In Depth August 6, 2009, 5:00PM EST

Starbucks: Howard Schultz vs. Howard Schultz

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Yes, Schultz approved Starbucks' first all-out advertising campaign. You may have seen the ads in the newspaper: They are meant to look like they are printed on a burlap coffee bag and tell you in no uncertain terms what the company stands for. Schultz seems to appreciate them, in a perfunctory way. Just before the campaign launched in May, Starbucks posted a video on YouTube (GOOG) of Schultz discussing the ads with baristas in a Seattle store. For a man routinely described as charismatic and inspiring, he seems surprisingly uncomfortable. See for yourself: It's still up.

Schultz's autobiography, written more than a decade ago, is called Pour Your Heart Into It. He comes across, then and now, as a classic entrepreneur: optimistic, relentless, mercurial, and eager to prove people wrong. And when he says, "I love being the underdog," as he did several times in our conversations, he's not talking about then, he's talking about now. Except now he is the chairman, CEO, and president of a company that made more than $300 million in profit last year, that is the most followed company on Facebook, and one of the most recognized brands in the world. Would anybody really call him, or Starbucks, the underdog?

Schultz's curious assertion seems to suggest that the role he inhabits now, as a conventional executive making predictable decisions, may be a little harder for him to play than he lets on. There are other signs. He recalled for me a story he had just told a group of Starbucks marketing executives. Schultz went to visit Molly Moon's, a new ice cream shop in Seattle that everyone was talking about. It was a summer Sunday, and about 100 people were in line. When Schultz finally got in, he looked around carefully. He figured the owners hadn't spent more than $50,000 on the place; the signs were poor, the furniture secondhand. But there was energy and passion, and the ice cream was fantastic. "You want to be there," he says. "To me that store reinforces all the things I believe in. It's not marketing, research, consultants, it's just the experience."

A month later, during a conversation in late July, he returns to the same idea. Word was out that Starbucks was opening a concept store in Seattle, and Schultz was as excited as I had seen him. Earlier in the year he'd asked a select group of employees a question: If you were going to open a store to compete with Starbucks, how would you do it? Then Schultz gave them a small budget, told them they were on their own, and left. In early June they emerged to present a design they called 15th Ave. Coffee & Tea. On the door it would say: "Inspired by Starbucks." (Schultz insisted the store have a different name because it offers beer and wine.) It would sell Starbucks coffee, but the company logo and graphics would be gone. So would the automated espresso machines that some Starbucks stores still use and Schultz has always hated. The food would be baked locally. There would be coffee and tea tastings in the mornings. In the evenings, music and poetry readings. "We all said we'd invest in that company," recalls Schultz. "I said: 'Go open it.' "

He visited the store for the first time just days before it opened on July 24. "I was blown away by the creativity," he says. "I asked the lead designer: 'Where did you get this coffee scale?' She got it from the flea market. When is the last time somebody went to the flea market to get something for a Starbucks store? It reminds me of the early days, when we were fighting for survival, for respect. To me this hearkens back to when we were at our best." He says there are plans to open two other concept stores in Seattle. Beyond that, he can't say. "But my hope is that we can expand it," he adds. It's as if Schultz can't help himself: Starbucks is growing up, and he needs to start over again with something small.

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Instant Caffeine Fix

In February, Starbucks introduced a product that sent a jolt through its customers, investors—and critics: instant coffee. VIA Ready Brew is intended to be drunk on the go, hot or cold, and is sold in single-serve packages. Starbucks is testing it in Seattle, Chicago, and London, and will launch it nationally in the U.S. this fall. "People talk about Starbucks having reached saturation in the U.S. and abroad," Schultz told the Financial Times. "But when we look at the size of the prize, this is the most significant opportunity that we can look at in terms of growth."

To read "Starbucks Hopes for an Instant Success With Via," go to http://bx.businessweek.com/starbucks/reference

Berfield is an associate editor at BusinessWeek .