Friday, March 14, 2014

Miracle Machine hoax shows many media organizations take pride in ignorance about wine

Philip James fooled a lot of media organizations with his hoax about a Miracle Machine, that would turn water into wine. That may not have been his initial intention. The ridiculous story was breathlessly leaked by a website that has a track record of writing stupid things about wine.

Moreover, the CEO and Editor in Chief of that website paid a $2 million fine in a securities fraud case and agreed to a permanent ban from the securities industry.

Yet the world media, which celebrates ignorance about wine, saw no reason to question the story.

First, a brief summary.

foolingconvincing investors to put more than $40 million into a now-sputtering wine Internet business called Lot 18, James was looking for something to do with his time and golden parachute. He created a fake Kickstarter campaign for something called The Miracle Machine, which would make wine on a countertop in 3 days, apparently with water and raisins, that would be better than wine those fancy-pants winemakers could make with all their fancy-sounding varietals.

Just as he did with Lot 18, James tapped into a vein of people who prefer, even brag about, ignorance about wine.

I don't doubt that you can make wine in three days with raisins, yeast and water. Prisoners do it all the time in plastic bags in their toilet. What was amazing was how the media jumped all over itself reporting the story as if the wine might be good.

Even the food media -- most of whom would never lower themselves to eat a TV dinner -- never stopped to ask if good wine should require, at the very least, freshly picked grapes. A friend of mine, a restaurant critic for chrisssakes, called me a snob on Twitter for suggesting the wine-from-a-kit might not be that interesting.

The strongest current of ignorance runs through the site Business Insider, which broke the story. I don't know how bad Business Insider (not to be confused with the excellent Wine Business Insider) is at covering anything else; I don't read Business Insider until somebody sends me a link to one of its stories about wine. Every one has promoted ignorance.

Finally somebody showed everyone how terrible Business Insider is at journalism, and ironically, it was someone whose reputation it helped build.

Here's the way Business Insider generally covers wine.

In January, a writer named Kelly Dobkin wrote, "Why You Should Never Order Wine By the Glass." The article is so misguided that I wrote a response on my blog, "Why I Often Order Wine By the Glass." Dobkin's point is that you should extract the most value possible when drinking wine, value being measured only by a bottle's retail price. I'll forget the dining experience and speak Business Insider language for a moment. She wasn't smart enough to look deeper at how wines get their retail prices; cost of production, marketing, etc.

In fact, she hadn't yet had the chance to read Paige Cooperstein's March article for Business Insider, "How To Pay Less For A Bottle of Wine." The answer, apparently, is to contact a guy whose business is to sell wine cheaply on the Internet, and interview only him. Nothing against Rowan Gormley, but a real journalistic publication would have sent that draft back to Cooperstein, paid her a kill fee and never used her again. Bully for Gormley for using a credulous writer to create (or should I say "craft") a PR piece.

This brings us to the subject at hand, the Miracle Machine, or as I was thinking of it, Prison Wine At Home.

Writer Alyson Shontell wrote a mea culpa on Wednesday titled, "There is No Machine That Turns Water Into Wine -- Here's Why I Was Duped." In it, she talks about how she covered Lot 18's highs and lows, and whines, "There has always been a mutual respect between James and I."

Yeah, sure he respected you. In fact, he probably owes you a cut of his windfall after you wrote, "11 Month Old Wine Site Lot 18 Is Generating $25 Million This Year" in October 2011. The lead to the story said Lot 18 "is on track to generate $25 million gross revenue this year, a source close to the company tells us." How many companies would love to have the business media run something like that without even checking it out? In October, before shopping season even starts?

So a month later, Shotwell wrote, "Lot18 Closes A Whopping $30 Million Series C Funding From Accel Partners." That gave Lot18 a total of $43 million in funding, Shotwell reported, and considering the source I don't know if that's right.

Problem is, nobody at Business Insider ever bothered to question whether an Internet wine sales company might be worth a $43 million investment. To those of us who know the wine business, it seemed like a lot of money for outsiders.

But who wants to listen to people who know something about wine? Not the proudly ignorant.

When James left Lot 18, a much smaller business than a year earlier, Shotwell wrote another glowing story about how he was taking a year-long bicycle ride. With what money? She doesn't say. She does write about Lot 18's downsizing, "Lot18 suffered a number of growing pains that stemmed from harsh, state-by-state regulations surrounding alcohol." Not that a business reporter covering a wine startup could have been expected to know that those exist. Oh wait, there are special laws about selling wine? Really?

Me, I'm a skeptical reporter. If I heard of a new idea from a guy who oversold his last company less than three years ago, I wouldn't jump all over it. Maybe nobody ever would have, if, as Shotwell herself admits, she hadn't pushed James into allowing her to write about it. He had set up a Kickstarter site as a hoax. She wrote about it, and he let the lie play out for 11 days before correcting it.

Yesterday I suggested to Shotwell on Twitter that she could have exercised editorial restraint. She replied, "I didn't think it was that farfetched b/c it was a kickstarter project. Also, I trusted him as a 3-year work acquaintance. Alas."

She thought they had a relationship. She thought he respected her. She completely misunderstood what it is that journalists do, as well as what it is that publicists do. And it seems like she didn't keep track of her own work, as I've shown above. Alyson, dear, he used you. Reporting is not like romance. He has his agenda, and you have ... his agenda.

Of course, with an editor whose entry into journalism was a plea bargain that permanently banned him from working in the securities industry, Shotwell probably hasn't had the best mentoring.

That said, James said nearly 600 media outlets wrote about his Miracle Machine -- many of them respectable.

The LA Times food section, which I used to write for, wrote without questioning, "To make the wine, add a pre-packaged kit of ingredients to the machine. Each kit corresponds to a type of wine. Then plug into the app which type of wine you'd like to make. You'll be able to choose from six wine types that include full-bodied Cabertnet [sic] Sauvignon, rich Chardonnay from Napa Valley, cool-climate Pinot Noir from Oregon, aged Tuscan blend from Italy, Sauvignon Blanc from Sonoma and a delicate red and white from Burgundy."

Seriously guys, a kit and an app gives you a delicate white from Burgundy? I might expect that from Business Insider, but et tu, LA Times?

Not one of these media organizations considered the impossibility of the statements. Moreover, not one looked at the Lot 18 story and saw anything other than a good reason to believe James.

Shontell is a disgrace to journalism, but we quickly learned that many media outlets aren't a whole lot better.

There are a few lessons to be learned here.

* Business Insider runs one-source, unverified stories and cannot be trusted

* Philip James is willing to give false reports about his businesses to the media, and cannot be trusted

* For non-wine media, when covering the wine industry, ignorance is not strength. Do you write about baseball without knowing anything about it?

* Somewhere Lot 18 investors are watching this hoax and saying, "At least we aren't alone."

Follow me on Twitter: @wblakegray and like The Gray Report on Facebook.


Robert said...

If it sounds too good to be true, then it probably is.

Sequoiagrapeboy said...

First thing I thought of when I saw this item:

W. Blake Gray said...

Funny link, SGB. Thanks.

Michael said...

I really can't blame high-volume news outlets for this. All sorts of much more unlikely businesses are launched every day. It was clear that there was exaggeration in their claims, but it's feasible to imagine a partially-fermented concentrate where you add water, heat it up with a super-aggressive yeast and get to an off-dry state in 3ish day. Degas it and, well, you've got a wine-like beverage. Yes, it's going to suck and no you're not going to be able to do that for $2. But marketing puffery is nothing new.

I can see why as a wine writer you would be bothered by the lack of due diligence, but these same writers had to write a story about very real nanotechnology the next day - stuff that would seem impossible to you and me. Maybe they exist, but I saw no critical stories written before the announcement that it was a hoax. That was the time to write about the state of journalism; not now.

I hate, hate, hate this trend of fraud and abuse of trust... there is an implicit social contract that is being violated and it's really disturbing. I felt the same way about the recent hoverboard video, except this seems quite a bit worse given the level of effort put into it.

This is a really slippery slope. Where do you stop? Let's say the 500 million views was correct - let's say it averages 15 secs and people's time is worth $20/hour. That's $42 million in people's time wasted. And I say wasted because there is no frigging way that the underlying charity is going to benefit from this in the long run. To the extent that anyone remembers this is a week, it will be "ah, those are the guys that lied to everyone... don't think I want to send money there."

W. Blake Gray said...

Michael: I don't blame news outlets for covering the story. I blame them for covering it as a PR piece, not asking any questions, not even being snarky about it.

The LA Times would look a lot better right now if its writer had liberally used, "The Kickstarter site claims ..." And people make mocking jokes about new inventions all the time. Why not here?

I believe it's anti-wine-snob snobbery. Nobody wanted to be seen as the snob who said, "This might be a fun toy, but the finished product can't possibly be as good as wine made from fresh grapes from a good vineyard." But that really needed to be said.

Caroline said...

People don't get angry enough about irresponsible reporting these days. Flubbed stories like this are just passed off as an "oh well."

I am also seriously bothered by her quote, "There has always been a mutual respect between James and I." This is incorrect grammar. From a writer!

Isaac James Baker said...

Blake, great piece. It's such a crazy story, so thanks for putting this together.

Michael, CEO FohBoh said...

I kept waiting for Jimmy Fallon to video-bomb Miracle Wine's video pitch BS. Seriously? Who would believe this. Next up, 3D printers for better burritos. No wait, an Internet business that turns lead into gold.

This is the kind of crap that muddies the waters for start ups that actually do have a plan, a technology and some credibility. Thanks for this well articulated expose for posers.

Unknown said...

That is terrible. I don't know if this is what you're referring to early in the piece, but BI was founded by Henry Blodget, disgraced analyst from the .com go-go bubble.

That said, BI tech and business stuff is actually pretty good.

New topic -- enjoyed your theory on why the WA attacked the Symposium tasting so violently.

Bob Henry (Los Angeles wine industry professional) said...


Philip James and Wine to Water should have waited until April 1st (or Halloween in the best Orson Welles prankster tradition) to release this "story."

Then everybody could have had a good laugh.

~~ Bob

Here's the next Kickstarter chortle: