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CNBC Transcript: Starbucks Founder, Chairman, President & CEO Howard Schultz Speaks with CNBC's Jim Cramer on "Mad Money" Tonight

WHEN: Today, Wednesday, March 18th

WHERE: CNBC's "Mad Money w/ Jim Cramer"

Following is the unofficial transcript of a CNBC interview with Starbucks Corporation Founder, Chairman, President & CEO Howard Schultz. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000362633.

All references must be sourced to CNBC.

JIM CRAMER: All right, Howard, I go and get my triple-Venti cappuccino with skim wet every morning. I say "hello" to these people. They say "hello" to me. I like it. I never noticed before whether they were African American or Caucasian; now I do. Is that good or bad?

HOWARD SCHULTZ: Well, in all fairness, Jim, I don't think that's the question. Let's first look at the situation in the country today. Between Ferguson, Madison, Wisconsin, New York, Cleveland, there obviously is-- the country is being torn apart by racial injustice and a level of racism that we haven't seen publicly for a very long time. I think Starbucks has had a long history of recognizing that we have a national footprint, and we want to answer the question in the affirmative, "Can we use our scale for good?" All we're trying to do is potentially do something catalytic to start a conversation. We don't want to be intrusive on any level, and in many ways this is what we did a year ago when we had the Concert for Valor and raised a level of awareness, when in fact most of the American people did not know very much about the two and a half million people who are serving in Iraq and Afghanistan. So, in conjunction with USA Today in producing this document which'll be in our stores, as well as soon as over two million USAs on Friday, we're simply trying to raise the awareness, the level of empathy and compassion necessary to bridge the cultural divide that exists in this country today. If a customer or a barista wants to opt out of it, it is not mandated. It's simply an act of kindness, if in fact the customer wants to receive a cup, and understand that we're just trying to raise the level of awareness and sensitivity, and perhaps that person may have a conversation with a coworker or somebody else as a result of the fact that we took this initiative. This is not marketing. It's not PR. And I think what happened yesterday was a little bit misguided about what took place on social media. It was out of context. In addition to that, we announced today that there are six million disconnected youth in this country. The majority of them are black and latino. They're not in school. They're not working. They're ages of 16 to 24, and like what we did with veterans on the hire initiative, we announced today that we're gonna hire at least 10,000 of them over the next three years. And I think lastly, and I know it's longwinded, I think it's just in a time in America where race relations, diversity, and inclusion affects all of us, and I think the country would be best served, and we would all be best served, if we could live in harmony and live together.

JIM CRAMER: Well, Howard, I was surprised, I have to tell you. You've brought up and put in front issues like gay marriage, gun control, partnership in-- partisanship in DC, veteran affairs and jobs. Weren't you shocked actually that it was so vitriolic?

HOWARD SCHULTZ: Well, no, I wasn't, because I knew that this is an issue that obviously has a high degree of emotion attached to it and is very complicated. But let's go back to the beginning. I have held town hall meetings across the country, with employees in Los Angeles, New York, Oakland, St. Louis and in Chicago. I've also met with Chief Bratton, I've met with Chief Beck in LA, I met with Chief O'Toole in Seattle. So, I've tried to do my homework and really understand how could Starbucks use its scale for good. I recognize that when you are taking on an issue like this and you're establishing leadership and potentially going against the grain, there are going to be people who are going to be angry and upset. But I, you know, what I try and do every day is ask myself, "Is this initiative in the interest of our people, our customers, and our shareholders?" This was discussed at length at a board meeting a month and a half ago, and I give great credit for our board to recognize that this is a time when we all should not be a bystander, and we have to have a level of engagement on this issue. I also think that the country is at a tipping point, and how long are we going to ignore these issues before something very serious happens? More serious than has happened in isolated Ferguson or Madison and in New York? This is a nationwide problem, a problem that we need to address, a problem that's been going on for hundreds of years. Starbucks is not going to solve the problem unto itself, but can we be a catalyst for a positive dialogue with our customers and our people and potentially elicit the help and support of other businesses and business leaders? And I will tell you, I have heard from other CEOs and other businesses who have complimented me and the company on this initiative and want to know more information about potentially what else they could do inside their own company. So --

JIM CRAMER: Okay, but Howard, I regard my Starbucks as my third place.

HOWARD SCHULTZ: Yes.

JIM CRAMER: And to quote Mellody Hobson, your terrific board member, this is a third-rail issue. Why would I want, as a customer or as a shareholder, a third-rail running through my third place?

HOWARD SCHULTZ: Well, I think you're missing something. If A, if a barista does not want to write on the cup, they don't have to. And if a customer doesn't want to accept it, they don't have to. But Jim, writing on the cup is a small piece of this overall strategy. The big piece of the strategy is Starbucks and USA, starting Friday, creating real content that will help all of our customers understand something. And I think this is vitally important. Whether a person wants to admit it or not, we all have some level of unconscious bias. And if we could approach that with a higher degree of empathy and compassion and understanding, it'll go a long way to bridge the divide. Writing on the cup is a de minimis piece of this issue, and it's not something that's going to last long. It was a catalyst to start this. What's going to last long is our company saying that we believe that there is a serious problem in America. We're in every community almost in America, and can we use our stores and our national footprint for good? I would also tell you lastly, and I think this is the most important piece of this, this decision would not have been made in the affirmative if the large majority of our people weren't supportive of it and very proud to participate in it. And so every open forum I've had across the country, our people have encouraged me and asking the question, "How could Starbucks get outside of its small self in relative to the small meetings we're having, and enlarge this to a larger conversation?"

JIM CRAMER: Right, twice you said that I'm missing the point. Now, my charitable trust is a shareholder, and I drink Starbucks every day, okay? So, I don't think, you know, my position is both as a customer and shareholder, and I don't know if I'm missing the point as much I'm concerned about Starbucks as a place, as a company, and as an institution, and I don't-- I want to get my priorities right. Remember, you know, I don't work there. I go there. And I'm not trying to say the wrong thing or the right thing. I'm trying to understand the context, because there's been an overwhelming response, a firestorm, and sometimes I think the message was hijacked already, and I think the message needs to be put in the context of, "Look, this is voluntary. It's not like you go to our place and you're going to be taught something." And I'm concerned as someone who watched the stock today, because that's my job too, that I just don't want the message lost, because in the end, you're a great American company doing fabulous things for shareholders, for people who work there, for customers. And all three have to be balanced.

HOWARD SCHULTZ: Well, I think you said it better than me, so thank you. It is voluntary. It's voluntary for our people, it's voluntary to the customer. Starbucks is a primary place for people to have conversation, to meet. It's a social place. We're obviously not going to do anything to dilute the integrity of the third place between home and work, which Starbucks provides every day in this deep sense of community. But perhaps, perhaps we can be a catalyst for some people to take the message and take it away, take it to their children, take it to their workers, to coworkers, and have a conversation about race. And one of the things we learned throughout the country in having these meetings is creating a safe place where people felt an opportunity to talk about their life experience and what happened taught other people who were not like them an opportunity for greater understanding and compassion. And I think that is what's needed.

JIM CRAMER: Okay, now, I want to ask you, do you think -- you've been criticized on both sides, which tells me that you've done something right. Do you think an initiative could be both a cynical exploitation to get more business and at the same time an idealist initiative that could hurt business?

HOWARD SCHULTZ: Well, I can without question tell you Jim that there's no part of this on any level that's about marketing or PR or trying to get more business. You know the company, and I think you've known me too well to know that this is from our heart and from our conscience, asking ourselves, "How can we use our scale for good?" I don't think it's going to hurt business. We certainly have not seen that in the last 24 hours. This is going to have a long tail to it. I think people trust the brand, they trust the intentions of the company, they trust our people, and I have great faith that our people will do the right thing and not put any customer in a situation where they're being handed something they don't want to carry.

JIM CRAMER: Well, I completely share that faith, but I would be wrong, because it's still Mad Money. I felt technology initiatives and Postmates, the idea -- we've had them on the show -- of getting your beverage delivered, these were two things you announced that along with the split, that would've been monumental, had we not talked about a far more monumental issue. Can you just give us a minute on the business side?

HOWARD SCHULTZ: Yeah, but I want to say something. I, you know, I'm not in the business of short-term rewards on a 24-hour cycle. We're building a great, enduring company. The stock split, the delivery opportunity with Postmates, they have a significant national infrastructure that will leverage all the things we want to do. We talked to a number of companies. They clearly won based on merit. And then we're going to have delivery in certain buildings. We announced directly that we'll have delivery in the Empire State Building. And one thing we did announce today which is quite significant, and that is a joint venture with one of the largest ready-to-drink beverage manufacturers and distributors in the country of China, with over one million points of distribution. And they'll be bottling and distributing bottled Frappuccino in China with a joint venture with Tingi. That is a huge deal for the company, going forward.

JIM CRAMER: Well, Howard, I wish I didn't have to say that you were courageous. I wish I could say it's just everyday business, because it should be. Right now it's courageous, and I think it's great. And I want to thank Howard Schultz, founder, chairman, president, and CEO of Starbucks. And honored to have you on the show, Sir. Thank you very much.

HOWARD SCHULTZ: Thank you. Thank you, Jim.

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