Your Business Must Make Sense in Excel First!
And more advice from Michael Dorf, Founder and CEO of City Winery . Michael started the Knitting Factory in 1987 and ran the company until 2003. In 2004 he made a barrel of wine in California and caught the bug which lead to the creation of City Winery in 2007--a combination winery, restaurant and intimate concert space. Now City Winery has locations throughout the East Coast and Chicago. You can read more of Michael's experience in his book, "Indulge Your Senses, Scaling Intimacy in a Digital World."
1.Don't Be Dishonest in any Aspects of your company!
I started the Knitting Factory 36 years ago. It's crazy to me how long it has been. Early in my career, very early in 1988, the DAT machine was released. I wanted to get into digital recording, and I couldn't afford a DAT machine. I wanted one so we could more easily record shows at the Knitting Factory. There was one on the Bowery for sale by a guy on the street next to a set of golf clubs and another stereo system. It didn't take a law degree to know that this was hot, but it was in the box and unaffordable to me under normal circumstances. And he only wanted $500 in cash for a $10,000 machine. And I stupidly said yes. In my mind, I thought, well, it's already been stolen. I may as well put it to good use. And so I bought it. About two months later, the Knitting Factory was broken into late at night, and all of our sound equipment was stolen. We were in a pickle because we didn't even have a PA system, amplifiers, or anything. So the lesson learned there was never stoop to buying anything hot or doing something wrong because karma is a bitch. It will come back to haunt you. City Winery is above board for any New York City Club in terms of how we operate. We are squeaky clean. And, I feel very lucky to have learned that lesson early on. Truthfulness is worth it and, it is critical.
2.Your business must make sense in Excel first!
The ability to do something again, start over, and start fresh is a blessing. My first business was the Knitting Factory, and then I created City Winery as my second business. It is one of those rare gifts that you can relook at how you did things with your first business. You can look at all the mistakes made and try and fix them in your second one.
One lesson I took from early on doing business and applying them to City Winery was to think in Excel. After it makes sense in Excel, then you can put it into Word or PowerPoint to make it look good. But it must make sense in Excel, no matter what you're doing. Even if the intended purpose is to lose money or get grant money, it needs to have some quantitative numerical rationalization. And I've been using that to this day, and it is crucial to the success of City Winery.
3.You can't be Everything.
I would say the other huge one that came out of the mistakes from the old days is that I now very clearly understand that I have limited options as to what I'm good at and what I am able to do. As well as the value of having great team members to work with and the value of the team itself. There's only so much that can be done by myself. And so, for instance, I don't know how to make wine. I don't even know how to make drinks, and I am certainly not a chef. These are all things I love. But you need really good people to do them. In the Knitting Factory days, I valued the team as much as I do today, and I recognize how absolutely critical the team members are to the success of the business. Now we have 150 employees. So, it's a big team. But I try to keep them as happy, satisfied, stimulated and inspired as my role as the leader of the company.
At the Knitting Factory, I had a couple of key people, and it was small enough that we always seemed to find people. And many people wanted to work there, but valuing and listening to them, taking their input, and recognizing their contribution was very important. It's more about creating a culture that fosters that level of teamwork that leads to overall success.
4.If something is not working, make a change quickly!
We opened in Napa, California and closed fast. One would think that we would be perfect for Napa. But we made a big mistake there. As the saying goes, you don't bring coal to Manchester or sell ice to Eskimos. And, of course, Napa is not a city. We went into Napa Valley knowing there were 6 million tourists that come each year. These are wine tourists who love wine and are affluent. This is exactly the audience that we are looking to attract. We actually were doing really well and would sell out our concerts. The problem was that the audience that was coming was wine tourists. And for the most part, they've been drinking wine all day long. And at 6:00 for dinner and 8:00 for a show, they didn't want to drink any more wine. They were ready to hydrate and have water. We could barely sell any alcohol. And our business is all about selling it. So, that was something that you live and learn. That was a big mistake that we will never make again. Instead of bringing wine to wine country, we needed to bring wine country to the city, which has been the strategy going forward.
5.When the Unimaginable Happens.
There's a great Yiddish expression, and I have this on my desk because the last couple of years has made this expression very poignant. It says, "Man plans, and God laughs." We had plans at the end of 2019 to expand to our new location. And we were raising a lot of capital from the private equity markets. We were all set, and then boom; we went from 1400 employees at that point to down to 50 in one day. We had no choice. It was one of my life's most difficult moments. It was devastating. People like to use the word pivot. This wasn't a pivot moment. This was a put on the brakes, and understand that nothing can be done except keep low and proceed. Throughout the entire pandemic, we had to navigate being a music venue that couldn't bring people together. It was a fundamental stop to our business model. It was incredibly challenging to see the sky was blue and keep it together, and was certainly the single biggest challenge we've been through in 36 years. We had to regroup and move forward after these extraordinary set of events.