WAYV Founder Keith McCarty and CEO is Creating the Amazon of Cannabis

keith mccarty wayv

WAYV is an automated, on-demand supply chain logistics platform serving California’s exploding Cannabis industry. The technology streamlines the traditional B2B process, including transport, sales, and payment through a one-stop website that integrates regulatory and compliance checks. WAYV serves as a transparent, efficient tracking and compliance platform that surpasses the fulfillment experience of non-cannabis markets in today’s on-demand world.

In this episode, WAYV founder and CEO Keith McCarty shares how WAYV is revolutionizing e-commerce in the industry to become the “Amazon of Cannabis.”

Learn more at https://www.wayv.com 

Key Takeaways:

  • Keith’s background as an entrepreneur in cannabis and how he came to start WAYV
  • How WAYV streamlines the traditional B2B process and removes friction points for retailers and brands in the cannabis industry
  • The most common difficulties retailers experience in cannabis and how WAYV works to remove those difficulties
  • How Keith builds trust with both retailers and brands using the platform
  • Conflict resolution methods WAYV applies within its FBA (Fulfillment by Amazon) model
  • A breakdown of the WAYV user experience for both retailers and brands
  • Ways in which WAYV brings in revenue
  • Keith’s plans to reduce other friction points within cannabis and expand WAYV beyond California

Read Full Transcript

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. Now, here's your program. Our next guest is Keith McCarty. Keith was on the show a few years ago talking about his then startup Eaze, a cannabis delivery app that is exploded in popularity. Keith is back today to tell us about his new startup called WAYV. Keith, welcome back Cannainsider.

Keith: Thanks for having me, Matt.

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

Keith: Well, I'm personally in Venice Beach, California where WAYV has headquartered. WAYV is available throughout the entire state of California though.

Keith: Cool. And I'm in Austin, Texas. So I hear that Venice is becoming quite startup scene, Snapchat, other things going on there. What can you tell us about Venice Beach?

Keith: Yeah. I mean, look up, you know, my backgrounds in tech. I spent the past 10 years up in Silicon Valley, San Francisco proper. But there's this burgeoning area down in LA called Silicon Beach, which is kind of like Venice, Santa Monica area that has a lot of, you know, just a high growth companies, a lot of exciting ones. And it's also the Mecca for cannabis. So it always seemed appropriate to be in LA given that we're in the cannabis tech space, especially given those two factors

Matthew: Good points. Now, Keith, what is WAYV at a high-level?

Keith: WAYV is an on-demand supply chain logistics technology that's built to connect retailers with brands through optimized distribution.

Matthew: Yeah. And so retailers, dispensaries, we kinda use these terms interchangeably for people not familiar. And Keith, when you were on the show a few years back, you told listeners about your background with Yammer, which was then acquired by Microsoft, I believe, but could you just give a quick snapshot of your background and journey up to this point?

Keith: Sure. So my backgrounds in tech, as you know, right out of college, co-founded a company called Yammer. It's kinda like Facebook for inside of your company. And we started that. We launched it in September 2008. We ended up selling that to Microsoft. It's about three and a half years later, in June 2012 for $1.2 billion. From there, I started looking at the next evolution of technology trends. On-demand consumer services were really becoming popular at that time, Uber and Lyft, which may be familiar with in the rain-sharing [SP] category. But marijuana seemed like a very natural fit for multiple reasons.

So ended up building the first on-demand cannabis company that essentially with a couple of clicks of a button delivered cannabis in about 15 minutes. We launched that in July, 2014. And I ran that company until late 2016-ish. And through that period, really started to better understand some of the other friction points that are in the cannabis industry. But one of which is deeper in supply chain, especially as the regulations continue to evolve and become more structured around testing and things like that, we'll get into that.

And so there was a huge opportunity and a huge need really to satisfy, you know, kind of that B2B side from a technology perspective. And, you know, that's the sort of WAYV. So we started working on it. We launched it in August. And I have a massive amount of traction already. And can't wait to talk more about it.

Matthew: Yeah. So the Amazon fulfillment model, the Amazon FBA as it's known, has been a huge success. I've had some experience with it because you can offload the logistics, you can offload the warehousing, and, you know, some of the communication with the end customer. And it's a lot of things that normally would have to be an infrastructure build out. Can you tell us how that relates to what you're doing with WAYV?

Keith: Yeah. I mean, I think you're right. The Fulfillment by Amazon model works because, one, is optimized through technology, and because of a centralized aspect of it, you get massive economies of scale much more so than what you can get as like an individual, in this case, brand or retailer, even. So, you know, I just think that, you know, we're not necessarily reinventing the wheel per se, but we're doing it in a very unique way, given that we're in the cannabis industry.

And there's a lot of other aspects that I'm sure that we'll get into. But you're right. Fulfillment by Amazon is continues to be a growth factor for Amazon, and businesses continue to utilize it for those two core reasons. Like I said, it's about technology enablement, and also decentralized aspect and getting economies of scale.

Matthew: So what should these burdens do you think, and when you're talking with retailers they wanna get off their chest the fastest, is this at the shipping, the logistics, the warehousing, the e-commerce? I mean, I know we're talking in generalities here, but where do they seem the weakest if you were to pick one or two?

Keith: Well, I think retailers really want a consistent experience, they want a professional experience. They don't wanna have, you know, a different experience and with every brand that they order from. Let's say, a retailer has 20 to 50 brands, at least that they're carrying on their shelf. You know, without an e-commerce platform like WAYV, you know, they would essentially be contacting the brand sales reps individually, there may be different delivery dates for each of those brands. So they'd be having a huge accounts receivable team or a staff at least to manage that. The payments going outwards would be different, and kind of siloed through these channels. So everything is, you know, it's not really consistent. And it's not really optimized around the most ideal experience.

What they really want is to order through a single e-commerce platform to pay a single entity or maybe even a few. And from a brand perspective, you know, I think that they kinda want the same thing. They don't want necessarily to be managing the logistics side of it, nor do they wanna get into the technology optimization side of it, either, they wanna really focus on building a great brand. And I think, you know, they've been kinda forced into having to manage the logistics side and the fulfillment side because there really wasn't a great option out there until WAYV came along.

Matthew: Okay. And how important is trust here in terms of both the brands and the retailers feel like they have a fair platform? In a sense, it's like the platform becomes this huge network of fact in this hive of activity. And this is a real position of power that WAYV can be in in helping both sides, but there's a responsibility and a tradeoffs going on there. So what can you say about trust? How you cultivate it? And how you make sure that it's balanced between the brand and the retailer?

Keith: Yeah, that's a great question. I mean, it's huge. You know, the industry is obviously growing, but it's also very connected. So if you didn't have trust, or you lost that trust with, let's say, one entity that starts to snowball pretty quickly. And sooner or later, you essentially don't have a business. So, you know, I think it's number one, when you say you're gonna do something it has to happen.

And I think one of the best ways to do that is through technology. Technology is highly scalable, it's highly replicable, you can ensure a certain behaviors, and also provide the transparency along the way. So trust and transparency kind of go hand in hand just to how we look at it. One, we need to do and deliver on what we say that we're gonna be doing, and then we need to provide them transparency and update them along the way. That's both on the retailer and the brand side.

Matthew: And how about conflict resolution? Because, you know, having dealt with Amazon in the past and FBA, and we're kinda going back to that as an example, this is similar to like an FBA maybe model for the cannabis space, how do you handle conflict resolution where, you know, it's kinda he said, she said, situation, and there's maybe pointing fingers, and, you know, both sides wanna get to a resolution, but there's some problem that's preventing a resolution? How does WAYV step in and help there if it all, or do you leave it to the two parties to figure out?

Keith: Well, I think, you know, the best way to do that is to build great technology that thinks through all these different scenarios. So one example, maybe, you know, a delivery is made to a retailer, the driver ends up getting there, maybe they don't want 20 cases, they only want 18. So having the ability to, you know, reduce the cases within the driver mobile app, and then ultimately getting double confirmation. So sign off on both sides.

And I think every action that's taken where there's a change of custody, there needs to be that double confirmation on both sides, so that you don't lose that trust. That's one example. You know, there's plenty [inaudible 00:09:33] other ones as well. And we help them plan to build out technology and a lot, if not all of these areas, until that's all built out on. By the way, we have a massive amount of these flows already built out into the technology today. But until then, we have full support.

And, you know, the customer is always right. You know, I think that we're looking at this as a long term strategic play. And I think that, you know, we need to entrust, you know, that the customer, you know, has the right intention and give them the benefit of the doubt. We built out, you know, pretty extensive services team that they can contact us through the website, through chat, through phone. We have people out in the fields. So we have a heavy presence there. And we're very responsive in those areas in the event that there is a conflict.

Keith: So if I'm a cannabis retailer, listening to you now, and I was looking over your shoulder as you walk me through WAYV, what would the experience be like? And what could they expect?

Matthew: Yeah. They would expect a very seamless and easy to use flow to sign up. So it's essentially a two-step process. First, they sign up as an individual users. So name, email address, phone number, password, just like you would sign up with most websites today. And then the second step, which is pretty elegant, we've actually integrated into the state database, multiple state databases. And we pulled those records into our system.

So essentially, the next step is just within a type of head to select your retailer. So let's say it was Madman, or ShowGrow, or Spark, or, you know, any retailer that's compliant and has an active license in the state database will show up in our system. So they select that. And it takes about a few minutes to get verified just for the first person that signs up. After that, they can invite others, so we don't need to go through that approval process again.

But essentially, what we're doing is we're associating that person with that entity and making sure that they belong within that entity. After that, it's just like shopping on Amazon. So they go through, they select the products or the skews that they want. They add them to their cart, they go through the remaining of the checkout process, and select when they want it delivered. We do standard next day delivery throughout pretty much all major cities in California, and even some that aren't major cities as well. And then they can track their package along the way just like, you know, you're used to doing with Amazon or a lot of other popular e-commerce sites outside of Cannabis.

Matthew: Okay. Anything different that you can dovetail for the brand side of it, what's like for them?

Keith: For the brand side, so it's the same signup process. So we integrated the signup flow to make it just as easy for the brands. When they get verified, their first step would be to register their products. So go through and register their skews, upload an image description, the pricing, and then to schedule their first pick up. So they would go through and select what products they wanna have picked up. They would schedule their pick up without a dispatcher driver to go and pick it up, bring it back to the distribution warehouse. If it needs to be tested, we could, of course, handle that with the state-sanctioned testing labs. If not, it goes right into active inventory and then gets load balance across the multiple distribution centers in California. And it's active on the marketplace. It's as simple as that.

Matthew: Okay. So is load balancing kind of like an algorithm to see a modeling of consumption, like San Francisco might be one-third of LA just based on projected demand, that type of thing?

Keith: Correct. Yeah. And it could just be, you know, the brand in itself. So maybe a brand is better suited for big cities, and not so much for more inland or vice versa. So the more data that we're capturing, we're, of course, learning and then optimizing where that product should be, so that it's always coming out of the closest distribution warehouse.

Matthew: Okay. So what's the business model here for WAYV in terms of how do you make money and keep the lights on?

Keith: So it's free for retailers to use. And then brands pay a fee for the services that are provided?

Matthew: Okay. Okay. So you're saying starting out in California, which is a good move, because it's a huge market when a big population. Are you gonna stay and focus on California for a while? What about beyond California and other geographies? And how would that affect the one-day shipping that you offer now?

Keith: So one of the things that really attracted me also on the B2B side was, unlike on the business to consumer side, this model really fits into pretty much all of the territories in the United States and even beyond. And so we could essentially move into these other geographies from a regulatory perspective like yesterday, right?

The second thing is that technology tends to be highly scalable. And so we obviously built the architecture in a way to where it took into consideration, different regulations, and different geographies, and became a very agile type of model for us to modify those two changes that need to happen in these other states or countries.

So to answer your question, we are built to scale extremely fast. Right now, we are focused on continuing to learn and optimize the experience for both the retailers and the brands. And we plan to expand, you know, after we feel comfortable in terms of that blueprint, I would say, you know, sometime in 2019.

Matthew: Okay. And tell us a little bit about your distribution partner Indus, if I'm pronouncing that correctly.

Keith: I think that's the correct, yeah, pronunciation. So Indus is, you know, when I was initially thinking about starting this company, there was a few different paths that we could go. One, you know, we could have fully verticalized, which means that we would manage not only the technology infrastructure, but also the physical infrastructure as well. That wasn't the path that I wanted to go down because I'm a big believer in best of breed. I know how hard it is to build an amazing technology. And I also know how hard it is to manage the physical infrastructure at these Amazon-like warehouses.

And so doing both, I felt like would either slow us down or wouldn't be the most optimized. But we needed to find distribution partner that can manage the physical infrastructure. And we weren't gonna settle with anybody that didn't one, share the same values, believe in kind of the growth model of what we're trying to achieve from a mission perspective, and be able to scale with demand that we're able to generate through this technology. And, you know, I really went around and talked to pretty much every distributor that was out there, and decided that and this was the best one. And we ended up partnering here in California and launching in August.

Matthew: Okay. So WAYV is managing a lot of details here in terms of, you know, the location of deliveries, volume, custody payment, arrival time, what can you tell us about the UI? Is that managed through an app, get email notifications? What's the UI, like in the experience like in, you know, consuming this information as it becomes available for both the brand and the retailer?

Keith: Yeah. For a brand and a retailer today, it's web. We may be rolling out some mobile applications for both the brand and the retailer here shortly. For the distribution partner, they have both web and they have mobile applications that are available both on iOS and Android. And that, you know, is both for the drivers, but also the logistics where the warehouse workers. So we've moved Indus to 100% paperless.

And before, before we had partnered with them, I mean, this is pretty much every distributor out there today that's not technology enabled. I mean, there's just paper everywhere, right? And so they utilize our mobile application for picking, packing, scanning products in, putting them into bands, driver routing, and then they utilize the web-based platform as well for some other things.

So for the distributor, to answer your question, it's both web-based and mobile app optimized. For the retailer and the brand, it's web today. And we'll probably be rolling out some mobile applications for some key functions, just to provide a little more rich experience when they're mobile.

Matthew: Yeah. Whenever I hear paper, I just cringe a little bit because it feels like we're choosing to be slow. I had a business ask me to send them a fax the other day and I almost felt offended. Like, why are we doing this? Like, would you prefer carrier pigeon? Like, can I just take a picture with my phone and send it to you somehow? But it's like, no, I'm sending a fax. Like, I don't even know where to get a fax machine anymore.

I don't know if they're made or what's going on, like why...Now, paper is still necessary that's good to be able to print out things. But it's like we're moving in a direction where it's like a geometric growth and communications, and the machines being able to, to communicate on our behalf and check things. So I definitely appeals to my sensibility. Now, we had LeafLink on, gosh, a few months back, maybe 6 to 12 months back. And they are a B2B cannabis platform. Can you tell us a little bit how you're different or similar to LeafLinks so we get some color and contacts there?

Keith: Sure. So LeafLink is B2B platform that connects retailers and brands. It's more or less, for my opinion, a lead generation platform. So they're not really as deep as what WAYV is on the logistic side. So in order to comes in from the retailer, gets pushed over to the individual brands. But it's not really solving the core issue that brands have, which is how do I get my branded product to that retailer? And how do I collect payments the most efficiently? And also, how do I just remove this from even having to think about it, so I can just focus on manufacturing more of this brand?

So, you know, LeafLink, like I said is, you know, definitely proven out the fact that retailers want to order through a centralized platform. And I think it will continue to move in that direction. But that's really just a portion of the WAYV platform. A lot of the value and the value that we're hearing both brands and retailers derive, you know, from the logistics WAYV platform is that it's not available within LeafLink.

Matthew: Okay. And you've obviously spent a lot of time here, both with ease and now WAYV, thinking about how technology can help people but also removing kind of big friction points. As you look around the cannabis landscape in the marketplace, are there any other big friction points you would love to address if you could clone yourself?

Keith: Yeah. So, you know, obviously, we plan to do a lot of these areas, so I don't wanna share it too much. But, you know, what I would say is after you kind of solve how to get product from point A to point B, you know, how do you get payment from point B to point A. And essentially, that's the machine. On the B2B side, that would be, you know, getting branded products for brands through distribution, to retailers, just in time, send their next day delivery, consistent experience, you know, trustworthy, transparency, all these things. But then how do you get that payment from the retailer back down to the brands.

So, you're constantly balancing, you know, giving out better terms to the retailers to help with their cash flow. But brands also need, you know, that cash flow to make more products. So I think that those are some of the friction points that we're really focused on today. And I would say are, you know, the most critical in the industry at this point. And like I said, with the finance side, it could be anything from, you know, banking or just digital payments in general, I think those are all extremely important or even safety, you know, as a concern.

Matthew: Keith, you probably been keeping up with the cryptocurrency space. And now, there's the introduction of stable coins, which are coins that track the U.S. dollar and value. Do you think there's room like something for a WAYV coin where you can keep the money in the ecosystem, but move seamlessly and then not have to think about ACH, or bank, or waiting for the lag time between banks?

Keith: Well, I guess I should say, first, I'm a big believer in cryptocurrency. I do think that there's a purpose at some point. What I would say is that when we work with the regulators, you know, it seems to be a little bit too much for them to grasp. There's a lot of moving pieces right now. And they certainly associated cryptocurrency today with, you know, Silk Road or avoiding transparency.

So like I said, I mean, I do think that there is a place at some point, but it's probably the...if we're gonna choose our battles and to move things forward at this point, I would say that that's probably not, you know, the best area to focus on from a regulatory perspective.

Matthew: Okay. Keith, I like to ask a few personal development questions to help listeners get a sense of who you are personally. With that, is there a book that's had a big impact on your life, or a way of thinking that you'd like to share?

Keith: I'm more of a discussion guy. I like to be, you know, kind of dynamic, kind of the conversation that we're having right now. So, I like to listen to podcasts, especially once where they bring on experts and kinda have that type of dialogue. So Joe Rogan, you know, as soon as his latest episodes come out, I listen to him right away. I am so huge fan of Joe Rogan.

And I think that it's really important also for me to not get so focused just on the cannabis sector, and to kind of be multifaceted, and have a more diverse or, you know, more breath in terms of what I'm learning, what I'm thinking about, how I'm challenging myself, how I look at the world. It's very easy as an entrepreneur to get kind of pulled into, like, just one area. But, yeah. So I'd say, you know, not so much books, more so podcasts, and huge fan of Joe Rogan.

Matthew: Yeah. He's got a great podcast. Gee's hilarious and also a great standup comedian, if anybody gets an opportunity to see him. And also, you know, occasionally, he'll focus on subjects that might not be your cup of tea, maybe you're into UFC, maybe you're not, but he has a lot of interesting guests on there. I think Elon Musk was probably the most downloaded one on there who really...that was an incredible interview for people that haven't listened to that just to hear a little bit about how Elon Musk's mind work, which is kind of crazy, which actually kind of brings me to another question here, Keith, is that I find people that create multiple successful startups are not the most balanced person.

And I mean that, like, in a very, you know, a nice way. I mean, you've gotta have some kind of crazy ass drive in you to keep on creating these big businesses. I mean, does your stomach churn? And do you have, like, a desire just that can't be extinguished to create these companies after you start one and move on, or how does this work here? I mean, what's your mind like?

Keith: Yeah, it's kinda funny. I asked myself the same question after each one I do. But, really, I think it's just when you see a need for something and you see how you could actually help, it becomes very difficult for an entrepreneur not to step in, and try and help when you know that you could do it much better than what's out there, or it's an absolute need that needs to be solved, and you're probably best suited to be able to do it.

So, you know, I think naturally, an entrepreneur is not a stand on the sidelines type of person. And, you know, so it's not just about like ideas, it's about, like, which ones are the most important to you, and are you the best-suited person to do it? And if so, then you're likely gonna try and start that company because it's the right thing to do.

Matthew: Okay. Is there a tool apart from WAYV or Eaze that you consider vital to your productivity that you'd like to share?

Keith: Well, you know, I think it's really important when you're growing these companies, and especially in ever evolving and quickly evolving industry to maintain sort of transparency and also consistency, and with, you know, your team and also your partners. And so I hate to be cliché, but enterprise social networking is probably the biggest and most useful tool internally at WAYV. And we use Yammer. We started with slot, but we ended up going back to Yammer.

And I think, you know, that's really also how we build our culture, right? So we build our culture around breaking down silos, flattening the hierarchy, having information move seamlessly, and transparently throughout the organization. And that tends to really accelerate productivity. And I think, you know, when you build a culture around those key aspects, that translates into, one, the type of people that you hire thereafter, but also what you ultimately plan to deliver, and what you do deliver to your customers.

So once again, even going back to trust, and transparency, and professionalism, and responsibility, and, you know, in terms of what WAYV delivers to retailers and brands, you know, we're building that culture internally, so it becomes very natural for us to expect and deliver that to our customers as well.

Matthew: Keith, as we close, how can listeners, cannabis brands, and retailers learn more about WAYV?

Keith: Well, the best way is to go to the website. So it's a wayv.com, W-A-Y-V.com and sign up there. Like I said, it's super easy to sign up. If you have questions, we have chat, we have phone, we have email, FAQs. So visit the website. We look forward to hearing from you. And just keep moving forward here.

Matthew: Keith, thanks so much for coming on the show today. We really appreciate it. Good luck to you in 2019 and keeps updated.

Keith: Thanks, Matt, I appreciate it. You, too.