for the environment somehow.’ And there’s part of him that’s saying, ‘The environment is miscalculating me … and I’m not getting the credit I deserve.’"

Now, the question may be whether Schultz will escape the hell of his own making. Schultz has said he will run only if he has "the conviction and the courage to believe I can win." He has shown willingness throughout his career to pivot when times get tough or — in a less charitable framing — to surrender when things do not go his way.

At the same time, he has also learned that ignoring critics can yield incredible results.

"I think he’s going to mistake stubbornness for commitment to a heroic cause," the former corporate staffer said.

"The longer he’s in this, the more he tarnishes his own legacy," she added. "This is a self-inflicted wound."

If you have a Howard Schultz story to share or a perspective on his potential presidential campaign, reach out to ktaylor@businessinsider.com.

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Source: Business Insider