How a sip of espresso at a piazza in Italy transformed the coffee industry in North America. It seems obvious now. But trust me. This idea was crazy. Learn just how crazy it was. You may need to go to Italy for inspiration. David Young: Welcome to the Empire Builders Podcast, teaching business owners, the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Sample is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is well it's us. But, we're highlighting ads we've written and produced for our clients. So, here's one of those... [No Bull RV Ad] David Young: Stephen, my notes say, Starbucks today. Now, I don't know. Are we heading to Starbucks? We're going to do the drive through? I've got credit on my Starbucks card. What do you want? Stephen: Five buck lattes. Here we come. David Young: All right. Stephen: You know, the thing that's interesting about Starbucks and we're going to go back to the early days of Starbucks because one of the problems is Starbucks business seems obvious today, but I'm going to tell you, if Howard Schultz back in the early days, came into your office pitching you to invest in Starbucks. You'd probably tell him to get the hell out of your office. So, Starbucks was founded in 71 and Howard Schultz bought it in 1980. At that time, I'm not sure whether it was four or six stores, but it was just a couple of stores in the Seattle area. Today, they have over 30,000 locations. They're doing $25 billion in revenue. They are everywhere, right? And in fact, they've had such an impact on the coffee business. It's even changed how McDonald's, McDonald's, it's created the McCafe's in response to what's going on with Starbucks. Stephen: But, here's the thing, let's go back to the early days, because one of the things we're often talking about in the Empire Builders Podcast is how you got to do things that are bold and different if you want to build an empire. Copying everybody else? Fine, you can get a little bit of growth, but you aren't going to change the world. You aren't going to change your industry and you aren't going to become a billion dollar business doing that. So, let's go back to the early days of Starbucks. And if you want to learn more about the Starbucks story, I recommend reading the book, Pour Your Heart Into It, which is written by Howard Schultz. It's a fascinating story about this business, but here's the thing, if we go back into the early 80's, late 70's, early 80's, the belief in the coffee business was coffee sales were declining overall. Believe it or not, you look at a Starbucks today and look how many young people are in it. Stephen: The demographics for coffee back then were old people, were dying off. The coffee business was dying with its consumer. Coffee prices were declining. A cup of Joe is what coffee was and it was drunk in diners with those linoleum counters and people smoking and the tacky, you remember the tacky little metal trim that was screwed in and some surly waitress. They were located in Seattle and the Seattle economy was poor, was abysmal. Boeing, the largest employer was struggling and laying people off right, left and center. Schultz was in the coffee business and he had just returned from a trip to Italy where he experienced Italian coffee and cafes. And he said, this seems like a good idea for the United States. What I'm going to do is I'm going to charge a premium price for coffee. Remember, coffee prices are declining, the local economy's the shits, your consumers dying off, and I'm going to charge a premium price for my coffee and I'm... Stephen: And I believe the reason why coffee is dying is because we have a crappy product and a terrible experience. And I'm going to change that. I'm going to charge $5. Prices are declining,
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