New York–In the July 2008 issue of Condé Nast Portfolio, contributing editor David Margolick profiles Starbucks C.E.O. Howard Schultz, who is facing penny-pinching customers, a plunging stock price, and competition from Dunkin’ Donuts and McDonald’s (“Tall Order,” p. 68). Schultz built his Starbucks empire in Seattle in 1987, but has spent the past eight years on the sidelines, watching rivals close in. Now back at the helm of the coffee conglomerate, Schultz is determined to regain his customers’ loyalty, Margolick reports. “We’re not this young, beloved, entrepreneurial enterprise anymore,” Schultz says. “We have to do business in a different way. And now we’re being tested, for the first time.” Margolick writes that Schultz is trying to refocus Starbucks on its bread and butter: coffee. One Starbucks executive tells Margolick, “He’s literally trying a do-over. He wants to go back to the point where everyone was happy and everyone loved us and then make a left turn instead of a right.” Despite a Consumer Reports survey concluding that drip coffee from McDonald’s actually tastes better than that from Starbucks, Schultz believes the coffee at competitors McDonald’s and Dunkin’ Donuts is “swill,” but also admits that he has been “embarrassed” by the food at Starbucks and promises that it will be “completely reinvented by the fall.” Schultz reveals new drink plans, including “Project Ferrari,” which involves swirls of yellow, red, white, and purple in parfait cups, bathing in grapefruit or blueberry juice, or espresso. Margolick reports that no one is predicting a quick turnaround for Starbucks, but luckily for Schultz, there is no Burger King to Starbucks’ McDonald’s.

Also in the July issue:

“Arming the Drug Wars” (p. 96). Contributing editor James Verini travels to Mexico to investigate the rampant drug wars and discovers that it is, in fact, the Americans who are arming the cartels. The U.S. has pledged more than $1 billion to helping Mexico win its war on drugs. But even as the body count rises above 10,000, most of the guns that do the killing—Colt .38 Supers and big-bore Barrett rifles among them—keep pouring in from the U.S., Verini reports. “When Americans think about the border, they tend to picture undocumented workers or clandestine river crossings. They don’t think about war. But what’s happening in Mexico now is a war—no other word seems suitable.… So far this year, more than 1,350 people have been murdered in drug-trafficking-related crimes in Mexico,” Verini writes. The U.S., with less than 5 percent of the world’s population, consumes more than half of the world’s drugs, Verini further reports, and the Mexican ambassador recently estimated that 2,000 guns cross the border from the U.S. to Mexico every day. “U.S. consumers are already financing this war,” Mexico’s attorney general, Eduardo Medina Mora, says. “Only it’s on the wrong side.”

“Patriot Games” (p. 104). Senior editor Daniel Golden profiles Muhammed Adbulqaadir, the former all-American running back at Southern Illinois, who seems to have all the right moves to gain entrance into the N.F.L., but hasn’t made the cut. Golden investigates whether his exclusion is merit-based or if the F.B.I. scuttled Abdulqaadir’s chances by branding his father a terrorist in the wake of 9/11. “A running back with those results would normally expect to be picked somewhere in the middle of the N.F.L. draft. But for Abdulqaadir, the draft has come and gone, one of a series of startling rejections that turned his dream of a football career into a nightmare,” Golden writes. Adbulqaadir’s father, Mujahid Abdulqaadir Menepta, an African American convert to Sunni Islam and an associate of Zacarias Moussaoui, gained notoriety as one of the first U.S. citizens detained after the September 11 attacks, Golden reports. According to his arrest warrant as a material witness, he was investigated for destruction of aircraft, bombing conspiracy, and seditious conspiracy to levy war against the United States. According to Golden, the N.F.L. has long maintained a close association with the F.B.I. A former high-ranking bureau official heads the league security office, which vets potential draftees, and other former agents work on his staff. Eureka High School assistant coach Tom Sumner believes that N.F.L. teams backed away from Abdulqaadir because of his father: “They’re thinking, ‘His dad’s a terrorist.’ ”

“I am Guilty” (p. 78). Infamous Milberg Weiss partner Bill Lerach pleaded guilty to conspiring to make illegal payments to plaintiffs and started his two-year jail sentence in May. For the first time, Lerach tells his side of the story, explaining why he’s going to jail, lashing out at federal prosecutors, and defending the practice of client kickbacks that put him away. “If you haven’t been a defendant in a federal criminal prosecution, let me tell you, it is not a fair fight,” Lerach writes. Alongside his essay is a rebuttal by legal expert and senior fellow at the Manhattan Institute, Walter Olson, who writes, “Class actions continue to thrive. Now there is hope that the lawyers who pursue them will meet a higher ethical standard than Lerach did.” Also in the package is “The Breakfast Club,” the diary of a daily discussion group in a white-collar prison whose topics range from politics to the opera, farm policy, jail food, and the gas tax. The introduction by David Sax begins, “A priest, a national rodeo champion, a Harvard M.B.A., and Richard Hatch from Survivor are discussing economic policy over stale bran flakes in prison.”

“Beach Bummed” (p. 102). Jessica Liebman investigates the cleanliness of 16 of the country’s most popular beaches and finds that the swankiest summer vacation spots don’t always boast the most sparkling water. “We discovered that levels of bacterial contamination—we’re talking fecal matter from wildlife, storm drains, and leaky sewage systems—have little to do with community affluence,” Liebman writes. The worst offender: Long Beach, California, with 101 fecal violations.

“Just Like Us!” (p. 124). Senior writer Kevin Gray sits down with Bonnie Fuller, the former chief editorial director for American Media, and questions her on her reputed tantrums, her thoughts about the gossip industry, and her feelings toward her former bosses. When asked whether A.M.I.’s David Pecker or US Weekly owner Jann Wenner is a better boss, Fuller responds, “All I can tell you is that David was a great boss. I had a great relationship with him.”

“China’s Big Drain” (p. 112). Senior writer Peter Waldman reports on how the preparations for the summer Olympic games in Beijing are causing a major water crisis in China. When the Beijing games open, they will present a lush tableau of lakes, rivers, and fountains—a difficult feat in a semiarid climate, Waldman reports. But in order to meet these demands for water, the government is taking from the countryside, leaving peasants and villages with no water to farm or survive.

“Bank Job” (p. 40). Senior writer Jesse Eisinger argues that despite the breakneck pace at which financial firms like Citigroup and Lehman are raising money to convince investors that the worst is over, they couldn’t be more wrong. Eisinger explains, “We’re still at the beginning of this crisis. We haven’t had the expected recession yet (and even if we never do, the economy is likely to be slow for a while).… We’ve gotten so good at disseminating and assimilating an idea and then moving on, we can no longer grasp a slow-moving phenomenon like a housing-market crash.”

“Can Dell Save Dell?” (p. 86). Senior writer Russ Mitchell sits down with Dell C.E.O. Michael Dell for a candid interview about the company’s slowing sales, design glitches, rocky start to retail, and what it’s like running the company for the second time. This time around, Dell is thinking less about H.P. and more about China, Nike, and cloud computing. Dell explains the real reason he came back as C.E.O: “Revenge! I started the company, so it’s my child. I feel responsible for it.”

“Stairway Surprise” (p. 42). Miriam Datskovsky puts a dollar value on the most requested rock tune in history, “Stairway to Heaven.” First released in 1971, the eight-minute song is considered a musical masterpiece and is one of the most-played rock tunes of all time. After considering potential earnings, live-performance royalties, hard-copy sales, and other deals, Datskovsky comes up with an estimate of $572 million for the song’s lifetime worth.

This month on Portfolio.com
The July issue of the magazine, plus additional content including an interactive feature on the growth of Starbucks franchises around the world, and a comprehensive golf guide, featuring stories on China's burgeoning golf industry, a new golf course in Scotland, and how to customize your golf cart into a '57 Roadster or any other ride you want.


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