The Painful Awful Slow Fall of Starbucks

It’s like a master class in corporate dysfunction

Starbucks is one of those nice little rise stories where this small idea comes along at just the right time and ends up being transformative and hugely successful. The real kicker though, is usually that idea is simple, almost obvious in retrospect.

For Starbucks, it was anticipating the demand for a new type of experience in the digital world. Coffee used to be ubiquitous. It cost a quarter at the gas station and tasted like dirty water run through a sock. You’d grab a white Styrofoam cup if you making a long drive. My mom was perfectly happy making a pot of Folgers on Sunday and then reheating cups in the microwave all week as needed. It was just a bitter delivery mechanism for caffeine.

What Starbucks realized is people wanted more than that. There was snob appeal. Tell people that smart, classy folks know that an Ethiopian dark roast is an exquisite drink fit for the elites. Encourage guests to custom order their drinks. That has snob appeal, justifies a higher cost, and provides a ritual for people to incorporate into their lives. “I need my ice quad venti mocha or I can’t work today!”

They saw the importance of wifi and having a place to study, work, or socialize. They also borrowed heavily from fast food and realized that consistency, clean bathrooms, and familiarity would make Starbucks a welcome sight for people all over the world. Sure, say what you will about the dark side of all this, and I’m about to, but one can’t deny that this basic idea of selling people the Starbucks “experience” was wildly popular and insanely profitable.

Ten years ago, I was going to Starbucks every day. A bunch of my friends worked there. They had big leather couches and chairs. They had the NY Times and the local New Orleans paper. Things moved slowly and it seemed perfectly normal to pop in there, say hi to my friends, drink a tall vanilla latte in a mug, read the paper, and spend an hour getting ready for the day.

Then it all started to go wrong. I don’t know if it was greed or hubris, or maybe just buried contempt for society. Whatever it was, Starbucks forgot that it was the experience they were selling. They deluded themselves into thinking it was the coffee.

They opened more stores. They got rid of the comfy seating and the newspapers. They started pushing mobile orders and drive-through…