'I Bought A Winery And It Caused A US-French Row'

Image copyright Famille Carabello-Baum

The BBC's weekly The Boss series profiles different business leaders from around the world. This week we speak to Michael Baum, US software multimillionaire and vineyard owner.

When American tech entrepreneur Michael Baum bought a prestigious winery in France's Burgundy region it caused a trans-Atlantic spat.

"[French newspaper] Le Figaro covered the announcement on its website, and there were about 2,500 comments on the article," says Michael, 57.

"You could split the comments right down the middle. Half of them were 'damn foreigners stealing our heritage'. the other half were 'if it wasn't for Americans you'd all be eating sauerkraut right now'.

"So you can say it was pretty divisive."

This was back in 2014, when Michael purchased Chateau de Pommard and its 25 hectares (62 acres) of vines for an undisclosed sum in the many millions.

He could afford the price because he had made a fortune in Silicon Valley, most notably as the founder and former chief executive of a software company hardly any of us have heard of - Splunk.

It is complicated stuff, but in simple terms, its software allows firms to monitor their data and security systems. With annual revenues of $1.8bn (£1.6bn), Splunk's customers are many of the world's largest companies. They include 92 of the Fortune 100 list of the biggest 100 businesses in the US by annual turnover.

Michael and his two co-founders launched Splunk back in 2003, and today it is a listed company with a market capitalisation (the combined value of all its shares) of more than than $16bn. While Michael retired from day-to-day involvement in the business in 2009, he says that he remains the largest individual shareholder.

Today, in addition to running his French winery, or domaine, he sits on the board of eight other companies in the US and Europe, and he has a multitude of additional business investments. He is also the founder of a mentoring and funding scheme for young entrepreneurs called Founder.org.

"I like to keep busy," he says. "Certain people, call them entrepreneurial or creative types, are just wired that way. For me work is about creativity, it is about building things. That is what is exciting to me."

Born and raised in Philadelphia, Michael says he had little interest in computers until his second year at the city's Drexel University in the early 1980s. Then, following a visit to the college by the late Steve Jobs, everyone purchased an Apple computer.

"All of a sudden my brain went 'how do these work?'," says Michael. "So I went headlong into software."

Switching his main university course from electrical engineering to computer science, it set him on an entrepreneurial career path in tech sector.

After graduating, Michael's first business venture was a software system for investors that studied past stock market conditions to try to predict future performance. Called Reality Online, it was ultimately purchased by the Reuters business information company.

Then armed with a master of business qualification from the University of Pennsylvania's Wharton School, he moved to Silicon Valley.

Other businesses he successfully grew and sold included a software system for early handheld computer devices, called Pensoft, and online money exchange firm Dotbank.

However, living in California, America's main wine growing state, he didn't like American wine.

"I didn't think I liked wine when I was a younger man, because I didn't like the American stuff," he says. "It is more often too heavy, too sweet, too alcoholic.

"Then I went to Europe for the first time when I was 28, and tried French wine for the first time. And it was a huge revelation.

"French wine is far more elegant, far more mineral, far more traditionally made. It is night and day.

"Then in 2012 we [my wife and I] moved to Paris for a year, just to take a hiatus, and I started looking more intensely at doing something in wine in France. We went to Burgundy, and I was like 'this is it, this is ground zero, this is the benchmark'. I fell hard for Burgundy wines."

Home to some of the most expensive, and highly-prized wines in the world, Burgundy predominately produces white wines made from chardonnay grapes, and reds made from pinot noir. The wineries and vineyards are often very small, with some producers owning just a few rows or plots of vines here and there.

Located some 300km (180 miles) south east of Paris, the region was until recent years informally closed off to foreign investment because the existing French owners get first refusal on any neighbouring wineries, vineyards and plots that come up for sale. And they are mostly snapped up.

For this reason, overseas investment in French wine has historically been focused on the far larger Bordeaux area, near the Atlantic coast in the south west of the country.

Michael was able to buy Chateau de Pommard, and become the first American to buy a winery in Burgundy, thanks to a bit of luck - the previous owner had based the firm that controlled it in Luxembourg rather than France.

He now divides his time between Burgundy and Silicon Valley. "It is fun to go back and forth, and experience two dramatically different worlds," he says.

Since Michael invested in Burgundy, another American has followed suite - sports billionaire Stan Kroenke, the owner of the LA Rams American football team, and England's Arsenal FC.

Tom Ashworth, chief executive of UK wine merchants Yapp Brothers, says there is growing international interest in buying top Burgundy wineries, because the wines they produce have surged in global popularity in recent years.

"It's not too surprising that as wine investors have turned their attention from buying bottles of Bordeaux to bottles of Burgundy over the past decade, so billionaires are pocketing the domaines themselves," says Mr Ashworth.

He adds that it also helps that the most prestigious sub region of Burgundy - the Cote d'Or - is far more picturesque than the main vineyard area of Bordeaux.

But if Michael had to pick just one region - Silicon Valley or Burgundy - which would it be?

"They are like chocolate and peanut butter, I like them both together," he says.