Launching Naked Wines in Australia

You went to join Naked and launched Naked in Australia. Can you provide some background to the strategy? I guess you were then competing with the Cellarmasters business?

100%. There is so much to go into here and I’m not going to, other than Woolworths bought us, thought we would all stay. I had a couple of meetings with them where I said, I don’t think so. That ended up quite interesting. What had struck me, in the Australian wine industry, is that every single time you met anybody, they would all complain about the industry. They would all complain that it was terrible; Woolworths and Coles are ruining the wine industry. This is wrong with it; this is wrong with it. I went to a major function, in Sydney, where there were hundreds of people in the industry and I just remember somebody standing up and talking about Burgundy or something and saying, Australians should be drinking Burgundy; we just need to educate them. It was a very patronizing concept.

If you think the way we are going to service Australians is by making them feel uneducated, it’s just not going to work. I went outside and everyone was talking about this was wrong, that was wrong and something just hit me. I was sick of people talking about what was wrong with this industry. I’m not going to say another thing about what is wrong about the industry. I’m either going to do something to change the industry or I’m just going to shut up. I immediately thought, no, when the Woolies sale is complete, I’m going to leave Cellarmasters and I am going to start my own wine company and see if I can try to fix this.

Rowan then said, why don’t you come and meet my backers, who backed Naked? I had been in constant conversation with Rowan, about Naked. Again, we were in that position where I thought what I was doing was mentally stimulating for him, having these monthly calls. I went in and saw his backers and did a 90-page business plan and boned up on the flight over to Germany. I got to the meeting with Rowan, am chatting to him about the Australian wine industry and this big, tall German walks in, sits at the table and says, don’t mind me. We talked for about 20 minutes and he looked at me and said, I like you; you can have the money. I think I said something like, I don’t want the money. It doesn’t work like this; I don’t know if you are the right person. We went to dinner and he said, let’s do this.

Then I found myself in Frankfurt for three days saying, what am I going to do? I’ve got the funding; I don’t really know what I’m doing, but I’m doing it. Rowan said, why don’t you come and check out Naked? I went and checked it out, properly. I said, everything that is wrong with the Australian wine industry, Naked has a solution to. In fact, we can optimize Naked in Australia. Everybody in Australia was complaining about how Coles and Woolies were horrible to supply; it was like, Coles and Woolies are screwing suppliers. With Naked it was, what would it look like if were actually nice to suppliers?

I remember sitting with our team, the first few people that I’d taken from Woolies and so many companies had started in Australia as online wine companies and there were just carcasses on the road. They’d all filed wine.com and all of that. I said, it’s not enough to have a cool name and a cool concept. This is one of the most competitive markets in the world, on price, in Australia. We have to find a way to compete. We were sitting there discussing how we could compete with Coles and Woolies as we don’t have their market; we don’t have their buying power. I remember this thought coming to me which was, even if we had their buying power, we wouldn’t use it the way they use it. People are unhappy with how they are using it. What would it look like if we were actually nice to wine makers? It would be wine makers getting to make the wine they want to make, instead of being told by somebody at Woolies that you need to make a wine that tastes like this, this and this, and letting them make the wine they want to make.

That’s when we started to realize that the Naked model was perfect for Australia. We did a whole bunch of testing on things and realized that Woolies are actually going to be the reason that Naked succeeds.

I’m going to tell you an interesting story. All the way, I told Woolies what I was doing. In fact, the guy who I’d worked closely with, at Cellarmasters, a guy called Brad Banducci, is now the CEO of Woolworths. All the way I told him, I don’t think I’m coming into Woolies and he was actually very good about it. He said, I can see you’ve got an itch to go and do this entrepreneurial thing and so he was quite supportive. About a week out from launching, I get a phone call from what was, at the time, the CFO. He basically said, this Naked thing, we are going to throw the full Woolworths’ legal at you. It’s not going to work. I was at my kitchen table and thought, don’t say a word and I listened and just let him talk for ages and ages and ages. While he was talking, I was thinking, we’re done. Then I was getting angry.