They’re now at half the total employees as a year ago. Over the last 4 months or so, I’ve noticed fewer and fewer bottles on wine flash sale sites worth hitting the buy button (with exception of lastbottle).
Are there any non-winery based wine clubs you enjoy (such as the WSJ, NYT)?
Lot18 made several missteps – bad business model, quite possibly the worst website I’ve ever seen, poor offerings, lack of focus (e.g., they diversified into luxury travel), etc. It’s just a matter of time until they fold, although perhaps some idiot will come along and try to “rebrand” them, which almost certainly will also result in failure.
The rebranding has already started - they are moving to a subscription based model, which is also unsustainable, IMHO. They need maybe 2 employees total for such an operation, as everything can be outsourced or shipped directly from wineries or distribution centers.
I’m still absolutely shocked they were able to raise $30million for a RETAIL operation. Ugh.
Getting people into subscriptions is quite challenging, and expensive. WSJ is able to do it easily as they have some pretty significant FREE advertising…
regarding the article comment for Snooth as proof of a market, I’ve NEVER heard anyone every mention them in a wine conversation. I think I registered there long ago but I’m not even sure what they do, honestly. (other than the CT scrapping scandal.)
same here, registered eons ago and never went back.
myspace and friendster also had a huge registered base but as history shows it, did not live up to the promise. sometimes (not all the time) i really feel that there is too much hype drummed up by certain VC funded companies (ahem… groupon…ahem) without a really solid business model aside from the temporary hype that they initially receive. it almost feels like a game of pass the hot potato…
on the other hand, this might just be the nature of the beast, they don’t call it VC for nothing. nothing ventured nothing gained i guess…
BTW, people are predicting doom and death, but is that really the case? With 100 employees at an average loaded coast of $100,000/year that is still only a $10mm burn. Obviously they have done other expansion and contraction, but I would imagine they still have plenty of resources to figure this out. Right?
Why are you shocked Todd? Get on some startup beta lists and you will be not only shocked but appalled at the quantities of bad ideas (often duplicates of the same idea) that get funded by VC money.
I guess I’m shocked because for a company that has 3 years of consistent profitability, a real business model, steady and rapid growth, and a gigantic market share not yet tapped, it seems impossible to get a tiny little loan of any sort, yet this idea - glorified retail - gets tens of millions. That capital is GONE, while other businesses, like mine, struggle to find tiny bits of capital with no luck, despite the aforementioned advantages over a pipe dream.
I totally agree with you: it happens 100’s of thousands of times a year maybe more. VC’s are looking for the big payout, a modestly successful and growing company is often not of much interest unless there is some sort of scale play. You also might not be connected to the right people.
Yeah, it’s probably 99.999% about the connections. Seems funny, however, that so many VC funded companies fail, and that money just goes away. I’m sure some payouts are good, but are the sufficient enough to overcome the many losses?