Philip James is the Founder and CEO of Penrose Hill / Firstleaf, a wine club for the modern age that uses data science to match the perfect wine for each customer based on their personal preferences. They ship over 100k boxes of custom wine every month. The company is a behemoth.

This isn’t Philips first go around in the wine industry. Philip has been a dominant force in the space for the past 15 years. We chat about his previous endeavours and how that helped him get to where he is today.

Along with being one of the most successful wine entrepreneurs in the world, Philip is an adventurer. In 2003 he climbed Mt. Everest, which turned into a rescue mission when one of his climbing partners broke their leg and had to crawl down the mountain in order to survive.

Philip and I discuss how Firstleaf operates, the three tier alcohol system, what it means when a wine is “Estate Grown,” and his myriad of adventures that I would argue makes him a candidate for the most interesting person in the world.

Special thanks to Philip for joining the podcast.

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MPD: Welcome Philip. Would you mind quickly running us through a couple of the companies you had started before this, just the headlines kind of how they played in the space, what different problems they were solving and then how you arrived at your current venture and what you do?

Philip James: [00:02:05] Uh, yeah, happy to. So, you know, I think so there's always a. When you tell the story with the benefit of hindsight that you like threaded as if it was a foregone conclusion and right before I give it to you, none of this was a foregone conclusion for me, but in hindsight, you can draw this thread that shows how.

In all cases, we, we stayed adjacent to the customer, but in all cases, we moved gradually up the value chain, as I figured out how to do the piece, the next piece behind the scenes. And so, so I had worked for somebody else. Uh, another company called wine messenger for a couple of years after business school.

Um, and what I realized there was how difficult it was to find out. There was no, there was no IMDP right. There was no standard database of wine information. And we were selling wine that were relatively unknown in the U S we were the sole importer, um, uh, the sole retailer in the United States. And. It was an immense amount of work to get these often not English speaking, small growers around Europe and around the rest of the world to give us high quality photography, to give us winemakers notes, right.

To tell us the acidity level and all of these things. And. My simple realization was, if it's difficult for us, it must be difficult for everybody else. And so the first company I left and started called sniff, it's still around today. Um, it's actually run by my, uh, my co-founder. So I was the original CEO.

He was the CTO, uh, and now he's CTO and CEO and, um, And really it was an information aggregator of wine content, wine reviews, um, pricing. Uh, we were ad supported to our ad supported as well as like lead generation for wineries and retailers. Um, but gradually what I realized there was we will only getting paid, you know, 30 cents a click or 50 cents a click and maybe the much and was selling the product for $150 for, you know, for a box of wine.

Um, But customers would blame us if there was an issue with the merchant, right. Because if you originate with us, but I would do that too. If I book through Expedia, I'm upset. I blame Expedia. Even if they have no control over 

MPD: [00:04:24] it, didn't give him a score where you recommending them at some level. 

Philip James: [00:04:27] Heard there was a, yeah, there was a ranking system for the 

MPD: [00:04:30] right.

So if someone's got to do something and it sucks, 

Philip James: [00:04:34] right. Would it be mad at you? And, and so one of the, so online wine has a number of challenges. So state regulations, you know, you, you get to the end of trying to check out and the store says we don't have it in stock, or we can't ship to your state or no problem, but there's a $50 shipping fee.

Right. So there's a lot of gotchas that can happen. Um, and so. So that was 2007 or 2006, till 2010. Uh, and then, uh, one of the, uh, advisory board members from Snoop and myself co-founded lot 18, uh, and, and lot 18 was we're like, okay, people need help finding the wine they want or finding a good one, or they need someone to help them understand which wines might be good for them.

And so lots, 18. Was a flash sale retailer, but we were still partnering with other wineries to make the wine. And we were often partnering, w w in some cases, those wineries would put that product in a central warehouse, but in a lot of cases, they wouldn't, and they would still do the shipping themselves.

And that business raised a lot of money and grew quickly. Um, we sold, you had big 

MPD: [00:05:45] investors. Excel was in right.

Philip James: [00:05:51] Yeah, Excel in NEA. Uh, yeah, we'll go. I mean, we went from zero to $25 million in sales in 14 months. Um, yes, we grew quickly. Yeah. So we had, you know, the, I have learned that lesson and I've seen. Friends and other entrepreneurs kind of go through this too, that the hotter your company is on the way up. The more people want to like, uh, destroy it on the way down.

And so business insider love to write about us and, you know, everybody else did too. Um, but the moment that there was a layoff or a misstep, or we missed the forecast, then everybody enjoyed writing about it on the flip side too. Um, anyway. And so, so a lot of the teams had big investors. We grew quickly, um, and this was the era of Groupon and Gilt.

Right. And it was flash sale frenzy and you know, where a lot of those didn't end up very well. Right. And so Groupon went public, but I'm not actually sure. Now what happened to ideally or living social or, you know, and there were 700 others behind that too. Right? But lot 18 sold wine. We also sold some specialty food, um, some cooking equipment and, you know, a few adjacent categories, but wine was the core.

But again, I realize that. We, so we were the front end, right? We were the website, the email, the marketing, the customer service, the customer would interact through us, but we were still beholden to perhaps this boutique winery and their shipping capacity. And I remember one day we had a Bonanza sale. We sold.

I don't know a year's worth of this wineries inventory. They were so incredibly happy. And then the next day, the winemaker field owner phoned us up and said, FedEx cannot make it up. My bumpy driveway, I have to put the wine in the back of my pickup truck and I have to carry it down to the FedEx Depot.

However you sold, whatever 2000 cases. And I have an injured dog, so I can only make one trip a day. And so it's going to take me six weeks to get the wine down to the FedEx Depot. And we're like, hang on. We just spent tens of thousands of dollars on customer acquisition. And now we have to write to them and say, it's going to be up to two months for delivery.

Um, and so kind of step by step by step. I said, To build the business. I want, we have to take on yet another piece of the value chain. And so eventually we get to, uh, to Penrose Hill and to first leaf. And so we are, and this is my kind of, hopefully the only buzzword sentence buzzword laid in sentence. We are a direct to consumer asset light wine company.

And I say wine company because, well, we are a winery. We actually have more than one winery license. We have one in Napa. We have one in Sonoma, but we're also an importer and we import wine, the all wine makers blend and make, and we make that wine now across more than a dozen countries, 75 different brands that we've created a 250 different skews.

And. And what we do well, uh, is how we incorporate all the user feedback into that product creation. Uh, and it's allowed us to get, I think something like 1,700 awards for our wines now, uh, and kind of nobody believes us. So we publish them all on the website. Um, Uh, but ultimately it's a, you know, it's a vertically integrated business, which means we do the work of the importer.

We do the work of certainly the winery and ultimately retailing. It direct to consumer. Um, we own the margin of those people, uh, of those, you know, of those tiers. Uh, and it means that we can. Pass a lot of that value back to the consumer, right? So, so at the price we charge the customer is getting a great wine, a great value, but also kind of incorporated in that very data, uh, you know, sort of data first a model is, is just how personalized the service can be.

And so it is a version of a wine club. I think it's a very 21st century version. Um, we have, uh, now we have a data science team. We have multiple. Granted patents and pending patents. Uh, now 20 years later, my master's thesis in mass spectroscopy's are useful. We have a, we have a six figure spectroscopy machine in our lab.

Um, and, and, you know, I think the algorithm runs on. Without joke. It's a number that I don't even understand how many zeros are in it. I believe it runs on more than a septillion data points. Right. Which is 21 zeros or 24 zeros. It says sounds impressive. Piece of AI machine learning. And it says the core of what we do, but it means that every single person is in a unique track.

Right? Like, like, like, yeah. 

MPD: [00:10:37] So explain that. So someone comes onto the service and they say they want wine. How do you figure out what's the ride for them? And can you take me through the journey? 

Philip James: [00:10:47] Yes. Sure. So we, so we, we asked people a relatively simple set of questions at first and, and so. You do, do you know any of these wine brands?

Do you know if you like the styles of wine? Um, the, we asked them some questions to help us figure out, you know, what your sensitivity to sugar or tan. It might be so nuts, have a lot of tannin in them. Uh, if you have your coffee, black is different than if you have it like a unicorn frappuccino. Um, and so it helps us understand at least like the guardrails of what you might like and.

The, and I think that's 12 questions and I don't know, there's some billions of combinations that would just automatically come out of that. We'll make a recommendation for your first box. We sell the first box at a very, you know, attractive introductory price. Um, but thereafter we incorporate everything that we can, you know, either the customer's review the ratings, whether they're buying, swapping, reordering, and so on.

Um, but we also, we now get, I think it's. 85,000 inbound phone calls and emails a week from customers. It's like some massive number. Um, and people will, the long tail of people's tastes is just miraculous. Right. And so, yes, a lot of people like red wine. Yes. A lot of people like California wine, but you get past that and you get to people that are like, I don't want French wine because 10 years ago, the us and France had an argument and freedom fries, and someone will say, I need to know how much alcohol is in the wine.

And we're thinking low alcohol. And they say, no, I want higher alcohol because I want good bang for my buck. And then someone might say, I just don't want a wine with an animal on the front because I'm an adult and I'm going to serve it to guests. And I want it to at least look sophisticated, um, and all kinds of things in between.

Right? It's burnt my throat, upset my stomach and, and we all have our customer service. Uh, annex reps are professionally trained, you know, wine and spirits, education, trust representatives, and. And it's easy for me. If you drink, if I see you tastes half a dozen wines and you talk about them, I can translate that back into, into what chemistry is you like?

And don't like, right. Is it tannin? Is it glycerol? Is it emollients? Is it alcohol content? Right? Is it acidity? Um, But nobody is really normal. People are not trained to do that. Right? Like we see blue, but a designer we'll see turquoise or Ceridian or whatever those colors are, I'm color blind. So I can't see any of them.

Um, but anyway, and so there is clearly a, you know, like lingua franca in the wine industry and only trained wine people would know it. And so what we do is we help. Did you use that for the customer? Um, and it means ultimately that every single person, uh, gets a unique track. Right? So the wines that go into that box are unique for that customer and.

And I think it's easy for companies to say it's personalized because what does that mean? Right. It might mean you can pick red, white or mixed, I guess that's personalized. But for us, we sent out over 120,000 boxes of wine last month. And more than a hundred thousand of those were entirely unique combinations to that person.

That's a nightmare of packing in the warehouse. Um, but huge in terms of customer satisfaction and retention. 

MPD: [00:14:14] So it's a wine club using data science to completely customize what 

Philip James: [00:14:19] people get. Well, yes, but that data science also goes back to the winemakers. So they, so they know how to source and make a wine, uh, for the various kind of clusters of consumer tastes.

MPD: [00:14:32] But you're not, you're not doing the agriculture, you're not growing the grapes and everything. You're you're sourcing and putting it all together. 

Philip James: [00:14:38] Yeah. So we, we will sometimes buy grapes and, and crush them ferment. Um, but in general, we're partnering with other vineyards. Uh, and remember we make wine in 12 countries, right?

So that is cross Europe, South America, South. Do you 

MPD: [00:14:55] own those vineyards or are 

Philip James: [00:14:57] they so no, those are, those are partner wineries, right? Yeah. And, and they could be some of them, a large companies, some of them are multi-generational family businesses, um, and all wine makers. We have three wine makers that are, that work in our lab every day.

Um, we have our own, our own tank storage, like is a winery in Napa. It doesn't have a tasting room. So customers don't really visit. Um, but all wine makers will work with the growers. Right. And so something that a lot of people don't realize is the wine industry is. Is a lot more like dis-aggregated than you think.

Because if I say winery, you're imagining an estate, you're imagining a house on a Hill with bring it out front, but very little wine is what is called a state grown. And if it is a state grown, you would know because it would say a state on the label and it's a protected term. Um, and so you said people are showing 

MPD: [00:15:51] up at the winery and what they're tasting was not grown on the property.

Philip James: [00:15:56] If it's a state, they will tell you, right. If you go 

MPD: [00:16:00] pick her off to the, not the tourists are coming through and it, or what they drink is what they're drinking. Something that wasn't made. They're usually holding 

Philip James: [00:16:10] that here on some shirts. No, no, no. So actually in two dimensions, Across two totally different dimensions.

It probably wasn't made there. First of all, it probably was not grown there. And secondly, it was probably not made there. Now there are exceptions and if your wine says estate on it, right, because it's a legally defined term estate means the, the. Fermentation facility, the vineyard have to be contiguous, right?

That's a very clear definition. All right. The grapes in here in the factory or whatever you wanna call it, the bottom line of tanks is there. And, and there are, there are a state wines, but they would usually say a state grown or something on the front label, because it's a very rare, I don't know the percentage, but I.

I think it's single digit percent of wine sold in America as a state. Um, now I think if you go to the tasting room, Those are usually more boutique boutique wineries, and some of those will be estate. But remember that most people who buy wine would buy it in a liquor store or a grocery store, right?

Most are not going to Napa and drinking wine. And also then average Napa wine is $50 will $75 and they might be estate. A lot of them still are not. Um, but if you pick up a bottle of, you know, pick your brand, if you pick up a bottle of anything in a grocery store, If it is a state drone, it's going to tell you because it's a powerful piece of marketing.

So why would you admit it? Um, and so, so most, so generally what happens is there are growers. Those are farmers, right? They farm grapes instead of almonds or something else. And then most wineries are not big enough to own their own facility. And so there are, we work type shared facilities, which we would, I would call a custom crush.

And so often the grower will sell to, uh, the custom crush who will make the wine to spec for the winery, which is in many cases, kind of a marketing and branding company and understand. And that's how a lot of wine is made. And the one industry doesn't want to talk about that, right. Because it's, it doesn't sound very romantic.

That there seems 

MPD: [00:18:29] to be some mystique, right? There's folks out there who take a, quite a lot of pride in being one kind of source and being able to put on a show at dinner, how much of that is real versus that they're the victims of marketing, right? Is there, you know, you're, you're creating customized alcohol for people's completely different pallets.

Is there a good wine? Is there a bad wine? Are people getting ripped off on some pricing? How do you, when you look at this as a guy who's inside of the industry, is that a joke when you see the guy putting his nose super deep in the glass in the middle of the restaurant, is that real? 

Philip James: [00:19:13] It's, it's all of the above.

Right? And so I, if you, I'm trying to think of what the right analogy is. Well, let's think of music, right. There are manufactured, pop bands, right. The, they audition and they put the participants together and they didn't know each other until they started singing together. Right. Right. I guess, I guess that's fake, I guess.

Right. But the music might be nice. Um, it's just probably not written by the people who sing it and clearly the other extreme, there are. There are singer songwriters who tore on their own and there is authentic as they come and there's everything in the middle. And so the wine industry has that too.

They will absolutely estate wineries. They'll probably say on the label, they're all there are. Possibly still wineries where they squash the grapes by feet, maybe. Um, but on the other extreme, there are four or five large conglomerate wine alcohol businesses in America, giant public companies typically, and they control three quarters of the revenue of the wine category.

And so there were a bunch of different 

MPD: [00:20:22] brands, right? Different labels 

Philip James: [00:20:25] buying from the same guy. Hundreds of brands thousand skews. And so, I don't know. Yes. I know a lot of fancy wine collectors and you're right. They, they bury their nose in the glass and, and I think some of them are genuinely buying wine.

That's, multi-generational, that's organic, that's, that's terroir from the place that's estate grown and traditional and all those are true, but it's a very small percentage of the industry. And don't forget that. Wine is sold in grocery stores. Right. And so right. For every collector, there are 99 consumers.

Right. And, and for a lot of people, yes, I'll warn you have vegetables and aisle four, you have Pringles and in all seven you have wine and. And we, we all like wine, but wine is, is only an art form to some people. Right? Like it shouldn't be an art form to everybody. And that's, I think that's totally okay.

Like I like wine. I like how it tastes. I I'd like the sociability of it. There's a lot, I like about wine, but I'm not a wine collector and, and. I like that I'm not a wine collector. Um, and I think it helps, you know, me and my team are generally not. And I think it helps kind of remind us to be real, to a lot of consumers.

It's not a collectible product either. So a lot of people, they buy a bottle and then they drink a bottle and then they buy a second bottle and later they'll drink the second bottle. Right. That's different than having to drink two separate issue, but that's different than having 4,000 bottles in a seller and building an election.

I dunno, you can use STEM to send mail, or you can use STEM to put in a book and look at right. 

MPD: [00:22:01] Thank you. That is very helpful. Uh, talking about the complexity you talked about in the Snoop days earlier in this discussion about dealing with selling across state lines. I think a lot of people don't have a lot of familiarity with the three tier alcohol system.

Would you mind giving kind of the, the quick one-on-one on that and. Um, I'd love to hear your take on whether you think that should remain, it should be changed, 

Philip James: [00:22:29] et cetera. Yeah. It's hard to give a quick take, but so it's because the problem is I have to begin this with, we have to go all the way back to prohibition.

So. The repeal of prohibition. I think this is kind of an as a, as an American. Now I think this is a very interesting stat. The repeal of prohibition is the only time when an amendment has repealed a prior amendment, or actually I think is very interesting amendments. Amanda's right. They adjust, but the repeal of prohibition removed or struck down entirely a former amendment.

And anyway, and that happened. Oh, man, I'm so bad with my dates, but let's say 70 years ago or something, right? Like 1913, 1914 was that 90 years ago. So it was a long time ago. And, and the, you get into like, why, why was that prohibition? What was the point of it? It was, there was organized crime. There were all of these, this is Al Capone, right?

There were, there was a lot of. Challenges that prohibition was trying to solve and in the repeal of prohibition itself. But what it meant was that the States get to choose how they regulate the flow of alcohol within their own borders. And the States then created the three tier system produces, sell to distributors who sell to retailers and.

In jail. Now I have to compress 70 years, right? There's 70 years and two or more, at least two Supreme court case rulings in here. And one of them was in 2019. So this is happening like right now, or this is still changing. Uh, and in fact it was yesterday, uh, that we began to ship direct to consumer, Kentucky, and.

Six months ago, if we ship to the consumer in Kentucky, it's, what's called a felony state, right? That like, not only are we not allowed to that, it would directly be a felony for me as an officer of the company to have allowed it to occur. But now Kentucky has a license and we're one of the first, you know, 10 or 20 wineries to be actively.

And legally of course, selling to consumers in Kentucky. And so the repeal of prohibition has created this. Patchwork of federal laws and state laws, and none of them agree with each other. It's incredibly complicated. We we've had a full-time compliance, uh, employee, um, for years. And I was thinking about this earlier.

I'm sure we spend millions of dollars a year on compliance costs and. Barrier. I feel like barriers to entry, a moat, right? Where if you're crossing the modes and nightmare, but when you've crossed the moat, you're, you know, you're like, wow, it's, it's a, it's a defense now against competition, but it definitely adds cost and complexity to the consumer.

And I think that's, what's unfair, right? It's if a consumer finds a wine, they like, and they go online and they see a store. Like you just assume you can order it. Right. And you don't realize that that store may not legally be allowed to sell it to you. Uh, even though that store may only be 50 miles away, right.

You could be in New York, they could be in New Jersey and they may not depending on their license, be allowed to ship it to you. Uh, and, and I think that's very, very difficult. Now that so many of the sales online, right? Where that geographic distance isn't relevant to the consumer. Right. In, in a, in a real world, it didn't massive because you went to the store, right.

And you pick it up in person. Um, but yeah, I think people don't realize if you, if you buy a bottle of wine in one state and you drive across the state line in some States that's illegal. Right. And obviously it's very difficult to enforce and so on. But the three tier system, which does have these protections, I think it does it at a cost of like consumer accessibility.

MPD: [00:26:09] What's the benefit of it. Why, why do we need the, at this point? We're Capone's long gone. I don't know all the rationale back then. Is there any benefit to the three tier system at this point in the game 

Philip James: [00:26:22] there that is a complicated ended, much debated question. Um, the, the Supreme court on down. I agree with the legitimacy of the three tier system.

And they say that very clearly, but what they don't agree with and what I find particularly unfair. Is is when the anti anti-consumer is when there are laws that treat, um, an in and out of state entity differently. So some States will say wineries within the state can ship, but wineries from out of state cannot ship.

And those protectionist laws are the ones that are being struck down. At the moment, very, very, very quickly. Um, and so since, since the starting of Penrose Hill, Pennsylvania, Oklahoma, and now Kentucky have all been made legal, right? I mean, that's, that's three States in four years. Right. That's meaningful.

Um, and at the same time, many dozens of other laws have relaxed, somewhat. Right. Uh, maybe there was a quantity limit. There are States that say, you can only buy one case of wine every three months, if you buy it online. Right. And you're like, okay, Really like, that's the limit, like that's one bottle of wine a week.

Like what does, if you live in a house with more than one person or enjoy wine more than once a week, it's not like it's a case a day. Right. And so how can the limit be justifiably set there? When in a liquor store I can fill up a shopping cart, a vodka, and nobody would stop me. And, and so there are definitely protectionist laws and those are getting struck down.

But I think generally the three tier system. Will always exist, but hopefully it will exist where the remaining laws. 

MPD: [00:28:07] Okay. So can you take us through the story of how you landed doing wine? I've heard a narrative of this where you weave together your education and it just makes sense on the outside. Is that actually the story?

How did you end up being in the, you know, the wine 

Philip James: [00:28:23] guy? So how do I get into the wine industry? So I. I grew up in England. I worked in London. I worked for an American investment bank and at least for those who did it right, three years in banking or three is in consultancy. And then the bank says we're an American company.

You should go to an American business school. Um, and, and, um, I was lucky enough to be accepted to, uh, to Columbia business school. Um, Actually a little known fact is I can't remember now if I applied to five or six schools, but I was, I was immediately rejected from all of them, but one, um, and Columbia put me on their wait list.

Um, and then I was smart one that took you. Well, I was on Everest at the time and I was like, I don't, if I don't get into one school, I'm not sure what I'm going to do next. Right, right. At least. The I'm going to business school next is a way to defer, having to look for a job for two years. And so on a satellite phone from 24,000 feet, you know, I took the oxygen mask off and I phoned the admissions office.

And I said, please let me in, you know, I'm on Everest and I will absolutely accept. Um, and I know business schools, they like to keep the, whatever that ratio between. Offers extended and offers accepted. And so at least, Hey, I have no alternatives, right? 

MPD: [00:29:48] I'm desperate. Let me in. You're a 

Philip James: [00:29:49] good candidate for them.

So at least that worked, um, Anyway. And so certainly by the time I went to business school, I knew I wanted to start a business, but I felt like that's the wrong, the wrong way to become an entrepreneur, right? The entrepreneur with no good ideas is not a very good entrepreneur. And, and. Off the back of the traveling and adventures.

Um, the no surprise. I thought, why don't I have an adventure travel company that is not a very scalable idea. Uh, if I have to go lead the trips myself, um, but back then, me and a friend had an idea and began to, to create this company. Um, we didn't get very far. We didn't raise money. Um, uh, for me, ultimately my immigration lawyer said.

You just, it's not credible that you self sponsor for a visa, right? Like that just looks too, too sneaky. It's just you and your buddy, you don't have investors, 

MPD: [00:30:46] right. 

Philip James: [00:30:47] It was like that, that doesn't sound like something that's going to work. Um, and at the same time, a friend of mine from business school, um, his father ran a.

A wine, importer and wine on online catalog retailer. And my friend's father was sick. He actually, um, uh, had early onset Alzheimer's. Um, and so the family, yeah, I think he was mid sixties. So, you know, still pretty early. Um, and so the family was trying to transition him out of the business. It was family owned company that my friend, the son was, was taking over and my friend knew wine and didn't know business by the way.

Not that I knew business, but at least I knew how to do a financial model and those kinds of things. And so. My friend said, come work here. We'll get you the visa. And then when you've helped me stabilize and turn the business around, you can go do whatever you want. Um, And, you know, that absolutely was a trial by fire for me.

And it's a huge change from, you know, no matter how good your Xcel modeling skills are, right. You can build a financial model for a business, but then you show up and you're in like, you know, a dusty warehouse in Yonkers. And, um, and, and, and the guys who have packing the boxes. Have like flick knives in their pocket.

Right. And I walk in and I'm like, hi, I'm the guy from England. And you know, let's talk about, you know, on time shipping percentage. And so all of that kind of fell with a thud and very, very quickly, I had to realize that, you know, this, this line on the PNL actually was me phoning up Xerox to get somebody to come fix the printer.

Right. And so there's like a gritty reality of business. The, if you're a consultant or certainly if you're a banker. You just don't see, right? You read the annual report, you build the financial model, you have a presentation, maybe you do the M and a, or the corporate finance, but, but, but, you know, getting into.

The what the numbers actually represent. Uh, and certainly the people in the business was just so, so instructive for me. Um, I ended up loving the wine industry and I did end up with a business idea and I did end up starting a business, but, you know, I think I not in the way you expected. Yeah. It, it wasn't adventure travel.

And you know, from there on, I've been in wine and wine commerce, and you know, it's been like that since 2005 

MPD: [00:33:25] and correct me if I'm wrong, you studied chemistry at Oxford on our undergrad. Is 

Philip James: [00:33:30] that right? Uh, you know, and yes, and 

MPD: [00:33:33] I had this, the narrative in my head that you were always a wine guy. You studied chemistry in Oxford.

You knew what you were doing. You got training at Columbia, and then you went out and did it, not that straightforward. 

Philip James: [00:33:45] Well, maybe when you finished editing, it will be that straightforward. No, it, no, it wasn't right. And there's a lot of accident and luck and all of those things, and it is ironic because for.

At least 10 years, I didn't think about chemistry and maybe the advantage of a STEM degree is the, you know, you're good at math. You're good at logic. Right? And so you can do other things, right? Because a lot of business is that right. If you can, if you're good with numbers, you can build a financial model, right?

You don't need to know gap accounting to build a model, right. You need to be good in Excel. Um, So there was certainly things I used. Um, but I have to say that now, and now it's different because, um, you know, we'll, I'm sure we'll talk about it, but I I've started different wine companies, but this is the only time when making the wine.

Uh, and so now suddenly the chemistry degree is useful and even more so, um, I actually have a master's degree in chemistry. My master's thesis was in using mass spectroscopy. So you want me to nerd out for a second, please? Back then was using a mass spectroscopy machine, uh, in order to help. Uh, uh, an Oxford university spin-out, uh, you know, startup, it was to help them find the blue compound that would be used in organic light emitting diode.

So, Oh, LED's right. And so it's fascinating to me that, you know, 15, 15 or 20 years later, sorry, that was 1999. So 20 years later, right. You can buy an old led TV. I'm pretty sure my phone screen is OLED and I was. I research a seconded to a startup, trying to find a blue compound for an Olin. We didn't do it.

Uh, I think some, some entirely different company. Yeah. Has 

MPD: [00:35:31] that been helpful to you in 

Philip James: [00:35:33] wine-making? And so it has now, because over the past few years we've gone from making the wine to actually now, um, running our entire laboratory in house. I see. So last year we bought. A a mass spectroscopy machine.

It's actually an infrared spectroscopy to come full circle. And so stunningly enough, we're now doing, uh, like predictive recommendations based on the spectroscopy data of the wine. And I get to fall back on my master's research project and it is 

MPD: [00:36:06] amazing. It paid off. I mentioned to someone recently that I was having one of the country's foremost wine entrepreneurs on the show.

And they asked if it was Gary V and Gary V is obviously he's made a huge name for himself. He's very successful. Um, and I was, I hadn't even occurred to me cause I see him in such a different light. I know he started out in the wine side and he's grown to be so much beyond that. Do you, do you see Gary V in your world, is he in your orbit?

Is he, where does he sit? Does that come up often? 

Philip James: [00:36:41] I think I have the same, the same answer that you just gave. Right. But I have a funny anecdote about that because yeah, I see him now as a, I don't both social media, Maven book, author, and giant consulting, running businessmen. Right. And he, he is still in the wine industry, but it doesn't seem like a motivational 

MPD: [00:37:03] speaker on top of it.

Philip James: [00:37:06] Yeah. Social, all of that stuff. But. This is a quote. I hear I've heard that Gary said, um, but he's never said it to me. So this is an indirect quote. He said something like. He's invested in three wine businesses in his life. And two of them were started by Philip James. And so I don't know if that's tote.

Well, he did invest in this business and one other, so that is true. One another business. I was a co-founder of, uh, I'm not a hundred percent sure. I didn't hear with my own ears that he said that, but I love that quote. And so I'm very grateful to him for saying that if true. Um, but he has an investor, uh, in Penrose Hill and he was an investor, um, uh, in previous company that I was co-founder of, but you're right.

That generally I don't bump into him in a wine context. 

MPD: [00:37:53] Yeah. I think he's transcended. I think he started there as a family business and then it's just, he's moved to a different game. Okay. That's a good transition. You're not only one of the most prolific wine entrepreneurs in America. You started three companies in the space.

He raised over a hundred million dollars at this point I presume. But what's more interesting about you is you remind me of the world's most interesting man from the dos Equis commercial, you familiar with that and 

Philip James: [00:38:21] you're laughing. Uh, I am, I'm familiar with that. I don't feel as, uh, as interesting anymore, but okay.

Thank you. Okay. Right. 

MPD: [00:38:28] Well, you've lived real life adventures. Can you tell us a little bit about climbing Mount Everest? 

Philip James: [00:38:35] Uh, I can, I spend, I spent more than two months, um, camped out on the side of Everest, uh, as part of a 6% expedition to summit by the North face, uh, back in 2003, but it's a long time ago now.

Right. So, you know, I was in my early twenties back then, and I think if I had summited, I would have been the youngest British person to do so, but that record, you know, it's been come and gone and broken many times since then. Um, Uh, but ultimately it ended up becoming a rescue mission. Uh, my, my, one of the six people in the team, my climbing partner fell and broke his leg on the summit day.

I was further down the mountain at the time. Um, but, uh, over a five day period, first, the people who were right with him and then all of us helped, you know, drag him, carry him. Colin help Bata, you know, get Basha and trade and get people to, to help where possible. Um, it's pretty difficult up there, right?

There's not a lot of nobody has any spare capacity right now. Nobody has any spare capacity for exertion. Nobody has any spare food or oxygen. Um, So it was quite, uh, quite, uh, you know, quite an Epic ordeal. Uh, I mean the guy who broke his leg ended up having multiple surgeries, um, you know, pins in his leg.

Uh, a lot of it was, was him just kind of. Uh, sliding on his hip and, you know, plant the ice ax in the ground and, you know, kind of do a pull up to drag your body forward 30 centimeters and then do it again. And, you know, people can barely climb Everest, right? People can barely walk and climb up the side of it, imagine crawling, uh, down it.

And, um, uh, and one of our team actually lost. The tips of three fingers to frostbite, like directly from helping from taking his gloves off, helping, uh, cone in the guy broke his, like helping him change his oxygen cylinders. Um, yeah, it was, um, feel, it feels very far away 

MPD: [00:40:42] realize the Everest story was a kind of a tragic one.

I mean, it sounds like it worked out, you know, you, you dropped it very confidently. Yeah. Climbed Everest, no big deal. Back in the day, if you 

Philip James: [00:40:52] Google. So the guy is called Conan Herod con AAN, Herod, Herod store. We'll link in the show notes to the sky. Yeah. And, and I mean, it was him above all else. Right. He's the guy who fell.

He's the guy that I had to. And I think that the BBC off-cycle is like down Everest on his knees. Right. But like, he's the guy who crawled everybody else played a supporting role to, to rebel, but everybody else would've, would've laid down and died and, um, I remember. So I wasn't that room, but I wasn't there when he fell, but he told me and the people who were there told me that soon after he fell.

So he falls, he's like screaming in agony. The, the, the climber on our team who was right next to him, radios us in, in like a total screaming panic. And, but days later they told me the two wa like famous climbers, People that I read about people I'd read books written by right. Two famous climbers walked past and said to the non-injured guy, leave him.

The poor bastard is dead. And so, wow. Not only did you, did the guy fall and is in immense pain, but like your childhood hero says don't even try. Wow. And so, so Conan deserves this just, I can't imagine a more stubborn human, like. It's 

MPD: [00:42:24] not your only adventure. You tell us about the motorcycle ride. 

Philip James: [00:42:29] Sure. So, um, so yeah, so in 2013, so I was, you know, older now.

Uh, that's why I sat on a motorcycle and didn't ride a bicycle. Um, but yeah, I bought a motorcycle. I lived in Midtown Manhattan. I bought a I, so I actually bought a off-road BMW motorcycle in the BMW dealership, off the, you know, off the shop floor on like 59th street, 59th street and 11th Avenue. And. I'm sure.

I sounded like a total moron because I w walked in and said, I'm looking for a motorcycle to drive around the world on. And the guy rolls his eyes like this shiny one. And I'm like, does it come in different colors? Right. Um, I'm greatly indebted to a friend who taught me. Basic bike maintenance. Uh, he took me on a, I don't know, a two or 3000 mile, like off-road mainly off-road trip, um, uh, down through the Appalachian mountains.

And, uh, by the summer I thought I knew what I was doing. Uh, Spent a month, uh, crossing the U S so again, mainly off-road appellations, um, the continental divide. So the Rockies, um, ultimately took the bike, uh, to Vancouver. Uh, got it. Wrapped in a box, put it on a plane, picked it up in, uh, in Shaun, uh, Seoul, South Korea.

South Korea is small. So across in a day, took a three-day ferry to Vladivostok, uh, Eastern site or far East Russians, far East. And then, uh, not more than two more months, uh, I think I was on the bike for over a hundred days, um, across Siberia, Mongolia, has it stand and in this was, this is wild camping, right?

So it was just me with a tent, uh, you know, a stove, some water and, uh, and, and by herself, By myself and a lot of this, uh, there were no roads. I mean, there, there were roads in Siberia, uh, and there were roads in and around the capital city of Mongolia, but you get outside of, uh, you get outside of that and the majority of Mongolia is not paved.

It's, it's ridiculous. It's basically a giant field. So 

MPD: [00:44:43] at this point, everyone listening is thinking, okay, this is insane. How does it end? And I know the answer. Yeah, 

Philip James: [00:44:51] so, well, it ended for me, uh, because I crashed in Kazakhstan. Um, and, and it's, it was kind of a pathetic way for me to finish because, um, It was near the capital city.

It was a paved road and it was actually where they were doing some construction and there was like a dip in the road that I didn't see. I mean, I'd been on the ride of all the stuff you had been through. Yeah. So basically I crashed in the roadwork section on the outskirts of . Um, I ended up having surgery in Kazakhstan, which is another whole story.

Um, Because you actually have to go by, uh, some of your own medicine and equipment and then like give it to the hospital. Uh, and I, you know, with, uh, I, I broke my collarbone ultimately, and I wasn't sure at the time, but you know, everything hurts. I was worried I had concussion and, and various things. But, um, anyway, so I had surgery in Kazakhstan, woke up on the operating table, uh, in the middle of the surgery and eventually got back to England and had so.

I'm pretty sure if you break your collarbone in the U S or England, they put a beautiful anodized custom plate to hold the pieces together. And I'm sure it's a thousand dollar piece of metal. Um, in Kazakhstan it's a bicycle spoke and they cut it with a wire Clippers. And so I still have the thing, the rod that held the, the bones together.

Uh, I have it somewhere, somewhere in my truck. 

MPD: [00:46:16] Right. So you, you are a lot like the dos Equis guy. Can we come back to that for a second? You live these crazy adventures, you work in the alcohol industry right there. There are some true parallels here. Okay. So for the entrepreneurs listening, we're trying to figure out what to do next.

What does the industry need? What does the industry need? How can they help?

Philip James: [00:46:41] I, I think of what I do or what we do as part of a bigger industry. And so if you start thinking about online grocery, so the move online or food and beverage, um, that is an incredibly exciting industry right now. And this, that, that, that. What is it? That analogy, not analogy, whatever it's called to fable, I guess, right?

Where if you put a frog in hot water, if you put a frog in water and you heat it up slowly, the frog doesn't realize that it's being boiled. And I feel like online grocery has moved so slowly for so long that nobody really paid attention to. To its rate of change. Um, but last year forced, you know, whether it's five years of adoption or 10 years of adoption in, in just a few months.

And I think consumers are not one, consumers will not want to go backwards from there. Right? So once, once the grocery store and the. B2B supply chain is very different than B2C, right? And I remember reading this on a, on a blog post, like Proctor and gamble. Doesn't sell soap, they sell pallets of soap, right?

That's a very different size and skew. And you know, the movement of that is very, very different. But now the grocery stores have figured out how to. Put your groceries, put them in the trunk of your car when you wait in the shuttle slot and text them. Right? Like I think it's going to be hard for consumers to get out of your one car, to stop surfing internet and want to go get your own groceries.

And now that consumers have seen the. It's okay to let the store pick your produce. Right. But they don't give you the squashed rotten ones. They give you the nice ones, right? Like once you've seen that it works. I think it's going to be very difficult to go backwards. And grocery is a trillion dollars and fine online grocery used to only be 5%.

But that means every, every percent, you know, every, every 10% that it moves. Right. And it went from 5% to 10% last year. So that was an extra $50 billion of, of grocery moved online last year alone. And so I think the next three, five, you know, whatever number of years. Uh, just another few percentage points of it moving online.

I mean, it's nearly a healthcare sized industry, right? And so every percentage point that moves is just a massive DECA billion dollar opportunity. And, and whether it's wineries, retailers, or grocery stores, she has to think of how much. You know, I'm not saying, go start a grocery store chain. No, but like think of the enabling technology or the web technology or the customer acquisitions that people, these spores are now going to need to do, because none of them were prepared to go online.


MPD: [00:49:28] For the folks listening. A lot of them are entrepreneurs. What's one thing you've learned as an entrepreneur that maybe is an obvious that focus folks could take with them. Any bit of advice. 

Philip James: [00:49:41] So the, so the first few words will sound so obvious, but I think if I give some context less, so, um, so I'm basically going to say trust your gut, but.

You have to build enough expertise that your gut tells you roughly the right thing. And if I think back through, you know, leaving business school, working for someone else, starting a company, the second time round raising institutional VC money, you know, learning how to manage managers, learning how to manage executives.

You know, easy enough, maybe now after 20 years, 15 years, I get to say, trust your gut, but maybe I have 40,000 hours of doing this type of work. Um, but generally, uh, Earlier on when I knew, I didn't know the answer, I would ask one person that I thought was really smart and I would basically do the thing they said.

And what I've learned since then is they don't know either, right? Like you don't know, but they don't know either. And many people play the game one time, right. Or even the people who play the VCs or whoever who played the game 10 times or a hundred times, they don't know your business, at least not like you do.

And. And so I think if there's a skill and there's no shortcut to this, but if there's a skill I've learned is how to ask lots of people, the question, and then how to synthesize my answer from it. And sometimes that means I ignore them and sometimes it means I smushed three ideas together. Um, but. But, and it is cheesy, right?

But like, if your gut tells you it's wrong, it probably is. And then what's really difficult is learning how to identify what's wrong about that thing. Right. And so you do ultimately have to trust your gut. Nobody will know your business or care about your business, to the degree that you do as a founder.

Um, and then the challenge is, you know, can you get smart enough around the things you need to be fast enough, you know, before you run out of. Time or willpower or sanity. 

MPD: [00:51:48] Thank you for coming on today. I really appreciate it. 

Philip James: [00:51:51] Great to see you. Yeah. Thank you. Thank you very much. 

MPD: [00:51:57] Wow. And incredible advice.

I'm very grateful to Phillip for taking the time to be on the show. I hope you found it as fascinating as I did Phillips advice about trusting yourself and believing in what you're doing is easier said than done, but it's a requirement. To be successful as a founder. If you liked what you heard, please look us up with a like, or a five-star review and feel free to share with a friend.

You can find me on Twitter at M P D to hear more of my conversations with innovators, subscribe on YouTube, Facebook, or any other major podcast platform. Just search for innovation with Mark Peter Davis.