‘We are regrouping’ – Paul Mabray on the future of Pix Wine
By Christian Smith
CEO Paul Mabray spoke to Christian Smith in the aftermath of Pix’s failure to secure a second round of funding, despite what Mabray called unprecedented annual recurring revenue for a wine-tech start-up.
Just over a year ago, Pix launched in Napa as a startup that sought to solve a common problem: that finding a specific bottle of wine online and figuring out where you can buy it can be a frustrating process. Mabray says the company made $600,000 in annual recurring revenue in six months, but despite this, Pix was not able to secure funding in its most recent attempts.
Part of the problem, Mabray says, is that there are precious few wine-tech success stories to hold up to potential investors. Using tech to bridge the gap between wine and the consumer, he believes, is key to securing the wine industry’s position in the future of the alcoholic beverage sector.
Do you think the complications surrounding advertising alcohol on social media platforms is part of the reason tech firms seem reluctant to invest?
“The complications around tied-house laws transcend social media but yes, I do think they are key to the challenges with VC firms understanding how to invest in alc-bev. The addressable advertising market for wine is hard to measure but also spends far less significant than other categories (~5% of gross revenue). I contend that the reason we spend lies is due to both regulatory challenges but also the lack of meaningful, measurable outlets.”
Why do investors struggle to see the potential in the digitisation of wine?
“Alc-bev doesn’t behave like other normal categories. There is so much product complexity – regulatory challenges, distribution complexity, product complexity, and more. It’s hard for them to understand the combination of these factors or even the basic challenge that we are the only super long tail consumable product that has growth limitations and incredible product complexity that changes every year.”
What are the biggest challenges in creating a comprehensive wine database for the typical internet user?
“There is NO database about wine that is authoritative and usable. The closest are CellarTracker and WineSearcher built over decades but not open for use for other applications. But this is a forever problem that starts again every single year – last year alone, just in the US, there were 111K NEW products submitted to the TTB (Alcohol and Tobacco Tax and Trade Bureau).”
That’s 111,000 individually new wines approved for sale. Note that a simple vintage change does NOT require an approval, so these are substantially NEW products. Compete much, wine industry? https://t.co/hjC7wKR3HG
Do you think there’s a risk a giant like Amazon could look to fill the space? Particularly as it now has brick and mortar stores through Whole Foods and Amazon Fresh?
“Amazon has always been the sleeping giant and we’ve never seen a category that had such a combination of clicks and mortar like Amazon in combination with Whole Foods. Amazon is already a very strong competitor against Drizly. The good news for our industry is that wine is hard. Both from a regulatory standpoint (US) and the category spans commodity wine to luxury wine (US and UK). Amazon struggles with luxury.”
How do you balance smaller growers and producers against wine giants, particularly considering mass consumer interest is typically skewed towards the best-known brands?
“Wine is not a monolithic category. It represents everything from Bota Box to Petrus. The physical limitations of space (150-300 shelf space at supermarkets) make it so that only a select few REGULARLY [sic] wines make it through mainstream distribution (~2500 products of 100’s of thousands). But digital (content, discovery, engagement, and shopping) is the great equalizer that can help those consumers find a boutique producer on the endless digital shelf. That being said, if they don’t participate or make it easier, their likelihood of being discovered is virtually impossible.”
What role do wine critics play in a successful digital wine business?
“Wine critics are incredibly important to a key segment of consumers and always will be. But like I stated above, wine is a complex category. Some consumers just want a tiny bit of guidance, others are on their own journey. Some want influencers, others want just a simple score. Some want the wisdom of the crowd, others view it as the yelpficiation of wine. Different strokes for different folks. That being said, expertise is fundamental for helping people explore regions, styles and more. I think the industry should continue to elevate critics to be key guides while looking for easier sign posts to help consumers find their way wine as a beverage to wine as a magical elixar that delivers time and space in a bottle.”
How do you reflect on the online reaction to Pix’s recent struggles?
“Aside from a small group of naysayers who represent the worst type of wine elitism, the response to our challenges has been overwhelmingly kind and supportive. I did get a bit frustrated at some of the superimposed narrative on what we were trying to build by people solely focused on trying to negate our vision. Moreover there were a lot of armchair pundits lamenting we didn’t sufficiently explain our model for them to understand. Candidly, we never had a obligation or concern to explain our business to them. Our only concern was ensuring our paying customers and our retailer partners understood which we did in spades.
The only hurtful part is that the vocal naysayers were overly cruel in that they forgot that so many great people made up the team that was Pix. People who believed (and still believe) we were building something of incredible value for consumers and the trade. Our team comprised some of the most brilliant, experienced and dedicated people in the industry. Throwing shade on Pix was often targeted to me and though I have thick [skin] was directly throwing shade on their work.”
Can a search engine properly define the characteristics of a wine that’s both accurate and understandable by the consumer?
“Sadly, no. I think the subjective nature of wine and the limitations of language make it nearly impossible.”
What is the biggest challenge wine tech faces with consumers?
“We have a myriad of problems but fundamental is understanding the consumer’s actual NEEDS and serving those vs. creating tools for our needs.”
And with the trade?
“The trade needs to continue to treat digital as a core part of human interaction to make it easier to learn, buy, and engage with wine, other consumers, content creators of all types and wine sellers.”
What’s next for Pix Wine?
“We are regrouping to determine how Pix can realize the vision that we were trying to achieve.”
Do you think the wine industry could do more to embrace technology?
“The industry needs to make it a priority and a center of excellence. And, as a risk adverse industry, we also need to understand that there needs to be an acceptable amount of failure so that we can progress. NO ONE has the answer for digital for wine and because wine is such a broad spectrum – what work for Opus One will not work for Apothic. What works for a small Napa DTC winery will not be the same formula for a small NZ DTC winery, etc. etc. etc.”
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