In the mid-1990s, a moving crew arrived and began hauling Michael and his assistant’s boxes and office furniture out of the crowded Oakville winery and loading them onto trucks. The convoy then headed south to an office park on the outskirts of Napa known as Latour Court. The plan was that Michael would join his fast-growing team of marketers and salespeople and work out of the new offices, while Robert, Margrit, and Tim’s staffs would stay in Oakville. Though they would work less than a half hour’s drive away from one another, Michael’s physical separation from the rest of the family echoed a growing philosophical rift about the company’s direction.
Following Michael’s ascension to sole CEO, the company split into three camps. Some employees remained loyal to Robert, despite the patriarch’s waning power. Others supported his eldest son, particularly those on the sales and marketing side. Timothy’s backers came mainly from the winemaking and vineyard management staff, including Charles Thomas, who joined Mondavi in 1978 as a “crush slave” and by 1994 had become chief winemaker for the flagship Robert Mondavi wines, the business closest to Timothy’s heart.
Timothy’s views on growing grapes and making wine had become more nuanced since the days he was a student at UC Davis. Yet his conviction that making high-quality wine should be the company’s utmost aim had hardened. Since working with the Rothschild organization in getting Opus One off the ground, he’d adopted a more French attitude toward winegrowing, embracing the notion that terroir, or the place where the grapes were grown, was of utmost importance to the final character of the wine. His new mantra was “Wine is made in the vineyards.”
Robert’s younger son became the guru of quality at Mondavi, often regardless of cost. He insisted on high-density replanting of Mondavi’s Cabernet vineyards, which improves the quality of grapes by forcing the plants to compete more vigorously for soil, sun, and water. Typically in Napa, vines are planted in rows that are eight feet apart, wide enough to allow machinery to pass through. In Bordeaux and at Opus One, the rows were typically planted about three feet apart, requiring the use of specialized tractors that cost $150,000 to $200,000 apiece. Although costly, this planting decision helped improve the quality of Mondavi’s grapes. At around the same time, Mondavi also got involved in a project with NASA to gauge the spread of the pest phylloxera and other characteristics of the vineyard by using satellite photographs.
Experiments like these bolstered Mondavi’s reputation as the “test tube” winery, setting it apart from the flood of new wineries rushing into the valley in the 1990s. But what made Timothy a wine iconoclast was his willingness to discard much of the conventional wisdom he’d acquired at Davis and try new ideas, such as planting twenty different rootstocks and choosing the best from among them. Although neither the board nor his brother saw him as a strong manager, Timothy was passionately committed to making fine wines, and although he wasn’t always seen as practical, he kept his team focused on quality.
That’s why Timothy’s forced abdication was such a blow to his loyalists. The family put the best face possible on the news, but the shake-up removed, at least temporarily, the most vocal champion for fine wines and shifted the balance of power to Michael, who believed that the Robert Mondavi brand could be extended up and down the price scale, in the same way that the German automaker Mercedes-Benz sold some of the world’s most expensive cars as well as moderately priced sedans. Each brother had trouble admitting that the other could be right and that brand management was indeed a difficult and delicate balancing act.
The brothers’ squabbling was an open secret in the industry, and some rivals sensed opportunity. Jess Jackson, for one, wanted Thomas to join his fast-growing wine business, compelling the soft-spoken and thoughtful winemaker to ask himself whose vision of the wine business he understood more clearly—Timothy’s or Michael’s? With his love for fine wines, Thomas was more interested in creating fine, artisan wines that reflected their terroir, than everyday wines that were blended from a variety of vineyards with no specific appellation. Thomas decided to accept Jackson’s job offer and became one of several talented winemakers Jackson recruited to his new upscale “Artisans and Estates” operation.
The winemaking staff took Thomas’s defection hard, as he was one of the few at the company who worked well with Timothy. To some in the Oakville camp, Timothy’s enforced absence and Thomas’s defection were potent symbols of how the company was moving in the wrong direction under Michael’s leadership.
The Balkanization continued as Michael recruited new managers who shared his philosphy. Thomas’s last day at the winery turned out to be Alan Schnur’s first as a full-time Mondavi executive. So impressed was the family with Schnur’s analysis of the company’s leadership problems that they had decided to hire him away from the consulting firm as senior vice president in charge of human resources and a member of the management council. Schnur also continued to work individually with Mondavi family members on the psychological and communications issues that hampered their ability to work well with one another.
Yet Schnur almost immediately got off on the wrong foot with some lower-level staffers, most memorably with a contretemps over free, company-provided donuts. On Tuesday mornings for many years, Robert had arranged for the Butter Cream Bakery in downtown Napa to provide donuts for employees. Schnur brought an end to the much-loved tradition in late 1994, with the company explaining it would donate the amount it normally spent per year at the bakery, some $10,000, to local food banks instead.
Michael and Greg Evans had supported the idea of ending the perk, but Schnur took the flack, many Mondavi old-timers interpreting it as a heartless move by the newcomer to slash costs. Another unpopular move by Schnur was cutting the company’s “wine of the quarter” program—a paternal tradition of giving workers a case of wine every three months. By axing that, Schnur became an instant pariah at the company.
Schnur was also dispatched to do a delicate job that Michael was not in a position to do himself: soothe Timothy’s hurt feelings over having been demoted from the co-CEO job. At the board’s insistence, Timothy, who was then forty-three, had agreed to attend a program for advanced management at Harvard for a few months, partly to give Michael breathing room in his new job and also in an effort to help Timothy improve his management skills. But Schnur, serving as Michael’s surrogate, was worried that Timothy might instead decide to quit the company, which could further damage morale. So in May of 1995, Schnur flew to Cambridge to check up on him and immediately concluded that Robert’s younger son was not taking the expensive executive education program very seriously; he seemed to be skipping classes and putting in a minimum amount of effort.
Schnur’s mission was to make sure Timothy returned to work, rather than quitting in a huff and starting his own winery. Over dinner, Schnur deployed a charm offensive, working hard to convince him that the company needed his gifts as a winemaker, viticulture expert, and family representative. Trying to counter Timothy’s belief that the only role of value in his father’s eyes was CEO, Schnur tried to convince him that he, too, had a crucial role, playing to his ego by proposing that he become the most visible winemaker on the planet, a “winemaking rock star.” Schnur’s campaign proved effective. Timothy ultimately did return to the family business, but not before making a halfhearted effort to strike out on his own, including scouting out vineyards for sale.
Against the grand scale of Michael’s vision for the company, complaints over ending the donut program looked petty. Michael’s goal was to turn Mondavi into a leader of the international wine industry, and he began searching for ways to expand the business overseas. Setting his sights far beyond Oakville, he began exploring the idea of setting up an Opus One–style venture in the Old World, this time with a leading Italian wine producer.
His father had become acquainted with the Marchese Piero Antinori decades earlier. Antinori had led a rebirth of the Italian wine industry by introducing Tignanello, produced in 1971 and released in 1974, the first of the so-called “Super Tuscans,” a blended red that had been aged in French oak barrels. Robert and Antinori had a lot in common; willing to experiment, committed to improving quality, and nimble marketers, they had both also had the sometimes frustrating experience of trying to bring their family wineries into the modern era.
Michael, in turn, came to know this noble Florentine family through Primum Familiae Vini, since both the Mondavi and Antinori families were members. But when the Mondavis approached them about a possible partnership, the Antinoris were reluctant to move as fast as their American counterparts wanted. So, the American family instead turned to the Frescobaldis, another wine-producing dynasty whose history in agriculture and wine production in Tuscany stretched back seven hundred years. In the sixteenth century, it sold wine to the English royal family and many other courts. Based in Florence, the family-owned business, incorporated in 1980 as the Marchesi de’ Frescobaldi, SpA, faced the same difficult dilemma as the Mondavis: how to grow while maintaining quality.
Back at work in the spring of 1995, Timothy became the family’s emissary to the Frescobaldis. During the trip, he developed an easy rapport with his counterpart, Lamberto, the son of Vittorio Frescobaldi, the company’s president. Like Timothy, Lamberto, too, had studied at UC Davis, and throughout the visit the Frescobaldis spoke English with their visitor, who had picked up only fragments of the Italian language from his grandmother Rosa. The first day, Lamberto drove his American visitors in his modest Volkswagen station wagon on a tour of family estates, visiting Castello di Pomino, a castle built at the end of the fourteenth century that the family used as its cellar to mature its estate wines, and Castello di Nipozzano, built around the year 1000. The Frescobaldis hosted Timothy at their fifteenth-century palazzo in Florence for an elaborate dinner that evening.
To Lamberto Frescobaldi and his father, Timothy and his technical team from Mondavi seemed serious and straightforward. In their mutual courtship, they assessed each other not just for business compatibility, but also for philosophical kinship. With just a handshake, the two families agreed to enter an equal joint venture to produce wine together in Italy—the first ever such partnership for the Frescobaldis in its nearly seven centuries of winemaking.
The deal was a stunning social coup for Michael and Timothy, whose great-grandparents had been peasant sharecroppers in Marche. To be accepted as equal partners by an aristocratic family that was one of the largest landowners in Tuscany meant that the Mondavis had returned to their homeland in triumph, as the equal partner in a marriage of American upstarts to Italian nobility. There were also a number of parallels between the two families: Timothy and Lamberto were both in charge of production and vineyards. Michael, on the other hand, found more common ground with Leonardo Frescobaldi, Lamberto’s uncle, who was vice president of international marketing and sales. Like the Mondavis, the Frescobaldis, too, were believed to be having disagreements among themselves, even having gone so far as to hire a university professor to help them learn how to better communicate with one another, just as the Mondavis had hired Dr. Grundland, Family Business Solutions, and Alan Schnur to help them sort out their differences.
But unlike the Mondavis, the Frescobaldis had installed a seasoned nonfamily member named Giovanni Geddes da Filicaja as its chief operating officer, leaving many of the business decisions to him. The Frescobaldis saw their role as a family as being primarily the owners of the business, rather than the managers, and thus left many day-to-day decisions to Geddes and other professionals. The Mondavis, however, were moving in the opposite direction from this long-lived European wine dynasty by shifting more operational control to Michael, who was not known as being cautious in his decision making.
An early example of Michael’s decision-making style occurred shortly after the families announced they’d signed a letter of intent for their fifty-fifty joint venture on July 10, 1995. They had spent the first couple of months writing a business plan for the venture together. But about two months after they inked the letter, a potentially ideal piece of land for the partnership in Montalcino came up for sale. While it was in the heart of Tuscany’s most prestigious wine-producing area, it was some of the most expensive agricultural land for sale in Italy at the time. Lamberto couldn’t reach Timothy and he was concerned that a rival Swiss bidder might scoop up the property. So he tried Michael on his cell phone, reaching him over the weekend in Alaska, fishing with his son Rob.
Explaining that he could not reach Timothy, Lamberto apologized for disturbing him over the weekend, then launched into the reason for his call.
“Michael, there’s a beautiful piece of land. Come over, look, it could be the right place….”
Michael’s response was forceful and brief: “If you think it is right, just do it.”
The partners tossed aside the business plan they had put together and went ahead with the purchase—in Mondavi’s case, sight unseen.
Cliff Adams’s power rapidly waned as Michael’s power grew. That became apparent on an executive retreat to Tahoe organized by Schnur. On the way up to the Sierras, the group stopped at a gourmet market and Schnur gave them their first exercise: shop together for the food and provisions they’d need for the next three days up in the mountains. Michael, Timothy, Greg Evans, Pete Mattei, and Alan Schnur were all there, as well as Mitchell Clark, the senior vice president of sales, and Martin Johnson, senior vice president of marketing. Cliff Adams decided to drive up separately, thus skipping Schnur’s assignment. Schnur hadn’t given the group a grocery list for the eight meals they were going to prepare together. The men good-naturedly protested the assignment at first, but they muddled through anyway, ending up with ten pies and a somewhat arbitrary assortment of other foods, and continued up Highway 80. When they arrived, there were three bedrooms with king-sized beds; the rest were bunk beds or singles, some with brightly colored children’s sheets on them.
Michael, Timothy, and Cliff Adams got the big beds, while the other executives bunked together. During the day, the men talked over a wide range of issues, and tensions rose between the Mondavi brothers and Adams. Complaints about what was perceived as Adams’s top-down management style had been mounting for several years, particularly from Timothy. Adams was dismissive of Robert’s younger son, considering him flaky in his work habits and rigid in his thinking. Timothy, for his part, bridled under Adams’s leadership, particularly resenting it when he was not consulted on key decisions. But while Adams’s problems with Timothy were long-standing, what was new, at least to some of the executives who participated in that Tahoe weekend, was the testiness between Adams and Michael. Perhaps it was inevitable that Michael, in his new role as sole CEO, would insist on asserting his authority over his father’s longtime advisor. Michael also had become sensitized, with the help of various counselors, to what he felt was the way Gary Ramona, Adams, and some other executives seemed to play him off his brother in order to increase their sway with Robert.
At the same time, Adams seemed culturally out of place among the new executive recruits. Behind his back, some made fun of him for wearing new jeans that his wife had ironed creases into. Unlike Michael’s loyal followers, who kept any skepticism they might have felt to themselves and appeared to participate enthusiastically in Schnur’s team building, Adams did not bother to hide his scorn for the exercises and made it clear he thought they were a waste of time. Unlike Greg Evans, who generally raised any concerns or objections with the brothers discreetly behind closed doors, Adams would openly disagree with them. Perhaps most damaging to his career that weekend, Adams spoke his mind on sales and marketing issues, which were areas outside his immediate responsibility, leading some to conclude he was grabbing for power.
Through the late summer and fall of 1995, Mondavi’s fortunes were turning: Its secondary stock offering in August had been oversubscribed, raising a total of about $60 million, with $36 million going to the company and $21 million going to the family. Investors were enthusiastic about Mondavi’s new flange-top bottle design, which eliminated the need for a metal capsule. Heralded as a packaging revolution, the design boosted Mondavi’s sales and was soon widely copied. The stock’s rising price—at the time nearly $20 a share—reflected Mondavi’s innovativeness, its more stable management team since Michael was named sole CEO, and that team’s confidence in the company’s opportunities for growth—in spite of risk factors named at length in the prospectus, including phylloxera, an expected grape shortage, and a rush of inexpensive imports from “New World” producers such as Australia and Chile. The company posted record results in 1995, with sales of $200 million and profits close to $18 million. Demand for Mondavi wines exceeded the supply, and most were sold on “allocation.”
As Mondavi’s stock continued to climb, the family’s suddenly accessible wealth heightened tensions between Robert and his children. As the company’s principal shareholders, the four members of the Mondavi family could track their rising pile of lucre each day by checking the stock tables of their morning newspaper. Robert’s net worth alone, by the late autumn of 1995, was approaching $70 million, and his adult children’s were also in the seven-figure range. As the yearly review of his personal finances drew near, James K. Edmunds, his estate planning advisor from Price Waterhouse, and Cliff Adams began discussing with him the tax benefits of setting up a philanthropic organization. Robert and Margrit loved the idea, since it would allow them to focus on the areas they felt passionate about: food, wine, and the arts. The plan would also increase Margrit’s sway over how Robert’s fortune was doled out—a fortune that she had renounced in their prenuptial agreement. But setting up a foundation would also mean a potentially explosive confrontation with Robert’s children. Hoping to initially avoid this, Robert asked his advisors to explain his decision to Michael, Marcia, and Timothy.
On a Friday morning in mid-December, Robert’s offspring gathered in the conference room across from his office at the Oakville winery. Adams and Edmunds had met with Robert earlier that morning, and Robert, then eighty-two, did not join his children for the session, hoping his advisors would smooth the waters for him. The hired guns laid out an array of papers with diagrams and explanations of the plan on the conference room table and proceeded to deliver the stunning news to the adult children that their father planned to set up a trust and give away most of his fortune to charitable projects—seemingly disinheriting them.
The news was a bombshell. The way Michael saw it, the new plan—undoubtedly the work of his stepmother—reneged on what he understood to be his father’s long-standing estate plan for his shares in the Robert Mondavi Corporation that Robert’s fortune would be divided among his children one-third, one-third, and one-third. Under the newly unveiled scheme, almost all of Robert’s stock was going to his and Margrit’s charitable projects, leaving his three adult children mainly with the stock their mother, Marjorie, had given them before she died.
Robert’s eldest son immediately feared the implications: The likelihood of his branch of the family’s maintaining control would grow progressively dimmer as the stockholdings were given, in smaller and smaller blocks, to the grandchildren and then the great-grandchildren. He also felt that his father’s decision had ignored his sweat equity in the business, working for what he considered the meager pay of $650 a month in his first two years at the winery. Robert’s apparent about-face infuriated his eldest son and he flew into a rage, his Mediterranean features darkening and his voice rising. The truth of what Michael was saying, though, was diminished by the childish way he expressed himself.
Timothy and Marcia took the news far more calmly, reasoning that it was their father’s money and he had the right to choose what he did with it. As long as the family could still maintain control of the company through its shares, they didn’t see a problem. They had been assured by the advisors that their combined stock ownership would have to slip below 15 percent before they lost voting control of the company—a possibility that seemed remote even with their father’s giving. And what was left over after the gifts and after Margrit was provided for would still be divided equally among his three children, just as their father had promised. To them, Michael’s fury was just one more example of their brother’s habit of putting his own interests first, rather than thinking about the larger good of the family or community.
When Michael’s temper subsided, the group adjourned the meeting and went to the light-filled Vineyard Room, where Robert joined them for lunch. Michael immediately confronted Robert, while Edmunds and Adams observed the angry scene between father and son, both stubbornly determined to hold their ground. The whole idea was to build a family business that could be passed from one generation to the next, Michael insisted to his father, growing frustrated in his effort to explain to him that by selling out to become a philanthropist, he was imperiling his children’s and grandchildren’s future ability to control the company through ownership of a large block of their own stock. But Michael failed to win him over. “You children have enough,” Robert told him.
During lunch, the patriarch adopted an expression that made it clear he wasn’t going to budge: He stubbornly stuck out his chin, as if daring Michael to defy his wishes. Robert felt his children had been well provided for and that he’d given them more than enough opportunity to make good lives for themselves. Michael, in turn, suspected that the philanthropic trust was Margrit’s endgame; she had, after all those years, found a way to get around the prenuptial agreement and influence where her husband’s fortune went. Although it still wouldn’t go to her, at least it wouldn’t go to the adult children who had treated her so abysmally over the years.
Margrit had never been present at any of Robert’s estate planning sessions, and, following the practice of his father, Cesare, Robert seldom discussed financial matters with his wife. Yet, Robert must have known that he and Margrit could counter their loss of operating control at the company by playing a far more powerful role as benefactor and benefactress. Michael, who sensed that his father and stepmother seemed to enjoy having people come to them and genuflect, felt that he and his siblings “were the happy victims of success.”
After lunch, Robert, Adams, and Edmunds walked back to Robert’s office. The two advisors were steaming at the verbal abuse they felt they’d taken from Michael. Edmunds, who had advised the Hewlett and Packard families with their estate planning, was particularly incensed by what he considered Michael’s unprofessional behavior. He told Robert, “Frankly, I’m not taking this anymore. This is crap….” Adams was also humiliated at having taken the flack for Robert and was deeply upset. He told the Mondavi patriarch that he had no intention of joining Michael or the rest of the family at the company Christmas party that evening, because he refused to subject his wife, Ann, to the experience. Skipping the annual celebration was a slap in the face to the family, but he was tired of Robert’s tolerance for Michael’s explosive anger.
Adams passed through the arch and drove home. Between Christmas and New Year’s, he and his wife disappeared to Mexico on vacation. When he returned home in January, there was a message from Michael on his answering machine, asking if he would meet him at Latour Court on his first day back.
Adams walked into Michael’s office, which was a study in contrast to his father’s. In place of Robert’s battered wood desk and homey wine artifacts collected from around the world, Michael had a black, sleekly modern desk. Michael, Timothy, and Robert were all sitting there when he arrived. It was Michael who delivered the news that he wanted Adams out of the winery. Looking him in the eye, Timothy said, “Mike and I agree.” Adams, who had been by Robert’s side for nearly two decades, had anticipated the news the moment he walked in the door and saw all three Mondavis sitting there. He also felt relieved. Robert assuranced Adams he wanted to “keep him whole.” After leaving the office, Adams called his wife and said, “I’ll be home early. I got fired today.”
Afterward, Adams suspected that Michael had spent the holidays convincing his father that Adams was a “control freak” and that it was, in fact, Adams’s fault that he had lost his temper that day in December. Robert, in looking back, described his long-time advisor Adams as hardworking and no-nonsense, but explained his downfall as the result of his having got caught between himself and his sons: “Cliff loved power and jockeying for more, and that often put him at odds with Mike and Tim.” As with Gary Ramona, when it came to choosing between his own blood and a nonfamily executive, Robert chose blood.
But despite the momentary rallying together of the three Mondavi men, Michael’s assertion that the Mondavi patriarch had stripped his three children of the bulk of their inheritance was still in the air. Although he and his brother ostensibly remained in charge of the company, the unforeseen risk was that Robert’s charitable giving would undermine their family’s hold on the company. Killing the messenger Cliff Adams didn’t mean that Robert would change his mind.