7 ms·

I guess I need to dig a little deeper into that Starbucks thing. But if I was an owner of Starbucks and Bill Gates Sr called the high bidder and scared him off

I guess I need to dig a little deeper into that Starbucks thing. But if I was an owner of Starbucks and Bill Gates Sr called the high bidder and scared him off so someone else could buy my business for less, I don’t know if I’d ever forgive that. It doesn’t strike me as fair or righteous.

hangonhn 6y ago
I see what you're saying. Here's the CNBC version of it: https://www.cnbc.com/2017/10/04/bill-gates-sr-helped-howard-schultz-buy-starbucks.html https://www.cnbc.com/2017/10/04/bill-gates-sr-helped-howard-... It sounds like the Starbucks owners already offered it to Schultz and gave him 90 days to buy it and it was an exclusive offer. Part way through fundraising, an Il Giornale investor caught wind of it and approached Starbucks with a higher bid. I think the fact that Starbucks had offered it to Schultz first and then his own investor tried to undermine him and Il Giornale is sort of rotten and underhanded. I think the fact that Starbucks had offered it to Schultz first and agreed on a price and Il Giornale's own investor tried to undermine the deal is where things get a little shady. Apologies for telling the story poorly and missing some important details.
- nuclearnice1 6y ago
  Tough call. If you and I handshake on buying my house, you’re rightfully upset when I sell to someone else for more. On the other hand, all we had is a handshake, so I’m rightfully upset when you chase off a higher bid. I guess how shady depends on the agreement that Schultz had. The fact that Sr was able to chase them off suggests the agreement was at least of some substance.
  - throwaway0a5e 6y ago
    As someone who buys and sells a lot of equipment and machine tools having someone sell to someone else after you have a deal is far more infuriating than getting "oh but I would have paid 20% more" after you sealed a deal.
  - deleted 6y ago
    [deleted]
  - tlb 6y ago
    In SV fundraising deals, going back on a handshake is considered pretty bad behavior. Investors stand to lose many future deals if they break one without a darn good reason. Discovering a serious misrepresentation is such a reason, but seeing a better deal elsewhere is not. The point of handshake deals is to give everyone time to get the details right, without the pressure of having the deal stolen. Forcing parties to rush through the details damages the whole ecosystem, so everyone is motivated to encourage everyone else to respect handshake deals.
    - deleted 6y ago
      [deleted]
    - bredren 6y ago
      I did not know this raising my last round, but it was legit. The money was as good as wired.
    - jjeaff 6y ago
      That happened to us and on this VC firm's maiden round. They offered no reason except that they reconsidered. Wasted months of our time. Our attorney (from Fenwick & West) told us the same, that it would damage the VCs reputation and that this was pretty much unheard of for them. But I never heard another thing about it and that VC firm seems to not be having too much trouble filling out their rounds.
  - slavik81 6y ago
    A handshake agreement could very well be a valid, binding contract if certain conditions are met. I would be very cautious about backing out of such an agreement without talking to a lawyer. (And it's a pretty bad look to go back on your word, even when you're legally in the clear.)
    - sohkamyung 6y ago
      I am not a lawyer, but from the legal point of view, a handshake agreement is not a legal binding contract. An exchange is needed to make it binding, even if it's a small amount like a dollar. At least, that's what I (mis-)remembered from a Contract Law 101 course taken long ago during my undergrad days.
      - slavik81 6y ago
        A valid contract requires consideration. That's one of the conditions I was referring to. A handshake and a deposit, for instance, could result in losing a lot more than just the deposit. However, not all consideration is monetary, which is why it helps to consult an expert. I am not a lawyer, either. Just an engineer with the minimum legal training required for licensure, which is basically, "know when you should ask for help."
        ABCLAW 6y ago
        This is right, but misleading. Consideration isn't the big question in this thread. It's whether or not a verbal agreement can be binding. In some cases it can be, but a mere agreement to agree is not binding. The biggest takehome is 'consult with legal before making promises or representations to counterparties". Edited this a few times to keep it as short as possible without being misleading.
      - nmfisher 6y ago
        That's not really correct - you just have to promise to exchange something. If you and I shake on a deal to buy your car for $100, that can certainly be legally binding if we intended it to be so. Usually, though, handshake deals mean "these are the commercial terms, let's go draw up the contract", which isn't legally binding. In many places, though, they're respected by convention and protected by reputation.
  - srtjstjsj 6y ago
    A handshake deal is a contract. Breaking that contract (and the law) just because it's hard to prove in court is at the depth of depravity.
    - gnicholas 6y ago
      Just FYI, handshake deals can be valid contracts if certain requirements are met. For one thing, there needs to be enough specificity around the material deal points. Even if you have a written contract but you haven't agreed on the material deal points (for fundraising, this would be things like valuation, type of shares, number of shares/percent of company) then you don't have a valid contract. There are some things that are on the fence in terms of materiality. For example, is the valuation pre- or post-money? Is there an option pool set aside? Lastly, there are some types of agreements that cannot be done just on a handshake — there has to be a written agreement in order to be enforceable. IIRC from my law school days, this includes the sale of real estate and a contract that, by its terms, cannot be completed in a year. The latter excludes things that are known to take more than a year, like building a skyscraper. It would include "pet-sit my dog for 13 months while I'm vacationing", for example.
    - _-___________-_ 6y ago
      > Breaking that contract (and the law) Breaking a contract is typically not breaking the law.
      - C4stor 6y ago
        That's a bid mind boggling for me. Let's say we have a contract. You break it. So I'm not happy, I suppose I take you to the court. And there, something is enforced that is not the law but where you are lawfully obliged to a sanction afterwards ? I don't really understand why you'd say that ? Isn't the law kind of saying "you shall not break contracts" ? And if it's not, what's the point of a contract ?
        _-___________-_ 6y ago
        My comment was typed quickly and was pretty non-specific, so I'm sorry about that and I probably deserved the downvotes. However, I maintain that under most people's understanding of the terms "breaking a contract" and "illegal", breaking a contract is not illegal. Regarding "breaking a contract": Contracts often stipulate penalties for non-performance of terms within them. For example, you contract with me to rent my house for 5 years. The contract stipulates that if you leave early, I am entitled to keep the deposit. In common language, people will refer to leaving early as "breaking the contract", but there is nothing illegal about doing so. Regarding "illegal": If the contract does not specify some penalty for non-performance of a clause, or it does specify one but you somehow avoid the penalty, then it would become a matter for the courts, but importantly, it would be a civil court, not a criminal court. You have not broken a law, you have broken a contract, and the civil courts will determine how this situation will be made right.
- balls187 6y ago
  Fast forward to today and Howard Schultz is despised in the Seattle area. His presidential bid was DOA. https://www.theguardian.com/us-news/2019/jan/29/howard-schultz-denies-a-2020-run-as-independent-could-re-elect-trump https://www.theguardian.com/us-news/2019/jan/29/howard-schul...
  - adventured 6y ago
    > Fast forward to today and Howard Schultz is despised in the Seattle area. That might be a compliment at this point. Have you seen the condition of Seattle lately? Have you seen the wild irrationality and chaos of its culture, the insanity that rules that city now? It's not functioning properly, Seattle isn't anything to aspire to. In Western Europe, or Canada for that matter, it would be considered a brewing disaster zone, held up as a poster child for how not to run a city. One can only believe Seattle's plunge into strife will get worse in the coming decade given the horrid, violent culture that is rising there.
  - klyrs 6y ago
    > Fast forward to today and Howard Schultz is despised in the Seattle area. Did you even read the story? The founders wanted to make more coffee, Schultz wanted to make more stores. Seattle used to have an amazing coffee culture, and starbucks largely killed that. Schultz rightly gets the lion's share of the blame for that
    - rorykoehler 6y ago
      I'm not sure Starbucks would erode a places coffee culture, even in Seattle. If anything it would expand the pool of potential customers. I love and drink a lot of gourmet coffee/beans. I also visit Starbucks on occasion. I never go to Starbucks specifically for their coffee though, unless there is no good local cafe in the area. Starbucks is a lightweight coworking space / 3rd space at this stage.
      - klyrs 6y ago
        Their predatory business practice killed a lot of local cafes. Places that were funky, cool, focused on their product and had a loyal base of locals but were kept afloat by tourists and other passersby who wouldn't cross a street, or just fell for brand recognition. They'd set up shop across the street or around the corner, and operate at a loss until they drove the locals off. I'm loathe to admit that starbucks quality has gone up a bit lately, but even today their standard pull is burnt to hell in the name of homogeneity. So yeah, they dealt a huge blow to Seattle's (and many other cities) local cafes, and replaced them with a sanitized lack of culture.
tptacek 6y ago
Bear in mind that the Starbucks you're probably thinking of, when you think "Starbucks", was created largely by Schulz after that acquisition happened. This story took place in 1987.
- benatkin 6y ago
  Timeline of Bill Gates: https://legacy.npr.org/news/graphics/2008/june/bill_gates/gates_timeline_04.html https://legacy.npr.org/news/graphics/2008/june/bill_gates/ga... So he was a billionaire or a soon-to-be billionaire.
  - chipotle_coyote 6y ago
    I think tptacek's point wasn't about Gates's wealth, it was that Starbucks at the time was pretty tiny. It (Starbucks) has a kind of interesting history, tangled up with Peet's Coffee & Tea in its very early years. (Starbucks also used to be a lot more, well, serious about coffee, selling fresh-roasted coffee in bins in the store rather than bags shipped out from central roasters, as well as selling a small but well-curated selection of brewing equipment that wasn't just Starbucks-branded stuff. Peet's still has some of that vibe, although they're less eclectic now than they were even 15 years ago.)
- nuclearnice1 6y ago
  Yeah this was six stores. The offers were 3.8M and 4M. What’s the importance of bearing that in mind?
  - tptacek 6y ago
    That it's easy to say with the benefit of hindsight that the rival bidders for Starbucks would have been cheated out of a fortune, but unclear that the fortune was theirs to be had even if they'd won the bid. What's more likely is that Schulz would simply have started a different chain, and we'd be talking about that company the way we do about Starbucks now.
    - 6y ago

hangonhn 6y ago

I see what you're saying. Here's the CNBC version of it: https://www.cnbc.com/2017/10/04/bill-gates-sr-helped-howard-schultz-buy-starbucks.html https://www.cnbc.com/2017/10/04/bill-gates-sr-helped-howard-... It sounds like the Starbucks owners already offered it to Schultz and gave him 90 days to buy it and it was an exclusive offer. Part way through fundraising, an Il Giornale investor caught wind of it and approached Starbucks with a higher bid. I think the fact that Starbucks had offered it to Schultz first and then his own investor tried to undermine him and Il Giornale is sort of rotten and underhanded. I think the fact that Starbucks had offered it to Schultz first and agreed on a price and Il Giornale's own investor tried to undermine the deal is where things get a little shady. Apologies for telling the story poorly and missing some important details.

nuclearnice1 6y ago
Tough call. If you and I handshake on buying my house, you’re rightfully upset when I sell to someone else for more. On the other hand, all we had is a handshake, so I’m rightfully upset when you chase off a higher bid. I guess how shady depends on the agreement that Schultz had. The fact that Sr was able to chase them off suggests the agreement was at least of some substance.
- throwaway0a5e 6y ago
  As someone who buys and sells a lot of equipment and machine tools having someone sell to someone else after you have a deal is far more infuriating than getting "oh but I would have paid 20% more" after you sealed a deal.
- deleted 6y ago
  [deleted]
- tlb 6y ago
  In SV fundraising deals, going back on a handshake is considered pretty bad behavior. Investors stand to lose many future deals if they break one without a darn good reason. Discovering a serious misrepresentation is such a reason, but seeing a better deal elsewhere is not. The point of handshake deals is to give everyone time to get the details right, without the pressure of having the deal stolen. Forcing parties to rush through the details damages the whole ecosystem, so everyone is motivated to encourage everyone else to respect handshake deals.
  - deleted 6y ago
    [deleted]
  - bredren 6y ago
    I did not know this raising my last round, but it was legit. The money was as good as wired.
  - jjeaff 6y ago
    That happened to us and on this VC firm's maiden round. They offered no reason except that they reconsidered. Wasted months of our time. Our attorney (from Fenwick & West) told us the same, that it would damage the VCs reputation and that this was pretty much unheard of for them. But I never heard another thing about it and that VC firm seems to not be having too much trouble filling out their rounds.
- slavik81 6y ago
  A handshake agreement could very well be a valid, binding contract if certain conditions are met. I would be very cautious about backing out of such an agreement without talking to a lawyer. (And it's a pretty bad look to go back on your word, even when you're legally in the clear.)
  - sohkamyung 6y ago
    I am not a lawyer, but from the legal point of view, a handshake agreement is not a legal binding contract. An exchange is needed to make it binding, even if it's a small amount like a dollar. At least, that's what I (mis-)remembered from a Contract Law 101 course taken long ago during my undergrad days.
    - slavik81 6y ago
      A valid contract requires consideration. That's one of the conditions I was referring to. A handshake and a deposit, for instance, could result in losing a lot more than just the deposit. However, not all consideration is monetary, which is why it helps to consult an expert. I am not a lawyer, either. Just an engineer with the minimum legal training required for licensure, which is basically, "know when you should ask for help."
      - ABCLAW 6y ago
        This is right, but misleading. Consideration isn't the big question in this thread. It's whether or not a verbal agreement can be binding. In some cases it can be, but a mere agreement to agree is not binding. The biggest takehome is 'consult with legal before making promises or representations to counterparties". Edited this a few times to keep it as short as possible without being misleading.
    - nmfisher 6y ago
      That's not really correct - you just have to promise to exchange something. If you and I shake on a deal to buy your car for $100, that can certainly be legally binding if we intended it to be so. Usually, though, handshake deals mean "these are the commercial terms, let's go draw up the contract", which isn't legally binding. In many places, though, they're respected by convention and protected by reputation.
- srtjstjsj 6y ago
  A handshake deal is a contract. Breaking that contract (and the law) just because it's hard to prove in court is at the depth of depravity.
  - gnicholas 6y ago
    Just FYI, handshake deals can be valid contracts if certain requirements are met. For one thing, there needs to be enough specificity around the material deal points. Even if you have a written contract but you haven't agreed on the material deal points (for fundraising, this would be things like valuation, type of shares, number of shares/percent of company) then you don't have a valid contract. There are some things that are on the fence in terms of materiality. For example, is the valuation pre- or post-money? Is there an option pool set aside? Lastly, there are some types of agreements that cannot be done just on a handshake — there has to be a written agreement in order to be enforceable. IIRC from my law school days, this includes the sale of real estate and a contract that, by its terms, cannot be completed in a year. The latter excludes things that are known to take more than a year, like building a skyscraper. It would include "pet-sit my dog for 13 months while I'm vacationing", for example.
  - _-___________-_ 6y ago
    > Breaking that contract (and the law) Breaking a contract is typically not breaking the law.
    - C4stor 6y ago
      That's a bid mind boggling for me. Let's say we have a contract. You break it. So I'm not happy, I suppose I take you to the court. And there, something is enforced that is not the law but where you are lawfully obliged to a sanction afterwards ? I don't really understand why you'd say that ? Isn't the law kind of saying "you shall not break contracts" ? And if it's not, what's the point of a contract ?
      - _-___________-_ 6y ago
        My comment was typed quickly and was pretty non-specific, so I'm sorry about that and I probably deserved the downvotes. However, I maintain that under most people's understanding of the terms "breaking a contract" and "illegal", breaking a contract is not illegal. Regarding "breaking a contract": Contracts often stipulate penalties for non-performance of terms within them. For example, you contract with me to rent my house for 5 years. The contract stipulates that if you leave early, I am entitled to keep the deposit. In common language, people will refer to leaving early as "breaking the contract", but there is nothing illegal about doing so. Regarding "illegal": If the contract does not specify some penalty for non-performance of a clause, or it does specify one but you somehow avoid the penalty, then it would become a matter for the courts, but importantly, it would be a civil court, not a criminal court. You have not broken a law, you have broken a contract, and the civil courts will determine how this situation will be made right.
balls187 6y ago
Fast forward to today and Howard Schultz is despised in the Seattle area. His presidential bid was DOA. https://www.theguardian.com/us-news/2019/jan/29/howard-schultz-denies-a-2020-run-as-independent-could-re-elect-trump https://www.theguardian.com/us-news/2019/jan/29/howard-schul...
- adventured 6y ago
  > Fast forward to today and Howard Schultz is despised in the Seattle area. That might be a compliment at this point. Have you seen the condition of Seattle lately? Have you seen the wild irrationality and chaos of its culture, the insanity that rules that city now? It's not functioning properly, Seattle isn't anything to aspire to. In Western Europe, or Canada for that matter, it would be considered a brewing disaster zone, held up as a poster child for how not to run a city. One can only believe Seattle's plunge into strife will get worse in the coming decade given the horrid, violent culture that is rising there.
- klyrs 6y ago
  > Fast forward to today and Howard Schultz is despised in the Seattle area. Did you even read the story? The founders wanted to make more coffee, Schultz wanted to make more stores. Seattle used to have an amazing coffee culture, and starbucks largely killed that. Schultz rightly gets the lion's share of the blame for that
  - rorykoehler 6y ago
    I'm not sure Starbucks would erode a places coffee culture, even in Seattle. If anything it would expand the pool of potential customers. I love and drink a lot of gourmet coffee/beans. I also visit Starbucks on occasion. I never go to Starbucks specifically for their coffee though, unless there is no good local cafe in the area. Starbucks is a lightweight coworking space / 3rd space at this stage.
    - klyrs 6y ago
      Their predatory business practice killed a lot of local cafes. Places that were funky, cool, focused on their product and had a loyal base of locals but were kept afloat by tourists and other passersby who wouldn't cross a street, or just fell for brand recognition. They'd set up shop across the street or around the corner, and operate at a loss until they drove the locals off. I'm loathe to admit that starbucks quality has gone up a bit lately, but even today their standard pull is burnt to hell in the name of homogeneity. So yeah, they dealt a huge blow to Seattle's (and many other cities) local cafes, and replaced them with a sanitized lack of culture.

tptacek 6y ago

Bear in mind that the Starbucks you're probably thinking of, when you think "Starbucks", was created largely by Schulz after that acquisition happened. This story took place in 1987.

benatkin 6y ago
Timeline of Bill Gates: https://legacy.npr.org/news/graphics/2008/june/bill_gates/gates_timeline_04.html https://legacy.npr.org/news/graphics/2008/june/bill_gates/ga... So he was a billionaire or a soon-to-be billionaire.
- chipotle_coyote 6y ago
  I think tptacek's point wasn't about Gates's wealth, it was that Starbucks at the time was pretty tiny. It (Starbucks) has a kind of interesting history, tangled up with Peet's Coffee & Tea in its very early years. (Starbucks also used to be a lot more, well, serious about coffee, selling fresh-roasted coffee in bins in the store rather than bags shipped out from central roasters, as well as selling a small but well-curated selection of brewing equipment that wasn't just Starbucks-branded stuff. Peet's still has some of that vibe, although they're less eclectic now than they were even 15 years ago.)
nuclearnice1 6y ago
Yeah this was six stores. The offers were 3.8M and 4M. What’s the importance of bearing that in mind?
- tptacek 6y ago
  That it's easy to say with the benefit of hindsight that the rival bidders for Starbucks would have been cheated out of a fortune, but unclear that the fortune was theirs to be had even if they'd won the bid. What's more likely is that Schulz would simply have started a different chain, and we'd be talking about that company the way we do about Starbucks now.
  - 6y ago