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Bottlenotes.com has become the favorite online destination for 20- to 30-somethings who are new to wine and curious about it. Founded by Alyssa Rapp in 2005, the company has increased subscribers of its daily wine tips e-mail from 30,000 in January 2009 to around 130,000 now. Drawing on the popularity of sites like Facebook, Bottlenotes’ focus on social media is what makes the company unique, not to mention successful. This year, while much of the business world is still reeling from the economic meltdown, Bottlenotes expects to double its revenue over 2009, and projects that it will double it again in 2011.
But, Bottlenotes did not start out as a media platform. When first founded, Bottlenotes was essentially a wine marketing firm and e-commerce site. Near the end of 2008 though, Rapp and her team transformed the site into the community- and content-driven site it has become today. The goal, she says, was to make it something akin to a Wine Spectator of the 21st century.
Users can comment on and post photos of wine they’ve tried. The site boasts a matching system to pair customers with a wine suited to their tastes, podcasts with “wine industry luminaries,” and a blog. The company of course has its own Facebook page and Twitter feed, and also plans to launch a mobile application. This transformation, Rapp says, is what helped the company survive the economic meltdown.
The focus on social media is also reflected in the company’s revenue. While Bottlenotes doesn’t disclose figures, 46 percent of its revenue comes from advertising on the site, 42 percent from hosting wine-tasting events and 12 percent from e-commerce.
Rapp spoke with SUCCESS about how she formed the company and why she decided it needed to change.
SUCCESS: How did you come up with the idea for Bottlenotes?
Alyssa Rapp: I was getting my MBA at Stanford. I knew I wanted to be an entrepreneur, but thought I’d probably follow in my father’s footsteps in the real estate or health and fitness space.
But, I ran a wine club at Stanford Business School for a few hundred people with a classmate of mine. We did two to three events a week. I was struck by how intimidated our relatively well-traveled, well-educated peers were by wine. While I didn’t have all the answers by any stretch of the imagination, I felt empowered to find them and to get experts to come and teach us what they knew.
Q: Aside from your experience running the wine club, how else did you realize there was a market for this type of business?
AR: Good old-fashioned market research. All the data shows the wine industry is really booming. In 2004, when I was researching it, it was a $26 billion business. By 2010, it was projected to be a $35 billion space.
The online portion of those sales in that industry was 1 to 2 percent but projected to be up to 10 percent by 2010. It was also a very fragmented market, therefore it was an opportunity to create a new destination, whether commerce, or now, also content and community.
The other attractive trend is that wine consumption exceeded beer consumption per capita in this country for the first time in our nation’s history last year. There’s a sea change happening.
Q: Can you explain why you made that transition from being primarily an e-commerce site to now more of a social media site where wine enthusiasts come to talk about and learn about wine? How did you realize you needed to change your business model?
AR: First of all, times were tough and they necessitated change. At the end of 2008, before the great macroeconomic meltdown, our revenues were growing, and they were growing meaningfully, but I also saw the danger ahead. We were impressed with our growth in three years, but at the same time it wasn’t as quick as I wanted it or needed it to be to build a profitable enterprise.
This role we were playing—as a wine marketing firm helping wineries and importers market their wines directly to consumers—in many ways was limiting our success.
I realized we had the model backward. Where we had looked at the shipping of wine as really the profit center, and the media business as a cost center, what would happen if we reversed the model? What if we thought of ourselves as the Wine Spectator or Wine Enthusiast of the 21st century?
What that means for the website, is that it has had to evolve from an e-commerce platform to a media platform. Our vision for Bottlenotes.com is to turn it into a vibrant community platform. If you go to it today, you’ll see recent notes from the community, the Daily Sip, the quiz of the day, wine of the day, wine word of the day, and soon to be launched video platform.
So that is really who we’re trying to be—that first stop for the 20- to 30-somethings who are new or intermediate wine enthusiasts.
Q: Do you think this idea of personalizing business to a consumer’s tastes and preferences will continue to be a growing trend?
AR: I think that, yes, this notion of niche verticals is an increasing trend. Look at JDate, look at Wedding Channel, look at Good Reads. Whether you’re a Jew trying to find someone to date—and I can say that as a Jew—or a bride or groom looking for information on your wedding, or in the case of Good Reads, looking to other friends for book recommendations, I think with the huge amount of information available, if it’s a subject where personal recommendations are highly valued, like they are in the case of wine, and it’s a subject like wine that inspires passionate dialogue amongst its users, it’s a natural place for there to be a niche vertical, community-wise.
Q: In general, how important is it to have a strong social media component in today’s business world?
AR: I think all businesses need to come up with and develop their social media strategy. All those targeted verticals have to interplay with the Facebooks of the world and the Twitters of the world. You can’t create this silo and not interact with social media and the rest of the community. I’ve seen data that shows that luxury brands with more Facebook fans in 2009 showed higher average sales than those without. Maybe it’s not your fan page driving sales directly, but your brand awareness, as reflected by the fans on your page, does translate to sales.
Q: What obstacles did you have to overcome, particularly when you transitioned your business from e-commerce to a media business?
AR: We had to find believers from our investor base. We said, we’re going to retool this business, and it will take additional capital to switch gears. We weren’t starting over, but starting anew nonetheless, and that requires new capital and new types of e-members. Needless to say, fundraising in the worst economy in 90 years has not been easy. We’ve gotten it done, but it’s been not without blood, sweat, tears and battle wounds.
Sometimes, it’s really just about perserverance. It’s about not giving up. It’s about looking all the challenges in the eye, acknowledging them, acknowledging the fear, acknowledging the stress, and just saying ‘Alright, you’re here, but I’m just going to keep on walking right past you, keep trucking uphill.’
Q: Do you have any other advice for entrepreneurs and small-business owners?
AR: Raise two to three times the cash you ever think you’ll need. And surround yourself with phenomenal, like-minded, great team members who are in it for the long haul and excited for a challenging climb.