Eno Tech - wine industry - Industry Trend or Event

Industry Standard, The, August 20, 2001 by Steve Bodow

TECH-INDUSTRY VETERANS ARE BECOMING WINEMAKERS IN BUNCHES. WE FEARLESSLY BENCHMARK THE RESULTS.

Of the recent industrial booms to shake California, at least one is getting better with age. The past five years have been the California wine industry's fastest-growing, with sales of "premium" vino (that is, non-jug varietal wine) up about 15 percent annually. Vic Motto, a Napa, Calif., wine industry consultant, attributes the concurrent growth in the number of small, independent wineries to a wave of professionals who "were successful in other industries, cashed out and headed for wine country." And the fact that the nation's biggest high-tech centers are a short drive from its premier vinelands has meant that, as high-tech executives, hankers and lawyers have been looking for something more enticing to do with their money, many have settled, literally, on vineyards.

And so from Santa Barbara to Seattle, wherever grapes grow there are new economy exiles making a go of it in a distinctly old-economy industry. Some are hobbyists, like former 3Com CEO Bill Krause, who plant in their back yards and make high-end homebrew for themselves and their friends. A few saw big business in bibulousness. Ex-HewlettPackard chief Lew Platt ran Kendall-Jackson until June; KJ's owners decided not to go public, so Platt retired to sow grapes of his own.

But most aren't doing it to get rich. Winemakers all tell the same joke. Q: How do you make a small fortune in the wine business? A: Start with a large fortune. Motto lists other motivators: "There's the great appeal of wine-country lifestyle and of owning a product with cachet." And in direct contrast to innovative software or silicon, vineyards' value lasts generations. "A tech company either merges into something or transforms into something else; at the very least, its products change radically," Motto notes. "A winery stays a winery. It's very, very solid."

Between the home-pruners and the power players are winemakers like David Miner, one of the early tech-to-wine converts, who spent six years as a sales rep for Oracle before leaving for Napa's greener pastures in 1993. "Over the last 10 years the wine business has got more competitive and the quality of the wine's got much better," says Miner, who founded Miner Family Winery in 1998. "A lot of that has to do with people coming in from other industries where quality and success is much more important."

Still, many eno-neophytes have learned that a vintner's life moves at a slightly different pace than that of a bit-addled tech-boomer. "When you come from Silicon Valley, you're used to making quick decisions and just going," says Lisa Pretty, a former marketing VP at Certicom, a Hayward, Calif., data-security firm that went public in May 2000. "Well, here on the farm you just wait for everything. You spend more time chatting and everyone wants to meet you face to face." Before Certicom's share price tumbled, Pretty cashed out and, along with husband Vic Smith (who still works at Adobe), bought 80 acres of Central Coast vineyard a year ago for $1.8 million. Within three years, Pretty hopes to have a profitable 11,000-case, $1-million-a-year business on her hands -- enough to truly retire on. But, she says, "we're still pouring money into it for new barrels, new irrigation, you name it."

Even a more established producer like Miner operates close to break-even, despite selling thousands of cases of $60-a-bottle cabernet sauvignon each year. "It's a business, so sometimes you still wake up in the middle of night screaming," Miner admits. "But you get to travel a lot, meet a lot of new people, enjoy great food and drink great wine." You also get to trade cutthroat rivalries for more convivial relationships. "Unlike the software business," Miner says, "most of my close friends now are my competitors."

Steve Bodow (sbodow@compuserve.com) is a writer in New York.

SPIN THE BOTTLE To test the quality of the grapeware, a panel of five wine enthusiasts was convened -- a headhunting executive, a financial editor, an actress, a social worker and your correspondent -- to taste the fruits of these second-careerists' labors.

(An interesting note: Of the bottles we opened, not one was sealed with artificial cork. Faith in new technology goes only so far.)

Tech Exec                          Winery
Bill Hambrecht, co-founder of      Belvedere Winery, Sonoma, Calif.
Hambrecht & Quist, then founder    www.belvedare.com
of W.R. Hambrecht & Co., creator   Hambrecht's first winery,
of Dutch-auction IPOs              purchased in early '80s, ships
                                   65,000 cases a year. Hambrecht
                                   also owns Bradford Mountain and
                                   Floodgate Vineyard.
Don Listwin, former No. 2 at       Page Mill Winery, Los Altos Hills,
Cisco, now CEO of Openwave         Calif. www.pagemillwinery.com
                                   Arey-Listwin is one of several
                                   small, local vineyards whose
                                   grapes Page Mill turns to wine.
Dave Miner, Oracle sales rep in    Miner Family Winery Napa, Calif.
late '80s and early '90s (uncle    www.minerwines.com
Bob Miner cofounded Oracle)
Bill Murphy, former marketing      Clos La Chance Vineyards,
executive at Hewlett-Packard       Santa Cruz Mountains, Calif.
                                   www.closlachance.com
                                   Family-owned and operated. Some-
                                   times buys grapes from Inktomi CEO
                                   David Peterschmidt's nearby vines.
Lisa Pretty, ex-VP at Certicom,    Pretty-Smith Paso Robles,
now president of PKI forum, a      Central California coast
public-key cryptography            www.prettysmith.com
advocacy; and Victor Smith;        Now in Its first full year,
business analyst at Adobe Systems  producing 5,500 cases. Plans to
                                   double.
Ben Smith, former Boeing           Cadence Winery, Seattle
engineer; and Gaye McNutt,         www.cadencewinery.com
In-house attorney at Microsoft     Shipped first bottles in 2000; has
                                   distribution in top-line
                                   restaurants on both coasts.
Tech Exec                          Wine               Price
Bill Hambrecht, co-founder of      1999 Russian       $20
Hambrecht & Quist, then founder    River Valley
of W.R. Hambrecht & Co., creator   Chardonnay
of Dutch-auction IPOs
Don Listwin, former No. 2 at       1999 Arey-Listwin  $20
Cisco, now CEO of Openwave         Chardonnay
Dave Miner, Oracle sales rep in    1998 Oakville      $60
late '80s and early '90s (uncle    Cabernet
Bob Miner cofounded Oracle)        Sauvignon
Bill Murphy, former marketing      1999 Chardonnay    $19
executive at Hewlett-Packard
Lisa Pretty, ex-VP at Certicom,    1999 Cabernet      $18
now president of PKI forum, a      Franc
public-key cryptography
advocacy; and Victor Smith;
business analyst at Adobe Systems
Ben Smith, former Boeing           1999 Spring        $30
engineer; and Gaye McNutt,         Valley Vineyard
In-house attorney at Microsoft     Red
Tech Exec                          Tasting Notes
Bill Hambrecht, co-founder of      Lemony nose. Drier than most off
Hambrecht & Quist, then founder    the starting line, then evolves
of W.R. Hambrecht & Co., creator   considerably with several tones,
of Dutch-auction IPOs              including a margariney oak and
                                   contrastingly dry minerals. Our
                                   pick of the whites.
Don Listwin, former No. 2 at       Fruity with cloying apple notes
Cisco, now CEO of Openwave         and (insisted one tastier)
                                   "something like cauliflower."
                                   Zesty finish.
Dave Miner, Oracle sales rep in    Blue chip and priced like it: big,
late '80s and early '90s (uncle    bountiful red with supple feel and
Bob Miner cofounded Oracle)        rich fruit - currant and
                                   blueberry. Good now, better in
                                   three to five years.
Bill Murphy, former marketing      Tan/straw color, nutty oak nose,
executive at Hewlett-Packard       nice medium body. Starts a bit too
                                   sweet, but resolves into pleasant
                                   honey and apricot flavors.
Lisa Pretty, ex-VP at Certicom,    Well-integrated young oak flavors:
now president of PKI forum, a      "Plainspoken, but still
public-key cryptography            interesting." A bargain red at the
advocacy; and Victor Smith;        price.
business analyst at Adobe Systems
Ben Smith, former Boeing           Mostly merlot, Bordeaux-style
engineer; and Gaye McNutt,         blend hits the tongue with subtle,
In-house attorney at Microsoft     enticing sugar. Develops dry and
                                   soft, nice licorice flavors, then
                                   finishes tannic.
                                   Confusing Wall Street  Simple
Tech Exec                          Analyst Rating         rating *
Bill Hambrecht, co-founder of      Medium-term            8
Hambrecht & Quist, then founder    purchase
of W.R. Hambrecht & Co., creator
of Dutch-auction IPOs
Don Listwin, former No. 2 at       Neutral                4
Cisco, now CEO of Openwave
Dave Miner, Oracle sales rep in    Long-term acquire      9
late '80s and early '90s (uncle
Bob Miner cofounded Oracle)
Bill Murphy, former marketing      Accumulate             6
executive at Hewlett-Packard
Lisa Pretty, ex-VP at Certicom,    Market perform         6
now president of PKI forum, a
public-key cryptography
advocacy; and Victor Smith;
business analyst at Adobe Systems
Ben Smith, former Boeing           Strong outperform      8
engineer; and Gaye McNutt,
In-house attorney at Microsoft
(*)1 = poor; 10 = excellent