Lesson #3: Be Ruthless and Rise to the Challenge
Lesson #3: Be Ruthless and Rise to the Challenge
To most of America, Gallo was seen as a compassionate entrepreneur, someone who provided cheap wines to people who never knew and perhaps could never afford anything better. But, behind the scenes Gallo was a ruthless businessman out to make a profit.
In the late 1970s, Gallo began using strong-arm business tactics for which he came under attack by the Federal Trade Commission. He was doing things such as forbidding his wholesalers to carry anything but Gallo brands. Gallo was also seemingly unfriendly towards the United Farm Workers union. He was even the subject of a long union boycott in the 1970s, and again in 2005. To this day, there exists a tense relationship between the two parties.
Why was Gallo on such uneasy terms with the union? Because Gallo was a demanding employer and meeting the requests of the union was not on his list of top priorities. His subordinates were always reminded of their position in relation to him. As one former employee recalled, “If not a violent screamer, he was at least a pretty audible shouter. On an emotional thermometer with a top reading of 100, Ernest regularly registered between 90 and 120.”
Gallo was also accused of using many hard-nosed tactics on his competitors. From puncturing their caps so the wine would go bad, to spraying light oil on the bottles so they would collect dust, Gallo developed a reputation for sabotaging his competitors. He was also accused of deliberately littering poorer neighbourhoods with empty bottles of his wine to increase product awareness.
To many, ruthlessness at work is not only acceptable but necessary. As the saying goes, it is not personal, it is only business. But Gallo made no such distinction. In fact, he was perhaps even more ruthless when it came to personal matters. After all, given his family history and the familial nature of his business, everything was personal for Gallo.
That is why, in the 1980s, Gallo saw no harm in launching a lawsuit against his estranged younger brother, Joseph Gallo Jr. In 1979, Joseph built his first dairy with over 4,000 milk cows. Its success led him to open another four dairies, and he subsequently began producing and marketing a line of cheeses. The problem was he was selling the cheese under his family name – Gallo.
Ernest Gallo sued his younger brother in 1986 in a bid to stop him from using the name. In return, Joseph launched a lawsuit of his own claiming that he was owed a third of the E&J winery since it had been built using all of the sons’ inheritance.
In the end, Joseph lost the legal battles with his brother and changed the name of his business to Joseph Farms. Meanwhile, Gallo continued to operate his winery unharmed. He had risen to the challenge, albeit against his brother, and had succeeded.
Lesson 3 Be Ruthless and Rise to the Challenge
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“You make the wine and I’ll sell it,” Gallo once told his younger brother. Gallo never wanted to be involved in the fine details of making fine wine. What Gallo wanted was to get out on the sales floor, to hit the streets, and to sell his stuff. He became known as a ruthless businessman for one reason; he was good at what he did and he did not let anything stand in his way. Gallo always got what he wanted because he was never willing to settle for anything less.
To most of America, Gallo was seen as a compassionate entrepreneur, someone who provided cheap wines to people who never knew and perhaps could never afford anything better. But, behind the scenes Gallo was a ruthless businessman out to make a profit.
In the late 1970s, Gallo began using strong-arm business tactics for which he came under attack by the Federal Trade Commission. He was doing things such as forbidding his wholesalers to carry anything but Gallo brands. Gallo was also seemingly unfriendly towards the United Farm Workers union. He was even the subject of a long union boycott in the 1970s, and again in 2005. To this day, there exists a tense relationship between the two parties.
Why was Gallo on such uneasy terms with the union? Because Gallo was a demanding employer and meeting the requests of the union was not on his list of top priorities. His subordinates were always reminded of their position in relation to him. As one former employee recalled, “If not a violent screamer, he was at least a pretty audible shouter. On an emotional thermometer with a top reading of 100, Ernest regularly registered between 90 and 120.”
Gallo was also accused of using many hard-nosed tactics on his competitors. From puncturing their caps so the wine would go bad, to spraying light oil on the bottles so they would collect dust, Gallo developed a reputation for sabotaging his competitors. He was also accused of deliberately littering poorer neighbourhoods with empty bottles of his wine to increase product awareness.
To many, ruthlessness at work is not only acceptable but necessary. As the saying goes, it is not personal, it is only business. But Gallo made no such distinction. In fact, he was perhaps even more ruthless when it came to personal matters. After all, given his family history and the familial nature of his business, everything was personal for Gallo.
That is why, in the 1980s, Gallo saw no harm in launching a lawsuit against his estranged younger brother, Joseph Gallo Jr. In 1979, Joseph built his first dairy with over 4,000 milk cows. Its success led him to open another four dairies, and he subsequently began producing and marketing a line of cheeses. The problem was he was selling the cheese under his family name – Gallo.
Ernest Gallo sued his younger brother in 1986 in a bid to stop him from using the name. In return, Joseph launched a lawsuit of his own claiming that he was owed a third of the E&J winery since it had been built using all of the sons’ inheritance.
In the end, Joseph lost the legal battles with his brother and changed the name of his business to Joseph Farms. Meanwhile, Gallo continued to operate his winery unharmed. He had risen to the challenge, albeit against his brother, and had succeeded.
Lesson 3 Be Ruthless and Rise to the Challenge
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