Ep 313 – Cannabis CEO Sees Billions in Accessories

bryan gerber hemper

Founded in 2015, cannabis accessories company Hemper has quickly become an industry leader – and all thanks to their monthly subscription box. Here to tell us about it is Bryan Gerber, CEO of Hemper.

Learn more at http://www.Hemper.co

Key Takeaways:

[1:56] An inside look at Hemper, a premium monthly subscription box for smoking essentials

[2:25] Bryan’s background and how he got into the cannabis space

[7:39] How influencer marketing helped Hemper get its start

[10:59] Ways in which Hemper uses their subscription box to collect real-time data on customer behavior and preference

[21:39] How COVID is affecting the community aspect of smoking and ways in which Bryan plans to bolster that community virtually

[26:55] How Hemper became one of the largest pre-rolled cone manufacturers in the world

[38:01] Why Bryan believes you must control the price in order to secure your place in the market 

[40:56] How Hemper is working to become a leading manufacturer in different smoking accessory products

[41:46] Where Hemper currently is in the capital-raising process

Click Here to 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.

Today we're going to learn how one entrepreneur uses his subscription cannabis accessories box to do research on what sells and how he created a cannabis empire from it. I'm pleased to welcome Bryan Gerber CEO of Hemper to the show today. Bryan, welcome to CannaInsider.

Bryan Gerber: Thanks, man. I appreciate you having me on. I'm very excited to discuss with you what's going on in the industry. There's a crazy world we live in nowadays.

Matthew: Indeed. Give us a sense of geography, where are you in the world today?

Bryan: Recently, I actually moved to Las Vegas and I was living prior in California, but we're now-- We've actually moved here literally a week before COVID hit. Now, we're here in Nevada.

Matthew: It sounds like a smart move and do you find yourself getting more flamboyant just by being in Vegas? You're wearing sequence outfits, blue suede shoes, pink Cadillac, anything rubbing off on you out there?

Bryan: You hit it on the nail.

Matthew: Oh, I did. [laughs] All those things, that’s crazy.

[laughter]

Bryan: No, not too crazy obviously with everything shutting down, it hasn't been-- We haven't gotten too wild yet but we're getting back out there. Vegas, it's definitely-- You can take advantage of that stuff or you can totally not take advantage of it. Luckily, I live in about 30 minutes away from the Strip and all the action. It’s kind of a schlep to get there.

Matthew: Yes. Well, tell us, what is Hemper on a high level?

Bryan: Hemper is direct to consumer discovery outlet for smoking accessories. It originally started as a subscription box for discovering new smoking accessories and then, it kind of segued into a trusted branded marketplace at this point.

Matthew: Bryan, can you share a little bit about your background and journey and how you got into the cannabis space and started Hemper?

Bryan: Totally. I got into the space early 2015. I think the inception for the idea was actually my last semester of college, around 2014, probably November. I was studying at GW, Accounting and Information Systems. Obviously, that has nothing to do with what I'm doing now. Personally, I was solving an issue that I had myself, which was-- I was in Washington DC, it just went wreck.

It was a pain in the ass to get smoking supplies because I lived on one side of campus where they didn't really sell any rolling papers or anything. Just stumbled upon to this and was buying off Amazon for a while and then, I just kind of got fed up with that and said, “Here, let me just start my own thing.”

Matthew: Was there any fear around that at all or doubt? I know, sometimes we have to overcome doubts like, “Hey, will this work? Is this something I really want to do or [unintelligible [00:03:43]?”

Bryan: Totally.

Matthew: Talk about that a little bit about it.

Bryan: When I first started, obviously, maybe not some people have gone to college who are listening to this and as we know, college doesn't really prepare you for too much in this world, specifically. Start-up, Cannabis, ecommerce, it's all-new. Obviously, when I was starting, everyone was like, “Oh, he's just a stoner kid with a stoner idea.”

[laughter]

Bryan: I was trying to explain to everybody and also I had my parents that were like, “Okay, you're applying to grad school, you're going to go and get your MBA or go to law school.” I was like, "I know you don't quite understand what I'm doing but it'll pay off. Trust me; this is better than the MBA." During my last semester of college, I was, instead of studying for my finals, I was putting the Shopify website together and creating the logos and all that.

When I first jumped into it, obviously, there's so many things you don't foresee coming up, but just going into it with the confidence. That I know that if I spent an obscene amount of time on something and I'm somewhat passionate about it, how could it not be successful?

It's partly the fears coming from exterior factors of people, that are maybe even closest to you and saying, "Hey, I don't know if you should really focus this, much time into something like that or--" A lot of things don't sound realistic to people. I like to say, and I go around the office saying this all the time, "Manifest your destiny." Seriously. You start speaking things into existence and you want to-- For example, you want to get in touch with that CEO at that company, or you want to get in touch with that investor, manifest it.

Go on LinkedIn, add them, send them a quick message, get them interested. That's really where I have a lot of-- My number one character trait is persistence. I had little startups when I was younger, and I think just being [unintelligible 00:06:03] and being able to talk to people and just-- I was fixing a simple problem with a simple idea that everybody says to me, "Keep it simple, stupid." That’s in terms of fear; I don't know if it was fear, I think it was more of excitement. I know where I'm going, people might not be able to see it, but I know and I think that's where people are just like, "Okay, we'll just see what happens." I told them so, right? [laughs]

Matthew: What percentage honey badger DNA are you? The higher the better, you just keep going, keep going, resilience and persistence and you just go. I call it the MacGyver quotient. I stole that from a VC but I learned it from that show MacGyver, that guy that could just get [unintelligible 00:06:59] he gets anything done with the smallest amount of resources just because he's determined to.

Bryan: Yes, scrappy is the number one trait. My investors talk about this, that's why they love us. We're scrappy, we're lean, we get things done with basically a few people wearing a million hats.

Matthew: You have a really strong sense of brand, which I'm going to talk about later, which is kind of hard to cultivate. I feel like there's something innate to people that can create it and if you don't have it, you just don't have it. You can build on it if at least you have a spark, and we'll revisit that later but I want to talk about now, what was the first thing that you saw that worked where you said, "Oh, my gosh, this is starting to work. I'm sending out these cannabis accessories and I'm getting feedback." Do you remember that moment?

Bryan: Yes. I think where the 'aha' moment hit was probably about six months into the business. Let's say a couple of hundred subscribers on the subscription. I came up with this whole guest-curated concept where I would bring in an influencer or a celebrity of sorts, they would pick the items for a month and then it would be as if you were smoking like them on your couch for a month. We had initially pilot-tested this with popular YouTubers in the cannabis community. We initially started with a lady named Jane Roe and I don't think she does videos anymore but she was the queen of unboxings at the time.

I contacted her and I was like, "Hey Jane, would you be interested in picking the items in a box one month and we'll deck out the sleeve with custom artwork?" At the time custom artwork was a custom stamp from Uline and we basically stamped every single sleeve. Basically, Jane started doing these promos like, "Hey, get Jane's box," and it became this kind of joke and it just hit. We went from a couple of hundred subscribers to over 1500 subscribers, the next month. We went from processing maybe $10,000 to over $50,000 in one month. That was our "Whoa, this is the value-add, this is the differentiator that we needed."

The concept in general worked but I think this catapulted the-- Hemper, in general, was through the influencer marketing. Obviously, not having a marketing background or influencer marketing or anything in digital strategy. I just stumbled upon this. It was just an intuition, 

right?

Matthew: Yes.

Bryan: That was our 'aha' moment.

Matthew: That's a great idea. That's like a case study in win-win. When people say "What's a win-win?" That's a win-win. You're helping her help her audience and she's helping you, there's nobody losing there. Sometimes there's this fixed idea in mind like "Well, if I win, some else loses" In this case, it's perfect that everybody wins, there's no loser-

Bryan: Exactly.

Matthew: -it's not a zero-sum game. That was a brilliant idea. You've done a lot of interesting things here. Another thing I picked up when I was talking with you was about, I was thinking how you used a lean startup methodology here because you had the subscription box and you still have that, the Hemper box. How many people get the Hemper box now?

Bryan: Currently, we have about 25,000 active subscribers.

Matthew: In the lean startup methodology, you do the minimum viable product test and you're using your box in that way where you say, "Let's see what the feedback is when we send out the box this month," and if people say they love an item or hate an item, you take that feedback. If they love it, you make it a permanent item in your store. Can you talk about that a little bit?

Bryan: Yes, I think it was about 2016 we started realizing that the boxes were coming out faster than the market was making new stoner gadgets, right?

Matthew: Yes.

Bryan: We took a step back and said "Okay, what is the evolution of Hemper? Where are we going with this? What's the evolution of the box?" I was doing a ton of research and this was right around-- right when the subscription boom happened. I think if you got in around 2015, in terms of subscription, you're probably doing pretty well right now. When I was doing my research I really focused on Birchbox. They raised obscene amounts of money, never turned a profit, why? I'm basically in the same boat just instead of makeup, its smoking accessories.

What they really attributed to one of their biggest failures was not investing in developing their brands and products early on. What they failed to recognize is that you could go to any major department store whether be it Bloomingdale's, Macy's, Sephora, Ulta Beauty, and essentially purchase every single product that Birchbox had in their boxes directly from the store. I know that sounds productive because people are saying "Online's the future" but why buy a sampled thing when you can go buy the real thing. That's where I was like ding, lightbulb went off, I was like, "Oh, we need to start developing our own products and not just white-labeling," which is what most companies do, really invest in our own cool kind of gadgets.

The way I started taking apart the industry was I noticed that there were all these, we call it six or seven niche markets, all these different segments. There's glass, there's concentrates, there's vaporizers, there's cleaning gear, odor eliminating, storage, rolling papers and grinders and stuff. What we started doing was really taking apart all these markets, identifying the key players, take the top three to five products, and really dissecting them in its entirety and then coming up with better versions and innovating on top of it.

One way with basically coming into a new market, you either duplicate and innovate or you duplicate and lower the price. There's only a few things you can do. We duplicated and innovated, we made things better because what we discovered was the people developing a lot of these products may not actually be smokers. As much as we want to hope and think and wish that the Willy Wonka of smoking accessories designed this, he didn't.

For the first time, it was a group of millennials developing smoking accessories for other smokers. We're the customers and now is the differentiator is where we weren't just hard on ourselves, but if we didn't like it why would our thousands of customers like it? We almost had our own internal focus group, and then when we started landing on some winners in terms of products, what we did was we tested it through the subscription service, we would develop a new product, pay for all the mold fees and then immediately get it into thousands of homes overnight. As a startup, we always thought the North Star was getting into thousands of stores, but obviously fast forward five years, what is a storefront anymore? Nobody even goes to it.

We didn't really focus on the wholesale side of our business; we focused on driving as much value at an affordable price for our community and our subscribers. We put these products in the box, got initial feedback from thousands of people and whether they said they loved, perfectly hit it on the nail or if they gave us feedback, we went back and retooled or changed things up, made things more user-friendly or more cool or this or that, whatever it may be. That was actually how we started developing our own catalog of products, and we call our subscription service almost like it's a Trojan horse, it's our way of developing products for this industry at an affordable and fast rate.

Most companies don't have this luxury. A lot of people may have a couple of thousand dollars just for an initial mold or an initial product run, but they don't have the test market that we do. I think that's where we really excelled was we were developing products for people who wanted products to be developed for them, right?

Matthew: Yes. This like the Trader Joe's formula, why Trader Joe's is still enduringly popular because they make their own products. You can't get anything they sell anywhere else really, a couple of maybe 10% of the stuff there, you can, but everything else is like their own niche, and they're these fun products that you're just delighted to try.

Bryan: Exactly.

Matthew: This is really smart. In your mind is your secret sauce that innovation you're talking about. You have to really make sure you're top of your game talking to other people in the community, talking to your subscribers what they like, what they don't like, what they're thinking. How much feedback are you getting monthly or through your team? How many people are you talking to and getting the pulse of what their thoughts are?

Bryan: It's a day-by-day thing, to be honest. This industry particularly is very vocal because we have to remember that we're secondary to the plant. People don't necessarily need these products so we need to make effort to drive serious value when we're developing products, and we're not going to just come out with something half-assed because our customers will let us know if we did, right?

Matthew: Right.

Bryan: We're on YouTube, we got content going everywhere, we have influencers. People wouldn't want to work with us if we weren't delivering real value, right? I think we'd send out surveys, our social media is so active there's an action happening on it every second or multiple actions happening on every second. There's no hiding at this point, the painted gallery is coming out, they're going to find us and let us know. I think it's more of being reactive to it because we know they're going to tell us and I think it's more so like "Okay, they love that piece. Awesome." Every month we release new pieces, so every month when we do that first reveal promo people will tell us, "Oh, you guys hit on the nail this month. Oh, my god, it's amazing," or people will be like "Eh, I don't know about that one, I think I might skip this month." It's in our best interest to develop things that are just so much cooler than what's out there and so much more relatable, right?

Matthew: Yes.

Bryan: That goes back to "We're the consumer." The day I wake up and say I wouldn't subscribe to Hemper is the day the box is no longer, right?

Matthew: Yes.

Bryan: We continuously make it cool and fun and exciting with different themes, and influencers, and collaborations, and products and that's really where people fell in love with Hemper was we really became that branded, trusted marketplace and we really did create brand equity where it is difficult to do that. Trust me; I didn't even know what I was doing when I first started. If you ask me what our brand bible was or 

just with your logos and color swatches, I would have been like, yes, no idea, right?

Matthew: Yes.

Bryan: Obviously now to a different story.

Matthew: I don't know [unintelligible 00:20:11] keep you up at night is the, "I just cannot have my subscribers be indifferent. That would be the worst thing is if they open up the box and they're indifferent to what's inside, Oh shit, that's just a terrible sinking feeling like, "It's just okay." Not excited.

Bryan: Totally. Exactly. I would hate that, that's hampered, my baby. It's something I've nurtured for five-plus years and we've gone through ups and downs and jumps and hoops and it's what why drop the ball now, at this point? If anything should be getting-- our capabilities should be increased at this point. It should always be a level up. I think that's where people really genuinely appreciate us is where we keep leveling up the products and the quality and the designs and all of that. We always keep it fresh.

I don't know if you saw this month, but we have this really cool shark bong in the box. It almost looks like a jaws type theme. People are loving it. The smoke goes into the piece. It looks like the shark is smoking, it's just fun. I think that's where people miss the boat, where it's like, keep it fun, keep it fresh, keep it exciting. Keep it affordable, right?

Matthew: Yes. You're really so tapped into this. Is there any desire by smokers and consumers, dabbers to get online and consume at the same time, or is it just like now it's just me and my friends are solo, like don't really want to be online, connecting at the same time? I mean, maybe social media post, yes. But don't really want to be like on zoom or some sort of other collaboration or tool.

What do you see in there?

Bryan: Interesting idea there. We've actually been thinking about this with everyone staying at home and trying to figure out, there's obviously, I don't know, if you're familiar with the YouTube bans with cannabis content, they can't really freely make it anymore. The Weed Tube came out, which got some steam, and then I think they're just stagnant at this point. I think people are really looking for the next thing. We've been really thinking about this.

Early on, there are apps called High-There and MassRoots, and those were the first wave of social media and connecting, but I think they missed the boat in terms of-- I don't necessarily think that many people want to smoke with other people, they don't necessarily know, right?

Matthew: Right.

Bryan: A lot of times people, are in fear of losing their job or someone finding out that they didn't want to. I think that's a whole thing. But kind of funny enough, and I'm going to bring this up. Last night, we were actually having a little brainstorm session. We thought that it would be-- well, I personally thought some people didn't think so. Whatever, we'll go with it. Almost like a Smoker's League, okay? I know, obviously telling people to smoke, it's not the best thing, but it is what it is. Where I thought would be cool is if we could basically set up almost like a call it whatever, working title Smoker's League. Basically, it was a $5 a month subscription to belong to it.

It was almost a combination between Twitch and Reddit, where the community basically uploaded certain videos by different people based on different challenges. The challenges would be randomized. You don't even know what you're going to get. You could be the worst joint roller in the world, but you get the joint-rolling contest. For example, maybe the joint didn't come out that great, but the video was hysterical, so you got up-voted to first place. I really think that this would get people and there could be a charity aspect to it. I think that it could be a fun thing for people to get into where they feel a part of a community and they're interacting. I don't know if this is the right move, this could be the start of something, but I think people are looking for entertainment and for some reason, we love watching people, inflict pain on themselves. Taking crazy bong rips and I don't know who or what the solution is, but I think the community is 100% looking for something fun.

I don't think it needs to be serious. I think [unintelligible 00:25:10] really cool with like brand partnerships. Let's say you have 1000 submissions for this concentrate video or whatever it may be. The video is sponsored by so and so brands. The winner of that competition gets a free bong or an E-rig or something. I think people would pay $5 a month to belong to a community like this, where they get to interact with the challenge, they get to vote on it, they get to do submissions of their own, things like that.

Matthew: Yes. That is really interesting what you're saying there and I'll be curious to see how you experiment with that and you certainly got the audience to try something there. You're right on some of the larger video streaming platforms; you don't have the liberties that you need to make that work. I'm curious to see what comes out of that.

Bryan: Totally. Were the inspiration, I would say, is stemming from this not just from everybody being home, but one of my competitors, actually, Grass City, they have a form that's been around for-- it could be 10, 15, 20 years at this point. They have a seriously active form on the website. We're on Shopify; we can't really do the form. That's where it stemmed from. But it was more of how do we connect the community in a fun way?

Matthew: Definitely. people want to be together, especially now with this COVID-19 thing. I think that's why I like drive-ins are having a comeback. We're separate, but we're together. It's these new things mashing up.

Bryan: Totally, yes. Well definitely keep developing it. But yes, I don't want to go off-topic too much.

Matthew: Yes. Well, I want to talk a little bit about what you did with cones here because this is an incredible case study, just talk a little bit about the cone market, what are cones? What you did here with cones?

Bryan: Obviously, again, going back to my initial thing about all the different segments of the market and obviously, rolling papers and cones and rolling stuff, in general, is a very big market. I would say about two years ago, in early 2018, there was this massive cone shortage in the market. For most people, they don't really know that cones are all handmade, which is crazy, but it is. There were really only a couple of major factories that were developing cones or producing cones for this industry.

I guess, just as cannabis sales go up. The more that goes up, the more you're going to need and packaging and pre-rolls and so on and so forth. What we did was we got wind of this shortage, and I was like, "Look, we have the Hemper, we have the box, it's great, let's diversify. I don't want to sell this for $20 million. I want to sell this for a billion dollars." That's what everyone wants. They want the crazy big exit. We need more tentacles.

Early 2018 get this wind of this cone shortage. I start doing research with my team. We basically it took us about six months to figured out pretty much where the papers coming from or who the paper suppliers are, the glue, how to make it. All the certifications we need to really get into it and a lot of people were talking about quality issues. I was like, "Guys if we're going to invest all this time, money, why are we going to half-ass it? We don’t half-ass anything here, right?" that? It took us about six months, but we essentially opened up the first-ever GMP ISO and Health Canada approved facility in the world.

What this means is, we're basically rolling cones in a medical facility. We uphold a different standard of manufacturing than the other cone facilities in the world. Because we're GMP certified, we pay fair labor wages. Most of the other facilities, located in Indonesia may not pay fair wages and may not have 18 plus people working there and we wanted to really do this right. The community, the cannabis community, in particular, is very conscious of people trying to bullshit their 

way through it.

So we really wanted to make a point to come into the market with this new offering and really clean up the industry because that's what we had to do on Hemper. There's not the most trustworthy people in this space. I'm sure everyone can remember at all time when they got screwed over and I think that us going into it with whole heart and it's really coming out with something better.

Again, back to my initial thing where it's you either duplicate and innovate or you duplicate and go cheaper. We duplicated and innovated. So, we now are actually one of the largest pre-rolled cone manufacturers in the world. We operate 150,000 square feet of GMP certified cone manufacturing. We're again the only GMP certified facility in the world so we are just commanding most of the-- especially with regulation and compliance in the market increasing basically daily.

It's a lot of the big multi-state operators buy through us because of our compliance and we also have a very strict 13 point checking system before any cone even makes it to the market or a customer of ours. We just have a different level and standard of compliance than most of the other facilities do and that's why we are now producing upwards of about 40 million pre-rolls per month for this market and we have demand for over 80 million if you could believe that.

Matthew: For people who aren't familiar with cones most people listening are but how do you describe it for someone who can't-- We are not on a visual medium here but just go ahead and describe what a cone is.

Bryan: Totally. So, traditionally you have a rolling paper and you have a filter tip to roll a pre-roll. In this instance, we take the paper and then we roll it around a conical shaped filter tip which means that it's a little bit wider at the top and skinnier at the bottom. It's really rolled into a kind of an ice cream cone shape. The same concept as the little sleeve over your ice cream cone, it's just like that.

We basically have different components and we basically hand assemble them together. Pre-rolls are becoming increasingly popular throughout many different markets just in terms of the convenience factor; it's so easy now to buy a little pre-roll pack. What we are saying in the market is initially they started traditional sizes are one gram pre-rolls or 0.75 gram pre-rolls or half gram pre-rolls.

What we are now seeing is extreme popularity in this thing called "dogwalkers" which are many joints where it could be anything from a 0.15-gram joint to a 0.35-gram joint. We are definitely seeing a shift in the consumer habits and the consumption habits because one gram pre-rolls are becoming freebies at the dispensary. We are seeing an evolution on the shelf and it's going to continue going down that path.

Matthew: A lot of people would look at this and say, "Hey, this is a low margin product, I don't want to be involved in it," but you took a different tact and you went right down to manufacturing this yourself which you do now. You don't really have a manufacturing background, so what kind of hurdles did you have here and how did you overcome them?

Bryan: Definitely low margin or not low margin just low cost, you are paying a couple of pennies per account but when you talk about making millions of them pennies add up to dollars. I think in terms of this project I really leaned on my two business partners Henry [unintelligible [00:34:29] and Ajay Singh or Ajay [unintelligible [00:34:33] and they both have manufacturing backgrounds from their families who are in textile also for about 25, 30 years over in India.

We actually had a decent amount of resources and understanding in terms of the processes or QC, QA, or AQL processes, so we actually knew how to operate a manufacturing operation, we just didn't know how to make cones.

Matthew: Was that process, that journey to like make a perfect cone difficult?

Bryan: It was. We probably produced about 30 million okay cones before he produced one perfect cone.

Matthew: Then you're like, "This is it, let's make a mold around this one. Do exactly what you did with this one and we are good."

Bryan: Exactly. We basically took that and said, "This is the golden sample, everyone make it just like this."

Matthew: You sensed that there was this shortage in the market, you are getting feedback there is a shortage of cones. You go and there is a journey to start manufacturing yourself how long did that take then from the beginning to the time you were really confident in what you had?

Bryan: We made our first batch and came to market; I would say September-October of 2018. We had a lot of the bigger buyers in the space of the time we're packaging companies looking for cones and with Futurola and RAW being the number one brands and them not being able to feel the market demands simply because they don't actually own their facilities.

I think I mention to you this before but that was another reason why we got into the cone manufacturing was because a lot of times when Cannabis companies are price quoting out for jars or concentrate containers or [unintelligible [00:36:42] bags they are probably asking about 10 other companies. They are looking for the best cheapest price possible for what they are looking for.

With us, there really wasn't that many cone manufacturers and I think that because our competitors don't actually own their facilities which is another thing in terms of compliance control and such just in terms of security. Like if something goes bad at Futurola's facility they can't really do much about it, they don't have control over it, they don't have their employees sitting there managing the facility.

I think the market just caught up to them where they were just selling and their [unintelligible [00:37:21] like 15 plus weeks and we just kind of swooped and said, "Look--" our cone is passeable, at the time, and people bought into it. We started selling and we got feedback and some people said, "Hey they are great." Some people said, "Hey are they are okay." We took all that into consideration, went back to the drawing board and said, "How do we make a perfect cone?"

We just trial and error and changed things up and we got there. Since then we are now producing like I said anywhere from 30 or 40 million pre-rolls at month rate now for most of the largest entities in the States.

Matthew: Wow, so you kind of had it that epiphany that you've talked about which is if you control the price you can never be kicked out of the market. Can you just talk about your ideas around that?

Bryan: Totally. So, this is a really big concept, and especially when you're dealing with commoditized products you really need to take into consideration. Most of the things that are being bought in the packaging realm, let's just take [unintelligible [00:38:30] for example. I can have a customer coming in and say, "Hey, Bryan you guys do great on cones, what can you do in glass jars?"

I said, "Joey, I can go get these glass jars for you and probably save you some money," I'm thinking, "Cool, we already have this customer this is going to be an easy [unintelligible 00:38:51]." On the back end, he's price quoting out 10 other glass factories or packaging companies so my competition goes through the roof. I'm making maybe 10% to really make this deal happen while some of the other packaging companies are willing to even go-- essentially breakeven or negative margin at times, we've seen in the space.

I don't own the glass factory so I can't control the price. I know my floor but with cones, my floor is whatever I want it to be. so I control the price where if the market dims, the new prices of cones is going to be $0.3 or whatever it is and I know that I'm going to be able to back up and figure out my overhead and my operating cost, how to get down to that. For companies that are purchasing capacity which is pretty much everyone in the industry other than us. Purchasing capacity, they won't be able to maneuver 

like we can because we control the facilities, we control the price. We can never be squeezed. Other competitors, they are always going to get squeezed because they're just bullying their facilities. They're saying, "Hey, guys, I want 20 million cones a month, you got to give me this price from going somewhere else."

Well, there really isn't anywhere else to go. That's the whole thing. Most of the companies that are in the market don't want to deal with manufacturing. They don't have manufacturing backgrounds. They don't even know what to do with a facility like this. That's where the epiphany moment was where it was like, "Hey, guys, if we own and operate the facility, and we control the price, no matter what happens in the market, we'll never get squeezed out, but our competitors will."

Matthew: Allows you to sleep at night better. Then you have this kind of philosophy now about how you can be squeezed out if you control the market. Are you bringing that to any of the other products where you're going to start being the manufacturer besides cones?

Bryan: Yes, we are diving into a ton of different stuff right now. Obviously, with COVID, there's been a ton of opportunities in the industry, and we're actually right now finishing out a capital raise right now, because we're tired of all the opportunities we're passing on due to cash constraints and all that, and we do run a pretty lean operation still. I think that you'll be seeing over the next 12, 24 months, we're going to be getting into a ton of new stuff. That's going to be very exciting.

Matthew: Where are you in the capital-raising process? You mentioned, you're raising capital, can you talk about that?

Bryan: Yes. Obviously, pre-COVID, we started hearing wins [unintelligible 00:41:58] all of this stuff. We talk to our investors and they're like, "Hey, team, hope for the best, but plan for the worst." Cash is king right now. Luckily, during COVID our cone operation did have to shut down for an extended period of time due to India going down. Obviously, with online sales taking up, there's a silver lining to all of this.

I think that in terms of where we're going, there's just so much still that's untapped because the first wave of cannabis companies that we've seen come through, really thought the endless cash wave was there. It wasn't going away. Everyone was like, "Oh, this is the tech industry. We're going to have billions available. Let's spend, spend, spend."

We thankfully have awesome investment groups, evolution corporate advisors, Greg Smith over there, unbelievable mentor, and investor guy literally does not lose. Poseidon, Morgan, Emily, unbelievable, whenever we need a door opened or advice or whatever they're there at a moment's notice.

Taking into consideration what they were saying was, "Guys cash is king right now, we got to basically plan for the worst and we're also getting it from them. We're going to see 2.0." Once we started getting wave of all this, we started going to the market, seeing what was out there. A lot of people were trying to figure out where the market was, and unfortunately, with some of the bad apples, I don't want to call any names, but companies like Madmen where it's like everyone thought they were going to be the end all be all and it's not.

People are starting to question the market, question the comps. When you come in and say, "I'm worth 50 million-plus da, da, da." They're looking at the comps in the market and they're saying, "No, you're not because, look, this company does X, Y, and Z, and they're only worth this." We're still in that cleanup duty phase where, and I was on a call the other day with a couple of investors, they called them the Clint [unintelligible [00:44:20] clowns, are now being moved out of the market to make room for companies like Hemper to come in and really do things right.

In terms of where we're at, we've gotten offered the term sheet out there, we're not biting at the first thing, we're really-- this round, specifically, is a major growth capital round. It also is very important we bring on various strategic partners, this round. That will really help us to take this business to; let's call it a 200-million plus exit. That's where we're currently at.

Matthew: I don't forget here, is there a way for accredited investors to learn more about this?

Bryan: Yes. Technically, they could email me. We don't have like a website or anything for this. It's more private thing. If anybody's in the market and isn't an accredited investor and think they can add value, totally reach out to me.

Matthew: How can they do that?

Bryan: You can send me an email. We'll call it Bryan B-R-Y-A-N @hemper.co.

Matthew: Hemper is H-E-M-P-E-R.co, right? Hemper.

Bryan: Correct.

Matthew: Well, Bryan, I want to pivot to some personal development questions here. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Bryan: A book? This is such an interesting topic. I had an interview a couple of weeks ago about this. I am actually probably the worst person to answer this question because I don't read books.

Matthew: Okay. Well, how about this? Is there a piece of advice that someone has given you that has stuck with you that you think about now and again?

Bryan: Totally. Throughout the last five years, I've been very fortunate to find mentors in the space that really have helped me, guided me, helping figure out different situations. Just touching on that, that's really important, is to find people who really want to help you genuinely.

In terms of one specific thing to carve out, honestly, we'll just go with what is current right now and hope for the best plan for the worst. Just when you think things are going great, that's when-- There's a saying that when things are going great and you stop worrying, that's when the pedal smacks you right in the ass.

Matthew: Never stop worrying is the advice?

Bryan: Exactly.

Matthew: That's good. I don't know if you know the internet marketer, Noah Kagan, but he keeps something called the kill list. That's the different ways that his business can die. Then he mitigates it proactively.

Bryan: Yep, exactly. I do something similar, actually. I have a running list of all of basically our vulnerabilities, and basically all of our problems. I basically match the problem to the vulnerability. I say, "Guys, if we don't fix this problem, we're going to be vulnerable to someone coming in and taking over."

Matthew: Your favorite book will be Antifragile, by Nassim Taleb there, boom. I just named your favorite book. You don't even know, but based on your answer here about the best advice. That is good advice. Let's move on to a couple of other questions here. I know you're sweet; you're becoming a Mac user. Is there any other kind of tool or collaboration, digital tool or anything else you and your team use that you feel like, "Hey, if I didn't have it would be a big setback to our productivity? What's the tool that helps you most with team productivity?

Bryan: Team productivity? We use a couple I would say. For all of our planning and projects and to-do lists and all of that stuff, we use Asana, as our workflow management. Then we internally use Slack extensively, just for communication between different parties and groups and people in different offices. I think that communication is the biggest thing, especially now that we're working in this kind of remote environment.

I would definitely say Slack, Asana; I think that would probably be pretty much in terms of productivity and just making sure everyone stays on track. It's really important to mention this that I use a lot of different stuff to stay on track. Email is as simple as it still is. It's basically your everyday to-do list. That's where I strive the most and where I make it a serious point for not just my sales guys, but anytime we're conversing even externally with other organizations, I make it a serious point to respond back to emails quickly. People want responsiveness. They want to know you're on it. That's a big thing is, just getting back to people, clear your email 

just not feeling overwhelmed and just diving into it.

Matthew: One thing I'm trying to do is to make my emails as short as possible and I really appreciate it. Some people have a knack for making their emails as short as possible. Now I make it so that if the person only reads the first sentence and reads nothing else, they know why I'm contacting them and what I want and what I can do for that either way and it's like, "Oh, this is great. I don't have to read this other thing, but if I need additional detail, I can get it down below."

Bryan: Totally.

Matthew: Well, here, final question for you or repeat to your question. What is one thought that you believe to be true that most people disagree with you on?

Bryan: One thought that I believe to be true, that everyone disagrees with me on?

Matthew: Yes.

Bryan: I did not prepare for this one.

Matthew: Maybe you believe Bigfoot still exists. Elvis is still alive; any of those are fair game.

Bryan: You know what? I'm going to sell this business for a billion-dollar.

Matthew: Boom. Wow. I like that. He goes on record. that is gritty. Well, I think that's a great place to end a billion-dollar ending. Bryan, you gave out your email before, give it out one more time and also give out your website for people that are interested in getting a cannabis accessories subscription box.

Bryan: Totally. If you're looking for any Cannabis accessories or discovery outlet, that would be hemper.co H-E-M-P-E-R dot C-O and then if you're looking for a pre-rolled cone for anyone that's listening in, that would be a harasupply.com, that's H-A-R-A supply.com. Then my email is Bryan B-R-Y-A-N at hemper.co, H-E-M-P-E-R dot C-O.

Matthew: Well, Bryan, I love your honey-badger quotient here. It's really high and I think there's great things coming for Hemper already. It's a successful business, but even more so good luck to you and everything you're doing in 2020 and beyond.

Bryan: Thanks, Matt. I appreciate you having me on and I look forward to coming back on a maybe post res.

Matthew: All right.

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