Andrew: Hey there, freedom fighters. You probably know by now, but I’ll say it again and again and again, in case there’s anyone who’s new. And I want to recruit you if you are new. My name is Andrew Warner. This is Mixergy, home of the ambitious upstart, and the place where I interview entrepreneurs about how they built successful companies so that they can teach you what they learned along the way.
In this interview, we’re going to find out how an internet start-up guy ended up creating a winery in Brooklyn. Brian Leventhal is the founder of Brooklyn Winery, which offers locally crafted wine, food, and private events. And by the way, I should say this interview is sponsored by Walker Corporate Law, the tech startup law firm. And Brian, welcome.
Brian: Thank you.
Andrew: Were you . . . as a kid growing up, did you drink wine? Was your family into wine?
Brian: My path to wine didn’t actually start until after I graduated college. I feel like I’m more of a . . . I’ve always had the entrepreneurial bug in me, but I didn’t really know where it was going to take me. Funniest . . . in college, I actually started my own company in a different liquid. It was in water. I had a successful water business in college, and then . . . but had no idea at the time that my future life would be in wine.
Andrew: Growing up, then, what did you think of wine? Let me understand the man behind the company, and then I want to come back to this water thing, because it’s going to blow people’s minds what you did in college. Most people just have side jobs. You did something really interesting, and took it way beyond that. But just tell me what your relationship was to wine as a family growing up. I want to get to know you a little bit.
Brian: Sure. So growing up, to be totally honest, my parents are not drinkers at all. In regards to my relationship with wine, I’m Jewish. It was probably more of a religious type thing. If we were having a dinner together as a family, there might have been wine at the table. We would have our Manischewitz during Passover. But there was no serious wine drinking whatsoever.
My closest relationship with any serious wine was to a friend of mine whose father had a very serious wine collection, and if we were lucky he would show us . . . he would take us on a tour of his walk-in cellar. But we never really got to drink any of it. So I didn’t have any real kind of serious bottle of wine until I was in my early 20s.
Andrew: I remember saying I’m going to be a businessman, I’m going to be social, I need to learn how to appreciate wine. And I tried reading books about it. It didn’t work. I tried going to wine tastings. It didn’t work. The Learning Annex in New York had a wine tasting class. I took that. It didn’t work. And it took me a long time to realize this just is not for me. But I tried it in that direction, trying to learn it so that I could talk it. Did you ever go through that? I see you nodding.
Brian: Yeah, no, it’s an amazingly complicated beverage, which to me makes what I do so fascinating and interesting. I certainly . . . it wasn’t until maybe about three or four years before I started Brooklyn Winery that I started to get into wine, read a little bit on it, take some wine classes. But I’m not a sommelier by training at all. But I do have . . . I think my passion for it more stemmed from the creation of the product than actually knowing how every little aspect of the finished wine . . . how it gets made was what fueled Brooklyn Winery.
Andrew: Okay. Tell me a little bit about this water business in college.
Brian: Sure. So I went to Washington University in St. Louis, Missouri. And while I was there, I started a business called Why Down Water. It actually still exists today. And what the company did was we essentially delivered the office coolers, the five-gallon bottles with cooling bases and heating bases, to dorm rooms and off-site campus apartments at Wash U.
And the reason why the business worked so well is one, there wasn’t access to premium water at Wash U for students at an affordable price. The drinking water in St. Louis is sub-par, and students . . . it was an affluent university, and students liked to drink bottled water, but the only options were 16-ounce bottles of DaSani sold on campus for $2-plus per bottle. And it’s in St. Louis, which is a city, it’s still in the suburbs. It’s not really in a city center where you can walk to a supermarket or so forth to get water.
Most of the freshmen didn’t have access to vehicles as well, so for me to come in and basically offer them larger format water that they could have in their dorm rooms, and you could imagine after the late-night partying, to have a cold glass of water the following morning always available, was beneficial.
On the flip side, people loved their ramen noodles and whatever, and having the hot water all in their dorm room was great. So from the customer perspective, it was a win. I could get them a five gallon bottle of water for about $6 or $7 per bottle, for five gallons, which was a huge cost savings over a 16-oz bottle at $2.
Andrew: Do you think college kids care that much about water? They wouldn’t just go to the sink and save some money and be done with it?
Brian: It’s amazing. People love their bottled waters.
Andrew: Okay. And the giant ones, not even the little ones that they could put in their backpack. We’re talking about the giant ones that they would put in their room and pour into cups from?
Brian: Correct, and there’s a huge eco consciousness especially at Wash U. It’s a pretty liberal university, and people don’t like the waste of all the individual plastic bottles. People would use our product and pour it into a Nalgene bottle, for example, and take that with them and fill it up.
Andrew: I see.
Brian: But the flip side, the reason why we had a supplier in St. Louis, and the number one cost for a water company is delivery. The water’s almost a fixed cost because it’s just tap water that runs through a machine that basically does its reverse osmosis process, whatever. But a delivery guy that’s going out and dropping three bottles here, four bottles at the office, and so forth, they can only deliver a certain number of bottles a day.
What I was able to provide them was, come in one delivery, drop off 200 to 300 bottles. It’s going to take them one hour. That’s more than a delivery guy could do in an entire week.
So the cost of that product, they were able to sell me each bottle at $1.25 per bottle. Then on the cooler side, I didn’t even have to make a fixed investment in the coolers. I rented them from the company at $4 per month per cooler, re-rented them to the customer $10 per month per cooler. If the cooler broke, which they did frequently, I wasn’t on the hook for it.
Andrew: The cooler meaning in someone’s dorm room, you’d put a cooler?
Brian: Yes. I know dorm rooms are small and whatnot, but they only had about a 1-square foot floor print, and then they were just tall. So they didn’t actually take up that much space within the dorm room itself.
Andrew: Okay. Alright, so I see the economics of it. You’re buying something for $1.50. you’re selling it for about $5, right?
Brian: $6 or $7, yeah.
Andrew: $6 or $7. Alright, so I see the economics of it. Talk to me about how you got customers.
Brian: I’m a sales guy at heart. I love sales. I love talking to people. One nice thing that Wash U had was they had a strip of storefronts that they rented out to students at an extremely low rent. Looking back now, it’s almost silly. I think they gave us maybe about 400 square feet for like $125 a month or something.
Andrew: Okay. Because they wanted to encourage entrepreneurship, be creative?
Andrew: I see.
Brian: But we still formed our own LLC and it was a fully official company. I didn’t have to pay the university or have them audit me or anything like that. So we had the storefront that was in a very trafficked part of the university. A lot of students, especially the underclassmen, would be walking by. I knew the way that I would acquire customers was coming during freshmen move-in, and get the parents.
The parents are the controllers of the dollars, and freshmen parents, where their children are going to school for the first time, are very apt to get their son or daughter signed up for the best thing. And who’s going to not sign up for water?
So I have a way with parents, I guess you can say. That was my initial target. So I got to school early, I set up shop, I got the whole store front ready. I basically stood on the sidewalk and [??]. Those freshmen would then be my customers the following year because they would sign up as sophomores.
Andrew: Wouldn’t you feel a little awkward just standing there and selling to people’s parents? Your introduction to college students is you selling and not just selling but selling to their parents. Most people go away to college so that they can meet their future friends, so that they can date, so that they could just be new people. And, here you are, your new person who you decided to be was the guy who talked to everyone’s parents. Wasn’t there any awkwardness or hesitation around that?
Brian: I was older. I didn’t start this until I was a junior. So, these were not people that I was necessarily going to be friends with, because they were just starting. I had my group of friends.
For me the passion was all about being successful with the business. I didn’t feel awkward speaking to the parents. Honestly, the kids wanted it as well. So, sometimes I’d speak with them. They’d grab their parents and make the purchase happen.
Andrew: I see. Why did you want a successful business when you were in college?
Brian: That’s a great question. I was in the undergraduate business school there also. I think for me there’s a little bit of the rush and the thrill of the sale, and the thrill of being successful, and basically proving to myself that I could do something.
Every time I would acquire a customer there was something about it that just ran through my veins that made me real excited and happy – just seeing that people were really happy with our product and people talked about it, I was making people happy. I think that’s part of what Brooklyn Winery does also. But, that made me personally happy.
Andrew: In the movie “Barbarians at the Gate” there’s a line that says people buy you when they buy what you’re selling. You’re nodding. It feels like that’s what it was for you, too.
Brian: It was. The best piece of sales advice that I ever got it was actually before I went Wash U. I sold Cutco knives. I was one of those guys. I was one of the top sellers in the country.
I guess my manager said to me all a sale is is a transfer of enthusiasm. If you’re enthusiastic about what you’re selling and you get the person you’re meeting with enthusiastic about it as well you’re most likely going to be successful and make the sale happen. I’ve heeded that advice now it’s been I guess probably close to 15 years since I was given that advice. It’s absolutely [??]
Andrew: I’ve got to say to anyone who’s listening right now I did an interview with Hal Elrod, one of the top salesmen of Cutco knives. He walked me through the process of selling. It’s not just the process step by step but the enthusiasm that he has for it that’s contagious. If you’re listening to this you’ve got to go and search for Hal Elrod. It’s amazing. Or, just do Cutco as a search on Mixergy. You’re shaking your head. You know him?
Brian: I’ve heard his name. I think he’s one of those legends. It’s been a while. I don’t know if I’ve met him or not. There’s a chance I probably have.
Andrew: The reason that I interviewed him is people who I’ve interviewed told me that they learned to sell by selling Cutco knives. I said I’ve got to get one of their salespeople on here to hear what they’re learning.
I see. So, you learned how to sell from there and you used it when you were selling water. Whatever happened to this water company?
Brian: The one rule that Wash U had was since we were kind of a “student run business” I had to sell the company before I graduated. So I couldn’t have it after.
The experience I had selling it was unbelievable. We put together a full prospectus, discounted cash flow model, multiple analyses for this little company. But, I sold the company for, I think, $65,000 after a $5,000 initial investment and just 2 years of operations. And, each year was profitable as well. I think the first year was close to $10,000 profits and the second $20,000.
All I know now is if I had four years running the company, if I had started out as a freshman, it would be even more successful. I think they’re on at least their fifth or maybe sixth set of owners now. I’ve heard selling prices recently close to $200,000 for the company.
Brian: So it’s kind of like one of my legacies left at the school. Any time I go to visit, which isn’t enough, I always go over and check it out. They still have our original logo and everything that we made.
Andrew: You know what? It’s great to start a company that sells directly to consumers, because you get to see this. You watch them all enjoy it. So then, here’s what I don’t get. With this entrepreneurial instinct, with your sales skills, why go to McKinsey and Company?
Brian: Yeah. I was 22 when I graduated from college. I felt like I needed to have some type of really strong business foundation in the real world before I were to kind of go at it on my own and start my own business, one thing that I didn’t have an idea. So I floated the idea of how do I duplicate this water company across schools throughout the country. And, that I thought about for a little bit. But, it was a little bit more challenging than just being able to roll this out, because every school’s different and so forth.
But, for me, going to McKinsey was going to give me this really solid set of skills that I knew was going to be very important when I was eventually going on my own from analytical skills, interviewing skills, having the confidence at a really young age to speak with people that are twice, sometimes three times my age about their business, and just thrown into the fire. I also wanted to surround myself by really, really smart people.
Andrew: You’re giving these companies direction. They’re listening to this kid fresh out of school, and they’re building their business, changing direction, based on what he says. Do you have an example of what you learned by doing that?
Brian: Yeah. You build confidence quickly. It’s very nerve-racking at the beginning, and sometimes the people that you’re speaking with have no desire to speak to you. Because they’re like why would a 22-year-old know more about my business than I did. But, it all comes down to a fact based approach of analysis. This is something that I learned. People can’t refute facts, and data driven analysis, and not making things up. Your gut is sometimes right, but I wouldn’t be making big decisions off of gut decisions.
Andrew: So, what you learned is if you can get the data then you can make your argument in a persuasive way.
Andrew: How would you get your data?
Brian: The data would come from a variety of ways. It totally depends on the project that we’re doing. A lot of it would be interview driven. So, it would be conducting numerous, numerous interviews, and you start to see trends across interviews.
Some of it would be first hand. I remember I had a client that was in an animal health space. I went out to cow farms all across the country getting first hand research to report back to the pharmaceutical company themselves about what’s going on on farms. Things like that. And, a lot of Excel modeling and doing that to come across to good answers.
Andrew: [??] who is another McKinsey consultant, seems to have learned the opposite lesson.
Brian: Oh yeah?
Andrew: Or at least one of his lessons was opposite to what you just said. He believed that you should go into the field, be exactly where the action happens, and then come back. Because whatever you say is more persuasive if you start off by saying ‘yesterday I was at the factory floor and.’
Brian: So, that’s true, and that was sometimes part of the rationale why went into the field was that during the client meeting they couldn’t throw the argument you haven’t even seen it yourself. I was like actually we have.
Andrew: I see.
Brian: That is 100 percent a McKinsey tenet, and we’ll always send you out. Usually it’s the youngest person on the team, like myself, that would be going out to do that in field work.
Andrew: I see. And, it wasn’t necessarily because you’re going to learn more by being in the factory for an hour or a day. It’s that whatever you said after ‘I was in the factory for an hour or a day’ has much more impact.
Brian: It has. I think there’s both. I don’t think it should be completely discounted of what you saw there. Granted, by spending a couple of hours you’re not going to learn everything. But, you will take away something from being there.
Andrew: I see.
Brian: But, 100 percent it definitely gives you credibility during a big meeting when you said you were there.
Andrew: Okay. I could see that also in tech startups. If you start a sentence with ‘and I was just talking to a customer yesterday,’ everything you say afterwards does and actually should have much more credibility.
Andrew: All right. Then, from there you go on to a company called… What’s up with my notes? I have so many notes now that I have to scroll a lot more than I did before. I keep wanting to do more and more research on guests. ExpoTV. Your first day at ExpoTV something happens that sets you on a whole new course for your life. What happened?
Brian: So, it’s after McKinsey. I only spent two years at McKinsey. I felt like I had kind of gained the knowledge I wanted. I wanted to join a tech startup and really learn how a young company operates. I also wanted to go into an industry that was different than anything I had worked on before, something that I thought would be really good for me to learn about.
So, I joined Expo. However, [??] what Expo did. When I joined, one of the first days I was there, and this is a small company, 15 employees – the person who is in charge of marketing, she basically is like hey we’re going out to New Jersey to this little place where we can make our own wine. Do you have any interest in joining?
This was totally outside of work. For me coming in, I wasn’t a big wino at all at the time. But, it was a way for me to meet my coworkers that I was going to soon be working with. Especially in a small, tight knit company it’s really important to know your coworkers.
Andrew: Do you have a land line, by the way?
Andrew: You do? What are you still doing with a land line?
Brian: It came for free with my cable and Internet.
Andrew: I see. Do you need to get that phone, or we could just let it go to voice mail?
Brian: Hold on one second, let me just…
Andrew: All right. I’m not stopping the recording.
Brian: I’m sorry.
Andrew: So everything you say we’re all going to listen in on it.
Brian: That’s really embarrassing. I apologize.
Andrew: We lost it? Okay.
Brian: Yeah. Sorry about that. I know I’m one of the only guys left with a land line.
Andrew: A land line?
Andrew: All right. Okay, so you went to New Jersey to make wine for fun with your coworkers. How does that change the course of your life?
Brian: When I went out to New Jersey it was just… You have to understand a little background on what this place was. We’re literally in the middle of nowhere in New Jersey. I have nothing against New Jersey. I like New Jersey. But, to live in New York City, and most people in their mid-20s who live in New York City do not own their own vehicle, so to get anywhere you have to take mass transit. Within New York City that’s very easy. When you start venturing outside of New York City it gets quite challenging.
So, to get out to this little place in New Jersey I remember it was literally two different subways to a railroad, to like a bus, to walking down train tracks. It was an unbelievably painful commute. But, when we went there we really enjoyed it. It’s this mom and pop place that basically piggybacked off this old post-Prohibition law that says everyone is actually allowed to make 200 gallons of wine in their home for personal consumption every year.
Andrew: This is in Prohibition people were allowed to make their own wine?
Brian: It got passed right after Prohibition, post-Prohibition.
Andrew: I see.
Brian: Most people don’t know that this law exists. This is just for personal consumption, so you can’t resell it. But, you’re not going to get in trouble if you make wine in your bathtub type of thing. Most people can’t do this or don’t know to do this.
So there are these places, and for whatever reason New Jersey seemed to really piggyback off this law. They create these locations called home wine making centers. They’re not wineries. So, they’re not legally allowed to sell wine to people. But, somehow they craft their contracts in a way that you’re basically using their space as your home to make your own wine that you would’ve been allowed to do within your house.
Brian: The legalities of that are very gray in my opinion, but that’s not my business. So, that’s kind of how the place operated. It had some very basic wine making equipment. They were not professional wine makers by any means. But, the majority of their customers were Italian families that love to drink a lot of wine. They would go as a big family and bring food. They’d have like a picnic there and do it and so forth.
Andrew: Brian, you can’t make wine in an afternoon, right?
Brian: Oh, no. You went like five times a year.
Andrew: I see. So, even your co-workers were going there as step one of a multi-visit process.
Brian: Multi-visit over the course of a year, and a year they rush the wine. Most good brands of wine take more than a year to create. But, in order for them to kind of recycle the barrels every year and not have things sitting post vintage, two vintages, they would get it all out within a year. So, you went about five times within a year.
Andrew: Okay, all right. So, what is it about this experience?
Brian: There was something really special about it, and I found this at the beginning. To start, wine is essentially one ingredient. It’s grapes. There are some things you use to guide it along the way to make wine. But, for all intents and purposes there’s only one ingredient in wine, and that’s grapes. Beer – a whole recipe, totally different.
To see this fruit transform over this process into wine I felt was the most interesting and fascinating thing ever. What I thought was God there’s eight of us. We’re normal enough people. We’re trekking out from New York City to New Jersey to do this. Why doesn’t something like this exist in New York City? There’s got to be more people like myself that would love to see how this wine gets made.
Andrew: That makes sense, right? Why go to New Jersey and do all that to get there if you can do it in Brooklyn or any part of New York City where the trains can take you?
Andrew: What did you find out about that? Why wasn’t that…Why didn’t that exist in New York when you can do anything in New York?
Brian: Well, you can do anything in New York if you have unbelievable persistence, I find.
New York, as much as small business and starting your own thing is promoted by politicians and the like. It’s tremendously, tremendously challenging to cut through the red tape on a whole variety of different levels to do something entrepreneurial in New York City, I found, especially in the alcohol space, which has a lot of regulations behind it.
Andrew: So it wasn’t…It was legal to do this, but it was not something that New York was going to turn a blind eye to.
Brian: No, you needed a lot of cards to fall the right way from making wine as a manufacturing activity. That means every space in New York City is zoned for different types of uses. You needed to find a space that was zoned for manufacturing. There’s very few spaces left zoned for manufacturing, because everything is rezoned for residential and commercial purposes.
So to find a space where it would actually be allowed to do this, and then for it to be in a neighborhood where actually people. The cost of real estate is so high in New York, that I can’t just open up a pure manufacturing space. I need the space to be able to generate other types of income as well. So the space needed to be in a multi-use zone where I can both manufacturing and have commercial purposes where people lived. There weren’t that many options…
Andrew: God, this is a headache. I talk to tech start-ups, and they say, “Well, I just started coding one weekend and…
Brian: Very different…
Andrew: …we were in business.”
Brian: …start-ups and a winery.
Andrew: Alright, which is kind of interesting because of how you ended up making your first $100,000, but let me get to that in a moment. First, if you don’t mind, I want to say thank you to this gentleman right here. Should have this ready before I say to this gentleman, but there we go. Right there to him. He is Scott Edward Walker of Walker Corporate Law. He is the startup’s lawyer. Did you have a lawyer, Brian, when you started?
Brian: Great lawyer story for you.
Andrew: Hit me. Do you mind if I keep Scott’s image up on the screen as you tell it?
Brian: It’s only going to help Scott, I feel like, because the first act as a really young entrepreneur when you’re starting a company. Usually, the first expense, real legitimate expense that you might have is retaining a corporate attorney, especially if you’re going out for a capital raise.
You need an attorney to raise money, to write your operating agreement, and all your subscription agreement, all that good stuff. This is, for us, my business partner and I, this was the first check we have to write out of our own personal investment to the company beyond our LLC filing documents which was $300.
This was a big check, and I got appalled by what some New York City attorneys charge on an hourly basis for their services. So, I though I’m going to be shifty, and I’m going to hire a law firm out of Florida that was a third of the price of our New York lawyers that knew the law much better and were used to big capital raises for start-ups and all that stuff.
What I ended up getting was a patched together document, and I’m not an attorney so I didn’t realize it wasn’t a great document. It wasn’t until I started raising capital that someone who was looking to invest, who was also an attorney, basically, said, “Hey, Brian, this is a terrible document. What’s going on here? There’s so many holes. You’re not even protecting yourself, here.”
I’m like, “Oh, my god.” Make a long story short, since then, the entire document was re-written by a wonderful attorney in New York at larger fees, but I can’t even speak volumes enough how important it is to have an attorney that you trust and can rely on. It’s worth the crazy dollars that they charge.
Andrew: Hopefully, Scott does not charge crazy dollars, but I do think he’s worth it. Not just me, but all these people right here and many others agree if you go to walkercorporatelaw.com, you’ll see it. Now you understand the importance of finding the right lawyer, not just looking for a cheapo lawyer that you can find online or through a friend.
I see the need for a lawyer. I see the issues that you’re having trying to bring this idea from New Jersey to New York and still my research shows that the first $100,000 that you made happened before you even opened your doors by helping people — you’re nodding. What did you do?
Brian: The initial idea of Brooklyn Winery was similar to what we were doing in New Jersey. The initial idea was a place where people can make their own wine. We wanted to do it in a more professional manner, and have the end product be really a great wine, not just something that was kind of thrown together by people that didn’t know what they were doing.
We hire a wine maker. We found our space. We raised some money. All that said, but going to what your question regards to our first sales, I had to pre-sell this idea of making wine and basically convince people to write me $5,000 – $6,000 checks which a winery that never made any wine before in the past, a wine-maker that no one had ever heard of from California, and a space that was under construction and looked like a war zone had hit it.
Then they like, “Hey, I promise you, you’re going to have a good time and make great wine, and you’re going to get it in two years, but give me $6,000 now.” And that was the challenge that I had to go out with.
Andrew: This again, is because you are a good salesman, but I don’t want to walk away from this interview saying, “Well, because Brian is a natural salesman, he could do it. That seems interesting. Natural salespeople are cool.” I want to understand how you did it, so that I can be a better salesman.
Brian: Sure, so one thing I learned was I wasn’t going to be able to do it by myself. At the time, just to give a sense of timeline here, I had moved into our space. The white lease was signed June of 2010. I had raised about half of my round of financing which was enough to start withdrawing the funds. I still had some fundraising left to do.
My business partner, he was totally in charge of the managing all the construction. He was 150% committed on other endeavors. What was left on my plate was all of the sales and initial marketing and figuring out what this product even was, and how to sell it. What I did was, I didn’t have any full-time employees yet. I hit the intern circuit, and I went out to business schools. I thought this was going to be a great opportunity for someone to do basically a summer with me at Brooklyn Winery, and what a great opportunity for someone to do this. They were essentially going to be a similar age to me.
I went out to Harvard Business School as well as New York University Stern Business School, and I brought in three guys that were unbelievable. So, there’s a team of four now. It makes you feel a little bit better about yourself, one to four…
Andrew: The company is there’s no wine being made. There’s no real store. There’s no real store. There’s just an idea and space that you’re renting that you need to clean up.
Brian: That’s correct. We did make a commit. We did hire a wine maker at this point who had just moved from San Francisco to New York City with his wife and was committed to this as well. So we had one other…
Andrew: Let’s find out the wine maker in a bit. I don’t want to forget to ask about that because in the pre-interview you told April a few interesting things about how you found a wine maker. The interns, how did they help you make sales? I want to understand how a salesman like you, how you specifically, Brian, end up selling this product that doesn’t yet exist so that I can become a better salesperson, too.
Brian: Okay. Step one, first we had to create a product. We kind of already knew what the product was because I knew the experience I had went through and there was a comparable type company, actually, that our wine maker had worked out in California called Crush Pad that had a kind of wine making experience. So, I was able to craft a product a product relatively quickly, and kind of put some pricing together based on some cost estimates that I had.
We got some marketing materials printed up on that from one of these online cheapo printing companies. I had some pamphlets and some one-sheeters on what we were going to do. Since we are online people, actually a really important part of sales that we learned and what we had, and I can’t downplay this at all, is a web site.
The website is one of the best sales tools, so we have that. My business partner was actually more on the product and technical side in the last company we were at, so he was able to build the website very well and get that up and all the search engine optimization and getting [??] by Google. People were starting to locate us a little bit online. The things that we specifically did, so we had the website as one.
One other thing that we did early on was how to we get people to at least talk to us? I know that if someone were able to talk to me and even some of my interns and meet us, we’d have the opportunity to potentially close a sale.
I came up with this idea of doing of what I called “Hard Hat Tours.” We were under full construction, and I bought some hard hats. They weren’t even real hard hats that would actually protect you, but they were just kind of for show. I spray painted our logo onto the hard hats, and I opened up our gates. I, basically, if we got some walk-by people, but also promoted on our website that you can have a free Hard Hat Tour of Brooklyn Winery. See what’s coming to the neighborhood, etc.
We had some…I think we went to some local businesses nearby and gave them some post cards. We started to get people actually come to these tours, and I just…
Andrew: Not as sales meetings, but a tour of a new winery that’s opening up.
Andrew: I love it already. Okay.
Brian: You don’t want someone to….People aren’t going to be as apt to go if they think they’re going to have to buy something at the end of it, right? If you again, selling, it’s a transfer of enthusiasm, right? So this was the whole idea was let someone kind of see what’s coming and what they could be doing. Then maybe they might be interested in purchasing something. Maybe not, and even if they’re not, they’ll remember us and be a customer maybe someday in the future.
Andrew: So you figure I get them in here, I’m much more likely to get them enthusiastic and potentially buy. What were you going to sell them at that point?
Brian: I had several different…I mean, my only thing I had for sale was make a barrel of wine or… I quickly learned that I needed to have some lower-priced tier options. A barrel of wine so your viewers know, is 300 bottles of wine. It’s a lot of wine.
Andrew: Is that first when people would walk in the door, you’d give them a tour. You’d say, “If you want to buy one of our early barrels of wine, it would only cost you…” How much?
Brian: Around $6,000.
Andrew: Okay, and so people balked at that.
Brian: It was like $20 a bottle, which, you know, and people…That was challenging for an individual to do that. So then our minds started to go a bit, “OK, we need some lower priced products.” When we moved into we can have half-barrels of wine at a little bit more than $20 a bottle, and you can own half a barrel of wine. It’s not just a finished wine you’re getting. There’s so many different steps where you come in and do all the prop steps and so forth.
Andrew: They’re also making this wine?
Andrew: And if it’s half a barrel, I’m making it with some stranger, but we both split the end result.
Brian: Yes, and no. Yes in the sense that the other half of that barrel is going to be with people that you don’t know, but we’re going to keep your group separate so that you still get to do your activities without the other people.
Andrew: Got you. Okay.
Brian: That was still a high price for them. Then we had the idea of, OK, let’s do what’s called a community barrel. Now let’s buy two cases, and we’ll piece you together with other people that may want to buy two cases.
That, selling-wise, was easier. We soon found out execution-wise was quite challenging, but we were able to sell people doing it that way as well.
Andrew: And that’s what you ended up selling and getting to about $100,000 in sales?
Brian: It was actually a combination of all three. We were still able…I was still able to sell people at $6,000 barrels of wine. They weren’t 22- year-old right out of college, but there were some people, and I had some people buy several barrels of wine. We actually made kosher wine also, because we got inquiries about that. That was an experience. But at the very beginning, I needed those checks to come in. That was working capital for me, so it was really important.
Andrew: And what’s the difficulty in putting this together? You said that the execution was challenging. What’s the challenge there?
Brian: To give you a sense, this program doesn’t even exist anymore with Brooklyn Winery. We can get to that in a second with how the entire business model’s completely changed. What we learned with whether it’s the community barrel or even the full barrel clients, to offer the experience that we really envisioned and what we were selling, didn’t work as well as we would have liked. There are a number of reasons.
One, we were working with Mother Nature with grapes. You wanted the groups to be able to actually work with the grapes that they purchased. We’re getting a lot of different grapes coming in, and they come in on different days. We don’t always know what the days are that they’re coming in.
So you might have Merlot Group A scheduled for Wednesday at 6:00 p.m. when the grapes come in for their crush and destemming process, but we learn from the farmer, “Oh, by the way, your grapes are coming in a day early.” Oh no, now I have groups . . . and you have to realize, even if [??] barrel, it’s usually him and me, but it could be 10 people splitting it amongst his friends.
Now you’re working with people within New York City with unbelievably busy lives, that schedule their lives three weeks in advance, and now you’re telling them, “Nope, you’re not coming in Wednesday. You’re coming in Tuesday.” They’re like, “Wait, I have a dinner. I have this. I have that.” It was like, what. So I was essentially setting myself up to fail, and there was nothing I could do about it to improve the . . .
Andrew: How do you deal with that because there isn’t anything that you can change?
Brian: All you can do is . . . I mean, you can apologize, and you can start letting groups potentially coming in for grapes that weren’t theirs, and you can say, “Hey, if half your group can make it today, we’ll try to get the other half of your group in a different day with other fruit.” But from an account management perspective, it was unbelievably challenging.
Andrew: All right. And I also want to talk about the blackmail that happened, but let’s go back for a moment about this thing that you said about the wine maker. You’re not a person with a family history of growing grapes and being in this space. You had a challenge finding a wine maker. How did you even know how to find the right one?
Brian: We’re fortunate that there is a website called WineJobs.com. So that was step one. We need to hire a wine maker.
Andrew: WineJobs.com. Okay.
Brian: WineJobs.com, your industry resource for anyone that’s looking for any type of job in the wine business.
Andrew: Yeah, I see there’s a . . . look at this. Craig Newmark thinks that this is way too old-fashioned, the design of this site, but it works.
Andrew: Look at that. It’s just blue text on a gray and white background with the word “new” on a few new job posts.
Brian: It works.
Andrew: Highlighted in yellow. I like it.
Brian: It beats Craigslist. That’s all I can say.
Andrew: But it works. This is where you found your guy.
Brian: We post . . . so I first had to read what a wine maker job posting looked like, because what did I know about writing a wine maker job posting? So registered a number of wine maker job postings. Started to see patterns and similarities. Eventually put together one, and then obviously had the angle of New York City.
One big thing we needed was most wine makers don’t live in big cities. They live . . . you know, most wine is working at a farm. And we needed somebody that not only could make good wine, but could handle living in New York City and could be a real partner to my business partner and I.
This was going to be our first employee, and someone that we hoped, if we hired correctly, would be with the company for a really long time. So for us, it was a lot more than “can this person make good wine?”
Brian: There was a lot more criteria at stake.
Andrew: And that’s how you ended up finding them. Was it any challenge?
Brian: It was a challenge. It was very challenging. It was an extremely well-received job posting. Because you can imagine starting a winery from scratch, doing it in New York . . .
Brian: . . . building and designing your own winery, which is a huge perk for wine makers, because usually they go from winery to winery and just find things they don’t like at the new wineries they’re working at. So we got several hundred applications. The funny part of this story is we actually missed our wine maker’s initial application, and I’ll tell you why. He copy and pasted his resume into the body of the email, as opposed to attaching it as a document.
And that was an in- . . . when we had so many applications and resumes coming in, that, for us, we instantly didn’t read those applications, because, like, they didn’t come formatted correctly and whatever.
So we had, like, three other people that we had kind of going through the process, and there was something about all of them that wasn’t perfect. And then he resubmitted it a second time and did it correctly, and attached the resume, and I read it. I was like, wait, this guy’s interesting. And he actually had worked at a place called Crush Pad in San Francisco, which was an urban winery.
He was running the whole wine making facility there. And I initially had contacted him almost as an information gathering call, because they were the closest comp to what I thought our company was going to be.
Andrew: And so before you even posted this help wanted ad, you talked to him.
Brian: No, this was . . . he had . . . I spoke to him . . . he submitted his resume as part of looking for the job, but since I had already . . . it was so far along in the process, I already had three people in the process when I called him, I wasn’t expecting him to be a potential candidate. I was just doing it as a kind of an information gathering, kind of call to try and learn some competitive information about the company he worked for and I ended up very quickly through the phone call realizing that he is the best candidate for the job. And, yeah… You were blackmailed, by whom and for what? The story, Okay…
Andrew: …Yeah, let’s get into that.
Brian: So this goes back to the wonderful world of New York City real estate which I don’t wish on anybody if you don’t have to go through this. If you think finding an apartment is hard work in New York City when you are actually going out for commercial space, it’s a whole other world. We found a space, coincidentally through Craigslist and it was a great space in Williamsburg which is in the part of Brooklyn that is probably the most affluent and the most, it’s beyond up-and-coming right now it’s where you want to be in Brooklyn.
It had the right zoning muse, it would be for manufacturing as well as commercial, and we’re near a subway stop. It’s, everything was great. The space was in shambles but that was okay. That meant we were going to be able to get it at a great good price so that we’d just renovate it. But anyway, we were in competition with another group of people that were looking to also lease out the space. Any good space obviously has more than one good suitor.
So the real estate agent that represented the landlord’s upper space saw that there were two different groups of tenants, potential tenants, looking at the space. And the way the New York City commercial real estate works is, the landlord pays the broker. The tenant doesn’t pay the broker. That’s not how it works. It’s very straightforward.
The real estate agent who represented the landlord, who I never hired, who was just showing me the space said to us, “If you don’t pay me off”, at a pretty sizable some of money, I think it was like 6 or 7 thousand dollars, “I will make this deal disappear for you.” “And I will make sure that the other group of people gets the space.”
Brian: That clearly.
Brian: That clearly.
Andrew: Okay. So what do you do with that?
Brian: You pay him off.
Andrew: You did it because that’s just the way things are done.
Brian: It was, one piece of advice that I was given and always get is, always have a back-up plan, especially in real estate. We didn’t have a back-up plan. This space was too perfect and we knew that if we didn’t get it, we would be in pretty bad shape. We had this really hard deadline for us because grapes are only harvested one time per year.
And if I didn’t get into this space by a certain date and give myself enough time to renovate; get all my equipment in. I was going to miss the harvest and be an entire year behind schedule. So, I unfortunately, didn’t have much room for negotiation on it.
Andrew: You have to do what you have to do.
Brian: Unfortunately, it was the cost of doing business that time around.
Andrew: I am looking at the photos on bkwinery.com. The place looks beautiful.
Brian: Thank you.
Andrew: You said that you changed it from make your own wine to what?
Brian: The business changed very quickly. So we were fortunate to have a very large space. It’s about 80,000 square feet. And only a portion of the space is for dedicated wine making and manufacturing muse. We did open up; we needed to have another source of revenue. So we opened up initially with the winery as well as a wine bar. And the idea was originally with the wine bar, brings some money in quickly.
And eventually it would almost be a marketing tool for the make-your-own- wine program so that we will be able to bring people in and talk to about making their own wine and eventually serve wine through it. That could be the wine that you would make if you were to make your own wine. That idea very quickly changed.
The wine bar picked up a lot of steam quickly. We weren’t serving any of our own wines at the beginning but we were serving other people’s wines because we didn’t have our own wine. But the biggest change that happened for us was, first week we were open, two women walked in the door and said to me, some of these moments you give never forget, “Can I get married here?” Of course I swooshed [SP], my head and I am like, “Absolutely, why not.”
And, I didn’t think, it couldn’t have been a coincidence that two separate people within a week, asked me that same question. And initially it’s like, oh my god there is this unbelievable opportunity staring me in the face that I didn’t even think of, and that was private events, more specifically, weddings. And I started to go, and this is just two weeks after we just opened our wine bar to the public.
I had no experience ever running any type of hospitality business in my life. I was managing, I was working two jobs at once, I was doing all the day work and then working till 2 in the morning at night. Now I wanted to figure out how to do private events and I realize the wedding market in New York city is a gold mine. There’s so many people within the demographic that are looking to get married and there’s surprisingly, there isn’t as much great space as much as there is demand for weddings and events in New York city, I’ve found.
And the other thing that I learned was to have a full service venue, so a place that offers everything from the space, to the food, the beverage, the staff, the management. It didn’t really exist in to many places in New York, it existed in hotel bar rooms that were kind of like cookie cutter type places and then there were beautiful spaces, like spaces that people had to bring everything into.
Brian: To have a beautiful space, and we’re fortunate, my business partner’s on the design and construction side. The space is beautiful I encourage you to walk into it, it’s all salvaged wood and reclaimed prop materials and it really looks nice. People love the idea of having a winery as a backdrop and now, for me to actually build out an event business, where I can actually have all the food done in house, all the beverage done in house, and surround it with this beautiful space. I can basically say, hey, write me one check as opposed to writing a bunch of checks that probably will add up to be more than the one check your write to me.
Andrew: You mean like a check for the location, check for the caterer, check for the bartender, and so on. So your saying instead of having to write all those, write it to me. One of the cool things about you Brian is someone comes up to you and says, “Can I buy?” and you say, yes. I will find a way to sell this because . . .
Brian: That’s one of the biggest things I learned was me to be able to change and adapt based on marketing needs and there’s a nice middle ground here. It’s like don’t always just do what the next person tells you to do but if you start seeing a pattern and seeing what people are looking for as something you can offer and do well. It’s okay to drop your initial idea, so yeah, we went into events and the wine bar picked up more steam.
We realized that, we saw that experience the whole business and all the money was raised on, originally, this make your own wine. It didn’t operate at the level that we wanted to from a client experience and from a production perspective, because it was very hard to produce any serious amount of wine when you had to have people going in every hour.
So we said, let’s drop it, let’s stop doing it, 100% and let’s build a brand and we realized now we also saw, alright, our wine maker is actually pretty damn good. So now, let’s make all this great wine but let’s put it in a bottle that says Brooklyn Winery on it and make that be all of the wine that we make. We’ll serve it at our weddings, serve it at the wine bar, get it out to restaurants, and bars, and arenas from the Barclay Center to Brooklyn and get it out in New York city every time someone experiences the product they may come back to our place and they just start seeing in everywhere.
Andrew: That was never part of your idea, your initial decision didn’t include making wine and sending it out Manhattan where people can buy it at bars. No, the original idea was I see this cool thing in New Jersey I got to bring it to Brooklyn so people don’t have to go that far.
Brian: Your initial idea I find is what your familiar with and what you know the best, and what you can speak most intelligently about, and it’s not you guessing about something you haven’t been involved with. At least for me that what was the most, what you’re most comfortable with, I saw an idea, on paper it looked great. I truly believed my gross scenarios of how many groups of people I thought, and it retrospect I was out of my mind, but I truly believed it at the time, I really did. But then you start to go through it and you can’t just hold on to it because that’s maybe what you raised money off of or what you initially thought.
Andrew: I had a researcher look you up because I don’t know you that well, we we’re introduced by a friend, Joe, I didn’t know where you were and so here’s what the researcher found online for revenue.
Brian: Oh boy.
Andrew: And this is the stinky part about online is you can’t even trust it, half a million to a million dollars a year, that’s the best we were able to find through research. Where are you now?
Brian: It’s good to say, I’m much higher than that, we will be, 2013, close to four million if not higher, potentially.
Andrew: Four million in sales, and we’re basically at the end of 2013. You still have the holidays which are a big part of your business.
Brian: Business is pretty predictable at this point which is nice.
Andrew: It is?
Andrew: And, still, one of your challenges – even though it’s predictable – is a challenge that many people who are listening have and, frankly, one that I even have. The place is pretty much running itself, but you’re still in the day to day operations and you want to move yourself out. How do you pull yourself out of that?
Brian: I’m so happy you asked this question. Because this is something that my business partner and I spoke a lot about six months ago.
So, step one is hire a great team. This was one of the hardest things to do. As a new entrepreneur, new business owner, you hire as you need. So, what I found was I try to do everyone’s job myself before I actually bring someone else in to do it, whether it’s been running the bar, doing sales, marketing, whatever. Then, you have to eventually say my time can be spent better doing other things.
That’s when you bring someone in – when there’s kind of this pain point. I didn’t hire perfectly. I’ve had to, unfortunately, fire people along the way which is also an extremely hard thing to do for a small business. It’s sometimes easier and feels easier to keep someone who’s mediocre rather than letting them go and bringing someone in who’s great.
Anyway, I do feel, and we found about six months ago sitting down it’s like we have the team. This is the team that we need to run this place. Now, let’s figure out how we can start passing off some of the things that we’re doing to people within the team and really pull ourselves out of the day to day.
I’ll give you a very simple example, but actually we calculated it. It saved about eight hours of time from my business partner’s week. It was maintenance. When you have a big space things break all the time, whether it’s fixing a light switch or an outlet, or someone’s computer wasn’t operating. They would go directly to my business partner, because he was kind of like the tech guy.
I’d go, John, just stop. Just say I won’t help you anymore. Someone else needs to be in charge of this. Just say, even though you may know the answer, don’t answer it, one of our other staff who is in charge of the whole front of house operations – like you are in charge of maintenance and you have to figure it out. I can give you a small budget if you want to have like an IT person that you can call on. But, you do not ask John any more to help you with maintenance.
Andrew: So it’s just as easy as saying John don’t do it any more, here’s the next person who’s in charge, and giving them an understanding of how much they could spend on it.
Brian: Exactly, exactly. There were a number of areas like that. One big area which I’m still trying to figure out a way to pull off John’s plate – he has a number of these things that really need to be pulled off – is the website itself. Because he built it all himself. He’s the only one that understands it. He still spends probably 25 percent of his time working on the website. If we can even pull that off your plate we can really free up even more time.
But we freed up a lot of time between the two of us. I’m actually really proud to say that most of our time now is thinking about our growth, opening up second locations, thinking about where we can produce more wine, and actually…
Andrew: …Sorry to interrupt, but I’ve got to go back to this idea of delegating. I know that it’s harder than I’m making it out to be here in this interview. So, I want to dig in. Because if it’s as easy as saying you don’t do that anymore, she does it, and she has a budget, you can pass on anything. But, you can’t pass on the website by saying John you don’t do website development any more, if anyone needs anything send them to someone. Here is this new college kid who’s going to be running our site.
Why wouldn’t it work there? The reason I want to understand that is so that I can anticipate why it wouldn’t work for me and the person who’s listening to us, and we’ll figure out how to solve it only if we can anticipate that.
Brian: Yeah. With the website, and John [??] should be better able to answer this than me from what I’ve learned. So, John’s not a coder. He’s not a developer by trade. So we used a platform called Drupal which is a platform where basically people have developed all different types of plugins and different things to help put together a website. It looks completely professional.
We have, in my opinion, one of the best websites in kind of our area of expertise whether it’s a winery or hospitality space. I haven’t seen many websites better than ours. But, there are so many kind of moving pieces that he’s kind of pieced together to form this website, that being able to communicate that to somebody is actually quite challenging. At least that’s what he tells me. I don’t have any idea how it runs.
We did have . . . to give you an example of one thing that he did do to pull things off his place. We had a big new product launch that we wanted to do on the website, which was to sell wine online through our website, which we just rolled out a couple weeks ago. So buy wine at BKwinery.com. [laughs] But . . .
Andrew: Hey, you’re a salesman. BKwinery.com. Okay?
Brian: Yeah. And you can buy our wine. We can ship it to 10 states, or something, in the country. But this was actually a huge amount of development work, and there was a lot of conditional things that you had to do, like you could only . . . you had to add this amount of sales tax if it’s within this state, and add this handling charge for this many bottles.
It was actually quite a complicated piece of programming. And Drupal was capable of doing it, but it was going to be a huge project. So since it was kind of its own siloed piece of work, we found a Drupal developer, and he built out the majority of the platform and then was able to help us actually install it onto the website itself, which was good.
Andrew: All right. And I see that there’s so many other things that you do on this site. You guys have, it looks like trivia night. Grape CSA smackdown. I don’t know what that is, but it is sold out.
Andrew: Basics of wine. Wine tasting. [??] farmer’s market. And all that has to be updated up on the site.
Brian: The website drives . . . we get over . . . I think we get over 20,000 visitors a month on our website, which is pretty good for the space that we’re in. And we drive almost all of our event leads through our website. So we’re doing over . . . close to a $3 million event business that is all driven through our website, and that is . . . it’s all done through . . . I don’t pay for Google AdWords. I did a little bit, but I don’t do it anymore. It’s all done through search engine optimization. So it’s extremely important.
Andrew: [??] as a follow-up to this interview. We’ve talked about lots of different topics. If there’s one area that you might want to follow up on, I would suggest it’s the interns. Not you necessarily, Brian, but someone who’s listening. Your ability to hire people early on, when you didn’t have much money, and get people who are hungry to learn from you and eager to produce for you, I think is one of the reasons why you’re so successful. The other one is your ability to sell.
And so I’d suggest anyone who’s listening to this, if you’re a Mixergy premium member, go and check out the intern course that Noah Kagan taught here. Noah Kagan, before he started AppSumo, he needed people to help him build a company, but he didn’t have money. So what he did was he went out and he hired interns, and he came back to Mixergy to teach how he found interns. And the process that he went through of qualifying people, of making sure they were the right ones, is a process that we’ve used at Mixergy not just for hiring volunteers, to bring in volunteers, but more importantly, for hiring people. It is that good.
And the people who you’ll hire when you go through this process where you’re forcing them to perform before you even hire them, forcing them to prove themselves, helps you find people who are the best of the best. People who can really perform day to day after you hire them. So check that out. It’s available at Mixergy. If you’re a premium member, it’s there for you if you just do a search for “Noah interns” and you’ll see Noah’s intern’s course.
If you’re not, go to MixergyPremium.com, sign up, and take that course. In addition to that one, we have over 100 other courses. I have hundreds of interviews, including the Cutco Knife interview that I think you’ve got to listen to, not just read. And I guarantee you’ll love it all. Go to MixergyPremium.com if you haven’t signed up yet, and join.
Alright. Final question, Brian.
Andrew: You’ve gone through all this work. Yes, it’s a $4 million company this year. But what is the proudest thing of having done this? What is the part that makes you feel like, yes, it was worth all this work. It was worth paying blackmail. It was worth transitioning my company a million different times until I got here.
Brian: Can I have two answers to that?
Andrew: I’d love it. Yes. Hit me.
Brian: So a couple of unexpected points of happiness for me. One, employing people. We have over 40 employees at Brooklyn Winery, and it’s what makes me nervous if things are in tough times, but also what gives me unbelievable satisfaction is being responsible for giving a lot of people their livelihood, and also making people really professionally happy.
And I tell all my staff — and this is one of my famous quotes — is if you ever get Sunday night and you’re upset because you know you have to go to work the next day, you talk to me immediately. That was my signal point at my past job that I wasn’t happy anymore was that I was really upset Sunday evenings because I knew the work week was coming up.
You spend way too much time at work to be unhappy, and hopefully we’ve created a culture that our employees are really, really happy. I think they excel in their work. That’s why I’m…So, it’s employing people.
And the second is, this is going to sound really cheesy, but it honestly makes me very emotional, is my job is to make people happy. I have a successful company because no one has to buy a glass of wine or a bottle of wine or spend $40,000 on a wedding or whatever it is, but people leave smiling. They’re happy. They’re making life memories, because there’s something we’ve created and they keep coming back and giving us feedback and writing me hand-written notes about how wonderful this was and that was.
To me that…I could make a lot more money probably if I went into banking and finance or whatever, or stayed at McKenzie [SP] to be a partner one day, but this gives me happiness and seeing other people be happy. That’s what makes it all worthwhile for me.
Andrew: Yeah, I can understand that. Congratulations on your success. Thanks for coming here and telling the story of how you did it. I wish I was in New York now so I could come and visit. My sense is that not enough people in my audience are in New York, but if you are in New York, go check out Brooklyn Winery. If you’re not, go to bkwinery.com, and I think just the photos alone will give you a sense of why I thought this place was so special that I wanted to hear how it was built.
I’m clicking around to see where the right place is. That’s why my eyes are darting all over. I would go to bkwinery.com, and then on the lower right there’s and image of Host an Event. That I think is what will give you a sense of the kind of space we’re talking about. Of course, click around even further.
I hope to see you in person sometime, Brian, sometime. Hopefully at the winery the next time I’m in Brooklyn, and thank you for doing this interview.
Brian: Thank you so much for having me. I really appreciate it.
Andrew: Thank you all for being a part of it. Bye, guys.