Starbucks Beat Shouldn't Awe, Just Inspire

In the 10 minutes it takes for me to get home from a morning workout at my health club there are a half-dozen Starbucks stores where I can pick up my wife's favorite caffeine addiction: A Grande Americano with an inch of steamed soy.

I'm not sure what's more amazing. The fact that I have my wife's drink ingrained into my memory or that on average there's a Starbucks store for every mile I have to travel.

Here in soggy Seattle, where I cover the international coffee giant for the Seattle Post-Intelligencer, it not only seems there is a Starbucks on every corner but the ever-growing retail phenomenon is constantly in the news.

At least 15 different reporters from various media outlets, including four wire services and another daily paper here in Seattle, cover this company that has made latte and cappuccino part of the American lexicon. So, how does a guy who doesn't even like the taste of coffee stay on top of a business that opens a new store every three hours? Well, here are a few tips that could apply to covering Starbucks or many major U.S. companies.

1) Know the Product: Even if I don't drink Tall drip coffees or Venti non-fat mochas, I need to understand the vocabulary and what the company sells in order to write with authority. With Starbucks venturing more and more into media, I also need to have an understanding of the music, book and movie industries.

2) Know the Company: Before I started the beat, I read "Pour Your Heart Into It" by Howard Schultz, chairman and founder of Starbucks Corp. The 351-page company bible gave me a great historical perspective about Starbucks and details about Schultz, an extremely passionate man and the corporate face of the business.

3) Know the People: The first line of entry -- or defense -- at Starbucks is the company's legion of public relations staff. Starbucks employs about 30 people to deal with the media, and it also uses outside consulting firms. Typically, I work with two spokespeople whom I have gotten to know pretty well. When I first started, I took them to lunch so they knew who I was. Sharing a meal with a source allows me to know them better and, hopefully, that person realizes when I write something critical or controversial it's not personal. And, I have found that if I'm reasonable and someone gets to know me then that person is more willing to help me out.

Recently, I had trouble getting an interview with a Starbucks executive over the company's launch of a record label because a Southern California consulting firm was doing the public relations. That firm said there would be no interviews. I put a call into the two people I had taken to lunch, pleaded my case, and within 2 hours I had my interview.

4) Don't Become a Fan: Starbucks has grown from a handful of stores in a few states to more than 9,400 in all 50 states and many more in 38 other countries. By any measure, the company is a business success story. However, while I admire the growth and I report about the company's success, it's also my job to point out the blemishes and keep an eye on the finances. Earlier this year, I wrote a story about how Schultz made more than $100 million in compensation in 2006 and also received $1.23 million in perks, including $475,685 worth of free air travel for himself, family and friends on the company's two luxury jets. The value of free air travel was nearly double from the previous year and it was one of the highest in the country among executives at major U.S. corporations, including those much bigger than Starbucks. The company wasn't happy with the story, but it was widely read in our print and online editions and it was a service to shareholders.

5) Read SEC Filings: Like most companies, Starbucks doesn't publicize when it makes regulatory filings except for quarterly financial reports. However, these Securities and Exchange Commission filings are filled with great information. By reading the company's proxy, I was able to see all of the perks, which also included security coverage that was granted to Schultz and other executives. By comparing the proxy to other public companies based in Washington a colleague and I determined that Schultz received the highest amount of perks among local top executives. Another SEC filing from Starbucks this year disclosed that Schultz transferred 3.6 million shares of his company stock to pay off a loan he used to buy the Seattle Sonics NBA team. Company filings can be found at sec.gov or there are programs you can buy, such as 10kwizard.com, which notifies you by e-mail about SEC filings.

6) Read the Competition: A great Internet site to see what others are writing about Starbucks is googlefinance.com, which also has detailed information about numerous other public companies. This site posts stories, including those from the P-I, about Starbucks from all over the world. Another great place for information is starbucksgossip.com, which tracks and posts stories -- and gossip -- about the company. While most businesses may not have a website entirely devoted to it, there are plenty of blogs or chat sites for diehards. I never report information from any website until I have sourced it myself, but the sites are great places for tips.

7) Listen to Others: When I wrote the story about perks at Starbucks I expected a call from the company. In fact, I got two: One in the morning and one in the afternoon from different spokespeople. During both conversations, I listened to their complaints and explained why we wrote the story. It didn't change what we wrote, and neither one asked for a correction or clarification. Simply, they just wanted to be heard and they didn't like the tone of the stories.

No voices were raised. Yet, they weren't going to back down. And, frankly, I appreciate that. After 16 years in the business, I have learned that little is accomplished by getting mad or inciting a source. If Starbucks or any company I cover knows I'm always willing to listen, they know I'm working to develop a long-term relationship and their respect -- even if I don't like coffee.

Craig Harris is the major retail reporter for the Seattle Post-Intelligencer. Along with covering Starbucks, he covers Nordstrom, Amazon.com and Costco.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism