Business

Howard Schultz says companies must do more than make money

Posted January 30, 2019 7:04 a.m. EST

— Howard Schultz remembers the moment he decided Starbucks would be more than just a coffee company.

Decades ago, an employee told Schultz -— who was CEO at the time -— that he had AIDS.

"I decided that we had to pay full insurance for him and his partner," Schultz recalled in an interview with CNN's Poppy Harlow. "This was a controversial decision at the time."

Schultz thinks about that moment as confronting an "issue of humanity."

"My whole life has been trying to make decisions through the lens of humanity and do what's right, even though if it wasn't in our economic interest," Schultz said. "That was probably the first time where I realized that the role and responsibility of a company is greater than just making money."

In his new book "From the Ground Up," Schultz reflected on his childhood and the years he spent at the helm of the successful coffee chain.

Schultz grew up in Brooklyn, where his family struggled to make ends meet. When his father, a truck driver who made deliveries, slipped and fell on the job, he was fired. Without health insurance, Schultz's family was "completely fractured," he said. "There was no money for food."

Schultz had a difficult relationship with his father, who he said abused him physically. As a teen, Schultz said his father once beat him for cursing at his mother.

"All I remember was being in the shower and him storming in, opening the shower, and then with his fists just beating me to a pulp," Schultz said. "Blood dripped down into the shower, and I couldn't go to school for a couple of days." The memory is so vivid that Schultz still feels his father's fists on him whenever he talks about the incident, he said.

Despite the ugliness, Schultz shared positive moments with his father. In fact, his father helped inspire Schultz as a business leader.

He "suffered the indignity of just never finding a job or a place professionally where he ever felt valued, respected," Schultz said. So he built a company his father would have liked to work for, with health insurance for all employees — including part-time workers.

During his tenure, Starbucks was a leader among big companies on wages and benefits. He instituted programs to help workers attend school, and he was vocal about social issues — such as health care, immigration and the wage gap.

Sometimes his attempts to spark national conversations about important issues fell flat.

In 2015, Starbucks tried to encourage employees and customers to talk about race with its Race Together campaign. The campaign sparked backlash, and the company ultimately abandoned it.

"I thought I had an opportunity to elevate the national conversation about race," Schultz told Harlow. "Unfortunately it didn't go well."

With Race Together, Schultz said he was trying to avoid being a bystander.

"I don't want to be part of a problem that I identify," he said. And while the effort was poorly received publicly, employees remain proud of the effort "because the company had the courage and conviction to try and face this," he said.

Schultz also made mistakes outside of Starbucks. Seattle sports fans turned on Schultz after he sold the Seattle Supersonics to an owner who relocated the team to Oklahoma City.

In his book, Schultz wrote that the sale was a "tremendous mistake," adding that he will be forever sorry for the error.

"The lesson is when you have power and responsibility you have to demonstrate restraint," Schultz told Harlow. "I made a very serious mistake, and I apologized for it."

Schultz transitioned from Starbucks' CEO to its executive chairman in 2017. Last year, he stepped down as chairman.

Now, Schultz says he's seriously considering running for president as a "centrist independent" in 2020.

Starbucks CEO Kevin Johnson said on Monday that "as a company, we don't get involved in national political campaigns," adding "nothing changes for Starbucks."

Schultz isn't worried that his possible political ambitions could hurt the company. "Starbucks is as healthy a company as it's ever been in its history," he said.