November 13 2009
Matti Anttila has JP Morgan to thank for his current career as the CEO of a thriving new liquor company. He joined the investment bank’s New York office in 2001, and was then sent to Brazil, where he found inspiration for Cabana Cachaça, the boutique brand he now runs. Assigned to the natural resources team, Anttila had started commuting to meet clients there, spending much time in Rio de Janeiro. “The JP Morgan offices looked right out onto the beach, which made motivation sometimes difficult,” he chuckles now.
Though the work days were intense, in Rio de Janeiro the evenings provided ample chance for Anttila to decompress, often nursing a first-class caipirinha, the cocktail made from Brazil’s national spirit, cachaça. Having become a cachaça connoisseur, he was shocked to find a lack of premium brand products in California; even Brazilian restaurants served only cheap brands. “They were carrying lower-end cachaça – the bottles on a back bar in the US sold for $1 a bottle in Brazil.” The market opening was self-evident, at least to him – a premium, beautifully packaged cachaça with both the credibility of Brazilian craftsmanship and an appeal to American or European consumers.
The trips he took for JP Morgan to Brazil may have sparked his interest in liquor, but Anttila believes he was only able to take advantage of the niche he’d noticed because of his time as a Wall Street analyst: “The skills you learn as a junior-level banker are easily transferable to almost any career path you choose after that, but they’re definitely relevant for starting a liquor company.”
He credits his background as an analyst in natural resources for helping him navigate the whim-filled vagaries of the liquor market, especially in the US where state-by-state laws vary wildly. “I understood, going in, that in a highly regulated industry there really are no shortcuts.” Investment banking offered other inbuilt advantages, too. “From the get-go, an important component to my success was that I already had a sense of my consumer base and what they want. Because, ultimately, that’s what I would want in that product.”
Given these synergies, it’s not surprising that Anttila isn’t the only one-time investment banker now toiling full-time as an alcohol entrepreneur. And indeed, others stress that the success they’ve found in this second career is firmly grounded in the skills they learned on Wall Street. Making money and making liquor, it seems, have more in common than one might assume.
Anshuman Vohra runs upstart British gin marque Bulldog. Like Anttila, he started his career in investment banking, six years largely in New York, specialising in mergers and acquisitions work. Vohra recalls that he spent his days at JP Morgan analysing strengths and weaknesses of a company and its management. Brutal, perhaps, but an ideal tool for self-assessment once he became a liquor-world entrepreneur. “You realise where someone else needs to come in and provide expertise; for example, if I have a question on how tax structures work in Europe vis-à-vis liquor,” he freely admits. “And people at Bulldog chide me because I always ask, ‘What are the next steps?’ I’m unbelievably goal-oriented. I always think three steps ahead, with the end in mind, and I wasn’t like that before banking.”
The germ of Vohra’s alcohol brand was seeded in his earliest days at JP Morgan, where he started in July 2000, four months after the market’s peak. “I was always fascinated by mergers, and timing is my forte. Things were moving down – it was the beginning of the dotcom bust – but there were still a lot of deals going on. It could get very intense, which I liked, being a competitive athlete.” (He’s an alumnus of the Nick Bollettieri Tennis Academy in Florida.) Three years ago, Vohra abandoned his finance career to launch Bulldog Gin, a citrusy ultra-premium boutique brand that is distilled in the UK and marketed as the ideal gin for a dirty martini – in part, because it’s one of Vohra’s favourite cocktails. Like Anttila, his interest in alcohol came through exposure via his banking job – JP Morgan has always closely monitored alcohol firms. “The liquor industry is a fairly active M&A environment. The really big liquor companies are among the most acquisitive, buying younger brands all the time.”
Brothers Courtney and Carter Reum tell a similar story, spotting the opportunity in the liquor sectors in much the same way as Vohra. They were also working as investment bankers – in this case, at Goldman Sachs. The way banking honed their analytical skills was a crucial training to launch a liquor firm; in the Reums’ case, it’s VeeV, a white mixing spirit flavoured using the açaí berry. “When we started VeeV we didn’t know all the answers, but we spent time calling people, asking questions – we Googled ‘America’s best distilleries’, then called all the results,” explains Carter Reum, noting how his time at Goldman had trained him to be shameless and fearless. “And investment banking is hands down the best in terms of fostering the ability to ask the right questions to get the right answers quickly. A lot of people will say to my brother and me, ‘Wow, you know so much about the liquor industry so fast.’ But we learned from Goldman Sachs. It’s the number-one thing I always tell people.”
The pair launched VeeV two years ago, rolling it out across markets in the US – it should appear in bars and stores in Europe by the end of 2010. Like Anttila’s cachaça, its provenance is Brazilian: the antioxidant-crammed açaí grows on Amazonian palm trees (though the VeeV website states that this “information is not intended to imply that VeeV… provides any health benefits”). “We knew [banking] was not a long-term career, two or three years of training just to get our feet wet,” Carter admits. Nonetheless, it was a crucial grounding for the success of VeeV. For example, not only did his brother Courtney land a job in the consumer products sector of the bank, but he also formed part of the team working on the biggest ever deal in the spirits world – the marriage of Pernod and Allied Domecq in spring 2005. Through this, Courtney came to know the head of the liquor sector at Goldman, who was later a source of sage wisdom for the pair. Meanwhile, Carter laboured in the industrial division, but is quick to note that the skills he honed there – quickly learning how to become an expert in dozens of different areas – have helped him enormously ever since.
Despite their short tenure at Goldman Sachs, the brothers also cite the fabled ethos there as a major influence on both VeeV’s culture and its conscience. VeeV donates $1 for each bottle sold to the Sustainable Açaí Project which will help to preserve the Brazilian rainforest, the source of its açaí berries. It is a carbon-neutral company that uses wind power in distilling and encourages the use of hybrid vehicles for its sales force with financial incentives. “That seed was planted at Goldman because it’s different from other investment banks,” Carter enthuses, noting its reputation for corporate social responsibility; whatever they did, the Reums made sure VeeV’s management took social responsibility as seriously as entrepreneurship.
Carter also credits the head of investment banking during his stint at the firm for teaching him lessons in management, beyond business plans and spreadsheets: “He said his favourite thing to see was an analyst leaning back in his chair with his hands behind his head looking at the ceiling, because that person is taking 20 seconds to think about what he’s doing. Whatever business you’re in – fashion, booze or investment banking – and especially in a small start-up where you’re doing 800 million things, it’s vital to take a step back and think about what you’re doing and the best way to do it. That’s what separates good employees from great ones – they step back and realise the bigger picture.”
There are other parallels, too – some less serious than others. Both the Reum brothers and Ashuman Vohra laughingly admit that working until midnight in the office is when their former lives on Wall Street feel close at hand. “When I’m here all weekend, the only one here at midnight on a Saturday, that reminds me of my banking days,” Vohra jokes. Carter Reum adds: “The industry is a lot more casual, but when I’m in the office late at night, with my keyboard out, modelling what the cashflows will look like for the year, that’s when there’s a crossover. At the end of the day, you have to run a fiscally sound business and that makes you feel like a banker all over again.”
Another carryover from their past career, for which all three are constantly grateful, is the credibility a stint in banking confers on any entrepreneur. “That’s one of the reasons I wanted to go into banking,” Carter admits, “When you go out there, whether raising money or taking a meeting with someone, working as an investment banker ‘credentialises’ you. You know what you’re doing.” Vohra also believes that his deal-making past gives him a professional edge when wrangling with suppliers or distributors. “It’s very much like banking in that with an A+ client you’ll bring the head of the firm to that meeting to say hello. There’s a lots of symbolism in that,” he says (the key difference, of course, is that Vohra isn’t sweet-talking a superior into helping out; he’s the boss himself now). “In any situation, I understand when I have leverage and when I don’t. When you have leverage, it’s your game. And when you don’t and you are able to extract concessions? You’re the man!”
Anttila concurs: “Investment banking is a service position where you have a client base and you have to understand their needs and develop scenarios that will help their businesses grow. In the liquor business, it’s similar.” Selling to a bar or restaurant, a firm such as Cabana has to justify how its product will improve business and the bottom line. The major difference, Anttila says, is that sometimes value in the liquor world can be really emotional – prestige, for example – as much as something tangible. “There’s a customer parallel with banking, but in spirits you’re not only selling a product but also a lifestyle, and people need to keep that in mind.”
And, of course, the deal-making know-how that each gleaned as entry-level Wall Streeters has conferred not only kudos but also contacts. Anttila says, “I had the experience to structure a company in a way that it could actually last and be successful. Without my time at JP Morgan, I would not have been as capable in that regard at all. And I had the financial contacts to allow it to be funded.” Having spent so much time in Brazil on JP Morgan’s tab, Anttila had a ready-made network of insiders who could advise him on the best cachaça suppliers, the key distributors and even potential local investors. “I had some capital contributed by some of my contacts down in Brazil,” he notes. “The total investment is more than $10m.” Vohra also has investors culled from his cronies in banking, and has just hired another staffer with a past stint at Goldman Sachs.
More than anything, though, one-time money managers are savviest at sniffing out the chance for big paydays, and the margins in the sin industry – whether sex, liquor or smoking – are among the healthiest anywhere. Vohra freely admits that this was a lure. “Yes, it’s the margins, the sexiness, the opportunity for huge exit play.” He cites one particular project that sparked his interest in owning a liquor label: while working on a telecoms deal, he’d helped a young entrepreneur sell his firm to AT&T. “That CEO was going to walk away with $1bn or something, and the guy next to him $500m. And I was thinking ‘What do I do for dinner tonight at 4am?’” he notes wryly, before adding that the freedom wealth brings was made even more concrete at that same meeting. “The guy said, ‘Look, after this, I’m done. I’m going to go fishing for six months.’ I was very focused on the fact he could do whatever he wanted, the liberation.”
But the potential for a hefty financial payoff in the alcohol industry was truly underscored by Sidney Frank’s staggering $2.2bn sale of Grey Goose in 2004 – a deal whose impact the trio all reference in conversation. Anttila believes it was the driving force behind the trend of refugees from finance starting liquor labels like his. “It was a period in this country when the spirit market was growing very rapidly, especially for vodka. Then the Grey Goose deal happened and this made a lot of people wake up and think, ‘Wow, there really is a lot of money to be made in spirits.’”
Bulldog’s origins were similar. “Let’s take a page from the super-premium vodkas and what they did to the category, and launch a premium gin that is authentic, stylish and tastes fantastic,” explains Vohra. As for Carter Reum, he sheepishly agrees: “I’m a little guilty of seeing the success of Grey Goose; we were swayed by that. But it also appealed to us as altogether something very tangible. If my brother and I started a technology company, we might only be as good as the tech we created. But here you hold your own fate and destiny in your hands.”
But though the workday links between banking and alcohol are crucial, off-the-clock habits were just as important to these entrepreneurs as they circled new industries to explore. Anttila’s cocktail-sipping in Rio was more than just decompressing – it was the germ of his business, as he’s quick to point out. Vohra agrees. “Banking is intense, a high-stress environment, and drinking is pretty entrenched in the culture. I do know some guys who had liquor in the bottom drawer. Bankers have an insatiable appetite for consumer liquor, and liquor people will always be happy to have bankers as their customers.”
And with the financial world still shaky after last year’s meltdown, it’s not surprising that more and more bankers are eyeing these entrepreneurs enviously, spotting the natural synergies that exist between their sectors. “Banking set me up great for the liquor business with an unbelievable, transferable skill set,” Vohra notes. “And now I get a ton of calls from my former banking colleagues asking me if there are any jobs.” The VeeV team puts it slightly differently. “Three years ago, when my brother and I both left banking, we couldn’t even go to the dentist without someone thinking we were completely crazy,” Carter Reum laughs. “Now, we can’t go to the dentist without people thinking we’re geniuses because we saw it all coming.”