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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From the Trenches

by alec on October 3, 2006

In Rebtel, Jajag and others should know what they are up against, Russell Shaw writes that “startups who are so wrapped up in their own special offerings should not underestimate the forces they are going up against”.  Russell is riffing off Andy’s Being on the Inside where Andy’s basic point is that the incumbents can make life difficult, or even shut down startups easily enough.

Frankly, you guys are great armchair quarterbacks.

I want to amplify a little bit of what Jeff Pulver just wrote in his remake of Parents Just Don’t Understand.  In the world of a startup each day is a fight for survival.  Each day you wonder whether or not:

  1. The offshore subcontractor you’ve got working for you is going to deliver when he says he will, because you’ve made a big commitment to an important customer.
  2. The employees you’ve worked so hard to recruit are still going to think that what they’re doing is meaningful when a recruiter from a larger firm comes along offering more money.
  3. You can make payroll in another quarter without more investment.

You do crazy things like buying used servers from EBay, without warranties, because it’s 80% cheaper than buying the new ones.  You build your own desks.  You drive 8 hours to a trade show because it’s cheaper than flying, and besides, that gives you some good talk time with the other folks in the company.  You make promises to customers who believe in you without knowing quite whether you can deliver on those or not.  And then you go figure out how to deliver.

You work every night until you fall asleep in your chair in front of the computer.  In fact, we just had a light hearted discussion yesterday about head snappers (the folks who lean back, and then lurch forward when they wake suddenly) versus face planters (those who sleep with their faces on the keys).  The next day you get up and do it all over again.

Worrying about whether a slow moving giant is going to cut off your air is the last thing on your mind.  My fondest hope is that we’re so successful that we can poke one of these guys hard enough in the eye that they want to buy us.  I’m sure that’s the way that RebTel and Jajah are thinking about their businesses too. Get out there, be visible, create a ruckus, build some momentum.  Build your successes day by day, and customer by customer.

Startups are about making choices, and then living with them, and that’s really different from a big company.  When I worked for Microsoft we debated the merits of cable versus DSL, and tried to predict who would win.  In the end, we participated in the GTE DSL trial and bought a piece of a cable company.  As the CEO of iotum, that’s not a luxury I can afford. We have to validate our hypotheses one at a time, not all at once. An example: a couple of weeks ago an old acquaintance asked why we had chosen to focus on building a hosted service instead of an enterprise play.  My answer?  We had to make a choice.  We couldn’t be both.  By being focused though, we can speed ahead of a player trying to execute both plays.

That’s the reality of a startup, Russell.  I just don’t care what these guys are going to do.  They’re not going to get around to what iotum is doing until long after we’ve already succeeded (or failed). 

And you know what?  Hjalmar Winbladh and Roman Scharf have both built successful startups before.  I’m pretty certain that’s the way that they’re thinking too.


Evan Williams on Startups

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Evan Williams Ten Rules for Startups came to me yesterday.  Wisdom!  Be Narrow Be Different Be Casual Be Picky Be User-Centric Be Self-Centered Be Greedy Be Tiny Be Agile Be Balanced (bonus!): Be Wary By Evan’s scale, iotum is doing pretty well.  We’re not about casual content creation, so we fail on number 3.  We […]

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TailRank Beta

November 9, 2005

Kevin Burton, one of the founders of Rojo, has a new service out called TailRank.  Beta was announced today.  The basic idea is that blog postings that are relevant to you are likely part of the reputation network that is defined by your blogroll.  By uploading your OPML file to TailRank, you create a personalized […]

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