Finds Heady Growth – San Francisco Business Times

SAN FRANCISCO, CA – 9/12/2008

After a bumpy 10-year history highlighted by burning through $72
million in venture capital in various incarnations, may have
finally found its feet.

The San Francisco-based online wine store expects to break even
this year for the first time, or possibly eke out a small profit. That's
on $45 million in estimated 2008 revenue, most of it from upscale
consumers and corporate customers with lots of disposable income.

Under new leadership since mid-2006, shed one-quarter of
its workers two years ago and slashed its marketing budget,
cost-cutting moves that appear to have paid off. Under CEO Rich Bergsund
and founder Mike Osborn, now the company's vice president of
merchandising, says it's finally turned the corner.

"It's pure retail — getting the right product on the shelf at the
right price," said Mark Vadon, a board member and investor.
"And this management team really knows what it's doing. They've put
themselves in a pretty positive position right now."

Vadon, who founded online jewelry giant Blue Nile Inc., recalls
that "people thought we were crazy (in the early days at Blue Nile)
trying to sell luxury products on the Internet." But his company,
founded in 1999, now sells more engagement rings than Tiffany’s,
according to Vadon, and had sales of $319.3 million last year.

Vadon’s not expecting an instant flood of profits at
Instead, the goal is to build it "into a very successful business within
a decade." operates two retail stores — one in Berkeley, inside its
81,000-square-foot warehouse at 2220 Fourth St.; the other in East
Hampton, Conn. — but sells most of its wine online, shipping to 25
states and Washington, D.C. It has eight warehouses nationwide in
addition to the Berkeley site.

Its goal is to become "the ultimate resource for wine
enthusiasts," said Bergsund, a partner at Bain & Co. consulting firm
and later the founder and CEO of online hobby and crafts site, before joining in June 2006. He said that means
offering a great selection, convenience, high value, quick delivery and
lots of online information about wines available for purchase. Also
critical are popular features like "90 under $20," an updated online
roster of relatively inexpensive wines with ratings of 90+ (on a scale
that goes to 100) from top wine critics like Robert Parker's Wine
Advocate, Steven Tanzer's International Wine Cellar and Wine Spectator

The site also includes winemaker notes, wine "pedigrees" that
show the history of how various wineries' wares have been ranked in
recent years by leading critics, a searchable data base and a shipping
club that gives discounts to loyal customers.

In mid-June, reported that it had been ranked as the top
online wine store by Internet Retailer Magazine, in terms of revenue,
for the fourth year in a row, and ranked 13th overall in the food and
drug category, and 207th in the top 500 e-retailers.

"Two years ago, we had a break-even point of $120 million in
sales, so the company was losing a lot of money," Bergsund said. This
year, with estimated sales at or above its break-even point of $45
million, he and Osborn say has momentum. Investors "are behind
us 100 percent," Bergsund added, "and we're in it for the long haul."

About is the nation's #1 online wine retailer, according to Internet
Retailer magazine's annual ranking of websites by revenue, offering
thousands of wines, wine gifts, gift baskets, and monthly wine clubs.'s mission is to be the ultimate resource for wine enthusiasts,
whether shopping for themselves or sending a gift, by offering a great
selection, low prices, convenient delivery and helpful information. is the world's most visited wine web site, according to
research conducted by comScore Media Metrix. For more information, visit
the company's website at
, its blog at
, or Facebook at
Twitter at


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