A few weeks ago SVB released a seminal report regarding the 2012-2013 State of the Wine Industry. Every year this is an amazing report with insights into the future of luxury wine in the US, insights into wine industry business mechanics, and US economics in general layered under amusing movie metaphors. A common theme (appropriately considering the Bank’s origins) has been about technology and how it intersects with wine. Prior to this year they have been small bullet points or paragraphs but this year the author, Rob McMillan, redefined a part of our industry naming us “The 5th Column.” If you have not read the report here was the origin of his new moniker for the digital sales and marketing tools that power the wine industry:
“In the same way, the term Fifth Column was coined during the Spanish Civil War when Madrid was under siege from General Vidal. Vidal announced over the radio that in addition to the four columns of attackers closing on the city, there would emerge a Fifth Column — an ad-hoc group of loyalists emerging from within the city who would rise up against the incumbent order.”But make no mistake, succeeding as a member of the 5th Column is fraught with challenges that destroy most companies that attempt this perilous journey:
So why do people like us get in to this part of the industry? We definitely don’t do it for the riches. Keeping the lights on at VinTank (without me getting paid a cent) is approximately $450K per year. To achieve sustainability, we need to convince over 1000 wine brands to upgrade!! Now I can assure you that I am not shopping for a yacht with all that spare profit or taking monthly vacations to French Polynesia.
You may argue that we are doing it for the “exit” like Facebook achieved last Friday or all the other tech sales successes you read about in the news. In all honestly, there has yet to be a significant exit for any wine tech service company. Moreover, in terms of revenue, the largest in the 5th Column is probably Shipcompliant with estimated gross revenues of $6M – $8M (after 12 years in business and essentially a monopoly in their category.) The rest of the 5th Column companies are lucky if they generate 25% – 35% of that figure.
You may say we got into this industry due to the amazing flexibility for our schedules and the ability to have infinite vacation time. Unfortunately this also is not true. James, Evan and I definitely put in 14 – 18 hours EVERY day. We spend endless time writing code, articles, and emails. We are constantly reading and curating new resources to share every Friday with all of our winery clients. It is a tireless job and every hour is valuable not just for work, but to try to be great for our families.
And perhaps you think we got into it for our love of wine and the wine industry. Though we are all big fans of wine (who isn’t?) and we live in the beautiful Napa Valley, there is a point of saturation around how many visits to a winery seem magical (really, another bladder press?) and tasting a great bottle of wine isn’t a substitute for a nice vacation or spending time with our families or paying our mortgages on time.
So why do we get in to this business? Why do we work so hard to try to help the industry succeed with digital tools? It is because we know in our deepest fiber that what we are building will help wineries succeed. Because we think we can make a difference. Because we see that the future is today, even if our winery partners do not. Because we believe that the industry, albeit slowly, will reward our efforts by voting with their dollars to allow us to do better. Perhaps we are idealistic. Perhaps we are fools. But in the end our motivations are simple: we believe.
Do we see ourselves as insiders rising up against the incumbent order as per the description of the 5th column? Yes, quite often we do, but not because we want to overthrow the incumbents. It is our goal to help them see that the world has changed and there are tools and channels, if properly invested in, that will yield 10x the results and stability that are no longer possible in the most difficult wine market in our life times. More often we feel like people with a deep passion for helping wineries succeed. A passion for learning and sharing our knowledge. A passion for building something great (and from my personal experience I know that VinTank’s software is one of the best solutions ever built for the wine industry). It is most often an unrequited love.
So who are the best 5th Column Companies? In our opinion, this is the list of companies that do the best job and are most dedicated to the wine industry. They may have their own flaws, but considering the challenges they face to build a successful, innovative and sustainable company, they have earned their place on VinTank’s list.
And here are some of the fantastic service companies that help leverage these tools:
It is very probable that I’ve missed some others that belong on this list but in asking our many winery colleagues (over 140) only these names were mentioned.