Howard Schultz: Key ingredient to Starbucks' success

Howard Schultz, chairman and CEO of Starbucks
Cramer gets Starbucks' success story   

As "Mad Money" heads into its 10th year, Jim Cramer has a tip for investors on how to beat the market. While some skeptics say it's not possible to consistently beat the market, Cramer knows if you pick the best stocks of the best companies with the strongest management, and you do the homework—it is possible.

"Let me reiterate the main point I've been trying to make for as long as I've been on television: not all stocks are created equal. Some are a heck of a lot more equal than others," the "Mad Money" host said.

One best-in-breed company on Cramer's list is Starbucks. This stock has shot through the roof and nearly quadrupled since the first "Mad Money" episode, up 274 percent. And to boot, it's up 17,300 percent since it went public in 1992. Wowzer!

The staggering performance is thanks largely to the company's visionary, CEO Howard Schultz.





Starbucks
Scott Mlyn | CNBC

Starbucks stock has been roasting up a storm lately, partly due to the low price of coffee and partially because of the amazing earnings announced in January. It has also taken the Chinese market by storm, with more than 1,600 stores in the country and 300 in Shanghai alone.

What could be the key to success for this company that seems to only roar higher? To find out, Cramer went straight to the source and spoke with Schultz.

The CEO said the secret to success in both the U.S. and China is people; the people behind the counter make the difference.

"From the very beginning we started out not as a franchise system, but as a company-owned system. We recognized early on that that if we were going to be a company-owned system that the cultural values and guiding principles, mainly our people, are going to be the equity of the brand," Schultz said.

In the very early days, Schultz understood the link between shareholder value and the value of his people. This was evident when Starbucks recently introduced its college achievement plan and raised wages for its employees.

"Success is best when it is shared. Every time we raise value for a shareholder, we raise value for our people. And that is the way we have been doing it all over the world."

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Those same principles were also applied by Schultz when entering the Chinese market. Three years ago, most thought he was crazy when he introduced annual family meetings to show respect to employees' parents and children.

"What we have established in China is no small feat. I think over time there will be thousands of stores, and it is very possible that one day China will be larger than the U.S. market. But I also think this is a challenging environment," Schultz added.

His long-term view on China has allowed the company to thrive, and Schultz clarified that while there may be a few hiccups along the way, Starbucks is just getting started.

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