Ep 296 – Cannabis Delivery Service Boasts Great Revenue With a Counterintuitive Twist

andrea brooks sava

Is speed paramount when it comes to a good cannabis delivery service?

Not according to Sava founder Andrea Brooks, who joins us to share how she’s gained more customer satisfaction and larger order sizes than her much faster competitors.

Learn more at https://www.getsava.com 

Key Takeaways:

  • Andrea’s background in cannabis and how she came to start Sava
  • An inside look at Sava and its mission to provide the highest quality cannabis products for delivery in the San Francisco Bay Area
  • How Andrea won the AVG Best Pitch Award and what about her presentation resonated most with investors
  • What investors need to know about unit economics and basket size
  • Common obstacles in cannabis delivery and how Sava has overcome these to get ahead of other services like Ease and MedMen
  • Ways in which Sava has gained so many repeat customers
  • Sava’s generous compensation for drivers and how this impacts the company’s overall success
  • Where Andreas sees the cannabis drink category heading in the next few years
  • Andrea’s conservative approach to growth projections and meeting investor expectations
  • Where Sava currently is in the capital-raising process and Andrea’s goals for the years ahead
Read Full Transcript

Matthew Kind: Hi, I'm Matthew Kind. Every Monday, look for a fresh, new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot com. Now, here's your program.

The only thing people want from a cannabis delivery service is speed and convenience, right? Our guest today is Andrea Brooks of Sava. Andrea has found a niche in the delivery market that does prioritize speed above all else. Today, we're going to learn how that has led to more customer satisfaction and larger order sizes. Andrea, welcome to CannaInsider.

Andrea Brooks: Hi, thanks for having me.

Matthew: Give us a sense of geography. Where are you sitting today?

Andrea: I am in San Francisco, at my home office in the Castro.

Matthew: Great. What is Sava on a high level?

Andrea: Sava is a highly curated e-commerce marketplace that also fulfills its own orders throughout the Bay Area.

Matthew: Okay. Can you share a bit about your background and journey and how you got into the cannabis space?

Andrea: Yes, I'm happy to do that. I entered the cannabis space after a very intense personal experience in which cannabis played a crucial role in my recovery. 10 years ago, I had a major injury, and it left me with a bunch of nerve damage and chronic pain. I had to stop working. My doctors told me I was going to be on permanent disability for the rest of my life. My life really just, all of a sudden, stopped overnight. It remained in that phase for a few years until I had a chance encounter with a cannabis cultivator. In talking with him, he put me on a protocol. After one month of using cannabis to manage my pain and inflammation, I weaned off of all of the pain medications that I've been taking for years.

Cannabis was an incredible game-changer for me. It wasn't even a last resort. It wasn't even on the radar that cannabis was something that could help me. Coming out of that experience, all I can wonder is, why didn't I come to cannabis sooner? Then I wanted to solve all of those problems. I realized there were so many people out there just like me that were just having some barriers to entry that needed to be removed.

Matthew: We're going to get into more what Sava is in a minute, but first, I want to wish you congratulations on winning the ArcView Group Best Pitch Award recently. That is a big honor. What about your presentation in business do you think resonated with most investors?

Andrea: I think really being able to succinctly drill down into the unit economics and why our business model makes sense, especially these days when there's been a high frequency of high valuations, high projections, which a lot of people haven't been able to meet. We've been a little bit more conservative this whole time, but we are meeting our projections. We are really transparent about the unit economics that are getting us there. I think that transparency is extra valued right now.

Matthew: Well, talk a little bit about what the unit economics are and the basket size and what investors like and need to know there.

Andrea: Well, I think in creating a shopping experience that encourages customers to stay longer online on the site, learning translates into them purchasing more. That is exactly how we've designed our shopping experience, in addition to being first-class e-commerce and making sure that we have really robust search features that can guide an individual to the right cannabis [inaudible [00:04:03] for them. There's also a lot of information about the brands. We tell the brand story.

We're really making a connection with the customer so that, again, they spend time and then really trust what they're purchasing. By spending that time, they find the right fit, which then keeps them coming back. It also increases the basket size. We're always trending north of an average cart size of 160.

Matthew: Wow. Many might say if [unintelligible [00:04:31] and MedMen are having a hard time with delivery, how does Sava pull this off?

Andrea: Well, there's a lot of things that we're doing different. Some of our model has been different and been different from the start. We're focusing on sustainable growth. We're focusing on a specific geographic area. Also, we're doing scheduled deliveries and not on-demand. I think there's numerous markets out there, and what we are going for is a higher value customer that is just fine with getting their delivery later that same day or the next day.

A major differentiator of Sava is in that we are a marketplace first, we treat cannabis as a consumer package good. We don't treat it like it's food. From our perspective, cannabis isn't pizza. It doesn't need to arrive hot and quick, but it does need to arrive in a timely fashion. You still want that convenience. We think that can be easily achieved with same-day or next-day delivery.

Matthew: Okay. Right now, you're just in the Bay Area, as you mentioned. What are your plans to expand?

Andrea: Immediately, we're just focusing in continuing our growth here. There's a lot more for us to dig into in the Bay Area, but then, we are looking to expand into SoCal and throughout the state, obviously, California. This is our home base. It's where we want to be. We are seeing incredible stickiness with our current area. Over 70% of our monthly orders are from repeat purchasers. We just want to deepen our presence here and work with our brand partners to increase our presence and their presence.

Matthew: You have a lot of repeat customers, and your drivers even know your customers by name. How does this impact loyalty and experience, from your perspective?

Andrea: It makes the experience incredibly sticky. A lot of our drivers are actually former customers that now work for us. Drivers are often also cross-trained to work in the office. We treat our drivers as much as the part of the team as anyone else on staff. Those drivers are the touchpoint of the customer. We really want our driver team strong, well trained, feeling like they're connected to the mission just as anyone else.

Being that drivers are doing regular routes, it creates a relationship with the customer as well. We frequently get customer support tickets, not of, "This driver did this wrong," but of, "I just want to say I love my driver. Thank you for doing what you're doing." We've had drivers with us for years. We invest a lot in them. We value that team incredibly, and we think that drivers should be valued just as much as anyone else that contributes to the company.

Matthew: I know you pay your drivers well, which is the opposite trend of many delivery platforms. How did you arrive at that style of payment, especially when it's such a juxtaposition to what the rest of the industry does?

Andrea: Just coming back to that thesis of how important the driver is to the overall experience. We're not just a marketplace, we're also overseeing all of the fulfillment. As someone who uses e-commerce and delivery, myself, I've had numerous experiences with different types of drivers from different companies. It does make a difference to me whether I return to that company or not. Again, so much of Sava is built on solving for what wasn't working for me in other experiences and having a driver that comes to my door that I trust that is giving me a clean, discreet package, that was important for me. That's what we're making sure our drivers are providing to our customers.

Matthew: If I put my investor hat on, Andrea, and I'm thinking, "Well, if the drivers are paid well, which is great, the margin has to come from somewhere for the investor and for the business to be sustainable." Your position is that margin comes from larger order size. Since the basket size is so much larger, there's more profit, even though the profit margin might be lower. Is that what you would say?

Andrea: Exactly.

Matthew: Okay.

Andrea: There's a couple of different things that goes into cracking this code to having a profitable model. That high basket size is really key. What's interesting about what our data shows is that also repeat purchasers purchase more over time, so that basket size only goes up once they're returning. It's the combination of the high basket size, the retention, and also keeping our cogs as low as possible, and making sure our brand partnerships are really strong to help us with that.

Matthew: Okay. Anything surprising about the way that customers orders in terms of what they're actually ordering, anything that sticks out?

Andrea: Well, we show different purchasing patterns than other companies that are doing delivery or even brick-and-mortar. I would say that with most retail outlets, flower and vape is number one. For us, edibles are number one. They pretty much dominate across the board as the top category. It's again because we're going after a different type of consumer.

Matthew: If you were starting a cannabis business now, like a brand, some product that would be sold by a delivery service, it seems like it's super competitive. If there's anybody out there listening and is like, "Hey, I really want to create a product, but I'm worried dispensaries or delivery services don't want to put it on their platform," is there any advice you'd give them?

Andrea: Well, we look for some different things than probably other retail outlets. I love to really see a strong mission statement. I like to see a company that is going to give back, that understands that sustainability is an important part of the growth plan, that is understanding how they need to manage their top and bottom line to be here for the long haul. I'm looking for a lot of forward-thinking companies, different cannabinoid profiles, companies that know how to showcase their terpene profiles, companies that really shine with regards to education. All of those factors are really important. Again, to really understand what's different about your company compared to others in the space.

I know that's pretty basic, but so much is the communication and language that's going to resonate with the consumer. If someone looks at a package and doesn't understand how to utilize that product, that's a missed opportunity, not just for that company, but also in a general sense because cannabis does require so much education. I'm always looking at brands that are going to really up the game in terms of education and making sure that they can make an emotional connection with a consumer rather than just a sale.

Matthew: Speaking of emotional connection, you're excited about cannabis drinks and some of the connections being made there. Can you talk a little bit about that?

Andrea: Yes. I think the drink market is exceptionally exciting. We frequently have gotten feedback over the years of individuals that have lessened their alcohol intake in favor of cannabis but have also mentioned that-- Some of these people are not smokers and they miss some of the social aspect. I think drinks are really filling that gap where it's a healthier alternative to alcohol. It can replicate the same type of experience, especially if it's a nice, low-dose infused drink. You can have a couple to-- The first drink might feel like that buzz, and then if you want a stronger buzz, you can have that second drink.

I think it is bringing some of the social component that is missing for people that maybe are more just towards tinctures or edibles but want to have a shared experience. Being able to bring a six-pack of an infused drink to a dinner party, as opposed to a six-pack of beer or some wine. I think this is the trend we're going to see. It's something that I personally do. I'm someone who doesn't drink alcohol, so I love being able to have this infused drink component, myself. That's how I go to all my dinner-- When either I'm hosting a dinner party or when I'm going, I like to bring infused drinks with me.

Matthew: Now, growth projections for a startup like yours is a touchy grey area in the cannabis space because everybody projects growth, and then wraps narrative around that. You're more of a conservative approach with how you do it and how you meet investor expectations. Can you talk a little bit about how you're different there?

Andrea: Yes. We investigate the total available market like everyone else. We understand the potential just like everyone else. We also understand that while there are a lot of potential customers out there, they don't just convert overnight and that this is still a marathon and not a sprint. For my investors and the right investors, for me, these are investors that are looking for a company that might have a little bit more conservative projection right now but want that company to meet their goals. We've been able to do that for our investors.

It might mean that our growth looks a little slower on slides, but again, we hit our numbers, we hit our projected numbers. That helps me sleep better at night. I think for the investors that are already in, they're happy to be seeing that from us and that we're hitting our targets. We've always taken a bit more of a conservative approach. Some people don't want to see that. People might also want to see all the aggressive growth that we can hit. We're going to continue to grow. In fact, we've had 10x growth from 2016 to 2019. We're going to have that again by the end of 2021. I always want to hit the numbers that I'm projecting. That's just the attitude that we've taken. Especially in a time with turbulence, this approach is starting to shine more and more.

Matthew: You're raising capital now. Where are you in that process?

Andrea: We are raising our second seed 2.5 on a convertible note and we are halfway through that round and looking to close by the end of Q2.

Matthew: For accredited investors at the end of the interview here, are you able to give an email or something where they can reach out if they're interested?

Andrea: Absolutely. People can reach out to me directly. It's andrea@getsava, G-E-T-S-A-V-A, .com.

Matthew: Andrea, if you were to start from zero on your capital raising journey again, what would you have done differently? What do you wish you knew back then that you know now?

Andrea: Something I would have done differently is probably raised a larger amount in our first seed. We did hit our goal and oversubscribed. I like to do a lot of mentoring with female founders in the space. We have a commitment on Sava that 50% of the brands on our platform are women-owned. What I have seen a lot amongst female entrepreneurs is not being as bold in their asks as some of their male counterparts. I've done the same in the past. To keep being at the table, you do need to have resources, you need to manage those resources sustainably.

I watch every single dollar, I know where everything is going. I will continue to do that, and it does make our shareholders happy how on top of managing all of those metrics are. You also need to have the capital to compete and the ability to give yourself a cushion through all the ups and downs and navigating and unfolding-in-the-moment industry. I would have raised a little bit more in our first seed. I was really focused on continuing to prove myself. Maybe having a little bit more confidence earlier would have pushed me to go for that higher amount rather than feeling I still needed to prove something, even though we had already revenue at that time.

I would say a little more confidence out of the gate. I'm a big believer in transferable skills. I think people with the confidence and with the right skills can still come into this industry and succeed, but making sure you're getting as much boosting energy around you at all times, so you can really go and get the number that you need to make your company successful. Too lean can be too stressful.

Matthew: Right. It's like there's an hourglass. As soon as you raise that capital and the capital's going out, the sand is coming out from the top of the hourglass as you put that money into growth. You want to have enough in there before it runs out, so I hear you. Let's move to some personal development questions, Andrea. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Andrea: My favorite book of the moment is still-- It's been my favorite book for a few years. It's Sapiens by Yuval Noah Harari. I just love his perspective on the world. I love when someone can take complex ideas that span history and time and really put it in a succinct nutshell that's easily absorbed. I think there's a lot of important lessons in his book of how to interact with the modern world. I just love the way he was able to dial it all in, both in terms of concerns of where we're going as a species as well as where we can go from here and possibilities. One of my favorite books, I can reread it over and over again.

Matthew: I know he goes on month-long retreats to where he's just meditating and not talking and stuff like that. That sounds like a pretty good idea. We are so hyper-connected and everything. I feel like I'm merging with the matrix sometimes.

Andrea: I personally have an affinity for historians and philosophers. His approach as an academic is really inspiring, and also just the way he interacts with the world and making sure he's staying grounded and mindful himself. I love that he lives that balance because we need to have that balance in order to just be successful. I also love the way that his lifestyle has continued to change and talking about the environmental impacts of our modern society. I love someone who practices what they preach in an authentic way and that is an incredible part of what's drawn me to him and his books, particularly that book.

Matthew: Andrea, what is the most interesting thing going on in your field besides what you're doing at Sava? If you could get involved in some other part of the industry but not in any way with what you're doing with Sava, what interests you? What do you think is cool?

Andrea: Something I feel very strongly about is expungement for individuals that are incarcerated for cannabis offenses. I think the fact that cities have been-- as they move towards legalization, have been working on expungement and clearing those convictions is really important. I wish I had a whole other clone of me to be able to work on that end of it because I think it needs to go hand in hand with the business development of cannabis.

That really brings me back to what is so exciting, both in what I'm doing and also in the industry in general is we have an incredible potential for social impact with these for-profit businesses that we're building. I love the idea that we can build that capital and really truly be doing something wonderful in the world. I think it is important for cannabis businesses to be examining the way we're giving back or just giving as we continue to grow and have increased influence.

Matthew: What is one thought you have that most people would disagree with you on?

Andrea: One thing I would like to highlight is something we've been focused on and I've been focused on this whole time, which is that this industry is way more of a marathon than a sprint than people thought and that sustainable growth really is the way to be a winner in this industry. I've been saying that for quite some time and saying that against individuals and companies that have been putting out crazy high projections, people didn't really like hearing those words or hearing my thought process on that.

Again, I think there is a shift now where we're seeing that there has to be a strong component of sustainability woven into the fabric of companies as they're growing, especially with regulations still changing and supply chain changes and just the nature of being in an emerging industry. I'm all about being a turtle, slow and steady wins the race, and that's the path I'm continuing on.

Matthew: Andrea, as we close, can you tell accredited investors how to connect with you and also customers in the Bay Area that want to give Sava a try?

Andrea: Absolutely. Customers in the nine-county Bay area can find us at www.getsava.com. We're also on Instagram and Facebook and all the other channels. Then for individual inquiries, people can email me directly, andrea@getsava.com. Again, it's G-E-T-S-A-V-A.com. People can also find me on LinkedIn, Andrea Brooks, B-R-O-O-K-S.

Matthew: Thanks so much, Andrea. Thanks for educating us, and good luck with your startup. That sounds really compelling.

Andrea: Thank you. I had a great time.

[music]

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