Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. And truthfully, when I was told that I could have today’s guests on, I was excited because he is the creator of the Knitting Factory, which, as a guy growing up in New York City, I knew about the Knitting Factory. It was this big event space that the cool kids went when I was growing up, they went to on the weekends. It was a place that you talked about. It was a place that . . . Oh, it is. It’s still is a place that has great bands, great vibe, great reputation, and that’s why I wanted to have today’s guest on. I want to understand how Michael Dorf built this up.
And I kind of thought at the end of the interview, I’d asked him a little bit about this thing, City Winery. I thought, “All right, another guy who made it, who decided he’s going to get into wine, and I’ll indulge him if he indulges me,” and we talked about the Knitting Factory. But it turns out that what he’s doing at City Winery, it’s way bigger than I expected. It’s bigger than the Knitting Factory. Am I right about that, Michael?
Michael: Yes, we have 12 locations. And it certainly makes a hell of a lot more money, and it’s a lot more fun, and we’re selling a lot more tickets. So we just did 700,000 tickets in 2019. It’s just vastly larger than the Knitting Factory.
Andrew: Wait, how could you have so many locations? I was on your website. I think I saw just six. And then I thought I saw that there was one in San Francisco, which is not on the website for City Winery, which I should tell people City Winery is a winery, restaurant, music venue, and a private event space. So what’s going on?
Michael: Well, we’re all of the above. After I left the Knitting Factory, I got a chance to make a barrel of wine, and I drank the Kool-Aid. I really wanted to be in the winemaking business. But I got nervous about just making wine and trying to create this urban winery, so I mashed it up. I combined it with what I really knew, which is putting on a show. But I focused the show and the vibe to be a more adult, more sophisticated environment, so sit down. It was wine served in glasses, Riedel specifically, not plastic cups, and the idea was to create this really refined atmosphere that would combine all of your senses, great sound, really good smells, beautiful vision, textures so that you felt very comfortable and homey and we have a great vibe. And it took off.
So I opened it in 2018. We unveiled Chicago in 2012, then Nashville, then Atlanta, then Boston and Washington DC. We just opened Philadelphia. And we have in Chicago, in New York, and Boston two sites in each location, each city. So it’s going fast.
Andrew: I think a few days ago, Forbes had an article on you, and they said that you were going to hit $90 million in revenue by the end of this year.
Michael: Yeah. We’re tracking a little bit more. We’re doing quite well.
Andrew: And it’s a two-year-old business.
Michael: No. No, no, no, 2008. We’re 11-year-old.
Andrew: Oh, 2008. Oh, good. That’s what I thought. All right, I should say this interview is sponsored by Toptal. If you’re looking to hire developers, and you too, Michael, if you’re looking to hire developers, you can check out . . .
Michael: I need a developer, yeah.
Andrew: Oh, this is the best of the best developers. I’ll talk about that later, but for now, I’ll just be open and say it’s sponsored by Toptal. All right, let me understand, let’s go back in time and understand how you got started. You’re a guy who . . . you quit school, am I right? You quit law school?
Michael: Yeah. Well, you know, let’s just say I didn’t finish the last two years of law school.
Andrew: Why did you even go to law school? What was it that you were trying to do honestly?
Michael: I wanted my parents to pay for room and board so I could still figure out what I wanted to do while I was managing a band and getting into the concept of putting out records. So I did get interested in intellectual property rights. I was, you know, actually fascinated with some of the elements of contract law and constitutional law, but I wasn’t finding the practicality in the University of Wisconsin that essential, and it started to feel like it was holding me back from getting into the entertainment business.
Andrew: What did you dream of being growing up? What was it that you are setting yourself up for?
Michael: Well, it’s funny. I always wanted to be in the arts in, and I love music but I sucked as a musician myself. I could never even get “Stairway to Heaven,” you know, down after two years of guitar lessons, and my friends were natural musicians. And I wanted to be in the band, so I was always working with them. I was the sound guy, the lighting guy, then the manager. For my personal expression, I thought maybe I was going to be an architect. And actually I did rec rooms when I was growing up, basements. And I applied to Washington University with a portfolio of these rec rooms, and I had photos of, you know, the wet bar I built. And the woman at the architecture program who was interviewing me, and I was showing my portfolio goes, “So people actually paid you to build these?” And I’m like, “Yeah. Aren’t they cool, great design?” She goes, “They paid you for all of these.” I’m like, “Yeah.” And they’re like, “We recommend you go to the business school here at Washington University.”
Michael: So I was a little disappointed that, you know, I wasn’t going to be an architect. But oddly enough, that’s all I do today is walk around with, you know, a hard hat and, you know, I build things all the time. I mean, that’s what I’m doing.
Andrew: I see you’ve got it on right now.
Michael: Yeah, so I’m a builder, and that’s what it says on my website. It just happens that it’s both the physical component of a venue, as well as what goes on inside.
Andrew: So you know what, I had this vision that you are an artist, or you were someone who said you’re an artist, but what you really wanted was to make money and be famous and get laid. I’m going to be honest. I see you wincing as I say this is, is that completely off?
Michael: You know, I think it’s obviously true to a certain extent. We all want to, you know, sort of get recognized for your work. We wouldn’t mind making money, you know. And I don’t know about being famous, but certainly, you know, getting recognized I think is important for people who create stuff. And, you know, when I was younger and started the Knitting Factory, certainly the idea of getting a lot of attention was really valuable. Post 9/11, and really after I made a decision to leave the Knitting Factory, you know, this baby that I had, you know, birthed in this world and do something new, it was really now about doing something more meaningful, doing something that actually felt like it was going to make a positive impact in the world. And yes, of course, if it makes money, that’s great, and yes, if there’s some attention for its attributes, that’s also great, but it was really about creating this magical two-hour window for people, and if we could do that, and replicate that, and it was really bringing some pleasure to people every single night, then I felt like we were actually accomplishing something.
Andrew: You know, you had this post on your website that I’m so glad that you had it. I feel like it gave me a solid sense of the beginning. It’s actually literally called “In the Beginning,” and it’s got a photo of that first building that the Knitting Factory was created in in 1987. And then I got it, rent was $1,800, which, for New York is not very much money, right? It’s not. It’s . . .
Michael: You know, I thought it was really cheap. When my parents came to visit me that first year from Milwaukee, $1,800 seemed like a lot of money. And when my mom actually saw the condition of the facility and I was all proud and we’re taking this place, and we’re going to renovate it and make it really great, I put all my bar mitzvah savings into the renovation, and, you know, I was all proud and had long hair and barrettes and probably my eyes were squinty while I was explaining this to my mom, she started crying, thinking that I had lost my money and that $1,800 was . . . I was out of my mind for paying that. But, in retrospect, you know, it was actually pretty fair for what we’re getting. And, you know, relative to what I’m paying in rent now in our new location, it’s absolutely crazy.
Andrew: What are rents like now monthly? Give me a ballpark to give us a sense of scope.
Michael: It’s something like $800 an hour.
Andrew: So the thing that I got out of it was, all right, I understand the Knitting Factory, your vision was “We’re going to take all these different forms of art, knit them together.”
Michael: Knit them together.
Andrew: So there will be poetry reading, and music, and coffee, and all that stuff, and at $1,800, you don’t have to sell that many tickets and that many cups of coffee to break even, am I right?
Michael: Well, you know, it’s more than rent. You’re right, you have staff, and you have the cost of goods, and you have insurance, and you have our local sanitation company, which was run by the mob at the time and had other expenses besides, you know, rent. And we were giving a disproportionate amount of the box office as we still do to the artists. At the time, it was always one deal we gave which was 75/25, 75% of the of the ticket price to the artists. And so our focus, where we made money at the Knitting Factory was selling Rolling Rock and beer. And so it was really on the beer that we were selling.
There was this band called Phil Gnarly and the Tough Guys from Wisconsin, and they had a gig every three months because they would fill their van with Leinenkugels that was $3 for a case of 24 bottles back in Wisconsin. And yes, I realize now, especially now that the statute of limitations has gone, that at the time that was an illegal thing transporting beer over state lines, but Leinenkugel at the time was this cool Wisconsin beer was not bought by one of the big guys that is today. It had long necks like Rolling Rock. I really cared about margin, and I had to care about margin in order to just pay the rent.
Andrew: You’re saying that you would bring an out-of-state beer marginally illegally just . . . yeah, got it. All right. This gives me a sense of how did you get . . . this is the lamest question, it’ll give you a sense of me, but hopefully, the answer will give me a sense of you. How did you get so cool? Where did that come from, that sense that the right bands, the right audiences were drawn to you?
Michael: I got lucky to be fully honest. I feel like I landed in New York City, you know, at a very vital time in the art scene. And what was going on in the music world, you had the jazz clubs that were booking pretty conservatively, jazz, you had in the rock scene, you know, obviously CBGBs and other great clubs, but the experimentation had taken place in the loft scene in New York and that kind of was being shown as illegal. You couldn’t do them in your private lofts anymore. And so small clubs were opening, and I happen to come to New York really right at the right time, and we had a very good sound system. And, again, I had this very honest door policy of 75/25 mostly because being on the band side managing several bands just before that. And playing in all the clubs, you know, we were losing, we’re paying to play a lot.
So when the word got out that there was this nice place to play on Houston Street, you know, music guys who are running it and then it was kind of respectful to the music venue, everybody started coming. You know, everyone was sending me tapes, and it was, you know, the alternative rock scene. So it was like, you know, Sonic Youth and They Might Be Giants and some really great up and coming acts, you know, Beck did his first show with us, you know, at this place. And on the jazz scene, we’re getting the, you know, lower east side, you know, real avant-garde players like, you know, John Zorn and The Jazz Passengers. But then we were also getting this really cool, hip, African scene that was African-Americans who were really representing, you know, what was really happening in Brooklyn, so Cassandra Wilson, and Steve Coleman, and Greg Tate, you know, all these people. And they all kind of converged on our place. And then within another few months, the more what you call blue-chip players like Cecil Taylor and Henry Threadgill had heard about this joint and, you know, by raising our ticket prices just a little bit more but still at that same 75/25 split, they started coming in.
So all of a sudden, it was like a black hole, everything started coming our way. And we had music every minute of the day and tried to find eventually . . . you know, when we moved to Tribeca in 1994, we had four different venues in one . . . you know, stages in one building because there’s so much vitality to the music scene.
Andrew: How did you know who to pick, who should be performing at your place? What was the tastemaker process?
Michael: Well, you know, sometimes I made some mistakes. I was trying to be as adventurous as possible. It was my eclectic taste. You know, I love rock and roll, but I was fascinated and wanted to get into the jazz world, you know, my Jack Kerouac adventures, so I, you know, had that whole concept. But I was trying to stay true to avant-garde. You know, a little band handed me a tape one day with a funny spelling, P-H-I-S-H, and he handed me the tape and said, “You know, we’d love to get a gig here.” And I was like, “All right. You know, I’ll listen to it.” A week later, Trey calls me back and says, “Hey, did you listen to our tape?” And I’m like, “I haven’t yet. Call me tomorrow, I’ll listen to it.” So I listened to it, he calls me the next day because it was telephone, we didn’t have email, you know, back then, and he goes, “So?” and I’m like, “You know, it’s a little derivative of the Grateful Dead. You know, we’re actually a place that is trying to do more sort of experimental avant-garde, you know. And I’m sorry, man, your stuff’s a little derivative.” That same year, I almost had a similar conversation with Harry Connick Jr. where I handed him back his cassette tape and said, “Sorry, dude, this is really conservative big band jazz shit. We don’t do that at the Knitting Factory. We’re an avant-garde jazz place, man, so sorry. Sorry, man. You’re pretty good looking though, you know . . . ”
Andrew: So you let him in?
Michael: I let him in, but I didn’t give him a gig.
Andrew: You didn’t.
Andrew: Phish didn’t get a gig . . .
Michael: I didn’t get Phish a gig and . . .
Andrew: And Harry Connick Jr. didn’t.
Michael: You know, I made mistakes, you know, but my . . .
Andrew: But you didn’t say, “Phish, how big is your mailing list, or how big is your audience? What did you sell last time, Harry Connick Jr.?” It wasn’t about that. It was what you feel is right.
Michael: These were their first gigs in New York, and it was based on listening. You know, obviously . . . you know, today you look and you see people’s, you know, social following and you can get all kinds of data on it, then it was just word of mouth. And, yeah, you could get a feeling for were they playing at the other clubs, and we tried to get some of those acts that had bigger names. John Lurie and The Lounge Lizards was a band, you know, I knew was popular, and we tried very actively to get them. So there’s, you know, bands coming to us and then my reaching out to getting acts. But I loved curating. That was, you know, how I really felt like I was, you know, learning the same.
Andrew: I want to talk a little bit about what happened at 9/11 for you personally, what happened with the company when you started to get into content and away from music, and then of course what you’re up to right now. But check this out. I found this old New York Times article about the Knitting Factory going Hollywood. It’s written by Neil Strauss before he was like the famous Neil Strauss author of “The Game” and a bunch of other things. And in it, they say you’re coming to Hollywood, and then look at this, “I’ve had a lot of agents in LA tell me that John Zorn garbage won’t play here.” John Zorn was the first I think jazz musician to play in New York. I’m wondering how did that Hollywood launch go for you with that attitude that what was solid for you guys and foundational in New York was not going to be accepted in Hollywood?
Michael: Well, I would never call Zorn garbage.
Andrew: No. This is an agent saying that what you do in New York is stinky.
Michael: Yeah. I know.
Andrew: Yeah, go ahead.
Michael: You know, it was a challenge, no question. I mean, LA has a certain sense of entitlement. You know, everyone’s in the entertainment business. And so, at the time, you know, people wouldn’t pay for tickets. It was actually quite a challenge because everybody wanted to see what we’re doing but get in for free. In fact, if you, you know, really ask Isaac Tigrett what was the original foundation room of House of Blues, it was to support all the music industry coming. and he was trying to get sponsorship from labels.
Anyways, LA was certainly challenging for us. It’s obviously an incredible music scene, and a lot of great artists live there. We went a little overboard on the technology of the venue. We opened it up at the height of the internet. We had cones of silence in the bar. The whole idea is you go into the bar, instead of just getting a drink and talking to someone, you would look on a screen and connect with a counterpart in New York because I was just playing with technology. When you walked in the entrance, you walked by eight kiosks of .com businesses. Every single one was actually bankrupt by grand opening day, you know.
Andrew: But they paid you just have access to people . . .
Michael: Just to have access to our people.
Andrew: . . . who are walking into the Knitting Factory. Wow.
Michael: Yeah. We had two rooms. We had a studio right in the middle of the facility so we could record. I mean, it was all about content. And we were, you know . . . I OD’d on it because I was so into the technology. It was less about, you know, the connection to the artists and the music at that point. It was really about content. And I think the whole company faltered because we really did OD on calling it content and forgetting that it was music and a magical moment for the patron at that point.
Andrew: How did that hurt your business that you were bringing all that technology?
Michael: We didn’t get hurt necessarily because we were ODing on technology or not having this personal relationship with the artists. The fact that we were focusing more on trying to extract the content and sell it outside of our four walls just made our bandwidth be poor in terms of being a host, being the hospitality company that we started to be with the Knitting Factory, and then 9/11 happened.
Andrew: And how did 9/11 impact you?
Michael: Well, in Hollywood, it killed all the tourism business and people going out for several months, and in New York specifically and physically we were located below Canal Street, so for one month our doors were closed. And that obviously hurt business. I opened up a couple of nights early on just to give firefighters, you know, free booze and beer, you know, from our place. And no one else was allowed below Canal Street so it was a very challenging time. We did recover, but, you know, it was a triple blow in that period. You know, in 2000 the .com bubble burst and people forget it, but at almost the same time as when the music industry, you know, faltered. Napster started making it impossible to sell, you know, physical media . . .
Andrew: Because people were trying to get it for free online.
Michael: People were, you know, digesting it online and Apple and Intel were, you know, doing a great job of infiltrating, you know, our collection. So, you know, between trying to sell music against people who are getting it for free and as the whole industry is transitioning, you know, there was a big flip flop. You know what, when I started with the Knitting Factory, record labels would pay an artist to go on tour to support them selling records and that’s how they made money. Today, you don’t sell any physical media. In fact, you hardly make money, you know, through subscriptions, and anything that is a sale of the recorded music, it’s all about the live performance. And that transition happened right between those years of ’97 to 2001. And I made a big decision, you know, in 2003, combination of all these factors, that it was time for me to go, you know, do something new. And actually, in 2004, I thought I was going to make wine. You know, I went so far, you know, away that I was like, “I’m going to get back to my agricultural roots.”
Andrew: Let me get into that in a moment. But I saw this line in an article that said you cheated death when a music lover came forward with a cash infusion, what happened there and then what happened to your ownership of the Knitting Factory?
Michael: Well, I essentially diluted myself. You know, I started it, like I said, with a little bit of money, bar mitzvah savings. My dad co-signed a loan when we moved to Tribeca. In 1996, I got my first outside investors, a couple of great old music industry guys, and they were, you know, just classic sort of wise investors, if you will. But then ’97, we got our first internet investors, vulture capitalists . . . I’m sorry, venture capitalists, I mean vulture capitalists, and you know, I didn’t understand the deal too well, “You know, here’s a million dollars, kid, we’re going to only take 8% of the company, you have this great value, you own 90% of common stock,” but I didn’t understand what preferred shares meant, participating preferred, and all of a sudden . . .
Andrew: What did it mean for you?
Michael: Well, for me, it meant that if the company was ever sold or the next round of investment and they wanted to take money off the table, they get 100% plus some sort of return before I would see a penny. And then if you do that three times in a row, which I did in ’98, ’99, and 2000, all of a sudden, you get to a place where the company needed to be sold for, you know, $50 million in order for me to get $1, even though on paper I own 50% of the common shares. So I essentially diluted myself out.
And by the end, the last .com investor who came in, all of their other investments were basically going bankrupt, and they wanted to bankrupt us as well because they were closing their fund. And I’m like, “No way. I got a real business. I have a beer and mortar business, one in New York and one in LA right now. We’re actually cash flowing out of those clubs.” And yes, our .com has gotten out of control. We had 50 developers at one point, you know, creating, you know, jazzy.com and all these kind of, you know, experimentations, you know, selling content online.
And we found an outside investor to buy the .com guy out at 25 cents on the dollar, but that money came in as a convertible loan and, again, didn’t really follow the financing here. And so not only did he buy all of the actual preferences from the previous investors, but then controlled the company because it was coming in from a loan. And he was a great music fan, and he loved what he’s doing. And, you know, on one hand, he almost looked at it as philanthropy, I think, but for me, you know, it was very tough because I really, at that point, lost control. And, again, in 2003, I finally made the decision it’s time to leave, I got to do something more meaningful in my life. I wasn’t sure . . .
Andrew: And that’s when you got into wine.
Michael: Well, I’ve always been into wine, but I’ve never made wine before. And making it was this kind of epiphany of how cool it was and artistry there was to the craft of winemaking. So I got into it. However, I got nervous when it came time to the idea of actually building an urban winery in Manhattan.
Andrew: And that was . . . you know what, let me . . . I’m sorry, again to pause it, Michael, because I know we’re getting into the stuff that you’re working on now which is more interesting than what you were before. But I should just quickly say to people, this interview is sponsored by Toptal. Michael, we’re just talking about how you might need to hire developer, what type of developer you’re looking to hire?
Michael: Well, we have a complex series of websites. We use Magento as an e-commerce platform. It’s kind of specialized. And, you know, we have a very good firm currently, but, you know, it’s expensive. So, yeah, I’m always looking.
Andrew: So one of the things that I love about Toptal is that they have specialists so that if you’re looking for a Magento person, you might even want to be clear and say, “Here’s exactly what we’re doing and what we want to be doing, find someone who’s done that.” And then they’ll go and find you somebody who is the best of the best, meaning they’ve tested them and has done the work that you’re looking to have done and then you can hire from them. I’ve hired from them. What are you thinking?
Michael: I’m just thinking give them my e-mail, you know, maybe, I don’t know . . .
Andrew: Well, I’ll hook you up after this.
Michael: Yeah. I mean, you know, talk about targeted advertising, here I am.
Andrew: It is true. My interviewees end up hiring from them. I think at a much higher rate even than my audience. The URL for anyone in my audience who wants to sign up, go to toptal.com/mixergy, you’ll get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period. You guys know that Toptal is not the cheap option. It is the option where I’ve seen developers who don’t get picked for Toptal write long blog post about what they did wrong in the screening process because Toptal wants just that high-level, high-caliber level of developers. So it’s Top as in top of your head, tal is in talent, T-O-P-T-A-L.com/mixergy. So when you were looking to make wine, you wanted to actually open up a winery?
Michael: So I got a chance to make a barrel of wine with a great winemaker, David Tate, who is the Assistant at Ridge in Cupertino. Ridge is one of the great wines in, you know, California. And they have one of the great cabernets called The Montebello. And we got a chance to . . . in 2004, my brother and another friend get in on the winemakers’ opportunity to make, you know, some extra wine and personally label it. And as I’m giving it to friends, bottles in 2005, everyone was going, “Wow, I want to make wine. You know, that’s cool, you know,” and I have some artwork from another friend of mine, and I could talk about the wine, and talk about the evolution, and, you know, a lot of bankers were going, “Man, I think I want to put my name on a bottle. How much would it cost to get a barrel?” And enough people did that that I started exploring the model. And there was a place in San Francisco that year called Crushpad that was making wine for people. They had a thousand customers making a barrel. A barrel cost $12,000. You get 300 bottles out of a barrel, so it’s about $40 a bottle and you’re making great $80, $90, $100 a bottle quality wine.
So it was a very compelling concept. I just got nervous about taking that concept and doing it solely in New York just as a winery. And so I mashed it up with an actual music venue, thinking about what is that audience that would appreciate the vibe of a winery. When I was exploring wineries, you know, and doing due diligence, every time I go into a barrel room or the tank room, I’d always think, “Wouldn’t it be cool to do a concert in here?” You know, so I couldn’t take that promoter side out of my bloodstream, and so, you know, just mashed it up and really made that combination in Manhattan.
Andrew: As a way of “got it,” I see how that would make it much more sustainable. What’s the first thing that you did, raise money?
Michael: Well, I raised, of course, some money. You know, I had to, you know, scrape together enough so I had some skin in the game. And luckily, I had a track record, you know. In 2006, when I was really putting a plan together, I was able to, you know, convince a few friends and sort of investors that this was a very viable project. And once I raised the first round, I was able to go rent some space. And, you know, we rented 20,000 square feet, much, much more than $1,800 a month, and we got this great space and from there just kept raising more money. The timing ended up not being so fantastic because our first grapes arrived from California the same week Lehman Brothers imploded in 2008, in October of 2008.
So, all of a sudden, you know, a bunch of these bankers that I actually had signed up to do the barrel program at that point all decided, “You know, now is not a good time for me to be, you know, ostentatious with my luxury wine barrel making.” So that whole side of the business went away in terms of the private barrel making. And it was a very challenging, you know, first six months because we, you know, we’re opening right during the financial armageddon.
Andrew: What did you do this time to avoid getting hurt by financing the way you did the first time?
Michael: One, we’ve never taken institutional money. And I say that because we’re about to probably in the second quarter of 2020 now that we’ve sort of shown that we can get to scale, and for us to get to the next level of scale, you know, we’re going to need a large investment. But, you know, it’s a different time. We certainly have a different set of really smart lawyers and board members who, you know, “We’re all on the same page, we all want to, you know, see us succeed, but it needs to be done fairly.” You know, 1998, ’99, during the .com build-up, that was just another time. The investment was done differently. And it wasn’t about making money in ’98, ’99, it was about, you know, trying to grow big and get your name out there. But, you know, the irrational exuberance truly was irrational. It wasn’t about bottom line. Our businesses is a cash flowing, you know, bottom line, in fact my nickname sadly in the office sometimes is EBIT Dorf, you know, and EBITDA is, you know, the earning . . .
Andrew: Earning before interest, depreciation and amortization. And so what’s the Dorf part of it . . . oh, because you’re so into the earnings. Got it.
Michael: I remind every location, every project we’re doing, you know. In fact, in the book, one of my little tags here is “Think in Excel, then try and sell in Word or PowerPoint.” You know, it has to pencil out. And so, yeah, I am approaching City Winery and everything we’re doing with a much, much more fundamental business mindset, and it’s paying off.
Andrew: And so you had your location, you had an idea of people getting to make barrels and convert it into bottled wine and put their names on it, that didn’t come through. What was that location going to be in the beginning?
Michael: Well, it was a winery and event space.
Andrew: Winery meaning you take . . . well, what does winery mean for you?
Michael: So we buy grapes from California and Oregon. One of the nice things about not having our own vineyard is we get to go . . . do you know the French word terroir?
Michael: Well, the root is terroir, terroir ground, the terra madre, you know, the earth, but terroir in French, in wine in particular, is about your entire atmosphere. So it’s your elevation, the type of soil, the climate, the amount of sun that will reach that particular vineyard. It’s why in France, for example, in Burgundy, you only grow Pinot Noir and Chardonnay. Those are the two grapes that come from Burgundy. You would never think to have, you know, Cabernet in Burgundy. That would be sacrilege. And then same thing in Bordeaux, you would never have Pinot Noir in Bordeaux. It’s always Cabernet or Merlot. And so certain grapes do well in particular places in certain soil types.
Andrew: So you get to pick the right grapes for the right wine.
Michael: In our case, we buy our Pinot Noir from Sonoma Coast, Willamette Valley. Our Cabernets come from Napa Valley and up in the Walla Walla in Washington.
Andrew: But, Michael, you’d have grapes brought into your place in New York. Where was the first location?
Michael: In SoHo, in New York City.
Andrew: In SoHo. Into SoHo, you’d have grapes just brought in by truck, and then you do the whole thing where I guess it’s not people stepping on it, but you’d have it squished down and turned into wine?
Michael: The Lucy Ricardo thing.
Michael: Yeah. So we bought, in our first year, 60 tons of grapes from California from some of the greatest, world-class vineyards in the Willamette Valley, and they thought I was nuts. I said, “We’re going to come, and not only are we wanting to spend a lot of money on your grapes, Mr. vineyard, Mrs. vineyard owner, but we’re going to harvest and we need you to pick them into small bins because we don’t want any mushing of the grapes, you know. And by the way, we need you to pick them at 3:00 in the morning because we want the temperature in September to be as low as possible so that they’re not warm in the [afternoon 00:35:35].”
Andrew: Michael, I’m also saying SoHo is one of the most expensive pieces of real estate on Earth, tiny, old-fashioned buildings. You’re having wine brought in there and made. I mean . . .
Andrew: . . . grapes brought in and made into wine, and then also I’m going to have Michael . . . sorry, Bill Moses, the founder of KeVita, the kombucha brand that he sold to Pepsi Cola, I’m going to have him here, he got into wine. He said it drove him nuts that he’d have to wait 18 months before he could even begin to sell wine after making it. So you’d have to do that and then wait for 18 months minimum.
Michael: No. No, no, no. So let’s be clear, every type of wine, every style of wine has a different aging format, right? So if you want to put wine in a barrel for 18 months, you actually need to wait even longer because by the time the wood gives wine such structure, you need it to soften by the time it’s really ready to drink. It’s why those great Barolos or Bordeauxs, you don’t really want to drink them after three or four years, you want to wait 10 years or 12 years. I certainly did not want to be waiting 12 years to be selling wine that were making. You know, we got a cash flow. So one of the things we did and made a decision on is the wine that we’re going to make to sell on-premise, we want this to be approachable, young, and as fresh a wine as we can make. So Sauvignon Blancs, and Roses, and Chardonnays, and Pinot Noirs . . .
Andrew: Got it.
Michael: . . . [inaudible 00:37:06] that was only going to go into used oak barrels for three or four months and give it some structure but still be very fresh and approachable. And in most of the wine, at this point, 70% of the wine that we sell on-premise is sold by the glass and it never goes into a bottle. When it’s finished aging in a barrel, we move it into stainless steel kegs like beer and it’s on tap. And so we save the bottling and save the corkage so it’s a much more environmentally friendly way to serve wine. Also, when you’re selling so much wine by the glass as we are, you know, we’ll go through it, it will be 10 cases of glass every night, why waste that glass, you know, why not be environmentally friendly? And then one terrific added thing, when you don’t put wine into a bottle, you don’t have to add sulfites because you don’t need that preservation in the bottle so when it gets transported, you’re keeping it safe . . .
Andrew: And it’s all your wine that you’re serving? No, it’s partially yours and partially bottled wine that you bought, right?
Michael: All the wine by the glass that we sell is our wine. We also bottle some of our wine, and then we also serve great wines from all over the globe. And, again, there’s terroir that we will never replicate. So, if somebody wants to spend $4,000 on a bottle of Petrus, we have it on our list. And we will never be able to make, you know, a Merlot like they can that Petrus. So we offer the whole gamut.
Andrew: By the way, we should tilt your camera down just a little bit, so I get all of your head in there.
Michael: Oh, yeah.
Andrew: Okay, so I’m with you on this. Then you had to start to get performers in there, to start to get an audience in, to start to get people to come in for dinner. How did you do that? How did you get the audience that . . . let’s talk about the customers, what did you do to get them in?
Michael: That’s easy. That’s what I knew, you know . . .
Andrew: How? How did you do it? What was your way of doing that? Teach me.
Michael: “Hey, Suzanne Vega, how are you doing? It’s been a while. I’d love to give you a gig.” “Okay. How much you are you going to pay me?” “Okay, $10,000.” “All right.” “We have 300 seats. I got to sell my tickets out at $40 on average,” we actually had a little more complicated system, so that’ll bring in $12,000, so I can afford to pay her $10,000, and we booked a show. Then, we market it, go out to the world. She tells her fans, people know who Suzanne Vega is, she’s a great brand. So first, you know . . .
Andrew: Who else? So then what else do you do to get people to buy?
Michael: Marc [Cohn 00:39:37], you know, Joe [inaudible 00:39:40] . . .
Andrew: So what you’re saying is you had relationships with the musicians already, you were able to get a price from them to work something out with them, have them show up. How do you get the audience to come in?
Michael: So, you know, it’s so much easier today than it used to be. You know, what I used to do in 1987 when I was starting the Knitting Factory, I ran around town and I put posters up on the streets and I gave people [posters 00:40:01] . . .
Andrew: Used to see dudes literally put out those papers out, just stand on the street and hand out papers showing who’s coming up.
Michael: You got to do everything you can do. Today, you know, we put stuff in social media. We’re putting stuff on our website. You can do Google ads and get to, you know, their fans. It’s so much easier, frankly, to market a good brand. And if it’s quality programming, people are going to come to it. And the word spread very quickly that we built a great space, you know, a serious listening room. We got a lot of press attention because I built the first urban winery in Manhattan. You could see the barrels, see the tanks. You know, we built a better mousetrap and something that was important for New York at the time for people to have a real listening room, and it took off like fire. It was great.
Andrew: Is it called the . . . what is it called, Cellar Sessions?
Michael: Cellar Sessions, sure.
Andrew: That’s what it’s called?
Michael: That’s a video series that we host.
Andrew: Okay. Oh, I see. You are doing a little bit of internet now.
Michael: It’s not me. We are lending our cellar to a videographer to create this session. But I’m a little phobic on getting back into the IP business. I don’t want to, you know, sell digits online. My interest is to create a great evening for the audience and for the fan . . . and the artist, and that’s where my focus is.
Andrew: What’s your thing with, like, technology? The book that you’ve written that’s coming out, it’s called “Indulge Your Senses: Scaling Intimacy in a Digital World.” I think in Forbes, you said something about how people need to put their technology away and have some real experience, like SoulCycle, like listening to music, like having a real glass of wine. What’s going on there? Why do you think that?
Michael: Well, it’s not me even thinking that. You know it. We all know it. You know, our society . . .
Andrew: I think that we all know it. You and I were introduced through VaynerMedia, Gary Vaynerchuk’s company. He has said several times, “The real world is bullshit. It’s the internet that matters. Stop saying that we should put our technology away and accept that it is the only thing that matters.”
Michael: So I love Gary, but on this one, he’s wrong. And he knows that as well. He’s out there touching the flesh tremendously all the time. He likes nothing more than to, you know, be out there with people and connect with them. You know, he has 50 people come through his revolving door, meeting schedule every day. You know, like you get 15 minutes with him, you know. And what’s his favorite thing to do? Go to a football game and not watch it on TV but actually go there. So let’s call Gary out on this one. And he’s also not drinking digital wine. He’s actually drinking real wine, and he appreciates good wine. So, you know, Gary, you’re full of shit. But I love him and, you know, a good guy.
But people are over-consuming, you know, music, film. They’re working all day in their screens and people need some time out. They need to do yoga, or go for a hike and a concert experience, or a football experience, or basketball. When you can get immersively into something that is live and precious, that isn’t as good on a screen, that’s what I feel our job is today, at City Winery, is to make that intimate concert as amazing as possible. And we feel, you know, if we combine in a two-hour window great food, great wine, and great music, we can create a magical two hours for somebody.
And when I say, you know, our job is to keep, you know, people’s phone in their pocket, the whole idea is that we don’t want to take your phone away when you enter the venue and say, “You know, for two hours, you know, we’ve confiscated your technology,” that seems a little draconian or Gestapo-like. That’s not who we are. But if we’re really doing our job and our attention to the hospitality and service and the concert is so, so deep, then maybe someone just naturally is keeping their phone more in their pocket than they’re used to, and then we feel like we’ve accomplished something.
Andrew: You know what, there was an event, I think it was called Digital Detox, I’m forgetting the name.
Andrew: You know it? Where they did make you take your phone out of your pocket and check it in at the door. And I so hated when they did that, and I saw you wince as I said that, I have to tell you though, the design eye in that event was just stunning. Everything was so thought out, and there was always something going on to draw you in whether it was typewriters for you to play on which for some reason adults and kids love typewriters. I have a typewriter in my house, the fricking thing is broken even though it’s like a nice antique because every adult, every kid has to hit the keys on it. They would have these troubadours walking through. They would have all these experiences. By the end, I was really glad that they made me put my phone away. I just felt bad for them because there’s so many Instagram-able moments that they were missing out on for promotion for themselves. I get it.
Michael: Yeah. I was just going to say, you know, I have troublemaker kids. I want to keep, stay connected when I go out, you know, and as much as I would love to do the weekly, you know, digital Shabbat, which is the detox concept but on a regular basis and playing with the whole idea of once a week you should try and be offline for 24 hours, that’s just a little too much for me. And I want that Instagram-able moment, but having someone hold the phone up the entire time hour and a half of a concert, it’s s just absurd.
Andrew: How do you get people to stop that?
Michael: Two things, one, the artists don’t like to tolerate it. So many artists call people out on that one. We have patrons who call it out on that one as well. We have a kind of a shushing squad that goes through, and we’ll ask people to stop doing that.
Andrew: Who works for you? Who’s walking around shushing people?
Michael: Our little candelabras say, “Please respect the artist and your neighbor. No talking during a show.” And you know, we’re trying to be a listening and watching room. And when someone has a screen up in front of your face, you know, trying to capture that, that’s taken away the right vibe from that other customer and we just don’t tolerate that.
Andrew: I get that. I hate sitting down and seeing nothing but other people’s phones. I want to experience the show. I get it. I get how they want to hold that memory though, and I can’t fault them for it, but it’s annoying for me.
Michael: Absolutely. It’s a precious balancing act, and there’s no question, you know. We want our patrons to love us and not think that we’re, again, the Gestapo running around telling them to shut the fuck up. But on balance, 95% of people appreciate that that’s the kind of atmosphere we’re creating.
Andrew: How Jewish are you by the way? You mentioned your bar mitzvah money, you mentioned Shabbat. I looked online and saw that you’re creating some kind of spiritual place. What is this? Tell me.
Michael: I’m a secular Jew. I’m not a religious Jew.
Andrew: What does that mean? That you don’t believe in God?
Michael: No. I just don’t know if there is a God so, you know, I’m questioning. I believe in karma. I certainly believe that the world . . .
Andrew: Like, karma in this world or come back in another world and get . . . ?
Michael: In this world. I think, you know, you, you reap what you sow, however you want to go with that expression. You should, you know, try and give back more than you take on this planet. There is a component of Jewish law called Tikkun Olam, which basically means “repair the world.” And I guess, you know, I’ve lived by that a lot. I put a lot of our company’s resources into doing and giving back, a lot of philanthropic, you know, fundraising happens at our place and, you know, we try and do the right thing. I took our whole company to Puerto Rico two years ago right after the hurricanes, 120 people to help rebuild some farms for two days. And I guess that’s in our DNA, it’s in my DNA and trying to have it be our company DNA. And I just think we have some responsibility as citizens on this planet, you know, to try and make the place better and we can leverage this really great venue and now in multiple cities where we can . . .
Andrew: But you didn’t have the sense of there’s a higher power looking out for me when things didn’t work out for you the way they should have with Knitting Factory? You didn’t say, “There’s a higher power here. I think I could do it?”
Michael: No. I don’t like jump off, you know, the side of a building and go, “You know, there’s a higher power who’s . . . ”
Andrew: So why did you believe in yourself where other people would have said, “All right, I had this thing, Knitting Factory. It’s done. I’m done.”
Michael: Well, you know, I mean, I will go to give Gary some kudos now and just say, you know, one of his philosophies or what he strongly believes in is where you need to know yourself. I love when he always talks about how, you know, I know I was never going to be a basketball player because I was 5’5″, you know, but I have good outside shot, but still I’m not going to be, you know. And I knew early on I can sell things. You know, I like music. You know, I like building. I knew who I was. And so there’s a confidence, yeah, that comes out of that, that if I believe in what I’m doing, it will work. It might not work exactly according to plan right away, it might require a lot of tenacity, but if I work and apply myself, you know, it will eventually succeed. And it’s hard. But, again, you got to work really hard, you got to push it, you got to have tenacity and it’ll come.
Andrew: All right. The book is called “Indulge Your Senses.” When’s it coming out? Probably by the time this interview is up?
Michael: Yeah. It’s out. I just finished the Audible. So the Audible in my voice, that’s now released. You know, I’ve been going around. I just, you know, got landed two hours ago from Colorado. I spoke at a business school at Leeds in Boulder. You know, I’m out there doing the thing, getting the book out.
Andrew: Oh, I didn’t realize . . .
Michael: I’ve been trying to build, [keep 00:50:55] to build the company. Yeah.
Andrew: I didn’t realize it was out because I’m on your site, michaeldorf.com, and it says coming soon, but I think . . .
Michael: I know. You know why it says coming soon?
Andrew: Because you’re busy working on [inaudible 00:51:08].
Michael: No. I need a developer. There we go. I need a developer. Like, do you know any good developers out there?
Andrew: I happen to know, and I’m glad that you set me up. Anyone out there who’s looking to hire developers, really, we’re talking about the best of the best. I think that every major . . . what is it, every major blockchain developer is in the Toptal network. For example, we’re talking about the best of the best, it’s available if you go to toptal.com/mixergy. When will City Winery come to San Francisco?
Michael: [Oy gevalt 00:51:38].
Andrew: By the way, I thought you were here. I’ll tell you why. I was looking, I said, “How did I think he’s here?” As we were talking, I’m looking, people bought your name on Google. So if I look for City Winery and in other places, they come up and I was misled. I pulled an amateur move. So, yeah, when do you think you’re going to come to San Francisco?
Michael: You know, right now, you know, San Francisco is so close to Napa and Sonoma, you know, a big piece of a vineyard is weddings and stuff. So if you want to, you know, have a wedding in Wine Country and you’re in San Francisco, you go to Wine Country. If you want to have a wedding in Wine Country in Chicago, or Nashville, you know, or St. Louis, or, you know, Milwaukee . . .
Andrew: New York.
Michael: . . . you come to City Winery. So, yeah, so City Winery, that’s . . . you know, and again, my website says coming soon because I got to get someone to update it. I lost my old developer. But the book is out. It’s doing pretty well. I got some nice reviews. And, you know, I’m, you know, kind of proud of it, very proud of it.
Andrew: Congratulations on doing so well. I was just so fascinated. Again, growing up in New York and know about the Knitting Factory, there are a few places that just stand out. CBGBs, but it’s gone. I don’t think anyone brought it back. There are a few that just that shaped the culture. And I was fascinated by who did it, what did the guy even look like, and now I got to meet you and . . .
Michael: There’s great stories on the early days of the Knitting Factory in this book.
Andrew: There are?
Michael: Great memories.
Andrew: I was so wondering if maybe you were just, like, you’re so burned out on it, you don’t want to talk about it. I felt like I was pulling it out of you for like . . . I thought, “I’m forcing him to talk about it for the first half of this interview for my own sake. He’s doing it, but maybe this is painful for him.” I’m glad to hear that. it’s not super painful.
Michael: It’s fun to look back.
Andrew: All right. I’m going to go to Audible. I’m kind of an Audible person because I like to run so much. So it’s “Indulge Your Sense” for anyone who wants to go check it out. Check it out on Audible, on Amazon, Barnes and Noble. I’m betting Barnes and Noble is on your website only because Barnes and Noble said, “If you don’t put it on your website side by side with Amazon, we will not sell it in the store,” and go, “All right, fine. Do it. I don’t care. Put a link,” right?
Michael: There’s a little bit of that, but they gave me a big window display on Fifth Avenue here. So I’m pretty stoked about that.
Andrew: Way to go. All right, Michael Dorf, thanks so much for being here.
Michael: Thank you very much.
Andrew: You bet. Bye, everyone.