Entrepreneurs

How Starbucks' Howard Schultz went from the projects to creating 300,000 jobs and a $3 billion fortune

Howard Schultz, the legendary leader of Starbucks coffee, is a billionaire three times over. He's a titan in the corporate world and he has significant sway in the political arena, too. When Schultz talks, Wall Street and Washington D.C. pay attention.

The news that he is stepping down as CEO reverberated through the business world, briefly sending shares of Starbucks stock down as much as 10 percent. Chief Operating Officer Kevin Johnson will become CEO on April 3, 2017; Schultz will focus on turning the company's new line of high-end coffee shops into destination restaurants.

"I willed it to happen. I took my life in my hands, learned from anyone I could, grabbed what opportunity I could, and molded my success step by step." -Howard Schultz, Chairman and CEO of Starbucks

When Schultz steps down in 2017, it will be the second time: He served as CEO from 1987 to 2000 and then returned to take the helm in 2008.

This time, despite Schultz's denials, the announcement has triggered rampant speculation that Schultz, who is a fan of President Barack Obama and publicly supported Democratic nominee Hillary Clinton, is preparing for a run for president of the United States in 2020.

If he did run, it would be the culmination of Schultz's classic rags-to-riches story.

Humble beginnings

Schultz, 63 years old, was born in Brooklyn, New York, and grew up in federally subsidized housing in hardscrabble Canarsie.

His father Fred never graduated from high school and held a series of blue-collar jobs including truck driver, factory worker and cab driver. He never made more than $20,000 a year, and with three children to feed, Fred was never able to afford to buy a home.

Schultz talks affectionately about his father in his book, "Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time," saying that Fred was an honest man who worked hard, played ball with his kids on the weekend and loved the Yankees.

Howard Schultz, chairman and former CEO of Starbucks
Adam Jeffery | CNBC
Howard Schultz, chairman and former CEO of Starbucks

But he also says that his father was "a beaten man." His father "had tried to fit into the system, but the system had crushed him. With low self-esteem, he had never been able to climb out of the hole and improve his life."

When his father broke his ankle at work in 1961, Fred couldn't go to work. That meant he didn't get paid. His mother was seven months pregnant at the time and couldn't work either. When bill collectors called, Schultz or his siblings were instructed to pick up the phone and pretend that their parents weren't home.

"Our family had no income, no health insurance, no worker's compensation, nothing to fall back on," writes Schultz. He didn't know then that he would become a businessman and job-creator, but, he says, "I knew in my heart that if I was ever in a position where I could make a difference, I wouldn't leave people behind."

"I knew in my heart that if I was ever in a position where I could make a difference, I wouldn't leave people behind." -Howard Schultz, Chairman and CEO of Starbucks

Schultz went on to graduate from Northern Michigan University, which he attended on a full football scholarship. He became the first person to graduate college in his family. He writes, "To my parents, I had attained the big prize: a diploma."

Before Starbucks, Schultz worked in sales and marketing at Xerox for three years. He went on to be the Vice President and General Manager of Hammarplast U.S.A., a Swedish housewares company.

Rising through the ranks

Schultz moved from New York to Seattle to join Starbucks in 1982 as director of operations and marketing. Back then, the company only had four stores.

In 1983, Schulz traveled to Italy, where he admired the way the espresso bars in Milan serve as a place for people to meet and share time together outside of the home or the office. He left Starbucks and started his own company, Il Giornale coffeehouses.

In 1987, Schultz returned to Starbucks to buy the coffee shop with the help of a few investors. He also took over as CEO. At that point, there were 17 store locations. Today, there are more than 25,000 Starbucks locations across 75 countries, and more than 300,000 people work at the coffee company.

Howard Schultz on Mad Money.
Adam Jeffery | CNBC
Howard Schultz on Mad Money.

Schultz navigated the company through tremendous growth while remaining socially conscious. In 1988, Schultz made a commitment to offer health insurance to eligible full- and part-time workers, including all domestic partners of employees. Also, Schultz decided to give "partners" (his employees) stock in the company, called "Bean stock."

In 2013, Schultz made a commitment to hire 10,000 veterans and military spouses by the end of 2018. He's hired more than 8,000 so far.

Also, Starbucks has shipped 60 pallets of coffee and 175,000 sticks of instant coffee to troops overseas. His own personal Schultz Family Foundation has committed $30 million to helping veterans transitioning into the civilian workforce.

A leading voice

Schultz is gracious in deflecting the spotlight.

"Starbucks has been in business now for 45-plus years. You know, I'm not putting myself in the class of Tom Brady or any other athlete that has been at the cornerstone of success on a team sport," Schultz tells CNBC. "This is a team sport. It has always been a team sport. I've gotten more credit that I deserve. The company has a large base of fantastic leaders."

Still, Schultz is largely seen as the smarts behind much of Starbucks' success and its evolution into a global brand.

He has accumulated a stack of awards, including the Distinguished Leadership Award from Northwestern University's Kellogg School of Management, the Horatio Alger Award for those who have overcome adversity to achieve success, the Rev. Theodore M. Hesburgh Award for Business Ethics given by Notre Dame University's Mendoza College of Business, the Botwinick Prize in Business Ethics from Columbia Business School, and the first-ever John Wooden Global Leadership Award from UCLA Anderson School of Management.

He's also a best-selling author. After his first book was well-received, Schultz published "For Love of Country: What Our Veterans Can Teach Us About Citizenship, Heroism, and Sacrifice" (2014) and "Onward: How Starbucks Fought for Its Life without Losing Its Soul" (2011).

Schultz's inspiring journey involves a bit of luck, he admits, but it has also been the result of a fierce determination and unwavering persistence.

"I willed it to happen," he says. "I took my life in my hands, learned from anyone I could, grabbed what opportunity I could, and molded my success step by step."