'It's Not About the Coffee'—Business Lessons From Starbucks

Back in the 1970s, when President Jonathan Veitch frequented a popular coffeehouse on Beverly Boulevard, a question kept popping up in his head: What could possibly be the business plan of a place that charges a dollar or less for a cup of coffee and allows patrons to lounge around all day?

The question is, of course, the flip side of what many people wondered about during much of the 1990s and beyond: Why would people pay as much money as they do for a latte?

Clearly, there’s money to be made when coffee shops place people before profits, effectively allowing customers to sit around as long as they like—provided they buy something. And few people have seen just how that works as a business model than Howard Behar, whom Veitch introduced at a Feb. 22 public talk in the Mosher Lecture Hall on the Oxy campus.

Business Lessons

Behar was president of the North American and international divisions of Starbucks at the turn of the 1980s, when the Seattle-based coffee company had 28 locations—all of them in the Pacific Northwest. Today, Starbucks owns more than 17,000 stores worldwide—and if Behar is to be believed, it’s because of the company’s commitment to the people-before-profits business model.

Titled "People Over Profits: Principles of Personal Leadership," Behar’s lecture was based on insights from his 2007 book, It's Not About the Coffee: Leadership Lessons From a Life at Starbucks.

College Dropout Turned Business Guru

“You’re looking a guy who barely got out of high school and had a couple of years in community college,” Behar told his audience, adding that if he had a Ph.D. in anything it would be in drinking beer.

Almost from the very first day that he started working at Starbucks, said Behar, he realized that this was a company guided by a firm belief that while the coffee it serves has to be good, the business model itself revolves not around the coffee but around those who serve it and imbibe it.

One of the first things that Starbucks did for its employees during the early days, said Behar, was to pay them above minimum wage (while offering attractive benefits and stock options). In fact, Starbucks never deviated from that practice, even when it looked like the company’s bottom line was being adversely affected.

Serving Others

“We tend to think of our identity as what’s on our business card,” Behar said, delivering one of his many one-line business credos. “But at the end of the day, we’re all here to serve another human being.” He added: “Whether we work for a newspaper or for IBM or Microsoft, everything—everything--is about serving another human being.”

For all its simplicity, however, that wasn’t a lesson that Behar perfected with ease. In fact, it took him years to realize the importance of what he called his “values, missions and goals in life.”

Besides being honest, driven and performance-oriented, it’s important to develop an attitude in life whereby people learn to “trust others before they trust you,” Behar said. It’s the kind of approach to life that prompts him to “try to do something for someone or the other every day.”

For example, said Behar, he often calls his older brother, who’s frequently depressed, and hangs up after saying nothing more than “Marvin—I love you.” His goal in life, added Behar, is to get people to “see things differently, especially in the business world.”

If there’s one thing businesspeople should beware of as they embrace Starbucks’ people-oriented philosophy, it is to persevere in the direction of people, as opposed to profits, cautioned Behar.

As he put it: “Don’t say you’re a people company and then back away from it when push comes to shove.”

Despite all the ups and downs that Starbucks has endured over the years, the company's philosophy has remained the same, according to Behar. "It's one person at a time, one cup of coffee at a time," he said. "The minute that changes, God help us."