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Damon Pistulka, Michael Houlihan
Damon Pistulka 00:04
All right, everyone, welcome once again to the faces of business. I’m your host, Damon Pistulka. And boy, do we have a special episode for you today. With me, I can’t believe I’m saying this. I have Michael Houlihan, founder of barefoot wines. And we’re gonna also be talking about business audio theater. But Michael, thanks so much for being here today.
Michael Houlihan 00:30
Great to be here, Damon, thanks for inviting me.
Damon Pistulka 00:34
I just I’m really excited. I gotta tell you, it was talking before talking to you before this. Before today, even I’m so excited that we got to connect and talk because you with barefoot lines? You did you kind of created your own. And we’ll talk about this a little bit, you kind of created your own segment in the wine industry. And it was really interesting. But getting to read the Barefoot spirit, your book, it’s a New York Times bestseller if people haven’t heard it, go out and get that that’s worthwhile.
And then we’re going to talk a little bit later about the business audio theatre where you’re telling that telling the story of business entrepreneurs and founders and their until their legacy lives on. So I’m just really excited about today. So let’s have some fun. Yeah, let’s do it. I just that was it. That was a mouthful. But Michael, kind of give us a little bit of your history up until you started in the wine industry.
Michael Houlihan 01:37
Wow. Well, you know, it was really varied. I, I sampled from a lot of dishes before I chose my main course that’s for sure. But one of them well, when I got out of college, you know, I had studied Business Administration and public administration. And so I went to work for the city manager of Anaheim, California as an intern, while I was going to school at what was called Long Beach State College in those days, but it’s California State University, Long Beach, and graduated from there.
And then I job opened up in San Francisco, and I took it and it was working with the federal government, which was the Housing and Urban Development and the SBA. And they were in those days, they were rebuilding the cities, they were helping the cities basically rebuild their downtown’s.
And they did this in San Francisco, Oakland, Seattle, Los Angeles, they did these mammoth projects. And in the process of doing these projects, they had to move people and businesses out of harm’s way, they would like take six or seven blocks and level them. And then they would come in with a plan and they would rebuild them. Well what happened to the people that were in those six or seven blocks. So that’s where I come in. So they would get these young guys coming out of college, to go in and talk to these people who were about ready to be moved. And so I became a business relocation specialist, they called me.
And so I would go in and talk to folks who were in business in a project area. And I would help them get their business codified to the point where they could be moved to a new location and stay in business and not sue the government and will. So it was cheaper for the government to help them. So I became a business consultant before I knew it. And I was doing things like, you know, documenting businesses, like little bits, like hardware stores, you name it, you know, from the time they unlocked the key in the morning until they locked the door at night.
Everything was documented, you know, how you clean the train, you know, how you smile for a customer, you know, all that stuff, how you make a bank deposit, how you hire, how you fire, all that stuff. And so writing these big manuals, and after doing like maybe 10 or 15 of these, I began to realize that there was a lot of principles that business had in common. And there were things I learned in one business I could apply to another. And then one day I quit my federal government job because who was the federal government, right?
You gotta wait for your boss to die, you know, to get a raise or promotion. Yeah. And my grandmother, my Irish grandmother, who was still alive, said, Gee, Michael, you know, you had all that security, how could you give all that security up, you know, and I said, my grandma, you know, I wasn’t going anywhere. So I became an entrepreneur at that time, and I started a couple of different businesses. And I started getting calls from some of these people that I’d helped working in urban redevelopment. And they said, you know, you did such a good job moving my business. I like to expand my business, can you come and help me expand my business?
So I began writing basically what we call today franchises. And in the process, I became a business consultant. And I realized that I didn’t have to be, you know, living in San Francisco, that I could live anywhere I wanted to, with this skill. So I moved to the wine country, I wasn’t really a wine guy. But I loved I love the river, and I love the, you know, the redwood forests, and I love the ocean. And you know, I mean, that’s where I would run away to every time I had a chance to escape the city anyway.
So I was an urban refugee. And when I got here, I met this beautiful girl that I wound up sticking with for like 39 years, Bonnie Harvey, and she was also a consultant. But she was in the other end of the business she was, she was helping people organize their offices and, you know, collect debts and stuff like that, the nitty gritty. And I was basically helping people subdivide their property and expand their business and stuff like that. But when you move to the wine country, you get sucked into the vortex of the wine industry, because that’s where the money is. So we wound up working for people in the wine industry. And that’s how we got involved. And so that’s the background.
Damon Pistulka 06:23
Yeah. So so
Michael Houlihan 06:25
there’s any crazy Hi, Damon, no, I
Damon Pistulka 06:27
know. It’s awesome. But you talking about Barney? And I still, I remember reading the, the part in the book where you talk about when you first saw Barney, when she came into that bar? Can you explain that a little bit? Because I think that that
Michael Houlihan 06:43
well, you know, that was, that was a long time ago, okay, in a galaxy far, far away. For one thing, we had live rock and roll bands, you know, with a four horn rhythm section, lead guitar, bass guitar, scratchy rhythm guitar, you know, drums and Congress. I mean, when this group took off, everybody danced. And in those days, you pretty much had to ask a woman to dance. You couldn’t just get up there and dance by yourself. And the women weren’t up there dancing by themselves. But the women were in control, because they could say no, right? Yeah. You know, and if enough women said No, you’d have to leave the club, right? Yeah.
But I was talking to my friends cup male friends, and we were in this club that we liked in Santa Rosa, California. And this woman came in the door by herself. And I was impressed with that move to start with. And the street light was shining from behind her. And she was wearing a really sheer dress. And I said, Excuse me, guys, I’m in love. And they’d heard me say that before. But this time, I didn’t show up for four days. It was, you know, I met somebody who I had something in common with, you know, just beyond the obvious male female attraction.
It was business, we were both business heads. And we would talk about business in really objective terms, you know, and after, you know, and I and I would, I’d say, Well, have you discovered this? Yes, I’ve discovered this, and what do you think about that, and we were, we were just eating like a couple of nerds, you know, business nerds. And so, you know, I was with her, I guess, for about less than a year. And she came to me, and she says, You know, I have a client. He’s a grower, and, you know, he’s owed for three years for his grapes.
And this winery hasn’t paid him a dime. And I noticed it on his books. And I was wondering if you’d go talk to these what this winery and see if you can settle this debt? And so how much is it? She says, oh, it’s only about $300,000. And I’m thinking to myself, you know, did I just marry the mob? Or what? You know, to go press somebody for 300? Large? Yeah. So I do and did. Yeah. And the only thing I can get out of it is wine and bottling services, because they had declared bankruptcy the day I showed up, they had no money. So I wind up with wine in bulk and bottling services.
And, you know, now I got to come up with a label and I got to come up with you know, a distribution system and a marketing program and, and all of this stuff, I have to learn the laws in every state and you know, but I don’t know that see? Yeah. So when I give it to Barney, and I say, hey, you know, I got it solved here. I got it. I’ve got a trade agreement for 300 large instead of money. You know, we can do that other stuff. Let’s just do it. Business and, you know, we’ll clear this out in a few years. You know, how hard could it be? Yeah, 1020 years? Yeah. I mean, we got our butts kicked for the first 10 years. And then we did some butt kicking for the next 10 years.
So it’s, you know, even though we were business people, I think that that’s what kept our humor is that we were looking at everything, you know, in an objective way, instead of getting subjectively involved in it, we were going, look what’s happening in this situation? What does it mean? Right. And, and we were taking notes the whole time, you know, and I mean, Bonnie and I, we’ve written over 4000 articles on business. And each one of those articles was like, a hard way less than, you know, from taking notes, you know, basically growing up in the in business. So that’s, that’s how Barefoot Wine gets started, you know, is now the largest wine brand of all time.
Amazing. But it gets started that way. And you know, at the time, our first office was in a little laundry room, you know, in a rented farmhouse. It was about seven feet wide, about 12 feet long. And the only reason we made an offense out of it was we couldn’t afford a washer and a dryer. My desk was a door with you know, to choose saw horses in front of, you know, a hot and cold water, you know, service, a dry read. I looked at that for a couple years. Well,
Damon Pistulka 11:41
so it’s so interesting, because you went in to settle this debt, you’re gonna negotiate the debt. And they said, well, we don’t have money, but we can give you a wine and we can bottle it for you. And you’re saying, okay, but you before that you did you have any knowledge about what it takes to sell wine, the legal the nothing like that. Not
Michael Houlihan 12:05
a clue, Damon, not a clue. You know, and what’s worse is, we didn’t have any money. So like, you know, I turn around now, in retrospect, the reason that we were so you could call it creative, but I caught resourceful. And the reason that we were able to really turn over the wine industry was because we had no money and no knowledge of the industry. Because if we did have the money, and we did have the knowledge, we would have thrown money at things like advertising, and offices and, you know, material and all that in, you know, in what we did was extremely efficient. We took a look at it, we said, what’s the value proposition here?
You know, is? Is it the vineyards? No. Is it the winery? No. Is it the offices? No. So it’s not bricks and mortar, you know, what’s the value proposition? It’s sales, okay, very simple. It’s sales. So if you’re not making sales, you don’t need all that other stuff. And so many people get in business.
And the first thing they do is spend a lot of money on a big millstone that pulls him down in the river, you know, what the heck, I mean, there’s months when you don’t have sales, there’s years when you sell less than last year. And the fact of the matter is, if you’ve got that kind of financial commitment out there, it’s going to bankrupt your company, you’re not going to get going.
And today, we work with startups, we advise startups and we even help investors who are investing in startups. And what we want to know is, are they really lean? Let’s talk about Lean let’s, let’s really talk about being resourceful. Let’s talk about what is the value proposition here, and let’s not get distracted by what everybody else is doing?
Damon Pistulka 14:04
Yeah, yeah. Cuz I mean that in the book, and I’m going to ask a few questions about that. I mean, there is the, the Oh, I got in my notes here. The guy Don Brown at Lucky supermarket that seemed like he was he was a hardball person that really taught you a lot about what you needed to do to get wine into these grocery
Michael Houlihan 14:30
stores. Well, you know, when you are not born into the wine industry, when you come in from the outside or any industry, and you’re broke, and you’re sitting on $300,000 with the product, you’ve got to move it you got to you know, and so now we’re back to sales again, but you’re not going to just sell it by putting up a sign. And so, you know, you got to be a little bit humble. You’ve got to be hat in hand.
You’ve got too, you got to, as we say, make friends in low places, you know, work with people who’ve got real dirt under their fingernails. I don’t care if they’re driving a forklift, I don’t care if they’re driving a truck or, or running a big bottling line, you ask them their opinion about what sells and what doesn’t sell. And you go to the buyers, well, this guy, he was gruff.
You know, he’s played in the business theater, you know, by incredible actor, and really comes off snarky, which he was. And, you know, I just, I just said, By the way, he was the buyer for a large supermarket in California, that had over 250 stores. So I mean, this was Plan A, you know, we bottle it up, we put a brand on it, you know, we sell it to the supermarket, they sell it, we get the money, we pay off the debt, we’re out of there, right? With maybe $1,000 in our pocket, you know, but no, no.
Yeah, he says, first of all, you won’t see me for four weeks. And then he goes, Yeah, you know, I, I, what are you? What do you want? What do you want? You know, what do you sell it? You know, make it fast. I don’t get all damn really busy says this, like whiskey voice. And I said, Well, I said, you know, we made a trade for a debt for a client. And you know, we have about $300,000 worth of wine. And we can give it to you any way you want. How do you want it? And the guy sits back for the first time. And he, he really, he really changes his look on his face.
And he goes, Wow, he says, you know, he says, nobody ever asked me that before. He says, You’re the first person to come in here and asked me what I want. Everybody else is telling me what they want. They want, what they’ve done. You know, what the prices are and what the programs are with the marketing is, and you come in here and ask me what I want? Well, I’ll tell you, he says get out of pencil. He says, Can you know, write this down? So I said, Okay, he says, are you ready? I said, Yeah, he says, okay, he says, give me a salt and pepper and make it better.
And Bob cheaper in Bob and put in a pig. He says, you got that. And I’m writing this down salt, pepper, Bob pig. And looking at it. And I’m thinking to myself, shut up. And he says, Can you do that? And I said, Yep, we can do it. And suddenly, he says, I gotta get out of my office, you know, and I’m about halfway down the hall and he goes there. And another thing he says, he says, Don’t make the label, you know, a castle or a chateau. It don’t make it a leap or a bridge or lake. He says, I got too many of those. I can’t sell any more. He says, he says, make it a name. That’s the same as the logo. The name is the same as the logo and make the logo visible from four feet away.
So, she can sit when she’s pushing her cart. All right, now get out of here, you know, well, I just got the equivalent of a master’s degree in, in, in wine merchandising, or, for that matter, any kind of brand, you know, a package that merchandising in about 37 seconds from a guy who didn’t want me in his office, and he was telling me the truth, and he’s yelling at me, right? And he was kind of, you know, irritated that I was so dumb about it. And so I go to my friend, I said, Can you translate this for me? He goes, Yeah, what do you got? And I said, Well, what is the salt and pepper act?
He says, Oh, that’s easy, says red wine and white wine. So tell me who’s Bob? He says, oh, that’s Robert Mondavi. Wow, gotta be better than Robert Mondavi. Gotta be cheaper. That’s gonna be a taller. I said, just tell me one last thing. What’s a big? He says, oh, a pig. He says that’s the big fat bottle of wine. It’s not the 750 milliliters, not the one we think about that’s the fifth. This is the big fat 1.5 Magnum. Oh my god. So this guy is telling me that the way to enter the market is with a 1.5 liter package. I would have never thought of that in a million years. So yeah, so the guy was rude. But he was given me the keys to the kingdom.
Damon Pistulka 19:22
Yes, yes. Because like you said, and this is what I was Facebook. I was thinking this guy was telling you that the most critical information from someone that has to sell just a gazillion cases of this stuff every year he would say make the label big enough so people can see it from four feet away. Well, that’s brilliant. How many times have you had to pick up a wine bottle and look like this? You know just about get out the magnifying glass to read anything on it if you wanted to. And then he was talking about get a big enough bottle that it doesn’t have to be a 95 plus Vala line, it just has to be this it has to be a decent wine in a big bottle that people can see what it is and recognize the brand.
Michael Houlihan 20:12
Yeah. And he was telling me where he had a space on a shelf, not just his shelf, but every chain store in every package store, there was an opportunity to compete at the 1.5 liter package. level. And that was incredible because that, you know, we have a saying at barefoot, you know, strike where the enemy is not. And so the enemy was not at the 1.5 level, they were at the fighting varietals in the 750s. So we got established in the big package. But, you know, it wasn’t that easy. Nothing’s, you know, you can’t say that was the one thing of course,
Damon Pistulka 20:54
NO, NO and NO, in through the book, you talk about, you know, just all the trials and tribulations of of actually growing it, but and not, but we’ll get to that. So, back to the 300,000. In line, how long did it take you to sell that first $300,000 worth?
Michael Houlihan 21:13
Well, it took it turned out to be about 18,000 cases. And it took us probably a year to sell 18,000 cases, which is actually we didn’t know it, but was really fantastic. Because they’re out there that only like 6000 cases a year wineries, and we were selling that a year 18,000. And when I went back to Mr. Brown, and I said, Look, I’ve done everything you asked is the salt and pepper act. It’s in a pig. It’s the same price as Bob, it’s about the same quality. And you know what? She can see it from four feet away. And we got a name barefoot, it’s the same as a logo of barefoot. Yeah. And, you know, it’s everything you asked for. I said, How many truckloads Do you want?
He looks at me like I’m from Mars. And he says, Are you crazy? He says, you put a foot on this. He says, nobody’s ever seen a wind with a foot on it. Nobody knows barefoot. He says, Are you going to put a million dollars into advertising? I said, Are you kidding me? I don’t have $1,000. Right. Now, no, I’m trying to trade. I’m trying to trade it away this asset here for money, so I can pay my debt? And he says, Well, he says, I can’t take it. No chain store will take it note, no box store. I’ll take it. Because nobody’s ever heard of it.
And if you don’t want to put money into advertising, you know, I don’t know what to tell you. So what am I going to do? I said, I bottle it all for you. He says, Well, he says, I guess you gotta go sell every mama Papa and every independent, you know, because the big boys are not going to have anything to do with you. So I go out and I start selling these little mama Papa in independence. So they got the same problem that Don Brown has, you know, is there any advertising behind this? We’ve never seen anything like it. And you know what it was not selling? I mean, I can’t kid you.
It was not selling. And so a month or two went by and we were freaking out because the chains weren’t touching it. And the locals were looking at it like, Are you sure about this. And so then we get a call from a guy in Chinatown in San Francisco, who’s the head of a, of a neighborhood association. And he’s trying to raise money for slides and swings and sandboxes in jungle gyms, or an after school park for kids in his neighborhood to keep them off the street.
And I mean, I really identify with what the guy is trying to do, but I can’t help him. I don’t have any money. You asked me for 50 grand. I answered the phone. I said, Are you sure you got the right number? He goes, Oh, yeah, this is your very wealthy, you know, well known business you can. And so I said, Well, I don’t have any money, but I’ll give you some wine. And maybe it’ll loosen some people up to write a bigger check couldn’t and you know, maybe you can auction it off and raise money and buy a few slides. He says okay, and I don’t hear from him anymore.
But I noticed that the sales in his neighborhood take off. And I thought to myself, this is really interesting. Yeah, I wonder if they’ll take off in another neighborhood. So we went to another neighborhood, found out what they were trying to do, gave them money for their not money, but gave them wine for the fundraiser. I wish I had the money and sales took off in that neighborhood. And we call that worthy cause marketing.
It was before cause marketing. And the idea was to get them to get the members of the nonprofit, to give them a social reason to buy our product and to turn customers into advocates. And so that’s how barefoot got started. And we supported now before, like I told you, I fell in love with wine country because of the trees and the ocean and the river. I didn’t say I liked the wine a lot. Well, that was our passion. Both Bonnie and I work conservationists, because we both grew up in big city, she grew up in Portland, I grew up in San Francisco, and we saw all the infilling, we saw all the suburbs, we saw just getting bigger and bigger.
And for us as kids, it was harder and harder for us to get into nature. We had to drive, you know, when we were kids, you can walk to nature, but then you had to drive to and then you had to drive an hour, and then you had to drive a couple hours, it was crazy. Because the cities just kept getting bigger. And so we were conservationists, and that was our passion. And we figured out a way to use that passion as an advertising program by supporting groups that were doing just that. Wow. It’s interesting.
Damon Pistulka 26:00
Well, it is and that’s the thing, and I think your need to be frugal. It’s like you said, if you would have had all kinds of want of money, you would have just done like everyone else, you would have been out there buying the ads, making the flyers, the big displays and everything else. But as you’re doing the worthy cause marketing, you’re able to drive a grassroots customer base. And then were you then able to your selling wine then into the local mom and pop grocery stores around these areas where you’re doing the worthy cause marketing? Is that how it kind of started to organically grow? Or how did it?
Michael Houlihan 26:42
Well, you know, it’s interesting, because, you know, the guys from Stanford will tell you about target marketing, they call it. Yeah, this was targeted marketing. We were, we were supporting groups that were within 10 miles of the retail stores where our products were for sale on the shelf. So these were like in the same neighborhoods. Okay, so the folks that were coming in, had seen our brand at their fundraiser and thought to themselves, Oh, I know, these guys, they support us, you know, for the kids park after school kids park, you know, I’m going to try their wine out.
Oh, you know, it’s pretty good. Maybe I’ll tell my friend, because maybe they’ll support us some more. And so that’s how we did it. But you know, we weren’t, we weren’t bragging to the general public and saying, Oh, we’re supporting all these worthy causes. We’re good guys. And that’s why you should buy our wine. We weren’t even do it. We weren’t talking to the general public. We’re only talking to the nonprofit organizations and their membership, because we had no customers. So we thought, well, heck, if we can get some customers, you know, we’re better off and having done. Yes, yes.
Damon Pistulka 27:58
Oh, my, that it’s so interesting and innovative too. And in the time, you know, you really took that along ways to develop that as your main way to market and you helped so many good causes by doing it.
Michael Houlihan 28:14
Yeah, absolutely. We took it across the United States, we backed groups in Oregon, and you know, save Delaware Bay Of all places. And you know, the O’Keeffe and okie and Florida, and you name it, I mean, we found these conservation groups, and we supported them. The Surfrider Foundation started in California, and wound up being in every city that’s in every beach around the United States, you know, including, you know, places like Michigan, you know, yeah. And, and we supported them, we helped them with their fundraisers.
And they supported us, because they saw that we were real conservationists at heart. And it wasn’t just a scheme to see how much wine we could sell, you know, it was like, a real thing. And we did something for them that they couldn’t do for themselves. We took their goals, and put them on tags on our models in the supermarket, which was a venue that they could not get to, to promote their goals. So all of a sudden, they had a new platform that they didn’t have before.
And that helped them get the word out about what they were doing. And who are they getting the words out to our clients and who are clients, their women, their 37 year old women with two kids of course, they’re concerned about how clean the beaches and how clean the ocean Yeah, right. Of course, they want to save the parks. You know, that’s where they go camping in the summertime. So this, this was a really nice marriage for us, and we speak a lot about it in our book. But we have helped hundreds of companies find and pair with worthy causes that help them sell their product. And they help the causes promote their goals. Yeah.
Damon Pistulka 30:23
Yeah. So that the way when you think about this, this is really a special marriage, because for the organization’s by you hanging the tags on the wine in the store, you are bringing a, like you said, a new level of awareness for them. Because you can have a Boys and Girls Club down the street that nobody would ever hear about, or whatever the organization is.
But with that tag hanging there, that person that’s in there, the mom that’s in there buying a bottle of wine, now she sees something about Boys and Girls Club, she associates the wine with a good worthy cause. So when you’re sitting here and for you, when you’re looking at this, all these different bottles of wine to choose from, I’m going to choose the one that’s going to support the worthy cause in my area.
Michael Houlihan 31:11
Right? Well, that’s the thing. You know, we believe that all marketing is local. And the more local you get, the more powerful you get. A lot of people I don’t know, what’s going on in America today is that we’re getting to the common denominator of corporate style, which is things get systematized things get standardized. And what are they doing at Nike? And why aren’t we doing that over here at Adidas, you know, and, you know, maybe there’s a good reason you’re not doing it, maybe it doesn’t really work for them? You know, maybe they don’t know it isn’t working?
Damon Pistulka 31:53
Well, and it’s not the same business, right? I mean, every
Michael Houlihan 31:56
meeting Exactly. But you know, you have this, there’s, what’s happened is we’ve professionalized the various different silos, within corporations, to the point where they’ve got their own national meaning. They’ve got their own website, they know what people are making, and other companies that do what they do. So they become hired gun, so you don’t have the kind of loyalty that we used to have. In corporate America. You now have this kind of a systems kind of like sports people get traded off, right?
Yeah, no, it’s when I remember. What are you? What are you rooting for? Anyway? It’s laundry, right? It’s a uniform. Yeah. And that’s it’s uniform. So we tried very hard to break that mold. We involved our people in all aspects of marketing and merchandising, and I don’t care if a guy was an accountant. We had him in the store, you know, so he had to see what was really going on?
Damon Pistulka 33:00
Yeah, yeah. Well, and so when did you get to the point? You said you struggle for 10 years, and then you killed it for 10 years? When did you get to the point that you said, I think this is gonna be a business that might go somewhere.
Michael Houlihan 33:16
Well, when we started to see that California brands like Trader Joe’s, were using barefoot as a way to introduce people in Iowa, to what’s going on in California. And we’re coming right to Des Moines, Iowa with Trader Joe’s. And you can go there on Saturday, and shop and see what the people in California are buying right now your kids are going to school in California.
And California has always been this kind of like, I don’t know, destination location. I don’t know why I’m in California. But we’ve got yet more problems than they do. But the thing is, people have this magical thing about it. And so when I saw that these companies were leading with barefoot in their wine sections, I realized that it was because barefoot was fun. It was retail entertainment. It wasn’t stodgy. It was a way to add color, and life to the wine section, which looked like a morgue for God’s sake.
You know, it was just not fun. And everybody was serious as a heart attack, you know? And if you didn’t know French words, you know you were out of luck. You’re not gonna go tell somebody in the Midwest to learn a bunch of French words so they can drink why? But if you show them a barefoot, they’ll laugh and they’ll go Okay, now here’s something I can relate to. It’s a very American image. So that’s, that’s what we when we saw that we went okay, this is going somewhere and That’s when we realized we had to shift gears and go from basically an entrepreneurial mindset to a much more international mindset, because we expanded into 28 countries at the same time.
So it was an expansion can kill a business too, because, you know, you can, you can expand so fast. So we lucked out, we really lucked out, we got a new CFO, who was a cost accountant. That’s different than a general books accountant, a cost accountant, is the kind of guy who can say to you, you know, you’re thinking about expanding, but you know, you really shouldn’t expand into New York because the cost of selling wine in New York is three times more expensive than the cost of selling wine. In South Carolina, you should just concentrate on South Carolina.
Now, that’s the kind of advice that people need to get in business when they’re in that critical expansion mode, which is it’s not the cost of goods, it’s the cost of sales. Do you have to have a person in the market how much does that cost? How much for dinners to kiss everybody’s but you know, how much for free cabs, how much for T shirts, how much for this? How much for the all this promotional material? And then you know, all these other costs? Like what are the taxes?
What is how much does it cost to move stuff around? What is shipping? You know, what kind of percentages are the retailers taking those kind of so we expanded into the southeastern United States, which was primarily supermarket laws you know, every state in the United States has a different mentality regarding alcohol. New York has the bottle shop mentality one person can own one shop that’s it. So it’s not like a chain store. You’re not gonna sell one guy and be an all the food lions or you’re gonna sell one guy and be it all the Publix. Right? So that’s why we expanded with caution. And with the direction of a good cost accountant. Yeah.
Damon Pistulka 37:18
Yeah, that’s, that’s incredible. So you’re sitting here, things are starting to hum. And you ended up selling the business you guys were doing? I think it was if I remember, right, or like 600,000 cases a year or something like that, which is, you know, we were one of the biggest brands in the world at that time. Right? Or in the US anyway, in the US
Michael Houlihan 37:39
fastest growing, fastest growing banned in the US and top 20 in the US.
Damon Pistulka 37:44
Okay, so then you ended up selling to Gallo?
Michael Houlihan 37:50
Yeah. Yeah. And we wanted to, yeah.
Damon Pistulka 37:59
So so, you know, I’m in I’m an exit business we help people sell. So were you thinking about this up to the point that it’s like, hey, it’s time for us to move on, we need to find somebody to buy or did it just happen?
Michael Houlihan 38:15
You know, there’s three reasons to go into business. One of them here is, Oh, I love it, you know, it’s my passion. You know, I love throwing pizza, I’m gonna have a Pizza Hut, and I’m gonna throw pizza. That’s fine, as long as you’re throwing pizza, okay, and you, you really love it, and you don’t care about your time. And then the other one is, you know, my kids are going to take over my business is going to be a legacy, I’m going to hand it off to my, you know, my oldest daughter, and she’s going to take care of me when I get old.
Well, good luck with that, because she’s gonna want to sell it about six months after you pass. And then the last reason for going into business is to build brand equity and monetize it, or in Straight Street English, build it to sell it. So the whole idea here is that Mr. Big doesn’t come knocking one day, I feel sorry for you. If he does, cuz you will not be prepared. If you’re going to exit your business, you want to do it deliberately, and you want to think about it from day one. In other words, you want to really think about who are the top five, you know, suspects that would buy my business and why?
You know, is it a vanity buy? Is it a strategic buy? Isn’t a bolt on? You know, why? Am I doing something in a space that they’re not? Is this going to help them? Do they want to destroy the competition and I met, they have all these different reasons for wanting to buy your business. But the idea is that the more prepared you are, the more you’ll make, because the moment that the word gets out that your business is for sale, you lose value right then because your salesperson leaves You know, your largest buyer says things like, you know, I’ve been waiting for you for years.
But you know, this time, I’m going to pass because I want to see what the new owner is going to do, I want to know if he’s going to guarantee the product, I don’t want to get stuck with product. And so the idea is you keep your mouth shut, and the last person that finds out that your business is sold, or the people that work with you buy from you and supply you, in other words, your stakeholders. So in order to do that, you really and by the way to answer your question, Bobby and I wanted to sell it from day one, we just couldn’t do it. You know what I mean?
It’s like, I used to be a surfer. There’s some ways you just can’t kick out. You got. I mean, if you try to kick out, you’ll break your neck. See? So the idea is, I mean, we were surfing on this wave of debt. Right? And, you know, that’s, that’s the thing that you got to think about when your own business. I mean, so you make a couple of $100,000, one year, what do you say, Oh, honey, I think we should build a swimming pool, oh, no, let’s have the airplane, you’re gonna do any of that, you know what you’re gonna do, you’re gonna buy a new rep in Iowa.
See, and there goes your 200 grand you thought you made, you didn’t make it. In other words, you don’t make any money. Really, if you’re playing your cards, right? Until you sell it, that’s when you really cash in. And that’s why it’s so important to understand exit to prepare for it. And to have the strategy. You know, it’s not like Mr. Big is going to notice you, you’ve got to get your peanut in front of that elephant. And that in itself is a strategy. How do you do that?
You know, it’s strategic management, you’re making decisions every day? And you’re saying, is this going to get our brand in front of the person we would like to acquire US? Is this going to make them notice? Or am I going to do this over here? So yeah, so it’s not like you have these freedoms that you think you do? You know, you’re up against this desire to sell your business? Well, you better make decisions that are going to make your brand valuable, perceived as valuable, interesting, to your acquirer. So that your acquirer says, you know, if I don’t buy this, my competition will, this brand is getting too big.
Here’s the other thing. You got to go to lunch with a broker, you got to go to lunch with a broker, and you got to say, Listen, have you sold any businesses like mine in the last year? Or do you know anybody who has? What did it sell for? What was its rate of growth? What was its market share? And on and on and on until you know, all the metrics that happened as a result of that business selling? Most you don’t you don’t sit out there and say, I think we’ll have some business goals.
Oh, what are our business goals? I’m sorry, they’re already written, the minute that you went into that business, the business goals were written for you. And they were written at the last transaction of the business. It was just like, here’s the sole. Say, yeah. And so the idea, and that’s why we are valuable to our clients, because we help them get out of business, and we understand what they have to do. And sometimes it’s totally, you know, counterintuitive. But it gets them the attention they need, it gets them the identity that they need. Yeah,
Damon Pistulka 43:31
yeah. Yeah, that’s awesome. That’s awesome that you intentionally built it to sell it. You sold to Gallo, you worked for them for a couple of years to make sure the brand carried on, and then I think you, you, you did this pivot, and you started the business audio theatre, I want to talk about that for just a moment. And what got you so explain the business audio theatre, first of all,
Michael Houlihan 43:55
okay, so, you know, Bonnie and I, we were asked for years to write a book about barefoot. And, you know, we wrote a book, but we didn’t like it, because it was the standard business book, here’s the three things you got to do the five things to never do, and the 20 things your customer wants from you, you know, it’s all outlined for you, you know, that’s prescriptive text, and it’s boring, and you’re not gonna get a 24 year old to read it.
And so, and they’re the ones that need to read it, you know, the next generation. And so we said, well, let’s do a business adventure story. You know, it’ll be a cliffhanger, you know, you won’t know are they gonna get arrested? You know, are they gonna get foreclosed upon? Is the bank gonna take everything? Are they going to lose their top salesman? Are they going to lose their top buyer what’s going to happen? See, and you find out in the next chapter, and so we wrote it like that. And we and then people started saying, Oh, you got to speak at our school.
So we spoke at 60 schools that teach entrepreneurship around the world, including Oxford which we spoke at Just two weeks ago, in India, and your ego, and these, these young people love business presented this way. And about maybe five, six years ago, we noticed that they were all coming in wearing earbuds, you know. And so, you know, I’m a boomer, so I asked Boomer questions. I said, Well, you know, what do you listen to? Is it rock and roll? Is it hip hop? What is it? He said, Oh, no, I’m listening to a podcast on how to improve my business. And other woman said, No, I’m listening to Warren Piece of dancing so long, I can’t sit still for it.
So I looked at Bonnie, she looked at me, she says, We got to do this, we’ve got to do an audio book. So we went out. And we bought the top five business audio books from Audible, and we listened to them, and they’re all great. I mean, I learned something from every one of those books. And I mean, I have a lot of experience, and I learned all new stuff. So I highly recommend that you do this. But what I didn’t like was that they were all read to me, they were all narrated to me. And I didn’t like the idea that they were prescription, you know, I’m telling you to do this, we did this, and then we did that. So it’s first person.
And I thought to myself, you know, we’ve got to do an audio book. But you know, we really got to think about so I’m driving with Barney from Phoenix down to Tucson, which is one of the most boring drives in the world. And I mean, you get to see some airplanes that are sitting there because it doesn’t rust, it’s so dry. And so here comes guy noir, Private Eye on NPR, on a radio station that we’re listening to, because we always go to the lower end of the FM’s and listen to, to NPR. And it’s, it’s, it’s a 1945 radio show, you know, with sound effects and musics.
And, you know, I knew she was trouble when she walked into the door, you know, or whatever. And, and so we thought, that’s the format we need to use. It’s really audio theatre. It’s not, it’s not, it’s not read to you, it’s performed for you. And we thought, This isn’t very interesting. It’s expensive, right? Because you gotta have actors and actresses, and you gotta sound effects. And you got to have, you know, technology to do this. But it all exists. And Hollywood’s come a long way.
So we get company in Hollywood, which we become really good friends with, in Sherwood players productions, and we work with Matt wineglasses, great director down there. And he’s done a lot of movies in his own right. And we said, well, you know, we’d like to do something like a movie, but you don’t need any cameras. It’s all going to be you know, audio. And he said, I love this idea. So we take our book, we turn it into an audio script, and we do it. And it wins top five audio books of the year from the audio book Producers Association in New York and 2020. And we’re talking to one of the judges. And she says, We’ve never heard anything like this. In the business world.
This is nonfiction presented like fiction. Yes. And so then we started, you know, then we got critical about our own business what we were doing, and we thought, I wonder if anybody else would like this. And you know, I’m network pretty well. So I, I asked my network, and I got in touch with a guy who’s in the medical business, and I want to protect his privacy. And but he asked us to do an audio book for him. It’s three hours long. It’s six, one half hour episodes. And it’s punctuated by little podcasts with the real doctor, so and so, you know, what were you thinking? Doc? Are you crazy?
Why did you do this? But he gets to tell his story in the third person. Yeah, so somebody’s acting him at meetings, and you know, in the airplane and in the car, you know, you know, in the operating room. Yeah. And so now you can really make it fun. See, that’s the whole idea. Because if you want to keep people’s attention, they’ve got to be excited about it. So that’s how we got into business audio theatre, and he’s our first customer and I just got back from a Hollywood yesterday, where we did a table read with some actors and actresses that are going to voice the parts.
And I met the guy that’s going to do the music for it and it’s going to be an Abbey Road style music and we’re really excited about it because, you know, it’s a fun way to preserve a legacy. And here it’s interesting, here’s how he wants to use it. He wants to use it to attract, retain and engage his stakeholders. The idea is if they can identify What I had to go through to get this multimillion dollar business running, they’re more likely to stay with me, they’re more likely to want to work with me, they’re more likely to want to give me credit, they’re more likely to want to buy my services, because they know that after all, I’m a real human being.
And I’ve got faults and fears just like everybody else. And I’ve made a lot of mistakes, see, and so that’s what we’re doing these days. And we’re really excited about it. I mean, this is so much fun. And when we were doing all those talks, there was other business leaders in the greenroom that we would meet backstage, and we would talk to him and they all said the same thing.
What’s going to happen to my business, when it sells what’s going to happen to my business, when I exit, what is my son or daughter going to do with my business, I’ve worked so hard to develop this culture, you know, and this particular attitude that we have toward our clients and putting the customer first, I’m afraid that’s all going to get lost by this corporate, you know, standardization that is happening in the country right now.
And so we thought, this would be a great way to save founders, stories, and preserve their legacy in a way that young people can identify with. So there you go, that’s, that’s the, that’s the long and the short of business audio theatre. And by the way, you know, we’re going to reward your clients for listening to all this, we’re going to give them a half an hour free episode from the Barefoot spirit, which they’re going to be able to download from your show notes, there’ll be a link you can click on, and they’ll be able to hear a half hour episode. And hopefully, they’ll want to buy the rest of the book, you know, but
Damon Pistulka 51:51
yeah, yeah, that’ll be awesome. Because like you said, this is a different way of portraying these, these stories that founders have. And I think it’s when you’re in that situation where you want to really share the legacy and share some of the goods and Bad’s of really how the business got to a certain point or, or this is the generation the founding generation and share that story with the next generations, I think is a powerful way to do it.
Because it’s, yeah, a video you but you wouldn’t get someone listened to video for the time. And that’s the thing with a podcast, people listen to a 30 minute segment, like you said, in a series kind of format, I think it’s gonna be really, really popular and, and interesting to him.
Michael Houlihan 52:41
I hope so, Damon, you know, it’s we’re a start up. And you know, we’re learning while doing, but I can tell you, we’re going to try to knock this one out of the park. So other people will say, hey, look, this is not Michael and Bonnie doing their own story. This is Michael and Barney doing a third party story. Yeah, you know, suggests a little more credibility.
Damon Pistulka 53:02
Yeah. Yeah. That’s awesome. That’s awesome. Well, Michael, I just want to say thank you so much for joining us today. I am so generous with your time and, man, I just thank you so much for sharing your story with us today. And we got some great comments here from Kenny and Kurt and, and others that are listening. Just thank you. I just love listening to love talking to you.
Michael Houlihan 53:32
And I wish all your listeners Good luck with their business. And, you know, I hope that they get the big check when they exit. And, you know, we’re here to help if, if that if that counts for anything.
Damon Pistulka 53:47
Very good. Very good. Well, thanks, everyone for joining us today. Again, Michael Hoolahan, founder of barefoot whines now with business audio theater, and as he said, we’re going to be dropping a link that link in the show notes that give you a free half hour download to the part of the Barefoot Wine story so you can listen to an example of the business audio theater. And just hope you enjoyed it a 10th as much as I did today because you will be back to listen to more. And lots of good nuggets of wisdom here. Thanks so much for being here, Michael.
Michael Houlihan 54:22
Thanks so much.
Damon Pistulka 54:24
And we will be back again later. Have a great time everyone.