Inside Wine Tech - Paul Mabray, Pour Now

[music] Welcome to Wine Country Business, the podcast exploring the strategy and trends shaping the global world of wine, spirits, and luxury hospitality. I'm your host, Andrew Allison, a third-generation Napa Valley native and exited startup founder. I'm bringing you inside candid conversations with the business leaders that are finding our industry today. [music] This show is brought to you by Top Shelf Ventures. Top Shelf finds, funds, and accelerates the premier opportunities in the global alcohol and vice categories led by industry experts with a track record of major acquisitions. Their team acts as the catalyst for disruptive startups reaching for global scale. They don't just invest. They bring operational horsepower, a huge network to you, the entrepreneur, to help you dominate your market. That's topshelfventures.com. Accelerating the world's most innovative brands. Let's dive in. [music] Today's guest has been in the wine tech game for a long time, but I will let him introduce himself. Who are you? And what do you do? I'm Paul Mebray, and you're right. I have been in the "Uk" Bev game since the beginning of "Uk" Bev Tech. You know, it's me and Gary Vaynerchuk, the old dogs in Andrew Campus, yeah. When you think about your business journey, help folks understand what that looks like. Wine tech used to never overlap, and now it's a huge innovation space. How did you get in this space? It started with hubris. Obviously, I'm a nerd. I'm a geek. I've seen joy technology my whole life. My career was accelerated by technology. A lot of it came from me building tools. It helped me be a better vice president of sales or run consumer direct. And then in the late 90s, I joined a.com company called WineShopper.com, which was Kleiner Perkins and Amp Jeff Azos from Amazon invested in. That's when I got to unleash my inner geek. And it's been there ever since. And the hubris was, I wanted to be one of the change agents of wine. I wanted to be one of those people to do it. Now it's transformed from hubris to, I want to help my neighbors, my friends, my family, my wives' businesses succeed against digital Darwinism. I want to make sure that they get the right tools and the right answers to use this digital catalyst to make better business. I have had the good fortune of building my own wine tech business. And it is an absolute grind. When you're customers, don't understand technology. What has it been like in your journey watching the different iterations between.com one, the next big.com, and then all the way up into technologies that today, there's very clear cycles. How have you experienced those cycles? Well, I think outside of wine, those cycles have been experienced. I don't think those cycles are fully flush through in the wine industry. I think we get shiny, lures in them. I mean, wine is talking about AI today are still not doing e-commerce from yesterday. So we're leapfrogging, getting a good acumen after to do the job right, I think oftentimes. How do you think about some of the components of what is going well in the industry today? What technologies have been widely adopted and accepted? So technology is a tough question. I think that obviously Andrew Canface has done the best job driving e-commerce. For those that don't know who he is. So I, Andrew Canface is probably one of the great digital innovators. He's done three different e-commerce companies. Right now, he's the CEO of Commer 7. He's driven the industry. It comes from his heart. He really cares about the industry. It also comes from his head. He does a great technology solution. And so I think there's about 4,000 wineries using his software at this point. That's a pretty big foot part. What are some of the aspects of your career and from origin story up until being the CEO of your own business today? What are some of those milestones? Yeah, I think the first ones were when I worked for John Wright from Domain Chandelion or when I worked for Nibam Koblo using tools that were not there. So as an example, I wrote my CRM program. So I could pay attention to people and that was pretty early. And then Nibam Koblo was an interesting one. We went and our wine club grew dramatically in just six months. And they were hand-entering library cards for credit card information. And that felt grossly inefficient. So we hired the guy that wrote SQL for dummies to make the first ever wine club processing software. They took it from four and a half, five weeks to 72 hours, which you and I are probably smiling in a heart. That's still a long right now. It goes like that. So those were great kind of structures. And then came along with the dot com era. I made a lot of failures in that era. And that was kind of a big catalyst moment. A lot of a strength, the cool aid. Thought we were going to solve the bottle of wine online. And white choppers, one of those great stories of failure as well as dogfruit.com or Cosmo. So today's market, as I understand it, it is something like 15% of wine is sold online. And I could be off on my numbers. But my understanding is the majority of the wine that is sold online, that is not a marketplace. We're talking about a winery's website is mostly people that have visited their property or are familiar with the brand. And then they are back home in their home market and then they want to order some more. So they go to the winery's website that they remember that they had visited prior. That's correct. Now that I'm in a customer acquisition tool is the Taser Room. I don't think that we've done a good job of knowing how to sell past that hospitality-based customer capture. It's less than 15% from wineries. It's less than 10%. I think it was eight most recently from the Silicon Valley Bank report. It veers up and down the numbers. It's greater outside of that when you go into winery, telling to like actual grocery and out best specialty retailers. They're doing a better job than we are at wineries. But it's a harder transaction, you know, trying to convince somebody to pay a high price that hasn't gotten on a plane to come here for a brand they don't know about. The S scores, the same that everyone else has, that is a limited selection of product and high shipping. That's a very hard transaction and we have to learn how to sell better to people in Boston and Austin without getting them on a plane to come here. Wine shopper, obviously, is a your big time investment in.com one. What did you do after.com one? Yeah, I started coming to call Wine Direct, which is the one Andrew recently. It was the first e-commerce software solution. Brands were paying a quarter million to a million dollars to watch a website that they couldn't change the content, couldn't transact, I had no e-commerce. And we built the first e-commerce task for the wine industry. And Wine Direct is its own right, gone on to establish a very strong brand and is a big player in the space as well. I know hundreds of wineries that are using Wine Direct. Yeah, so Wine Direct just sold its e-commerce to Andrew. Commer 7, Wine Direct State is a fulfillment company currently that omnichannel kind of from Supertonuts. Yeah, it's been a great legacy with they've maintained going forward and now what Andrew's carrying it forward is also great. I actually love the e-commerce part especially. How did you transition from Wine Direct to your next venture? And what was that? It was a challenge. I mean, honestly, I felt like I hadn't moved the football very far down the line. I mean, when I started Wine Direct, which was originally called the Nerser Beverage Group, you know, I'd go to Wine Rays and say, "Hey guys, there's this thing called the internet. We're going to be able to sell wine. It's going to be amazing." And they're like, "Oh, Paul, you're so cute." And the internet fad goes away. And so it was very hard. We had to train. We actually had to do the work to help people sell because they didn't have any understanding of that. That is the friction that I experienced in the wine industry, even most recently with the business coupé that I had built. When you have customers that are not thinking about things like user acquisition or top of the funnel or non-core revenue lines, it's very hard to get customer attention. And so what were some of the learnings through that journey? You have to match a needs state that they need. Like, too many of us, we try to force this technology solution. We think is the right answer for them. And it has to be an acute pain point that they're struggling with to be able to solve a problem, right? You have to solve a real customer problem. There are lots of good customer problems. My next startup was called Vintank, which was social media listening, social CRM. We were listening the entire internet on Facebook, Twitter, and Instagram. When anyone mentioned your wine, letting the answer from one dashboard. For me, that was amazing. For the first time in history, the world is lighting up with customers you've never seen before in New York or in Seattle that are not getting out of playing, telling they love your brand and your first chance to talk to them. And I thought that was a needs state. And I still think it's an easy, I believe it is true, but like getting them to understand that needs state was the educational process. Your customers have to believe it to need. Yeah, you have to, now they do. It's an educational process, but then now social media has transformed pay-to-play. 100%. Multi-time founder, same similar customer base, wine brand, Alkbev. Yeah. How did you go on to start your next business? I actually wanted to get out of the way. It's true. The pain was pretty brutal. I mean, the selling software to wineries was hard on me. It was emotionally hard. And you're seeing your neighbor and they're your friends and they're your customer. But like, you're asking for $50 a month, $100 a month. They're like, well, that's a lot of money. And then you see them spend $40,000 on an event or buy some sort of ad somewhere that you know has no value. And it was painful for me. And even if those low dollars, I mean, Vintink was a big company. We had 4,000 wineries. We were the biggest at that time. But it was just painful. So when I sold the company to big agency, I didn't want to come back. I was like, not going to return. That agency sold this restaurant middleware. So I've actually only worked for really three companies in the last 24 now this one. I didn't want to come back to the industry. I was really struggling. I didn't want to do another startup. And then I'd be on the board of directors of a company. The CEO had a failure to launch. I settled into the CEO seat and tried to help that be a turnaround. There were lots of challenges. I mean, we got all the big customers. But selling software to wineries, they was called imagery. It was like an analytics. And I definitely didn't want winery analytics on my tombstone. I was trying to get out of there as fast as possible. And during that period of time, a big company that was, that you know winesearcher.com went up for sale. And we raised a bunch of money with a lot of friction from those guys to try to get stats and KPIs. It was like, we were dealing with not enough data to go raise them. Maybe we still raised the money from a private company. We had that big publisher's clearinghouse check, March of COVID. We walked and we said, we got the money. Let's do this. And they're like, no, COVID, we can't deal with it. And they walked away. So we like everyone huddled up, tried to figure out what we're going to do. And I'm like, oh, geez, I'm going to have to run this analytics for a while longer. And then about 90 days in, I was like, you know, there's something that's changed. The wineries, for the first time need to interact with digital. We're seeing it happen. Maybe this is the cresting point that allows us to actually. So what we wanted to launch was if wine searcher and Vavino had a handsome smart baby, it was going to be picks.wind. And that's what we tried to do. It's one of the few failures I had, a very public failure. It was very emotionally draining. This was the startup that. Yeah, my last startup before this one. Yeah. It was a moonshot. We were going to take over and be that world-based kind of discovery platform. There's a lot of learnings I have from it. I think that's one of the biggest ones is venture capital money for Alcbev is very hard to convince. Generally, they want you to have a very hockey stick of traffic, which if you have that, you're killing your customer base because they're drinking too much, right? So that's never going to happen. Or they want you to take a slice of the transaction, which is just a very normal intermediation model, structurally that's broken as well, because you reduce the amount of participation with everybody else. Everyone, right? Yeah. And then you look at a SaaS model. It's really hard to get a SaaS model for just wineries specifically because the Tam Sam Psalm is so small, so fragmented, so problematic. So that's why you see a lack of innovation around industry-specific needs. And we have really cool needs. I can tell you as an example, what Andrew's built in going back to Andrew Kempfist from Commer 7. The YStrees demanding really interesting omnichannel experience. We're asking to do subscription economy. We're asking to do hospitality. We're asking you retail and we're asking you e-commerce as a blended solution. If you go to Nordstrom, they would want that, but they don't think that way. And they have the same thing. They have the trunk club. They don't know, though, if I'm a subscriber to whatever their trunk club is, and then I'm a high member, when I walk in, hey, Paul, you get it only by these jeans. You get a discount on these things. That's a really great omnichannel experience, but our market size isn't big enough to build a tool that supports it if it wasn't for Andrew Kempfist. When I have interacted with venture capitalists raising money for a wine tech business, the number one thing that I heard all the time was if it's tech, it can work for multiple industries, not just wine. And if you're making something just for wine, it's going to be too narrow. How do you think about the segment and building a business today? So I think wine probably is too narrow to be fair. So I'll have you have to expand to the entire category. And that's what we're doing, because otherwise it's about a budget, so the amount of companies or the curve is hard. The good news is most outpev behaves the same. I think they're wrong, though. I think that growth, you defuse your attention, you defuse your product solution. I think outpev has very specific needs. If you solve it for all the outpev you do a good job and it's a big market, but they're so focused on trying to build these different kinds of unicorns and they love to, you know, I always say the private accolades about mashing companies together and getting value from that collision. But actually it's about cooking as fast as you can, like pressure cooker and you either burn it quickly or you create a great vehicle. And so they're wanting you to do that because it helps you get large faster. I think if you have a good business model, you can do that and drive big business. When you decided to stop working on picks, what was the things that you made the biggest mistakes on upon reflection? Yeah, I actually had a lot of reflection. I took me two years off afterwards. So, you know, so when picks failed, it was six days. We had a fund. We had the money raise if someone would match it. We had three people that were going to match it and one of them said no and it set off a chain reaction. So six days later, we couldn't get the other two to say yes. That meant that our lead was going to fall out and all of our bridge funding was now frozen and we had the fire going clean myself. It's brutal. Crying in the board meeting. I haven't cried in a board meeting ever. It was really like it went from here to zero in such a short period of time. It's out in the news. It's leaked. It's like it's tough. Then we're trying to sell the business to a house on fire. You can't get it. There's bad, you can't sell house on fire. I actually went and did my road of contrition to all the outpev because we had a lot of high profile winery and retailers and winery owners that invested in us and I was like, I'm really sorry. They were all very kind about it. But most of them were like, hey, maybe you threw the baby out with the bathroom or a pole. Maybe you could try it again. So I brought a small group together and we really tried. I worked for free for a year, got with some bullshit lawsuits that were painful on top of it. But yeah, it was, it was hard on me. When I finally pulled the plug, it was one board member was moving the goal post and two board members came to me and said, Paul, you're killing yourself. You're going to get divorced. You're hurting your health and you're working for free and it's not good for you in any way. You have to try to align in the sand or the goal post is going to keep moving. That person has nothing to lose. And so that's what I did. And then I just took a break. I had to breathe. It takes a lot of, you leave it on the startups, take it all out of you. I remember after my third startup failed, we had raised $4.5 million and I told myself I was never going to do a venture back startup again. And about four years later, I raised $2.5 million and did my fourth. It's an itchy feet syndrome. When you are not renewing your bones, you just can't turn that off in your brain. Well, so I'm pretty niche. I mean, how many wine ticker out, Bev, tech, CEOs are there on the planet? 10. It's very few. It's very few. It's very few. So the job structure to go do that and then you look at those companies, most of them are pretty broken. So, you know, I've kicked the tires with most of those guys in different ways. So the mistakes I made from picks is, you know, we were actually within, from back envelope to launch as a second largest selection of wine, 14 months. We had 720K, ARR, and 15 months. We had the largest selection wine with not the best UX. There were some UX problems in 16 months. The YST has a problem with perfect as the enemy of goods. So they wanted those search engines to work like Google and they forget how many years it took Google, how many hundreds of millions of dollars to get to Google. So there was a brutal harangue. It doesn't do this the way I want it. Even though I always show them screens of Amazon having those same problems, it was just a weird structure. So I think the things that I did really wrong is I let the consumer side over shadow what we were doing function on the back end. Part of that was around the editorial part of the business. We had great writers that we wrote. Some of them were fantastic, some of the articles were absolutely inane and stupid where we had Alice Farring matching Zodiacs with natural wine. There was just clickbait bloney and it didn't drive the business. That was a disagreement and what that editorial was meant to be. It was meant to be a clean objective way for brands to have a place to publish content. And for us, there was an MQL, a marketing qualifier lead to bringing the brands to us. It wasn't supposed to generate revenue. It wasn't supposed to generate these things. It was supposed to be a diffusion of focus. Yeah, it created a diffusion of the way we were perceived. Not focused, we kept it kind of isolated, but the perception level on the outside was there. Secondarily because we focused so much on the search engine. That was even though we were generating great MRR in a short period of time, that was all the VCs. How are you going to generate your MAUs? Yeah, where is this all coming? They forgot the model of like, we were much more like an open table model. Everyone could drive the traffic to us and we could help out with that structure and discovery. And if you know open table, it took them 10 years and they didn't pay for any cost requisition cost for 10 years for a decade. So I kept reminding the VCs, but it was so stuck in their head on that structurally. And then a couple other things that I did. I split my attention between fundraising and operating and it just drained the hell out of me. Fundraising is a full time job. It's a full time job. So I was never really being a good operator, but the fundraising was always on this rat wheel. And so I had a lot of trust falls in places that if I had been a better operator, I would have caught some of the challenges a little deeper, but you can't do both at the same time. Totally. And I mean, I've made that mistake myself where you're this eternal optimist and you end up running yourself ragged, pursuing things that probably told you earlier on in signals that they weren't going to invest. But you're like, well, maybe one more meeting with, you know, so and so is going to, you know, lead to a fundraising check. But the reality is is I ran myself so ragged trying to fund raise that it left little of me to go around operationally for my business. I'll say so. So we had a venture capitalist was it from their family fund. It's a famous venture capital. We met with the venture capital and it was a back of an envelope on month 13 right when we were launching. I showed the business plan to them and they're like, and what we've done in 13 months and like, wow, Paul, you're what we hope every entrepreneur CEO would do. You didn't just meet your promises. You exceeded them. I'm like, okay. So where's our check is really what I'm thinking. And says then they said to me, Hey, Paul, we can't look at you for less than 20 to 30 million. And I couldn't rationalize evaluation. And so when I went back to the actual family fund that would put him, I mean, I was like, this is not just my fault. It's the greed of your industry now. You're you're making bigger bets and someone is doing a good job. Can't get the capital from your fund. It's always the challenge. Let's bring it back around to what are you up to now? How are you thinking about the future? You famously have a startup in stealth at the moment. And so we'd love to hear how you're thinking about the greater industry. I'm in stealth because I want to prove something to the industry, not just the industry. So I want to create something of value. So I'm just focused on that. I'm just operating. I'm doing the job. We're growing very fast. We have great customers over 200 brands. Some of the biggest Y and Spirits companies on the planet have already signed up for multi-year contracts. I'm very fortunate that they believe in me, but also they were rewarding them in the value of the software. And in January, we'll unveil what we built. And we'll have a lot of logos on it. And it's something that creates true value. I'm also pretty, I'd like to say objective in a different way about the industry. So during this two-year break, a couple things happened. I just arrested. My wife was really cool. I spent some time on some boards. I started going, visit some wineries, including my wife and some friends and say, "Hey, let me volunteer you on Sundays and help you with digital transformation. Let me see what you're dealing with." Because I get on stage and I inspire you to say, "Yes, let's do it." And then you don't do it. So I want to find out what the friction is, what's going on there. And it's been really revealing. Like we're fluffing a lot of these, brancingly, can do these things or this works automatically or there's, you know, and not a lot of people tell on a stance or. When you think about the. a dog fooding of a product and product market fit, what are some of the things that have led to finding success? - Yeah, so usage is oxygen, that's a simple fact, right? You know, obviously, how much they're touching that software to get the value out of it? So we have a philosophy in everywhere I work, usage is oxygen. If they're not using it, it's not a real thing. That's product market fit on that one. So usage is oxygen, simply that. And then if you can create value creation from as fast as possible, so they're seeing that in either math or response rate, that reinforces that virtuous cycle. Those things are pretty easy for me to look at for P and F. - And how do you think about the challenges that you're seeing brands have today in the market? What are some of those things that are still coming up short, you know, all these decades later? - So it's what I learned from working with these small whiners is like, the systems are really working that well. Some of the people aren't working that well and the processes are. Those are the systems, people and processes. You know, we're facing a tough time in the YS3, I think all I've got, but the YS3 in particular right now is having a really difficult challenge and it's not singular. There's a lot of people that want to make it singular and want to make a single boogie man about what's causing our problems. I would as a vendor and we see it through a different lens than most people. The amount of houses that are not in order and trying to scramble. So I can, this is actually when I see the YS3, it's a haves and have nuts. I know the businesses that are maybe are doing a little better than the market right now, but when the market comes back, they're going to do way better because they have good systems, good people and processes and then the people are really struggling. It's either because they've got a rubigold bird machine that they're running or a winchister mystery house and it's hard to operate their business because technology's not meant to add more weight. It's meant to let you scale and talk to more customers and do more business. - Is it a data hygiene? Is it a system selection? Is it a maturity of, it's a system selection but these are all just structurally like how they treat their technology and their digital and their business in general. Like how does it flow? Many of these technology solutions that exist in the YS3 today are because they're small and they're nice people, mom, paw solutions, they have 100, 200 customers, it pays the bills, they do great job and they build all these custom features that wineries have asked for. So now both of them are locked in together, right? There's a classification between the system and the winery. The winery is never going to leave that system to go to Commerce 7 or to Shopify 'cause those systems will never do that. Weird nuanced function that they requested and that system is now locked into that servicing that total cost of ownership of that feature forever keep upgrading and updating. - And so how are you thinking of, you know, not reliving the same mistakes that you've had to learn over time? Like how are you thinking about helping navigate this environment, knowing the customer as well as you do? - Well, we're building, at least I'm building in partnership with the customers. This is a solution built by them now. It's not built by me at this point. It's stopped being built by me in March. And so what we're in October now. So that's a lot of time and you know, every day and we have usage, I mean, we're seeing it. You know, we reward our customers when they give us a feature set. We just had someone submit two features. We sent them a gift, you know, reinforcing that behavior 'cause I want them to tell me what's right or wrong about the tool. Even if it doesn't fit what I'm gonna build, there's something wrong that it's not fitting their needs fit. - Yeah, that makes a lot of sense. - What would you suggest to anybody that is trying to find product market fit in the intersection of Alcbeven tech? - I think you need to start small. I think you should probably check to see if that's something that you think is a problem versus what is actually a problem. I think you've seen me write about it a lot about different solutions, you know, that like, I don't want to name it, but there's a lot of people solving problems that are not problems with the Y3. Food pairing app is not a problem. It's a nice tab, it's not a need. There's no acute pain from the consumer. There's no acute pain from the brand, building an app that does that will never scale. So that's an example, but maybe you fall in love with wine or Alcbeven, you think that needs to happen, right? That's, so oftentimes you superimpose what we think the market needs versus what the market is. So you need to test that and you need someone who will steal man that, someone who's an expert and you call me, call Andrew Campos and get some real honest opinions 'cause everyone else will tell you, yes, and you don't want to hear yes. And there is so many people that would show up and share effectively like they're nice to have versus what's actually gonna change their business and this industry's rife with people that'll yes you to death and then take no action. If you were gonna think about what are some major macro trends in 2026 that the wine industry is gonna see here or continue to trade sideways on, what are those? So we're gonna trade sideways an AI a lot. And look, AI's, for it is a good transferational technology. I think it's gonna go through its own kind of gardener hype cycle. I think that it's gonna be imbued and everything we do and you're icing that, right? You gotta go daddy. It's gonna be invisible like the internet. I think more than it's gonna be the generative part, there'll just be parts of the software that we work with. You know, we're gonna have to learn some of those skills but it's as easy as being in Excel or Word, right? There's gonna be a lot of stuff like that. I think that what I'd like to see and I think that we're gonna see more of it, hopefully is a reconciliation with the software that they need to work with. And some of the big brands that I'm working with, you can see this kind of like rationalizing, firming down, getting rid of all this nuance and getting to the core basics that are gonna drive value. And I'm speaking in so grow up at the end of the month, I'm going off to Portugal. And they asked me to talk about the future of ice. The future of ice going back a few years and solving what we haven't solved in the current, like using e-commerce better, using search better, getting product information more structured into databases that we can let those are not hard things. But if you look around at the category, how many of them do that? And such is wine, it's all up to. - For those that wanna follow your work, see what you announce in the new year. Where can they find you online? And of course we'll link it in the show notes. - Yeah, yeah, so I'm on, I always every platform at PMAB, PMAB, R-A-Y, and then poor now is out there. It's our kind of, it's our site. You know, you'll see that really transform in the new year, but it's holding, it's a nice holding place for now. - We can't wait to watch you announce your start up in the new year, and thank you so very much for jumping on. (upbeat music) Thanks for listening to Wine Country Business. For more insights and video clips, make sure to follow the show on Instagram at Wine Country. If you found value in today's conversation, please follow us on Spotify, Apple Podcast, or wherever you get your pods. And brief thank you to our publisher Wine Country Media, and a special thanks to Napa Valley Car Club for letting us record at the barn. They're members only club in downtown Napa. I'm Andrew Allison, thanks for joining me, and we'll see you in the next episode.