Barefoot Wine: Bonnie Harvey and Michael Houlihan

Bonnie Harvey and Michael Houlihan started Barefoot Wine with $300,000 in debt and almost no knowledge of wine. What they did understand was how to sell it—with a carefree name and label that evoked the beach, and a consistent flavor and low price point that attracted shoppers who normally rejected wine as being too snooty. But winning over that audience took extreme patience, and years of pavement-pounding by Michael. In 2005—twenty years after launch—Barefoot had become ubiquitous, and was acquired by E & J Gallo, one of the biggest wine brands in the world. This episode was produced by J. C. Howard, with music by Ramtin Arablouei Edited by Neva Grant, with research help from Olivia Rockeman. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected]. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:45Guy Raz?

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• 1:30Guy Raz?

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• 2:14Guy Raz?

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• 4:23Guy Raz?

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• 5:07Guy Raz?

  Visit mobili fuels.com for details. Hey, really quick before we start the show, we have an announcement about a really exciting new thing we're launching, a newsletter. And like our show, the newsletter is designed to be interesting, informative, inspiring, and most importantly, fun. It's 100% free. And to sign up, just visit guyraz.com. That's G-U-Y-R-A-Z.com.

• 5:47Speaker 01

  He takes the bottle in his hand and he spins it around and he looks at me and he goes, "Are you crazy? You put a foot on it. You can't put a foot on wine." Yeah. He says, "And nobody's ever heard of this barefoot idea." So I say, "Okay, well, you know, what am I going to do, Don? We bottled it all up for you." He says, "Well, I guess you're going to have to sell this to every independent, every mama, papa, every corner grocery store, every restaurant, until it becomes a household name. When that happens, I'll put it in." And I said, "But that's going to take years, Don." He says, "That's right. You better get started."

• 6:33Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:44Guy Raz?

  I'm Guy Raz, and on the show today, how Michael Houlihan and Bonnie Harvey stumbled into the wine business and then disrupted it by marketing their brand like beer and growing it into one of the top-selling wines in the world.

• 7:03Guy Raz?

  When starting a business, there are obvious advantages to being an insider, and we've told some of these stories on previous episodes. You might remember the show we did on the pet food brand Freshpet. Before Scott Morris launched it, he worked for the cat food giant Meow Mix. Before she launched her eponymous label, Tori Burch worked for luxury brands like Ralph Lauren, Vera Wang, and Luweve. Jim Van De Hei was at The Washington Post and Politico before he went on to found his media company Axios. And all those experiences were really helpful for each of these founders because they knew how their industries worked. But most of the time, most of the founders who've been on the show don't really know

• 7:47Guy Raz?

  a whole lot about the category they're getting into. And that is also a kind of advantage because it allows you to approach your business with an almost childlike naivete, which, in many cases, is useful. Before they started Barefoot Wine, Bonnie Harvey and Michael Houlihan knew very little about wine. Both of them were accountant/consultant types. They didn't know about terroir, or vintages, or noble grapes. They couldn't tell you the difference between a claret and a Beaujolais. But they did manage to create what is now one of the biggest wine brands on earth. And there's a good chance you can picture the logo. It looks like a footprint in the sand.

• 8:32Guy Raz?

  But here's what Bonnie and Michael did know when they launched Barefoot back in the 1980s. They knew that wine wasn't being made, or at least marketed, for people like them. It was impenetrable, snobby, and felt exclusive. They wanted to market wine to beer drinkers. They wanted the wine to taste consistent no matter when you bought it. And they wanted a label that evoked fun, which is why you get the footprint in the sand. Now, if all of this sounds like it was easy, it was far from it. Bonnie and Michael spent years and years trying to convince skeptical buyers from supermarkets that they were on to something.

• 9:15Guy Raz?

  But today, Barefoot Wine is worth over half a billion dollars, and it's a huge part of the E&J Gallo Company. Bonnie and Michael met and became a couple in the early 1980s. As kids, Bonnie grew up in Portland, Oregon, Michael in Oakland, California. After college, Michael got a job in government advising businesses on urban renewal projects for the city of Oakland.

• 9:39Speaker 01

  And in the process, I learned how to write business plans and write business procedures and manuals and job descriptions and checklists and all of this fundamental stuff. Then I realized that I was going nowhere in the government, and my grandmother, she just about died when I quit. She said, "Oh, Michael, you gave up that fine civil service job with all that great security." Yeah, but I was business-minded, and the government was not the place to be. However, I learned about government, and I learned about how to get things through the government. And then I had the opportunity to move...

• 10:19Speaker 01

  To Sonoma County. Now, when I was a kid, my parents used to bring me to Johnson's Beach in what we called Gurneville, which is actually Gurnville.

• 10:28Guy Raz?

  Gurnville, yeah.

• 10:29Speaker 01

  In Sonoma County. And of course, now that I've moved here, what is the industry here? Well, it's the wine industry. And so I get sucked into the wine industry as a consultant. And so that's what I was doing, really, when I met Bonnie.

• 10:45Guy Raz?

  Okay, so you're fully ensconced in Sonoma County, doing consulting work, and it turns out that you end up working, because Sonoma County is, I think, one of the top producers of wine in the United States. And so that's, there's work to be done there. Okay, so you're there. Bonnie, you grew up, or you were born in Portland, and I think grew up in Oregon. Tell me a little bit about how you ended up in the Bay Area.

• 11:11Speaker 02

  Well, I like traveling. And San Francisco was such an exciting place. I was hearing about it and reading about it. And I thought, I've got to go to San Francisco. So as soon as I turned 18, basically, I headed off to San Francisco.

• 11:26Guy Raz?

  And tell me about, a little bit about what you were doing for work?

• 11:29Speaker 02

  Well, I started off working for temporary agencies, and I'd go out into other businesses and take care of whatever they needed.

• 11:37Guy Raz?

  Like you would just be sent off to be a receptionist for a day, or a secretary for a day, something like that?

• 11:42Speaker 02

  Do filing, do coding.

• 11:44Guy Raz?

  Yeah.

• 11:45Speaker 02

  You know, other boring stuff. But as I worked for them a little longer, I started getting more interesting jobs. And once you've learned how to file, there's no challenge after that.

• 11:56Guy Raz?

  Yeah.

• 11:56Speaker 02

  So I was interested in learning more about business. It was exciting for me to learn, so I continued to work with, much like Michael did, the clients that I got on a temporary basis through the agency. I would go back and work with them because I would recognize a need that they had, that I knew I could fulfill. So I started getting my own clients after that.

• 12:21Guy Raz?

  So, so basically, you would go in, and what a great idea. I mean, you'd go in and to small businesses and help them just organize their books and their ordering and their likes, because a lot of people are not good at that. They're just not, I'm raising my hand here.

• 12:38Speaker 02

  Yeah, exactly. They're brilliant people, and they're very good at what they do, and they're good at their own business. But I quickly realized that they don't know how to run a business. And I realized that if I could just organize everything and put it in a format that was easy for them to understand, I think that most business owners need that.

• 13:02Guy Raz?

  All right, let's now, we're gonna bring Michael back in. May, I believe the date is May 20th, 1983, which is the fateful evening when the two of you met. Michael, let me start with you. How do you remember meeting Bonnie?

• 13:17Speaker 01

  I was with my friends, and this gorgeous woman came through the door, and she was backlit by a streetlight.

• 13:24Guy Raz?

  And the door of what? A bar?

• 13:27Speaker 01

  The door of this club.

• 13:28Guy Raz?

  A club?

• 13:29Speaker 01

  This is a club in Santa Rosa.

• 13:30Guy Raz?

  Santa Rosa, California, so just north of San Francisco.

• 13:32Speaker 01

  It was called Magnolia's at the time. And this club, one whole wall of the club was the stage. And there'd be like 11 pieces up there, you know, lead guitar, bass guitar, scratchy rhythm guitar, three horn rhythm section, drums, congas. I mean, it was a serious orchestra. In those days, it was more romantic by today's standards. So, I was talking to my friends, and I was looking behind them. I saw this woman come through the door, and she was backlit by the streetlight. And I thought, you know, excuse me, guys, I'm in love. And so I left. They'd heard me say that before, but this time, they didn't see me for four days.

• 14:16Speaker 01

  I walked up to her, and I said, I bet you're looking for a drink. And she says, as a matter of fact, I am. So, I went, I said, why don't you scope the place out and see if there's anybody better looking in here than me? And I'll go get you your drink. She says, that's not a bad idea. When I came back with the drinks, she was gone. And so I had to wait until she finally came back.

• 14:41Speaker 01

  And we hit it off. We started talking about things that, because we were both adults and we'd been around on the single scene for a while. So we knew what the behavior was and the way that people would behave in those kinds of environments. And so we were actually commenting to each other on how people were going to behave in this club. And sure enough, they behaved exactly the way that we predicted and we got a big laugh out of it. And so that was it, you know, we've been together ever since.

• 15:13Guy Raz?

  Wow. Bonnie, you were, you were there, I mean, you happened to be at that bar because you were doing work for, for somebody who had an office in that area or like above the bar?

• 15:24Speaker 02

  Yes. That evening, I knew the band that was there. And I'd heard them in Oakland and they were really hot. And I said, I've got to go in and hear that, that band.

• 15:38Guy Raz?

  So the two of you meet and you start dating and eventually you, you move in together? Is that, is that right?

• 15:46Speaker 02

  No, we never dated. He moved in with me immediately that night.

• 15:50Guy Raz?

  Oh, wait, sorry.

• 15:51Speaker 02

  The guy's hard to shake, Guy.

• 15:54Guy Raz?

  You, you moved in together right away?

• 15:57Speaker 02

  Yes. Yeah.

• 15:58Guy Raz?

  Wow.

• 15:59Speaker 02

  He thought it was a one night stand, but no, it didn't quite work out that way.

• 16:03Guy Raz?

  Forty years later, yeah. And basically you keep doing your jobs. Bonnie, you keep doing your sort of office organization consulting and, and Michael, you keep doing your consulting for wine businesses?

• 16:16Speaker 01

  Right.

• 16:17Guy Raz?

  Okay. So I guess at a certain point, Bonnie, you are working with a guy named Mark Lyon. This is around 1985. Tell me what, what he was doing and what you were doing for him.

• 16:29Speaker 02

  Uh huh. Well, Mark was a winemaker at Sebastiani.

• 16:33Guy Raz?

  Sebastiani was a, a winery?

• 16:36Speaker 02

  A winery, yes, in the town of Sonoma.

• 16:38Guy Raz?

  Okay.

• 16:39Speaker 02

  And he also had grapes that he was growing, a hundred acres along the Russian River. He was not just a client, but before that, he was a friend and he was somebody that Michael had introduced me to. So then I took over his bill paying and organization for his office and, and that also involved helping keep track of his records for his vineyard.

• 17:02Speaker 02

  And within a short period of time, I saw that he was owed $300,000 for three harvests. And that was in 1985.

• 17:14Guy Raz?

  Wow, he was so, he was, he had sold his grapes, but he'd never, he'd never collected, collected the money?

• 17:19Speaker 02

  Yes. And I don't know if he'd ever tried to. He was fortunate to have funds of his own. And collecting the money was not what was important to him.

• 17:31Guy Raz?

  He just wanted a good wine to be made.

• 17:32Speaker 02

  Growing, growing these wonderful grapes. He really had a passion for growing grapes and making wine.

• 17:39Guy Raz?

  All right. So you, you say to him, Mark, you're owed 300 grand.

• 17:42Speaker 02

  Yes.

• 17:44Guy Raz?

  And he was owed this from, I guess, a winery called Sovereign?

• 17:47Speaker 02

  Suvarine.

• 17:48Guy Raz?

  Suvarine?

• 17:48Speaker 02

  Suvarine Winery. Yes.

• 17:50Guy Raz?

  Okay. So you say, hey, I think we can collect this. We should, we need to go figure out how to collect this debt. And I guess you get Michael, your boyfriend, involved at the time. Michael, what do you remember about, what did Bonnie ask you to do?

• 18:06Speaker 01

  Well, you know, I just met this girl, right? I've only known her for a year. And she comes to me and asks me to go collect 300 large from this winery. So I said, okay, well, I'll give it a shot, you know, no promises. So I got an appointment with their board of directors. And as I drive up, the guard stops me on the way in. And he says, I hope you're not here to collect any money. And I said, well, as a matter of fact, I am. Well, he says, we just declared chapter 11 this morning.

• 18:37Guy Raz?

  Wow.

• 18:38Speaker 01

  And so I thought, well, do I go through with the meeting? I went, I'm going to go through with the meeting. So I went through with the meeting and I was sitting there. And I'm trying to make small talk.

• 18:46Guy Raz?

  Yeah.

• 18:47Speaker 01

  Because it's going south in a hurry. And I look out this window in the conference room, and there's a big line of tanks out there, a big line of stainless steel tanks. And I said, well, what's in those tanks? And they said, well, it's Cabernet Sauvignon and Sauvignon Blanc bulk wine. And I'm thinking, isn't that interesting? That's what Mark sold you.

• 19:08Guy Raz?

  He sold them grapes, Cabernet grapes?

• 19:10Speaker 01

  And, yeah, and he made the wine out of it. But now they have it in bulk wine. They haven't bottled it. So then I look out the other window and I see this strange looking room that looks like a handball court, you know, with a chrome locomotive sat right in the middle of it. It's got tracks and everything. And I said, what's with the chrome locomotive in the handball court? And they said, well, that's not a chrome locomotive. That's a Chrome's bottling line from Germany. I said, really? And they said, yeah, it's not a handball court. It's a clean room. It's where we do our bottling. And it hit me like a chrome locomotive. And I said, what would happen if we settled the debt by you guys giving

• 19:53Speaker 01

  us some of that bulk wine in those steel tanks over there and run it through that bottling line? And instead of paying us in dollars, which I know you can't, you can pay us in bottled wine. We'll come up with a label. We'll come up with the sales program. How hard could that be? How long could that take? So basically, from ignorance and naivety, I closed this deal.

• 20:16Guy Raz?

  Well, well, hold on. You said, just basically sell us glass, you know, bottles full of wine. Give it, give that to us. The equivalent of $300,000 worth of it. But you came up with this, this proposal on the spot there?

• 20:32Speaker 01

  Yeah. Well, you know, this was a situation where I was either going to walk out of there with nothing, or I had to come up with something pretty fast.

• 20:43Guy Raz?

  I mean, I'm just curious, because Mark Lyon, there's this guy who owned, who was owed the money, right? He was the guy who sold them the grapes. And Bonnie had sent you there to collect the money. Did you clear this with either of them? Did you go to either of them and say, hey, what do you think about this idea?

• 20:58Speaker 01

  No. I came back and I said, I think I've got this solved. Because I thought at the time, you know, Mark could bottle it up and sell it to a supermarket and get his money that way. But I wanted to make sure that they were committed.

• 21:14Guy Raz?

  So when you went back to Bonnie and to Mark and you said, look, it's almost like a Jack in the Beanstalk thing. It's like, hey, I gave you the, I gave you the money and you came back with magical beans? You know, where, where's the goat or whatever he was supposed to buy, right? The sheep. You, you're coming back with, I, I sent you to get the money and you're coming back with magical beans, basically, Michael. I mean, I mean, you're like Jack in the Beanstalk here. I would have been, I would have been like, what are you doing?

• 21:41Speaker 01

  Well, that's exactly what Bonnie said. She said, this isn't going to pay our bills. This is, this isn't going to help Mark out. You know, now, now we have to do all this other stuff. And I said, yeah, but how long could that take? How hard could that be? Because I had no idea. You know, I didn't realize, you know, that I would need 50 different licenses from different governments to do this. And here I was a government guy. And so we went to work.

• 22:05Guy Raz?

  But even before you went to work, was Mark receptive to this? I mean, it was his money after all.

• 22:11Speaker 01

  He was initially, for him, it was better than a sharp stick in the eye. Yes.

• 22:16Guy Raz?

  So he said, okay, all right. You know what? Let's take the $300,000 of wine, bottled wine.

• 22:21Speaker 01

  That's right. And so that's why we thought, okay, good. Mark's going to do this.

• 22:27Guy Raz?

  Okay. So you guys, so now Bonnie, you feel like part of your job is to get this money to him. So you guys acquire, the idea is you acquire $300,000 in, in bottled wine, or you're going to, and then you're going to help Mark sell it. And then he's going to get his money back. And Bonnie, you've done your job as a consultant. That's basically, it sounds like that was the plan.

• 22:48Speaker 02

  That was basically the plan. Yes.

• 22:51Guy Raz?

  What were you guys going to get out of it? I mean, you, you were going to help sell this wine or help Mark Lyons sell this wine. But would you guys get a cut of it?

• 23:00Speaker 02

  Whether or not we were going to help him sell it hadn't, we hadn't gotten to that point in, in the procedure yet. But I was getting paid by the hour and Michael was getting a percent of that 300,000 that he was collecting.

• 23:15Guy Raz?

  Right.

• 23:16Speaker 02

  And one thing I wanted to point out is the bottled wine did not include the bottle or any of the bottling supplies. It was just the bulk wine and the service of bottling.

• 23:27Guy Raz?

  Oh, you had to pay for the glass bottles?

• 23:30Speaker 02

  Yes, yes. So I-

• 23:31Guy Raz?

  Wait, that wasn't part of the deal? They owed you 300 grand?

• 23:35Speaker 02

  That was what they had on hand. They didn't have any glass on hand.

• 23:40Guy Raz?

  They were just selling you the juice and the ability to bottle it, but you had to provide the bottles.

• 23:45Speaker 02

  Yeah, so I set about researching.

• 23:49Guy Raz?

  This is a Jack and the Beanstalk deal. Because I'm thinking, you're nuts.

• 23:54Speaker 02

  Well, we didn't know enough to know that we were nuts. And yes, we were. We had no business getting started that way.

• 24:00Guy Raz?

  All right. So was this the first? Because, because Michael, you had been a consultant already for a few years for wineries and Bonnie, you'd been doing, helping office, you know, organize offices. Was this the first project that the two of you kind of combined your forces on?

• 24:16Speaker 02

  Yes.

• 24:16Speaker 01

  I would say yes. Yeah, it was the first one.

• 24:19Speaker 02

  And Michael went about getting information from the marketplace. And I had gone about getting all the research that was necessary for the licenses. I started researching bottling supplies, different colored glass, different types of corks and foils. We realized early on, we had to come up with a label. Well, what's the label look like? And gee, things seemed to be getting a little more complicated.

• 24:46Guy Raz?

  Plus, you would need a cash for all that stuff, right?

• 24:49Speaker 02

  Yes, well, Mark had the cash and I was getting this line of credit with the bottling supplies company in Mark's name. I could only do business with one company. It was California Glass. They were the only ones that would answer my questions. I was asking too many questions. People were just hanging up on me. So I finally found somebody who'd pay attention and realized how ignorant I was and that I really did have a big project and that they would sell a lot of glass. So somebody listened to me there and became my mentor. And we worked throughout August, September, October, November, and December. What is that, about five, six months?

• 25:29Guy Raz?

  Eighty-five, 1985.

• 25:31Speaker 02

  Yes. And I had the licenses in place. We had bottling scheduled for right about Easter of 86. And it was Christmas time of 85 when Mark said, I have a confession to make. I can't take on another responsibility. He's a full-time winemaker and he's got 100 acres of vineyards he's managing. He said, I'm sorry, I can't take on another project. I guess I'll just have to take the loss.

• 26:02Guy Raz?

  He basically says, I'm out. I really, I can't do this. It's too much. I understand. It's a lot of stress, right?

• 26:09Speaker 02

  He was very wise to say that because that's exactly the situation he was in. He couldn't take on another project. And we weren't intending on doing all the business for him on an ongoing basis, just to set him up. Basically, we were doing whatever was required to get him the money. We simply didn't know what was required.

• 26:30Guy Raz?

  So, so, Michael, when Mark said this, I mean, because you guys had done a bunch of work, but there was still more you had to put in. All of a sudden, the money guy, the guy who's owed the money, but also has the money to finance this, says, I'm out. What, so what'd you do at that point?

• 26:48Speaker 01

  So, we had just completed dinner at a lovely restaurant down in Sonoma. We're driving home and all of a sudden, it hit me and I just slammed on the brakes and pulled the car over to the curb. And I said, I have an idea.

• 27:06Guy Raz?

  You said this to Bonnie?

• 27:07Speaker 02

  No, he was in the car.

• 27:10Guy Raz?

  Oh, Mark was in the car?

• 27:11Speaker 02

  Yes.

• 27:11Speaker 01

  Oh, yeah. He's in the car.

• 27:12Speaker 02

  Yeah.

• 27:13Speaker 01

  He's sitting next to me.

• 27:14Guy Raz?

  Wow.

• 27:15Speaker 01

  Bonnie looks at me and goes like, whatever it is, because we're facing destitution here, you know, and a big waste of time. And I'm not going to get my commission and all kinds of things. And so I said, well, you're facing quite a loss here of 300 grand, Mark. What would you say if, instead of us working for you, you work for us? Instead of the winery owing you the money, we execute the contract and we owe you the money?

• 27:49Speaker 01

  And what if we pay you off over time so we can use the cash flow from the sales of the wine to finance the business?

• 27:58Guy Raz?

  Okay, so you say, well, we'll take this on, we'll take the wine on and we'll pay you back over time if you're up for that.

• 28:05Speaker 01

  That's correct.

• 28:07Guy Raz?

  What was his response?

• 28:08Speaker 01

  He goes, well, he says, that sounds a lot better than having to deal with this bankrupt winery.

• 28:15Guy Raz?

  Wow, okay, so you're basically starting a business right off the bat with 300K in debt, like in the red, which is a little scary. Before we get there, let's just pause for a second, ask about your wine making or wine judging chops at that point, right? Because you need to have a developed palate, for example, right? Like you need, and people, you can develop that over time, like a lot of great winemakers develop a palate. But you need to know, understand balance and flavors and it takes time. And I wondered, had both of you developed that, living and spending time in Sonoma County, naturally?

• 28:53Speaker 01

  No, not at all. Not at all.

• 29:01Guy Raz?

  When we come back in just a moment, we'll hear about the hoops that Michael and Bonnie have to jump through to get one buyer to take their wine. And after they jump through those hoops, why he still says no. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 29:31Guy Raz?

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• 30:13Guy Raz?

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• 30:58Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 31:43Guy Raz?

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• 32:03Speaker 03

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• 32:37Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1985, and Bonnie and Michael are about to dive into the wine business without knowing much about wine. Fortunately, their business partner, Mark, is an expert.

• 32:54Speaker 01

  We were not wine aficionados, but Mark Lyon was.

• 32:58Guy Raz?

  Yeah.

• 32:59Speaker 01

  And when we said, instead of us working for you, you work for us, we meant you work for us as not just the winemaker, but the wine designer. And this is something that Mark wanted to do for years, and we provided a vehicle for him to actually do that. So we were not the wine people. As a matter of fact, as the business grew, we got excellent winemakers, some of the best.

• 33:25Guy Raz?

  So really, he was going to help you kind of develop a flavor profile. But just out of curiosity, you already had the juice, right? The wine was in steel tanks waiting to be bottled. So presumably, it was a matter of figuring out how to blend wine from the different tanks to find the right flavor profile?

• 33:46Speaker 01

  Yes.

• 33:47Guy Raz?

  Yeah.

• 33:47Speaker 01

  Our nickname for Mark was Mix Master Deluxe because he had a way of looking at wine and fixing it. He could blend out the mistakes, and he could accentuate the benefits. He's a top winemaker. He still is today. He's a fantastic artist at what he does.

• 34:08Guy Raz?

  All right. So you're at this point, Michael, I think about 40 and Bonnie, you're roughly 35. And you decide that you're going to take on this debt, right, this wine and eventually pay back Mark. Once you got the wine bottled, then you had to, of course, slap a label on it and then get it into stores. That's, that's much harder than just getting it bottled. Like, that's the challenge. You started to go and try and meet with potential buyers. And I think you, Michael, had met with this guy, Don Brown, right, from Lucky?

• 34:44Speaker 01

  Yeah.

• 34:44Guy Raz?

  Lucky supermarkets, which is a chain in California. What did you, you know, what did he need from you in order to sell those wines in Lucky's?

• 34:53Speaker 01

  Well, I, just to get the meeting with him was amazing. I called him up. I said, Don Brown, I said, I know you went to St. Mary's. I went to Bishop O'Dowd and we cleaned your clock on the basketball field. I said, listen, I'd like to meet with you. I got something I want to talk to you. He says, I don't have time to talk to you, Houlihan. I said, you know, I'm going to make it worth your while. Just give me 15 minutes, Don. And so it was luck that I knew this guy. And he went on in his career and he became the buyer for one of the largest supermarkets in California. And so when I went to Don, in about 37 seconds, he gave me the equivalent of a college education in wine marketing and merchandising. He says,

• 35:37Speaker 01

  I've got room in the 1.5 liter section.

• 35:40Guy Raz?

  Which is a Magnum. That's a big bottle of wine.

• 35:43Speaker 01

  That's the big bottle of wine.

• 35:44Guy Raz?

  Okay.

• 35:45Speaker 01

  He called it a pig, which is the industry jargon. To quote his jargon, he said, look, Houlihan, he says, give me a salt and pepper act, make it better than Bob, cheaper than Bob, and put it in a pig. Can you do that? And I'm writing down salt, pepper, Bob, pig. And I'm looking at it and I'm thinking, what language is this, you know? And then I thought, I better not ask. He says, can you do that? And I said, yeah, I can do it. He says, good, get out of my office. Well, I didn't know what it was. I wrote it down. I had to translate it. And what I found out was that the pig was the 1.5 liter Magnum. And that the Salt and Pepper Act was a red and a white wine under the same

• 36:26Speaker 01

  brand. And then Bob was Robert Mondavi. Robert Mondavi had a red and white in a magnum, so he wanted to have another alternative to Robert Mondavi on the shelf.

• 36:39Guy Raz?

  Robert Mondavi, the most famous winemaker probably in in in American history, who kind of built modern Napa.

• 36:46Speaker 01

  The father of American wine, exactly.

• 36:48Guy Raz?

  Yeah. So, OK, so now, here's my next question, right? Did you so you needed to do do in a magnum, a big bottle? And what what did you tell me what you started to learn about who was buying wine at the stores?

• 37:04Speaker 01

  Don Brown said, make sure she can see the label from four feet away. I noticed he used the pronoun she. So I did some research and I found out that like 78% of supermarket shoppers were women and that they were actually doing the buying, even though the men were the gatekeepers. So even though the supermarket wine buyer was a male, his customers were females, for the most part.

• 37:35Guy Raz?

  And it was a particular, specific type of woman, like age or?

• 37:39Speaker 01

  Thirty five years old with two and a half kids pushing a cart. Yep.

• 37:43Guy Raz?

  Got it. And she was buying the wine not to sit around and talk about, you know, I guess appellations or vintages, but just to have it on a Tuesday night after dinner or with dinner?

• 37:55Speaker 01

  She was buying it like a staple, like sugar, like bread, like meat. She was buying wine as one of the ingredients that she needed for her week's worth of food. And so we started to interview women and we found out that what they were looking for was wine that tastes the same from year to year to year, which was the opposite of the vintage wine idea.

• 38:22Guy Raz?

  At this point, most wine had a year on it. It would say 1983 or 1981.

• 38:30Speaker 01

  95%, yeah.

• 38:31Guy Raz?

  And also, it would say where it's from. Sonoma County, or Russian River, or wherever it was from, right? What you're saying is that that only appealed to a very small percentage of consumers? That actually, most people who wanted to buy wine didn't care about any of that stuff?

• 38:50Speaker 01

  I would say that's technically correct. They cared about it on Saturday night. They cared about it when they brought a bottle of wine over to a friend's house. But if they were having hamburgers on Tuesday, they didn't care about it that much. So, there was a market that we saw that had been unaddressed. The everyday drinking wine market. So, what are people drinking every day? Not Saturday night, but Tuesday night?

• 39:19Guy Raz?

  Okay, so Tuesday night wine, which meant that you didn't have to create a vintage. You didn't need to use grapes from a specific year. You could just use whatever pressed juice was available and blend it. And presumably, that would give you an opportunity to get really inexpensive bulk wine.

• 39:39Speaker 01

  That's absolutely correct. The profile was fruit-forward, low acid, easy-drinking, soft on the palate, and mimic the taste of the grape. So, when you tasted Cabernet Sauvignon, it tasted like the Cabernet Sauvignon grape.

• 39:55Guy Raz?

  Yeah. But it sounds like, Michael, the insight you had was, we need to focus on making a consistent flavor no matter what year the grapes are grown. No matter what the weather was like that year, what the wind was like, or when the grapes were harvested. Like, it doesn't matter. All we're going to focus on is a consistent flavor every time you buy this wine. Was anyone else doing that at the time at all?

• 40:24Speaker 01

  Nobody was doing it on the scale that we were imagining. We didn't have any real competition, other than Robert Mondavi, but his had an appellation on it, and it had a date on it.

• 40:35Guy Raz?

  Yeah, I mean, why do you think the industry was resistant to doing that at the time? Was it out of pride? Was it like, well, that's not real wine. You have to taste a terroir. You have to, it's got to be of a place.

• 40:51Speaker 01

  I think the reason was because they were worshiping the French pretty hard.

• 40:56Guy Raz?

  Yeah.

• 40:56Speaker 01

  They thought they were second-rate winemakers to the French. And the French were the ones, if you wanted wine, you had to get French wine. And so, it took Americans a long time to develop their own pride in what they were doing. And in those days, they were trying to copy the French as much as they could. And so, the idea of a wine that didn't have a number on it was just unheard of. You know, that was just sacrilege. You couldn't do that.

• 41:24Guy Raz?

  Yeah. Okay, so you're doing all this research. Meanwhile, Bonnie, you also are trying to figure out a name for this wine. And from what I understand, there's a guy that was living pretty close by to you named Davis Bynum. And I guess, Michael, you had known his son. And this guy, Davis Bynum, back in the 70s, had made his own wine for a couple of years that petered out. And he called it Barefoot Bynum, or something like that.

• 41:52Speaker 02

  That's correct. He had been a reporter in San Francisco, and he made wine in his garage in Albany.

• 42:01Guy Raz?

  And this is in like, the mid 70s, I think, like 74 or 75?

• 42:05Speaker 01

  Early 70s.

• 42:06Guy Raz?

  Yeah.

• 42:07Speaker 02

  And he'd put it in a big jug, and put a screw top on it. And there were some people in the Bay Area that enjoyed his wines. And it had been off the market for 12 years when Michael and I had started. And we thought this was a nice friendly name, Barefoot. And of course, Barefoot is the way that grapes were originally crushed. So it definitely had something to do with grapes. So we purchased the rights to use the name Barefoot Bynum. And we bottled under that name for the first year. Then we dropped the name Bynum. It was too confusing for everyone, of course. So then we just called it Barefoot Wines.

• 42:47Guy Raz?

  Do you remember how much you paid for the name?

• 42:49Speaker 02

  Uh, $30,000.

• 42:51Guy Raz?

  Okay, so that was not cheap at that time.

• 42:53Speaker 02

  Correct.

• 42:53Guy Raz?

  That was, that was quite expensive.

• 42:55Speaker 02

  Yes.

• 42:55Guy Raz?

  To buy that.

• 42:56Speaker 02

  Yes, it was.

• 42:57Guy Raz?

  But why were you convinced that was the name you wanted to go with?

• 43:01Speaker 02

  It was chosen because another thing that Don Brown had said during Michael's meeting was that he wanted to see the label with the name the same as the logo. And he wanted her to see it, the shopper, when she was four feet away. And I had an inspiration of what the label would look like.

• 43:24Guy Raz?

  Tell me about that inspiration.

• 43:26Speaker 02

  Michael and I'd been out at a late dinner, came home and walked in the door. And I said, Michael, I know what the label looks like. And I said, quick, I want you to go to the blackboard that we had in the kitchen where we'd walked in. And I said, you've got to draw a foot. And I said, I can see this big red or green gold foot on the label would certainly get people's attention. It doesn't look like anything else out there on the shelf. And it's easy to remember. Barefoot's the name of the wine. It's also the name of the logo. And I was so excited, I was just bouncing around. And I said, I can see this stacked in the chains. This is going to sell a lot of wine.

• 44:12Guy Raz?

  Why did you think that that, I mean, again, like Barefoot, I mean, it, it, it was risky, right? Like, some people might think, ooh, I don't want, I don't want feet in my wine.

• 44:22Speaker 02

  Yes.

• 44:22Guy Raz?

  I don't want toe, I don't want sticky toes touching my wine. Like, there, there, there might have been pushback. What did any, did you run this by anybody at all before you, you, you decided to stick with Barefoot?

• 44:37Speaker 02

  No, it was too much of an inspiration. And when you get those kind of flashes of inspiration, it's kind of hard to question where they came from. Everybody's going to have complaints, no matter what you do. So I knew that there was going to be a Bigfoot on the label.

• 44:56Guy Raz?

  I had no idea how you knew that, but somehow you knew it.

• 44:59Speaker 02

  I don't either.

• 45:00Guy Raz?

  And in your brain, you saw a foot on a bottle of wine called Barefoot. And it's now early 1986, right?

• 45:09Speaker 02

  Right.

• 45:10Guy Raz?

  And you've got all this juice ready to be bottled, and you start the process of just getting it bottled, right? And how, by the way, how many cases of wine did you guys, was this going to produce?

• 45:21Speaker 01

  18,000.

• 45:23Guy Raz?

  18,000 cases of wine. And a case is 12 bottles of wine, right?

• 45:27Speaker 02

  Well, it was six for us.

• 45:28Speaker 01

  In this case, it was six.

• 45:28Guy Raz?

  Six, okay.

• 45:29Speaker 02

  Because it was the big bottles.

• 45:31Guy Raz?

  Right. All right, so from what I've read, the bottling starts around March of 1986.

• 45:38Speaker 02

  Yes.

• 45:38Guy Raz?

  And you, Michael, had met with this guy, Don Brown, right? From Lucky. I'm assuming you go back to him and you're like, "Okay, we're ready to go, Don." What did you say to him when you came to see him?

• 45:52Speaker 01

  I said, "Here you go, Don. Everything he asked for, you know, it's a salt and pepper act. It's as good as Bob, and it's in a pig. You know, how many truckloads do you want?"

• 46:01Guy Raz?

  I love all the language. It's in a pig, salt and pepper, Bob. You're basically saying, "I've got a liter and a half bottle. I've got, it's red and a white version, and, you know, it's..."

• 46:14Speaker 01

  High quality.

• 46:14Guy Raz?

  High quality, good to go.

• 46:17Speaker 01

  And he takes the bottle in his hand, and he spins it around a couple of times, and he looks at me and he goes, "Are you crazy?" He says, "I can't put this in. You put a foot on it. You can't put a foot on wine."

• 46:31Guy Raz?

  Yeah.

• 46:31Speaker 01

  He says, "No box store, no chain store in the country is going to take this."

• 46:35Guy Raz?

  Because why? You've done everything he asked you to do.

• 46:38Speaker 01

  Exactly. And he says, "Well, because nobody knows the name. He wants me to advertise it. And if I don't advertise it, he won't put it in." He says, "You know, so what? Are you going to put a million dollars into advertising?" And I said, million dollars. I said, I don't have a million dollars. I don't, I don't know how to do that. So I have to back off. And I say, okay, well, you know, what am I going to do, Don? We bottled it all up for you. He says, well, I guess you're going to have to sell this to every independent, every mama, papa, every corner grocery store, every restaurant, until it becomes a household name. When that happens, I'll put it in. And I said, but that's going to take years, Don. He says, that's right. You better get started. So he kicks me out the office.

• 47:23Guy Raz?

  So you had gone back just assuming he was, he was gonna say, yep, let's do it, right?

• 47:27Speaker 01

  Oh, yeah. Well, you know, I was rather naive. You're like a kid with a straight A report card showing it to his dad, right?

• 47:35Guy Raz?

  Yeah.

• 47:35Speaker 01

  Here you go. Everything he asked for, you know, how many truckloads do you want? You know, talk, talk about chutzpah.

• 47:41Guy Raz?

  Yeah.

• 47:42Speaker 01

  So when he shut me down, I was like, really shocked. And, and my mind was racing. What does this mean? You know, I've got all this wine bottled up. We took this big risk. We got Mark Lyon behind us and we're facing a real traumatic situation at this point. And the idea of going out on the street. See, because our plan A was, you know, sell it to a supermarket, right? How hard could it be?

• 48:10Guy Raz?

  I, I wonder when he, when he said to you, you know, you gotta spend a million dollars in advertising. If not, then go start selling store to store. Did you respond? Did you say, hey, man, you know, uh, you're, you're screw me over here? Or did you, were you just kind of stunned and flabbergasted and just kind of shocked?

• 48:30Speaker 01

  I didn't, I didn't want to put him off and, and say, hey, man, you know, I did exactly what you say you owe it to me. Because I knew that I'd be back in there within a year or two, asking him to put it in again. And whatever hoops I had to jump through, I figured I would jump through them. You know, you don't swim halfway across the English Channel and get tired and swim back. So I think the thing that saved me was I was not from the industry.

• 48:56Guy Raz?

  Yeah.

• 48:56Speaker 01

  I was from the business industry. And I worked with lots of businesses and many of my clients had the same problems starting off. It took them a long time to get traction. They had to eat humble pie for a long time. But it's, it's sort of like, Yes, you want to show them, but it's not so much you want to show them. You want to show yourself.

• 49:19Guy Raz?

  Yeah.

• 49:19Speaker 01

  Now, I'm out there on the street and I'm trying to sell it in San Francisco to little stores, little bodegas, independents and whatnot.

• 49:27Guy Raz?

  You're just walking in with this magnum and saying, hey, can I, can I sample some wine for you?

• 49:32Speaker 01

  Exactly. And they say the same thing. They say, well, are you going to advertise it? Nobody's ever heard of Barefoot. You know, you put a foot on it, it's pretty radical. You know, I said, yeah, well, people will remember it this way and it's, it's fun. You know, it's, they said, oh, well, tell you what, we'll put it in, but if it doesn't sell in three months, you know, we're going to, we're going to discontinue it.

• 49:52Guy Raz?

  And so you would do this store by store, liquor store by liquor, wine, wine store, but, but still the, the pushback was, are you going to advertise it? Well, that's a chicken and egg problem. You have no money to advertise it.

• 50:03Speaker 01

  That's right.

• 50:04Guy Raz?

  Tell me what your pitch was. Were you literally saying, look, we're going after a different wine drinker here? Is that what you were saying or not quite?

• 50:13Speaker 01

  Well, the pitch was really threefold. Number one, we are going after a wine drinker that has not been properly addressed. The second pitch was, interestingly, we're not in the supermarket. This is something you as an independent can have that they don't have in the supermarkets. And then the third thing that we said is, this is a transition. You know, Barefoot is a bridge between beer and wine. And if we want to increase the size of the wine industry, we have to have inexpensive, easy drinking wine so that people's first experience with wine will be a good one. And they're not going to get introduced

• 50:53Speaker 01

  to wine by having a $40 Pinot Noir as their first try. This will increase the amount of business that you have for your upscale wines because now you're going to get more people who try wine at all. And they're going to say, oh, this is wine. Gee, I can drink this.

• 51:14Guy Raz?

  I mean, you had, if my math is right, 108,000 bottles of wine. Okay, now, some of that you were going to pour for sampling and so on. So let's say roughly, I don't know, 105,000 bottles of wine. Because you're not selling the wine by the case. I mean, you weren't selling it to restaurants. You were selling, you were trying to sell this to wine shops and liquor stores and corner stores that were going to sell one bottle of wine at a time. And to sell 100,000 of them, that's kind of, that, I mean, how did, once you, once a store agreed to take, take the wine, it doesn't guarantee it's going to sell because there's 100 bottles of wine in that store. So what, how did you even get people to notice your wine?

• 51:59Speaker 01

  Well, what we did was convince the store owner that if he was going to introduce our product, that people had to stumble over it. And so he needed to buy several cases of wine to build a display. And we would show him a couple on the beach going out at sunset, a very romantic picture that we would put on top of the stack.

• 52:23Guy Raz?

  Okay, so if the store agreed to a display, where, because a display is not that complicated with wine, right? It's just you're stacking a couple of cases and then you're opening one case up and then you put a little sign up. But you put a photograph of a couple on the beach. And I guess the message you're telegraphing there is, hey, this is a fun wine you can bring with you to the beach and crack open on the sand. And that's what you're essentially saying there. This is a casual, fun wine.

• 52:50Speaker 01

  We were selling the sizzle and not the steak, as they used to say. We were selling the idea of a romantic place that you could go to in your mind. Later on, that poster became really popular in places like Iceland in Canada, where they don't even see the sun, because they had this California vision of the beach. But when we did it in San Francisco and in Santa Barbara and up and down the coast of California, people identified with it right away. We got a younger crowd. We got a predominantly female crowd. They said, okay, this is our wine.

• 53:27Guy Raz?

  Okay, summer of 86, you're starting to sell in a couple of stores. And what started to change? I mean, I know by the end of that year, by 1986, you did manage to sell virtually all those cases to wine stores. So you got those cases sold. But what was it that started to move things?

• 53:52Speaker 01

  One day, we get a telephone call. It's a guy from, in San Francisco, from kind of a neighborhood group. They want to build a kids' after-school park. He says, "Oh, you're a very wealthy winemaker up in Sonoma County. We only need $30,000 to build this park. You know, won't you donate $30,000 to our cause?" And I said, "Well, I really appreciate what you're doing. You know, keeping the kids off the street is great." I said, "But, you know, I don't have $30,000." I said, "I don't even think I have five at this point. But I do have all this wine. And I would be happy to donate some of this wine to your fundraiser." And he says, "Okay."

• 54:37Speaker 01

  Well, he wasn't very happy because he wanted to get the check. But he took the wine begrudgingly. About three weeks later, we see a big upsurge in the three or four accounts that were in the same neighborhood as the neighborhood organization. And so I looked at Bonnie and I said, "Look at these sales." I said, "Something's happening here."

• 55:00Guy Raz?

  It was basically because they saw, they drank it at the fundraiser?

• 55:04Speaker 01

  That's right. And more importantly, I think, we gave them a social reason to buy our product and to advocate for it. They said, "Oh, these guys are on our side. You know, these guys are trying to help us achieve our goal here." And so we said, "Well, heck, if it works with that neighborhood, let's try another neighborhood." So we tried another neighborhood in San Francisco. We went to a group that was trying to clean up a stream. And they had a big fundraiser. And we provided all the wine and whatnot. But this time, we got smarter about it. We actually said where they could buy it and put our name up and got them to announce us from the podium and a bunch of other stuff. Sales took off in that neighborhood.

• 55:47Speaker 01

  And so we thought, gee, maybe we've learned something. Maybe we've discovered an alternative to advertising.

• 55:54Guy Raz?

  Okay, and I guess, and I don't know if it's still the slogan for the company today, for the, for the brand, but the original slogan was get barefoot and have a great time.

• 56:02Speaker 02

  Exactly.

• 56:03Guy Raz?

  Which, which sounds nice, you know, get barefoot, which means go to the beach, grow a park, you know, hang out around the pool. But from what I read, this was like controversial in, you know, that some people, many people who sold wine didn't like it. They thought that was more like a beer slogan.

• 56:19Speaker 02

  It was like a beer slogan. Beer was outselling wine by far. And the posters were a little more like beer ads. And so we took a lot from the successful beer industry and used it in the wine industry.

• 56:37Speaker 01

  Again, we were business people. We were not wine people. So when we looked at the business, we didn't say it's the wine business. We said it's the alcohol beverage business. And we said, okay, what's selling? The answer is beer. What are they doing right? And we saw how beer was being marketed. And we said, let's apply beer selling concepts to the wine industry. It had never been done before.

• 57:00Guy Raz?

  But still, even with some of that, right? I have to imagine that first year, 86, 87 even, I mean, it's a grind.

• 57:10Speaker 01

  Oh, yeah.

• 57:11Guy Raz?

  Because you're going store to store, making the same sales pitch, answering the same questions, getting the same pushback, repeating yourself 1,000 times a week. Am I right? Is that, was that your life?

• 57:22Speaker 01

  What happened is, instead of selling the wine based on its benefits, or its pricing, or its profitability, we started to find out what the retailer really needed. They wanted help decorating their store for events that happened during the year. So products that had marketing material that, for instance, celebrated autumn, or celebrated Mother's Day, or whatever. And if it was the summertime, you know, we would have, say, something to do with the barbecue, or with the 4th of July, or fireworks. And we would show pictures of what our displays looked like and say, you know, you can do a 4th

• 58:06Speaker 01

  of July display right here in your store, right on that corner. And this will put people in the right mood.

• 58:13Guy Raz?

  By the way, what was the price of a bottle of like a, were you only doing it in magnums?

• 58:19Speaker 01

  Yeah.

• 58:20Guy Raz?

  Yeah.

• 58:20Speaker 01

  When we started, the magnum was $4.99.

• 58:23Guy Raz?

  $4.99 for a 1.5-liter bottle of wine?

• 58:26Speaker 01

  That's correct.

• 58:27Guy Raz?

  Okay, wow.

• 58:28Speaker 01

  It'd be about $10 today.

• 58:31Guy Raz?

  Yeah, so in 1985, that was not a cheap, not a, it was, it was an affordable, right? Because I think today, anything between sort of $8 and $20 is considered the sweet spot.

• 58:43Speaker 01

  Yeah.

• 58:44Guy Raz?

  And, and what was your, what were your margins on the wine at that time? I mean, you guys had, if you're selling a bottle for $4.99, what were you guys making on it?

• 58:53Speaker 01

  I would say, uh, nothing, or less than nothing. But if you took the debt away, and you took some of the other costs away, and you took the cost of expansion away, we were probably making about 10%.

• 59:09Guy Raz?

  Well, but you can't take all that other stuff away, because those are liabilities.

• 59:12Speaker 01

  There you go, there you go. You can't take it away.

• 59:16Guy Raz?

  Got it, okay. So the idea was, you were not going to pay this debt off quickly. It was going to take time. Because you, it sounds like, you know, I'm sort of jumping a little bit ahead here, but we're in the summer of 1988. This is two years, really, a little over two years in, because I think you first bottled it in March of 86. And you're far from profitable at this point, right? And, and probably still far from paying off the debt.

• 59:42Speaker 02

  We hadn't touched the debt at that time. Mark had continued to help us with winemaking and fronting us grapes. You know, we were slowly growing. One of the problems that we had was in some accounts, the brand was so popular, it would run out on the shelf.

• 1:00:00Guy Raz?

  Huh.

• 1:00:01Speaker 02

  So that was a big problem, being so popular that you ran out of product on the shelf. So of course, all sales stopped at that point. So we were learning our lessons well, and Michael was continuing to go back to Don Brown to see if he could get an order.

• 1:00:19Guy Raz?

  All right, so let's, let's go back to Don Brown, the buyer from Lucky. Now you're two years after your initial meeting with him, and he takes another meeting with you. This is summer of 88. I mean, you had to make a case to him, or show him that you had some traction. What did you, what did you do at that point?

• 1:00:36Speaker 01

  Well, we, there's something that happens before I go in to talk to Don that I want to say. Hmm. I was advised to go talk to these people in Southern California, who they said were just as crazy as we were. And they had three stores and everybody thought they were going to fail. It was called Trader Joe's. They had one in Pasadena and they had a couple of others in LA. And I mean, the guy who was the head of the store was the captain and, you know, the clerk was the first mate and they had a big, you know, net on the wall with a lot of things. And we went to Trader Joe's and we said, look, you're crazy, we're crazy. We've got something here that we think we can work together on.

• 1:01:19Speaker 01

  What do you think about putting Barefoot in? So they put Barefoot in their three stores and they expanded rapidly. I mean, within a year, they had like 27 stores or something in California. It was just amazing. And they put Barefoot in all of them. So that's was one of the things that pushed Don Brown over the hump.

• 1:01:38Guy Raz?

  He saw it at Trader Joe's and he's like, well, we want it too.

• 1:01:42Speaker 01

  That's right.

• 1:01:43Guy Raz?

  Always works that way.

• 1:01:44Speaker 01

  Oh yeah. It's like you were saying, you know, it's the cart and the horse. We finally had a horse.

• 1:01:52Guy Raz?

  When we come back in just a moment, Michael and Bonnie launch a brilliant publicity stunt by poking fun at a very fancy winery. Chateau La, well, we'll get there. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 1:02:22Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1988 and after doing pretty well at Trader Joe's, Bonnie and Michael finally convinced Don Brown of Lucky Supermarkets to start selling Barefoot wine.

• 1:02:37Speaker 01

  He decided to give us a test market only in the Bay Area, which was where we were strong. And we executed that very well. And then he went to all his 225 stores in Northern California.

• 1:02:51Guy Raz?

  Presumably overnight, they become easily your biggest distributor, biggest retail partner.

• 1:02:59Speaker 01

  Absolutely overnight.

• 1:03:00Guy Raz?

  Okay, now here's my question. This is the late 80s. Wine is really starting to kind of gain more and more traction. I mean, more and more people are drinking wine. It's becoming more mainstream in the U.S. And how were your, how was the, the health of the business? I mean, were you still losing money on every bottle of wine you were selling?

• 1:03:23Speaker 02

  We started making a little profit here and there. We increased our line. We put the wines into the smaller bottles, the 750 milliliter bottles.

• 1:03:33Guy Raz?

  The regular sized bottles.

• 1:03:34Speaker 02

  Exactly.

• 1:03:35Guy Raz?

  Still one red, one white? That was it?

• 1:03:37Speaker 02

  At first, yes. And then we produced what was called at the time Blush or White Zinfandel.

• 1:03:44Guy Raz?

  Rosé.

• 1:03:45Speaker 02

  Which is now called Rosé. And we started expanding into different states. And because we weren't able to be there or keep track of the salespeople that we'd hired for those states or the distributors, it didn't do very well.

• 1:04:01Guy Raz?

  They just didn't get the concept.

• 1:04:03Speaker 01

  Well, one quick story. I was told that one of the main stores in the Minneapolis-St. Paul area was not selling Barefoot. And I was told by the distributor, well, you can't expect to sell it everywhere. I got on a plane the next day and I went there. And what did I find? I found that the potato chips were in front of the Barefoot. And they'd been there for two weeks, just stopped the sales. So rather than the distributor seeing that and doing something, because they're selling thousands of brands, what do they care? This is just one of them. They let the potato chips stay there.

• 1:04:40Guy Raz?

  Right.

• 1:04:41Speaker 01

  So it physically blocked the customer from seeing the product. So I removed the potato chips, you know? But what really did it for us was when we began to realize that it wasn't that the product was not popular, which it was, it was selling so fast that it wasn't getting replaced.

• 1:05:03Guy Raz?

  Right.

• 1:05:04Speaker 01

  And the distributors were not replacing it, and even the retailers were not replacing it. So we had to have wine cops in every market that would be policing the back rooms of the world and pulling the wines out of the back room and putting it on the shelf for the retailer. They were pricing items on their hands and knees on the linoleum in stores in places like Tallahassee, Florida, that you've never heard of, just to keep it scanning on the gatekeeper's screen. So we wound up creating jobs for people to do things like call the distributor up, you know, every week to stay on top of their inventory, because if they ran out, we'd be out for two weeks, if we were out for two weeks, there was no sales for two weeks, and

• 1:05:49Speaker 01

  we would lose our shelf position, which means that in some stores, there'd be no sales forever.

• 1:05:54Guy Raz?

  But just, just on that point, I mean, that would mean you'd have to hire a lot of people.

• 1:06:01Speaker 02

  Yes.

• 1:06:02Guy Raz?

  How were you going to pay them and afford to pay them? Like, what, how did you make it so you could actually manage the costs?

• 1:06:10Speaker 02

  We did eventually come up with a commission and salary combo for the salespeople, and they had to make sales in order to make the money that they wanted to have in their pocket. So that helped us a lot in our hiring efforts. We also had to expand only as quickly as we financially were able to. So we had to make some profits along the way so we could hold these profits aside and say, what is the next state or territory that we can open up and hire a salesperson

• 1:06:49Speaker 02

  who does know the market and does know the buyers and is incentivized by the large commission? There was no limit on the commission. The more they sold, the more they made.

• 1:07:01Guy Raz?

  Yeah.

• 1:07:03Guy Raz?

  The brand, you know, by 1990, now you're four years in, you're growing steadily. Do you remember, either of you remember roughly what your annual revenue was by 1990? Had you, had you broken a million dollars in sales?

• 1:07:15Speaker 02

  Probably half a million bucks.

• 1:07:18Guy Raz?

  Half a million bucks, okay. So you're, you're doing okay, but you're still a small brand, comparatively small brand.

• 1:07:25Speaker 02

  Mm-hmm.

• 1:07:25Speaker 01

  We had a report, we called it the Cliff Report. We finally got an account, we said, look, we want a report that tells us how long we have before we can't pay our bills. We call it the Cliff Report because we're going to fall off the cliff. How far is the cliff away? Is it a week away? Is it a month away? Is it three months away? Okay, so the whole time we had the business, I mean, if it was three months away, we were smoking cigars, you know?

• 1:07:54Guy Raz?

  Yeah.

• 1:07:54Speaker 01

  But the fact of the matter was, most of the time, it was between a week and two weeks away because we threw everything right back into it.

• 1:08:06Guy Raz?

  By the way, did you, how long did it take you to pay Mark Lyon back, the loan?

• 1:08:10Speaker 02

  I think it was about six years. You know, we might have made a first payment in the fifth year.

• 1:08:17Guy Raz?

  Yeah.

• 1:08:17Speaker 02

  And it probably was over a period of those fifth, sixth, and seventh year.

• 1:08:23Guy Raz?

  Okay, I think 1993 was a pretty important year because I read that that year, you sold 100,000 cases that year for the first time, which is, that's a lot of wine. I mean, that's much more than $500,000 worth of wine.

• 1:08:40Guy Raz?

  But I want to, I want to talk about something else that happened that year because I think this is interesting. It reminds me a little bit of Cliff Bar. I know that, you know, back in the early days, Gary Erickson ran ads for Cliff Bar that basically took on Power Bar. Power Bar went and threatened to sue Cliff Bar. They sent a cease and desist, and that actually generated a lot of interest in Cliff Bar. People were like, what is this?

• 1:09:03Speaker 02

  Mm-hmm.

• 1:09:04Guy Raz?

  You guys did something similar. What, what did you do? What happened?

• 1:09:08Speaker 02

  Well, we always like to use humor when we're selling the product. And I think it was one of our buyers that said, "Oh, Barefoot, like Lafitte, Chateau Lafitte, huh?" And we said, "Yeah, that's right."

• 1:09:23Guy Raz?

  One of the most expensive and prestigious wines in the world, right? Chateau Lafitte.

• 1:09:26Speaker 02

  Exactly, unless you spell it F-E-E-T.

• 1:09:30Guy Raz?

  Oh, Chateau Lafitte, not F-I-T-E, right? Okay.

• 1:09:33Speaker 02

  That's right. So, we were bold enough to print up T-shirts that said, "Barefoot, Chateau Lafitte of California Wine." And Michael was giving a talk to UC Davis to their enologist convention, which was really throughout the world, students would come in and winemakers throughout the nation would come in. So, we're passing out these shirts and they were very popular. Michael loved to throw them out into the audience, said, "Chateau Lafitte, well, what do you know, Michael, who was in the class?"

• 1:10:08Speaker 01

  Well, we heard secondhand that one of the Baron's relatives was in the class and took the T-shirt back to France. We get a call from a very expensive attorney in New York. He says, "I represent the Baron Rothschild," and he's taking umbarks to your use of the term "Chateau Lafitte of California Wine." He thinks that it would cause confusion. And so, I said, "Well, if you're going to threaten me, you've got to threaten me in writing. You can't just call me up on the phone." And in those days, we had fax machines. I said, "You type it up and, you know, I'll go stand by the fax."

• 1:10:53Speaker 01

  He does. I immediately take it out of the fax machine and I put it right back in the fax machine and I send it to, we had a friend who was a writer for the LA Times. And we sent it down to him because he, you know, I would bug him all the time and say, you gotta write about Barefoot, you gotta write about Barefoot. He said, Houlihan, don't call me unless you've got some real news. So I sent it to him and it was real news, you know, this thing was, he writes it up and, oh my gosh, it like hit the AP, the UPI, the phone blew up. It was over the Thanksgiving weekend and they wanted to know,

• 1:11:33Speaker 01

  you know, what I was gonna do about the potential of being sued by the Baron, one of the richest guys in Europe. He said, you know, this is what we've been waiting for. Cause Americans don't like the idea of snobbery, really. Really, Americans always pull for the underdog. And so I said, well, we agree with the Baron, there might be some confusion. And if there was confusion between his wines, which are like a hundred and fifty dollars a bottle, and our wines, which are five dollars a bottle, we'd be ruined.

• 1:12:06Guy Raz?

  Yeah.

• 1:12:07Speaker 01

  So we're gonna change it. We're not gonna use that term anymore. And thanks for pointing it out Baron. And they said, well, what are you gonna call it? And I said, well, I guess we're gonna call it Chateau La something of the Lower Lake.

• 1:12:22Guy Raz?

  Chateau La To.

• 1:12:25Speaker 01

  It went out. It was in the London Times. It was all over Europe. Thank God, you know, it was a slow news day, right?

• 1:12:32Guy Raz?

  Yeah.

• 1:12:32Speaker 01

  For them to take something that corny and make a big deal about it. But we took copies of that and said, you know, let's put this article up on the shelf next to our bottles.

• 1:12:42Guy Raz?

  Um, I'm, I'm curious about, at what point, a certain point, did you think about creating, you know, a legacy brand that you would run for 40 or 50 years? Or did you, did you guys know pretty early on that you wanted to get this to a certain level and then sell it?

• 1:13:02Speaker 02

  We intended to bottle it up and sell it all to a chain store, put a couple bucks in our pocket and move on and decide what else we wanted to do.

• 1:13:12Guy Raz?

  That was the plan, to just kind of get it to a certain point, sell it and move on. So were you constantly looking for buyers all the time?

• 1:13:20Speaker 02

  No, it took us a few years to realize that it had to reach a certain volume in order to be attractive to anybody else. I mean, we knew that we weren't making much profit and we were trying to build the volume. So our real goal was to open more territories so we'd have a higher volume and become more important to our potential buyer.

• 1:13:43Speaker 01

  You know, we actually went to lunch with a broker and we asked the broker, have you sold any wine brands that are at our price point for what we're doing? What does that look like? What has sold recently? In other words, what are the comps? And what we found out was not just what sold and how much it sold for, but how big they were when they sold in terms of volume. And that's when we realized that we had to be selling over a half a million cases a year before any serious acquirer would even look at us.

• 1:14:23Guy Raz?

  Half a million cases, wow, okay, so a lot of wine.

• 1:14:26Speaker 01

  That's right. So all of a sudden, we had our marching orders. We knew we had to achieve the 500,000 case level before we would start.

• 1:14:34Guy Raz?

  Before anybody would be interested.

• 1:14:35Speaker 01

  That's right.

• 1:14:36Guy Raz?

  Yeah.

• 1:14:37Speaker 01

  That's right.

• 1:14:38Guy Raz?

  And when did you hit that milestone? When did you sell half a million cases?

• 1:14:44Speaker 01

  I think we probably 2003, 2002, 2003, we hit it. And by 2004, we were pushing 600,000.

• 1:14:54Guy Raz?

  Wow, okay, so 2004, you knew that it was the right time to kind of seek out a buyer? And you did, but not just any buyer. You were approached by the largest wine producer in the entire world, Gallo, which is incredible. So how did that come about?

• 1:15:13Speaker 02

  Well, first, we got into the same distributorships, a couple of them, that Gallo had pretty much monopolized.

• 1:15:22Speaker 02

  By doing that, they became more aware of Barefoot and the fact that it was selling. Some of their brands were being outsold by Barefoot. And I understand now that some of the distributors were saying, hey, you ought to take a look at this brand because they're growing, you know, they could be a serious competition for you. So by being in those two or three distributorships, the word kind of got back to the company.

• 1:15:52Guy Raz?

  And so 2004, you start to talk about an acquisition with them, quietly, I imagine.

• 1:15:58Speaker 02

  Yes.

• 1:15:59Speaker 01

  Very quietly, yes.

• 1:16:00Guy Raz?

  Yeah. And from what I understand, you guys are selling over half a million cases and you had, what, about 30, 40 employees on payroll?

• 1:16:08Speaker 01

  Right.

• 1:16:09Speaker 02

  Yeah, 42, including us.

• 1:16:11Guy Raz?

  And so just kind of doing back of the envelope math here, I mean, I'm thinking your revenue is over $25 million at that point.

• 1:16:19Speaker 02

  Probably.

• 1:16:20Speaker 01

  Yeah, that sounds about right.

• 1:16:21Guy Raz?

  So that's a very, I mean, were you profitable at that point?

• 1:16:25Speaker 01

  Yes, we were profitable.

• 1:16:26Speaker 02

  Yes, we were.

• 1:16:27Guy Raz?

  I mean, it seems like a pretty, I mean, 40 employees, you know, you're doing 25 million at least a year, seems like things are going pretty well. I mean, was there any part of you that thought, let's just keep this going, let's just grow, grow and grow? Or did it, did it feel like, you know, we're just not going to be able to scale because I compete against the big, big guys because we don't have the resources to do that?

• 1:16:51Speaker 01

  I think it's choice too. Once we realized that the key to consumer packaged goods is staying in stock on the shelf and that that's more important than anything, because if you're not there, they can't buy it.

• 1:17:09Guy Raz?

  Yeah.

• 1:17:10Speaker 01

  And then we realized what that physically took to police it and to oversee it and to do everybody's job for them. Once we realized that, we said, no, this is not what we want to do with our life. We're looking at an exit and now's the time to do it.

• 1:17:30Guy Raz?

  You guys finalized this deal in January of 2005. Some is undisclosed, I think contractually neither of you are allowed to disclose it. But I imagine both, you know, you certainly did well out of it and well enough to live a comfortable life. Is that, is that fair to say?

• 1:17:48Speaker 01

  That's very fair.

• 1:17:49Speaker 02

  That's very fair to say, yes.

• 1:17:51Guy Raz?

  What's amazing is, I read that that year, okay, the year you, the deal was finalized, you sold 600,000 cases. The next year, this is, and you guys stayed on as consultants, this just shows the power of Gallo and their distribution network. One year later, they sell 4 million cases.

• 1:18:11Speaker 02

  Yes.

• 1:18:12Guy Raz?

  Seven times the number.

• 1:18:13Speaker 02

  Yes.

• 1:18:14Speaker 01

  Yeah.

• 1:18:15Guy Raz?

  And today, I mean, do you even know, it's gotta be one of the top three selling labels. It's gotta be up there.

• 1:18:20Speaker 01

  Well, according to Drinks Magazine out of London.

• 1:18:24Guy Raz?

  Yeah.

• 1:18:25Speaker 01

  It's the top wine brand in the world today.

• 1:18:27Guy Raz?

  Wow, even bigger than Yellow Tail.

• 1:18:29Speaker 01

  Oh, much bigger.

• 1:18:30Guy Raz?

  I mean, it's, it's kinda, it just shows you the power of, you know, a really well-capitalized, well-oiled machine like Gallo.

• 1:18:39Speaker 02

  Yes.

• 1:18:40Guy Raz?

  Because, right, because you're, it's not like the quality of the wine changed or the, you know, or the price point changed. It's just that they were able to take exactly what they bought and really scale it and, and do what they intended to do with it.

• 1:18:55Speaker 02

  Yes, that's exactly what we were looking for, Guy. We were very happy to have brought it to life, but we knew we weren't the people to, to bring it to the success that it was capable of.

• 1:19:07Guy Raz?

  Yeah.

• 1:19:08Speaker 02

  It had the capacity, it just didn't have the manpower. Yeah.

• 1:19:12Guy Raz?

  And you felt like it wasn't worth it trying to raise the money and from investors and just try to scale it and do it on your own?

• 1:19:20Speaker 02

  We were tired, Guy. We worked for 20 years at this.

• 1:19:25Guy Raz?

  Yeah, fair enough.

• 1:19:26Speaker 01

  Yeah.

• 1:19:28Guy Raz?

  So you stayed on for another year as consultants and then that was it. You were free and clear. You are today, of course, we're talking 2024. You have no connection to Barefoot Wines. The only connection you have is that you created it, but you have no financial relationship with Gallo. You've got no stock in the company. It's family owns, there's no stock, but you've got no equity. That's it. You're out of it, right?

• 1:19:50Speaker 02

  That's true. And we do see the wine everywhere. We get pictures of Barefoot Wines throughout the world that people send us that we've made friends with. Say, hey, look where we saw your wine. They still call it our wine, but it's not a part of our lives in any way any longer.

• 1:20:07Speaker 01

  We're just glad it's on the shelf. We're just glad that they have been successful with this brand and that it kind of goes ahead of us. So for that, we're happy for Gallo's success.

• 1:20:22Guy Raz?

  It's amazing. When you guys think about about this incredible journey you took, right? Even even sort of just the chance meeting at that bar and and then, you know, asking Michael to go collect the money and then how really that was a one off job and how it led to all this. How much of it do you attribute to the grind and the work? And how much do you think it had to do with luck?

• 1:20:48Speaker 02

  Well, first of all, I believe in luck. I believe in good luck. Everyone has good luck every day, but they have to move and take action on it. So that's where the hard work comes in. It's not just a pile of gold that you stumble over. You might have to dig up that treasure chest. So, yes, it was very fortunate that I met Michael that day. And it was fortunate that he was able to make a trade. But that's because of the actions that we both took and the decisions that we made after that.

• 1:21:27Guy Raz?

  Michael?

• 1:21:28Speaker 01

  Well, I kind of second what Bonnie says. You know, if you're looking for things that are solutions and you believe that there's a solution, you're more likely to find them. So preparation is the is the greater part of luck in my view. Chance favors those who work.

• 1:21:51Guy Raz?

  That's Michael Houlihan and Bonnie Harvey, co-founders of Barefoot Wine. By the way, the drawing on the wine label, that naked foot, that's Bonnie's design. And-

• 1:22:02Speaker 02

  It's my foot. It's my shape.

• 1:22:04Guy Raz?

  That's a famous foot.

• 1:22:06Speaker 02

  Yeah. I sent Michael out to get the largest ink pad he could find. I put my foot in there and on some artist's paper, and I sent that off. And that's how my foot got on the label.

• 1:22:18Guy Raz?

  That foot on Barefoot Wine is your foot.

• 1:22:23Speaker 02

  Yeah. I say, I like, I want to dance on everyone's table. So that's how I did it.

• 1:22:31Guy Raz?

  Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And of course, it's free. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyraz.com. This episode was produced by J.C. Howard with music composed by Ramtin Arablouei. It was edited by Neva Grant with research by Olivia Rockman. Our audio engineers were Robert Rodriguez and Kwasi Lee. Our production staff also includes Kerry Thompson, Alex Chung, John Isabella, Chris Messini, Carla Estevez, Sam Paulson, Devin Schwartz, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.