What I Learned at Starbucks' Annual Meeting

People do strange, wonderful things. Maveron’s Dan Levitan, for example, sent me a note two weeks ago asking if I’d like to go to Starbucks’s annual meeting, despite his having no stake in Redfin’s success. Wednesday morning, I rode over to Seattle Center, and filed into a huge theater, taking a seat next to Dan. Dan tapped on his very cool, weird watch, and said, “It’s all about to start.”

The room went dark and a video came up on a big screen. Except the screen was black. We heard Starbucks’s old CEO apologizing at the 2008 annual meeting for the company’s failures, past, present, ongoing, anticipated. He sounded like he was trying not to cry. We saw people crying at a Starbucks layoff. We saw late-night comics lampooning Starbucks, while McDonald’s and Dunkin’ Donuts attacked the company. And then we saw employees pulling together, and people cleaning stores, and moms with babies drinking coffee. And then Howard Schultz — the CEO who built the business into an empire and took it over again when it faltered — took the stage to talk about how the company had turned itself around. In 2009, its stock price more than doubled.

Whenever Howard Schultz talked about coffee, my eyes glazed over. I don’t drink coffee, and couldn’t be less interested in it. But what he said about treating employees as partners, and fanatical customer service, and building a company with a social mission — these statements made me wonder how Redfin would be different and better if it were run by Howard Schultz. Here’s what I learned from that meeting:

  • Better customer & quality tracking: to become a great company, Redfin will need better customer & quality tracking. We carefully monitor every electronic touch-point, but don’t always follow customers and agents into houses and out the other side. Starbucks knows how long people wait for coffee and how customers rate store cleanliness, not by sending out an email survey but through pain-staking, store-to-store gumshoe work. Without these metrics, the company couldn’t have pulled off the first step in its turn-around, perfect execution on each cup of coffee.
  • Health insurance for everyone: the first story Howard Schultz told was about a chat with one of Starbucks’s largest and longest-standing shareholders, who called him the month he came back as CEO, to ask about canceling barista’s health insurance. “You’ve got the cover to do it now, during the recession,” the investor said. Schultz told the investor: “It sounds like Starbucks isn’t the stock for you.” In another industry where benefits are far from the norm, Redfin insures all our full-time agents & coordinators. We’ve wondered how long we can afford to do that. Howard Schultz would say “forever.”
  • For every meeting, put the customer in the room: Howard Schultz said he likes to begin every meeting by asking people to pretend the customer is in the room. Corny? Sure. But I’ve sat through plenty of meetings that felt like a math problem where we didn’t know which variable we were solving for, because we’d lost focus on the customer. Two of the greatest consumer companies in the world, Amazon and Starbucks, are right here in Seattle, and the two sound so identical when talking about their customer focus that you can’t tell which is which.
  • Innovation isn’t just technology: if you programmed a computer to spit out the meaning of life, the universe and everything, its answer these days would likely be “The Internet.” Guided by the same logic, I struggle to think of innovation except in terms of Internet technology. But for Starbucks, innovation is instant coffee, or finding a new way to train people, or using Burger King as a distribution channel. Howard Schultz would think about innovation at a real estate brokerage in the same way, not just in the brokerage’s web site, but in its training and its service.
  • Retail experiences define the brand: Starbucks uses the physical environment of its stores to define its brand. What does that mean for Redfin? I think Howard Schultz would think about the quality of the stationery an offer is delivered on to the customer. He would think about the yard sign a lot. He would think about the offices where we run home-buying classes, and how the cars our field agents drive are branded & what the agents wear. He’d like our agent photos.
  • “Everything mattered”: Howard said this more than once. He meant that everything has to be perfect – not just the coffee, but the store, the sleeve, the stuff created by every department at Starbucks — to create a great brand. These are the kind of exhaustively high standards we want to bring to employee training, our home-buying class, how we answer the phone (why do so many people say “I think I have the wrong number,” when I answer my phone?) So much of retail is just a willingness to work harder to get everything right, all the time. It seems like Howard Schultz has this willingness in spades.
  • Simplicity, Wit: I was thinking about all the long treatises I’ve written for Redfin when I saw all the Starbucks ads being flashed on the big screen. Everything was so simple. And almost every sentence tried to make you smile. I think Howard Schultz would tell us to be more serious about not being so serious. You can get people to do anything once you get them to smile.
  • Video = Emotion: it was hard not to see the Starbucks videos that day – there were many – without thinking that Starbucks used emotion to great effect in their branding. Video is the best vehicle for creating emotion. Redfin has a video of stick figures that I absolutely love for its wit, but like everything on Redfin, it has low emotional payload. If Howard Schultz made a Redfin video, he might show people crying when they won the offer and got the keys; he’d show new families driving up in an overloaded Beverly Hillbilly station wagon to an empty house on a nice little street; he’d show tense negotiations and smiling agents and customers too. He’d set it to music, which makes a big difference. Coffee is less emotional than buying a house, but Starbucks made it more emotional.

Anyway, this is what I thought about on my way back to the office from the Starbucks meeting. Thanks to Dan Levitan for inviting me, and to Howard Schultz for putting on such a great show. I learned a lot.

Discussion

  • http://www.zillow.com Spencer Rascoff

    Great post Glenn.

    Dan, where was my invitation?

  • http://www.digitalquarters.net Ben Elowitz

    Have you ever got an opportunity for video = emotion! Buying a house is a huge emotional experience… come on, who doesn’t get at least a little bit hormonal over a purchase like that. It’s not only a lot of money, but it’s a life decision about who am I, where am I, what are my roots. That’s Redfin’s opportunity to help ease the emotional burden as a better way to buy a house. I feel relieved just imagining that! To be a part of somoene’s major life occasion – and be making that occasion better for them – now that’s some powerful emotional benefits.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Couldn’t agree more Ben, and well said. Spencer,next time it will be the three of us…

  • Will Kelly

    Internet has brought transparency to the world.

    Redfin has brought it to the Real Estate industry.

    Continued success!

    Great Post Glenn.

  • JanelleS

    Insightful post. Thank you.

  • http://www.dlush.com Jeffery Adler

    Glenn, Enjoyed your share. No doubt, Dan is a mench. With super instincts. He was kind enough to take a meeting with me recently up in Seattle to idea-share (and we are vying for the same customers!). So many ways to learn from the best, and to cross-pollinate ideas across spaces and sectors. Good luck!

  • Rebecca Schwartz

    Thank you for sharing this experience. You have inspired some ideas.

    I don’t know about the paper an offer is printed on but you have opportunities with yard signs. You could put a barcode on them and when you scan it with your iPhone or Android phone it takes you to the Redfin listing.

    And there is a retail experience for online customers, it just doesn’t happen face to face. But what would be the equivalent of the barista remembering your usual drink, or offering you a free sample of the latest whateverccino? What adds value and potential revenue like the monitor that displays what song is playing and the chance to buy the CD? What rewards can you offer loyal customers (or visitors)?

    Do new owners get their new keys on a Redfin keychain? Do they get a Redfin doormat or window sticker? Do they get a gift card for Home Depot as a thank you for referring friends (after the sale has closed)?

  • http://www.robiganguly.com/blog Robi Ganguly

    Glenn, great post, what an excellent way to share your experience and your thought process with us. Schultz is a really impressive guy – if you’ve never read his book, “Pour Your Heart Into It”, I definitely recommend it:

    http://www.amazon.com/Pour-Your-Heart-Into-Starbucks/dp/0786883561/ref=sr_1_1?ie=UTF8&s=books&qid=1269712342&sr=8-1

  • Pingback: Put Your Passion Into Your Product | Untitled Startup

  • http://michelle.yelp.com Michelle Broderick

    What an inspirational way to start a weekend! I was planning on being lazy, but now that my creative buttons have pushed I want to go out and do something to make a difference.

    Thanks for the motivation!

  • http://www.teachstreet.com Dave Schappell

    I especially appreciate the reminders to “for every meeting, put the customer in the room” and “everything matters”. Thanks.

    Now, I’d love to see a post by Howard Schultz, describing how Starbucks would be different and better if it were run by Glenn Kelman :-)

  • Alex Berg

    Great post Glenn!
    It sounds like there might be some opportunities to develop your brand and experience more fully by bringing your users into the driver’s seat of your product development process.

    An ethnographic study paired with persona usage could be a great way to get your customers in every meeting. And I have to agree with Ben. If you want to bring out a little emotion tap your customers directly. They will bring an authentic voice that can help establish trust and empathy in the buying process.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Michelle, laziness is important too.

    And Alex, what the heck is an ethnographic study? Is this an exercise in dividing your customers into segments?