You like wine. So you decide to create ‘‘Facebook for wine’’. You love the idea so much you sell your family home and pour your life savings into creating an online community where other wine geeks can talk about sniffing and swirling the latest shiraz. Like many start-ups, you think that if you get enough eyeballs, a money-making business model will one day emerge.
That’s what Andre Eikmeier and his brother-in-law Justin Dry did in July 2007. They launched qwoff.com, an online community of wine lovers who can review their favourite tipple. But it never made them enough money to be a sustainable business. It was a labour of love. And an expensive one at that.
Pivoting the business model
By April 2011, they were still only selling about 50 cases of wine a week. At this rate, they weren’t going to be millionaires any time soon. So, like many start-ups, Eikmeier and Dry had to pivot their business model before they saw any real cash. They decided to experiment with a sideline business, a group wine-buying project. This turned out to be the winning formula and, eight weeks later, they were selling 500 cases a week. They’ve since grown 30 per cent month on month ever since.
However, many entrepreneurs would have given up well before then. After all, it took almost five years of blood, sweat, tears and very little money before they hit the winning formula.
‘‘There was huge pressure during that time,’’ says Eikmeier, 40. ‘‘When we set up qwoff.com we sold our houses and backed ourselves to run it. We thought it would make us millions but that didn’t happen. So we were burning through our savings in order to survive.’’
Time to get a ‘‘real job’’?
Their entrepreneurial dream was looking grim in Christmas 2008, when their respective families tapped them on the shoulders and suggested it was time to get ‘‘real jobs’’.
‘‘Christmas is one of those awkward times… If you’re going well in life, it’s wonderful. It you’re not, it can be very hard,’’ says Eikmeier. ‘‘We had tried so many different ways to make money — from holding big weekend wine tastings to selling online — but we couldn’t manage to turn it into the kind of money which we needed in order to survive. We knew we needed an investor and we gave ourselves three months to make that happen.’’
Three months came and went with no investor in sight. ‘‘By March 2009, we should have walked away but I think we just stuck our heads in the sand,’’ he says. But this dogged approach paid off. By April 2009, the pair secured an angel investor who poured $200,000 into the business for a 20 per cent share.
Although they still didn’t have a business model that was generating enough cash, Eikmeier says this gave them a buffer that eased some pressure and allowed them to make decisions that weren’t just based on short-term survival. ‘‘It meant that we could make decisions that didn’t need a pay-off in the very next week. We could do things that had a pay-off in three to six months.’’
Despite this reprieve, the pair still struggled financially. They had created a popular site among wine lovers and they sold small amounts of wine but it wasn’t giving them a return on their already massive investment.
"We've got a three-year plan to grow the company to be the biggest online wine destination in Australia. In three years, I hope that we're turning over over somewhere around $200 million a year."
The turning point
By the beginning of 2011, they knew that something had to change or they would continue to go nowhere fast.
‘‘We were struggling financially,’’ says Eikmeier. ‘‘Justin suggested that we experiment with a group buying site for wine.’’
Along with a business partner, Leigh Morgan, they were going to launch their new group wine-buying business, vinomofo.com, in April 2011. But three days before they were set to launch, they had to change everything.
‘‘We had already run a six-week teaser campaign before the launch when we received a ‘cease and desist’ order from a public company that owns a wine called Mojo. This had the potential to extend into a long and expensive legal case. Someone joked that we should call ourselves vinomofo.com.
‘‘To be honest, I thought this would be a little thing to do on the side while we stayed focused on qwoff.com. But within four to eight weeks, vinomofo.com quickly became our hero brand.’’
By July 2011, the business was growing so quickly Eikmeier realised they would need another investor. Towards the end of last year, they were about to ink a deal when they received an unexpected email from daily deals site CatchOfTheDay.com.au CEO Paul Reining.
‘‘We were days away from signing this other deal so thought nothing would come of it,’’ says Eikmeier. ‘‘But we had a Skype call… they were dressed in T-shirts and they were speaking our language so we thought they were a bit like us. There was a real simpatico.’’
In the meantime, Eikmeier also realised his company was riding a group buying wave that was popular at the time. ‘‘We knew that we couldn’t rely on a gimmick mechanism so we dropped the group buying December 2011. We’re still focused on wine deals but, as we matured, we wanted more of a full solution.’’
Ultimately, Eikmeier, Dry and Morgan sold a majority stake of vinomofo.com to CatchOfTheDay.com.au in March this year. Before selling, the business had grown to 30,000 customers. It now has more than 100,000 customers.
This fast growth has meant that what was a two-man operation for many years now has 17 staff. ‘‘It’s challenging because we’re responsible for 17 families,’’ he says. ‘‘When we only had 20 people buying wine from us, we would send everyone a handwritten note or even ring then up. You have to find ways to keep that personal feeling when you have 100,000 customers."
While the original qwoff.com site still exists, Eikmeier admits it’s been ‘‘neglected’’. But he has plans to reinvigorate it by travelling around the country in a Kombi with Dry, telling people about wine. But for now, his focus is on vinomofo.com.
‘‘We’ve got a three-year plan to grow the company to be the biggest online wine destination in Australia. In three years, I hope that we’re turning over over somewhere around $200 million a year.’’
It’s a far cry from the 50 cases a week Eikmeier used to sell when his business was struggling. The hard work and ‘‘head in the sand’’ approach seems to have paid off. And, four weeks ago, he finally bought his family a home. "There just a huge sense of relief," he says. "Finally, we got the right formula."