Silicon Valley has become synonymous with tech innovation and a brand in its own right, but it also sits adjacent to some of the largest and best known wine producers in California. The US wine business has grown up alongside Silicon Valley’s tech industry – some of today’s best known California wine brands started as small mom and pop operations in the 1970s while companies like Apple and HP were beginning in garages. Silicon Valley Bank, with a reputation for bucking convention has been an innovative force and change agent in both industries.
The bank’s founders first jumped into the Tech business in 1983; a time when perceived risk kept banks away from financing technology startups. Instead of risk, the Bank saw opportunity. Nine years later in 1992 with demand for wine sagging, traditional banks just saw risk and moved away from the wine business. Rob McMillan noticed and convinced bank leadership it was another point of opportunity then created the bank’s Wine Division. Both risks paid off.
Today Silicon Valley Bank (NASDAQ:SIVB) is a worldwide force in the Technology space, and the Wine Division is regarded as the leading provider of financial services to the US fine wine business. We asked Harvest Council Member Rob McMillan, EVP and Founder, Silicon Valley Bank Wine Division, to share some of his views and learnings from his extensive career.
You have been with Silicon Valley Bank for over 25 years, that puts you in the top 10 in the bank in tenure and has to give you a unique perspective on change. Can you share some of your learned insights?
On Management: Celebrate failure. We are such a competitive culture, failure often isn’t tolerated in so many places. People are too often fired for making mistakes so failure is hidden under the rug. When that happens in business, there is no opportunity to learn from a mistake. I believe success is an iterative process, so without creating a positive culture around trial and failure; a place where you celebrate failure and examine it, there can’t be success.
On People: You can tell people what the goal is. You can tell a machine how to accomplish a task. You can’t tell smart people what to do, and then how to do it. Successful outcomes are enhanced, people develop faster, and success is sweeter when people are allowed to use their own God-given skills and talents to tackle a job.
On Longevity: The secret to longevity in an evolving business world is personal change. The world around you will change so you have to find new ways to provide value to a growing organization. If you try and play it safe and stick with what made you successful alone, the organization will pass you by.
On Success: The elements for success are knowledge, timing, and hard-work, and you need all three. You can be the smartest person around and fail because of bad timing. You can work hard at an impossible task and never complete it. But you can have average intelligence and above average timing, and find tremendous success if you are willing to outwork everyone else. There is no substitute for effort in the equation.
On Creativity: Ideas are still-borne when lucid and practical people are willing to tell you why it won’t work. The dumbest comment ever uttered regarding an original idea is “Who has done that before?” Truly enlightened people when presented with original thought, instead of looking for what is wrong with the idea, will look for what is possible. That is one of the cultural secrets of successful innovation.
The wine business is thought of as a traditional business, in what ways will innovation play a larger role in the future?
The wine business has been a cottage industry for so long and has lagged in both adoption and in discovering technological solutions. Starting from behind only means there is more opportunity for evolution in the sector. Today we are seeing more digital options to support direct sales with CRM, tasting room and club solutions, and compliance. There is the use of drone technology in vineyards on pest management and vine health, analytics in water and nutrient use, big data employed for customer identification, consumer apps connecting the consumer’s desire in a purposefully fragmented industry. The use of innovation and technology in farming, wine production, logistics and consumption has only just started to scratch the surface. While wine production and sales will evolve in the digital world, I hope the enjoyment of food and wine with friends stays stubbornly old fashioned.
Your State of the Wine Industry Report has become a well-regarded must read in the wine business – what have you learned from forecasting trends?
To forecast in any business, expertise and curiosity have to collide. Forecasting can only come from knowing a segment intimately. While the business itself is one that is overtly collegial and one that shares, because the business is family owned and private each person in the business only sees the world from their own vantage point. Without information to calibrate that belief, business decisions get made from a base of limited vision, leading to big surprises from unexpected sources.
Each year when I write the State of the Industry Report I start from scratch and try and reevaluate the important factors impacting the business in a given year and I share that openly. That creates a dialogue when a point stimulates either agreement or disagreement. The end result is I’ve learned the dialogue in and of itself is a self-sustaining research feedback loop. People call me wanting to “pick my brain about some report finding,” as if there were any brain left to pick – and inevitably I am left learning something new myself. That illuminates another perspective in subsequent research.
Rob is a veteran of the wine business, and has written and published many industry references including the Bank’s highly acclaimed State of the Wine Industry Report. Twice named one of the Top 100 Most Influential People in the U.S. Wine Industry; he is the only banker to make the list. Check out his blog and follow him @SVBWine.