A Wine Lovers Guide to Entrepreneurial Success

an interview with
Philip James Co-Founder, Snooth

Plato’s words, “No thing more excellent nor more valuable than wine was ever granted mankind by God,” would find no argument from Snooth co-founder Philip James, who turned a 30-page business plan into a profitable media business in under four years. Just before handing the reigns over to a new CEO, James spent an hour with me, reflecting on his company’s growth to-date and providing, with a little help from other illustrious oenophiles, a wine lovers guide to entrepreneurial success.

Life is too short to drink bad wine–Anonymous

As is often the case with successful start-ups, the original idea may not be the big idea, so entrepreneurs must be prepared to pivot. Explained James, “Snooth was originally going to be an installed kiosk company,” that provided detailed information on wine in understaffed grocery stores. Having built the database and a demo site to support the kiosks, James and his partner, “fumbled around as every-start up does looking for a revenue model.” Fortunately they quickly eschewed the hardware business for a software-driven alternative made possible by the well-timed rise of smart phones. Noted James, “we realized people are just going to use it on the phone, they don’t need it in the store.” Thus Snooth.com, the ultimate wine lovers resource, became their focus and mobile iterations became essential.

Wine gladdens a man’s heart–Psalms

Once you build your product or service, it is essential that you really understand what business you are in. Having grown Snooth.com into the world’s largest wine database with over 5 million unique searches per month, the Snooth team does not see themselves as educators. Explained James, “it is not our job to make you an expert in Burgundy, it is actually our job to entertain you and give you what you want, otherwise you just don’t come back.” Recognizing the importance of entertainment to the Snooth.com experience, the editorial team covers a wide range of products and topics from expensive Bordeaux’s to cheap chardonnays, from baby backs to box wines. If consumers respond well to a particular topic, more posts along a similar vine follow thus enhancing engagement.

I like best the wine drunk at the cost of others–Diogenes the Cynic

An essential ingredient to rapid growth is the ability to find new customers on someone else’s dime. With site traffic up 60%, page views up 100% and time spent on the site up 15%, Snooth is expecting triple-digit revenue growth in 2010. A large part of this growth can be attributed to numerous partnership deals on sites like Epicurious, Yahoo! And MyRecipes.com on which Snooth powers wine pairings with recipes. Explained James, “we reach about 10 million people per month through these partnerships which are branded and link back to Snooth.com.” Because these are revenue sharing deals, “there are benefits for both parties, they get unique content and it helps recipe sites tap new ad verticals,” enthused James. It also means that Snooth can avoid investing in what James calls, “paid marketing.”

Wine is the most healthful and most hygienic of beverages—Louis Pasteur

When it comes to the health of a start-up, it is important to have multiple means of customer engagement, staying top-of-mind and encouraging word-of-mouth. Adding over 1000 registered users a day, Snooth.com has done an especially good job with its newsletter, which “goes to a quarter of a million people and is Tweeted, ‘Liked’ on Facebook and shared really extensively,” offered James. In addition to pushing out content, consumers are encouraged to participate on the site itself. Explained James, “users used to come just to read about wine and look up prices and over time that has expanded into an active forum.” This rapidly expanding community has multiple tiers, with the most engaged considering Snooth’s headquarters a home away from home. Noted James, “the top 1% have my cellphone number, email me and come by the office unannounced, so we know what they are thinking!”

Wine is a puzzle yearning to be solved–Aaron B. Sherman

Web-based businesses like Snooth.com capture a tremendous amount of data, data that can be used to increase customer satisfaction AND to create new revenue streams. Currently, Snooth “serves over 41 million food and wine matches per month and we expose some of the data to wineries, and that is really helpful to them,” explained James. Snooth also encourages wineries to certify their content which 2,700 wineries have done thus far increasing the accuracy of the data and improving the ranking of those wineries. Each winery can also access their own data through a merchant interface, so they can see in real time, “which area in the country or the world have the most interest in their products right now,” reported James. Though this information is very helpful to the wineries, James admits that when it comes to data mining, “we could do a much better job.”

“Wine is inspiring and adds greatly to the joy of living” Napoleon

While most entrepreneurs can inspire the launch team, there comes a point when they need to ask themselves if they are the person to bring long-term joy to investors. When I asked James if he was the guy that could get Snooth to $20 million in sales and beyond, his response made the announcement of his successor as CEO one week later only a modest surprise. James spoke to the need of any entrepreneur, “to hire really smart people, way smarter than [he is] and to give them responsibility.” “I think people like me are really good at vision, creativity, hiring and inspiring the team,” explained James. James went on to tout his soon to be successor, Rich Tomko, as “an operations guy who knows how to make it from $5 million to $20 million.”

Final note: As a long-time member of the Snooth community and a wine lover from way back, I must ultimately side with Alexander Fleming who said,”Penicillin cures, but wine makes people happy.” And it would really make me happy if Verizon had the iPhone so I could use Snooth’s mobile app in NYC liquor stores to find my faves at even better prices!  This article first appeared on FastCompany.com.

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