Howard Schultz doesn’t have all the answers.
It’s early April, just five days after a police officer fatally shot Walter Scott, an unarmed black man, in South Carolina, and the Starbucks CEO is on stage at Spelman College, the historically black institution of higher learning for women. He’s here for a panel discussion with United Negro College Fund chief Michael Lomax and Spelman president Beverly Tatum, author of the best seller Why Are All the Black Kids Sitting Together in the Cafeteria? Schultz is seated in an awkwardly large white sofa-chair, fielding tough questions from the crowd, mostly black students who have come to hear this white, 61-year-old billionaire speak about racial inequality.
Not long ago, he might have looked more out of place. But the crowd already knows that the head of the world’s largest coffee company is willing to thrust himself into this emotionally charged issue. Only three weeks earlier, he made waves with Starbucks’s “Race Together” initiative, an effort to spark a national dialogue about race in response to the killings of Michael Brown and Eric Garner–two other unarmed black men–and subsequent civil unrest. It was a bold idea that backfired. Starbucks had encouraged its baristas to write “Race Together” on the cups of coffee they served and engage customers in conversations. But critics lampooned what came across as a superficial gesture, and the backlash exploded onto social media, where Race Together received 2.5 billion impressions in less than 48 hours–much of it, Schultz complains, driven by a barrage of negative tweets filled with “visceral hate and contempt for the company and for me personally.”
Yet Schultz tells the audience he isn’t backing down. In fact, this event is his second two-hour forum on race today. Earlier this afternoon, he met with nearly 400 Starbucks employees (called “partners”) at the Fox Theatre in Atlanta, which marked his 10th symposium on the subject in the past three months. At that event, the partners greeted him like a hero, snapping selfies and getting autographs before engaging in town hall-style group therapy, filled with tears and soul-searching discussions, employees professing love for what Starbucks and Schultz stand for (“You’re the reason I’ve stayed 14 years”) and sharing deeply personal experiences with racism. Schultz, dressed in a black suit, listened and responded in heartfelt ways. When a young black barista broke down while talking about the discrimination she faced in a past job and how working at Starbucks is the first time she’s ever not felt “disposable,” Schultz leaned forward, held her hand, and gently touched his palm to her cheek to wipe away her tears.
The mood at Spelman is far more subdued. There are no tears, no constant rounds of applause. “This is not an easy thing for me to do, candidly,” Schultz says. The students here want real answers–concrete ideas that would address the disparities in this country–not just conversation. When Schultz references an education initiative he recently launched, in which Starbucks will cover tuition for its U.S. employees working more than 20 hours per week who enroll in an online college-degree program from Arizona State University, Tatum asks whether Starbucks considered paying for them to attend traditional, class-based institutions with proven track records and lower attrition rates, like Spelman. “I didn’t expect that question,” says Schultz, looking genuinely caught off guard.
This is a position Schultz finds himself in frequently these days. By wading into unchartered waters for a CEO, he’s often out of his depth. But some dog-paddling is worth it to him as he tries to figure out the answer to a larger question he’s increasingly preoccupied with, which he asks at Spelman: “What should the role be for a for-profit, public company in [this] world?” He continues, “Over the last two to three years, we’ve taken on a number of issues that, for the most part, were absolutely untouchable for a company, let alone for a company as ubiquitous as Starbucks.”
Schultz believes corporations have obligations to society beyond what tangibly impacts their bottom lines. And with 22,000 stores and 75 million customers per week, Starbucks can certainly influence public discourse. In an age of the Koch brothers, Hobby Lobby, super PACs, and Washington lobbyists–a time when “corporations are people,” as Mitt Romney phrased it–Starbucks wants to make its values felt. The truth is, the role of a corporate leader is evolving. Tim Cook’s personal advocacy for gay rights has proven more popular than his company’s Apple Watch, and Sheryl Sandberg is more famous for her support of gender equality than for her role at Facebook. “We’re at a tipping point where businesses need to step up and take a lead with moral and ethical voices, and call out the things that are harming people and the planet,” says Rose Marcario, CEO of Patagonia–a company Schultz admires for seamlessly blending its beliefs into its brand.
Schultz has long championed corporate social impact, but his high-profile push on the issue of race has some from both the business world and the black community wondering whether there’s a limit to the growing trend of what’s known as “CEO activism.” As he plots the future of Race Together, Schultz faces deep challenges and perhaps even deeper cynicism. He’s also creating a blueprint for other CEOs to learn from–even if it’s learning what not to do.
“I feel we’ve been called to do this,” Schultz says on stage. “Along the way, there are going to be some mistakes.”
When Schultz took over Starbucks in 1987, it was a fledgling empire with just 11 locations, but he already had a higher purpose in mind. Schultz believed that warm and inviting interactions between baristas and customers would make a Starbucks store feel like another home. He believed that investing in his employees–Schultz boasts that Starbucks was the first U.S. company to offer comprehensive health-care coverage and stock options to part-time workers–would also yield rewards. Indeed, moves like these have kept employee turnover rates down and morale up–a major hurdle for any company with a low-wage, hourly workforce–which, in turn, has led to happier customers. “This is not altruistic; this is business. Values are a big part of both the balance sheet and the income statements of Starbucks–it’s behind the performance,” Schultz tells me in late April at Starbucks’s Seattle headquarters, over French-pressed Sumatra he’s just brewed himself. “You can’t attract and retain great people if your sole purpose is to make money, because people, especially young people, want a sense of belonging–to be part of an organization they really believe is doing great work. You can’t create that emotional attachment if you stand for nothing.”
“Let me put it to you this way: If we didn’t get an ROI, these things would be a lot harder to do,” says Matt Ryan, Starbucks’s chief global strategy officer. The company’s recently announced goal of hiring 10,000 military veterans and spouses by 2018, for example, means that Starbucks will be gaining a fleet of largely disciplined, top-notch employees. Its “College Achievement” initiative with ASU, which the company estimates will cost $250 million over the next decade, is another investment in the future. “We think it’s worthwhile to invest those dollars,” says chief community officer Blair Taylor. “You’ll work for us [during those four years]; we believe you’ll stay longer because of what we did; and even if you leave the day after you get your degree, we believe you’re going to be a lifelong customer of Starbucks. Because we sent you to college!”
Not everyone is buying it, however. “I don’t see this as some new trend of wonderful CEOs,” says Nelson Lichtenstein, director of the Center for the Study of Work, Labor, and Democracy at the University of California, Santa Barbara. “I see a certain institutionalized arrogance, where CEOs have been given the right to mouth off on whatever they feel like.” Schultz argues that his public-oriented endeavors are “not marketing–this is not PR,” but the truth is that they’re A-grade PR–marketing so camouflaged in genuine, magnanimous intentions that it’s hard to tell it apart from philanthropy. Starbucks’s efforts recently landed Schultz on the cover of Time, touting his presidential aspirations, and a barista on the cover of The Atlantic, which teased, “Can Starbucks save the middle class?”
With Race Together, though, there’s simply no obvious corporate benefit. If anything, the potential downsides far outweigh any ostensible ROI. (Even Lichtenstein acknowledges there are a lot of “land mines for a white Jewish guy” talking about race.) Matt Ryan, whose team crunched the numbers for its education and veteran initiatives, says that there wasn’t even any financial forecasting done in advance.
So where did the idea come from? The seeds can be traced back to December 2014, when the company held a grand opening for its Reserve Roastery, an upscale coffeehouse and tasting room in Seattle’s trendy Capitol Hill neighborhood. Schultz couldn’t get his mind off the racial protests dominating the national headlines in the wake of the grand jury decision in Ferguson, Missouri, not to indict Darren Wilson, the police officer who killed Michael Brown. “We were by the restrooms, and I don’t even know how we got on the conversation of race–we’d been talking about how the Roastery was doing,” says Starbucks retail EVP Chris Carr, who is black. “I’ve spent 30 years in the corporate environment, and there’s always been an unwritten policy that you don’t talk about politics, religion, and race, but he just started asking me about it, and saying he felt like no one was paying attention to the civil unrest. I told him, ‘Howard, frankly, I think it’s a crisis.’ ”
Carr told Schultz about the dinner-table discussions he’d had with his kids regarding Ferguson. (“My daughter told me she feels like my generation let her down, that we’d become too complacent, which is hurtful for a parent to hear.”) When Schultz’s wife, Sheri, arrived, they decided to delay their post-opening dinner plans to talk more. “I remember him saying, ‘I don’t know what to do, but I have to do something,’ ” Carr recalls.
That’s not to imply this was some mythical origin moment. It was just one of many race-related conversations employees tell me Schultz was engaging them in prior to Race Together. Rodney Hines, who oversees community investments, remembers being out with his mother one weekend and bumping into Schultz. The CEO pulled Hines aside to ask his thoughts on race. “You could tell he’d been stewing on it for a while–he was looking for answers,” Hines says. “I remember telling him that with the #BlackLivesMatter movement, this is a young, empowered, and fired-up group of people–not the historic faces of leadership like Jesse Jackson or Al Sharpton.”
A few nights later at home, Sheri says, Schultz, who was unable to sleep, told her, “I can’t just run this company and not say something, not have an opinion, and not allow others to have an ability to talk about what we’re not talking about.”
The next morning–December 10–Schultz called communications chief Corey duBrowa and head of partner resources Scott Pitasky into his office and proposed holding a forum on race at Starbucks headquarters. “He said, ‘I have this idea, what do you think?’” Pitasky recalls. “I’ll admit, I wondered whether it was a good idea or not.” It took Schultz, a peerless salesman, about 15 minutes to get his team on the same page. “I said, ‘When do you want to do it?’ He said at noon. He’s like, ‘Nancy [Schultz’s longtime executive assistant], can we do it at 12?’ I think the email invite went out at 11 a.m.,” Pitasky says with a smile.
More than 400 people soon gathered on the ninth floor of Starbucks’s headquarters, and Schultz kicked things off: “If we just keep going about our business and ringing the Starbucks register every day, then I think we’re in a sense part of the problem.” The ensuing dialogue was unexpectedly rich and poignant, executives say. By early January, the company had held another partner forum in Oakland, California, followed by events in St. Louis and New York. Numerous employees say they’re grateful to Starbucks for putting the forums together. The company, which felt like it was witnessing some real collective healing, believed it was doing the right thing.
In mid-January, the Starbucks board convened in a conference room at a Marriott hotel in Costa Rica, not far from the coffee farm the company purchased in 2013 as part of a billion-dollar commitment to ethically source 100% of its coffee by the end of this year. The forums had continued to go smoothly, partners seemed engaged, and Schultz wanted to do more with the idea–to take full advantage of Starbucks’s massive platform and reach.
Schultz and his directors, who include former defense secretary Robert Gates and former presidential candidate Bill Bradley, spent several hours talking about race. The conversation grew candid, and director Mellody Hobson, the president of Ariel Investments and chair of DreamWorks Animation, recalls several people even crying. “It was not your usual board meeting,” she says. Schultz said that Starbucks hadn’t paid enough attention to the issue of racial inequality; the board agreed, but differed over how best to approach the topic more broadly. Some felt that Starbucks should focus first on its own diversity shortcomings. Others wondered whether it was the right time to broach the subject publicly, given how volatile the issue had become in cities across the country. According to Hobson, multiple times during the meeting, Schultz repeated, “I cannot be a bystander. I cannot be a bystander.”
Schultz is aware that people might find it hard to understand where this emotional drive and empathy comes from. “I’m not black, I haven’t lived a life in which I was racially profiled, and I wasn’t discriminated against because of the color of my skin,” he tells me. His outlook was shaped by his upbringing in the Bay View projects of Brooklyn–he often says that he always dreamed of building a company that his late father, who struggled financially throughout life, never had the opportunity to work for. “Look, I’ve known him for a long time, and I’m not bullshitting you when I say there’s a part of him that’s never forgotten where he came from,” says Whole Foods co–CEO Walter Robb. “He feels a deep sense of responsibility to create a better country with more opportunity.” At Schultz’s 60th birthday party, after a series of glowing toasts to the man who seemed to have it all, Robb recalls Schultz standing up and saying, “ ‘I just want to tell you guys, I’m still working things through, I don’t have [life] figured out.’ The humility and sincerity with which he said it–he’s really just trying to find his way like all of us.”
Since diving headlong into the issue of race, Schultz has been on an educational journey (“the burden of proof is on me to establish legitimacy,” he says), and he often cites anecdotes he’s internalized from the forums, such as the white barista who grew up with family members in the KKK, or the black mother who makes sure her son isn’t wearing bright colors before he leaves for school. Schultz has met with clergy members and police chiefs. Recently, he had dinner with the newly elected CEO of JCPenney, Marvin Ellison, who confided how, while teaching his teenage son to drive, he had to train him to keep his hands glued to the steering wheel in case a white cop pulled him over.
Schultz shared his insights with the board, and the directors ended the meeting in agreement that Starbucks should pursue a broader initiative. Hobson says that they didn’t spend time discussing how it would look for a white billionaire to front a national dialogue on race, focusing instead on how to scale up what worked so effectively in the partner forums. They did foresee some challenges. “We went into this with our eyes open. I said to Howard, very clearly, that this will not be like [baristas] writing ‘Come Together’ [on cups] when there was a government shutdown in Washington–this will be more challenging, and has much more nuance,” Hobson explains. “I kept saying to him, ‘It’s one thing to be in a forum with partners self-selected to show up, and who not only trust you, but revere you. So what happens when conversations are not so controlled, and no one is facilitating? Could it lead to unintended consequences that we haven’t even thought of?’” Starbucks’s leadership, recalls retail EVP Chris Carr, raised a few questions as well. “We had conversations about whether [the rollout] shouldn’t occur during peak periods, because that’s not when customers would want to engage in dialogue,” Carr says. “We even had some conversations about whether it would be appropriate to [release the campaign] in certain parts of the country where [race issues] could be much more volatile than in many other places.”
On March 15, Race Together, as it was now officially known, went live with a full-page ad in The New York Times. An internal memo educated baristas about the campaign, encouraging them to write “Race Together” on cups to start building awareness for an accompanying stats-filled USA Today insert (which wouldn’t be released until later that week). The memo instructed baristas to “engage [customers] in conversation,” and offered three bullet points for possible sentiments to convey, including, “Our company feels responsible to do our part as the country faces ongoing racial tension.”
It didn’t take long for #RaceTogether to start trending online. Just 24 hours after the initiative launched in stores nationwide, public affairs VP Vivek Varma told the board–incidentally in another meeting, this time in Seattle–about the negative reaction on Twitter. Varma and the board spent five or 10 minutes discussing the hiccup, but it was too early to fully appreciate the PR disaster looming. No one suggested pulling the campaign; they figured Schultz and Hobson (who is black) could give it more context at the company’s annual shareholder meeting the next day. “It was happening in slow motion,” Hobson says. “The difference between that Tuesday [when we met] and Wednesday was dramatic.”
It kept going. “Honest to God, if you start to engage me in a race conversation before I’ve had my morning coffee, it will not end well,” tweeted PBS NewsHour anchor Gwen Ifill that Tuesday afternoon. Communications chief duBrowa, feeling “personally attacked in a cascade of negativity,” disabled his Twitter account, which some saw as a symbolic end to the “dialogue” on race. Many also noticed that of the 19 members of Starbucks’s own leadership team, just two are black, which fanned the flames. By Sunday, John Oliver was blasting the initiative on his HBO show, joking that “it’s pretty clear no one has said no to [Schultz] in 25 years.”
Like most Twitter witch hunts, the stake-burning didn’t last long, perhaps because so many people wrongly believed Starbucks had decided to cancel Race Together. Starbucks, however, remained committed. “The irony is, we did create a national conversation–not how we intended, but you learn from mistakes,” Schultz says. He adds that he feels that the campaign was misconstrued–that Starbucks never envisioned baristas and customers solving the racial divide over caramel macchiatos.
This contradicts what Schultz himself said when introducing the initiative to partners. (“What if we were to write race together on every Starbucks cup, and that facilitated a conversation between you and our customers? . . . If a customer asks you what this is, try to engage in a discussion.”) But there were other, more egregious problems with the rollout. For one, it’s a mystery why Starbucks didn’t heed its team’s own warnings about potential pitfalls; strategy officer Matt Ryan tells me the company did no market research to vet whether Race Together would resonate with the public, a decision both refreshingly authentic and inexplicably naive. Second, the messaging was tone-deaf. The press release, which led with “It began with one voice,” all but heralds Schultz as a savior: “As racially charged tragedies unfolded in communities across the country, the chairman and CEO of Starbucks didn’t remain a silent bystander.” Critics have also lambasted the company for leaning on its low-wage workers for such emotionally taxing labor. While Starbucks says participation was voluntary, it’s evident the company didn’t think through even the most basic repercussions of this dynamic. (For example, if a store manager or employee chose to opt out of the program, would he or she be perceived as disloyal, or even racist?)
How could Starbucks get something so important so wrong? Chris Carr contends that the company was swept up and “misled” by the success of the partner forums; Starbucks simply assumed that its goodwill would engender public support. Hobson feels there’s a greater force at play. “I told Howard this would be hard–that this conversation would get people worked up,” she says. “Because the de facto suggestion to white people, I believe, is that they’re somehow being called racists. America has a shame about our history around race.” (As for John Oliver’s comments, she says, “There are plenty of times we’ve disagreed and said no to [Schultz].”)
Schultz has less patience for the Monday morning quarterbacking. “We made a tactical mistake. So what?” he says. “We’re moving forward.”
If Starbucks wanted to see what an effective campaign for social change looks like, it only needed to wait a week. In late March, Silicon Valley rose up against “religious freedom” legislation in Indiana and Arkansas that many worried would discriminate against the gay community. Salesforce CEO Marc Benioff led a fleet of high-profile technology executives, including Apple CEO Tim Cook and PayPal cofounder Max Levchin, in protesting the bills. (When Schultz witnessed the groundswell, he immediately emailed Benioff, lauding his efforts, but recalls explaining that “given how hot the brand of Starbucks was” from Race Together, he “thought it would be ill-advised for me or Starbucks to stand with [you all], because it would potentially cause [you] problems.”) Benioff even threatened to reduce Salesforce’s operations in Indiana, where the company is the state’s largest technology employer. Soon, the CEOs of Marriott, Walmart, and Gap lent their voices, too, and the states’ governors retreated.
To many, it was a perfect display of CEO activism. In leveraging their economic influence, these executives had an unbeatable argument: this legislation is not only morally wrong, it’s bad for business. The effort served as a loud juxtaposition to Starbucks’s campaign. Whereas Race Together seemed top-down, this demonstration seemed organic and democratic. In Schultz’s view, these CEOs “used social media as an advantage to them, converse to our situation.” Then there’s the larger, more fundamental difference: CEOs seemed willing to speak up about gay rights but not about racial inequality. Sounding upset and acknowledging how he’ll “probably regret saying this” since “many of [them] are friends,” Schultz reveals during the Atlanta forums weeks later that “I have not heard from one CEO in America, black or white or Hispanic, to say, ‘Is there anything I or my company can do to help, assist, or support what you’re trying to do as a result of Race Together?’ Not one.”
When I ask Benioff about Race Together, he simply says that Starbucks had an “execution problem.” In contrast to many of Schultz’s other social-good initiatives, he says, “Race Together was not well-executed, and he paid a price for that, just as he would if he had launched a product that was not well-executed.”
Julian Bond, the longtime civil rights leader and former NAACP chairman, was a strong advocate for the gay community in Arkansas, working with the Human Rights Campaign to condemn the controversial legislation. But he becomes increasingly anguished when we talk about Starbucks, not because of Schultz’s missteps–he’s proud of the company for taking a stand–but because it solidified to him how little support there is for black issues in general. “My impression is American corporations are generally more eager to stand for gay rights than black rights, and they ought to be equally progressive,” he says. “The tech industry is so bad with respect to racial diversity, but that’s no excuse. All this is depressing.”
Throughout my reporting for this story, I struggled to find business leaders willing to talk candidly about social and civic issues. Race, especially, was a topic no one wanted to touch. It could be that they simply don’t know what change they can effect, or whether their voices would even be welcome in the first place.
Asa Hutchinson, the governor of Arkansas who faced a public fight against Walmart CEO Doug McMillon over Hutchinson’s support for the state’s “religious freedom” measure, feels that companies would be better served by not engaging in social issues at all. “If they start entering into the world of social debate, they’re going to have everybody from Greenpeace to the Rainbow Coalition saying, ‘We want you to support our initiatives.’ Where do you draw the line once you start down that path?” he says.
Levchin, the PayPal cofounder, has dealt with this type of criticism firsthand. In a post entitled “The Discrimination Double Standard,” Re/code called him out for not addressing Silicon Valley’s gender disparities as forcefully as he did homophobia in Indiana and Arkansas. Levchin considers blowback like this inevitable, and recommends “picking your battles and sticking to them,” because if you try to anticipate cynicism or charges of hypocrisy, you’ll ultimately talk yourself out of doing anything. “What if Howard Schultz read all the negative press for [Race Together], and said, ‘Fuck it, I’m just never going to start another controversial thing, because all I get is flak in the press, while some people think I didn’t do enough’? ” Levchin says. “I don’t think that’s how he should feel. He should feel like he tried his best, and that he can do more when the timing is right.”
He might not be able to wait too long. My interview with CVS/pharmacy president Helena Foulkes–who was going to speak about her company’s health initiative that removed all tobacco and cigarette products from its stores–had to be postponed at the last minute due to the unrest in Baltimore, where yet another unarmed black man, Freddie Gray, was allegedly killed by police. Two CVS stores were burned down.
As Schultz puts it, we’re at an inflection point where racial inequality can no longer can be ignored. He’s pushing ahead, with or without the help of his colleagues. “Howard is doing what’s needed,” says John Wilson, the president of Morehouse, the historically black college for men, who is disheartened to think that business leaders might further avoid the topic of race after Starbucks’s PR stumble. “It’s so backward, the suggestion that this conversation belongs to some people and doesn’t belong to others,” he adds. Action on this issue, he believes, will “separate the courageous from the cowards.”
On April 23, Starbucks released its second-quarter earnings report and instantly silenced its critics. Revenue and operating income had leapt 18% and 21%, respectively, driving the company’s stock to an all-time high. “There was no indication that the move to wade into the complex and divisive issue [of race relations] hurt sales,” noted The Wall Street Journal. Starbucks had survived what Schultz calls a “firestorm.” Also, customers never strayed from the brand. If anything, they embraced it even more. Who can complain with such results?
Schultz constantly reminds me that his obligation “first and foremost is as a fiduciary of our shareholders.” At one point, after I keep peppering him with questions about Starbucks’s civic goals, he stops me short. “You have to understand, I spend 90% of my day on Starbucks’s business–I’m not spending my entire life on the issue of racial inequality, I have a company to run here,” he says. “You understand that, don’t you?”
Matt Ryan, the chief strategy officer, reveals that the company has been exploring a range of pilot studies to explore specifically how corporate efforts to support issues like race, education, and same-sex marriage yield tangible revenue gains. “We have successfully linked the percent of store partners in a given store who think we’re living up to our values to the performance of that store,” he says. “We’re able to see a very distinct market improvement in the store’s comp performance”–that is, same-store sales–“controlling for all other variables, when partners believe we’re doing the right thing, values-wise. That’s pretty amazing.” Ryan won’t share specific numbers, but he says it’s “material to our business.”
There are other promising metrics. Starbucks has found that more than a quarter of the public opinion of its brand is based not on its store experience or its coffee products, but on what customers think of Starbucks as an institution. “A big part of that is how we treat our customers and our own people,” Ryan says, highlighting the company’s College Achievement plan. “We knew that would move the lever in terms of public love of Starbucks over time.” Even Race Together, despite the hubbub, is showing signs of long-term value. According to Starbucks, the campaign drew one of the largest awareness pops the company has ever seen. “Through all the yak yak,” Ryan says, “[our customers saw it as], ‘Here’s a company that’s trying to do the right thing.’ ” (Schultz also says that several CEOs have even called in the past few weeks to learn more about Race Together and ask how they can help.)
Schultz is naturally wary of presenting Starbucks as acting so deliberately, as if data informed its values. “We didn’t say, years ago, ‘Okay, strategically in 2014, we’re going to support post–9/11 veterans, and in 2015, we’re going to get involved in racial inequality,’” he says. “I’d like to say there’s this master brilliant strategy, and I’m brilliant, but that’s not the case. I don’t have a short list of issues I’m thinking about at Starbucks, like, Okay, after we deal with Race Together, we’re going after . . . I don’t have that, honestly.”
Still, the positive indicators have given the company a renewed sense of commitment. Starbucks plans to hold more partner forums throughout the summer and release another USA Today insert in July. It recently committed to hiring 10,000 “opportunity youth” employees over the next three years, 16- to 24-year-olds who are unemployed and have dropped out of school, a largely ignored demographic. Schultz also announced a plan to open stores in majority-minority neighborhoods such as Ferguson, Missouri, to provide local job opportunities and community centers. A spokesperson for the company says it aims to open stores in 20 such cities by 2018, in partnership with local “women- and minority-owned business,” and that newly conceived on-site training programs “will help us model how we develop and hire young people who have faced systemic barriers.”
But the company still has some soul-searching to do. When I press Scott Pitasky, the human resources chief, to explain why its leadership team is made up predominantly of white males, he stutters and restarts for a full 13 seconds before saying, “First of all, I’m not sure that all of them [are white], if you look at the diversity.” After I push back (13 out of 19 are white men), he stumbles through a vague answer about how the company will improve its diversity, without a quota system, but offers no other solution. It was a weak answer, and Pitasky knows it.
Later that day, when we bump into each other in the hallway at Starbucks headquarters, he stops me and humbly thanks me for giving him a hard time. “Honestly, the tough questions–they’re the ones we’re asking ourselves,” he says.
When I join Schultz in his eighth-floor Seattle office just after his second-quarter earnings call on the morning of April 23, he looks exhausted. Wearing a puffy vest and chewing on a cough drop, he’s trying to beat a cold before setting off on a flight to Europe the next day. He’s behind his desk when I enter, his Bloomberg Terminal switched on next to a computer screen open to The New York Times, but he joins me on a set of gray couches, kicking back below framed photographs of Martin Luther King Jr. and Robert Kennedy.
Schultz had told me that morning that he planned to say something “not generally spoken about on Wall Street conference calls.” Grinning, he had said he expected there might be a measure of pushback about Race Together, since some thought it might have negatively impacted the company’s business. Like a home-run hitter eyeing a juicy fastball, Schultz had been looking forward to the challenge, and he ordered that I listen carefully to him when I dialed in. Schultz clearly relishes these kinds of opportunities. During Starbucks’s 2013 investor meeting, he squared off in person against a shareholder who complained that Schultz’s public stance on same-sex marriage was alienating customers and hurting earnings. “I don’t know how many things you invest in,” Schultz shot back, “but I would suspect not many things, companies, products, investments have returned 38% over the last 12 months [like we did] . . . [this] is not an economic decision to me . . . we’re making this decision [for our people] . . . to embrace diversity. If you feel, respectfully, that you can get a higher return than the 38% you got last year, it’s a free country. You can sell your shares in Starbucks and buy shares in another company. Thank you very much.” Investors in the audience erupted in cheers.
But today, the earnings call came and . . . nothing. Race Together wasn’t even mentioned. When I ask him about it in his office, Schultz seems to have forgotten that he had teed anything up for me. “Performance drove the call,” he says matter-of-factly. “These are shareholders who are invested in Starbucks because of our financial performance, and we delivered today.”
Perhaps this focus is a good thing. Schultz has long been wary of hubris born of success. In his office he keeps a bottle of Mazagran, a disaster of a coffee beverage Starbucks put out in the ’90s that reminds Schultz even the most well-intentioned ideas can fail. When I inquire about it, he grabs the bottle from a side table and looks down at it. “It reminds me every day that we’re not invincible,” he says. “It was my idea, and it was a complete fuck-up.”
How will Schultz ensure that Race Together, or, for that matter, Starbucks’s other social initiatives, are not big failures too? He knows that Starbucks won’t bridge the racial divide on its own, nor end the achievement gap, nor save the planet. A coffee company can only do so much. But he knows that if he pursues these initiatives with the same vigor as he pursues corporate profits, he can sleep at night.
[Photos: João Canziani]