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Starbucks Coffee 1971-87

Updated on May 21, 2012
The first Starbucks-1971
The first Starbucks-1971
Howard Schultz and his Starbucks
Howard Schultz and his Starbucks

Starbucks began in 1971, in Seattle. Starbucks ordered its coffee beans from Peet's Coffee, located in Berkeley, CA. Owner's Baldwin and Bowker experimented with Alfred Peet's roasting procedures and came up with their own blends and flavors. A second Starbucks store was opened in 1972. By 1981, there were four Starbuck coffeehouses. That is when Howard Schultz started to work at one of them in on-the-job training. He learned all the facets of the operation but had his own ideas based upon his visits to Milan, Italy, and how Italian coffeehouses were-like a gathering place to people to hang and drink coffee freshly brewed. Once he had learned everything from the original Starbuck owners, he left.

It was back in 1985, when a doctor, Ron Margolis, had to make a serious investment decision. The doctor had just made a killing in a recent stock market trade, He had always dreamed of owning a red Ferrari sports car that was for sale for six figures. While expensive, even then, the Doc had the surplus income from the stocks. Ron also tried to get other doctors, 40 of them, to invest. None would. A coffeehouse was too risky. As he talked it over with his wife, the wife suggested that her husband tal to a nice, young, Jewish boy, Howard Schultz. Howard was not a boy but a married man. He had been working at a local coffee house in Seattle that provided only one type of coffee, you know, strong kick-ass stuff. The coffeehouse was nothing special but sold other pastries and such. It was there that Howard had the idea that probably had occurred to many others, to start a more upscale shop based on Italian coffee houses. He would call it, Il Giornale. It first opened in 1986. A second one in 1987. But Howard wanted to expand and offered the owners of Starbucks, 3.8 million for the few stores and its inventory and name. This was done in August, 1987. One of the original owners, Albert Peet, started to expand his already liked chain, Peet's Coffee in California.

Ron was one of the critical investors that allowed Howard the ability to buy the Starbucks stores in Seattle. He loaned him $225,000. Since then, Ron has tried 20 times to invest for profit in various business arrangements, of which, only three have paid off. His loan to Howard greatly paid off, it had made him tens of millions! Yet, in 1985, it was gamble and he had to give up something he REALLY wanted-a Ferrari.


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