It may not seem at first glance that a billion dollar company -- that's based in the wine industry, no less -- has much to teach entrepreneurs and startups at their earliest stages.
But, just as every wine can be traced back to its vineyard roots, so too can a billion dollar business be traced back to the fundamental tenets and strategies that fueled its success. It's those same strategies -- "seeding" customers at the grassroots level, education, and what one CEO calls the "nights-and-weekends plan" -- that help to explain why, against significant odds, rare and fine wines have proven to be one of the best investments of the past 20 years.
Let's say you bought a case of fine wine from Acker Merrall & Condit auction house in 1999, and let's say you paid around $123,000 for it. How much do you think it would be worth today?
Here's a little context: the same $123,000 invested in the S&P 500 Index would be worth about $166,000 today. Which is a decent return. Right?
Not at all, actually. Or not, that is, in the eyes of investors in fine wine.
That case of wine you bought in 1999 would be worth around $1,083,000 today, which makes it a full nine-fold increase in value. That's just one-sixth of the value of the wine investment.
You wouldn't be, if you monitor the fine and rare wine auction space. If you do, you already know that fine and rare wines have proven to be one of the best investments of the past 20 years. And you'd already know that auction house Acker Merrall & Condit passed the $1 billion marker in sales this month with two pivotal events, on June 9 in Hong Kong and on June 20 in New York. That includes $60 million in revenue in just the first six months of this year, which pushes them over the billion dollar top.
So how does any of this help you in your daily life as an entrepreneur? It has to do with looking behind the scenes at the comprehensive strategies that Acker Merrall employs to "seed" their base of buyers and sellers of fine and rare wines. It also has to do with the working habits of CEO John Kapon, who foresaw the emergence of Hong Kong as a leading center for fine wine and as a gateway to the Chinese market.
Here are three top takeaways that you can put to work for yourself and your own enterprise.
Find your next generation customers at the grassroots level
Acker Merrall's success and longevity depends upon the strength of its base, both of buyers of fine and rare wines and of sellers who "supply" the firm with their lots to be sold at auction. It's a lively back and forth that synthesizes, dynamically, both sides of the commercial exchange.
To succeed, Acker Merrall meets their next -- and even their current -- generation of buyers and sellers where they are, namely in the corporate dining rooms of some of the world's most profitable companies (where they manage the wine programs), as well as at regular specialty wine dinners organized through an affiliate called The Wine Workshop.
Experience and education above all
More than hosting such events, however, is the experience of them, which is unflinchingly focused on sharing, enjoying and learning about wine. Wine, particularly at this level of buy-in, is about the experience most of all. It is aspirational even for those who aspire at the highest levels, and the root of experience is education.
A differentiator for Acker Merrall, Kapon said, from more traditional auction houses is their effort to make auctions themselves a more interactive drinking and dining experience. "That's a big factor in relationships, and in the personality of the product," he said. "Sharing a bottle of wine with someone is never something you can do online. As important as technology is, it's more important to sit down and share a great bottle with another person."
Try the nights-and-weekends plan
In such an intensely high-touch, face-to-face environment, particularly across so many time zones, "macromanaging" his staff is becoming a priority for Kapon. In the meantime, he relies on the "nights-and-weekends" plan, meaning the three or four hours before regular office staff arrives, and the two or three hours after dinner.
"After hours is when you have the most me-time, when I go to work out or just not look at my phone for the next hour," Kapon said. "Your time is going to get picked apart all day, so you need to carve some time out before the whistle blows."