Howard Schultz and Ray Kroc

Howard Schultz and Ray Kroc are two great entrepreneurs behind two of the most identified American brands, Starbucks and McDonald’s respectively. I love long plane journeys, one reason being that I get to catch-up on my reading. During my most recent trip to India, I picked up Pour Your Heart into It : How Starbucks Built a Company One Cup at a Time authored by Howard Schultz. This is one great book. (One thing to learn from Howard Schultz apart from his entrepreneurial skills is the art of story telling…) Coincidentally, during my last long plane journey (to Milano, Italy), I was reading Grinding it Out: The Making of McDonald’s by Ray Kroc, another book that falls in the same autobiographical league. The two autobiographies have some amazing similarities worth talking about.

First, both were believers. After his first visit to the single McDonald’s store in California, Ray Kroc knew that this is going to be something bigger than what anyone can think of. He believed in the concept of McDonald’s and had the drive to spread it beyond boundaries more than anyone else, even more that the McDonald brothers running it. Similarly, Howard Schultz was impressed by the coffee bars he saw in Milano, Italy. He believed that Americans should start enjoying their coffee experience and became a preacher of serving hot coffee in the once retail-only Starbucks stores. Their belief powered by persistence through all the ups and downs led to the formation of these two global brands.

Second, neither one of the two started the first store of what they are known for. Not only this, both of them were suppliers to the stores they later converted into big phenomena. Ray Kroc supplied juice mixers to the original McDonald’s store in California and Schultz supplied appliances to the Starbucks stores in Seattle. A slight difference in approach over here, Ray Kroc signed a deal with McDonald’s owners to use their name and concept to open similar stores elsewhere, while Howard Schultz joined Starbucks as a marketing manager, left the company to open coffee joints under the name of Il Giornale, bought Starbucks and became its CEO.

Third, both were obsessed with the names. Kroc went through series of issues with the McDonald’s founders but stuck with the name and the famous M curves. Ditto for Schultz. He opened his coffee bars Il Giornale, but liked the name Starbucks so much that he renamed all his already running Il Giornale stores after acquiring Starbucks.

Fourth, both left stable jobs to chase their dreams. Kroc was selling mixers when he came in contact with McDonald’s. Within weeks, he was on plane with deal papers to start his journey. Schultz decided to quit his well paying job of $75,000 a year in 1980 and took a big pay-cut to join Starbucks.

Fifth, both were staunch believers of quality. Starbucks is known for its quality, and Schultz developed the entire enterprise one store at a time keeping the quality intact. Till today, Starbucks does not compromise on the quality as far as possible. They do not add flavor to the beans, or sell low quality beans in their stores. Starbucks, since its inception has a 40 hours training program for its baristas to serve the perfect cup of coffee. If McDonald’s is known for one thing, its the fries. McDonald’s got a perfect process for preparing its fries and they have not compromised on standards there even a little bit. There’s a complete university like program for the employees at McDonald’s for decades and every person working in McDonald’s goes through this program to maintain the McDonald’s quality and service standards.

Sixth, like any other successful entrepreneur, both Kroc and Schultz pioneered the unique quality of building and leading great teams. Read their autobiographies and you will find chapter after chapter in praise of the people they worked with and the great folks who embarked on the journey with them to lay the foundation of their respective enterprises.

These two individuals, role models for many budding entrepreneurs, and the similarities in their approaches endorses the importance of persistence and people management among other things. A look at one big difference between the two can be interesting as well. Howard Schultz started his first coffee store operation when he was 28 years old. On the other hand, Ray Kroc started his first McDonald’s when he was 52. If nothing else, this definitely proves that age is no barrier to kick-start something you believe in…all you need is a dream and the vigor to chase it!

2 responses to “Howard Schultz and Ray Kroc

  1. Pingback: Every McDonald’s requires a Ray Kroc « Adscovery

  2. Pretty nice scoop from 2007! I’m just watching The Founder for the first time today and noticed the similarities. This is what I got:

    Ray Kroc franchised McDonalds similar to how Howard Schultz franchised Starbucks from Zev Siegl, Jerry Baldwin and before Alfred Peet:

    – Founders: Theme + Operation breakthroughs
    – extremely limited menu (initially)
    – cultural cult classic food, while still a variant on existing popular tastes, e.g. Diner Food and Coffee
    – Built in tight friendship or brotherhood, this doesn’t scale and consequently the initial business can’t scale either
    Franchise leverages the following aspects:
    – operations are built from ground up to hit quality targets at mass audience price point
    – hits not only unseen demand, but meets growing segment of taste emerging in society.
    – standardized product, employees, architecture.

    – Franchiser: manic, persistent, type-A, “poor”, charasimatic
    – relatively unconnected in mega-business and never “made”/tenured by any institution, although prior work shows some success and lots of grit; promising but not a boy-genius.
    – knows lots of people through previous experience, actively seeks out different people, makes friends easily, but anti-cliquish
    – Both were suppliers to their unicorn store, and both were impressed with their orders and went to personally meet with store owners.
    – Overcomes their given name which carries some stigma in mass-market

    Franchiser will wrap his establishment in in un-assailably noble abstract concepts, but strategy will always favor growth over tradition.

    Franchiser will attract ambitious and talented. Many will try to “franchise” his brand, sometimes with fallout. Franchiser will also make several grunts from the early growth phase into executives.

    Pretty haunting how similar the #1 and #2 most known American food brands contain the same story (I think you could argue which one is above the other, but not that they are both respectively above everyone else). Small irony in such divisive times: Schultz a life-long Dem, Kroc an R.