Wisdom from the Grapevine

(Photo by Duane Zehr)

By Matt Hawkins
April 3, 2014

When Michael Houlihan and Bonnie Harvey took a blind leap into wine production in 1986, they relied on community relations to build their Barefoot Cellars brand. The partners shared their journey from startup to national recognition at the spring Distinguished Entrepreneur Series lecture sponsored by the Turner School of Entrepreneurship and Innovation.

Houlihan and Harvey jumped into wine production to help one of Harvey’s office management clients, a grape grower, recover debts from an area winery. The creative solution led to a crash-course in the wine industry, marketing and branding that began in their laundry room office.

Video of Complete Lecture

“It’s about the American entrepreneurial spirit, doing things out of necessity that turn out to be brilliant,” Houlihan said.

Houlihan and Harvey developed their own brand and marketing strategy. Because they lacked financial resources to advertise like other brands, the two relied on small stores and community partnerships to develop a market. They started with a San Francisco nonprofit and branched out across the region.

By taking a fun, community-first approach, the entrepreneurs targeted a female-dominated demographic that wanted a consistent everyday beverage at a cheaper price. This broke with conventional wisdom that targeted men who preferred expensive, fine wine.

Houlihan and Harvey also forged partnerships with neighborhood groups and nonprofits like the Surfrider Foundation. These relationships sold wine through word-of-mouth and also gave partner organizations exposure in new markets.

“What you want to do is talk to people who have touched your product along the way and find out what they’re interested in besides buying wine at a low price,” Harvey said. “We asked how we could support them other than providing wine and were able to take a nonprofit’s message to a marketplace they don’t have access to.”

Though Barefoot Cellars eventually had the money for advertising campaigns, Houlihan and Harvey avoided ads to keep the informal discovery process alive.

The business took seven years to pay off the original debt and 20 years to sell to the Gallo family.

“This was not a get-rich-quick scheme,” Harvey said. “It was a get-rich-slow scheme.”

In addition to learning from community-based marketing, the businesspeople learned the value of a competitive, open environment for employees. Houlihan and Harvey instituted performance-based pay to focus staff on sales and kept business dealings in the open.

“You have to look at people as an asset and not a cost,” Houlihan said. “You’d be surprised how into the action they’re going to get if you don’t isolate them. I’ve got hundreds of examples about how people helped us out in areas that weren’t their specialty.”

The presentation illustrated a valuable entrepreneurial lesson to mechanical engineering major Ken Ratekin ’14.

“The world’s greatest invention means nothing if you can’t sell it,” he said.