A journey from established CEO to winery founderOctober 16, 2012: 12:57 PM ET
A former retail exec describes how and why he jumped ship to start a winery in his 50s.
By Jim Borsack
FORTUNE -- People are always asking me how and why I went from running an established luggage retail chain to starting up a small winery. I suppose, at first glance, that those two positions seem like polar opposites. And in many ways, they are. But many of the lessons I learned from running El Portal Luggage helped prepare me for the adventure of starting and managing a winery (I've certainly learned quite a few more over the past few years.).
The biggest adjustment -- and one of the toughest challenges for me -- was making the shift from being a buyer to a seller. I've now been on both ends of the sales pitch. As the executive at El Portal, I was the buyer and had the advantage of listening to other people pitch their goods to me. Today, as I try to define my brand in an incredibly competitive market, I take cues I picked up from all the sellers I've worked with in the past. A few helpful lessons:
Take chances. Making the jump from one career and industry to another career in another industry was the biggest chance I have taken. Early on, we ran into the classic chicken-egg scenario: the well-known grape growers in the area were hesitant to sell us their fruit because they didn't know us and we didn't have a winemaker; and the well-known winemakers were hesitant to sign on with us until they knew where our fruit was coming from.
We were introduced to Kirk Venge, son of legendary winemaker Nils Venge. Just like us, Kirk was trying to make his own name in the industry. We were willing to take a chance on Kirk and he on us. This turned out to be incredibly fortuitous for us. We have 10 harvests under our belts, and Kirk is now a highly respected winemaker.
It's all about relationships. Running any business requires good relationships. This sounds cliché, but it's absolutely true. In my experience both at El Portal and B Cellars, there has always been a clear connection between building personal relationships with customers and their ultimate value to the company.
At B Cellars, we know that if we can get the wines to a qualified customer -- a premium wine buyer -- our chances for converting them into a customer is 85-90%. Once they become a customer, then we focus on retention, which is, of course, a team effort that involves several different steps. With affluent customers, we go with a communications approach based on personal interaction -- and each individual is different. When we understand how that person wants to be approached, we tailor our interactions accordingly. In other words, we are building our company one customer at a time.
You don't know everything, so educate yourself. Learning how to make wine has been one of the most gratifying things I have ever done. My partner, Duffy Keys, and I were successful businessmen embarking on something neither of us knew how to do. I knew the luggage business and Duffy, a former executive at the Four Seasons Hotels & Resorts, knew the hotel and hospitality business. So, at 50+ years old, we both went back to school. We took enology and viticulture classes at UC Davis so we could understand the intricacies of winemaking. It was fun to jump into something new. I also introduced myself to growers in the area so I could get an understanding of their strategy and views on winemaking.
Be patient. It takes time to make good wine. Our red wines can take up to three years to go from harvest to the table. At first, this seemed frustrating. As a new business, we wanted to make things happen quickly. However, having this kind of lag time allowed us to refine our process and distribution network. It allowed us, also, to take advantage of our existing relationships from our previous jobs before launching our first product.
Recognize your strengths. My business partner and I are very different but, luckily, we complement each other's strengths. He comes from a large luxury hotel business that prides itself on process. I come from a family-run luggage business with an entrepreneurial spirit. It serves us well even though it took -- and still takes -- some adjusting here and there.
Be prepared to wear lots of hats. I'm no longer selling someone else's products -- I'm making and selling my own. While this is fulfilling, it has been challenging to extend beyond my comfort zone and do things I'm not used to doing. At the beginning, we were building a winery and tasting room, making wine, hiring people, developing our brand, and selling to customers. And I had to accept the fact that we did not have layers of support to lean on.
Invest in quality upfront. When you are starting a new business and laying out a lot of capital, it's tempting to try to save money by choosing less expensive alternatives along the way. It's not rare in the wine business. French oak barrels cost $1,200 each, so a lot of wineries go with less expensive options. We considered this, but we could taste the difference. And if we could taste the difference, we knew our customers would as well. So we went with the French barrels.
Keep your goods consistent. Since we launched our first wines, our customers -- and wine critics -- now expect our product to be consistently good from year to year. They do not want surprises. We now have to live up to their expectations as well as our own. Sure, we want to keep things fresh and try new things, but we also need to deliver a product that they are familiar with and appreciate. No simple feat.
Jim Borsack is the co-founder and principal of B Cellars, a winery and tasting salon in Calistoga, Calif.