Discovering Market Realities: Starbucks

June 1 2012

In 1985, when Howard Schultz (current CEO of Starbucks) was preparing to launch coffee bars in America modeled after those already in Italy, he and his partners didn’t just launch the stores on a whim. They first did everything in their power to understand the dynamics of the market they were entering. They visited five hundred espresso bars in Milan and Verona to learn as much as they possibly could. How did the Italians design their cafes? What were the local coffee-drinking habits? How did the baristas serve coffee? What did the menus look like? They scribbled observations in notebooks and videotaped the stores in action. This kind of market research is not a one-time thing entrepreneurs do when a start-up first launches, either. David Neeleman founded his own airline, JetBlue Airways, and served as CEO for the first seven years. During that time he flew his own airline at least once a week, worked the cabin, and blogged about his experience: “Each week I fly on JetBlue flights and talk to customers so I can find out how we can improve our airline,” he wrote. 

Schultz and Neeleman had tremendous vision when they started founded their start-ups. Yet from day one they focused on the needs of their customers and stakeholders. For all their smarts and vision, they knew well what VC and friend Marc Andreessen likes to say: “Markets that don’t exist don’t care how smart you are.” Similarly, it doesn’t matter how hard you’ve worked or how passionate you are about an aspiration: If someone won’t pay you for your services in the career marketplace, it’s going to be a very hard slog. You aren’t entitled to anything.