The Making of the Starbucks Card

Posted on by Allen Eskelin

This week’s Black Friday (2021) marks the 20-year anniversary of the nationwide launch of the Starbucks Card. As the initial program manager for the Starbucks Card, I have often thought about telling the story (as I recall it) on how this multi-billion dollar success came about. What better time than in celebrating this 20-year milestone. Unfortunately, I didn’t get a backup of my files when I left Starbucks in 2005 so I’m basing this strictly off my memory, my personal experience, and by contacting key members of the original team for input. This was a massive team effort so I will do my best to give credit to all the people who made the Starbucks Card a global success.

I joined Starbucks in mid-1998 in the North America Business Systems organization. I was working in a program office for a store systems program and had been asking my VP (Karen Metro) for an opportunity to manage a project. One day in early-2000, Karen called me into her office and said “Since you have led vendor selections, how about you go manage this project to replace paper gift certificates with a gift card”. Since paper gift certificates are difficult to track, they sometimes disappear and then there’s this thing called escheatment that could go away with a gift card (more on that later).

What would make this the best gift card in the world?

The very first meeting was at my cubicle on the 7th floor of Starbucks HQ with Pete Magnone (Procurement) and Bill Winkelman (Business Development). I remember asking the question, “What would make this the best gift card in the world? We’re Starbucks so we should be able to do something amazing that hasn’t been done before.”

As we brainstormed ideas, one option we killed immediately was the idea of making it a loyalty program in the traditional sense (ie: buy ten, get one free). For one, we didn’t want to give away profits. But more importantly, we talked about the challenge of getting the card to work at our licensed partners (grocery, airport, hotel, etc). Any functionality requiring changes to the POS would become a barrier to domestic licensed partners and international joint-venture partners participating in the program. To understand why, consider the example of a grocery store. The Starbucks kiosk within a grocery store is a small % of the store’s revenue and the Starbucks Card would likely (or so we thought at the time) only be used on a small % of the kiosk’s transactions. Given this, if the Starbucks Card required changes to the POS, it wouldn’t likely get prioritized by the grocery store’s IT organization.

So we agreed we had to stick with basic gift card functionality and that any loyalty would be done off-line (users could register their card on starbucks.com in order to receive rewards in the mail). So now that loyalty was out of the question, we came up with three big ideas:

  • Premium Card: Since we wanted this to be a reusable card, Bill suggested we should spend a few cents more per card and make the card thicker and the best-looking card design in the world. We also discussed how this could be a “member of the club” type of card and have it be a card customers would be proud of having in their wallet. As the primary business lead on the project, Bill was excited to champion the card design, distribution, and channel sales efforts.
  • Faster-than-Cash: Back in the year 2000, stores weren’t networked but instead used phone lines to process payment transactions. Since we figured our target customers for the gift card would be those who visit our stores multiple times per week (or day), our goal should be for it to become a regular payment method and not just a use once and throw away gift card like most of the gift cards at that time. If it were to be a regular payment method, we figured it had to be the fastest payment method. Eventually the project team came up with the “faster-than-cash” way of describing this priority.
  • Global: At the time, there were cards in each region but they didn’t travel. In other words, you might have a gift card in Japan and a gift card in the US but they only worked in those regions. So we decided it would be great if our card worked wherever the Starbucks brand is (local, international, domestic licensed partners, international joint-venture partners, online, etc…).

These three big ideas that we defined in this very first meeting became the foundation that I strongly believe enabled the Starbucks Card to become the global success that it is today, 20 years later.

Premium Card

Naming the Starbucks Card

It seems obvious now but initially there was a debate on whether to call it the Starbucks Card or Starbucks Gift Card. Initially, Bill proposed the Starbucks Gift Card since that would have more meaning to the customer. After weeks of debate, Bill saw the benefits of Starbucks Card as we continued to envision it being more than a gift card.

Bill was the one who came up with the idea of putting the logo on the top right of the card so that it would be visible in a wallet whether it’s slid into a sleeve vertically or horizontally. Bill and Shelli Funamori in Production worked with several premium card manufacturers and came up with the initial design feature of having the right half inch clear plastic. This hadn’t been done to date by other retailers (likely due to the higher costs per card) so this became a design feature that clearly differentiated the Starbucks Card from other gift cards at the time.

From Project to Program

We set out to formally charter the project and review it with all the stakeholder organizations to get their input and ensure alignment on scope and priorities. This chartering process (facilitated by Jane Anne Mahoney) helped solidify the priorities, ensure internal alignment, start creating a Work Breakdown Structure (WBS, a project manager tool for organizing work), and begin defining the technology platforms and technology partners we would need to build the first global gift card. We also quickly realized that the gift card touches almost every organization in the company in some way so it made sense to upgrade the project to a program consisting of many projects.

The Business Case

We had originally sold the program based on the ROI of eliminating escheatment, which is a customer gift card balance that has essentially been abandoned. As an example, if a customer has a $10 paper gift certificate and uses $9.70, the remaining balance of $.30 isn’t significant to the customer and therefore may never get redeemed. The problem for the retailer is that this money sits on the balance sheet as a liability (and accumulates over time) and doesn’t move to the P&L until the customer uses those funds to buy something from the retailer. Where escheatment comes in is that the states would require retailers to give them those funds after a number of years of sitting on the balance sheet (a number difficult to determine since an individual paper gift certificate’s transactions weren’t tracked to an account number so you couldn’t determine the age of any specific gift certificate’s unused balance).

The idea with a gift card (at the time) was to apply a small monthly service fee starting after a year of non-use of the card. Since a gift card’s transactions are tracked (compared to paper gift certificates that aren’t), you can use this service fee to move the funds from the Balance Sheet to the P&L before the funds are considered abandoned and therefore eliminate the state’s ability to take those funds.

Note: We never applied these services fees. We had the fee in the fine print during the first year but the program was so successful without the fees that the decision was to remove the text and not take the PR hit (my recollection is that Toys-R-Us was the first to apply these fees and it became a PR nightmare for them). We also assumed the states would eventually change the laws to figure out a way to keep that revenue stream alive as gift cards became more broadly used. I’m only including this section to describe how we used the escheatment as the business case since it was easy to quantify the escheatment as pure profit contribution (customer revenue with close to zero cost of goods). Luckily, the program was so successful we didn’t end up needing it.

Selecting the Technology Partner

Up to this point, I had managed multiple technology vendor selections (a few at Gateway and the one for Starbucks Store Dev) but this one was significantly different because we were selecting a partner based on their ability to build a global payment platform and not based on something that already existed. The selection process ultimately came down to the top two gift card companies: ValueLink (a subsidiary of FirstData) and Stored Value Solutions (SVS, acquired by Comdata in 2000).

Both companies had their strengths and we had sufficiently sold them on our ambitions to be the first global gift card and that the transaction counts would be significantly higher due to reuse of the card. I recall in our presentation to the steering committee that we said we believe both companies would equally be great partners and asked if Pete and I could go negotiate the best possible deal with both companies and let the financials decide who gets the business (having it come down to only price is the best case scenario for a negotiator). They agreed so we set out to negotiate with both companies.

Negotiations

We sufficiently sold both vendors on the strategic nature of our endeavor. They both realized that whoever landed this business would not only be the first to build a global gift card infrastructure but also the first to have a top global brand validating that solution globally.

To share some thoughts on the significance of this negotiation at this point in my career, here I am, not only getting to manage my first decent sized project at Starbucks, but I’m also negotiating directly with two big company executives who are super motivated to land this business. It’s not until years later when negotiating on behalf of smaller companies that I realized how much of a tailwind having a large brand like Starbucks behind me produced in terms of negotiating leverage. But even with the leverage, we had to navigate and orchestrate the selection process and negotiations to optimize (and not give up — see second paragraph below) that leverage in order to negotiate the best deal for our company.

So Pete and I get both vendors down about 25% in the negotiations. We shared these numbers with the steering committee and everyone was excited with the results of the negotiations. But Pete and I felt we should make one more ask. SVS held their ground with the previous offer being their best and final. What happened next I will never forget. It’s one of those meetings I remember vividly.

We’re in a conference room on the 8th floor with windows facing north to an amazing view of downtown Seattle. Pete, Bill, and I have met in advance and agreed to who would say what and how we would make the final ask. Then suddenly Pete’s boss in procurement decides to crash our meeting to share how important supplier diversity is to Starbucks. He’s talking about how excited we are to work with them and I’m thinking to myself, here’s a director of procurement giving away our leverage. I knew from an experience on a previous project that someone can give away all your leverage in one sentence. So I’m glaring at Pete and head-motioning to “get him out of here!”. Pete is thinking the same thing and urges his boss to wrap up as we have a lot of agenda to cover. So finally we get this guy out of the room and deliver the message about how we’re making a decision after lunch, that it’s down to price, and that they need to seriously sharpen their pencils if they want to win this deal.

The Valuelink team goes offsite for lunch so they can make some calls to their parent company and now we’re back in the conference room. Bruce Bell, the head of sales at Valuelink, is to my left, Bill to my right, and Pete is across from me at the other end of the table. Bruce starts talking about how much they want to partner with us to build the first global gift card and then proceeds to make their final proposal, a tiered model that will end up being half the price of their last offer. I remember trying as hard as I could to keep my poker face, while inside I’m jumping up and down, knowing we just saved the company millions. We thanked them for the offer and excused ourselves for a quick meeting with our steering committee and then came back and congratulated Bruce on landing the deal that we believed would be a massive win-win for both companies.

Little did we know that it would exceed even our wildest dreams in terms of success. Bruce later told us that his board told him not to come back without this deal no matter what. In retrospect, they could have paid Starbucks and it still would have been a massive win for Valuelink/FirstData. I remember our account manager, Rick Kissler, telling me a few years later that prospects were coming to Valuelink, showing them a Starbucks Card, and saying “We want this for our company!”

The Project Team

After selecting Valuelink as the gift card processor in late-2000, we were off to the races in building our new payments platform. The initial focus would be on launching the Starbucks Card in all North America company-owned stores on Black Friday 2001. With a gift card, if you don’t launch by holiday, you might as well wait until the next holiday season. The steering committee was in agreement that we needed to hit that date, no matter what it took.

My first step was to build out the project core team. Abraham Palmer would be our technical architect (responsible for building the enterprise data transport system to route transactions from store-to-corporate-to-Valuelink and back (maintaining our leverage if we were ever to need to change processors or bring processing inhouse). Christa McBryan would represent Retail Operations and help to ensure we set the store partners up for success operationally. Murray Aldrich would be responsible for leading the POS development (Starbucks had an inhouse POS solution at that time). Bill Winkelman would be responsible for designing the cards, setting up the physical card replenishment for the stores, and publicizing the launch.

We also had an extended team to represent the Customer Care team (to prepare to take calls from customers for balance inquiry, bulk orders, etc), Sales Audit (to ensure the numbers reconcile correctly between the POS and Valuelink data), InfoSec (to ensure we didn’t introduce more potential for fraud), the Starbucks.com team (for customer registration and auto-reload setup), and Supply Chain Ops (so stores could order more physical cards as needed). I’m sure I’m forgetting other teams but you can see what I mean when I said the program touched every organization in the company in some way.

Faster-than-Cash

Networking 3000 Stores in 11 Months

This project wasn’t technically part of the Starbucks Card program but I’m including it because it enabled us to meet the “faster-than-cash” objective, making the card a viable recurring payment method (instead of just a use once and throw away gift card).

Just before Christmas break in the year 2000, my VP (Karen Metro) called me into her office and said “the project to network all 3000 US and Canadian stores is spinning its wheels. They haven’t touched a single store yet and we’re 11 months from launch. If that project fails, your Starbucks Card project fails (it won’t be faster than cash). Can you take on project managing that project as well? You can ramp down on the Starbucks Card program over the next few months and hand it off to Mary Stumpf to deploy while you ramp up the Retail Network project. Your strength is building and now that you’ve completed the design, you can let Mary deploy it since that’s her strength. Think about it over the holiday weekend and then let me know if you can take it on.”

Since my dad had spent his career in the telecom industry, I took advantage of that while visiting on Christmas Day. We arrived early and the two of us spent an hour in front of his whiteboard. I remember he told me my biggest challenge would be the last mile as the local phone companies don’t jump for anyone since they have monopolies. He also said unions will gouge us if they know we’re motivated to move quickly if they control a building where we have stores that need cabling (from the phone room to the store back office).

With my new understanding of the challenge at hand, I went back to Karen the next week and said I think I can be successful if you agree to three things: 1) we separate it from the T-Mobile hotspot project since they’re only going to about half of our stores and we don’t want to mix customer WiFi with business transactions anyway, 2) I need to throw away the rule-book and run over anyone who gets in the way with process and bureaucracy, and 3) I need an unlimited budget since we will need to pay premium prices to go fast. Karen’s response was “done, done, and done, go make it happen”. One of the things that I always found to be amazing at Starbucks is the support they gave their people to get s%#t done. Karen delivered on these three things and I actually had daily 15-min meetings each morning with the three VPs involved and they were always willing to give us whatever we needed. I remember in one meeting, James Snook (VP of Enterprise Architecture) offered to get on the phones when our guys supporting the field techs were getting overwhelmed but we couldn’t slow down to train new resources.

To understand the significance of what it means to network 3000 locations in 11 months, this included 3-5 visits per store (I believe we exceeded 8k store visits by the time we were done and approx 25k store notification calls). Factor into this that the business-class AT&T VPN solution we were deploying didn’t exist yet.

Retail Network Team

We set out to build the team above and quickly realized we needed to take-over control of scheduling from AT&T. We built a database to schedule and track all activities and calls. This allowed us to query all stores that have completed one activity but still needed to schedule the next activity. We would export the list of stores to Excel and send it to AT&T or CrossCom to schedule the activities. They would then fill out the scheduled date column and send it back to us later that day so we could import it into our database. They would also send us lists of completed activities multiple times per day to be imported (this was before smart phones so having field techs fill out status online wasn’t a realistic option given the time we had available). The database we built ended up working so well, we had NCR build a replica of it in QuickBase for future deployments (something all NCR customers have leveraged over the past 20 years).

I also remember that we deployed equipment to 300 stores in January, knowing it wasn’t likely the right equipment, in order to get experience and fine-tune our per-store process. We just charged ahead at full speed and never let off the gas until Black Friday. It was like a drag race where you accelerate all the way to the finish line.

Leadership set a target of 97% of stores networked in a market before we would unleash publicity for the Starbucks Card in that market. Our database was able to give us a % by market and was updated almost hourly. In the end, the weekend before Black Friday I believe we visited over a thousand stores to put the final touches on the service and we launched in every major market on time. To understand how significant of an accomplishment this was, you also have to consider the additional adversity we had to overcome during those 11 months:

  • No accurate store address list or phone room address/location list existed – something we ended up building during this project. I know this sounds strange but a store would relocate to a better nearby location and the delivery companies would just start delivering there even though it was the old address on a shipping label. So even the mail room had incorrect addresses. We would have techs show up at an address and call us saying there’s no Starbucks here. In some cases, the address was the location of the construction shed back when a mall was being built.
  • 9/11 happened that year, causing field techs from all over the country to be sent to NYC to help rebuild, causing delays with local phone company tech visits.
  • Floods in Houston caused delays in that market.
  • Not enough bandwidth between 1st Ave and Starbucks HQ (I remember options included digging a trench across the parking lot to lay new pipe/cables or putting dishes on rooftops to transmit between HQ and the regional office across the street, which had plenty of bandwidth since it was a newer building).
  • Earthquake caused significant damage to HQ and we had to work remotely for several weeks before they would let us back in the building.

In the end, it was hard work and the whole team (including AT&T and CrossCom) giving up their summer to get 97% of the stores networked by Black Friday. This not only enabled the Starbucks Card to be faster than cash but also sped up credit card approvals, speeding up the lines. I believe this was the key factor that led to double-digit comp sales growth for the next year.

Starbuck Card Launch

The Starbucks Card was first piloted in Boise, Idaho, then expanded to the Portland market, and finally launched nationwide on Black Friday 2001. As I’m sure you know by now, the Starbucks Card launch was a huge success for the company during the 2001 holiday season.

In January’s monthly all-manager meeting at Starbucks, I remember Michael Casey (CFO) presenting holiday results and saying “I didn’t even know we were doing this project and now I have a $20M interest free loan from our customers sitting in our bank account. This means we don’t have to use banks for cash flow anymore.” And that is probably when we all first realized one of the huge benefits of the Starbucks Card to the company. It wasn’t escheatment like we planned (as I mentioned above we removed the service fee language from the back of the card and never implemented it). I have heard that these interest-free loans ended up making Starbucks one of the biggest banks in the US in terms of deposits.

Some time shortly after the holiday launch, the whole project team was treated to a thank you dinner hosted by Howard Schultz, founder, Chairman, and CEO of Starbucks at Wild Ginger. It was a nice gesture and a chance for us all to meet Howard and celebrate what we had accomplished. We were all given a special gift card (the one I’m holding in my photo above) that was specifically made for the project team as a recognition for our contribution. I recall them saying they only made something like 100 of those cards.

Another memory that stuck with me was something that happened during my commute. I lived on Bainbridge Island at the time, which required a bus-to-ferry-to-shuttle commute. One night I was sitting on the bus and two older gentlemen were sitting in front of me chatting. One of them says “Hey, take a look at this!” to the other guy, pulls out his wallet, and shows him a Starbucks Card he got in Hawaii during his vacation. As they were marveling at how cool the card design was, I was overcome with a sense of pride in what we had built. In most information technology projects, you only see the results on a computer screen or a report showing improved performance. This was the first time I had a chance to see real customers interacting with something I had helped bring to life.

Starbucks Card Duetto

Sometime in early-2002, Starbucks, BankOne, and Visa decided to innovate a new combined gift card and credit card. One piece of plastic that the customer could use as a gift card wherever the Starbucks Card was accepted as payment and as a Visa card wherever Visa was accepted as payment.

Colette Courtion developed the card with Valuelink/FirstData, BankOne, and Visa and Mary Stumpf managed the project. There wasn’t any need for my involvement in regards to adjusting the settlement platform since it acted just like any other Starbucks Card from a technology perspective. But I do remember going on a trip back down to Safeway with Ken and Colette to help sell the idea of Safeway selling the Duetto card in their check-out lanes. Since I had worked with Safeway IT to participate in the Starbucks Card program, my role on the trip was to speak to the Safeway IT team to answer questions and confirm that the current settlement platform would easily support this new type of card. In the end, the Starbucks Card Duetto was named a Business Week Best Product of 2003.

Global

Expanding to North America Licensed Partners

After successfully launching the Starbucks Card in company-owned stores for the 2001 holiday season (meeting the premium card and faster-than-cash objectives), we set our sights on the last of the three objectives: making it a global card. By global, we didn’t just mean international, we meant everywhere the Starbucks brand existed. That included the North American licensed partners (airports, grocery stores, hotels, universities, etc). Since Mary Stumpf was going to be busy managing the deployments to the international joint-venture partners (Japan in Nov 2002, then Greece, UK, Hong Kong, Thailand, etc), I was asked in Jan 2002 to re-engage in the Starbucks Card program and figure out how to expand the program to the domestic licensed partners.

What we had realized the previous year when evaluating gift card processors is that all that existed for settling funds between partners was a spoke-to-spoke transfer from one store’s bank account to another store’s bank account. That wouldn’t work for our vision. Instead, we knew we would need Valuelink to build a new global settlement platform with a hub-and-spoke design. Why is this so significant? Here’s an example to illustrate the difference in the old model and new model we aimed to build:

  • Spoke-to-spoke scenario: a customer buys a $50 gift card at a Safeway checkout lane. Later that day, that same customer spends $20 using the gift card as payment at a Kroger Starbucks kiosk. We now have a situation where $20 needs to be transferred from Safeway to Kroger and the remaining $30 continues to sit with Safeway until it is redeemed by the customer, giving Safeway the cashflow benefit of holding the customer funds.
  • Hub-and-spoke scenario: in the same scenario as described above, we would create what we referred to as the bank of Starbucks as the hub and all licensed partners would settle funds with the hub daily. So in the scenario above, we would pull the $50 (minus a commission for selling the card) from Safeway that night and send $20 to Kroger that night. Starbucks would hold the remaining $30 card balance until used by the customer. Now everyone is made whole daily and Starbucks has the cash flow benefit of holding the customer’s funds.

We knew that the only way this would work is if we could push/pull funds systematically each day from licensee bank accounts. We enlisted the help of Patrick Guilfoy from our Treasury team to help us define the requirements for Valuelink to build on as well as to help us eventually convince the licensed partners to let us pull funds from their bank accounts. We also realized we would need to build a portal that licensed partners could access to view reporting down to the penny on the transactions that justified the net settlement amount.

I want you in Safeway’s HQ at 7am tomorrow morning!

One day in early-January, Hank Suerth, the SVP of Business Alliances called me, Jeff Schaller (a Director in my department), and Ken Poppe (from Hank’s team) together for a quick chat. He said he just got back from a meeting at Safeway and they chewed his ass out for not including them in the Starbucks Card program launch. I explained that we had asked the licensed partners to participate and they all declined. In 1999, gift cards weren’t such a big deal and as I mentioned earlier in this article, it would be a very small percentage of their overall transactions. I explained to Hank that we were building a net settlement solution that would allow us to expand the program to licensed partners.

Hank then said “I want you in Safeway’s HQ at 7am tomorrow morning to walk their IT team through the details of our program. They said they have customers throwing cards at baristas when they say they can’t honor the card. Also, they have a successful gift card program and want to tell us how we can be part of their gift card mall (the name used to describe the end-cap gift card displays they pioneered).”

Jeff, Ken, and I booked our flights and were in Safeway’s headquarters the next morning. While driving from the airport to Safeway HQ, Ken and his teammate responsible for the Safeway account had explained that there are always 10 things on the table in the negotiation with licensed partners and that they assumed the business team at Safeway was using not being included in the Starbucks Card launch as leverage to get more favorable terms on something else. The meeting included about 15 people, mostly IT and the business team responsible for the Starbucks relationship. We reviewed with them the net settlement platform we were having Valuelink build for us. Since they were also a Valuelink customer, they wouldn’t have to build or change anything to participate in the program. Once we finished building the settlement platform, it was just a matter of Valuelink identifying the BIN range of cards that were Starbucks Cards in order to add them into the net settlement calculation. The IT team ended up telling their business team to stand down and wait for us to finish the settlement platform as that would make it very easy for them to participate.

I engaged Carrie Dorais and Scott McKillop on my team to project manage the individual licensed partner Starbucks Card deployments, Ken Poppe (Business Aliances) as our liaison to the licensed partners, and Patrick Guilfoy (Treasury) to help us communicate with the licensed partner finance teams. Over the next year, we expanded the Starbucks to over 100 companies (airport, grocery, hotel, education, etc). This was definitely a challenge since each licensed partner had varying levels of technical sophistication, had different technology, operated at different speeds, and had differing levels of priority put on the Starbucks Card integration. What gave us a strong tail wind was the continuing success of the program that caused all partners to want to participate asap.

Howard said what?

I believe it was around March or April of 2004, that Howard Schultz announced publicly that Starbucks Cards purchased in the US would be accepted at the 2004 Greece Summer Olympics in Athens. Valuelink had built our settlement platform and we had integrated with all 100 North American licensed partners from 2002-2003. Now it was time for us to finish what we started and make this the first truly global gift card. When Howard made the public statement above, he hadn’t talked to anyone in IT and we found out in the news that this was now our top priority to expand our settlement platform to handle global settlement in 6 months.

As I worked with Valuelink to determine how to extend the platform globally, what we ended up realizing is that we would need separate hubs for each continent. The driving force was a requirement in the European Union that gift card balances must stay in Europe until the customer redeems those funds. That meant we couldn’t settle with the bank of Starbucks in North America. Instead, we had to build a hub in Europe that settled with our international joint-venture partners daily. Instead of licensed partners, Starbucks would setup a joint-venture in each country with a 50/50 ownership between Starbucks and a local partner who knew how to operate in that market. Eventually Starbucks would buy-out that partner at a pre-determined milestone in its growth.

So the plan was for the bank of Starbucks in Europe to settle with the bank of Starbucks in North America daily. The big question then became when does currency conversion take place: at the time of the transaction or during the daily net settlement. After playing out both scenarios, we realized there was risk in either direction of the exchange rate changing between the time of transaction and the time of settlement. So in the end I believe we picked the time of the transaction since that would make the most sense to the customer. I always used this scenario to describe to the Valuelink/FirstData developers how it should work:

  • A customer buys a $50 gift card at a Safeway gift card mall in North America
  • That night, the funds are moved to the bank of Starbucks North America
  • The customer flies to the Greece Olympics and spends the equivalent of $20 USD at our Greece joint-venture partner’s store
  • That night, the bank of Starbucks Europe would send the equivalent of $20 USD to the Greece joint-venture partner and transfer $20 USD from the bank of Starbucks North America to the bank of Starbucks Europe

To simplify this, the spokes settle with the hubs daily and the hubs settle with the other hubs daily as illustrated in the following diagram:

Much more complicated to build but that was our design and that’s what FirstData built. Patrick Guilfoy (our Treasury representative on the project) told me once that we built the third global settlement platform in the world. The first was Western Union, the second was the platform that banks use to transfer funds globally, and the third was the Starbucks Card global settlement platform that we built. This settlement platform that we had Valuelink/FirstData build for us benefited all their gift card customers for the past 20 years. I’ve heard some say it changed the whole gift card industry.

In the end, we were able to back up Howard’s promise and delivered the Starbucks Card experience at the 2004 Greece Summer Olympics whereby a card purchased in a home market like the US could then be used in Greece. I led the effort to expand the settlement platform to support global settlement and Mary Stumpf led the deployment of the card acceptance at our Greece joint-venture partner.

It was also a significant milestone in fulfilling the last of the three priorities Bill, Pete, and I defined in that very first meeting in my cubicle on the 7th floor of Starbucks HQ as we dreamed up what could make the Starbucks Card the best gift card in the world. Even as the Starbucks Card team grew to 100+ people, we never really lost that focus on those three priorities. They were simple, not easy by any means, just simple. Let’s make it global (everywhere the Starbucks brand exists), faster-than-cash (the preferred method of payment), and a premium branded card (something customers would put first in line in their wallet).

I have observed over the past 20 years that when something is this successful, many people will try to assume credit who weren’t involved until after it was successful. This is my attempt to tell the real story (based on my experience) and give credit to the people who really made it happen. As you can see below, there were a lot of people involved in this program – no single person was responsible for the program’s success. As Karen said, my role was to lead the ideation/innovation/building phases of the program and then hand-off the deployment phases to Mary Stumpf, Carrie Dorais, Scott McKillop, and Troy Masters (retail network). We were a great team and accomplished great things together. And that’s just the program/project management. We also had business-focused leadership from Bill Winkelman (Bus Dev), Ken Poppe (Bus Alliances), Christa McBryan (Retail Ops), Patrick Guilfoy (Treasury) , and many other representatives the various departments touched by the Starbucks Card program (listed below). And lastly, we couldn’t have been successful without our technology partner: Valuelink/FirstData.

Here is a list of the people who were instrumental in making the Starbucks Card a success. If I missed any of you, please direct message me so I can update this list:

Starbucks Card Team


North America Business Systems:
  • Karen Metro (accountable NABS VP and program sponsor)
  • Jeff Schaller (accountable NABS director)
  • Allen Eskelin (Program Mgr – from idea thru design phase, networking the stores, building the settlement platform, expanding program to 100+ domestic licensed partners, and expanding the settlement platform to support global settlement)
  • Mary Stumpf (Project Mgr – market deployments in North America, Japan , Greece, UK, Hong Kong, Thailand, etc and Starbucks Card Duetto project)
  • Carrie Dorais (Project Mgr – domestic licensed partner deployments)
  • Scott McKillop (Project Mgr – domestic licensed partner deployments)
  • Jane Anne Mahoney (PMO, facilitated initial program chartering and requirements documentation)
  • Abraham Palmer (technical architect)
  • Mike Smith (middleware design)
  • Murray Aldrich (point-of-sale design-dev phase, RIP my friend)
  • Mark Pearson (pilot testing)
  • Rob Reed (starbucks.com/card)
  • Lourdes Orive (starbucks.com/card website design)
  • Steve Hayhurst (technical writer for Starbucks Card program and Retail Network project)
Business Development:
  • Darren Huston (accountable Bus Dev SVP year 1)
  • Anne Saunders (accountable Bus Dev SVP year 2+)
  • Bill Winkelman (Bus Dev owner for Starbucks Card, marketing for North America launch, and B2B card sales)
  • Colette Courtion (Developed the Starbucks Card Duetto, Bus Dev owner for Starbucks Card after Bill)
  • Susan Flannery (product mgr for card and retail distribution)
  • Katie Ference-Moreno (post-launch product mgr for B2B and non-owned channel)
  • Mike Preacher (post-launch ops mgr for B2B and non-owned channel distribution)
  • Darrin Newwell (bus dev admin)
Marketing: Retail Ops: Supply Chain/Procurement:
  • Pete Magnone (Valuelink negotiation)
  • Shelli Funamori (card production and distribution to stores)
Business Alliances:
  • Ken Poppe (liaison to North American licensed concept partners)
Treasury: Valuelink/FirstData:

If you’re still reading this, thank you for taking this journey with me as I tried to recount this part of my past, 20 years ago. When Karen asked me to take on this project to replace paper gift certificates (a low priority project nobody wanted to manage), I never could have imagined the result of that project would become a multi-billion dollar success that changed the gift card industry.

“We are also anticipating that nearly $3 billion will be loaded on Starbucks cards this [holiday] season”

Starbucks CEO Kevin Johnson in a recent Forbes article

In closing, if there is someone interested in doing the legwork to create a business biography of the Starbucks Card, I would love to collaborate. I would do it myself but don’t currently have the time available to take on the project. Whoever takes on this challenge now has the list above as a starting point of people to interview.

Allen Eskelin

Advisor | Fractional-CTO | Negotiator