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Starbucks cofounder: 'We thought we'd have a couple of stores' | Guardian Small Business Network | The Guardian
Starbucks co-founder: 'We thought we'd have a couple of stores' Zev Siegl on kickstarting the coffee movement, why he has no regrets about leaving the company, and his passion for mentoring startups
Zev Siegl left Starbucks after 10 years to start other businesses. Photograph: Zev Siegl
Supported by Suzanne Bearne
About this content
Friday 9 December 2016 07.00 GMT
Today Starbucks has more than 24,000 stores in 70 countries. How did it all begin? My friends Gordon Bowker, Jerry Baldwin and I used to throw around terrific ideas for businesses; we wanted to make a change in our lives [Siegl was a history teacher] and do something that could have impact and be meaningful. We began meeting every few weeks to kick https://www.theguardian.com/smallbusinessnetwork/2016/dec/09/starbuckscofoundercoupleofstoreszevsiegl
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Starbucks cofounder: 'We thought we'd have a couple of stores' | Guardian Small Business Network | The Guardian
around ideas and one day when we were having lunch we ordered an espresso, which turned out to be really bad. It came up in that moment that two of the three of us had ordered fresh roasted coffee in other cities, but there wasn’t anywhere in Seattle. There weren’t any coffee bars in the US in 1970, so we put coffee roasters on the list of business ideas.
How did it turn from an idea into an actual business? We did what all smart entrepreneurs do – research. My attitude is that all ideas are good ideas until you find out why they’re not, and in this case we never found a roadblock. Then as we researched, something magical happened. We discovered a fellow in San Francisco named Alfred Peet, and he had something we didn’t have – an enormous background in sourcing coffee and tea in Indonesia. I arranged a visit and he showed me his store and roasting plant, and he ended up agreeing to be our mentor. During that time, we also found our first store in Seattle’s Pike Place Market. The goal was that we wanted to be close to where neighbourhood people went to buy food.
What was the biggest challenge you faced in the early days? Financial planning. It happened in the second year when we had the opportunity to open a separate roasting plant in an industrial facility in Seattle. So we went ahead and did it, and then we opened a second and third store. We made the classic mistake of entrepreneurs – carpe diem – and forgot to do the calculations and ran out of money. We were saved by family and friends who appreciated our stores and helped us out.
Did you always plan to create a global chain? We weren’t as calculating as that. The world of entrepreneurship didn’t exist like it does today. We didn’t know people who were starting companies. We thought we’d start a company that would roast coffee and have a couple of stores. Instead, the company dominated the Seattle coffee market within the first few years and we had six stores and 300 restaurants using our coffee within several years.
You left Starbucks after 10 years. Do you regret that decision? No, by that time we had grown to six stores and had hundreds of wholesale customers. Things were going well, but I was a startup guy. I remember approaching the other partners and saying, “Look, I’ve got a really good idea”, and them saying, “Great idea but we need to focus on the core business.” I walked away with a handsome buyout. I started other businesses, such as a coffee equipment business, and also became an equipment dealer in used coffee grinders. I started a baking company. I have no regrets at all; I’m very happy.
You now focus on paid and voluntary mentorship, helping entrepreneurs and small businesses. What key advice do you give them? To ensure they carry out financial forecasting. I lead them to it by asking questions until they realise they need to do it. A great discipline is filling out a financial forecast, as it forces you to focus on things you want to ignore. Everyone has a blind spot – financial forecasts forces you to confront your blind spot. https://www.theguardian.com/smallbusinessnetwork/2016/dec/09/starbuckscofoundercoupleofstoreszevsiegl
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Starbucks cofounder: 'We thought we'd have a couple of stores' | Guardian Small Business Network | The Guardian
What are you most proud of? Not having ceased to be a student. I’m still curious and I think my openness to new ideas and strong interest in people and how they function has enabled me to help a lot of people. Last week, one of my clients whom I coach voluntarily obtained a bank loan after working on it for six months. A paid client in California is about to close an equity offering of $500,000 (£395,000) for the first phase of their startup – I helped write their business plan and business forecast. And that’s just in the past week. Do I want to do another startup? No, I do get ideas for startups and I pass them along to other people. The stress of being an entrepreneur ... I don’t want that now. I help other people with that.
What do you think of Starbucks today? I admire what Starbucks has become. I think it’s fascinating that I can go into one of its stores in Kuwait City, which I have done, and have the barista enthusiastically telling you about the virtue of a particular coffee. There are still similarities in today’s Starbucks to the one that we created, such as quality first. It still puts an enormous effort into sustaining and creating a relationship with customers, and they still greet customers when they come in. When our first store opened, staff were trained to greet everyone and ask if they would like a free sample of brewed coffee. We were trying to create an interest in gourmet coffee. I go into all kinds of coffee bars around the world and I love it when coffee shops practise those two things. Sign up to become a member of the Guardian Small Business Network here for more advice, insight and best practice direct to your inbox.
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Topics Accessing expertise Small business Entrepreneurs Coffee Starbucks Food & drink industry Reuse this content
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