Starbucks was a "slowpoke" by today's standards: co-founder Zev Siegl
News•Business• 25.09.2019 • Interview by Natalie A. Gerhardstein
Zev Siegl, one of the three co-founders of Starbucks, calls himself a serial entrepreneur. Handout photo.
Starbucks co-founder Zev Siegl will be in Luxembourg on 9 October for Entrepreneurs Days. Delano caught up with him for a two-part interview to talk about the company’s beginnings and his views on entrepreneurship.
NG: Were you aware Starbucks didn’t arrive in Luxembourg until 2016?
ZS: [Laughs]. That’s really interesting because 7 years ago I went to Siberia to a gigantic university there. [A reporter at the local television station in Krasnoyarsk], 3 minutes into the interview, looked at me and said, ‘Mr Siegl, when are we going to get our first Starbucks in Krasnoyarsk?’ I was absolutely dumbfounded. This was 3 hours in a large airplane east of Moscow, it was really nowhere. As it turns out, they did open a Starbucks there.
Starbucks is a success today, but it didn’t happen overnight. Could you tell us a personal anecdote that really stands out about those early days?
There were 3 founders, and it took the 3 of us about 14 years to establish the company in Seattle. This was not an overnight success, even in Seattle. Then Howard Schultz had an opportunity to buy the company. He was working for the company at the time and was able to close a purchase. It took him 32 years to get to where the company is today. That’s not an overnight success… by today’s standards, where you have unicorns, which reach $1bn in a couple of years, Starbucks was the slowpoke.
In the first decade, an important factor was that we had a mentor that was absolutely exceptional. We were very fortunate that he took interest in us, almost a fatherly interest. And that was Alfred Peet, [who] is from one of the Benelux countries, the Netherlands, and he [was in] Indonesia after WWII where he learned about the coffee and tea industry firsthand, then went to San Francisco where he was a green coffee broker and in the 1960s he opened Peet’s Coffee.
We stumbled on the idea of starting a coffee company instead of the other things we were working on. We started doing research and found out that there was one company in the US--this is at a time when the US was pretty much a coffee desert--one company had a fabulous reputation. Being 26 years old, I just picked up the phone [and called] him… I think that was pretty brash. But he said, ‘Why don’t you come down to San Francisco, I’ll show you a couple of my stores, I’ll take you to my roasting plant, we’ll talk about coffee. He was very generous [and] agreed to be a coach to us. He was what we call today old school. He had very high standards, no compromise, completely blunt with us, helped us organise our thinking about the coffee industry. It was a pivotal relationship. That’s one of the reasons I do a lot of mentoring. I keep thinking about Alfred Peet and what he did for me.
Starbucks was your first startup, but not your only one. Does the “buzz” feel the same each time you move from the idea to business creation?
That’s a very good question. I’m what’s known today as a serial entrepreneur…I think of myself as an early-stage guy. I’m the person who likes exploring and then, if it’s a good idea, organising a new company. That was actually my strength with [co-founders] Jerry Baldwin and Gordon Bowker. I think that everybody in business has a contribution to make… My ability is strongest at the beginning and, as a result of that, I’m extremely empathetic with people who have been possessed with the idea to start a company.
The Starbucks reserve roasting and tasting room in Seattle, as seen in modern times. Photo: Shutterstock
You’ve previously talked about the romance and seductiveness of the coffee business…
I’d also add that entrepreneurship is very seductive today. I don’t think it was so seductive in the 1970s but today it’s fantasy land. Anybody can start a company.
Whether through the scent of roasting or new coffee terminology, customers especially in the US learned about the world of coffee through Starbucks. Was this intentional storytelling on your part, or simply educating the customer?
In Starbucks’ first decade, when the founders were running the company, the story was coffee. As Mr Peet would say: no compromise, high-quality coffee. For us it was almost a religion. I can remember the thrill of seeing our first batches coming out of our Probat roaster, a beautiful German-made roaster…it was so exciting, the aroma, the machinery, the cooling tray with the rakes going around…fabulous! We had about 200 employees by the end of the 1970s, and everyone would be so enthusiastic at coffee tastings, where you were comparing 4 varieties of coffee and 2 different ways of roasting… it was absolutely intriguing, that became the focus, bringing that engagement to everyone. Today I like to say to audiences that our mission was to establish long-term relationships with every customer. We wanted a long-term relationship, and we did it through coffee. That was the medium of conversation.
You see the same thing in a few other businesses… when you look in the eyes of someone with a really interesting app or computer software, they’re just as enthusiastic as I remember feeling. You could argue that we were product-oriented, and when you’re an entrepreneur being product-oriented can be a fatal flaw because for some people, it means they aren’t oriented to the financial side of the business or marketing, they’re just attracted to their precious product. We were a little that way. Lucky for me, I had partners: Gordon, a really intelligent marketer, thoughtful, and Jerry, a good leader and, as it turns out, a good financial manager. Their strengths, combined with my strengths as a startup guy, worked really well. For the type of entrepreneur who is very egocentric and doesn’t have good lieutenants, life’s tough. You’re not protected from your faults in that situation.
What aspects do you think were embedded into Starbucks’ corporate culture early on which helped contribute to its success?
I’d say that mutual respect within the company was very high. Gordon, Jerry and I were all perfectly willing to listen to anyone who worked for us… They never had the feeling they were operating in a restrictive system. In some companies, that’s not the case. We had passion for coffee as one centre, then mutual respect as a kind of enjoyment. It was an interesting place to work. People came to work looking forward to talking with customers.