He Grew Up So Poor He Slept in the Hallway. He Built the Company That Sells $6 Coffee to Billions.

Brooklyn, New York, 1960s. You are a child in the Bayview housing projects — a complex of federal government apartment buildings for low-income families. Your apartment is small, crowded, and cold in winter. Your father works a series of physically brutal jobs — truck driver, factory worker, cab driver — none of which come with health insurance or any safety net. When your father breaks his ankle at work, the family has nothing. No compensation. No income. No safety. You watch your father lie on the couch in the hallway because there is no other room — and you understand, at a very young age, that the world as it currently exists does not particularly care whether your family survives.

Howard Schultz grew up in that apartment. And everything he built — every management decision, every benefit package, every healthcare policy, every element of Starbucks’ culture — was constructed in direct response to that childhood memory of a father with a broken ankle and no way to pay the medical bill.

Schultz’s childhood in the Bayview projects shaped Starbucks’ benefits philosophy.

Schultz did not found Starbucks. He discovered it. In 1981, he was working as a sales manager for a Swedish housewares company when he noticed that a small Seattle coffee bean retailer called Starbucks was ordering an unusual quantity of drip coffee makers. Curious, he visited the store. He walked in and experienced something he had never encountered in America: the smell of freshly roasted coffee beans, the feel of genuine coffee culture, the possibility of a retail experience that was about more than just buying a product.

He joined Starbucks as director of marketing in 1982. The following year, he traveled to Milan for a trade show and walked into his first Italian espresso bar. The experience changed him permanently. He watched how the barista knew every regular customer’s name and order. He felt the atmosphere — the espresso bar as a “third place,” neither home nor office, a social hub built around a beverage. He thought: this is what Starbucks should be. This is what America doesn’t have yet.

The Italian espresso experience Howard Schultz brought to America.

He came back and told the Starbucks founders. They were uninterested. They sold coffee beans. They didn’t want to become a restaurant chain. Schultz left the company and spent the next year trying to raise money to build his own version of the Italian coffeehouse. He pitched 242 investors. 217 said no. The rejections were polite and consistent: Americans don’t drink espresso. The market doesn’t exist. The price point is too high. Nobody will pay $2 for coffee when they can make it at home for pennies.

“I was not deterred. I believed that people in America would come to love the romance of coffee — not just the caffeine, but the ritual, the warmth, the community.”
— Howard Schultz, from Pour Your Heart Into It

The 25 investors who said yes funded Il Giornale, which opened its first espresso bar in Seattle in 1986. In 1987, the original Starbucks founders decided to sell the company and focus on their other venture. Schultz bought Starbucks for $3.8 million, merged it with Il Giornale, and kept the Starbucks name. Then he began executing the vision he had been carrying since Milan.

Today, Starbucks operates 35,000 locations in 80 countries. It is a brand that redefined what a coffee shop could be, what a retail experience could feel like, and — in the eyes of many — what corporate culture could mean. Full benefits including healthcare for part-time workers (something Schultz implemented in memory of his father’s broken ankle) became a template that other companies were eventually pressured to follow.

Most founders are told no before they change the world.

242 investors saw a coffee shop. One man saw a movement. The 25 who backed him became very wealthy. The 217 who didn’t are remembered only because of what they missed.