Onward (18 page)

I was with Sheri in New York City when I decided to do a round of impromptu pop-ins at independent coffeehouses I'd been hearing about. We jumped in a cab and hopped out on a tree-lined block, where we walked to a small shop with a charming wood and brick façade.

We ducked inside for a look.

The space had a bohemian feel and in general I was underwhelmed. But one thing did intrigue me. There was a long line of people waiting for brewed coffee that cost, according to the sign, up to $6 a cup. A tall brewed at Starbucks was $1.50. I decided to try it.

For me, the best way to brew coffee has always been in a French press. That was how I'd brewed it at home for 25 years. Unlike the drip method, where water passes over coffee grounds and drips through a filter, the coffee grounds in a press pot are continually steeped in water; the full immersion brings out a taste that just cannot be achieved with a drip brewer.

As I stood in line and waited my turn, I watched the barista. I did not recognize the machine she was using, but it was fascinating to watch as she weighed and ground the beans for each order and then poured the grounds into the top of a stainless steel, black-sided machine. A silver spout on top added hot water and then, like magic, the resulting grounds unexpectedly materialized atop the machine in a thick, precise, pancakelike formation. It was beautiful.

When it was my turn at the counter I ordered, watched, waited, and finally took a sip. I was stunned. This coffee was as rich and flavorful as coffee from my French press. Sparkling.

“What's the name of the machine?” I asked the barista.

She looked up at me as she prepared the next customer's cup. “Clover,” she said, and went back to her work.

I walked outside and on my cell phone dialed our coffee department back in Seattle. “Who makes the Clover?” I wanted to know. Less than an hour later, I received an e-mail. Unbelievable. The machine was made by a company in Starbucks’ own backyard.

I did not recall that I'd actually seen a Clover brewer in action, tasted its coffee, and met its inventor in mid-2007 as part of a demonstration at Starbucks. At the time, as Zander recalled, I told him that I had never tasted such a good cup of brewed coffee from a machine. About a month after that tasting, unbeknownst to me, Starbucks ordered one Clover and put it in one of our stores to test.

The next time I saw Zander was in his makeshift laboratory not long after I rediscovered Clover and only three weeks after I had returned as ceo.

This time when we met, I wanted Starbucks to acquire Clover.

It interested me for several reasons.

First and most important, Clover makes a terrific cup of brewed coffee. A cross between a French press and a vacuum pot, Clover sucks water through the bottom of finely ground coffee instead of pressing water through the top, using a very fine filter that lets the coffee retain its best-tasting oils. By no means did I see Clover as a replacement for our brewed coffee, but it would complement Pike Place Roast in our attempt to elevate coffee and the coffee experience. Nor was Clover a big revenue play to immediately spike sales. Rather, Clover would add depth to our menu, offering customers more options while supporting our mission to be the undisputed coffee authority.

Second, because of Clover's inventive engineering and graceful design, it treats brewed drinkers to a level of customization and personal attention that had, historically, been reserved for our espresso drinkers. When someone ordered a brewed beverage at Starbucks, our barista poured the already brewed coffee into a cup with his or her back to the customer and then handed the drink over at the register. For espresso beverages like lattes or cappuccinos, the experience is intrinsically more elaborate and personal: The barista pours the shot, steams the milk, and customizes the drink facing the customer, then announces the order and presents the beverage on a high, uncluttered counter, much like a stage. All in all, there was not much theater for the drip drinker.

Clover presented an opportunity to help solve that. Like an espresso machine but much more compact, a Clover could be positioned on a counter in front of customers, who could then watch the barista and the machine brew their coffee in a way they had never witnessed. What's more, Clover's technology would allow us to serve more specialty, small-batch coffees whose complex flavors are often lost using traditional brewers.

Clover's quality and beauty not only were thrilling, but also posed a very real competitive threat, even at its premium price per cup—so much of a threat that I believed Starbucks needed to own it. Now.

I was a bit taken aback when I walked, alone, into the large garage that was home to the Coffee Equipment Company.

“Zander,” I said, a smile on my face and a hand outstretched. A slight, soft-spoken young man in glasses smiled back and welcomed me. Although we had met before, I did not recognize him. (Throughout my years at Starbucks, I have always met so many new people in the course of even one day that, as much as I wish I could recall every face, it's almost impossible.) Zander and I chatted for a bit next to a few half-built Clover machines before walking to Brouwer's Café to eat lunch outside.

Listening to Zander, I was tremendously impressed. Here was an articulate, highly intelligent young man who is passionate about coffee and had educated himself about the industry. Respectfully, I told him why I had come. “Zander, we would like to acquire your company,” I said. “I think Starbucks can offer you something that you'll be quite happy with.” By “something” I was alluding to not just the purchase price, but also to the respect and opportunity Starbucks would give Zander, his team, and Clover.

It was obvious from his expression that selling was not in Zander's immediate plans.

“And what would we do with our current customers?” he asked me, clearly concerned.

“You'll have to take great care of them,” I answered, knowing that, even if we bought Clover for Starbucks’ own proprietary use, Clover's current coffeehouse customers could continue enjoying the machine.

“And what about our team? We have 11 employees.”

I said they could come work for us and stay with Clover.

After a handshake, I left Ballard rejuvenated.

During the next month, I met with Zander several times to negotiate the broad strokes of the deal. Often it was just the two of us, across the table in my office or at my home, and with each meeting our
mutual trust increased. It was important for me to stay closely involved with him. I never wanted Zander to regret trusting us, trusting me, with his dream.

Meanwhile, back at Starbucks, our senior vice president of global finance and business operations, Troy Alstead, and his financial team worked diligently on the nuances of the Clover acquisition. Troy had been with Starbucks for 15 years. He is not only extremely intelligent, possessing a keen understanding of our global business, but also an excellent communicator. When Troy speaks, he never hides behind accounting jargon or numbers. His integrity, knowledge, and personal style garner a high degree of trust.

Thanks in part to Troy's round-the-clock dedication and ability to work well with the young entrepreneurs we were acquiring, I had faith that the Clover deal would come together in a remarkably short period of time.

As for launching Clover machines in Starbucks stores, that was
not
something we would do at a rapid pace. In light of the country's receding consumer spending as well as Clover's manual manufacturing process, it would take time for Clover to realize its full potential inside Starbucks and for Starbucks to see the financial fruits of the marriage. But I was okay with that. More important, in my view, was the message of confidence that Clover's acquisition would send to partners, customers, and shareholders, reassuring everyone that Starbucks was once again committed to decisiveness and coffee innovation.

I have long believed in the power of a word or a single phrase to effectively communicate a business imperative—and to inspire people. The best words are never big or complicated, but are packed with emotion and meaning, leaving no question of what I expect of myself and others.

Rarely in my career have I actively searched for the right words. They tend to find me, often in a poignant moment, maybe minutes before addressing a roomful of people; during an impassioned, unscripted speech; in a private conversation; or when sitting alone in my kitchen, drinking a cup of coffee. The concepts that my words convey may be strategic in their intent, but the words themselves are spontaneous manifestations of my love for Starbucks. I feel them before I voice them.

Mike Ullman, our lead director and an experienced CEO, has said that communication is always important, but it is even more essential when things are not working. Ensuring that communication is narrow, clear, and repetitive to set expectations wins people's trust. During this tumultuous period in Starbucks’ history, what I said and how I said it was, I believe, key to tapping into our partners’ passion, recapturing their faith, and redirecting their talents.

In any well-run retail business there is, by definition, a maniacal focus on details. Especially in the beginning. Young companies must produce results every day or risk closing their doors. Anything with the slightest potential to add or detract from sales or earnings—the quality of each item, every customer interaction, the attitude of each employee, every dollar spent—is attended to with steadfast concern.

In 2008 I felt very strongly that many of us at Starbucks had lost our attention to the details of our business. While there exist obvious limitations to what the leaders of a multibillion-dollar global organization can be expected to attend to, we had, as a group, strayed too far in the opposite direction. We had defaulted, for example, to talking about national or global comps and rapid expansion, and when our comps went up we assumed that individual parts of the business—distribution, partner resources, entire geographic regions—were also healthy.

Like a doctor who measures a patient's height and weight every year without checking blood pressure or heart rate, Starbucks was not diagnosing itself at a level of detail that would help ensure its long-term health. We predicated future success on how many stores we opened during a quarter instead of taking the time to determine whether each of those stores would, in fact, be profitable. We thought in terms of millions of customers and thousands of stores instead of one customer, one partner, and one cup of coffee at a time.

With such a mind-set, many little things dangerously slipped by unnoticed, or at least went unacknowledged. How could one imperfect cup of coffee, one unqualified manager, or one poorly located store matter when millions of cups of coffee were being served in tens of thousands of stores?

We forgot that “ones” add up.

Grounding our leaders as well as myself in a more disciplined, detail-oriented mind-set—down from the 30,000-foot view and way of thinking about the business—was one of my earliest challenges. It was all too easy to assume that an almost $10 billion company could not operate with the perspective of a single merchant fighting for its survival. But wasn't every Starbucks store a single merchant?
Yes
, was my position, and I was adamant that we should think of ourselves as such.