It’s been two years since Howard Schultz retired from the board of directors of Starbucks, a company he founded and led for decades, but he still enjoys chatting with customers—as he did on Tuesday before sitting down for a wide-ranging interview with Dan Roth, editor-in-chief of LinkedIn.
Schultz was curious to know what a customer thought of the coffee chain’s protein lattes that debuted last month and he says there’s no better place to source this information than one of the 40,000-plus Starbucks locations around the world. A sense of curiosity is important for a business leader, as well as a willingness to “be in the mud” and learn directly from customers, Schultz said during an interview broadcast to LinkedIn Premium members.
“We have thousands of stores, so I’m in the stores, that’s where the action is,” says Schultz, who now serves as chairman emeritus for Starbucks. “I want to observe the experience.”
Schultz didn’t discuss Brian Niccol’s turnaround strategy for Starbucks, other than crediting the CEO with making a “big bet” on the human experience, nor did he address the recent news that the company plans to close North American store locations and eliminate 900 jobs.
But Schultz did talk about why a so-called “third place,” where people can convene, is so important today, especially as artificial intelligence and other technology disrupt how many people do their work.
“We have made the strong decision that we are a people company and we want people to serve our customers,” Schultz says. “You’re not going to see a robot at Starbucks.”
‘Worry with a big W’
But that doesn’t mean Schultz is anti-AI. In fact, he calls himself a supporter of the technology because he sees the potential for it to benefit both companies and consumers—and Starbucks has invested in AI to help with back-of-house operations.
But Shultz does worry about the “arms race” that’s underway both between companies and countries and that regulators may enact guardrails only when it’s too late—as was true with the evolution of social media. He hopes that lessons learned from the lack of governance in the early days of social media will encourage more responsible oversight of AI.
“The ramifications could be so severe that I just wish there was an opportunity to understand the responsibility that comes with the technology that is going a million miles an hour,” Schultz says. “I worry with a big W about the impact this could have that could be adverse.”
Building a ‘currency of trust’
While running the Seattle-based coffee giant for decades, Schultz grappled with all sorts of challenges—including in 2008 when he recalled Starbucks was in “deep trouble” and he had to decide what type of speech to give to 10,000 store managers. Though he was advised not to tell these managers how bad things really were, Schultz felt it was more important to trust the managers with this information so everyone could align on how to recalibrate.
Though employees do want a visionary leader, they also want authenticity and the truth, Schultz says, and that’s especially true in an era when people don’t trust much of anything. Being human—including being vulnerable and even crying in front of employees, as Schultz has—is the only way to build a “currency of trust,” he adds.
What a values-driven company looks like
As a publicly traded company for most of its existence, Starbucks has a fiduciary responsibility to its shareholders, though Schultz says that most of the company’s decisions come from a place of humility and understanding what’s best for customers and employees. That’s why he started a practice several years ago to leave two chairs empty during board meetings to represent baristas and customers.
After returning to Starbucks as interim CEO in 2022, Schultz announced the company would end its stock buyback program and instead invest that money into its workforce—a decision that only worsened a stock selloff during that time. As a leader, he says it’s important to play a long game with such decisions, lead with your heart, and establish empathy and compassion.
“If you take care of your shareholders, in a way, as the primary focus, you’re going to lose your people and your customers,” Schultz says. “Starbucks is living proof after 50-plus years that you can make significant investments in your people that are not [an] expense but an investment that is going to return to the shareholder.”
Why love is so important
Even if it’s a “fragile” time we’re living in right now, Schultz says he finds reason to be optimistic and hopeful about people—and he says the human experience will remain front and center at Starbucks.
Schultz was famously inspired by Italian cafe culture when he founded Il Giornale, which later served as a model for Starbucks. Reflecting back to the 1980s, when he was building Starbucks at the same time he was starting a family, he says the values, characteristics, and guiding principles of both endeavors are very similar.
And so is a sense of love, which is a word he says you won’t find in any textbook or class at the likes of Harvard Business School.
“You have to instill love inside your company and people need to feel loved and it has to be joyous, it has to be fun,” Schultz says.