You can always count on the founder of a company to retain the passion of its original business concept — long after the recruited executive wonks have arrived, armed with hockey-stick charts and completely dissociated from the inconsequential “widgets” they’re peddling for maximum revenue and EBITDA growth.

Starbucks founder and corporate chairman, Howard Schultz, is case and point. In a memo dated Feb. 14, Schultz addressed Starbucks executives expressing his concerns that their measures to facilitate massive growth have damaged their brand: Is Starbucks being watered down? – Food Inc. – MSNBC.com. (Also the Wall Street Journal: Starbucks Chairman Says Trouble May Be Brewing – WSJ.com, UPI: United Press International – NewsTrack – Chairman: Starbucks commoditizing itself, and Television New Zealand: Starbucks warns of damage to brand | WORLD | NEWS | tvnz.co.nz.) In his memo, Schultz cited their superautomatic espresso machines (“Verismo hell”, as I call it), bagged coffee (not scooped fresh beans), and “cookie-cutter” store designs as signs of major brand erosion that have helped open the door to fast-food chains and other competitors.

“In order to achieve the growth, development and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have (led) to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.”

We’ve been saying this all along: Starbucks wasn’t always this poor. They just sold their soul to the devil for massive growth. Ironically, Schultz’ memo is perhaps the best sign in recent years that Starbucks might still have a chance to become relevant again to the specialty retail coffee trade they were so instrumental to popularizing over the past 10-15 years.

Unfortunately, the other corporate truth is that founders are often tolerated as crackpots. Meanwhile, executive teams do their best to ignore them and keep counting the money as fast as possible — until it’s too late. Starbucks’ cancer has metastasized with their growth, and I see only a terminal diagnosis of irrelevancy.

UPDATE: February 27, 2007
The irrelevancy news for Starbucks just keeps on comin’… Today Forbes reported that Dunkin’ Donuts edged out Starbucks for first place as the hottest coffee chain — according to Brand Keys’ latest Customer Loyalty Survey [linked PDF from 2006]: Dunkin’ Donuts Edges Starbucks – Forbes.com. This marks the first time in five years that someone other than Starbucks topped the list from these revered marketing researchers.


UPDATE: March 4, 2007
Today’s Washington Post published a story illustrating how none of this is news to residents of Seattle, Starbucks’ birthplace: Is Malaise Brewing at Starbucks? – washingtonpost.com. The comments from customers at Victrola are particularly pointed.


UPDATE: March 23, 2007
…And Starbucks shows no signs of slowing down their expansion: delawareonline ¦ The News Journal ¦ Starbucks aims for 40,000 locations worldwide.