Last Updated on October 26, 2023 by nicole
Philip James is the Founder and CEO of Firstleaf, one of the largest wineries in the US, directly serving hundreds of thousands of consumers with wines from around the world. With over $500 million in online sales to his name, he’s an entrepreneur known for combining technology, consumer insights, and the expertise of world-class winemakers. He has also helmed successful ventures like Lot18 and Snooth, earning awards and recognition. With graduate degrees from Oxford and Columbia University, he’s not just a business leader but also a sought-after guest speaker at prestigious institutions.
Here’s a glimpse of what you’ll learn:
- Philip introduces Firstleaf as a unique wine company that combines import, winemaking, and personalization
- Firstleaf’s wine personalization quiz, exploring its evolution from past wine quizzes
- Philip elaborates on Firstleaf’s approach to categorizing users into clusters based on their feedback, creating a unique wine selection for each individual
- Philip shares insights into Firstleaf’s fulfillment process
- The conversation shifts to the role of technology in Firstleaf
- Philip reflects on the common misconception that wine appreciation requires memorization
- The discussion touches on Firstleaf’s classification as a Consumer Packaged Goods (CPG) or technology company
- The conversation explores wine subscription services in other countries
- Philip shares valuable advice for aspiring entrepreneurs in the wine industry, emphasizing the importance of leveraging technology
In this episode with Philip James
Dive into the world of wine innovation with Philip James, the Founder & CEO of Firstleaf, a game-changing direct-to-consumer wine company. Learn how Firstleaf uses personalization and data to craft unique wine experiences for each customer.
In today’s episode of the Legends Behind the Craft podcast, Drew Thomas Hendricks is joined by Philip James, Founder & CEO at Firstleaf. Discover the secrets behind their wine personalization quiz, wine clusters, and fulfillment magic. Philip also challenges the need for wine memorization, making wine enjoyment accessible to all. Plus, get insights on entrepreneurship in the wine industry and the role of technology in business growth. If you’re curious about wine, tech, and entrepreneurship, this podcast is a must-listen.
Resources Mentioned in this episode
- Drew Thomas Hendricks on LinkedIn
- Barrels Ahead
- Philip James on LinkedIn
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[00:00:00] Drew Thomas Hendricks: Drew Thomas Hendricks here. I’m the host of the Legends Behind the Craft podcast. On the show, I talk with leaders in the wine and craft beverage industry. Today’s episode is sponsored by Barrels Ahead. At Barrels Ahead, we help the wine and craft industry build stronger bonds between their customers and brands through authentic content.
Go to barrelsahead.com today to learn more. Today, I’ve got a really special guest on the show. I’m talking with Philip James. Philip is the founder and CEO of Firstleaf, which is a personalized wine subscription service. Welcome to the show, Philip.
[00:00:33] Philip James: Drew, thanks for having me on.
[00:00:35] Drew Thomas Hendricks: Oh, thank you so much for being on.
We had a little technical difficulties, but we’re, we’re ready to go now. So talk to me, tell me about Firstleaf.
[00:00:45] Philip James: Sure. So Firstleaf is a direct-to-consumer wine company. We’re an importer and a winery. So some of the wines we sell are ours and some of them are imported from, from other wineries.
But I think what we do very well is we use personalization to figure out what each user will like. And essentially every box we send out is a unique combination of wines based on that user’s individual tastes.
[00:01:15] Drew Thomas Hendricks: I’m super excited to learn more about that. What, stepping back, cause we’re really. Stay tuned guys cause I want to talk about wine and how it intersects with technology. But first, let’s talk a little bit about yourself and how you kind of evolved into Firstleaf. Because I know you’ve been through a few different ventures in the wine industry.
[00:01:35] Philip James: I have. I’ve worked in the wine industry and the e-commerce wine industry now since 2005.
Which is a while. And originally was working for someone else. A company that was an importer and a retailer, primarily a catalog company at first. And they, they were moving online. I mean, 2005, such a long time ago now. And you know, fundamentally I, I found the category just really complicated.
I didn’t have a wine background before I worked there and, and I sort of think it’s unfairly difficult and wanted to make it easier for people to find wines they’ll love. I don’t have a memory for, you know, a good memory for facts and figures. And so learning the vintage years, learning the regions, the right bank, the left bank, and you know, the kinds of soil I, my brain doesn’t work that way.
And so, I, I left that company to create a business called Snooth and the idea was to help people to help people find the wines that they’re going to like, you know. And, and over the years I’ve learned that to do that well, you can’t just give the information you ultimately have to get and get the wine to them as well.
So ordering wine online is still a bit tricky depending on the state you live in. The shipping fees can be very high, making sure it’s in stock, you know, and so on and so on. And so we try to solve it originally through data, sort of like an IFDB. Who makes this? Who’s it connected to? What’s the rating?
But over time, you know, we stepped, oh, I stepped further and further up into, well, we have to sell it, right. And we have to provide the customer service and we should probably ship it. And here I am third time round saying, you know, we should oversee all of it. We should import it. We should make it, you know, we should control that experience end to end.
And hear it firstly, if I think, you know, we sort of kind of have that in its ultimate expression. But it’s hugely the, that relationship direct to the consumer is hugely important to us, not just for the obvious of what we know who they are and we can provide good personalization. But it’s hugely important all the way back up to the sourcing and the winemaking because it really helps the winemakers understand you know, when they’re making a wine for a kind of a, a cluster of our members, it really helps them understand to know exactly what those members are looking for.
[00:04:19] Drew Thomas Hendricks: That’s really interesting because you think a lot about wine and technology and servicing the consumer, but that back-feeding, that kind of data that you have to the winemakers to help them actually. Was that help them craft the wines to your consumer’s preferences?
[00:04:36] Philip James: And it’s, I mean, we use it, I mean, really, we use it across the whole business and, and I describe it internally as like a closed loop ecosystem.
So yes, the front end is you would sign up and you would take the quiz and, and we’ll tell you what goes in the box. You tell us what you like and don’t like, we’ll figure out what goes in your second box. And
[00:04:58] Drew Thomas Hendricks: Let’s talk about this quizzes. Cause we’ve always seen for the last 20 years, we’ve seen wine quizzes back in another venture.
I had developed one where you, how is your wine personalization quiz building upon those in the past? And how’s it different?
[00:05:14] Philip James: You know, I think the quiz is, the quiz is good. The quiz works, but the quiz is not supposed to be all of it, right? The quiz is just the way to get you to the first box. And look, if you knew you wanted higher acidity, leaner reds from Northern Europe, you could probably find that.
Right. And like, if you have your WSET or your, or your CSW exam, you can probably describe what you want and maybe you join or don’t join a wine club. But we really cater to the people who they know what they like when they taste it, but they can’t describe it. And, and I think it’s unfair to expect people to know how to describe their preference for acidity and tannin.
Can you imagine if I asked you to describe the music you liked in terms of beats per minute? And which key it’s written in, right. Which is just such a crazy way of having to describe something. You know, you might say it’s uplifting, right? Or you might say the wine is delicious or anyway. And so, so people aren’t, I don’t think they should be expected to learn the same you know, technical language that we do in the trade.
And so the quiz is designed as a way around that. We use it for the only the first box and then we begin to use the ratings and your actual preferences. Which I think are more accurate right much better to to read or see someone’s reaction to the wine than it is to infer it from you know how you take your coffee or what kind of dessert you like.
But in the absence of sitting down with the consumer and watching them drink six wines, we needed a faster way to get to that first box. And people can go as deep or shallow as they as they wish, right? So the quiz is the front door. If you, if you want, you can talk to a WSET trained member of our MX, our customer service team, and you can dial it in.
You can ask only for high sugar, low sugar, low alcohol, regions you like, grapes you know you don’t like, get rid of the wines with high tannins, you know, whatever level of customization you want. We can support. It’s quite difficult to expose all of that to someone in the first five minutes, and we try and do it over time.
Anyway, and so you’re right. The concept of, of a quiz leading into a wine club is, you know, it’s been done a lot. But for us, it’s everything that happens thereafter and on the consumer side. It drives the personalization, but that information, of course, is just as useful for, for both winemaking.
So you’re going to make a rosé. Well, there’s a cluster over here that wants it crisp and dry and pale salmon. And there’s a different cluster that wants that rosé, you know, richer and sweeter and more full-bodied and a lot more skin contact, a lot darker pink. And you can make both right. But we also have a good sense of how much of each to make, and which warehouse to go put it in.
So it’s closer to the right, to the correct consumer. And there really aren’t many examples of ultimately a CPG company, you know, that’s able to harness that consumer feedback, like it’s built into our product cycle, right? It’s not a focus group, right? Everything we do, you know, is under that glare of their consumer feedback all the time.
We know very quickly if the wine is great or if it’s missed the mark, and for us that just, you know, I think that helps us get better at every stage in the You know, every stage in the supply chain.
[00:08:59] Drew Thomas Hendricks: Oh, absolutely. Now that brings up an interesting question. You talk about the clusters and you’re talking about, to go back, the quiz is the perfect on-ramp, and it’s really what you do after that quiz that helps cultivate your user base, and the more happy they are with their subscription boxes, the more profitable and happier they’re going to be.
How do you go about, without sharing the secret sauce, talk to me about the clusters and how you’re able to categorize these people based on their feedback?
[00:09:29] Philip James: So we don’t, we don’t put a consumer into a, into a bucket, right? We don’t say that, sorry. So, the output of the quiz for us on the backend is not a simple categorization, right?
The output, the quiz has some, I don’t know, some huge number of theoretical possible permutations, right? Possible answers. And we leave that unique for you, right? So you like these grapes, these regions, you dialed in your sweetness to this percentile, and we leave that unique. But when, when winemakers are making a wine, they do think of a sort of target persona.
Right? Like this is a Napa cab, and we want it to be, you know, big and bold and fruity and, and you know, the tannin’s a bit riper and softer versus a Bordeaux or a Northern Italian red. And so they, they will make it with a persona in mind, but we don’t put you in a category.
We don’t say that you want big reds and you want crisp whites or something. We don’t have that concept of, of categorization. And what you like in, in red and white may not be the same and, and so on. So we do look at it individually. I made a comment in passing earlier in this interview, I said nearly every box is unique, right?
And so, we send out something like 50, 000 boxes of wine a month. And when I last looked, 98 percent of those boxes was a unique. Combination of wines that month.
[00:11:14] Drew Thomas Hendricks: How do you illustrate that? That’s gotta be a nightmare in fulfillment.
[00:11:18] Philip James: So what it is, and we have very good fulfillment partners who accept that, yeah, so we have no economy of scale in the warehouse, right?
We’re not designed that way. And so 50, 000 boxes. 98 percent unique. That means what? 49, 000 are unique. A thousand would duplicate with someone else. So there’s a couple of twos and threes and whatever, but it’s not like we, we put you in eight categories and send out 10, 000 boxes of each of the eight.
And the reality is people move around, people migrate in preferences and, and level of sophistication and the flavors that you look for. You know, maybe at first it’s, it’s sweeter wines and more obvious, and maybe over time you develop a taste for, for the tannins and the subtle flavors, but maybe you don’t, maybe you, you just want bold fruity wines and that’s how you stay.
Anyway and so, yeah, we have no, no economy of scale, no efficiency in the warehouse. That’s not. That’s not what we’re optimized around. For us, it’s always been important to be focused on the consumer and ultimately the lifetime value. You talked about that. We have something like two-thirds of our members have placed more than five orders with us.
And a third of our members are now at 15 orders or above. And so we have, you know if you get through the first. Some people take the quiz and don’t go on. And so that’s fine. I always signed up for HBO every time Game of Thrones had a new season. Right. So, so we accept that there’s, there’s people who come in and take a look and it doesn’t work for them.
Right. Maybe maybe at home delivery of wine doesn’t work. Maybe the hands-off subscription where, where we pick the actual wines doesn’t work, you know, whatever, right? Maybe you’re looking for something specific. Anyway, and so, but for, but for people that stick around and kind of get it dialed in for their own preferences, the retention is very, very high.
[00:13:22] Drew Thomas Hendricks: I can imagine that. Now, how do you manage a fulfillment like this where everything’s unique? Is it a just a pick and pick an automated pick and pack system or
[00:13:36] Philip James: So, we use a, we use a 3PL, called Wineshipping. That’s I think the biggest in the wine direct-to-consumer space. And hopefully, we pay them well enough that they’re okay with that.
Yeah, I mean, there’s, it’s picked to order. We know a couple of days out. We have a good sense of what the orders are because it’s a, it’s very flexible, but it is ultimately a subscription. So, let’s say you want four reds and two whites at a frequency of every 10 weeks, right? We know two days out.
As your order is coming together, we know probably what you’re going to get now. You can cancel, you can make a substitution, but the majority don’t. Right. So we have good visibility a few days out when we show that order volume to the shipping partner so they can staff correctly for the day. But until that morning as a consumer, you can change your mind.
So there’s a, you know, a 5 percent Delta between the forecast and reality. They don’t get to pack it like a batch they are packed individually.
[00:14:50] Drew Thomas Hendricks: Well, that’s amazing. So you’ve got that whole individual hands-on, but then there’s that technology, there’s an algorithm that’s predicting what you might or might not like, and there’s so much talk today about AI.
Are you, is this an AI-driven company, or is this a, an algorithmic-driven company?
[00:15:11] Philip James: So the algorithm uses AI and machine learning. You know, but when people talk about AI, I mean right now, today.
[00:15:18] Drew Thomas Hendricks: Right now it’s super hot, you can just throw it at anything. I think I have an AI company.
[00:15:21] Philip James: I mean it is, but when people talk about AI specifically today, I think they’re talking about like generative AI and you can ask, you can ask a question and it will sort of summarize information on the internet back to you. I mean, it’s fantastic, right? It’s a lot of fun. But AI was not invented by Chat GPT, right? AI has been around for a while.
And, you know, AI machine learning, the idea of, so you can teach a human being to be a sommelier, you can send, in our case, we send our customer service team on the, the WSET, the Wine and Spirits Education Trust classes, usually to level two, which is a, I don’t know, 20, 30-hour classes, right?
Plus some study. You can teach a human to do that. So you can teach a computer to do that. I, I never understood why people draw a distinction between the two around that. You know, computers can’t innovate, right? And they can’t speculate in the same way that humans are very good at, but to ask a consumer what they like, what they know about wine and be able to be able to use that to be able to make a recommendation.
I mean, if you’re comfortable talking about wine, you can walk into a wine store and do that. Right. So, I mean, I don’t love it, but I’m capable of describing my wine preferences to any sommelier in a restaurant across the whole of the country.
Right. And because I’ve had enough training in it, they understand what I’m saying, I use the words they use, and they were able to give me a recommendation off the menu because I don’t recognize… You know, the tens of thousands of different winery names and, you know, I don’t know how this guy in Italy farmed his grapes or, or how sunny his vineyard may be, but the sommelier probably does, and I can describe my tastes well enough, right?
And so we believe that at least for our consumers, we don’t expect them to know that language and to describe their tastes. Yet we can infer it for them and just like maybe you or I could talk to a sommelier, we do that work for them. And we make the recommendation anyway. But the al yeah, the algorithm uses AI and machine learning, and I get that it’s hot now, but we don’t do that generative ai.
[00:17:50] Drew Thomas Hendricks: More of a predictive modeling.
[00:17:53] Philip James: Yeah. I mean, so we, you know, it does learn from, from when. Because we, we get the feedback all the time, right? So, if you sign up and you take the quiz and we put six wines in a box and you tell us these two or one or four of them are not a good match, or these four are a good match, of course, that feedback automatically goes back into the database and is used the next time. It’s used for you next time you order.
But it’s also used for everybody else who goes to takes the quiz after you. And so it gets more accurate over time. So at the moment, if you rate, if you take the quiz and you rate three wines, we’re 97 percent accurate in being able to predict a wine that you would like. But when we launched, that was like 70 or 75, right?
So it’s got better over time. I don’t know if we, I don’t know if we need to get to 99. 999. I mean, even if you’re an active consumer, you know, and you buy from us every month or two, 30, 50 wines a year, bottle a week, maybe, 97%. Maybe we’re only missing once or twice a year. We back it up with the money-back guarantee phone us up.
We’ll give you the money back on that wine. You know, and it’s, but it’s such a better experience for these kinds of consumers than it is in a store when look, a lot of people don’t buy wine in a boutique specialty store. They bought it in a grocery store and in most of those stores, there’s nobody in that aisle to help you.
And even if there is. You know, if you can’t articulate what you want because you don’t have the technical words, you know, and in the store, you’re not sure why they might make that recommendation. I don’t know if the, is the incentive different. Do they get a commission on certain wines? I don’t know.
But, you know, in the same way that Netflix and YouTube are pretty good at recommending me what to watch and Spotify is very good at recommending what I listen to now. You know, these, these models are very. They refine and correct over time. Obviously, the challenge is you need enough breadth of wines to offer and you need enough data.
And, you know, we have several million ratings now from the consumers. You know, you need a lot of a corpus of information to make it accurate.
[00:20:15] Drew Thomas Hendricks: How much of that did you, was kind of what you learned at Snooth through that venture? Cause wasn’t that a lot of a community thought sink?
[00:20:24] Philip James: Yeah. So, I mean, the general, the general kind of North Star for me has always been the same, which is, which is I’ve, I mean, frankly, I resented how complicated wine is.
Right. And I always felt belittled, right? You know, as a, in my twenties in a restaurant ordering off the wine list was intimidating. I took wine classes. Like, like not as part of my course, but on the side.
[00:20:55] Drew Thomas Hendricks: Did you grow up in a wine-drinking family or did one appreciation come later?
[00:21:02] Philip James: My parents drink wine, drank wine.
It was on the dinner table most evenings, but they didn’t have a lot of knowledge about it. Right. And so my mother who passed away, she was a big fan of Chateauneuf du Pape. Oh, you know, which, which even back then I knew was in Southern France. But not, not down to the producer level. I don’t think she knew what grapes were in Chateau Neuf, even I would struggle today.
I think it’s, I think it’s a lot of different, yeah. And so I’d probably struggle today to name them all correctly. You know, so wine was on the table. It was, but it was not, not with any formality, right? It’s like grabbing a beer, right? So a casual appreciation for wine in the house.
And certainly, the real appreciation came, came much later, but, you know, I always found it so intimidating, and realizing that this word, that’s a place or this other word, that’s a grape. Right. And it’s not obvious at first, right? I mean, Bordeaux is fine. You know, that’s a place, but maybe you don’t know at first that Nebbiolo is a grape, right?
And not actually the name of a place in Italy and, and so, you know, I think it’s unnecessarily complex. And I don’t think we should have to memorize all that stuff. And the idea that you memorize which vintage is good, right? For each region is yet another level of, I don’t know. I just, memorization is not
[00:22:27] Drew Thomas Hendricks: I used to, I used to geek out on that when I started.
I was a philosophy and Greek major and just came right from the academic standpoint. And back, back in 93 the internet wasn’t strong and you could see just a bookshelf. Here’s this row of books. If you were in this row of books, you’re going to be pretty wine-knowledgeable. And then you just keep up to date with vintages.
But nowadays it’s, and that was intimidating for a lot of people, which I can see. And nowadays it’s the amount of knowledge, the amount of wineries. It’s hard to have a bookcase full of that knowledge. You need services like yourself.
[00:23:02] Philip James: I have never found memorization thrilling. I mean, that’s what I did the night before the exam just to pass, right?
So, I studied chemistry at undergraduate and I have a master’s in chemistry from the UK. And I had to memorize the periodic table, right? I mean, I have a master’s degree in chemistry from Oxford University. Of course I had to memorize the periodic table, but I found it really, really difficult and I had to use these like mnemonics to remember it.
Right. Because I don’t know, what is it? 110 or whatever. There’s a lot, right? There’s a lot of them. And a lot of them have weird words and, and they’re not chemicals that we know, you know, lanthanum and whatever. We don’t bump into that. Normal day. And my professor said you will not pass if you don’t memorize this.
They were like, I don’t care if you want to, you will not pass your exams if you if you don’t memorize it. And so I had to develop these mnemonics to remember, remember all the chemical elements and where they fit. And then when I started to learn about wine, I was like, I can’t believe it’s the same. I mean, you know, I’ll do it for school because I need the degree, but I’m paying for this wine. I can’t believe you make me memorize it too.
And I don’t know. I just find that offensive. I don’t need to memorize, you know, I’m, I’m capable of buying a pair of shoes. I’m capable of choosing a book or a movie or ordering my entree. And yet when it comes to wine, why are we, why have we been conditioned to second guess our own preferences?
I am, I watch trashy movies and I listen to eclectic music and I’m just as confident in both right in my, in my naivety around TV and my knowledge of the weird music that I enjoy. And yet you turn to wine and we’re all, you know, intimidated and second-guessing. I don’t know. I feel like that’s wrong.
We’re paying for it. Why are we belittling ourselves and judging ourselves?
[00:25:04] Drew Thomas Hendricks: That’s a great point. You watch a movie, you can enjoy a movie without knowing who any of the actors are in it, or you can do a song without knowing who any of the musicians are, or even the instruments they’re playing and you’re still enjoying the song, but for some reason with a bottle of wine, what are the varietals, who made it, where is it from, and you need to know that whole backstory.
[00:25:24] Philip James: I think, I think it’s so anti-consumer, it’s, I don’t know, it’s like, so basically I kind of have this chip on my shoulder, I think wine should be simpler, I think people should be allowed to enjoy it without memorizing it. I don’t think there should be a, a gate of academia in front of this category. And so, and I think the internet fundamentally can change that or has changed it forever, right?
Because you can look up the region, the grape, the producer, the score, whatever it is you might, interested in. And, and again, and wine is super complicated. If only it was 110 things to remember. Right. But I mean, there’s a thousand plus different grapes just grown in Italy. And who knows, maybe another thousand around the rest of the world.
If you get down to the AOC or DOC level, I don’t even know. It must be thousands of, of individual regions. And then you layer on the complexity of memorizing vintages and styles. And, you know, and it’s, it’s incredibly complicated. I don’t think everybody should have to learn what malolactic fermentation is or whole cluster press or aged on the lees, batonage, you know, it’s in a foreign language just to, just to add to the complexity anyway.
And so, you know, we cater to people who, who want it, who like it, who are willing to spend on it. And, and, you know, they are, they’re somewhere in that rank between obscure collectors and, you know, casual drinkers somewhere in the middle there. But that’s a lot of people. That’s tens of millions of people in the U S who, who like it, but they’re not, they’re not self-professed connoisseurs, right?
There’s room in the world for people who collect stamps, but there’s also room in the world for people who use stamps as a method of postage.
[00:27:12] Drew Thomas Hendricks: For sure. For sure. You mentioned earlier in the conversation, you talked about CPG, Consumer Packaged Goods. Would you put firstly from the CPG category or technology category?
[00:27:25] Philip James: Oh, yeah, it’s a good question. I, we, we’ve had that debate, you know, over the years. I dunno, we’re both, I don’t like that categorization. I mean, I think when my team forced me to answer it, I said, “We’re a wine company that uses technology.” Right. When they forced me to do it, but I don’t know if it’s 60, 40 or 49, 51, I sort of don’t like that, you know, cause you say it that way and you imply that it’s a hundred slash zero. Essentially, I don’t think that’s true. I mean, look, we will, we only sell wine. We’ve never sold anything else. We’ve never sold a corkscrew, let alone a beer or a spirit. And I don’t even foresee when we would sell anything else.
We have no intention of taking our algorithm and applying it to different categories. Or to licensing the personalization on its own. Right. And so, you know, for, and I talked about that closed-loop ecosystem for us, we’re all in on that. We, we,
[00:28:28] Drew Thomas Hendricks: That’s important today with consumer privacy, making sure that you’re not selling their data, keeping that closed loop just to help benefit the consumer.
[00:28:38] Philip James: Sure. I mean, for us sure, I mean you’re right. There’s a benefit there. We never, that’s not the driving reason for us, for us, it’s from the ground up our data and our algorithm is designed around the wines that either we have made or the wines that we’ve worked with other wineries to make. Right. And that’s it. Right. And it’s like, it only functions, you know, it’s like a, it’s like a search, searching your own hard drive.
It’s only indexed the information on your computer, right? Versus searching inside Facebook or whatever, right? Like our data set is designed for us and our business. Everything in and around the algorithm is designed for the way that we work. I don’t know. It just doesn’t seem worth it to try to retool it to do anything else.
And so you’re right. There, there happens to be the consumer privacy benefit, but you know, we are a CPG. It’s not really my categorization, but wine is a, you know, an FMCG, right? A Fast Moving Consumer Goods. But we are all in on, on US DTC, wine and, you know, I don’t think, I mean, never say never, but certainly have no plans to ever, ever do anything else.
You know, we don’t, we don’t sell into trade. We did try briefly some years ago, but it wasn’t, I didn’t like it as a business model. We, you, we immediately lose the personalization. We immediately lose the feedback of the consumer. The closed loop system breaks the moment that we sell into trade. I don’t think we’ll sell outside of the U S. I mean, for me, this is a very focused play, but it happens to be in the largest wine market in the world.
That is deregulating that is allowing direct to consumer. And of course, leveraging, you know, all of the data, the internet, everything you, you know, you and I talked about on this. You know, during this conversation, but also all of the data that we can get actually out of our labs and on the wines themselves.
[00:30:47] Drew Thomas Hendricks: Yeah, the U. S. I mean, I can see why it’s concentrated in the U. S. And you may not know, internationally, how are subscription services like in other countries such as Britain or France and Italy, do they have? Are there competing models going on over there?
[00:31:02] Philip James: You mean for wine or
[00:31:04] Drew Thomas Hendricks: For wine. For wine subscription services? I know it’s sold very differently in every country.
[00:31:10] Philip James: I mean, so there are some large subscription services for wine in the UK for example, there’s the, there’s Laithwaites, right? There’s the, they run the Wall Street Journal wine club in the U. S right, but in the UK they run the Times newspaper, or there’s a much older company in the UK, I think it’s older called the Wine Society, which is a kind of wine of the month subscription service.
Neither of those, to my knowledge, neither of those focuses on personalization. But
[00:31:43] Drew Thomas Hendricks: You’ve got like hyper-personalization with every box being different. That’s, that’s amazing.
[00:31:49] Philip James: I mean, okay. When we, when we say personalization, we assume it is. I mean, I think it would be weird if you logged into Netflix and they’re like, hey, we’re just going to show you other shows that people who like you know, international travel. No. They like, it’s for you. Right. But I get it. I guess personalization might mean many.
[00:32:09] Drew Thomas Hendricks: It’s been watered down by many people.
[00:32:10] Philip James: Mean many things, right? Maybe controlling how many bottles are in the box or the frequency. Maybe that’s personalization. No, to us personalization is down to the person.
[00:32:20] Drew Thomas Hendricks: To the true meaning of the word. Because you could call an email template where you put the first name in there. Personalization. You wouldn’t really call it that personalized.
[00:32:27] Philip James: Yeah, yeah. Fair enough. Fair enough.
[00:32:30] Drew Thomas Hendricks: So no, you’ve got some hyper-personalization.
[00:32:32] Philip James: That’s not what we mean, but yeah, fair enough.
[00:32:34] Drew Thomas Hendricks: Definitely technology-driven. Stepping up toward more of a broader picture here is on your website you talk about being a serial entrepreneur. You’ve gone through a few different companies, many different companies. What advice would you have for like a young and up-and-coming entrepreneur in the wine industry as far as leveraging technology?
[00:32:52] Philip James: I’m trying to give an answer that isn’t, isn’t superficial. I mean, I feel like some of it’s obvious, right? That like technology, of course, is reshaping everything we all do, right? But technology doesn’t necessarily develop in the way we all think, right? And I remember reading a quote. Like a VC quote a long time ago and, you know, they said we asked for flying cars and all we got was 140 characters.
But you know, the reality is we all now have a perpetually connected supercomputer in our pockets, which is unbelievable, right? You talked about having, I see behind you a bookshelf, right? And you know, I used to have not that long ago to find something. I used to have to go to the library and not just check the book out.
Many of those books don’t leave the library, right? So they give you the book and you have to stay on the premise to go read the book. But when you’re finished, you, you drop it back off, which is so alien now, right? If I can’t pinch and zoom and, you know, whatever. You know, the world is obviously very different.
I’m not, not to generalize, but I know some people are like, Oh, I’ll just run a company for two or three years and flip it. And those who did, I guess, but that, that, that was not me. I’ve been doing this for a long time, you know, 15 plus years in a relatively focused market, e commerce of wine in the U. S. only for, you know, 17 years now.
Some of the wine industry is resistant to that technology. You know, even going back only 5 years ago. Just before the pandemic, people would make comments about, you know, they’re not sure if they want to go all in on the internet, right? Not, not that it’s going to disappear, but unsure about its impact on the wine category.
It wasn’t long ago that the whole wine industry was very very anti automation, you know, automated harvesting or an optical sorter in the winery and, and kind of computer control of understanding the fermentation and, and the vineyard itself. You know, I think labor costs and, and hiring challenges kind of moved people over.
And so, you know, I think there’s a, there’s an arc that technology is inevitably following, and there are pockets of rapid adoption and maybe pockets of resistance and, you know, it feels like, like the wave is sort of surging back and forwards. And so I, I think I’d just encourage people to zoom out and really look at the, at the macro trends because they’re more.
They’re true over the time cycle of your career, right? They’re true over 20 years and 30, 40 years. Even if, if you zoom right in the thing that was true two years ago is not true today, but I mean, if you look over 20 years, e-commerce adoption of wine is a real trend.
[00:36:08] Drew Thomas Hendricks: That’s one of the, I think it hit the nail on the head there with zooming out sometimes because the way I see, I see a lot, and I’ve made this mistake multiple times where I’ve just been so focused on one feature or one little technological loop, or that it becomes this vicious circle where we never get the product launched.
And by the time we get that thing figured out, we’ve lost scope of this whole macro market that we should have just been in the market.
[00:36:36] Philip James: You know, so I, so we launched Firstleaf in early 2016. Right. So we’re sort of seven years in now. And we were a solid business before the pandemic. At the start of the pandemic, we grew very quickly.
And at the tail end of the pandemic, we gave up some of that growth. Right. And so, you know, there was an era in there where my investors thought I was a hero because we were growing so quickly. And there was an era in there when they thought I was an idiot because we were losing some of the scale. And I had to keep reminding them that, no, no, no, let’s back out.
Right. Let’s look where we were in 2019 or well, don’t forget that we only launched in 2016 and we’re a much bigger business today than we were in at the end of 2019. And you know, the someone gave me a quote, so people talk about a career ladder, right? And it was described to me as like a climbing wall, right?
You go up, you go across, maybe go down a bit. I mean, you’re still climbing up, but it’s no longer direct, you know, because I think, I think my parents, my dad had two jobs. He worked for the military for 20 years, and then he worked for the local government for the next, whatever, 25 years or however long that’s it.
Two jobs. And probably for him, that’s a career ladder, right? You have this title, maybe you get promoted to the next title eventually. Right. And people take much more indirect routes to success. The world that we have built today is much more complicated, right? And I’m sure that generative AI will play a role in many businesses, but computers and technology have been playing a role in our, our business and many others.
And increasingly, you know, for decades and it’s not just we can email and whatever, send, send a file faster. It’s the, we can, we can look up and register a trademark more easily, right? And we would have used a lawyer before, or we can generate analysis around a blend we’re considering and, and run it up against the algorithm and do that in 10 minutes.
And it used to take us, even at the start of the company, it used to take us two weeks to do that because we had to send it out to get analyzed. Right. And so technology is just allowing us, and people always talk, people talk about like technology will like lead to the end of our jobs. I think, no, I think technology will just allow us to do new jobs and technology will, will speed up a lot of the routine stuff.
And so, you know, I want to go all the way back to when I said, if you can teach a human how to be a sommelier, you can teach a robot how to be a sommelier. But, but that doesn’t mean we don’t have sommeliers in the future. It means sommeliers will do more advanced stuff. Right? Maybe, maybe there’s a way that as a diner.
I don’t know. Do you pre-fill some questionnaires on OpenTable, right? And now every restaurant you walk in has some sense of what you like, and the sommelier now can like tease out maybe the entree you’re ordering, or the occasion, or the group, or something else. Like, how much better would a sommelier be if they already knew what your preferences were before you walked in, right?
I mean, just for example, I feel like technology will just… Create new and better jobs on top of the, the sort of routinization of the work that we used to have to do that computers can do for us reliably and faster, but the creative work that humans are good at can always sit on top of that.
[00:40:26] Drew Thomas Hendricks: That’s very, that’s very good.
I like that idea. Painted a good future of how you can level up the whole sommelier process in a restaurant for sure for them to be able to stand on the shoulders. Because a lot of times, like in a wine store, when I used to work there, I’d get to know the customers. So I kind of know what they like when they come in. Most of the time, the sommeliers just see the diner.
[00:40:50] Philip James: And how, how boring is that? I mean, to me, it’s unfairly boring, unfair, and boring to the consumer. I don’t know. I don’t know how many times you eat out of human eats out per year, but let’s pretend it’s once a week, 50 times a year, you have to explain to a brand new person that you like Pinot Noir, but not, you know, if it’s sort of too much barnyard, I mean, couldn’t they have saved that?
Couldn’t they have shared that? I mean,
[00:41:15] Drew Thomas Hendricks: Like, here’s my preference.
[00:41:18] Philip James: Yeah. And I, there’s a real art to, well, there were four people at the table and you guys don’t obviously overlap, but you know, these are your entrees. Do you want to be bold or do you want to be safe? Like, let’s make a, let’s make the choice for you.
In almost everything we do online, those preferences get saved and the search results or the recommendations or the whatever, I don’t know. My airline knows I like a window seat. I don’t have to keep telling them, right. It’s my settings now. And yeah, I mean, the rest, the things where it bumps back into the real world, they don’t have an easy way to save that stuff.
But I mean, there are ways, we just have to build them, right? Again, it exists in OpenTable or it can exist on your, I don’t know, your contact information on your phone. Maybe you have to bump your phone with the sommelier when you walk in and, and then they’ll figure out the wine for you.
[00:42:16] Drew Thomas Hendricks: There is a company, I interviewed about a year ago, and I’m gonna, I know I’m gonna get the one wrong because I believe it’s SIP where it’s a social wine rating and sharing thing.
And the people can integrate it. Their goal is to integrate it with menus so that anybody at the table. It could compare all their different ratings and then it would recommend a wine based on the collective people at the table.
[00:42:39] Philip James: I mean, I see this just the fundamentally the concept of aggregating that information, categorizing it, you know, tying it back to the consumer.
It just unlocks the next layer of stuff beyond that. I can’t remember. It’s been a long time since I wrote my resume or applied for a job, but back in the day, I wish I had LinkedIn, right? I wish I had one application for jobs. I wish, you know, there was a matching tool that found the right job for me. It was very crude and inefficient.
I don’t know. Remember what dating was like when you had to stumble over to someone in the real world and introduce yourself? And, and anyway, so I think the world, the human appetite for new things will just get bigger and bigger and, and I have nephews and the jobs they want to do, I mean, they’re like 10 and seven, the jobs they want to do didn’t exist when I was younger, right?
They want to be content creators or, you know, Twitch gamers, right? These are not jobs that existed, you know, when I was growing up.
[00:43:51] Drew Thomas Hendricks: Esports, that’s a whole nother conversation. Philip, as we’re kind of wrapping down here, where can people learn more about you and Firstleaf and take the quiz and subscribe?
[00:44:02] Philip James: Well, simple could just come to firstleaf.com. You can obviously take a look at the quiz. Sign up and try those wines that the, the quiz recommends. We did recently launch something that we’ve called wine print. Cause I’ve talked a lot today about, you know, one of the most important things to me in wine is, is understanding your own preferences.
And it’s one thing for us to understand them and give you the wine. We wanted to help our members out in the real world. And so wine print is what I’ve been talking about. It’s just like distillation of your preferences. And, you know, it turns out that I do like big, robust, fruity, reds. And I, you know, wine print is the, is how you or, you know, whoever, whoever’s listening can discover the same thing about their own preferences.
[00:44:56] Drew Thomas Hendricks: Very interesting. You just hand the wine print to the sommelier. So here, this is
[00:44:59] Philip James: Save it, take a photo, print it out. Yeah, exactly. Memorize the sentence. Exactly.
[00:45:04] Drew Thomas Hendricks: Sure. Oh yeah, it is. I know that. I love that. I’ve got to go do that one. So Philip, thank you so much for joining us today. This has been a great conversation.
[00:45:15] Philip James: Yeah. Drew, thank you very much.