How do you take lessons learned from Silicon Valley and apply them to cannabis POS software to help retailers save time and money? Here to help us answer that question is Barry Saik, CEO of Greenbits.
Learn more at https://www.greenbits.com
[00:53] An inside look at Greenbits, a cannabis retail POS software solution that provides compliance and marijuana inventory management
[1:07] Barry’s background working for Intuit and how he got into the cannabis space
[2:19] Greenbits versus other POS systems for cannabis retailers
[5:54] How Greenbits automates different workflows within a cannabis dispensary
[8:26] The types of platforms Greenbits integrates with, from online menu companies to delivery services
[9:31] Intuit’s “follow me home” strategy and how Barry is using it to optimize user experience at Greenbits
[15:18] Scaling challenges POS systems often face on 420 and how Greenbits has overcome those challenges
[19:42] How Covid-19 has changed how cannabis retailers use tech
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. How do you take lessons learned from Silicon Valley and apply them to cannabis POS software to help cannabis retailers save time and money? Here to help us answer that question is Barry Saik, CEO of Greenbits. Barry, welcome to CannaInsider.
Barry Saik: Thanks. Glad to be here.
Matthew: Give us a sense of geography. Where are you in the world today?
Barry: I am in Silicon Valley. Our company has a few people in Silicon Valley. Then we have some people in the Pacific Northwest and spread out all over the world actually.
Matthew: What's Greenbits on a high level?
Barry: Greenbits is a point of sale and inventory track and trace system for cannabis dispensaries to use to run their operations.
Matthew: Barry, can you share a little bit about your background and journey, and how you got into the cannabis space and started Greenbits?
Barry: Sure. I spent a long time working at a company called Intuit that makes TurboTax and QuickBooks, and spent a good amount of time in TurboTax in the product management organization there and once had a product at TurboTax for a time. Then I became a general manager running businesses at Intuit, but all those businesses were focused on either personal finance or small business accounting and finance.
Then later in my career as I was moving on from Intuit and some other businesses, I've maintained that theme of focusing on businesses that really were trying to solve problems for small business owners. When I came across the Greenbits opportunity, it really was a great fit for me given my background in small business accounting, and also coupled with my background in compliance and with filing tax returns with the government.
There's a similar problem in the cannabis space in terms of filing all of your cannabis reporting with the various state entities. It was a really good fit for me when I learned more about Greenbits in this space.
Matthew: Barry, there's a few POS systems or point of sale systems for cannabis retailers. Where do you think Greenbits strength is relative to the competition out there?
Barry: Yes, you're right. There are quite a few of them although we're starting to see it consolidate into a few of the bigger players, but where Greenbits really stands out is we early on focused on compliance. We really work hard to ensure that our customers are 100% compliant with their state rules regulations in terms of all their filings and we make it really seamless and easy to stay compliant.
As you're using the product, selling products, and taking inventory, we've worked hard to make it so that you just have to use the system and we do all the filing in the background. That's one big string. The second one is we've really focused on ease of use of our point of sale registry system. We're the only one in the market that has an app-based system that ensures a high degree of usability, really speedy operation, and a user interface that's really designed for a tablet so that bartenders can really work effectively.
Overall, this translates into time savings for the dispensary. You don't want to spend time as a dispensary owner or manager training people or having to go back and do a bunch of catch-up filing or building your own Excel reports to send to the state filing agency. We make all that go away so that you can spend more time figuring out how to grow your business, get more customers, and sell more product.
Matthew: It's just super boring. Let's be honest, Barry.
Barry: It is. It's a little boring to be working in spreadsheets and doing accounting stuff. That's what software is for, that's why companies like Greenbits exist is to make all that easy so you can spend time doing things that are more enjoyable, more fun.
Matthew: How does it work then with these state regulators? Do you apply as a partner to get an API to their compliance system, or how does that work?
Barry: Our customers actually do get the keys. We are filing on behalf of them, but we work closely with the various providers and have an API that we use with them. We definitely have a lot of communication with the various filing agencies to work out how best to solve the problems for our customers together.
Matthew: Which of the states do you think are doing the best job in just creating a nimble, effective software for compliance? Like I said, it's not fun, but which state's doing a good job would you say, the top one or two?
Barry: One point of clarification too is that almost all the states outsource the filing to three companies. There's Metric, Leaf and BioTrack. Metric is the leading company, they have the most states under contract. Then a lot of it is affected by the rules the states put in place, then Metric implements those rules.
From a rule standpoint, I would really look at Oregon as being a leader. They've been out early and figuring out how to make everything work, but the legislature and the rules have really taken an approach of enabling the market and making it easy for both Metric and the dispensaries to understand what the rules are, and then stay compliant with the rules.
Matthew: When you think about the process that a worker in a dispensary has to go through, an employee there, how do you think about workflows and automating that? We talked about with the regulation piece and making sure you're compliant with reporting, but what other workflows are there?
Barry: There's many. Intaking inventory is a big deal. Making sure you've got the inventory set up properly, and then intaking the actual products, counting them, and then making them available for sale. Conducting sales is the most important one, making sure that you can actively process sales. We actually have an emergency mode so that if the network goes down, we allow our customers continue processing sales because that's such an important workflow.
Then there's stuff that starts to get much more complicated and nuanced. Customers that have more than one store will need to split inventory and transfer it between locations which requires some special work. Then another example would be managing deliveries and setting up deliveries in a good way.
Matthew: One frustration I know that's out there is sometimes, let's say you run out of flour of a particular strain or a vape cartridge or an edible, and then the third party live menu or review sites show that they're in stock even though they're not in stock, and the end-user gets frustrated. Do you think there's progress being made there? Can you talk about that at all?
Barry: There is, and that's a result of the menu and online menu companies being separate companies from the point of sale. There's definitely progress in partnership. We're working closely with the menu providers. I'll mention Dutchie as one that we've worked with quite a bit, and we're just working on how to figure out the right way to make sure they're up to date with current inventory and representing products in the right way.
There's a lot of detail there and a lot of rules. Again, you get back in the compliance aspect of what pricing and what products you show, but we're making a lot of progress. It really does require a partnership between the companies.
Matthew: A lot of retailers want to be able to integrate with other software packages that do different things so everything talks together. What's being asked for the most and what do you integrate with now?
Barry: Well, we integrate with, we call them online menu feeds. The online menu companies is a big one. The other one is loyalty points. Cannabis is a pretty competitive retail space, and just as you see in some of the other competitive retail segments where the retailers are trying to drive loyalty points and other programs, couponing and reaching out to customers with marketing programs to try to bring customers back to their store, you see that in the cannabis space as well and loyalty points is a key feature that allows that.
Those are I think the two big ones that we've seen. The third I'll mention is then delivery integration. That's something that the COVID pandemic has certainly raised in importance, there's a lot more emphasis on delivery these days.
Matthew: Now you mentioned that you worked at Intuit, which most people heard of TurboTax, and then most business owners have heard of QuickBooks. One of the things that really set Intuit apart especially in their early days was making it usable for their clients. I had read about this, I can't remember which book. One of the ways that Intuit make sure the software products were usable for the way that the users actually used them, not this pie in the sky idea of how they should use them was they would watch them use that. Can you talk about what that is and if you use that at all with Greenbits?
Barry: Sure, yes, at Intuit we call those follow me homes. It's a technique that the Intuit founder Scott Cook developed when he was building the very first versions of Quicken, which is a personal finance software. He brought over some techniques from the consumer packaged goods space, he was a Procter & Gamble alumni.
When you're selling consumer goods like cake mix or something, the way you test it is you would totally bring people in, because you can set up an environment and have them make cakes, but one of the things Procter & Gamble learned is that, it's better to go out and see what people are doing in their house. Scott applied the same techniques. In software, it's even more important, because you're doing so much and there's so many workflows that then affect real life that are outside of the product, if you will. The only way you can really see those unexpected things is if you're there actually watching.
If you try to do a lot of stuff remotely and in today's world, you have the internet doing like a FaceTime interview with a customer. The problem is they're filtering whatever they tell you. You can't break through that unless you're actually there and able to see something they do or pick up a piece of paper you go, "Why don't you pick that up?" That's the spirit of it is being able to observe the things that may get filtered by the respondent if you're actually asking them to tell you what's going on.
Now at Greenbits we did the same thing. We do a lot of store visits and spend time with our customers watching how the store operates, understanding why they're asking for certain features or functionality or extensions, and also looking at how we're doing on the key workflows. That's just a key piece of how we conduct business and how we get inputs from our customers about how to make software work for them.
Mathew: Was there any one specific thing that stood out to you in the Follow Me Homes to the dispensaries?
Barry: I don't know if there's one specific thing. I think the thing that stands out for me is the number of different workflows and the difficulty that then creates with managing the dispensary. There's because of the compliance aspect and the high number and variability of the products that are actually being sold, which was a surprise to me, I thought it would be much more like, there's like 15-20 different kinds of things you're buying. But most stores have hundreds of products available. Different strains and different cartridges and vapes and different mechanisms for dispensing. It creates quite a lot of variability.
Then you've got the other dynamic of a retail environment where you're hiring help that has a high degree of turnover. There's a need to keep them trained and up to speed with how the store operates. My main takeaway was, wow, there's a lot going on. This is a difficult business for a manager to really manage and run effectively.
Mathew: Yes, indeed. How do you think about the user interface? Because as you mentioned, there's a lot of different workflows, there's a lot of different types of inventory, you have to do complex things like split inventory between different retail shops. I mean, how do you make a user interface that is approachable, because I know when you're working on software, there's a tendency to get like so deep in the weeds, it's hard to have a beginner's mind as to what the end user is looking at.
Barry: Well, yes, that's a challenge. I mean, that's why we have designers that think a lot about user experience and how to design an experience that allows the user to have the right capabilities and easily understand the options, but also doesn't overwhelm them with a bunch of features and functions that just make it more complicated and difficult to know what to do. It's a tough balance. It's something that all software companies have to deal with, especially if you're tackling difficult user problems. I saw this in the tech space for years where you have this challenge of how do you would take this complex problem and digest it down so that a regular average person can operate software.
The other thing I think people don't always appreciate is that you have users that have very different skill levels and knowledge levels about the space you're working into. It can be really tricky to figure out how do I present the right interface to a user based on what type of user they are? How do I give them an option? How do I give a pro user a way to not have to go through a slow, more helpful interface and let them have an expert mode that they can kind of quickly go through. It's always a balance of trying to figure out exactly how much do your customers know, how experienced are they? How much help do they need? Then what's the right way design the software to allow them to accomplish the task as quickly as possible.
Mathew: On 4/20 and 7/10, maybe there's those are, or maybe and also right around Christmas time, I know, there's huge demands on kind of the network or server architecture. Can you talk about just some of the scaling issues around 4/20? I know, some of the POS software providers have had difficulties around maintaining services and software connections during that time, but can you just talk a little bit about that generally, and then your server architecture and your emergency mode?
Barry: Sure. Actually, emergency mode is a little unrelated, but I can talk about it a little bit. But on scaling of 4/20 has been historically a challenge in the industry, a lot of industries that I've been in have a cyclical nature, a season where there's more sales, and actually, the 4/20 spike is not particularly larger than I've seen in other industries, particularly the tax industry, tech software, and tax prep is very spiky, and more so even actually, when you get down to April 15, where you see more like, five, six X times traffic. In the cannabis space we see kind of 50% more so you know-
Barry: -maybe half an X to one X on time the size of normal processing. It's a challenge, Greenbits historically, before I joined did have some [unintelligible [00:16:54] But it's really, when you have an average like that it's really just a lack of focus and planning in today's world, like building out systems that can scale, all the companies have access to cloud based infrastructure. It's not an issue anymore, like you need to rack servers and make sure that servers are up and running, it's really just an issue of spending time focusing on it and figuring out how to do load testing that actually is a real load test, and not some sort of fake test that's not really representative of what your production environment is like.
Because the thing about scaling and handling a lot of load is that oftentimes you're surprised as you scale up with which piece of the system starts to fall down. It's not always immediately obvious which piece is going to be your bottleneck. The best way to tell is to exercise it and get comfortable with the traffic you can handle. At Greenbits since I've been there we've been focusing a lot on scalability and reliability for just that reason, because it's completely unacceptable to go down on peak selling days, I mean, we're running the sales, and you've got a bunch of stores and the customers in the store and the last thing would have happened is your point of sale system crashes or has a problem.
That's why we're super focused on that, we had an extremely clean 4/20 this year with no issues at all and we expect the same going forward because we've been spending a lot of time on our architecture and a lot of time testing. We run load tests against our production environment, and we can get comfortable with how much traffic we can handle. You mentioned emergency mode. emergency mode is really there for a lack of connectivity. We've seen a need for this, because people's Wi-Fi and internet connections depend upon the provider and depending upon their Wi-Fi setup. We've seen some of our customers have challenges with keeping that connectivity running. The emergency mode is great, because when you do lose connectivity to the backend service, you can keep selling product and operate your store.
Mathew: Okay, so it's like the local client has the client software has the ability to run things locally. Then once the cloud connects again, it syncs?
Barry: Yes, you can think about it like a sync architecture. The nuance there, though, it's not an easy thing to do is that all of our registers sync with each other too. Because we can't, we have to track everything. We can't allow the registers to both try to sell the same product. We do have sync between the registers on the LAN as well.
Mathew: Okay. There's a lot going on behind the scenes you have to think about.
Mathew: Okay. Just from your perspective, how has COVID-19 changed how cannabis retailers work and function in their care abouts?
Barry: Well, I mentioned the focus on delivery, which is one key one. There's other things though too that have come up. Like curbside pickup and ordering in advance and pickup. You do see just this emphasis on more COVID socially distant workflows, if you will. That makes sense and it's pretty obvious. I think the other thing we've seen is that they're all of our customers are selling a lot more. Their sales have been up pretty much 30% above what they were tracking before the COVID pandemic. That's just been an interesting thing for all of our customers to deal with and account for.
Mathew: Okay. No one has a crystal ball here, but how do you think the cannabis retail space is going to change and evolve over the next three to five years?
Barry: I think it's a classic example of an industry that is figuring out things and was early and there was a lot of disparate companies trying to attack problems in different ways. It's natural as the industry matures to see some of that stuff consolidate. It's like Darwinism natural selection. The things that work well people will gravitate to you and that means the things that aren't working well in the companies that aren't doing quite as well are going to struggle to keep up.
We're seeing some consolidation and in the industry across the various different tech providers. I think that's something that you'll see continue a little bit just through the natural choices that the company, the dispensers are making on who they want to use to provide their software and services.
Mathew: Well, I know a lot of cannabis retailers and delivery companies have come up with clever ways of being able to accept debit cards and different things. When we get a full legalization of banking opportunities for cannabis retailers, how do you think that's going to affect the retail environment?
Barry: The big one is that you'll be able to pay with your credit card, which is what every consumer wants. I've spent a lot of time with payments solutions over the years, working on accounting and personal finance. There's a lot of alternative payment vehicles out there and companies trying to do other alternatives. I've seen time and time again now that overall consumers want to pay with the thing that's already in their wallet. Credit card payments is a key enabler.
I think from a standpoint of a consumer experience, it's going to feel very natural. It'll be like paying for anything like paying for coffee. You tap your card or use your phone for a contactless payment. That part won't feel the different what's interesting for the retailers though is there's really good data that shows that using credit cards increases sales in two ways.
You can process more volume because it speeds up the transactions and everybody just knows how to pay and it's very comfortable and familiar. Then people tend to buy more when they're using credit cards than when they're using cash or other systems. I'm excited about those two factors of being able to increase the throughput and increase the basket size of sales.
Mathew: Do you think we'll see some sort of cannabis rewards credit card that's cross dispensary?
Barry: Possibly. I think when you think about those kinds of things, I think it's important to ask, why is that a good thing for what type of people? I think we'll see some of that, but I believe that it'll be more of a niche offering for probably for people on the heavier use side of things. Typically cards like that with credit cards, there's a set of complicated economics behind credit card offerings. The reason you see cards that are affiliated with a certain brand or entity is usually because there's some type of points kickback to the end consumer that's related to the backend economics.
That might make sense. I have a one from REI the more I spend I get points credits that I can spend at REI for future products. You could see something like that happening in the cannabis space, but those tend to be for the higher consumption heavy users. We'll definitely see them.
Mathew: The way the crypto space is evolving it reminds me of the early internet. I remember the first time I used Quicken, it was a CDROM. It wasn't even connected to the internet, I don't think. Now we have these edge use cases of digital assets and cryptocurrencies. Do you see a similar arc to the internet and ways that's going to be integrated into people's lives?
Barry: I think crypto will eventually transform how we do payments. I think the challenge with crypto is that the interesting thing from a payment standpoint is if you can clear payments very inexpensively and quickly, then it's valuable from a transactional payment standpoint, but we haven't seen any of the crypto platforms actually fulfill on that promise of providing really cheap and quick clearing of transactions. Coupled with that is most of the crypto platforms are pretty complicated and difficult to set up and people aren't familiar with them.
People have been treating them more as an investment vehicle, like buying gold or something. Then that's the other piece of crypto that's been difficult for people to really get their heads around is that cryptos and the whole digital coin thing it's a digital Fiat currency as well as a transaction mechanism combined into one. There's actually two different benefits out of those things. The Fiat currency alone is an interesting thing and it can, because you can invest in and where it can change value, but then the transactional capabilities are a different thing to think about.
I think both will have an effect on how we buy things in the future. It just isn't easy enough to use them right now and there's just too much uncertainty. People will I think largely gravitate in the near term back to credit cards and the US dollar until something that's a better alternative comes around.
Mathew: Okay. Where are you in the capital raising process?
Barry: We completed our latest capital raise back in the fall. We are building the company right now, so we're just a hundred percent focused on our customers on building out the software and investing that capital wisely for our investors.
Mathew: Okay. For accredited investors that are interested in investing, is there a way they can reach out or is that on hold for now?
Barry: Well with us, that's on hold we've closed our round and we are pretty set on capital.
Mathew: Okay, good. I want to ask a few personal development questions, Barry, to help listeners get a better sense of who you are. Is there a book that's had a big impact on your life or your way of thinking that you'd like to share?
Barry: Well, the one I always go back to and it's not actually a business book but there's a book called The Power of One by Bryce Courtenay and they actually made a movie out of it but the book is as usual way better than the movie. That's all about perseverance and about pushing through adversity. It's just a very inspiring book about a boy growing up in Africa and the gold mines and how he struggles to find himself and develop and grow up.
It's just a really great book and it's reinforced for me the importance of knowing that when things get tough, you can push through them. The book talks about you need help sometimes, and it's important to look for that help, but ultimately you got to also think deep and push through things and you'll find a path through the problems.
Mathew: Besides what you're doing at Greenbits, what do you think the most interesting thing going on in the cannabis industry is?
Barry: Well from a business standpoint, I think the continuing legalization across the country it's pretty obvious, but that's huge. Just the more and more States that legalized, I think it's just better for everybody. It makes the space safe. Both in terms of the quality of the products and in terms of the banking side of it and the purchasing experience. I think that one's really, really interesting and then we mentioned and talked a little bit about the financial aspect and the federal endorsement of banking is a big one. The lack of the banking infrastructure and real digital payments happening in the space creates all kinds of weird things and unsafe issues for people in industry. Those two I think are the most important enablers of the industry.
Mathew: Okay. What is the one thought that you have that most people would disagree with you on?
Barry: That's a tough one. Right now we're all embroiled in the COVID space, I guess right now I think we're going to get through the COVID thing in another month or two. I really have a lot of faith in science. I'm impressed with it. It's just amazing how fast these companies were able to make vaccines and get them out. We're all talking about the distribution issues and how fast can it get out and what are the rules around who gets it first but I'm in the mindset of like, just keep pushing on, guys. [chuckles] Get the shots in people's arms and you know what? We're going to be through this, I think.
People are going to be surprised and then all of a sudden you have to figure out like, you come out of the light on the other side of the tunnel, and it's bright light, you're like, "Okay, now what?" I think that's going to happen pretty soon that we're going to be on the other side and feel like, "Wow, I'm glad that is over with."
Mathew: Well, Barry, as we close, how can listeners find out more about Greenbits and for retailers that are interested in coming on and giving your software a try? How can they find you?
Barry: Sure. Well, just go to greenbits.com. We've got contact info up there, information about our products and offerings. That's the place to start.
Mathew: Great. Well, thanks so much for coming on the show. We really appreciate it.
Barry: Thank you. It's been a lot of fun.
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