The original Starbucks coffee shop was a business venture by Gordon Bowker, Jerry Baldwin, and Zev Siegel, all former students of the University of San Francisco. Their initial value proposition was to sell to an average consumer, high-quality coffee beans and roasted on-site.
The three opened their first store in Seattle, Washington on March 30, 1971.
In 1982, Starbucks’ management hired Howard Schultz as director of marketing and operations. At that time, the company remained just as it was—a coffee shop that also happens to sell whole bean coffee and, later, espressos.
Schultz believed Starbucks can be a lot more if he could only find their edge. While on a vacation in Milan, he found what made him fall in love with the business in the first place. It was about people. Italians seem to congregate in coffee shops in almost every block of the city, not entirely because of its excellent espressos. Instead, coffee shops were a hit in Italy because they functioned as a place to talk about business, politics, books, stories, etc.
On his return to Seattle, Schultz was a reformed and determined entrepreneur. No longer was he interested in leading the company’s marketing department; he wanted to run the company itself. In 1987, he bought the company from the original owners and converted it to an Italian-style coffee shop.
And like the coffee shops in Milan, Schultz wanted a Starbucks outlet on every corner. With the mission to deliver high-quality coffee to “one person, one cup, and one neighborhood at a time, the company put up 46 stores and roaster nearly 2 million pounds of coffee per year by 1989.
The company’s popularity continued to skyrocket thanks to its unique marketing strategy known as the Starbucks Experience.
During the company’s rapid expansion in the 90s, it mastered the art of creating authenticity through crafting a story.
The menu had a story. It told stories of travel. Of being transported in Europe. Of how farmers sow coffee beans.
Starbucks wasn’t just selling a cup of coffee; it was selling the experience. It was marketing brilliance. It touched customers on a deeper level. The company didn’t need television commercials. It succeeded entirely through a classic word-of-mouth.
Starbucks’ unique value proposition was, more than anything, the reason it became the largest coffeehouse chain in the world. In 2019, the company’s total asset value stands at $19.21 billion It has 32,660 stores in 76 countries.