It's 6pm on Thanksgiving Eve, and here's the view from my desk out across the office. We're busy, we're in the final ramp up to the three biggest food and wine days of the year: Thanksgiving, Christmas and New Year and we're still working.
I'm not from here, and my family all still live back in the UK. Thanksgiving has never been a special day for me, but I know its one of the biggest US holidays. I'm humbled by the dedication the entire team has shown again and again, putting our members and producers interests before their own every time. Our employees care about what they do, and this is just another reminder of how proud I am to be a part of Lot18.
Lot18 started in a Starbucks (there were 2 of us back then), from there we graduated to a cube rented from Snooth (6 people), pretty soon it was 2 cubes and a satellite office for the dev team and myself - generously loaned by Ziff Davis (that saw us to 20). After that, and having reached 25 people, we moved to our first proper office.
A whopping 8,000 square feet on East 32nd St in Manhattan. That was in March. Now with nearly 90 people that averages out to less than 100 square feet per person and its become untenable.
Last night we formally broke through the wall to the rest of the floor, which we've just signed. That takes us to around 16,000 square feet. We'll see how long that lasts.
Samwoo E breaking the seal
Josh Mohrer saving money by doing his own demolition
Perils of dust
Part of the new space with a better dust barrier in place
The other half of the new space
Yesterday we announced (here and here) that Lot18 raised a Series C financing of $30m. This is the third round of capital we've raised in 12 months, and it brings the total we have raised to nearly $50m.
We're incredibly excited by what we've been able to offer so far and this additional funding will allow us to double down in our core areas: wine, gourmet, and experiences. We work very hard to take these complicated industries and present the best they have to offer to the consumer in a simple and enjoyable way. Providing access to the best in food and wine is our mission, and you'll not see us stray outside of that.
One thing that does not go unnoticed by us (I talked about it when we raised our $10m Series B) is that the last time companies in the wine space raised this much money it was the 90's and it was a disaster. Hundreds of millions of dollars were poured into companies including Wine.com, Virtual Vineyards and Wine Shopper. These coalesced into Wine.com and New Vine Logistics, the former announced its first profitable quarter this year (after 10+ years in business) and the latter went bankrupt last year.
In every single meeting we've ever had with a VC we've been asked "Why will you be different?". Our answer is simple: the laws are different now, and as Snooth nears 1M registered users we proved it was possible to build a wine community online.
These prior failed investments cast a pall over the industry, companies couldn't raise money and tech innovation was stifled over the first decade of this millenium - many VCs won't go near the category, even now. Like music after Napster, wine had a stigma. However, today, a decade later, just as Spotify is doing with music, we're trying to tell the same story a different way.
The food and wine industries are massive, but the road is littered with corpses, and we're acutely aware that there's a heavy burden on our shoulders now, as if we fail, funding for future companies will likely dry up for much of next decade. We take our role in this seriously.
The governing body for California's wine industry (the Alcohol and Beverage Commission / ABC) released a seismic document today. In it they clearly defined how third parties could work with wineries to help them sell their wines. The advisory is here and the press release here.
It's pretty deep technical stuff that the advisory covers, but its effect will be felt by everybody. A lot of companies are going to be scrambling to rebuild their systems to be compliant, but I'm glad to say that Lot18 invested from the start in a system that accounted for these requirements and then some, and we're happy to report that there is no interruption in service.
The net outcome of this will be that a larger variety of wines will be available online (including via Lot18), and that's good for everyone.
Here's additional coverage:
We work hard to deliver an experience for our members, and in doing so the details count. Even if many of the subtleties of what we do go unnoticed by our members, we're confident that overall people will enjoy their time on the site.
I got to see the site as a user would the other week, when during the lead up to our 1 year anniversary, we had a whole line up of surprises to offer. I was not part of the planning of these, so each day I'd have the pleasure of seeing what was new.
One little piece I wanted to highlight, was how the Lot18 logo treatment varied across the week. First the 1 was transformed into a candle, and then on the anniversary itself the candle was lit, only to die down to a flickering ember a few days later.
For anyone who noticed this, there was another easter egg in store for those that moused over the candle, as the flame would snuff out. You can see it in the movie here: Lot18 Candle.
I'm sure some people think that focusing on such a small element of the site is a waste of time, but for us its representative to the care and attention we apply to everything we do, and I was amazing proud of the team for this.
Thanks to @catlo and @vinceallenvince for coding this up.
EDIT: @iconsam belongs on the list above
Yesterday our office internet went out for an hour. Despite the fact that we pay for multiple redundant lines and have a router that is supposed to offer seamless failover, we lost connection. There's not much work we can do without the net, and pretty soon we had 100 people wondering around the office chatting.
I used that time to nip downstairs and grab a snack, and when I came back I found the whole office was engaged in some impromptu spring cleaning: tossing out the trash, tidying desks, and generally smartening the place up.
I was taught that as an owner, I should lead by example, and that others would follow. We've put in place several initiatives that help everyone feel like owners, from the fact that everyone has equity in the business, to the management policy of radical transparency around the company operating data, we treat everyone like adults. Employees set their own start and finish time, their own dress code, and even their own vacation policies. A lot of work has gone into creating the culture.
To actually see the whole team pitch in like that, though, made my day.
Imitation is the sincerest form of flattery? Then consider Lot18 collectively flattered...
This one makes the short lived 'Lot18 doppelgänger' BeyondTheCellar site pale in comparison. By the way, Lot18 is on the left in each case.
I just finished reading Business Stripped Bare by Richard Branson, and he references an ancient Chinese proverb: "may you employee more than 100 people". The idea being that it's a double edged sword. On one hand it means that you've built a successful business, or at least a big one, but on the other, with that many people, creativity dips, progress slows and problems spiral.
Whether the key number is exactly 100, as per the proverb, or 150, which is commonly known as the Dunbar Number (the theoretical limit of personal connections that a person can maintain), its clear that there's a quick transition from a nice little cozy startup where everyone knows each other, to a sprawling corporation complete with inefficiencies, under-performers, politicking and worse.
As Ben Horowitz bluntly puts it:
"If you manage a team of 10 people, it’s quite possible to do so with very few mistakes or bad behaviors. If you manage an organization of 1,000 people it is quite impossible. At a certain size, your company will do things that are so bad that you never imagined that you’d be associated with that kind of incompetence. Seeing people fritter away money, waste each other’s time, and do sloppy work can make you feel bad. If you are the CEO, it may well make you sick."
Between all the businesses we have about 120 employees. Most people report into me, so worst of all is that every mistake, every bad hire, every failure is ultimately my fault. It has taken me a while to come to grips with that, but now that I have, my focus is on the three levers that I control. My job now is to slow the decline as much as possible.
People often ask me what I do all day. Or, more specifically, they are often surprised at how many things occur in the company that I don't have direct control over, or, in some cases, don't even know about.
I was standing in the Lot18 kitchen the other day foraging for snacks, and one of my engineers was surprised to hear that I didn't know exactly what our regular FreshDirect food order contained. I told him that I probably had less idea than him of what treats lay inside which kitchen cupboard. And that as much as I love Swedish Fish and Triskets, it's not my job to manage purchasing that closely.
"What do you do all day then?"
I spoke for an hour at an Executive Education event at General Assembly last week. The topic was leadership.
I speak at a lot of events and conferences about either the wine industry, or starting a company in New York. I'm pretty confident I have something to add on these topics, but leadership is so nebulous, and with people like Ben Horowitz saying: "If CEOs were graded on a curve, the mean on the test would be 22 out of a 100." I wondered if I should be IN the audience, rather than in front of it.
I was taught that a CEO needs to be good at three things: money, people and decision making, and my talk revolved around what exactly occupies my time:
- Money: Put simple, don't run out of it. Startups die when cash reaches 0. To me, this means two things: raise financing and manage spending. Fund raising is only done periodically, but can be a 2-4 month whirlwind each time. Updating financial forecasts, setting budgets by department, and tracking return on invested capital, however, are ongoing.
- People: Hire and retain those better than you deserve. Part of this is recruiting, but a lot of it is cheerleading. Convincing the best and brightest to leave their high-falutin' jobs to come grind it out in the trenches with the rest of us, then convincing them that they didn't just take on a job, but a mission. I'm always recruiting, and I'm always speaking to the team, as many of the 100+ people as I can on a weekly basis.
- Decisions: Sales people make sales, engineers make code, managers make decisions. Part of that is "strategy", but I'm still not sure what exactly that word means, the rest is execution. To me, that's listening and learning as much as I can about our evolving and mutating organization, so that when presented with a choice I know which direction to push for. The reality is that I'm often wrong, but the key is to be nimble, to back off mistakes once the picture resolves sufficiently to see. CEOs are forced to make a lot of decisions, in rapid order, and with imperfect information in each case. Its the opposite of a Business School case study - those were complete and may as well have been wrapped in a bow. My day to day is much grittier, layered with real world consequences and emotion, and uncertain.
That's it. That's what I do all day. Given the mean score above, I'm glad there's no easy way to be graded on this.
Apologies to anyone that tried to visit Lot18 between about 11:00pm and 11:45pm ET on Monday night, as the site was unavailable.
Specifically, the site itself didn't go down so much as the whole hosting service we rely on - Amazon's run East Coast data center (East 1) - bringing down other companies including: Foursquare, Instagram, Netflix, Reddit and many others.
As Lot18 has grown over the past year, we've upgraded our infrastructure repeatedly. More servers, more backup, more layers of protection. We now run with multiple database servers, remote backup storage and even the ability to provision and spin up new servers to meet demand (free shipping spikes, for example) with literally 1-click, but when the infrastructure we rely on fails, our site fails too.
Ultimately this was a power failure, and so no data was ever in danger of being lost. It also, and luckily, happened at an off-peak time, so the impact was lessened, but we're still looking into ways to reduce our dependancy on any single point of failure. As the service continues to scale, as more people use the site concurrently, and as the volume of transactions increases we'll make sure to layer on additional security and protections.