There’s a running joke on the great HBO series, Silicon Valley, to the effect that the only tech company that’s worth investing in is one that’s losing money.
If that’s true, then social media companies must be doing really well. However, in the case of Twitter, LinkedIn and Yelp, that doesn’t appear to be the case. The stock value of all three has gone down significantly lately, causing the San Francisco Chronicle to headline an article, “Is social media losing favor? Stocks dive on weak results.”
The issue, says the report, is “whether social media companies can keep their growth rates vigorous enough to justify their valuations.” Underlying that problem is the continuing challenge for these companies of how to maximize revenue, when their basic services are free for everyone to use. Yelp, for example, reported that ad sales have slowed down, making it harder to make money; Yelp’s CEO said the company is responding by “seek[ing] ways to increase engagement and drive awareness” in order to boost “local advertising.”
Well, “seek and ye shall find” may be basic Biblical advice, but it doesn’t always work in the real economy. I think what we’re seeing in social media is the same sort of consolidation that every other industry has experienced, with smaller firms getting driven out or gobbled up, as the giants expand their power. Facebook’s stock, for example, has been on a tear for the last three years, more than quadrupling, thanks to continued growth, including from Instagram, which it bought in 2012.
Twitter is an interesting example of a social media company, perhaps the prima facie one, whose actual financial performance consistently lags behind the weltanschauung it has created for itself in the popular culture. “Early hopes of rapid user growth were rapidly dashed,” reports the online news site, Fusion.
As a result, “the company decided to concentrate on other metrics, like ‘audience’, which would count not only people using the service directly but also non-users and logged-out users who encounter tweets in any number of different contexts.”
This sleight-of-hand reminds me of the numbers game some bloggers were playing a few years ago, with sites competing with each other based on metrics like hits, unique visits, page views and so on. I was always asking the question, What difference does it make how many hits you have, if you’re not making any money? And I was always told not to be silly, because the big-number sites would eventually make money, and plenty of it, so I should keep my mouth shut.
Well, here we are, with some of the biggest big-number social media sites in America still struggling to make money, with no apparent solutions in sight. This is why the Fusion article suggests that Facebook buy Twitter, in order for Twitter “to remain relevant over the long term.” The theory is that Facebook, which has figured out how to make the Facebook experience “personal,” could transfuse that personality into Twitter, which—however much you may like and admire it—is about as personal as a classified ad.
Still, even if it were, would that make Twitter profitable? It couldn’t hurt. But figuring out how to create a revenue stream remains the single greatest obstacle to social media sites. If they can’t figure it out, they’re going to have to change direction and become something else, if they want to survive. There’s evidence this is already happening. The Wall Street Journal recently reported that Instagram is making money from an industry not usually associated with the personal warmth and fuzziness of social media: “the commercial real-estate brokerage business,” with real estate giants like Cushman & Wakefield “using photography-intensive Instagram for branding purposes.”
I suspect my young friends in Oakland, who love Instagram and are part of the cadre that made it popular, will continue to put up pictures of their tattoos and dogs on Instagram, but you have to wonder if their dedication will survive Instagram’s transition to what they may interpret as a rapacious corner of entrepreneurial capitalism and hype. How Instagram, and by extension social media in general, straddles that stool is going to be interesting to watch.
Last week, while Americans were watching developments concerning the Comcast-Time Warner Cable merger, which eventually (and thankfully) collapsed, another more successful merger went almost unnoticed. That was the marriage between Blue Bottle Coffee and Tartine Bakery, a far happier union that consumers could celebrate, instead of worrying about.
Blue Bottle was founded in my hometown of Oakland and now has cafés throughout the Bay Area, L.A., New York City and Japan. It’s become what Starbucks used to be: the hippest java joint around, one of “the high-end coffee industry’s most respected roasters,” according to Fast Company, an appraisal shared by Bloomberg Business, which described Blue Bottle as “the next wave of artisanal coffee shops” and reported on enthusiastic investments in the company by Silicon Valley tech giants such as Google, WordPress and Twitter.
Tartine Bakery sprang from the famous San Francisco restaurant, Bar Tartine, a Mission District hotspot that helped make the Valencia Corridor one of the city’s most visited dining destinations. Tartine’s bread makers earned the prestigious James Beard Award for Outstanding Pastry Chef. As wildly popular as the bakery is, Tartine has not been able to figure out how to expand to other locations. Blue Bottle has. The San Francisco Chronicle predicts the merger will “provide mutual benefits to both,” as consumers continue to seek out “well-crafted quality, locally sourced and planet-sensitive foods.”
There are lessons for the wine industry, particularly for family-owned wineries that want a more personal connection with consumers. Consumers do want “planet-friendly” things to buy. They do want quality that’s apparent, and preferably locally-sourced. But, maybe more than anything, they want a connection with the people who sell them products and services. Never in the history of American industry has that personal connection been more important. People—in their loneliness, idealism and confusion—desire to feel something human. Not the appearance of something human. Not something crafted in some P.R. shop that seems human. Something that is human.
Tartine and Blue Bottle (I’ve been to both) provide that connection to human-ness. It’s hard to pinpoint exactly how, or to describe it, unless you’ve been there; the blogger Kevin Lindsay has called it a “visceral reaction” that can “create lifelong connections with the shoppers who can and will become compelling brand evangelists.” This is, of course, the Holy Grail for all companies, including wineries: to “create lifelong connections.” A lifelong consumer does not have to be marketed to with the same ferocity (and costs) as a new, unaffiliated consumer. This is the magic of branding: it’s why I met so many fans of Kendall-Jackson Vintner’s Reserve wines on my trip last week. It’s why the About Money website says “branding is not about getting your target market to choose you over the competition, but it is about getting your prospects to see you as the only one that provides a solution to their problem.”
What a concept! So doable, and yet so rarely done. This is precisely the challenge wineries must confront, and solve, in the coming years, if they are to remain viable, in the face not only of domestic competition but international, as trade agreements erode traditional national boundaries and the entire planet becomes a single marketplace.
How is this to be done? Now that the clamorous exaggerations for social media have begun to calm, we can see that merely having a robust online presence isn’t nearly enough. Social media is simply a tool: put a chisel in the hands of Michaelangelo and you end up with David. In the hands of a child, a chisel is merely something to thump and bang with, and possibly do damage. To really connect with the consumer, you have to think like the consumer. You have to have empathy. You have to get out of your box and into the mind and heart of the consumer you hope to reach. That may sound New Agey, but, as Mark Benioff explains in this interview about his late friend and mentor, Steve Jobs, Jobs’ spirituality (inspired by yogic meditation practices and The Beatles) made the Apple co-founder “a prophet” who knew what consumers wanted even before they themselves did. Steve Jobs not only gave them what they sought, which was a way to increase their connectedness to the world, he made them—and the world—a better place.
There’s a movement afoot in corporate America that doesn’t get enough attention but is gaining traction and could be a game changer. This movement is about inculcating social, environmental and health concerns into the sale of goods and services: call it Capitaltruism, where traditional capitalism meets idealistic altruism. And nowhere is it being embraced more heartily than by Millennials, who may feel that—since neither the government nor corporate America by itself is tackling important issues—it’s up to them.
Two recent developments illustrate this movement. The first is reflected by the rise of the “B Corporation.” The “B” stands for “beneficial.” A B Corporation is “a for-profit company committed to social or environmental goals in addition to its financial obligations.” That’s according to this article in the San Francisco Chronicle that describes how such corporations try “to benefit not [just their] shareholders, but also society.”
Millennials in particular are “drawn to firms that do good.” B Corps are certified by a third party, B Corporation, that claims to have registered 1,247 companies in 38 countries, across 121 industries, including wine. A Brookings Institution study found that the “desire on the part of Millennials for their daily work to reflect and be a part of their social concerns” is a chief factor in their choice of careers—and in their purchasing decisions.
The second development, reported courtesy of the Wall Street Journal, is of two California restaurateurs, Daniel Patterson (of Michelon-starred Coi in San Francisco but also of Plum Bar in Oakland) and Roy Choi, who got his start with L.A. food trucks. The pair have started up a company, Loco’l, whose aim is to replace the dismal diet of unhealthy fast food that now dominates less affluent neighborhoods with what Patterson calls a “natural, cooked-with-integrity alternative.” The first two Loco’ls will open in San Francisco’s Tenderloin and in Los Angeles’ Watts district. The foods will cost between 99 cents and $6 and will include things like a “Burg”: a beef-grain-garum [fish sauce] patty with Awesome Sauce, Jack cheese, grilled scallion and lime relish, on a Tartine Bakery bun. Sounds good, doesn’t it?
What do these two initiatives have in common? For one thing, both the Loco’l people and the B Corp people want to make money. But they want to do so in a way that addresses serious social concerns that, frankly, are not yet being addressed adequately. Both ventures are fueled by idealism and creativity, and both fill an important niche in a consumer market that’s been waiting for somebody to give them something worth spending their money on. What a fabulous idea!
Have a great weekend!
Both cities have come a long way over the last ten or fifteen years. When I began visiting Napa Valley, in the 1970s, Napa city was (let’s face it) kind of a drag from a tourist point of view, although it did have that All-American City cleanliness. Downtown was a heap of mattress stores and “antique” parlors that were little more than flea markets. As for Calistoga, it was the redneck side of the valley. My roommate Eugene’s parents lived up there, in a trailer park. Nobody I ever heard of went to the mud baths, except Eugene himself, for his arthritis.
Napa city was first to change. New restaurants began to go in. They developed that Riverfront area, and built all the flood control projects to keep downtown from its periodic inundations. COPIA brought in some travelers, but even its closure didn’t seem to put a dent into Napa’s attractiveness as a destination.
Calistoga by contrast seemed content during the first decade of the 2000s to glide by on sleepy feet. A few good, new restaurants went in, but otherwise, Calistoga remained more or less a backwater. When Solage opened, I took notice, but it seemed more of a standalone luxury resort than a reflection of any underlying change in the town of Calistoga; it wasn’t even within walking distance of the town center, but a schlep down the Silverado Trail.
Now, however, the Santa Rosa Press Democrat is reporting that Calistoga is “shifting to more emphasis on the high-end, luxury tourists,” to quote its city manager. New “luxury resorts,” priced at “$300 to $1,200 a night,” are going in, financed by the likes of the Four Seasons and Hong Kong billionaires. That this will change the character of Calistoga is granted by everyone. The Press Democrat article correctly surmises that the changes will bring more traffic and will result in much more water use; critics of the development managed to put initiatives limiting it on the local ballot, but these were defeated by the voters, who evidently felt that Calistoga’s chronic budget shortfalls, which impacted such local services as police and fire, would be made up for by increased tax revenues and tourist spending.
It’s not for any of us to judge whether Calistoga’s new ambitions are a good or bad thing. It’s for the people of Calistoga to decide, and they already have. What’s certain is that Napa Valley, from Yountville north through St. Helena to Calistoga, now has become a luxe destination for upscale travelers from all over the world—whether they’re into wine or not. Outside of San Francisco, Napa Valley is the culinary capitol of Northern California (The Restaurant at Meadowood and French Laundry alone would suggest that). It’s also the golf capital and the spa capital. And all in all, the politicians and city fathers and mothers who manage Napa Valley’s growth have done a good job of managing development and keeping its too-ugly side from creeping in.
Except for the traffic. It’s very bad now, and bound to get much, much worse. I know of no plans in place to expand or allieviate automobile access into and out of the valley, on either the Silverado Trail side or the Highway 29 side. (They certainly can’t add new lanes to 29 between St. Helena and Oakville, can they?) Napa Valley seems to have accepted the conventional wisdom that gridlock is the inevitable cost of development. It’s too bad, but what are you gonna do?
You’ve probably read about it: According to Fox News, a new study out of Spain has been widely reported to “prove” that “People think weaker wine tastes better.”
But, in fact, the study doesn’t show that at all; and much of the second-hand reporting on the study actually shows how lazy journalists can be.
For example, the Fox account of the study claims that “people think wine with a lower alcohol content tastes [better] because it allows them to focus on the diverse flavor profiles of the beverage.”
That’s a pretty sweeping statement. If you’ve been deep into the alcohol-level tall weeds, as I’ve been, you might think, “Wow, that gives credence to the In Pursuit of Balance argument.” But, in fact, if you read through the entire Fox report, you won’t find a single wine variety mentioned. You will find the implication that wine with 12 percent alcohol “induce[s] a greater…exploration of sensory attributes” than wines in the 14-15 percent range, or higher.
Well, let’s think about that for a minute. Do you really want to drink a 12 percent Zinfandel? A 12 percent Petite Sirah? A 12 percent Merlot, Cabernet Sauvignon, Sauvignon Blanc or Viognier? In fact, let’s be even more generous and raise the alcohol level on those six varieties to 13 percent. What do you think they’d taste like in California?
Not very good. They wouldn’t be ripe—nowhere near ripe. They’d be all sour in acidity, with chlorophyll flavors and tart green fruit. This is why California vintners allow those varieties to get ripe enough to yield wines above 14 percent and usually above 14.5 percent. In the case of Zinfandel and Viognier, sometimes the alcohol level is 15 percent or higher.
When we’re talking about Pinot Noir (and sometimes Chardonnay), the story is, of course, different. California can indeed produce splendid Pinots below 14 percent in a good vintage, as the recent I.P.O.B. tasting showed. But to use the Spanish study to “prove” that consumers don’t like any wine over 14 percent is completely misleading.
Let’s look at the study itself, not just Fox’s reporting. Its key finding—the one seized upon by so much of the media—is, “significantly greater activation [of the brain’s flavor-processing regions] was found for low-alcohol than for high-alcohol content wines…”. It is this assertion that led to such headlines as:
“Does weak wine taste BETTER?” (Daily Mail)
and “Taste Perception Higher With Lower Alcohol Wines” (The Drinks Business)
But, again, the actual study did not identify specific grape varieties that were given to the subjects. (Does anyone really think that a low- alcohol Zinfandel from Amador County or an unripe Viognier from Russian River is “more appealing” than a ripe one?) All the study says is that the wines tasted “were red Spanish [varieties] coming from Rioja, Navarra, and Cataluña),” of unidentified grape varieties (although we can presume they were old varieties like Garnacha, Tempranillo and Monastrell; there may have been some Cabernet and/or Merlot blended into them to make them richer). All of the 26 subject tasters were Spanish. From this, we can infer that the subjects all had palates geared towards Spanish (not California) wines. We also can infer that, in all probability, they are not familiar with our California wines that routinely clock in higher than 14.5 percent alcohol. And so, it seems to me, the study has very little application to an assessment of ripeness and alcohol levels in California wines.
Discover Magazine also reported on the Spanish study and also read into it things that are not supported by the facts. They wrote: “people tend to pay more attention to the flavor when the alcohol content is low.” Well, I would wager that if you give a big, tasty California Zinfandel, Petite Sirah, Cabernet, Viognier, etc. to anyone, even Europeans, they would not and could not indict it for lacking in flavor! Some of them might not care for that particular wine—but they’d pay attention. And that’s what makes the world go ‘round: Different strokes for different folks. That doesn’t bother me at all—but sloppy reporting does. The Spanish study simply doesn’t support the “low alcohol wines are better” headlines.
Doesn’t it seem to you like these stories lately about microbes in soil affecting wine are making the concept of terroir even more complicated than we thought it was? We used to think terroir was a matter of the physical structure of the soil and the climate, or meso-climate, of the vineyard. John Winthrop Haeger, in his encyclopedic “North American Pinot Noir,” interpreted the soil part to include “orientation and aspect,” and possibly the “chemical composition.” But he said nothing about microbes.
Emile Peynaud, the great French enologist, in “The Taste of Wine” similarly referred to terroir’s “combination of site and soil,” and while he differentiated between “surface soil [and] subsoil and its water content,” he, like Haegar, has nothing to say about microbes. (For the record, as I’ve pointed out before, Peynaud takes note of the hand of man in crafting wine’s qualities in introducing the word “cru” to denote the combination of terroir and human intervention.) Even as hardcore a scientist as Clark Smith, in “Postmodern Winemaking,” refers to no fewer than “sixty five data dimensions” in soil analysis, but they have to do with structure, chemical composition and water content—not microbes.
So if this new report on the “wine grapevine’s microbiome,” published by the American Society for Microbiology and widely reported in scientific media, is true, we’re looking at a vastly more complex explanation of terroir than anyone has envisioned up to now. The study looked at “how different bacteria colonize these plants [i.e. grapevines] and also how those microbes might ultimately contribute to the wine’s sensory properties.” The study found a very close connection—almost an identity—between the “bacterial species found in the plant [and] the soil it was growing in.”
While one of the scientists who conducted the study, Jack Gilbert, conceded that “We don’t have evidence that bacteria are specifically contributing to terroir,” he firmly concluded that “those bacteria are affecting the chemistry of the plant,” which seems to pretty conclusively state that the microbes are, in fact, impacting terroir, since the chemistry of the plant obviously plays a large part in the qualities of the wine made from it.
The thing that puzzles me is this statement from Gilbert, which really requires more explanation than I’ve been able to find. “No matter where you are in the world, the types of bacteria growing on or in Merlot grapes are quite similar.” Gilbert looked at Merlot grapes or wine from Long Island, Bordeaux and California and found “similar bacteria species” in them all. Several things are unclear. Were the Merlot microbes also found in lab specimens of other grape varieties and wines? Were the Merlot bacteria substantially different from the bacteria associated with other varieties? Why should plants growing as far apart as California and France all possess similar bacteria? Does this suggest that Merlot itself can only thrive in the presence of certain bacteria?
I hope the scientists do a lot of followup work in these areas. This entire conversation about terroir has been stuck in a ditch for decades, and important new discoveries in the vine’s microbiome may help to push it forward. It will certainly give wine writers a whole new area to write about.