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Snooth User: Philip James

Wine companies enter Inc 500

Posted by Philip James, Oct 3, 2008.

Cameron Hughes Wine and WineCommune both made it into the Inc 500 by Inc Magazine. Congratulations to them both. A growing company really only ever has one shot at this, and its nice to see the wine industry represented.

Here are their stats:

Cameron Hughes Wine (No. 18)
5,754.1% three year growth rate
$13.5 m in revenue
Employees: 17
Founded: 2001


WineCommune (No. 40)
3,460.2% three year growth rate
$16.6 m in revenue
Employees: 35
Founded: 2002

Now the stats are out the way, here's why I think the Inc 500 is totally pointless. Ranking companies by three year annualized growth means that companies that start from small bases have an inherent advantage. Its a lot harder to grow from $10 million in revenue to $1.5 billion than it is for a company to grow from $10k to $1.5 million over the same time period.

Cameron Hughes Wine and Wine Commune grew from around $80,000 and $160,000 respectively to their present day numbers, so clearly impressive gains. However, each year in the Inc 500 there are a few companies that post 10 times the growth of either of these two, and while it sounds astronomically impressive its often different when you work out what the starting years revenue was. Frustratingly these other companies that post 30,000+% gains often take theglory, when companies posting 'just' 5,000% gains get relegated to the middle of the pack.

Back to the two wine companies, you can see that Cameron Hughes generates nearly $1m in revenue per employee, which is a great figure and really shows how well he leverages his staff, the whole value chain really and keeps everything as virtual as possible. Compare that to WineCommune, which at first seems like a tech company (WineZap, WineCommune etc), but on further investigation, the primary revenue driver is the retail store JJ Buckley. Traditional retail has a much higher larger fixed base of staff: warehouse, customer service and so on, so it scales less well and the average revenue per employee is lower. But, at $500k per employee its still very impressive.

Ive spoken to Michael, and met Cameron a couple of times. Both excellent managers clearly. Very well done to the both of you.

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Reply by Philip James, Oct 21, 2008.

http://eastbay.bizjournals.com/sanfrancisco/stories/2008/10/20/daily25.html
Cameron Hughes just received $3m in new capital - great work in these markets


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