February 25, 2008

We Even Make Good Wine

While the usual discussion in these pages is about start-ups, and how Israel is an incredible breeding ground for tech entrepreneurship, we have also gone back to our roots.

I was first introduced to Castel Winery  by my good friend Elie Wurtman, and we actually entertained the thought of opening a winery ourselves. Probably good that we stopped at the drawing board with that one, but Eli Ben Zaken and his peers have blazed a new trail for Israeli wine. Yet another example of the "new Israel," as a center of creativity and a global sense of the aesthetic.

Take a look at this story from this past weekend's Wall Street Journal (thanks to Jules Polonetsky for pointing it out):

Israel's New Revolution in Quality

By WILLIAM ECHIKSON
SPECIAL TO THE WALL STREET JOURNAL
February 22, 2008

It started as a hobby. Eli-Gilbert Ben-Zaken, an Israeli restaurateur and poultry farmer, planted a few grape vines on a hilltop next to his house in the Judean hills in 1988. He chose the name Domaine du Castel after a nearby crusader fortress and, starting with a mere 600 bottles, attempted to make high-quality, French-inspired wines.

In the beginning, Mr. Ben-Zaken's quest looked quixotic. Wine was produced in ancient times in Israel -- archaeologists have found antique wine presses in the Galilee and Judean Hills -- and the Rothschild banking family reintroduced grape cultivation at the end of the 19th century. But for most of the country's history, the Israeli industry was dominated by sweet wines of poor quality that taste like alcohol-tainted grape juice -- tired red wines with cooked, herbaceous flavors.

[Kosher wine photo]
Israeli winemaker Eli-Gilbert Ben-Zaken in his cellar

Today, Mr. Ben-Zaken and a small group of other Israeli pioneers are creating world-class reds and whites that are gaining increasing recognition from critics both at home and abroad. Ever more-prosperous Israelis are demanding better drinking choices, while connoisseurs in the U.S. and Europe in search of something different are intrigued enough to taste these "new" world wines from an ancient land.

"We were real pioneers -- the Israeli market used to be a prisoner market for poor-quality kosher wine," Mr. Ben-Zaken, 63 years old, recalls. "It's different these days. Everybody is trying to make something good."

Traditionally, Jews drank mostly for Shabbat blessing and this wine was made sweet because a bottle had to last for several days and still be drinkable. In modern Israel, winemakers had a captive market that demanded kosher wines and little in terms of quality. Israelis traditionally put little emphasis on gastronomy.

The country's economic boom over the past two decades has changed that, creating more of a market for the finer things in life. Israel's reduction of travel taxes prompted a wave of visits to Europe and exposure to good food and good wine. Import taxes were lowered and many of the world's most famous international wines finally began to become available in the country. Annual per capita consumption of wine has doubled in the past two decades to about seven liters.

A new generation of wineries and winemakers has emerged to satisfy Israelis' new appreciation for quality wines. Before 1980, Israel counted only about 20 wineries. One company -- Carmel -- dominated the industry, vinifying about 70% of the country's total grape harvest. Today, more than 200 smaller wineries are spread across the country, from the Golan Heights in the far north to the Negev Desert in the far south. Sweet wines now represent a minority of the market.

In Europe, supermarkets still tend to stock the mainstream Israeli brands. But increasingly specialty wine stores or Jewish stores are carrying a wider selection of highly rated Israeli wines. (For details on some stores in Europe and tasting notes on some wines, see accompanying article.)

In addition to Castel, some of the best names to look for include Margalit, Tzora, Chateau Golan and Clos de Gat. Even Israel's largest and oldest wineries, led by Carmel, have invested in new production of high-quality, European-style wines. Carmel has launched the well-respected wineries Ramat Daltan, Zichron and Yatir.

Mr. Ben-Zaken's Domaine du Castel was the first winery to plant vines in the Judean hills, in the center of the country. Now, more than 30 wineries flourish there. The Judean's Mediterranean-style hillsides -- where olive groves also flourish -- benefit from relatively cool summers, which make them suited to quality winemaking. For his wines, Mr. Ben-Zaken has given the hills a French name: Haute-Judée.

Domaine du Castel regularly ranks among the best Israeli wines in international tastings. Its wines are exported to the U.K., Netherlands, Belgium, Luxembourg, France, Switzerland, Italy, Japan, the U.S., Canada and Mexico. Bottles sell for €30 or more. Mr. Ben-Zaken often shows off his wines in St. Emilion during the Bordeaux region's annual primeur tastings, and he recently traveled to Brussels.

"Castel is the king of Israeli boutique wineries," says Philippe Weinberger, an Antwerp-based importer and wine-shop owner who sells a wide range of top-ranked kosher wines. "He was the first one to do this and he pushed the big guys -- the big companies such as Carmel -- into making better wine." At his Antwerp shop, Mr. Weinberger says, he sells top-flight Israeli wines to Jews "who want to taste great kosher wine" and non-Jews "who just want to try something new."

The diminutive, bearded Mr. Ben-Zaken grew up in Alexandria, Egypt, having no experience with wine. In the 1960s his family moved to Italy, where he acquired a taste for fine food and wine. Both he and his wife Monique, also from Egypt, attended the University of Geneva, which nurtured his Francophile tendencies.

In 1970, the Ben-Zakens settled in Israel, on a small farm with a chicken coop about 17 kilometers from Jerusalem, where Mr. Ben-Zaken opened a restaurant called Mamma Mia. "It was the first restaurant serving fresh pasta in Israel," he says. The restaurant required a wine list. He began to taste seriously, traveling often to French and Italian wine regions, and was inspired to plant his initial vines.

During a 1985 trip to Burgundy, Mr. Ben-Zaken was staying in Puligny-Montrachet and asked for a bottle of the local wine at the hotel's restaurant, not knowing the village was home to one of the world's most famous Chardonnays. When the wine was served, it proved a revelation -- "the first time I tasted a white wine aged in oak that was not just fruity but had much more complex flavors."

For his own wine, Mr. Ben-Zaken has adopted a similar French style. His reds blend the five Bordeaux grape varietals led by Cabernet Sauvignon and Merlot. His whites are 100% Chardonnays and are crafted to resemble Burgundies. One of his two sons, Ariel, joined the winery after studying oenology in Burgundy. His son-in-law also works at the winery. All Domaine du Castel wines are aged in French oak barrels.

The winery now has 15 hectares under cultivation and produces about 200,000 bottles each year. Mr. Ben-Zaken has stopped raising poultry and turned the old chicken coop into a modern cellar and winemaking facility. When in 2002 the intifada put his Mamma Mia restaurant on the front lines of the Israeli-Palestinian conflict, forcing him to hire security guards and chasing away many of his customers, he closed it and concentrated full-time on making wine.

Mr. Ben-Zaken is a secular Jew, and at first, he didn't make kosher wines. But many of Domaine du Castel's customers began asking for wines that respect Jewish dietary laws, so Mr. Ben-Zaken changed his production process to get rabbinic approval. Although much debate continues to swirl about what makes a wine kosher, most insist on rabbis or their assistants supervising the wine's production and prohibit the use of animal byproducts such as gelatin, which is used to clarify wine.

The domaine's wines are intriguing -- impressive but not always successful. At a recent tasting in Brussels, the 2005 Chardonnay, which costs €39 a bottle, seemed crisp and cool, with a nice buttery finish. But one of the tasting participants, Brussels wine-seller Paul van Dievoet, said too much oak masked the fruit's full flavors. "It's hard to justify such a high price," he said.

The reds received similarly mixed reviews in Brussels. Both the 2005 Petit Castel at €32 a bottle and the 2004 Grand Castel, at €54, are clean, impressive wines, with full flavors -- from floral violets to fruity cherries -- with licorice, clove and other spices in the finish. "These are more Bordeaux than real Bordeaux," said a surprised Mr. van Dievoet. Despite the high quality, he remained dissuaded by their high cost.

None of the criticism matters much to Mr. Ben-Zaken. His wines' high prices reflect the low output and strong demand for top Israeli wines. Most of his vintages are sold out and he has begun mimicking Bordeaux growers in selling them en primeur -- before bottling, while still aging in barrels.

Accolades continue to pour in. Wine author and expert Hugh Johnson awarded the domaine his highest four star rating and named the red Castel Grand Vin one of his 200 favorite wines in his 2008 pocket wine book. Robert Parker's Wine Advocate magazine gave the domaine many of the best notes in its December, 2007, Israeli tasting. Mr. Parker grades on a 100 point scale, with anything over 90 considered superb. The red 2005 Grand Castel received a 92, the Petit Castel received 90 points, and white 2005 "C Blanc du Castel" won 91 points, with the Advocate reporting "generally good balance, some brightness, some depth, and a respectable finish that lingers and has some intensity."

When German Chancellor Angela Merkel visited Israel last year, Prime Minister Ehud Olmert served her Castel. She liked it -- and placed an order for several cases that are now being delivered to Berlin.


November 28, 2007

Why Aren't I More Viral?

Happy to report that I have [finally] passed 10,000 unique page views of my blog. Obviously the blog reaches many more people than that, because I have subscribers (through email, RSS, etc.), people pass from one to another, and so on.

But it is at least one indication.

One the one hand, nice that over the past year, since I created this blog, there have been 10,000 views  of what I spend time to create. I have not parsed to see  "unique" visitors (even that stat would be  fluffy, as the same person without a static IP address or cookies from this site would appear different every time). But all the same, 10,000 is nice round number.

On the other hand, how depressing. Some ridiculous postings to Youtube have garnered hundreds of thousands of views, that took minutes to create. Some even millions of views. Why aren't I more viral? How come millions are not flocking to read my pearls of wisdom? One reason could be that I spend zero time and energy on marketing this blog...but that should not stop viral effect in its purist form.

This brings me back to something Elie Wurtman said to me about the blog when I started -- it should be
about quality, not quantity. So thank you, dear reader, for sticking by me. And pass this on to a friend;-).

May 31, 2007

Some More Cool Stuff

Check out the widget below. Definitely cool technology...took me about 30 seconds to create (after a few false starts). Not sure what the business model is, but I leave it up to my former business partner Elie Wurtman (now a Benchmark partner) to help figure it out. Kudos to Eyal Gever and friends at Gizmoz! I wish them all the best. 

February 15, 2007

Quality, Not Quantity

A few days ago I was lamenting to my friend Elie Wurtman that I still have not managed to get into a regular schedule with my new life as venture capitalist, and that one of the things suffering was this blog. Elie answered immediately: "It's Quality, Not Quantity." Elie was one the people who inspired me to start writing at all, so his comment was very important to me, and I have been giving a lot of thought to it.

Meanwhile, I continue to meet with dealflow, negotiate potential partnerships with start-ups, and try to keep up with the blistering pace of change in Web 3.0 and beyond. More and more I think we are seeing the value of Elie's comment, that quality, rather than quantity, is really what counts.

Take a look at almost any area of life, and the Quality v. Quantity rule holds (of course, there are exceptions, but as this is a family blog, leave that to you). Can we shoot for both? Yes, but focus on quality.

We are currently seeing a re-emegence of the eyeballs phenomenon of the late 90s. More is more, we are told, whether that be users, dollars invested, valuations, headcount, etc. Take a look at many blogs, and it is difficult to find the actual content, given the myriad tagging services, links, widgets and doodads pasted all over the pages. Do we really need all of that?

500 channels and nothing to watch sound familiar? Now try 5,000 or more channels available on the Web today, and it doesn't get any better. (Thus the need for Jeff Pulver's TV Guide for web television, Network2.TV).

So together with Quality over Quantity, we need to add that sometimes Less is More. And as a small fund, with limited resouces, we need to say: Show Me the Money.

Does that mean I don't want to be told about the billions....NO! I want to dream and work with dreamers, but need to see the path between here and there. Given that we are a small fund, we have the flexibility to do deals that will not be multi-billion dollar acquisitions. A 2X return for us on a $500K investment makes a difference (whereas for a mega-fund a 2x return on a $5 or $10 million investment simply is not interesting...).

In general, like my blog entries have become, we are looking for quality over quantity in our venture fund, but I also think its a good rule in general. Just think how different the world would be if there were fewer non-governmental organizations but of much higher quality. If there were fewer peace summits but real peace. And so on...

May you all be blessed with quality AND quantity!