Category Archives: Forbes

South Beach Wine And Food Festival Beginnings

This post originally appeared on Forbes.com.

If you’ve ever done sales before you know how important customer service is. At the heart of any sale, there is mostly always good old fashion communication and relationship building. That is why I find it fascinating to look at how some of the best people in the hospitality business do what they do and how they think about all facets of an experience or of a relationship.

Take Lee Schrager as an example.

Fourteen years ago, Lee attended the food and wine classic to represent his company, Southern Wine and Spirits. After a wonderful experience, he decided to try to create an event that benefited his brands in a place that he felt would be more conducive to a larger and more influential group of people. He realized that to win people over he would need warm weather and a closer location to NYC.

Shortly thereafter the South Beach Wine & Food Festival was born.

Today, more than 60,000 people attend the events, and Lee is able to attract big names like John Legend, Chrissy Teigen and others.

I was able to chat with Lee to learn about three things that he felt contributed to the successful execution of this event. Here is what he said:

Leverage your unfair advantage. Lee was very quick to admit that part of his success with the event stems from the fact that he works for a large and successful organization, Southern Wine and Spirits. Having the resources of a large organization gives him a tremendous platform to get things in place however, this is just a part of the puzzle.

Engage with tastemaker and influential folks. In the first year of the event, Lee had no track record to speak of when it came to producing such large-scale events. So he reached out to his network and engaged with friends who become early adopters which in his case, were people like Emeril Lagasse, Rachel Ray, Bobby Flay and Giada DeLaurentiis, all highly respectful folks in the food industry. Couple this with the amplification of social media and the popular shows on the Food Network, and building an engaging audience was not too difficult for Lee.

Create great products, programing and listen to your customers. Lee and his team are very conscientious of different demographics, price points and customer feedback. As a result, they recently revamped the festival’s signature event – the Grand Tasting Village - to offer a brand new layout and timing based on festival goer feedback. They also added more late night events with cocktail themes, instead of only adding more of their traditional daytime events, and intimate dinners with chefs ranging from international superstars to local culinary talents.

Lastly, everything Lee does is done with a mission in mind and in this case, it’s charity. To date, Lee and his festival have raised over $20 million for the Chaplin School of Hospitality & Tourism Management at Florida International University.  The New York City Wine & Food Festival is hosted by and benefits the Food Bank For New York City and Share Our Strength’s No Kid Hungry campaign and 100% of the Festival’s net proceeds go toward helping these community based organizations fight hunger.

That’s not a bad mission to have, and with right skills and groundwork, it’s easy to see how an event like this can become and remain a success.

Nice job, Lee.

The Most Unlikely Startup: IAF

This post originally appeared on Forbes.com.

In 1948, at the Henry Hudson Hotel in New York City, the most unlikely startup was created. It’s founding members dropped everything to fly across the country to Manhattan for secret meetings to launch their endeavor.

Just a year before, one of it’s founding members Leon Frankel was already running a highly successful business buying and selling used cars making $100 to $200 a pop on every sale. Not bad when you consider this is 1947.

But then Leon and a few others got a phone call that would change their lives and put them in one of the harshest environments to build a new organization.

As Leon put it, “I just made up my mind and nothing was going to stop me.”

When you’re building any new venture from scratch, that attitude is critical. When you’re building an air force amidst an ongoing war, that attitude is absolutely required.

Today, the Israeli Air Force ranks second to none globally, according to a study conducted by military experts for Business Insider. “Pilot to pilot, airframe to airframe, the Israeli air force is the best in the world,” said Chris Harmer, a senior naval analyst at the Institute for the Study of War.

In a new documentary called Above and Beyond, which debuted in NYC this past weekend, Nancy Spielberg tells the story of how a few young Americans started what is today considered the world’s leading air force.

nancy-w-f15

Nancy Spielberg with Israeli F-15, Hatzor Air Base, Israel

I was able to sit down with Harold Livingston, another founding pilot who also happened to write the screenplay of Star Trek: The Motion Picture, to ask him a few questions about how this highly unlikely organization was formed.

Dan Reich: I can’t imagine the numerous challenges you confronted, but what was the biggest obstacle you faced when building the Air Force?

Harold Livingston: The United States Government who prevented us from taking the aircrafts out of the country. They enforced an embargo against any aircraft weighing over 25,000 pounds being sent without an export license.

Reich: In the beginning, there wasn’t a blueprint or playbook for what you were doing. How did you train and recruit new members?

Livingston: We played it as it was, with what we had. Recruiting was achieved through word of mouth, airline and/or ex-military friends of friends, various Zionist organizations, even to the point of scanning Air Guard rosters for pilots and crewmen with Jewish-sounding names. Training was another matter: everyone had to be thoroughly checked out by the handful of experienced people (obviously airline and military veterans) available. This was why we were always so woefully short of skilled crewmen, and towards the end forced to hire some dozen (non-Jewish) mercenaries.

Reich: In any new venture, partnerships are very important to achieve success. Were there any partnerships that facilitated the growth of the organization?

Livingston: Czechoslovakia of course was essential, without their assistance and cooperation, we would have been in deep trouble. Same for the Panamanians, although they (Panama) were led to believe we truly were establishing a national Panamanian airline. That “franchise” allowed us to fly the airplanes out of the U.S., and on to Israel.

Reich: In hindsight, what steps would you have taken differently in growing and building the organization?

Livingston: No, not even in hindsight could we and probably would we have done anything different. Under the circumstances, there was nothing we could have done differently. We were, as stated, a “start-up” organization, and therefore learned as we went. And, for sure, from our mistakes.

Harold and Leon’s “nothing was going to stop me” attitude continues to permeate throughout the rest of Israel’s high tech institutions today. With nearly $15 billion in exits through mergers and acquisitions and public offerings, 2014 was an all-time record year for the Israeli hi-tech industry, compared with a mere $1.2 billion raised in 2013, according to a PwC report for 2014. The exits were spread out between a variety of tech industries, including Internet, IT, life sciences, communications and semiconductors.

According to Hillel Fuld, CMO of Zula and startup advisor, “Last week there were $910 million in Israeli tech transactions. In one week!” This past week, the Israeli ecosystem continued to deliver with both VCs and startups raising substantial capital. Some of the financing announced include companies and firms like like Vintage, Singulariteam, ClickTale, Addallom and Kaminario. That amount of capital is highly unlikely for any set of companies, and yet, these businesses and others continue to grow despite the many challenges the region faces.

How This Low-Tech Founder Got A High-Tech Startup To House $150M In Transactions

This post originally appeared on Forbes.com.

In a market like this where it’s relatively easy to raise capital at higher valuations, it can be tempting to spend big on customer acquisition. This environment has led to recent conversations around high burn rates and the relationship between “Capital and Success.” But some startups are realizing that overspending on customer acquisition may not lead to the return they are looking for and are instead finding different, more cost-effective growth strategies.

In just two years, Sweeten, a New York City-based virtual matchmaking service for homeowners and renovation experts, hit $150M in projects posted on their marketplace driven by one of the cheapest forms of customer acquisition: content marketing.

sweeten homepage

Under enormous pressure to post gains in the $12B NYC renovation space, Sweeten CEO and founder, Jean Brownhill Lauer, was initially tempted to spend on obvious advertising purchases. Surely, targeted advertising would bring homeowners looking for hand-selected general contractors and designers to the site. Instead, Lauer has bet big on a different approach: creating in-house content that gets serious traction with zero customer acquisition costs. Adhering to a strict no-paid-advertising model, Lauer’s team is using original content to drive social media activity and partnerships with widely-viewed shelter and design sites, drawing prospective customers to the site more organically.

In-house content over paid advertising

“We started with big ideas but severely limited capital,” Lauer said. “When we looked at our budget and tried to envision parting with funding to cover advertising costs, we knew we could get clicks and site visits but probably not much else. Instead, we’ve watched as our investment in high quality and highly visual in-house content has drawn those same clicks and site visits through collaborations with industry leaders, and at the same time, has been a particularly powerful tool in establishing relationships and trust with customers.”

For a company trying to bring trust and structure to an unwieldy market, this outcome is in many ways more important than page views.

Regular, reliable content

Sweeten’s blog features two key categories of regular content.

The first is fairly typical “before and after” photos that show how the site connects homeowners to contractors who are uniquely suited to a project’s budget, location, and style. The second is content that digs deeply into questions around the renovation process that most homeowners face.

This combination of content is attractive to both a design-savvy urban audience as well as actual homeowners who are desperately looking for reliable information before spending significant money on their own home renovations. In both cases, this content is relatively cheap to create and has a high return on prospective customers and users of the site.

Content partnerships and social conversations

In today’s world of Instagram, Pinterest and other ‘photo-first’ platforms, users continue to demonstrate an increasing demand for quality content. As Lauer said, “We’ve learned that quality writing and photos seem to be constantly in demand – there is this insatiable appetite for design gorgeousness and trustworthy information.”

And to prove it, Sweeten’s photography has generated a not-insignificant social presence with 160K followers on Instagram.

“The Instagram crowd loves our design perspective and actual homeowners are coming back to our site for guides to renovation pricing and regulatory insight that they need to feel ready to start a transformative renovation.”

Lauer is now focused on getting the most out of the content: tailoring it across social media platforms and building it into the site so that customers are getting personalized information as they use the marketplace.

Lauer is also seeing that investors are paying attention to the content cycle; “Our investors want to see site traffic and transaction growth, and they love the fact that we’re able to garner this kind of volume with zero acquisition costs. When you pay for a click, you might get that one click and then the interaction is over. When you create great content, you can get thousands of clicks and use that piece over and over again.”

More and more companies are beginning to realize the value of content over paid advertising.  Sweeten is just one example of a startup that is realizing this and for them, the result is over $150M in transactions.

How To Deal With Company Growing Pains

This post originally appeared on Forbes.com.

Every company goes through growing pains. They suck. And no matter the company size these problems will always exist. It’s just that the pains will be different as the business grows. A 300 person organization feels the same pressure that a 10 person organization does, but early stage companies don’t have the resources that a later stage company does. As a result, it’s often very easy to get caught up “in the business” without ever thinking about how to work “on the business.” So here are some easy tips that can be used to work “on the business” that I’ve found to be helpful for early stage companies:

Create and write down roles, responsibilities, and goals and then review these goals. Do it over and over again.  Each week, team leaders should have one on one’s to talk about what is working and what is not, and why. If the team members can’t provide answers with data and facts, that means they are not doing the hard work of getting their hands dirty. Goals and documented responsibilities will hold everyone accountable. Without accountability, there will be complacency and complacency will lead to a slow death.

Look at the data. Spend time to segment your best customers by your most important metrics. Try to identify what the overlap looks like between those top metrics. Consider including and also removing the outliers to see what that might mean, if anything. See if the results align with any hypothesis that you might of had. And then once you have your answer, stop, and go execute. Don’t get bogged down with analysis paralysis but do enough to make you feel confident in your course of action and then aggressively attack. Stick with your instincts and if the data supports it, then great! If not, try to figure out why. I heard a story once of a company who thought all of their customers would be located in the densely populated US cities like New York and San Francisco. It turned out their customers were all in India and so they relocated the entire company.

Sell. It’s great to try to optimize the inbound and outbound marketing funnels of your business but sometimes a quick sales hack to sell something is to simply get in front of the person you want to sell and to close them. Often times old fashion ‘hustle’ is the most critical part of a business and as  Mark Cuban says, “Sales Cures All,” which brings me to my next point.

Prospect and get referrals. Take time to create your top 100 customer list. Figure out who the decision makers are at those organizations. Then figure out who knows those people and can provide you with a warm introduction. This requires hustle but often times this tactic yields the highest ROI. For B2B businesses, LinkedIn is a powerful tool here. For B2C businesses, Facebook and Twitter can be pretty powerful.

Create urgency in the organization. One of my favorite business stories is when the founder of Intel Israel created an artificial war. He knew that for his semi-conductor factory to stay operational, in a region torn with chaos and doubt, he would have to exponentially outperform his peers and competitor. What did he do? He put up a black pirates flag with the motto “$0.66 or die” meaning that if they did not figure out how to hit a specific $0.66 price point for their semi-conductors, their organization would be out of business. Well, they hit their goals and became one of the highest revenue generators for the early days of Intel. What can you do to get the team fired up and operating like they need to win?

So those are just a few ideas that might be helpful to a growing organization. Perhaps they aren’t the most revolutionary, but sometimes easy tweaks is all that’s needed to make a difference.

The $2.3 Billion Business Model – How Content, Community and Commerce are fueling these companies.

This post originally appeared on Forbes.com.

A new breed of business model is emerging which combines content, community and commerce to dramatically improve the consumer discovery and shopping experience online. Sites like Houzz, Polyvore, and Motoroso are putting themselves at the center of their industries using this “Trifecta,” a moniker applied by Mary Meeker of KPCB in her 2014 Trend Report.

Why is this?

Consumers rely on three factors when making purchasing decisions: content, community, and commerce. Content for inspiration and information; Community for social validation and recommendations; and Commerce for making the purchase. Today the landscape of the web serves all of these needs from every imaginable angle and from millions of fragmented sources. This results in a lengthy and frustrating experience for the consumer. Amplified by the massive adoption of mobile, consumers are increasingly demanding seamlessly integrated experiences that combine these 3 C’s.

This concept seems to be working well. Five years into its life, Houzz recently made news by fetching a $2.3 Billon valuation and appears to have become the definitive online resource that combines design inspiration, products, and service providers in the $300B home remodeling industry. Polyvore has revolutionized fashion by enabling community contributors to curate and drive sales of fashion, propelling it into the limelight and attracting over $22 Million in venture capital.

It’s not unimaginable that companies like these will rise to become powerful forces at the center of many different industries. One such business focused on the automotive industry is Motoroso. Released in beta just 2 months ago, Motoroso features over 100 official brand profiles from leading auto and motorcycle brands, including Ducati North America, Porsche, and Volvo.  Ducati North America Online Marketing Manager Patrick Flynn says: “Motoroso is an excellent online platform for Ducati as it allows the distinctive designs of our products to speak for themselves. It’s a welcome addition to our online marketing strategy.” Volvo Cars of North America’s Head of Social Media, Rahul Mahtani states “Volvo is in the process of a major brand transformation and Motoroso provides a unique channel to showcase the evolution of our products visually, as well as demonstrate our commitment to innovation.”

Porsche 911 GT3RS
Porsche 911 GT3RS (Photo credit: Axion23)

I sat down with Motoroso CEO Alex Littlewood, he says “We live this lifestyle, so we know how painful it is to discover and shop. We’re here to create a better experience for everyone in this industry.” In regards to launching Motoroso he adds “We’re starting with enthusiast niches and lifestyles, because they’re the influencers that drive the larger industry trends.”

While Houzz, Polyvore, and Motoroso seem poised to become powerhouse companies in their respective industries, it will be exciting to see which other major verticals or lifestyles will see similar business models applied. Sports, travel, food, outdoor, education, and pets could all benefit from sites that serve their industry this way.

How This Former Internet Entrepreneur Is Building A Wine Empire

This post originally appeared on Forbes.com.

In 2008 Michael Dorf opened his first combination music and wine venue in NYC called City Winery. In 2013 the brand generated over $1 million in profits for his investors. Compared to his previous media and technology company called Knit Media, parent company of the Knitting Factory, Michael generated more profit with City Winery in the first year than all of his years combined at his internet company. The business now has locations in NYC, Chicago, and Napa. This fall will see the opening of the fourth location in Nashville with more expansions to be announced by the end of 2014.

Here are some lessons from a former technology entrepreneur on how to build a rapidly growing business in the old fashion world of food and hospitality, using technology as a catalyst for growth.

You can’t digitize wine, but you can music. Marc Andreessen famously said “software is eating the world” however there are just some things that will never go digital. Food, wine, and live music are just a few examples. So when Michael looked at his business, he asked himself “what is impossible to copy?” For him, live music was at the top of this list because as he said, “even the best high def surround sound Imax films can’t capture the magic of a musician performing live.”  Thus, the opportunity around the live concert business was the side of the music industry he wanted to focus on. Michael isn’t the only one to capitalize on this opportunity. From 2009 to 2013 “the rock band Phish has generated over $120 million in ticket sales, handily surpassing more well known artists like Radiohead, The Black Keys, and One Direction.” Michael and Phish focused on live music as their point of difference.

User Interface (UI) is not only important for computer screens. It’s also important for physical space. In the world of software, User Interface (UI) and User Experience (UX) are both critically important. It is how a customer navigates a website, what they see when they enter, how they are greeted, treated and ultimately served. A physical room is no different so when Michael designed his first venue, he strongly considered the material choices and the design elements of what a customer can touch and feel. Danny Meyer calls it “enlightened hospitality” to look at all of these elements. With the mindset of user interface, you can improve customer experience by thinking about the various movements in the physical spaces of your store, restaurant or office.

Technology is a tool to make your simple tasks, even simpler. Michael wanted a ticketing system that could allow his customers to pick their seat at a particular table, visualize it on a map, and see who was where in their 300 seat room. This capability would enable City Winery to perfectly scale the room with different pricing options and configurations. This solution however did not exist, so they spent some resources to build a custom ticketing solution for their business. Now, people can show up an hour before an event or 20 minutes late and they will still have their seats available. This created a much more luxurious approach to seating and tickets thereby creating a much better overall experience. According to Michael, “this in fact, gives people back a little time, something that has gotten more scarce and valuable in an overly digitized, super fragmented, and fast paced high tech world.”

Direct Marketing is cheaper today. Years ago, marketers would have to send a piece of snail mail to their customers. Today, emails and social media enables real time, cost efficient marketing. Sending direct emails that get through junk filters and to the radar of City Winery’s customers is a tremendously inexpensive way to stay in close touch with their community. By combining this with social media platforms, Michael and his team are able to get the attention they need in an overly saturated world of media.

Know who your customers are by measuring and analyzing data. In a larger scale organization, the ability to have a maître-de remember everyone who walks in and what their favorite wine is, simply will not work. However, by using a membership program which is tied to a POS system, Michael is able to track what kind of wine people are consuming and is therefore able to see patterns in their consumption. Their “virtual sommelier” can send suggested wines for the customers to try on their next visit. Like great sommelier with a tremendous memory, this is terrific service perk, especially the more regular a customer is. As Michael said, “this was a classic old world dining trick which we used new technology to reapply in a tangible way. If it was purely a digital suggestion box, it would not work as effectively.” When you think about your business, think about how you are keeping track of who your customers are and what they like. There are newer tools out there that can help you do this more efficiently then pen and paper.

City Winery is not just using technology, but the best of the new media’s thinking, in delivering a unique, profitable and real world experience. Besides locations around the globe, if anyone is going to be able to digitize wine, chances are good that it will be Michael.

The Band
The Band (Photo credit: tr.robinson)