Howard Schultz Bought Starbucks From Its Founders in 1987 for $3.8 Million

Howard Schultz joined Starbucks Coffee Company in 1982 as director of retail operations and marketing. The company at the time was an eleven-year-old Seattle bean-and-equipment retailer with eleven stores; it sold dark-roasted whole beans by the pound, espresso machines, and coffee accessories, and the founders Jerry Baldwin and Gordon Bowker considered "selling cups of brewed coffee" beneath the brand. In 1983, Schultz traveled to Milan on a buying trip and visited the city's espresso bars. He came back convinced Starbucks needed to add a beverage program — espresso, cappuccino, brewed drinks, the whole standing-bar Italian café format — and pitched it.

Baldwin and Bowker said no. Schultz worked on them for two more years, opened a small experimental Starbucks coffee bar in 1984 that did well, and pitched again. They said no again. He left in 1985 to start his own coffee bar, Il Giornale, named for the Milanese newspaper. Raising the money was harder than starting the business: Schultz pitched 242 investors and was rejected by 217. The 25 who said yes funded an opening in Seattle in April 1986.

In 1987 Baldwin and Bowker decided to sell Starbucks. They were busy with another acquisition — the Peet's Coffee chain in California, which Baldwin had personally come from — and wanted to concentrate on it. The asking price was $3.8 million for the entire Starbucks operation: six retail stores, the roasting plant, and the brand. Schultz raised the money among his Il Giornale investors, bought it, rebranded the merged company as Starbucks, and dropped the bean-only business almost immediately. By 2018 the chain operated some 28,000 stores in 77 countries.