Where do you start the search for your next cannabis product? Here to tell us how customers are starting their cannabis search (and what they’re searching for) is Dan Nelson of Wikileaf, the industry’s leading price comparison platform.
Learn more at https://www.wikileaf.com
- Dan’s background in cannabis and how he came to start Wikileaf
- An inside look at Wikileaf and its mission to help customers save money while making informed purchases
- Consumer trends and the types of products that are gaining traction
- Differences and similarities between Wikileaf and Leafly
- How Wikileaf creates perceived value to attract buyers without cutting price
- Dan’s advice to entrepreneurs on how to go to market to ensure the best chance of success
- Wikileaf’s ad policy for brands looking to stand out in a crowded market
- Where Dan sees dispensary offerings and consumer preferences heading in the months ahead
Matthew: 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.com. Now, here's your program.
Where do you start your search for your next cannabis flower product? For most of us, it's online. Our guest today is Dan Nelson of Wikileaf and he is here to tell us how customers are starting their cannabis search and saving money. Dan, welcome to CannaInsider.
Dan: Thanks for having me, Matt. Appreciate it.
Matthew: Give us a sense of geography. Where are you in the world right now?
Dan: We're here in Seattle, Washington. That's Wikileaf technology's headquarter, but we have offices up in Ottawa and then a dev team out in India as well.
Matthew: Okay. And what is Wikileaf on a high level?
Dan: So Wikileaf is the first price comparison platform. We've got a little over a million people using the site to price shop and to find dispensaries in their area, also to research strains and find strains that they like in their area and do a price comparison at that level. We have a little over a million users using the site and we're in 25 States plus Canada and we've got about a little over 4,500 dispensaries on the platform.
Matthew: Wow. Dan, can you share a little bit about your background and journey and how you got into the cannabis space and then started Wikileaf?
Dan: Oh, yeah, sure. So, I guess the best place to start that story would be back in late 2007, early 2008. So, back then, I was actually running an interest rate comparison website. I focused on the savings side, so not anything to do with really mortgages or credit card, but more to do with money market accounts, CDs, online savings account, anything that was federally insured by the FDIC or the NCUA if it was a credit union. And back in 2008, if you can recall interest rates, the environment or the landscape was a lot different than it is today. You had, you know, one year CDs yielding 7%, 8%, 9%, today, you know, you're lucky to get a 1.5% percent on those same products. So, the search volume for these products was through the roof. And I started the interest rate comparison site to sort of highlight where these products were and where the best interest rates could be found.
We focused more on smaller regional banks and credit unions and some of our, most of our competitors focused on just the large national banks. So, that's how we carved out a niche for ourselves. And the site was doing really well. Again, interest rates were sky high, so they were just extremely popular. And I actually got into an arrangement with Bank Rate who was a publicly traded company at the time, and I embedded their interest rate tables into our high traffic pages on our site. And we had a rev share program where they charged the banks $8 per click. They would send me $4 a click and then they would keep $4 a click. So we split the CPC 50/50. And the site was just doing really well. We were ranking well for all the key terms and we were able to convert our traffic into leads for the banks. So the site was doing well financially and it allowed me to kind of pick up and travel the world in my mid-20s and run the site remotely.
So, from 2008 to 2011 I was abroad, I was in Europe traveling, I went to Asia, I went to Africa. My brother was actually playing professional basketball in Austria at the time. So I kind of made that my home base. It was kind of a central location in Europe and I just had a bunch of buddies from high school and then from college that were coming out and spending stints out there and in Greece and in Germany. So, I was able to connect with them. So the site was doing really well and it allowed me to basically travel the world. And then when I came back to Seattle in 2011, I noticed something very interesting had happened and that was that dispensaries were popping up here in Seattle.
I'm not really sure why my friends didn't clue me in on that, but it was a very interesting thing to see when I got back. This was circa 2012, so, the only...it was all medical at the time and Washington and Colorado were the only States that allowed for it. So, I got my medical card here in Seattle and started shopping around and seeing what these dispensaries kind of were all about and quickly noticed that there was a massive price disparity from one dispensary to a next. So, I was in the South, like union area, which may not mean anything to you, but it was...there was a high density of dispensaries in the area. So, there was about four or five dispensaries that weren't any more convenient to me than the other. So, I was kind of just trying to figure out what was gonna be my go to, if you will.
And I quickly noticed that, you know, I could get one gram of OG Kush for 20 bucks down the road here and then see that same gram of OG Kush, you know, at another place down the block for just $10. So, it was kind of like, how are people pricing these products? You know, what's the rhyme and reason here? And that was sort of the initial sort of aha moment or a concept of Wikileaf where I was gonna...I wanted to bring all of this pricing out in a transparent way for people to be able to shop based on price and see what these prices are in these dispensaries that were kind of reclusive and didn't do much marketing or advertising. So, I took a lot of the framework that I had used for the interest rate comparison site and sort of changed it for this new emerging market of cannabis. And that's essentially how the Wikileaf idea was born.
Matthew: Cool. So, visitors that are looking, when they find you, are they usually saying, like, hey, where can I get the best deal for blue dream in this zip code? Or is that how they come across your site?
Dan: Yeah, there's a lot of people looking specifically for strains that they like. That's the majority entry point to the site. But then there's also people that are just looking for dispensaries in their area and sort of want a general lay of the land. So, right now if you go to wikileaf.com and click on the dispensaries button there, you'll immediately get thrown into your market. We'll pick up your location, we'll spot out all the dispensaries that are in your area and then we'll run, we have an algorithm that runs an average pricing for one eighth of an ounce, which is the most commonly-purchased increment of cannabis. So, you can kind of see how on average people are charging for an eighth of an ounce in your immediate vicinity and get a sort of a general lay of the land in that way.
But the way that we're actually shaping our product here for Q4 and Q1 of next year is that we're actually trying to bring that price comparison down to a granular SKU level. So, what we're seeing is that people are now starting to have favorite products. And in the beginning of the cannabis industry, it was kinda like you pop into a dispensary, you kind of asked the budtender a couple of questions and they sort of show you what you should purchase. But now what we're seeing, probably as any industry matures, is that people now are having favorite products. They're having favorite strains, and they're specifically searching out dispensaries that have these strains. And we want Wikileaf to help facilitate that search and allow people to find out who has which products in their inventory in real-time, and be able to run a price comparison at that SKU level so they can find the best deals in their area.
Matthew: Yeah, I could see that. That's very helpful. And how many visitors do you get to your site a month?
Dan: Right now we're a little over a million people using the site every month. And like I said earlier, we have about 4,500 dispensaries to put in front of those million people. And of those, we have 1,600 what we call live menus where we're pulling inventory from their POS via an API sync or some other live menu workaround like that, so that we can have real-time information so that people, when they see a specific strain or a specific product in a dispensary's menu, they can be sure that what they're seeing when they go into the store, will be the exact same thing as what they saw online.
Matthew: Okay. That sounds like a lot of complicated technical work. I'm glad I'm not doing it, but and, like, once you get it done, I'd love to be a consumer. Are most of the people searching, I mean you probably have the most traction in the Pacific Northwest I'm gathering because you started there or in California. Is that pretty fair?
Dan: Yeah. California, Washington and Colorado are huge for us, where that's where the majority of our users come from. But we do have a growing, we do have a lot of emerging, what we call emerging states and emerging markets. For instance, Oklahoma is a very, is a quickly growing one for us. So, we're about...Oklahoma's about our fourth or fifth most trafficked state. And, you know, if you look at the population there, it's obviously not that high. So, we're getting a lot of traction Oklahoma and they're using us to sort of be that forefront of their, their cannabis shopping and navigation experience.
Matthew: So, what's kind of the typical path that someone who lands on the site? What do they do? What are they checking out after they come and they're looking at how the strain will, you know, what experience it'll evoke, they're comparing prices. What else do they do?
Dan: Yeah, so the number, what you exactly just said. So, the number one instance of people using Wikileaf is coming through from a strain that they're looking to read up on, they're looking to learn how it's affected other users and then they're looking to see you know, where this is nearby and potentially even run a price comparison and see where they can purchase. So that's the number one use case. The number two use case is people that just wanna find a dispensary in their area and they wanna make sure that they're getting, you know, a decent price. And that's how we showcase the landscape using our average pricing algo that we attached to the one eighth of an ounce increment.
Matthew: Okay. So, for each strain that you have the typical effects, and I mean, what is the effect most people are going for? You can probably tell that, you know, by looking at your data, like, what do people want right now?
Dan: Yeah. So we can see through search volume what people are looking for. It's usually creativity. People wanna be, you know, focused. People wanna be able to use cannabis and still sort of proceed about their normal lives. And we see that through people filtering for cannabis strains for creativity, focus, energy, these sorts of searches.
Matthew: Yeah, that's a funny thing to search for, like, I want cannabis to make me more creative, which is kind of a funny thing, but it's like, it's inside me but I need something to unlock it, which is...The whole thing is kind of crazy, but it does work.
Dan: Right. Yeah, yeah. It's interesting.
Matthew: Can you give us an idea of what people want in terms of the different products? Like, what they're most interested in right now in terms of vape, flower, edibles and so forth?
Dan: Yeah, I mean we see that vape is the quick, sort of like the surging product that people wanna use. It's a little more discreet. It doesn't come with the smell that flower does. You know, you can kind of take one or two pulls and be fine. You don't need to, you know, smoke a full joint or anything like that. There is a bit of a scare that's had a bit of a pullback on vapes with the whole I guess the black market that's sort of tainted the vaping scene in general. But it's still the quickest growing product line I would say in the cannabis industry.
Matthew: Yeah. It seems to be recovering. Like, that scare seems to be fading a little bit as people understand, like, oh, this was kind of black market stuff that got into the mix somehow. How has the market changed in a way that surprised you over the last couple of years? Have you ever scratched your head, like, wow, I didn't expect this to happen and yet it has?
Dan: Yeah. Well, really the CBD, which we kind of just touched on a little bit earlier, the CBD market has been the biggest sort of like wow moment for me, seeing how much that's caught fire in the industry, seeing how that there's, you know, just CBD only stores now that are popping up in places like Texas where you wouldn't imagine maybe cannabis, you know, succeeding in that state. But we're seeing a lot of CBD in States like that really catch fire. And also, we can see that the search volume for things like CBD oil, CBD tinctures, CBD gummies, you know, all this stuff is going through the roof. So, we can tell that it's definitely growing in popularity. And I think the whole side of the plant that is non-psychoactive, that doesn't, you know, ''get you high,'' the trending popularity in that has been the biggest, sort of a, I guess, eye opener to me because just, you know, growing up being, you know, 37 years old, you sort of only think of cannabis in one sort of vein. And now it's, you're seeing that there's a lot of other applications that consumers are keen on and it's exciting to see.
Matthew: Yeah. So, you mentioned that you're connecting to get real-time data on products so people can walk in and know, like, hey, I wanted this vape cartridge and there it is. So, like, there's price certainty. So, you're connecting with, like, the point of sale systems, it was like MJ Freeway, Flowhub. Any others?
Dan: That's exactly right. Yeah. We have partnerships with MJ Freeway. We have partnerships with Flowhub, Green Bits is extremely big here in the Pacific Northwest. Cova, we've got Corona coming online. They're another Pacific Northwest company. So, yeah, I mean, just connecting with the big ones and it's still a fragmented market, the POS sort of landscape. But what we're trying to connect with all the big ones and we've got all the majors under our belt. It's just sort of picking off the ones that are kind of growing market share in new states that we need to still sync up with.
Matthew: Yeah. Because if you show a product that's actually not available or not available at that price, then you've got an angry, angry, customer on your hands, right? And they're out. So, you just gotta be, it's gotta be real.
Dan: Yeah, that's exactly right. And we've actually had an instance of that back a couple of years back before we were connecting with point of sales and the menus were all updated by the budtenders or the dispensary managers. And we had instances where yeah, someone drove a very, very long way over an hour drive to get a specific strain they were looking for. They found it on Wikileaf. It was a great a price, and then they got to the dispensary and it was no longer there. So, that was a bad sort of experience for us. But it also showed us that, you know, people are using the site the way in which it was intended, and now we just need to get our data on point and we'll be providing a very valuable service to people.
Matthew: Is it hard to get these dispensary partners to talk with you, and, you know, get them on the horn and get the technology all set up? I mean, what does that take?
Dan: Yeah, I mean, it's a bit of a...it's a bit of a rigamarole. Yeah. I mean we have to find the right time of day to touch these people. We have to know when their shops are busy, when their shops are not busy, when the dispensary manager is gonna be in, you know, who that dispensary manager is. So, we have a dispensary onboarding team that handles all of that and they're doing a phenomenal job. We've integrated with, you know, 1,600 dispensaries in under a year. So, I mean, if we continue at that rate, you know, I think we'll be in a very, very good place throughout 2020.
Matthew: Yeah. Okay. So, most listeners are familiar with Leafly that's also there in Seattle. How are you similar or different or how do you compare yourself in your mind?
Dan: I mean, there's some things we do that are similar, but I still think that we are the number one price and product discovery vehicle. Leafly kind of, I think, is very strain and review focused almost kind of like a Yelp kind of model, where we're as a product finder and a product price comparison vehicle, and strains and reviews is also an important element of that, but it's not, like, our focus where I think that is probably likely with Leafly.
Matthew: Now, like, do you see at some threshold there is a transition in the customer's mind where it's like, if the price drops below 10% of what they think it should be, or 20% that, like, that gets them off the fence? Like, is there some trigger or is it totally variable on geographies?
Dan: No, there is a trigger and we can see that the dispensaries are actually leveraging this. So, they'll have things like, you know, 20% off wax Wednesdays and you'll get a flood of people in specifically for wax because of that 20% discount. And dispensaries update their deals and their about section on our site specifically highlighting these daily deals throughout the week so that they can drive in a surge of customers that are specifically looking for that price break for that product at that time.
Matthew: Okay. That's interesting. Any other best practices for dispensary owners out there listening where it's like, hey, you know, I'm sitting here as Dan, you know, CEO of Wikileaf, but if I was forced to become a dispensary owner tomorrow, I would do X?
Dan: I think you really would want to, I mean the biggest thing is driving, you know, boots into the store, right? Everyone needs customers. So, that's number one. So, that's what we're doing with our million, you know, million plus people using the site every month is trying to, you know, showcase which dispensaries those million people should use. But I think the other thing is gonna be big, is gonna be business insights and data intelligence and finding out really which products are selling well, which strains are selling well, who, you know, your dispensary neighbor across the street, what's flying off of their shelves and how can I leverage that and how can I stock my shelves correctly. So, I think that's also an important aspect moving forward for dispensary owners.
Matthew: Now, what if you had a cousin that moves to Seattle and he says, Dan, I know I wanna be in the cannabis space and create a brand. What do you think I should do so I can get my brand into dispensaries and get people to care about it?
Dan: Yeah, that's a good question. I mean, I think I would just talk to people, talk to people that have built successful brands, talk to people that have been in the cannabis space for a long time. Learn what's worked, learned what hasn't. And just go from there. I mean, it's all a learning process. You know, it's a brand new industry. We're all kind of learning as we go. And just having the conversations with the right people will get you, I think where you need to be.
Matthew: Yeah. Now, do you offer ads for brands that want to stand out a little bit, they wanna, you know, make themselves get above the fold or do something on your site?
Dan: Yeah. So, we are unrolling a beta program for brands that we're working on right now actually. And what we're allowing brands to do is to be able to showcase all of the SKUs that they offer. And then through our point of sales syncs with our dispensary clients, we're actually able to allow the brands to show customers in real-time where their brands are right now, who has those brands in their inventory and how are those retail outlets pricing those products. So, that's the brand side of the equation that we're building out right now. And we'll be having that beta program roll out here in the next coming weeks and months.
Matthew: Okay. And if you were to look down the road, you know, maybe the next five years, how do you think consumer preferences are gonna change?
Dan: I think that like I said earlier, brands, specific products, and strains are gonna start getting more traction based on the quality and the price of those products. Just like in any other industry where, you know, as time goes on people start to get loyal to certain brands and products, I think you'll see that that same phenomenon exists in our space too.
Matthew: Okay. And where are you in the capital raising process? Can you tell us about that?
Dan: Yeah, so we just actually finished our $6.8 million Canadian round. We also listed on the CSE with that raise.
Matthew: Cool. Congratulations.
Dan: Thank you. I appreciate it. So that'll sort of allow us to just execute our operations that we've had planned out for the next 12 and 15 months. And, you know, we'll be obviously, the big part for us is rolling out our advertising network and our product suite where we're actually gonna be bringing in revenue from the dispensaries and from the brands. So, we think that this raise got us the appropriate runway to reach breakeven and profitability.
Matthew: Great. So, Dan, I like to ask a few personal development questions to help listeners get a better sense of who you are as a person. With that, is there a book that's had a big impact on your life or way of thinking that you'd like to share?
Dan: Yeah, so when I was traveling three years abroad, you know, I didn't have much access to technology, to TV, to even my phone or my laptop at all hours of the day, like you obviously have here in the States. So, I did a lot more reading then and I think ''Pillars of Earth'' actually was, is my most favorite book. It's the book that I recommend to, to everybody. It's not really, I mean, it's a fiction book. It doesn't have much to do with work or anything like that, but it definitely allowed me an escape when I was sort of abroad and just provided some much needed entertainment during that time, I think.
Matthew: Okay. What do you think the most interesting thing going on in your field is besides what you're doing?
Dan: I think that the CBD space is extremely interesting and something that I didn't foresee catching fire like it did. You know, I had touched on this a little bit earlier, but like, just growing up it was always kind of cannabis is, you know, THC, gets you whatever ''high.'' And then just seeing that there's all these other chemicals and all these other sides to the plant that have very real value for people has been very interesting to see, and CBD specifically. I mean, when we have the guys look through search volumes for, you know, all the CBD products under the sun and we see that these things are going up and to the right, it's very interesting to see that just consumers are super keen on this side of the plant.
Matthew: Who living or dead would you most like to smoke a joint with?
Dan: I think that hands down would go to former president Barrack Obama. I know he's dabbled in the past. He probably doesn't now, but that would be quite the experience.
Matthew: Okay. Dan, as we close, how can listeners find out more about Wikileaf and also find your stock ticker symbol?
Dan: Yeah, so we're trading under Wiki, W-I-K-I. I'd say head to our blog to keep up on news and then just going to Google news in general and searching for Wikileaf should keep you up-to-date with all the developments of the company.
Matthew: Well, Dan, thanks for coming on the show today. We really appreciate it.
Dan: Thanks Matt. I appreciate you having me.
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