When I read Inertia Beverage’s announcement of a change of CEO it was not only interesting but actually a very wise move by the current CEO and a friend of mine Paul Mabray.  I don’t want to get into a long post on my business philosophy but I thought I should post a short commentary as I saw some conversation breaking out that made it seem as if this was a negative thing.

I know many times press releases put alot of spin on a bad situation to make it seem like a good one.  I know because part of my role in various marketing jobs had been to do just that and I always put out the story before someone makes a "scoop" and spins it negatively first.  Thats just good PR.

But I view Paul’s announcement differently.  I’ve been in High-Tech since the 1980’s even before I was in college (when I was working for a software retail company).  But more importantly, my view is shaped by something my mentor, Don McKinney, imparted on me when I first moved to Silicon Valley.  Basically, if you want your company to really succeed you first have to recognize that the company will require different CEOs and RARELY does the same person have the personality to be all of these.

1. the "$0 to $10M" CEO - this CEO thrives on the startup situation.  Risk taker, entrepreneurial, big-game hunter, and business developer (as well as visionary and marketeer), this CEO is usually one for the founders.  The key here is to have a sales person in this role and drive the initial products to be customer-oriented with a saavy product team.  This CEO recognizes that getting A+ players on the team is more important then having the right structure or hierarchy.
2. the "$10M to $100M" CEO - This CEO can take those first few BIG customers and nourish them such that they can be cash cows for the company.  At the same time he/she starts to pull in trusted sales and business development folks as well as marketing folks to compliment development and empowers them to do their job.  What can happen to a company that may cause it to fail is if CEO #1 thinks he/she is CEO #2 but isn’t really and has trouble either getting help to create new business, create a polished brand, or both because he/she still thinks he/she has all the best ideas and no one else can do it for them.  Its the beginning of scaling the company.
3. the "$100M to $1B" CEO - This CEO recognizes that the company is going to go BIG TIME and needs processes that allow the organization to scale.  Oh the dreaded "P" word, but its true.  At this point, customer care is still job #1, but setting up the structure to scale operations is becoming more and more important and this CEO needs to allow that to go to a professional A+ COO type.  Again, failure can happen here when a CEO doesn’t appreciate what an operationally oriented person’s value is (i.e. can make the organization scale in ways the CEO never dreamed up).  This CEO also has to be able to attract the investment levels that typically the founding CEO doesn’t have access to.  This is usually when you see a CEO finally step aside but it can be too late.
4. the "$1B to $10B" CEO - Now your talking about the professional CEO that you see at the top of Cisco, GE, and companies like that.  Charismatic and oozing leadership that can rival Bill Clinton in his prime.  This CEO still focuses on his top customers but there usually are so many that the top 10 are likely the only he/she gets to visit.  This CEO could be very very smart but is really removed from day-to-day so is fed development information and status from a staff of A+ lieutenants but likely has a big company filled almost 50% with B players (inevitable at this size).  The hope is that CEO #3 created solid enough processes that the company will thrive and compensate for some incompetence that has inevitably creeped into the the ranks of the company.

Thats the idea in a nutshell.  You can move the revenue bands up and down a little but this is generally true.  I had this wisdom passed on to me in the early 1990s and I’ve seen it proven out time and time again.  What I see in the Inertia announcement is a smart man that wants to see his company do great things.  But I say "smart man" because from my conversations with him, he intuitively sensed he wasn’t CEO #2 or #3, checked his ego at the door, and did the right thing.  He’s still working in there directing strategy and given his history in the wine business thats probably a good move.

The employees of Inertia should be excited.  As a Silicon Valley veteran, I can tell you more often then not that a move like this initiated by the CEO prevented this from happening later in your lives when the Board of Directors forces this decision (and they always do) because the CEO isn’t scaling the company for the big time.

Cheers!

Core wine consumers are interested in purchasing sustainable wines because they want to support producers of sustainable products and because they believe it to be better for the environment, according to a recent study conducted by Full Glass Research in partnership with the Oregon Wine Board. However, many remain confused about exact definitions and certifications; and accessibility is a key barrier to purchase.

Educational campaign will help consumers easily identify certified sustainable wines

Full Glass Research conducted surveys with 954 core involved wine consumers from the Wine Opinions panel and 731 less frequent wine consumers in late 2007 to better understand perceptions of sustainability and purchase motivations among these two consumer sets.

There?s a lot of information here folks!

Rob Rosania, a 38 year-old collector aka “Big Boy,” sold off around $5 million of his champagne and still wines at auction a couple of weeks ago. And yet he still remains one of the biggest collectors of champagne around.

This factoid from a recent Bloomberg article piqued my interest: Rosania owns 400 cases of the excellent champagne Salon 1996 (minus the five he sold at auction) out of a total of 5,000 produced. Poking around on the web revealed other sources saying that there were 8,000 cases produced. And these are six-bottle cases that we’re talking about. The champagne retails for $250 - $300 (search for the Salon 1996).

It’s a fascinating strategy for investing in wine. Rosania has somewhere between five and eight percent of this blue chip wine outstanding–and that percentage rises every time a cork of it is popped elsewhere. That’s probably a good percentage of the production to have to really benefit from a future price move yet not control the market entirely. It would be hard to take an equivalent percentage of a first growth Bordeaux wine since the production volumes are higher. All it takes is a big cellar and a cool $700k or so.

Even if the economy stagnates, wine such as this will probably always have buyers. Could it double in value in ten years? Even if it doesn’t Rosania can always have fun popping open the bottles of this fine wine with his saber.

I’ve tried a tasting-sized-pour of the 96 Salon and it is a brilliant champagne. In a wine investing video game, I might be tempted to adopt a similar strategy. If, in some fantasy world, you were going to take ten percent of a wine, which would it be?

Port, Just of Old Men? - 19 December 2006

Cooking with Wine - 21 March 2007

Salad Dressing Wine - 25 April 2007

Wine Origins: Truth in Wine Labeling - 17 April 2008

Of course, it would be no surprise to assert that Argentina has come a considerably long way over the last decade in terms of the depth that its wine producers are capable of achieving. The manner in which this process has and continues to take place, however, has less to do with the factors that used to be paramount (foreign buyouts) and more with the industry exporting a different image of itself altogether. This phenomenon alongside other compelling developments in recent times have precipitated what I believe to be a pivotal changing of the guard when it comes to the style of Argentine wines that American consumers are welcoming more and more.

Artisan-made Argentine wine producers are no longer lost in the wilderness, playing second fiddle in terms of international exports, to say, the larger, industrial-style producers or Mendoza wine operations funded with foreign money. Argentina?s bout with hyperinflation in the early 1980?s, the kind that made my family sell their business and book it towards the United States, as well as the government?s mismanagement of the World Bank and IMF-instigated crises of the 1990?s were devastating for the export aspirations of Argentine families with a winemaking tradition. Like many American fruit farmers getting undercut and essentially obliterated by Dole, Sunkist and the like, the nature of wine production during times of turbulence in Argentina has made it difficult for these producers to stay afloat; and so, like vultures, the 1980?s and 1990?s saw foreign capital descend upon Mendoza in the form of large multinational drinks corporations and others who scooped up the winemaking patrimony of many financially pressed families.

For quite some time now, these types of wine operations have made drinking the wine of my native country while abroad in the US a sadly confusing affair to say the least. Here I was, drinking these wines which had labels reading ?Mendoza? or ?Cuyo,? so they were certifiably real, but made in styles which weren?t even in the ballpark as far as what I knew I liked to drink. Did Argentine wines change, and thus, Argentine tastes, or was something being kept from those of us who live in North America? Some very successful investors and qualified winemakers from highly prestigious European wineries became involved with their pet projects in Mendoza, but to me, something just did not sit right. I felt a bit heartbroken that as a wine lover, the wines of my native country available for export reflected something I didn?t like?far from it in fact, something I couldn?t even relate to in any meaningful way.

Those darker days, however, seem to be coming to an end as the tide of taste gradually begins to favor Argentine winemakers that provide innovation, quality, exceptional value, and at last, the types of wines that bring a little piece of home back to my dinner table. I feel that a newly found sense of openness and curiosity in the American wine consumer is taking hold. From the wider availability of all sorts of Argentine wines I?ve noticed to the stimulating conversations I?ve had with people here about Argentina?s winemaking heritage and how it is increasingly reflected?things are moving in a direction I am liking more and more. Someone, however, from the point of view of imports to the US, has to be at the forefront of this revolution. For my next post, I?ll be presenting my interview with a major player in building long-term relationships with artisan Mendoza producers and in turn, striving to make authentically Argentine wines more of a staple than an oddity in the US market.

In January, for those of you who weren’t following our play by play of the II International Conference on Climate and Wine, Catavino spent three days cornering wine celebrities, in order to get a better sense as to how wine is being affected both now and in the future by the fluctuating climate conditions. Stubborn and wonderfully determined people such as Richard Smart, Bruno Prats, Miguel Torres, Pancho Campo, Carlos de Jesus of Amorim, Dr. Gregory Jones, and of course, Al Gore, all vented their fears and frustrations with the current lackadaisical attitude held throughout the wine world regarding the impact of climate on wine. Each passionate in their own right, but there was one in particular that I had been pining to interview for months.

Having been previously introduced to Oz Clarke through his books and articles, it wasn’t until I saw his charismatic nature in Oz and James’s Big Wine Adventure that I was hooked. This BBC television program, first aired in 2006, and was undoubtedly one of my favorite wine programs, if only to see Oz flirt with yet another woman. His coy and passionate nature was fun and made learning about Bordeaux and Languedoc-Roussillon entertaining, rather than intimidating. Therefore, to have the opportunity to not only see him in person, but to interview him, albeit a little daunting, was great fun. Add a camera and question that impassions him, and Oz will keep going for hours, interweaving personal stories and jokes with highly specific wine facts that will eventually leave your head spinning.

That said, we would like to thank Richard Gillespie for filming and producing our interview, and hope you enjoy the clip! Next up a special interview, but will share that one with you later!

Cheers,
Gabriella

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