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Comment by aeden | Hacker News Reader

Reading this post I can't help but think that if they had built services that the middlemen needed that they would have succeeded. For example, take the following two quotes:

"We wanted to revolutionise the fine wine industry, a market with many layers of middle men, and one that has traditionally eschewed technology, failing to patch it's many inefficiencies."

"Unfortunately, the service offered by all of these warehouses is poor. Again, we see little technology (basic online systems, preset passwords, refusal to spend money on an SSL certificate), and lots of human errors (such as very expensive wine being moved to the wrong accounts)."

If these statements are true then there are very real pain points here. Selling services to these vendors, solving their pains, is likely where there is money to be made.

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We tried this. The middle men simply weren't willing to pay for software (or at least enough to build a viable business).

It's a very antiquated market - with a lot of independent traders. Their view on software (particularly web based) is often that it's something you can get a teenager to build on the cheap and isn't worth spending real, hard cash on.

well then, it should be a simple matter to WalMart them out of business.

That would have taken a lot of money (to buy stock), and expose us to a lot more risk. Investors were backing us for the disintermediation.

I quite strongly believe that someone with an understanding of tech, the ability to build something, and take a position on stock, could make a lot of money in this market.

How much would you need?

You need a hedge-fund billionaire that is obsessed with wine to back you. He would own, (or have a perfect lean) on all the inventory allowing him to buy $10M in wine as a business investment. He would get the satisfaction knowing that he was arbing the wine market as a side project, and if it failed, he would be "stuck" with a bunch of inventory that he liked.

Exactly. There's a wine trading company called Wine Networks - a branch of SK Group (huge South Korean conglomerate).

They're relatively successful, but are hugely inefficient (no tech).

I think this is actually a decent idea worth testing. Not as the typical startup but more as a one customer at a time but big customers sustainable business.

The warehouse situation seems like it needs solving. I don't quite get why someone that buys 5k of wine wouldn't pay for a good warehouse. High tech new age warehousing for wine seems to be the in.

With some big customer that loves wine you'd basically switch to building and running his warehouse and then see how you can scale that to warehouses that store wine for multiple people.

Premium wine is pretty much comparable to art imo. Show effect and "because I can" are big drivers for buying. If you successfully run the warehouse for one rich guy you can leverage that as marketing.

Either way: Very fascinating article. Thanks for posting it.

You are missing the point. Being Italian I know exactly what problems OP is facing because are problems that almost any Italian sector has. People do not want to move on.

Coming to the specific problem OP has. The wanted to work on fine wines, not WalMart wines. If the best wine in the world, would be sold at WalMart(or any other super market) even at the same price and in the same conditions it would lose immediately value because all the research, experimentation, and everything is lost, and that is a huge part of the experience that you taste with the wine.

A practical example: you know how to make the best cake in the world, but it takes a lot of time and it's hard so you can do it only once a year, but you love it, it's your favourite cake so when you make and eat it you love it and you wish you could do more. If WalMart started to sell the same cake you would buy it once or twice but it would not be the same and you probably would end doing once a year as you always did. This is the same problem of OP, people wanted the service, used once or twice and then went back to the old habits.

I think it's an important insight that certain inefficiencies can be tied to livelihood of the customer (wine sellers) and even the end user (wine buyers). There are strong emotional attachments to the PROCESS of making wine, promoting wine and selling wine. If you go to wineries throughout Sonoma county, you can clearly see that small, independent wineries often take pride in doing everything by hand and controlling their own selling to restaurants etc.

It is very similar to bookstores and record stores. Yes, there are big players that are handling there own optimizations but if you are a small winery (or bookstore/record store) you are doing it at this point in part as a preservation of an artisanal experience. There are countless ways they can do things better but there is a genuine fear that "optimizations" can be a slippery slope to Walmart-ville, both in how they think and how they are perceived.

I'm sure there's an audience for which that's true, but it would seem like that's an edge case of people who prefer to overpay for nostalgia purposes if they could get the same product cheaper and more conveniently. Wine is often a luxury good though, so I'm probably underestimating the people who are willing to be snooty about it :)

I would have enjoyed being a fly on the wall to hear your sales pitch. I don't know the market well enough to know whether they truly would sieze the opportunity to make more profits or not. Anyhow, sorry it didn't work out for you and good luck in your next venture, whatever that may be.

Having read many of Paul Graham's essays about his time trying to start a company selling web services to art galleries, I can totally relate to the fact that there are indeed still many industries that are extremely archaic and uninclined to change the way they do business (even if small changes would make their lives simpler and their businesses more profitable).

Found it. thank you for the tip http://paulgraham.com/bronze.html

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