Alex Andrawes: “People are everything; If you hire people and pay them a low wage, you’ll get what you pay for”

People are everything. If you hire people and pay them a slave wage, you’ll get what you pay for. If you under pay, your employees will never be focused. They’ll be worried about how they can pay their bills, not on how they can make your business more valuable. After hiring interns and entry level employees because they are the easiest to acquire from a cost perspective, I realized that we spent a lot of time training people who would leave for a higher paying job after they acquired the training. I once had a Sales Manager who was satisfied with his living wage and didn’t want to work harder or earn more. He was happy, plain and simple. Our business was stuck and this person was in a position of power that would have created the impression that average was OK. Average is never OK in business.

I had the pleasure of interviewing Alex Andrawes, CEO and Founder of PersonalWine.com. Alex’s company can help you deliver a powerful, personalized message to your wine gift recipient like they have never experienced before.

Thank you so much for joining us Alex! Can you tell us a story about what brought you to this specific career path?

In late 1999, I had nice little internship going on at a financial planning firm in Austin and I kept the internship going so that I had a fallback plan. If everything failed, I could always put on suit and dazzle my way up the corporate ladder. It’s always good to have Plan B and Plan C in your back pocket. I was in my early twenties and imminently graduating from college. It was an interesting time as I was observing the surge of the internet dot-com, I knew this was my chance to do something on my own. While my friends were out drinking at bars, picking up beautiful people and renting boats on weekends, I hunkered down and channeled all my energy towards building a business. I took all the money I saved up working and investing in the dot-com madness and funded my own startup.

I decided to start a company focused on the secondary ticket market (for events) but within three months, I found out that someone (Stubhub) was launching a better platform with greater reach than I could ever achieve in such a short timeframe. I am a scrappy dude that likes to bootstrap before I take on capital, so when I heard about a competitor with deep pockets that was about to release a well-executed platform, the feeling of impending doom set in and I realized that I should close it down and focus on something else. In short, I was down on my luck, pissed off at myself and at a rock bottom state professionally. The good news was that my personality has always been one that doesn’t seek pity or petulance. I also don’t like to waste time. I am resilient.

A couple days after shutting down the business I was sitting at a bar with my roommate and he mentioned to me that we should go into the wine business together. We both loved wine and we both loved business. I had no idea how complicated it could be, but the idea sounded amazing. I come from a family where wine is celebrated and as a kid who grew up in Tunisia and Egypt I personally saw how important was to their ancient societies, and the history fascinated me.

The idea stuck in my head, and the following week I walked into the internship office and my boss approached me and asked me to go to Costco to buy 10 cases of wine, up to $50 per bottle,which we would be sending as gifts to his clients for the Christmas holidays. It was at this moment that I started connecting the dots. I was going on my first wine mission.

At Costco, I found selecting a wine to be arduous and intimidating. I loved wine but my knowledge of wine was certainly at an entry level stage. I found a lovely Grand Cru Bordeaux at the right price point, bought the wine and drove to a greeting card store to find the perfect greeting card to accompany the wine gift.

Shopping for a perfect greeting card for a business thank you gift is not easy to do. Greeting cards are not universal, they don’t apply to everyone. You can’t send a Merry Christmas card to everyone because not everyone is Christian. You have to individually write out 120 cards and try to make them work for everyone and it then dawned on me that we should just remove the front label of the wine and replace it with a customized label, personalized with his logo and his text. I called my Boss, he loved the idea, so I took the wine home and soaked the labels off in my bathtub. My roommates laughed their asses off when they came home to find me soaking off wine labels and designing wine labels on my computer. Little did they know!

After multiple attempts of printing wine labels and testing them for durability, I found a solid paper source, printing source and brought my boss a sample. He was blown away at the concept and showed the bottle off to a few co-workers in the office. One order turned into five more orders and then a few financial planners at other firms who got wind of what I was doing hunted me down and asked for the same product and service. The folks at Costco found it bizarre that a young man in his early 20’s was buying dozens of cases of wine at a time, returning back for more, but hey… they never turned me down.

Between October and December of 1999 I managed to produce five figures in orders and I realized I was onto something big.

Can you share your story of Grit and Success? First can you tell us a story about the hard times that you faced when you first started your journey?

Interestingly in January of 2000, I got a call from the Texas Alcohol and Beverage Commission and I was instructed that I had to get a license to do what I was doing. Additionally, they told me that I had to get my business practice approved by the agency as label modifications were controlled by the Federal and State agencies. Anyone would have thought “well that was nice while it lasted” but in my mind I began to envision that my castle was being invaded, and this was an opportunity to build a bigger moat. A couple days later, it just so happened that I was visiting with my dentist for a routine cleaning, and as I explained to him what I was up to, he gave me the name of a prominent lobbyist and attorney.

I met Chuck Bailey in February of 2000 and we hit it off. He had been the personal attorney to Lieutenant Governor Bob Bullock, a former state prosecutor and a well-respected lobbyist for various interest groups. I can honestly say that I have never met a man like Chuck. He has always been a friend and an angel to me. He told me he would give me a good deal on his fees because he always wanted to start a business. As long as he could live vicariously through me, he would help me out. Chuck walked me into the TABC office and we walked out with a plan. I had a plan to continue operations with the approvals of the state agency.

In March of 2000, I incorporated my business under PersonalWine.com Inc. and was 30–60 days away from being a licensed wine retailer. The hurdles involved in getting a license in a highly regulated environment are astounding. I had to get an office at least 1000 ft from a school or church. I had to supply references, a lease agreement, drawings of the facility, register my vehicle for delivery, register with the Federal Government (Treasury dept) -the list was continuing to grow and so were the expenses. More hurdles presented themselves each day, and bolted to those hurdles were time and money constraints.

A couple months later, I received my permit and I was officially in business and legally permitted. In most states, alcohol retailers typically are required to buy wines from licensed distributors. I set up my first meeting with a prominent distributor and I will never forget that meeting. Here’s a young man walking into a room filled with people in their 40’s and 50’s dressed in suits. I asked them if they could supply me with single label wines that I could personalize, and they laughed at me. In short, I left that room with no deal. I had dinner that night with my parents and my Dad offered to help me by tagging along and advising me on how to negotiate.

My first meeting was painful. We left the meeting and my Dad told me that I talked to much. He told me that if I wanted to be successful, I needed to listen more than talk. People will tell you what they need and if you listen, you know how to respond. You’ll know if you can serve this person well. I got brutal feedback from my Dad and I still love him for it to this day. Rarely do you find a person who is willing to give you honest, brutal feedback. It’s easier to be nice or quiet, and ironically it’s harder to be honest when it comes to dishing out constructive criticism. That said, I left the winery that day with my first supplier. Now I could make money instead of spending it!

Where did you get the drive to continue even though things were so hard?

My parents were immigrants into the United States. My father came to the United States from Egypt in the early 60’s and my mother came in the late 60’s. Neither of them spoke English and they both came to the United States with less than $300 and a big suitcase. My parents often spoke about instances of ridicule, bigotry and the obstacles they faced as immigrants. Two stories in particular changed my perception of who I am and where I came from.

My father told me a story about how he discovered one of the first deep sea oil fields off the coast of the North East Atlantic. His team led the exploration and discovery, yet his boss got a massive promotion and all the credit. I witnessed many times in my Dad’s career where he was skipped over for promotions because he wasn’t “one of boys.” My Dad didn’t go drink at bars with co-workers. He didn’t party with them either and that made him less popular. His accent would bother coworkers and they would egg him on. He never let it get to him. Instead he would poke back with snarky remarks aimed at their intelligence level.

My Mom told me how she was a Nurse, studying to become a Doctor. My Mom explained how simple things like ordering a hamburger or giving directions to a taxi driver were very difficult to overcome. But she managed and adapted. She became well respected by her peers and most importantly by her family. My Mother and Father both come to the United States legally, became citizens and made this amazing country their own. While my parents are not American by birth, they still believe there is no land of opportunity like we have in the United States.

I believe my resilience, my tenacity and unwillingness to accept failure as an option was given to me by my Parents first and foremost. I also give a lot of credit to my amazing business partners and advisors. Even when things were tough, for example in the Great Recession, they continued to support me with advice and motivational words.

So, how are things going today? How did Grit lead to your eventual success?

Today things are great, but they can always be better. Personal Wine continues to achieve new accolades, we continue to grow our product lines and customer base fairly consistently, even after 10 years in business. That said I am a big believer in constant improvement and I never believe that we’re done innovating. We constantly strive to improve internally and externally as a company. As long as I am at the helm, I will always incentivize my Team based on achieving milestones. If my name is attached to a service or product, then the result must be superlative.

The definition of grit is courage and resolve; strength and character. Grit can be also mean passion and perseverance. I’ve never been one to rely on expertise and natural talent. I am someone who sees demand and I strive to build a simple, high quality solution. I saw a gap in gifting and I seized the opportunity. I take success and failure one day at a time and I try my best to work hard to achieve results. While I have 5 to10 year goals, I map my goals in 90-day increments. It’s amazing how many small wins can turn into a big number.

I believe that as a human being we all have short comings, and I have many of them. At a very early stage in my career when I was in financial distress, I decided I would surround myself with amazing mentors who would not be afraid to give me brutal, honest feedback. I don’t want to hear all the things I am doing right, I also want to know how I can improve myself. I take advice seriously and often I implement team-derived solutions. I love to be convinced otherwise. It has been my belief that it’s my job to be the dumbest guy in the room and pray not to get kicked out. That philosophy has worked well for me and the Company. I have amazing advisors, mentors and a great group of business friends who continue to give me advice on how to be a better businessman, husband, father, brother and friend.

In the early days of Personal Wine, a group of graduate students from the University of Texas at Austin McCombs School of Business built a case study on my Company. They saw an 88% chance of failure. I saw a 22% chance of success and built upon that. I addressed every point of failure within reach and things progressively got better. Around the same time, I had plenty of family members who called me to tell me that I would make a great doctor or lawyer and that I should go work for a big company and climb the ranks.

Fortunately, I have amazing parents who supported my craziness and helped me along the way in many different ways. One of the greatest pieces of advice I got from a mentor came from my Father. He once told me that I talked too much and that if I wanted to be successful I needed to listen way more than I spoke.

An individual must overcome ego in order for grit to become real. From my experience ego gets in the way 99% of the time and that’s why bad decisions get made. From the moment I walk in the door to my office building, I do my best to leave my ego out the door, and I empower my Team to make decisions on a group basis. At the end of the day… I would bet my stakes on an average idea with a great team versus a great idea and an average team.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

There were two major mistakes I made that almost crushed me. The first mistake was buying a ton of Texas wine instead of California wine. I relied too heavily on my instinct that people didn’t care what was inside the bottle. The truth is that Texas does produce some high-quality wines, but Texas wine is largely unknown in the wine world due to the fact that we don’t spend a lot of money marketing or selling Texas wines outside of Texas. After one year of sitting on a pile of inventory, I decided it would be a better idea for me to send prospective clients wine bottles to introduce them to my Company instead of throwing the wine away. That mistake costed me $30K and that was a lot of money to me at that time.

The second major mistake was taking on another large-scale project that deviated from our core business. I met with a visionary businessman who encouraged me to figure out a way to think larger than life. I decided to go big and buy a domain name for over $1 million. This domain name and the area of business was a huge distraction and almost killed our business. It took me three years to figure out that I had made the mistake of losing focus. I was distracted and looking at the shiny object vs seeing that I had the golden pathway all along. Shutting that line of business down was the most humbling and rewarding experience of my career. To this day, I encourage my Team to remind me of the shiny object when the object reappears in a different form.

What do you think makes your company stand out? Can you share a story?

Our company stands out because we really care about the wine and the customer experience (order and post order). Most of all we have amazing people on our Team. Our Team consists of brilliant people who constantly think of ways to improve ourselves so that our customers feel compelled to become our biggest fans.

I have many stories about how we went above and beyond for our customers, but there’s one story that stands out the most. I once had a customer who ordered wine and needed it delivered on a Thursday or Friday. The shipping courier who was responsible for the delivery missed the target deadline. The customer was beyond upset.

I called the customer and told her that we would drive the wine from Austin, Texas to San Francisco, California for her Shareholder Meeting. She was extremely doubtful that we would actually commit to this, but sure enough we arrived super early on Sunday. I called her to tell her I was in the lobby of the hotel with her wine. You should have seen her face and her reaction. My business partner at that time told me that we should just refund her money and walk away. I refused to let this customer down on a such an important event.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

The wine industry is very difficult, and it takes at least 5 years and a boat load of passion to succeed. I have met many people who have come in and left the industry. I have met a few people who stayed focused and built a following of loyal customers. Wine is subjective to a large degree, so the amount of energy and the story behind a wine is what separates a good wine and an exceptional wine.

Don’t sacrifice quality for quantity. You can sell 100 cases of super high quality, single vineyard estate wine. Or you can sell a container of super cheap, average wine (1000 cases). Selling more doesn’t always guarantee your success. Selling the best and staying true to the game is how you win in this business. That and a lot of patience.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

I can name a few people who helped me along the way. My first mentor is my Father and my Mother. They gave me hope and encouraged me through the hardest times. They’ve seen me sweat, bleed and cry. They’ve seen the best and the worst and encouraged me all along the way.

My second mentor still helps me to this day. In 2010, I met a gentleman by the name of Tom Meredith. Tom is a super successful businessman who once held the ranks of global CFO for Dell, Motorola and before that he was the Treasurer of Sun Microsystems. Tom is a lover of fine wine and he has an exceptional palate. Tom taught me the most important thing in my career, opportunity cost. At the time I met Tom he helped me dissect my business plan, avoid some costly mistakes and constantly encouraged me to stay focused. Tom did this with no economic benefit to himself. He did it to help me as a friend. Tom is a true friend and amazing mentor.

My last mentor is actually a business group I joined in 2010 called EO (Entrepreneurs Association). A sister organization of YPO (Young Presidents Organization), EO is designed to create a fellowship of entrepreneurs who have at least $1 million in revenue. This organization encourages members to join a Forum, which acts as an informal Board of Directors. At Forum meetings we present our monthly updates and we focus on our top 5% issues. We advise each other, and more importantly we hold each other accountable.

How have you used your success to bring goodness to the world?

A year ago when I re-assumed the role as CEO, I decided I wanted to create a program designed to give back to the community. I only want to be part of a community-driven Company. We developed our Wine Barrel Program to help match non-profits build a donation program that would appeal to their audience. Our Wine Barrel Programs have helped raise over $100,000 in the last twelve months for assorted charities and school programs. One particular achievement that I am proud of is that our Wine Barrel Programs have helped school districts hire more teachers, allowing for a higher ratio of teachers to students than existed before we came into the picture. Our children are everything and anything we can do to help add more teachers into our society will have a significant impact on the future of mankind. Every adult remembers that one teacher who made a difference!

What are your “5 things I wish someone told me before I started my company” and why. Please share a story or example for each.

1. The mythical man month is a reality. If you think it will take a month, it will take two months. Plan on the fact that things will never go perfectly smooth. Problems will surface, and you should expect the unexpected. I planned a major technology development in March of 2018 that I expected would be finished in September or October of 2018. Major problems surfaced in the deployment of the technology that required more work. Instead of deploying in November or December and risking our heaviest season, we opted to delay the deployment for Q1 of 2019. Rarely do things go as planned. So plan on the unexpected.
2. People are everything. If you hire people and pay them a slave wage, you’ll get what you pay for. If you under pay, your employees will never be focused. They’ll be worried about how they can pay their bills, not on how they can make your business more valuable. After hiring interns and entry level employees because they are the easiest to acquire from a cost perspective, I realized that we spent a lot of time training people who would leave for a higher paying job after they acquired the training. I once had a Sales Manager who was satisfied with his living wage and didn’t want to work harder or earn more. He was happy, plain and simple. Our business was stuck and this person was in a position of power that would have created the impression that average was OK. Average is never OK in business.
3. Stay focused. If you have a plan and you keep changing direction, you’ll never know what success looks like. You’ll never get to the point to where you know how to improve. Create goals and action items that are required to achieve those goals and follow them through. I once co-founded, seeded and invested energy in a company that experienced substantial growth online. We were accumulating 100,000 fans every week on Facebook. Our growth was astounding for a 4–5 man team. After all but one co-founder left the Company, the CEO lost the directional advice of the other leaders. He changed the direction of the business every few weeks and as a result the business lost so much momentum that the talented individuals who he hired began seeking other employment opportunities. What made the company great was focus and what turned the company in the other direction was the lack thereof.
4. Surround yourself with great people. If you’re the smartest person in the room, you’re doing something wrong. You need great people who can support your vision and help you see things that are not evident. Often enough I find that amazing employees identify problems and bring them to you with potential solutions. Those people are keepers! I hired some people who were really challenging people to deal with. One in particular had such a strong personality and was difficult to deal with. The redeeming factor of this individual was their tenacity and unwillingness to compromise on quality. It could be argued that this individual cared too much and pushed accountability of her peers to the forefront. The result was a shift in culture, which previously was tied to friendship vs. merit. Today we have higher levels of accountability and fewer, better people who understand the meaning of high-quality work.
5. Reward success, celebrate failure and punish inaction. If you reward success, the Team will know what success looks like and they will strive to celebrate it. If you celebrate failure, you’ll understand what NOT to do. Sometimes knowing what not to do is the success of a failure event. It’s your goal not to make the same mistake twice. If you punish inaction, then you discourage complacency. The worst thing in business is when you have a team member that feels like bringing a challenge won’t change anything. I decided to pitch my Board of Directors on a profit sharing plan that would reward all employees of the company in a significant manner. I felt this would align owners with employees. In order to do this you must be transparent with your financial condition. I share the profit/loss statements with my executive team and they know how much money we make or lose on a weekly basis. The goal here is to encourage profit and minimize waste. I consider this one of the greatest ways to reward success. One year ago we closed our tasting room at our office in downtown Austin, TX. The business was making money, however growth was limited and the amount of energy involved in keeping the tasting room open was exhausting. Even though it provided decent six figure income, we decided to focus all our energy into specific profit centers that had the opportunity to scale. The result was a business that doubled in revenue in one year. The failure was celebrated and turned into success. Double whammy!

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I abhor single-use plastic. I believe that if anything can be done to improve our society, it would be to eliminate single-use plastic from our daily consumption routine. Single-use plastic is in our ocean, our water systems and in our bodies. What single-use plastic has done to our oceans is devastating. And while it can be cleaned up, the correction should be in the behavior vs. remediation.

Simply put when you throw plastic into the ocean, algae eat the plastic, which is eaten by multicell organisms, which are eaten up by the smaller fish, which are in turn eaten by the larger fish that we eat. Plastics can be found in the tissue and digestive tract of our fish diet, and our bodies do not digest this plastic. We’re killing ourselves by allowing convenience to rule our everyday lives. The behavior needs to change on a global scale, and it would be my wish to see this corrected.

This was very inspiring. Thank you so much for joining us!