Bill Gates Sr. Helped Howard Schultz Buy Starbucks In 1987 By Towering Over A Rival Investor: 'This Kid Is Going To Realize His Dream'

Starbucks Corp. (NASDAQ:SBUX) might never have grown beyond six Seattle coffee shops if not for Bill Gates Sr., the towering attorney, who stepped in when Howard Schultz lacked the cash and the clout to buy the company in 1987.

What Happened: Schultz, then 33, had 60 days to raise $3.8 million after Starbucks' founders offered to sell the chain. One month in, he had only half the money, and a deep-pocketed investor from his previous venture, Il Giornale, swooped in with a higher $4 million bid. "I had no money. Nothing," Schultz later recalled at a Summit event in 2018.

A lawyer friend sent Schultz to meet his firm's senior partner — six-foot-seven Bill Gates Sr., father of Microsoft (NASDAQ:MSFT) co-founder Bill Gates. After hearing Schultz's story, Gates Sr. marched him across the street to confront the rival bidder. "You should be ashamed of yourself," Gates Sr. said to the bidder, according to Schultz. "You are going to stand down. And this kid is going to realize his dream."

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Gates pledged that he and his son would help finance the sale. Local investors soon joined, and on Aug. 15, 1987, Schultz bought Starbucks for the original $3.8 million price. The company has since expanded from 11 stores to more than 38,000 worldwide, with more than 16,000 outlets in the United States alone, according to Cafely.

Why It Matters: Schultz, who has narrated the story at several fireside chats since, credits Gates Sr. for protecting a young entrepreneur at the time. Gates Sr., who died in 2020, remained an informal mentor while Starbucks defined modern coffee culture and inspired rival chains worldwide.

For Starbucks’ stock, the 200-day moving average sits at $95.64, according to Benzinga Pro, which is above the current price of $92.28 at market close on Thursday.

TD Cowen analyst Andrew M. Charles recently kept a Hold on Starbucks and held his $90 price target, noting investors have begun rotating into the stock amid optimism that CEO Brian Niccol can replicate the turnaround he engineered at Chipotle.

Benzinga Edge Stock Rankings indicate that Starbucks has a Momentum in the 68th percentile and Growth in the 37th. Check here to see how rival restaurant stocks rank in comparison.

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