Start-up advice, from the wine industry

by alec on July 25, 2011

Sunday morning Janice and I took a quick trip to Picton, Ontario. One of Janice’s photographs has been juried into CLIC, the Eastern Ontario Photo Show, and so we made the trip to Picton to drop her entry off before the exhibition begins next week.

It happens that Picton is in the centre of Prince Edward County, Ontario’s eastern wine growing region.  So we made the rounds to some of our favourite tasting rooms – Norman Hardie, Huff Estates, and Long Dog – as well as a couple of new wineries.

Prince Edward County has seen an explosion of wineries in the last few years.  When we first visited the county in 2006, there were 21 wineries.  Five years later, there are 34 or 35.  It’s a bit of a gold rush as start-up wineries are springing up all over.  Like many start-ups, they sometimes make mistakes as well.   One winery served us a chardonnay tasting from a bottle that had been open for two days – it was clearly oxidized.  Another opened a new bottle of cabernet franc, and served a “corked” taster.  Another had just varnished the walls in the tasting room, which made it impossible to smell the wine – all you could smell was varnish.  And another had cranked the price of their new white up to $49 per bottle after winning first place in the recent Ontario Wine Awards.

I was chatting with Long Dog co-owner Steven Rapkin at the end of the day about some of what I’d seen, both yesterday and other trips.  He made the following comments:

  1. Winemaking is a retail business.  It’s true that everyone has a different perception of wine, which more than ever drives home the old maxim that “the customer is always right”.  Address the perceived flaws in your product and services immediately, because it’s always easier to retain an existing customer than to recruit a new customer.
  2. Winemaking is a word-of-mouth business.  Very few winemakers can afford the huge marketing budgets of the large wineries.  They rely on satisfied customers who tell friends in order to bring new business.  See point 1!
  3. Don’t sweat the loonies (that’s a Canadian 1$ coin).  Today it’s common to charge a nominal fee for a tasting at a winery, largely to combat the busloads of wine tourists who sometimes show up intending only to drink sample without buying.  Most wineries waive the sample fee for buyers, but some don’t.  In Rapkin’s own words “you’re not going to get rich on the loonies”.  You have to price your product fairly, and reward customers by treating them fairly.

Starting a winery sounds a lot like starting a technology business, doesn’t it?

We left with Prince Edward County with three cases of wine, including a half case of Long Dog’s wonderful 2007 “Bella” Riserva Chardonnay, which will soon be sold out.  On the way back to Ottawa, we also stopped at Fifth Town Cheese, and bought a half dozen of their excellent artisanal cheeses to enjoy with our wine.

What a way to spend a Sunday!

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A lot of die-hard Skype fans worry that Microsoft’s acquisition of the company is going to change it, and not for the better.  Yesterday’s news that Skype For Asterisk will be discontinued didn’t help, generating speculation that this action is a result of their impending acquisition.

Before we rush to declare the “Micro-Skype ApocalypseTM”, let’s consider a few facts.

Skype has two very similar competing offerings in market that will allow an Asterisk PBX to connect to the Skype Network – Skype for Asterisk and Skype Connect.  One (Skype for Asterisk) sells for a very low one-time license fee, and the other (Skype Connect) sells on a subscription basis with additional charges for minutes of usage.  Skype Connect must be dramatically more profitable than Skype for Asterisk.

Skype for Asterisk has issues that limit its use in business.  For example, it can’t forward a call from the PBX without stripping caller ID.  How do you build a modern call center without caller ID?  Those in the know say that this is a limitation of the Asterisk channel driver, and not a Skype limitation. After all, Skype Connect doesn’t have that limitation. It appears that Digium may not have given the priority to Skype for Asterisk that it needed to be successful.

The business fundamentals don’t favour Skype for Asterisk.

Moreover, the agreement with Microsoft doesn’t come into effect until it has cleared regulatory approval.  Skype would be foolish to make decisions about apparently important partnerships solely at the behest of their new owners before gaining regulatory clearance.

Granted, Microsoft competes with Digium.  But business fundamentals, as opposed to Microsoft influence, are a far more likely reason for Skype’s decision not to renew the Skype for Asterisk agreement with Digium.

Sometimes it just makes sense to sunset a product that isn’t working out.

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