Starbucks co-founder Zev Siegl spills the beans about building a brand

Starbucks co-founder Zev Siegl, who was on a visit to India to attend Global Investors Meet in Bengaluru, was seen at a restaurant enjoying filter coffee and masala dosa

Zev Siegl co-founded Starbucks in 1971 in Seattle, US, along with Gordon Bowker and Jerry Baldwin. It is now the biggest coffee house brand in the world and reported net revenue of $32.3 billion in fiscal 2022. Siegl is on a visit to India and was recently seen at Bengaluru’s iconic restaurant Vidyarthi Bhavan enjoying filter coffee and masala dosa. He was also here to attend Karnataka's Global Investors Meet (GIM) and experience the startup boom and technological prowess in the country.  

In the area of direct-to-consumer space, the country is witnessing the rise of D2C brands across categories. Some of these brands include Lenskart, Licious, Zivame, Wow Skin Science, Mamaearth, and Third Wave Coffee Roasters. D2C is estimated to become a $100 billion addressable market by 2025, according to analysts.

At a time when Covid-19 wreaked havoc on businesses across the globe, Siegl said that the pandemic has given rise to many winners in the direct-to-consumer space.  For instance, the demand for the products of Indian bicycle manufacturers increased significantly in many countries. D2C companies focusing on the pet industry as well as work-from-home related products also witnessed rapid growth.

When asked about the opportunities to build brands in a country like India, Siegl said that it is very important for entrepreneurs to take professional help.

“You have good instincts, you know who your customers might be, but for brand building, you really need somebody who has broader insights,” said Siegl, while addressing industry leaders, investors, startups, and government officials at GIM. “There are many ways to get professional help without spending a fortune.”

Siegl who has earned the nickname ‘Mr.Startup’ shared his own life lessons from his entrepreneurial journey, which includes taking professional help to build the business. A former public school history teacher, Siegl decided to take the entrepreneurial plunge almost 50 years ago along with his two friends Gordon Bowker, a writer, and Jerry Baldwin, a former English teacher, after having an intense discussion about changing their lives. All three friends were in their mid-20s at that time. “We decided that the way to change our life was to start a business,” he said.

They came up with a list of business ideas and narrowed it down to coffee roasting. “Coffee was pretty terrible in Seattle,” said Siegl. But they had no knowledge or experience in the coffee business. There was no entrepreneurship ecosystem like today to provide them with any support. The friends reached out to an expert who helped them learn about the coffee industry. “We loved him and he loved us. And he made it possible for us to move into the coffee industry really easily,” said Siegl.

They started Starbucks in 1971 along the cobblestone streets of Seattle’s historic Pike Place Market. It was here where Starbucks opened its first store, offering fresh-roasted coffee beans, tea and spices.“When we started Starbucks, nobody had a computer,” said Siegl.

In 1982, the company hired Howard Schultz, a young New Yorker, as the director of retail operations and marketing. In 1987, he purchased Starbucks from original founders with the help of local investors. Schultz served as CEO of Starbucks (1987–2000, 2008–17, 2022– ). He changed the business model from selling coffee beans to offering beverages and helped Starbucks transform into a worldwide presence.

Siegl said Schultz became the founder's exit strategy. “This is the kind of person that you want to have around you. Somebody who is smart and aggressive enough to help you with the exit,” he said.

When asked about the rationale behind his complete exit from the firm and not keeping any Starbucks shares, Siegl said he and his partners are early-stage entrepreneurs and he wouldn’t pretend to be a corporate executive.

When asked about not pursuing investing as a career after exiting Starbucks, Siegl said he is afraid of the ‘Peter Principle’ a concept in management developed by Laurence J. Peter, where members of a hierarchy are promoted until they reach the level at which they are no longer competent. “I'm really good at very early-stage companies and love working with them,” said Siegl, who now advises small businesses including Voga Coffee, a Silicon Valley-based manufacturer of coffee brewing machines.

Siegl said there has never been a better time than now, to be an entrepreneur. Innovation is very dispersed. It is emerging not only from regions such as India, North America, and Europe but also from countries like Mexico and Vietnam. In the post-Covid world, there are greater opportunities for investors and entrepreneurs to connect with each other. “Using Zoom (video-conferencing), you can contact almost anybody in the world today,” he said.