That intimate relationship with customers is one of the keys of its brand, he says, as he doesn't believe one can build a sustainable brand simply through advertising and sales promotion.
"I would say strongly, the success of Starbucks demonstrates the fact we have built an emotional connection with our customers. I think we have a competitive advantage over classic brands in that every day we get to touch and interact with our customers directly. Our product is not sitting on a supermarket shelf like a can of Coca-Cola. Our people have done a wonderful job of knowing your drink, your name, your kids' names and what you do for a living," he says.
Schultz, 51, joined Starbucks as director of operations and marketing in 1982. Five years later, he bought the company, and five years after that Starbucks became the first coffee organization to become a public company. Today, it has more than 8,000 locations—many of them right across the street from each other—in nearly 40 countries around the world and employs more than 80,000 people.
Schultz says, in a world of technology, his organization is the quintessential non-tech company.
"We have no patent on anything we do and anything we do can be copied by anyone else. But you can't copy the heart and the soul and the conscience of the company. It's a great example for other young people about execution and doing things the right way. You don't have to have a cure for cancer, this is just a basic business," he says.
Schultz notes that the phenomenon of opening up new Starbucks locations literally across the street from other Starbucks stores was not part of a master plan and happened by chance.
The company operated one of its busiest stores in downtown Vancouver in a 1,000-square-foot space. Eventually, it became too small for its level of traffic and service levels suffered. Then a bigger location across the street came up for rent.
"We kept looking at it and looking at it, and finally we said, let's take the other side of the street. My board members thought I was out of my mind," he says with a laugh.
The original store experienced 10 to 15 percent sales dilution for the first year both were in operation, but within 18 months, the two had developed different customer profiles and were in positive sales territory. "We've repeated that strategy countless times," he says.
Schultz also set out to create a company culture that cares about its employees. For example, it gives stock options to every single person who works more than 20 hours per week—the vast majority of its employees—and has been doing so since 1990.
"The way we have built our company by including the success of the company with everyone in it and not leaving our people behind is a great example of building a business the right way," he says.
Schultz says one thing he has learned over the years is everything Starbucks employees do in front of customers matters. He says the company started out with a philosophy of acquiring and roasting the highest quality coffee in the world and delivering it fresh to its customers. But it has evolved to include the way in which it's delivered, the style, the elegance, the environment, the relationships its people have with customers and the trust staff have built with customers.
"We look at the brand not as a piece of advertising but everything we do communicates who Starbucks is. The place, the physical environment really has become an extension of the brand and it's very important to the success of the company," he says.
Schultz says he drinks about five cups of coffee daily, only from Starbucks. Depending on the time of day, he'll drink different varieties, an espresso macchiato in the morning, black coffee or a double short latte later in the day.
And despite visiting the competition in coffee shops all around the world, he never drinks their coffee. "I know what it's going to taste like," he says.
Schultz says one of the most remarkable facets of the company's evolution is its increasingly diverse customer base—young, old, rich, poor, educated or uneducated.
"The taste of our coffee has really created such a quality experience that we've been able to convince people over the last 20 years that it's still a very good value even though it's more expensive than traditional coffee you can find at a diner," he says.
He notes the customer's ability to customize his own beverage has also played a role in building the Starbucks experience.
"The majority of our customers make their own proprietary beverage, a double tall latte, vanilla latte, frappuccino. We've made it fun," he says.
Believe it or not, despite Starbucks' astronomical growth, Schultz doesn't foresee a time when the company will slow down.
"It's still so early on for us. We're in the embryonic stages of the growth of the company. Our dream is to continue to grow the company and become one of the most recognized and respected brands in the world. Coffee will always be the core of what we do. So many companies have made mistakes by not sticking to their knitting and they start believing their own press. That's not going to be us," he says.