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So what’s really going on with Crushpad?

27 comments

I was shocked and saddened to read yesterday that Crushpad, the do-it-yourself winemaking facility that opened in San Francisco in 2004, had suddenly gone out of business, according to Lewis Purdue’s Wine Industry Insight [no online link available yet].

The article said “the company was desperately seeking $500,000 last week in a last-ditch effort to stay alive after the company’s main investor, Bill Foley, refused to underwrite any more of the operation’s mounting losses.” It quoted sources as blaming Crushpad’s problems on the recession. Even the wealthy no longer have the discretionary income to spend thousands or even tens of thousands of dollars on what is, essentially, a vanity project.

I covered Crushpad and reported on it when it first opened its doors, in a warehouse-turned-winery at the base of Potrero Hill, in San Francisco. It was then that I met Michael Brill, its then CEO, a smart, funny guy whom I’ve bumped into over the years. He described the business model to me: get great grapes (Bien Nacido, Beckstoffer Tokalon and Stagecoach, for example), hire great in-house winemakers (from the likes of Siduri and PlumpJack), as well as great consulting winemakers (from Clos du Val, Loring and Surh Luchtel), then let the customer choose his or her level of involvement in the wine’s production–everything from passive to intimately active.

I chatted with a few of Crushpad’s earliest customers and they were ecstatic. It didn’t surprise me when Crushpad grew so big that it moved from San Francisco to Napa, and opened a second field office, in 2009, in Bordeaux, at no less than Lynch Bages, whose Cazes family invested in the company. Crushpad seemed the very essence of success: Brill & Co. had discovered a niche in the wine market and exploited it brilliantly. They even crashed the reality T.V. circuit when the 2007 series, “The Winemakers,” was filmed there.

However, is it really true that Crushpad is closing? In the Wine Industry Insight article, Perdue wrote: “Former CEO Michael Brill, who founded Crushpad in 2004, stated in an email that this article contained inaccuracies…”, while current CEO Peter Ekman told Perdue, “Since I can’t stop you from writing an article, I can only ask and hope you will reflect the optimism for the future our clients, shareholders and employees share about our business.”

And then, this morning Perdue issued an “update” in which he added a question mark to the article’s original headline, so that it now reads “Crushpad closing?”. He also wrote that “Crushpad subsequently launched a Twitter smear campaign against Wine Industry Insight and attempted to have Tweets about the article withdrawn.” And he quoted this email he said he received from Ekman: “If we [Crushpad] do not receive sufficient interest, we will be forced to initiate a wind-down process in the very short term.”

I don’t know exactly what’s going on between Perdue and Ekman, much less with Crushpad, but I do sincerely hope that Crushpad does not close. Supposing the information about Foley is true, it seems to me there should be plenty of other investors out there who believe in the future of Crushpad and would be willing to help it during these tough times.

  1. Only thing going on between be and Ekman is that he stonewalled me when I asked him for information.

    Then subsequently launched a smear campaign. All he needed to do was be honest and straight-forward. And he never denied the company was closing in his email to me. But, then, he went all Richard Nixon about vague inaccuracies that he would not define.

    Facts are what’s needed. He doesn’t want to share facts.

    My job as a journalist is to gather facts. And therein lies the roots of a conflict that will subside when the facts come out.

  2. Here’s the link to the original article: http://wineindustryinsight.com/?p=44706

    And to today’s: Crushpad Implosion: Investor Communication Sheds More Light http://wineindustryinsight.com/?p=44744

  3. Thanks Lewis for keeping us informed on this developing story.

  4. Lewis: I’d root for you a lot more as a fellow journalist if you didn’t steal my blog posts, along with other people’s, and run them inside a window on your site.

  5. Sincerely hope this isn’t true. We got our start at Crushpad as have many other small wineries. Our experience throughout was always first rate and we couldn’t have been happier with the people, process, product, and results. Sad to think that the next generation of wine makers might not have Crushpad as a potential “launchpad” for their aspirations.

  6. Blake, your blog posts in a frame are not “stolen.” Nothing robs you of click-throughs, traffic or visibility.

    This is not like some sites that cut and paste LARGE amounts of someone else’s writing and pop it into their own blog … that steals from the original author by publishing so much content that the reader doesn’t need to click over to the full article.

    Check around and you’ll see those.

    Calling an iframe “theft” is pretty harsh a well as unfounded especially when you could just as easily have emailed me.

    All you needed to do was ask me to do otherwise and I would have been happy to do so

    And will do so.

  7. I don’t know Jack about Crushpad–except for this.

    It is one thing to be a small, entrepreurial startup business. It is another to go big time with sites in Napa and Bordeaux.

    The concept, in its original incarnation, had great merit. The results, as attested to by Brian Overstreet above, were the proof in the bottle.

    But the wine business is a business. It is not part of the social safety net, and it needs to stand on its own. Was it making money in SF? How did it all of a sudden get caught up in Bill Foley’s big money game.

    I have no problem when small business want to expand. Some of them grow into Apple and Microsoft. But, some also overreach and fail. It’s known as capitalism, and Crushpad, if the basic premise is sound financially, will reappear in some other guise with new players and new energy.

    If the King is dead, there will be a new King soon enough.

  8. Kurt Burris says:

    Blake: I read and like your posts, but the only way I get them is through the WII email news roundup.

  9. Ross Outon says:

    Crushpad has been poorly managed for years. Even as the economy was falling off a cliff and they weren’t paying their bills here, they’re opening up Bordeaux and German operations. They took whatever press and profit they got from The WineMakers and then screwed me, the “winner” on the back end do they could move twice in a year’s time. They failed not just because the economy dropped but because wine margins are piddling to former tech geeks who want to live a rockstar lifestyle.

  10. Here’s a recent comment about Crushpad from winemaker Russ Orton: http://wineindustryinsight.com/wp-admin/edit-comments.php?p=44731

    “Here’s a fact: Crushpad has owed me money for almost 2-and-a-half years. They produced a wine for The WineMakers on PBS, sold 6000 cases and then screwed me (the “winner”) on my cut of the revenues so they could move. Twice. They quit communicating with me in March with a balance due of close to $9000.”

  11. Kurt, thank you for the comment. I try to treat people fairly, and know from blogger comments that News Fetch brings them extra traffic when I include them. That would not be happening if I were stealing their work.

  12. re: Blake Gray’s “steal” comment, it doesn’t bother me when these news sites feature my blog. It increases my traffic! So I see no cause to complain.

  13. James McCann says:

    Vinfolio, Lot18, Wineshopper, IBG, Crushpad, etc… when will people learn that when you take investor’s money, you need to either: A)Become profitable enough to return their money, or B)Grow the topline enough to sell the company for more than the investment

    The wine business is going to find it increasingly difficult to raise VC funds without a solid success story to balance all of the negatives.

  14. If Bill Foley won’t come up with $500k to keep it afloat, that says a lot.

  15. Steve – I nearly made some wine at Crushpad back in 2009 / 2010 with a group of people, but I decided to use $2,000 to $3,000, that I would have spent at Crushpad on ’09 Bordeaux futures.

  16. Crushpadian says:

    I knew Crushpad was dead when they left SF. The whole point was to be an urban winery and bring wine country to the city, when they left they became one of thousands. Business model aside they made some great wine and got lots of people into the space. They will be missed.

    As for Lew he is constantly breaking quality stories which is great, however I HATE his iframe on his 3rd party links. It feels like he is desperately trying to force me to stay on his site. When I want to save a link I have to search for it outside of the email which is greatly annoying. Obviously he does not trust his readers to come back.

  17. James McCann,
    Being an armchair quarterback to all of those companies is unfair and you seem to have very little understanding why you take investment or what happens after you do. Every company you mentioned has moved the ball significantly forward and many are still operating despite the inertia of the industry (pun intended). It is nothing but difficult to build a successful 5th Column Company in this industry due to a myriad of factors (see my previous blog post – http://www.vintank.com/2012/05/the-reality-of-being-a-5th-column-company/). Instead of commentary, it would be more interesting to see your contributions than your pedantic assessments. I am saddened by the loss of Crushpad as should much of the industry. I am also saddened to see the current management’s current behavior. There are better ways to handle key industry reporters like Lewis Purdue: with the truth.

  18. Paul Bergeron says:

    I have been a Client of Crushpad for many years, occasionally skipping a vintage here and there because my consumption can’t keep up with the fun of making wine. I have never experienced anything less than great wine, service and fun.
    I called them today, they answered the phone, answered my questions and I even prodded them to get their take on the whole Lew Perdue articles and was told that everyone is entitled to work their own stories and they don’t harbor any ill will towards him or any of the other piling on that seems to be going about the message boards.
    I disagree with Paul Mabray’s comment regarding current management of Crushpad. I don’t see how they owe Lewis Perdue anything. He was clearly forwarded an internal communication from a former investor that did not have the best interest of Crushpad’s staff or clients at heart, or else why would they send something that has no context and can cause so much damage.
    Lewis Perdue for whatever reason, clearly has issue with Ekman and Crushpad, regardless of what he stated in the initial comments above (I’m just not buying it). The main point that I noticed in his article is that he quoted an email that did not talk about closing the doors, it talked about winding down the business (I have used this same language when looking at restructuring or downsizing) – the creative license he took by telling the industry they are closing down was extremely harsh. Especially when there was nothing in Brill or Ekman’s comments to warrant it.
    I have confidence that there are some smart people at Crushpad and hope they can turn it around. Meanwhile, they seem to have the interest of their clients and shareholders at mind, not a pot-stirring wanna be reporter, or angry former investor.
    My $0.02.

  19. raley roger says:

    What James McCann said. That’s it in a nutshell.

  20. Paul Bergeron, I sincerely hope you’re right. Crushpad was/is a great little company and despite the carping they’re getting from various corners, they had/have a great idea. I hope they pull this out and succeed.

  21. Note to Paul Mabray–

    No one is addressing the central issues here. What happened to a very successful urban business?

    Napa Valley? Germany? Bordeaux?

    Bit off more than they could chew?

    Can come back or will disappear? Winding down is not slowing down. In business parlance, a winding down order means that the doors are about to be shuttered.

    It is not that Crushpad owes Lew Perdue an answer, but the company is ducking and weaving and, whether they are or not, it feels like they are either in denial or are obfuscating. They may not even know the answer themselves as they try to line up the money to stay afloat.

    But, you have hit the nail on the head when you said that there are better ways to handle the public telling of their story.

  22. So what are current Crushpad clients doing? My understanding is that Crushpad handles their compliance, licensing, etc. Are there other services out there able to step in and handle these functions?

  23. I just wanted to chime in to mention http://www.CityWinery.com is moving forward with our second urban location in Chicago later this summer. Based in Manhattan, we certainly were inspired by CrushPad and even hosted a great tasting competition in NYC with Michael Brill. (It was a close contest, but we lost ;-)

    City Winery is a unique space to enjoy world-class wine, food, and music. Our robust business model includes an opportunity for individuals to make their own wine and we have many corporate and individual customers. Our concept is growing and we have further plans to continue bringing winemaking to additional urban locations.

    Obviously we differ significantly from CrushPad as our model had multiple revenue streams since inception – specifically a concert space with almost nightly shows, a restaurant, bar and multiple private-event spaces. This has proven to work well in this economy. Our barrel owners gain additional benefits and perks which have proven to also be attractive. There is a real symbiotic relationship between the winery portion of the business and the concert space and restaurant. Our winemaker has been killing it with approachable styles of a wide selection of varietals. We even offer 10 of our in-house wines on tap! Steve and Lewis come visit!

    -j.

  24. I love Crushpad. It’s been a great business for many people.

    My only issue here: I sent Peter Ekman a draft of the article. I asked him for comment. He read the draft.

    He emailed me back a vague “this story is inaccurate” but did NOT dispute the “closing” part. Or tell me what was inaccurate.

    I have heard that same line over and over … from the reporting I have done on Cosentino, Ascentia and others. Hell, I heard that from former members of the Nixon Administration when I was a Washington correspondent.

    Had Ekman simply said, “no we are not closing. We are re-structuring.” The article and headline would have been different.

    But to launch a Twitter smear campaign against my work after being given a FIRST look at the article and opportunity to correct it — and FAILING to do so — is the essence of this whole thing.

    Had Peter Ekman acted responsibly, the tone and content of the article would have been different. But no matter how a journalist tries to be accurate and complete, much responsibility lies in the lands of those directly involved.

    A little honesty and transparency goes a long, long way.

  25. This just in:

    Cazes Family Takes Over Crushpad Bordeaux, Updates Clients
    http://wineindustryinsight.com/?p=44802

  26. For people still interested in making wine in the San Francisco area, try Bacchus Wine Making in San Carlos. I have been making wine there for 5 years now and the wines are really really good. The cost at Bacchus is ~ 1/4 of that of Crushpad.

Trackbacks/Pingbacks

  1. Honesty: The Crux Of The Crushpad “Closing” Controversy | Wine Industry Insight - [...] left a shorter version of this a few minutes ago on Steve Heimoff’s blog (So what’s really going on …

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