Starbucks began in 1971 when three men opened a store called Starbucks Coffee, Tea, and Spice in Pikes Peak Market in Seattle. Jerry Baldwin, an English teacher, Zev Siegel, a history teacher, and Gordon Bowker, a writer, all shared a love for fine coffees and exotic teas. Each invested $1350 and borrowed $5,000 from a bank to open the store. The partners chose the name Starbucks in honor of the coffee-loving first mate in Herman Melville's Moby Dick. The inspiration for Starbucks was Alfred Peet, who began importing coffees into the US in the 1950s. Peet had achieved great success in California with Peet's Coffee and Tea.
The Pikes Place store was decorated with hand-built nautical features. One wall was devoted to whole bean coffees while another wall consisted of shelves of coffee products. Samples were available for testing, but the store did not sell fresh-brewed coffee. The store was an immediate success, and sales exceeded all expectations. During the first year, Starbucks ordered its coffee beans from Peet's. The partners later acquired a used roaster from Holland and set up roasting operations in a nearby building in Seattle.
By the early 1980s, Starbucks had four stores in Seattle, and the company had been profitable every year since its inception. Zev Siegal grew tired of the business and left. Gordon Bowker remained involved, but devoted most of his time to other interests. Jerry Baldwin became the CEO and took over day to day management. .
Howard Schultz was the vice president and general manager of US operations for Hammerplast, a Swedish manufacturer of kitchen equipment. In 1981, Schultz noticed that Starbucks had been purchasing more drip coffee makers than Macy's. He was curious and decided to visit the company. Schultz was immediately overwhelmed with Starbucks and started asking questions about the company, its coffees, and its roasting process. Schultz then met with Jerry Baldwin and Gordon Bowker and was stoked by their business philosophy.