Eric LeVine, the founder and CEO of CellarTracker, visited the wine cellar at his home in Seattle.
Before Facebook, there was CellarTracker.
Eric LeVine is a former Microsoft employee who fell in love with wine while traveling by bicycle in Italy. He created the website in 2003 for his own use and released it to the public a year later. In 2005, he quit his daily job.
During the Covid-19 pandemic, CellarTracker grew by leaps and bounds as wine retailers went digital and consumers looked for places to learn more about wine. CNBC interviewed LeVine to find out the inside story about the beginning of the application – and how the founder of CellarTracker sees his future prospects.
CellarTracker is famous for finding wine varieties and buying wine bottles on other websites such as Vivino. E-commerce itself has never been LeVine’s top priority. Instead, wine apps help lovers manage what they have on hand, decide when to open the bottle and figure out what they might want next.
This seems to be exactly what the user wants. CellarTracker has 11 million unique visitors each year and tens of thousands of people pay for this service, which provides 9 million reviews on nearly 4 million different types of wine.
Now, as consumers increase online spending, it is expanding with other wine-oriented companies.
CellarTracker received an unknown amount of funds from angel investors in November 2020, thus embarking on a new track.
“What I want to do now is a start-up company,” Levin told CNBC in an interview. By 2021, the company’s number of employees will increase from 4 to 13, and new employees in data science, engineering, design, and marketing will be added. LeVine said he wanted to conduct more experiments and explore new sources of income.
This is a good time. During the pandemic, the wine world has become more and more digital. According to estimates by the International Vine and Wine Organization, even if the lockdown measures are taken, consumption in the United States in 2020 will remain the same compared to the same period last year. But Rob McMillan, founder of Silicon Valley Bank’s wine division, said that online channels accounted for more than 9% of US wineries’ total sales in November, up from 2% in April 2020. He said he can see it reach 20% of all sales within five years.
In March 2020, the winery closed the tasting room and people no longer patronized the restaurant. These two factors rule out meaningful sources of income that many wineries take for granted.
“Almost overnight, we started from the best we had to become a year in which we had to lose all restaurant, hotel, and wine shop business overnight,” said Michael Kennedy, the founder of Component, which is located in Napa Valley and Bordeaux region, France.
Larger wineries have traditional distribution channels that can ship their wines to the appropriate grocery store. Although people continue to shop in supermarkets through delivery services such as Instacart, passenger traffic in smaller areas has declined.
Some wineries already have their own wine clubs through which they ship bottles to their members. Then there are some wineries that have not yet diversified to take advantage of digital sales. Managing partner Pierre Rogers said that online wine retailer Yahyn started in 2019 and has been trying to get wineries to answer the phone, but suddenly began to receive 15 per week in March and April 2020. ask.
At the same time, investment in the wine business began to flourish. “You see a huge influx of capital from private equity and venture capital into this field. I have seen this in the past year and a half or two,” said Irv Goldman, CEO of Acker Merrall & Condit. Hold a wine auction and open a store in New York. From February 2020 to August 2021, the number of visits to the company’s website doubled.
Among other developments, the online wine club Winc made its debut on the New York Stock Exchange in November, and the Winery Group, after merging with a special purpose acquisition company, began trading on the Nasdaq Composite Index in June.
“If you do not perform well in a pandemic, you will make some mistakes because this is a good time to become a wine retailer,” said Gary Westby, a champagne buyer at K&L Wine Merchants, which has three stores in California. Gary Westby) said.
Some investors are skeptical about their opportunities in the wine market. But entrepreneurs are more optimistic. Heini Zachariassen, the founder of Vivino, said that a wine company could be worth 10 billion U.S. dollars. Vivino is an online wine retailer that has a model that people use to take pictures of labels with their phone cameras. Bottle application. Vivino, which has 55 million users, announced a round of financing of US$155 million in February, with an estimated valuation of between US$500 million and US$1 billion.
What’s next for CellarTracker
CellarTracker has not yet joined the Vivino alliance. Its website has not changed much in the past nine years. The light yellow and burgundy background sets a predictable theme, and the text uses long-standing Microsoft fonts such as Georgia and Verdana. The company released its mobile app in 2014. The homepage shows a photo of LeVine’s personal wine cellar.
The personal wine profile page displays the user-generated “community tasting notes” and the wine world 100-point score, the percentage of bottles the user has consumed and the drinking window. People can add or remove wines from the cellar, post public or private notes, upload tag images, submit food pairing suggestions, and view similar popular wines.
Before the 2012 redesign, there were no notices, no miniature profiles hovering over the wine, and no side panels with rich information next to search results. In order to appease those who do not like change, LeVine introduced a classic mode to access the old interface.
“We have people like,’Never take the classic website, and don’t change anything,'” he said. “There are always some people who are like this. If you only listen to those people, maybe one day they will be the only people using the site.”
Although the site is familiar to older people, it is not a cutting-edge Internet asset that attracts millions of new users every month. Moreover, it does not process much data, and other companies cannot easily copy the data.
However, others recognize the value of CellarTracker. LeVine said that after deciding that he did not want to give up control, he has given up nine acquisitions, joint ventures or investments, including Robert Parker Wine Advocate, which popularizes the 100-point system.
Instead, in 2020, he decided to promote CellarTracker through external investment under his terms. His main investor is Brad Goldberg, the former general manager of Microsoft’s search business, and Levin first met him in 1997.
In 2021, the company hired its first data scientist, Eric Hullander, who began to observe how long it takes for wine to mature. Large social networks such as Facebook and Microsoft’s LinkedIn hire a large number of data scientists to help develop data-driven features and analyze usage.
LeVine said the company is forming a winery consulting group to determine what they need, including their presence on the website and the way they provide information to consumers.
Then there is the retailer. The ratings and reviews of CellarTracker users are richer than those of professional critics, who can provide useful background information for online stores.
But the company hopes to proceed with caution so as not to damage the site’s reputation as a productivity app for alcoholics.
“In short, there is no creepy sh**,” LeVine said. “You look at technology and social media in a broad sense, we are flooded with companies that use our data to do really creepy things. We just don’t go there.”
If anything, CellarTracker is too quiet.
“If I email people twice a year, that would be a lot,” LeVine said. “We will start to do more and let people turn it up or down.”
The relative lack of nudges means there are fewer reasons to check for CellarTracker updates.
Jackson Rohrbaugh is a chief sommelier and president of Crunchy Red Fruit, an online wine club based in Seattle. He uses Excel spreadsheets to master his wine collection, but he visits CellarTracker to read tasting notes for certain wines.
“Sometimes it is very useful,” he said. “This is a very cool community, come together to provide these very interesting wine notes.” But he read the comments with skepticism. He said that sometimes people may be experts at first glance, but they are not.
This does not mean that the crowd cannot judge wine like critics. Vox analysis of CellarTracker user wine ratings in 2016 showed a positive correlation with ratings published by British critic Jancis Robinson, international wine cellars and wine advocates.
Even Rohrbaugh is worried about critics’ scores. He said that they might try five kinds of wine at once, but most people don’t drink wine like this.
However, since consumers have so many choices, critics can provide value. Subscribers still pay to understand what the critics think.
Tim Komada, the founder and managing partner of venture capital firm Deep Fork Capital, had followed Wine Spectator and Wine Advocate, but his subscription lapsed. Instead, he pays for CellarTracker’s services every year.
He wrote in an email: “I prefer to research (and trust) wine ratings through CT and its community rating system, rather than a single publication that prints the scores/ratings of a single critic.”
Komada moved to Philadelphia after working in the San Francisco Bay Area for 18 years before the pandemic, and since 2009, he has kept more than 1,000 bottles of wine on his CellarTracker account.
“If it weren’t there, I would forget it completely,” he said.
Most of the collection is with him in Philadelphia, but the rest is in the warehouse. CellarTracker shows the location of the different bottles and the value of all items.
“I don’t mean it’s bad, but it reminds me of Craigslist and not all the others who oppose it,” he said. “It’s always been there. It’s the market industry standard. It’s practical enough. There are also companies that have raised millions of dollars for something similar. CellarTracker survived and thrived.”
It is longer than the start-up Vintrust co-founded in 2003, which stores wine for collectors and helps them manage inventory. Komada said that Vintrust closed its consumer storage business in 2009 and was interested in acquiring CellarTracker, but LeVine refused, saying he wanted to focus on organic growth.
In 2019, family and friends gathered at Bisato, Seattle’s highly regarded Italian restaurant, to celebrate the 50th birthday of LeVine and his wife Suzi. In the middle of the night, after most people left and LeVine ordered a few bottles of Barolo and Burgundy so that people’s glasses would not run out, he started talking to his former Microsoft colleague Goldberg.
LeVine has just received an offer to sell control of the company, and he is trying to figure out what to do next. We should sit down, Goldberg told Levine that they found a table to stay alone. Goldberg told him that he had advised many CEOs before and he would be happy to help.
Two days later, LeVine and Goldberg chatted over espresso for several hours. Goldberg said he helped Levine “figure” what he wanted.
“I’m very cautious,” Levine said. “Because of too much ambition, I have seen a lot of other things screw up. If CellarTracker will screw up, it is because of lack of ambition.”
Later, wine entrepreneurs and Goldberg brought in Lars Morgan, who had worked in management at Amazon and Microsoft. Morgan later joined as Head of Operations for CellarTracker. Goldberg gave LeVine a variety of options, including investment, and this is what he chose.
For an 18-year-old company, institutional venture capital may be too extreme. It turns out that the cultural consistency of individual investors is more appropriate, Goldberg said, he has published 185 tasting notes over 15 years on CellarTracker.
Now, Goldberg says, there is room to make it easier for new members to use existing features and become a necessary condition for researching what to buy next. If these initiatives are successful, then new initiatives will follow. Goldberg said that over time, the company may accept more external funding.
“I hope CellarTracker will flourish in 10, 20, 40 years from now,” LeVine said.
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