Ep 300 – Cannabis Investors Are Changing Tactics Amid COVID-19 Crisis

kim kovacs arcview

How is COVID-19 impacting investments in the cannabis space?

Here to tell us is Kimberly Kovacs of The Arcview Group, the leading private investment network and market research firm in the cannabis space. 

Learn more at https://arcviewgroup.com 

Key Takeaways:

  • Kim’s background in cannabis and how she came to be CEO of The Arcview Group
  • An inside look at Arcview and its mission to forge a principled and profitable industry from the ashes of cannabis prohibition
  • How the coronavirus is impacting cannabis businesses and investor sentiment
  • Kim’s advice to startups looking for funding right now
  • Tips on how new investors can get started to set themselves up for long-term success
  • Kim’s best investments and factors that played into her decision-making
  • An update on what investors are currently funding most
  • Important takeaways from Arcview’s recent data reports on the size and dynamics of the cannabis market
  • What investors and entrepreneurs can gain from AV Access, Arcview’s new educational webinar series
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. The Arcview Group is the leading private investment network and market research firm focused on connecting high-net-worth individuals, institutional investors, and money managers with investment opportunities in the cannabis space. Here to give us an update on what investors are funding right now is Kim Kovac, CEO of the Arcview Group. Kim, welcome to CannaInsider.

Kim Kovac: Thank you so much. Matt, it is a pleasure to be here. I have to say I'm quite a groupie of the show, so I'm thrilled to be on this now and representing Arcview.

Matthew: Oh, that's great. I can't hear that enough. Give us a sense of geography, where are you in the world?

Kim: I am in my home office, I think like many of us today, in Laguna Niguel, California. It's raining here, which is a novelty for SoCal. We need the rain, and it actually makes sitting inside a little bit easier.

Matthew: Oh, that's nice. It's only like 10 days of rain, I think, a year or something in Southern California, something crazy like that?

Kim: Yes, so we're tipping it probably at 20 this year, which we desperately need.

Matthew: Wow. We've had Troy Dayton and Steve DeAngelo on the show before, co-founders of the Arcview Group, but this is your first time on the show. Can you tell us a little bit about your background and journey and how you got into the cannabis and investing space?

Kim: Oh, absolutely. First of all, I have some really big shoes to fill and also a big hat. If you know Steve DeAngelo, you'll know the reference to that one. It's an interesting journey, one that I wasn't expecting. Probably what you hear from a lot of guests on your show, jumping into cannabis was a little bit of serendipity for me, but my journey actually with Arcview is a little bit of a poster-child situation.

I got into the industry a few years ago, also listened to your show, Matt, but decided to become an investor in Arcview and become a member. I started going to events and meeting folks, then I had this harebrained idea that I wanted to start a company, which I'd done before in my past, and I'll talk about that in a second, but I started a company called MyJane, and it's a company focused on women and getting more women into the cannabis space as consumers.

We actually then funded the company through a pitching event that we did on the Arcview stage. I was actually sharked by some of my, now, team members. Then we also got investing through that and then five months later, we exited the company also through an Arcview member. I'm truly the Arcview success story.

Matthew: Yes, the circle of life.

Kim: The circle of life, it is. Before that, it was really interesting for me. I'd a whole long history in tech investing, tech entrepreneur. I've had six startups, exited all the companies, good or bad. The last one that I had, which was successful in 2012, I took some time off and became an angel investor, and I started investing in a lot of technology, women's companies.

I actually ran an angel group in Southern California, it's a branch of Golden Seeds which is a well-known women's investment group out of New York. One day back in 2017, my mother-in-law actually confessed to my husband and I that she was taking cannabis, and she was taking it to get off of opioids, and I was really surprised. I had no idea that the plant could do this, I had no idea that it could be a replacement for things like that.

Literally, within a couple of months, she was off of it completely. With a 10-year history in managing pain and now doing that with cannabis, it was remarkable. I made a decision at that point that I needed to be in this industry, and I needed to invest in this industry. My heart and soul are in it.

Matthew: Wow. We have another interesting intersection going on with the coronavirus right now. How do you think that's impacting the cannabis space in the investment world?

Kim:  I think, like all of us, we're living day-by-day and really looking at, what is this next thing? How are these things happening? What are we going to be looking at tomorrow, even our families and our businesses and our markets and looking at everything? At the end of the day, I believe and I believe our investors believe in the consumer. The consumer is really driving what this market is now and what it will also look like.

If you read any one day, consumption numbers are up or they're varying. In California, we're still up 9%, 10% over where we were last March. Last week or actually two weeks ago, we had a lot of the top CEOs from the industry talking about the market right now and what we're doing with COVID. If you think of things like going from legal or illegal to essential in 18 months, that's incredible, Matt. We don't see that in any other industry, and all of a sudden, we're now an essential business with cannabis. These shifts in consumer behavior, I believe, are creating opportunities for investors to step in right now.

Matthew: Investor sentiment, how would you describe it right now? Are they mostly waiting for the dust to settle or are they saying, "Okay, this is the time to get a better valuation on something I was interested in before"?

Kim: As you know, investors are a little bit like cats and dogs, they all operate under different theses and different situations, but I would say, generally speaking, everybody is very cautious right now, but they're also very opportunistic. They're looking at deals, they're funding deals. The public markets are very risky right now. Private companies are actually looking very attractive, especially those that have what I'd say a longer-term horizon or a longer-term outlook on the market and what they're going for. The days of the quick buck are gone, and I believe our investors are looking for those companies that are doing the right things and have a sustainable business model and product.

Matthew: Even though the coronavirus is severe, it's not been around a long time. Is it fair to say that founders aren't really ready to give up too much equity for too cheap since it's a fairly recent development?

Kim: I would say probably some but I think others who have been around for a while, for example, one of my companies that I started. We literally started in 2007 and did our first round of funding in 2008, that was not a good time to fund.

[laughter]

Kim: If you read the Death Spiral of Venture Investing by Jason Calacanis, those are the things that would just deter, I would say, many from seeking capital or having real valuations, but I believe that right now because we've had such a brutal beating in our valuation markets in the public side, I think we were ready for this reset, and I think it needed to happen. I don't think it's COVID-related as much as it was, it needed to happen in this industry anyway.

Matthew: What advice do you have for startups looking to raise funds right now if you were having a cup of coffee with a startup founder and say, "Hey, if our roles were reversed, this is what I would do"?

Kim: The first thing I would say is, do you need to raise money right now? I am a realist, and there isn't as much capital in this market. It is a little bit more challenging to find, but supply and demand, so the less that people are looking for capital, the ones that really need it and, like I said, have realistic expectations and all these other things that make a solid investment, they're going to get invested in, but that being said, I'd say get real.

I wouldn't focus on what you're going to do in five years from now and how you're going to take 5% of a $100-billion market and things, but how are you going to tactically execute on a plan over the next 30, 60, 90 and get really real about those expectations? Have a couple of scenarios, making sure that you've looked at, what if this gets extended, the stay at home order, for another six months? What do you do? How do you maintain and/or build your business in that kind of situation?

We talked about reasonable valuations, but I'd also say reasonable exit plans too. A lot of this cannabis industry was a quickie, and we can't be thinking that way. Other investors don't think that way in other industries. We always talk about a 7-year plan and sometimes even 10 years for companies in the private space. I think we're culling the herd a little bit, but I think there's great companies out there, and those are the ones that are going to not just survive but thrive.

Matthew: Do you feel like any first-time entrepreneurs, they focus, maybe, on the wrong things, like getting their logo just right or something and not focusing on the bigger picture of what the investor might be interested in and or getting cash flow in? How would you try to orient a startup founder on what's the most important thing?

Kim: I had a great mentor, he ran a venture fund in the cleantech space, so think about emerging markets, right? This is cleantech back in the late '90s, early 2000s, and nobody even knew what cleantech was. For me, if you have a shiny logo and you have a great PowerPoint presentation, anyone can put that together. Your job as an entrepreneur is to talk to the investor and convince the investor that this is the time, this is the now, this is the right team, and you're the one to lead it.

That can be done over a conversation. It doesn't have to be a flash. I think that's where a lot of new entrepreneurs don't have a lot of confidence because they haven't done it before. If you really believe in this business and this idea and "the time is now," that's what you need to communicate, and you need to do it in a way that makes the investor want to invest. It's an opportunity, right?

We always think of this in the reverse. I think of being an entrepreneur, going to an investor is an opportunity for that investor. You're allowing them to come in, and you're going to demonstrate how you're going to make them, really, a lot of money based on this, and it's going to be a good time. It's going to be a fun ride together, right? Focus on those things that you would want to see if you were also sitting in the investor space.

Matthew: Then switching it around a little bit for investors looking to get into this space, maybe they have some extra capital, they're an accredited investor, they've had some success with their own business and they want to get out and invest in the cannabis space. They believe in it, and they want to invest, but it's this nagging feeling like, "Who do I pick? Can I trust them? How do I do due diligence?" All these things jump up as these roadblocks, and they prevent the action. What do you say to someone who's thinking those things?

Kim: We all have that exuberance. I think a couple of years ago, it was hard for investors, especially, I would say, sophisticated investors who'd been in other industries, to jump into cannabis because it was a two-week turnaround, no due diligence or very little, nothing to really go on. It's still an illegal market, federally. There were just so many things that were red flags for most investors that they just couldn't get their arms around it.

I think as an industry, we allowed it to happen because we really saw the Gold Rush or the Green Rush happening. Investors now, especially new ones getting in, they're going to take their time. They're going to want to also buddy up. I call this a team sport. I say this every time I talk to anyone about getting into the cannabis space or investing in general, don't go it alone because you have your experience, you have your life experience, your investing experience, and you're bringing, to the table, that.

If you multiply that by 5 people, 10 people, 20 people in a room and they're all collectively doing due diligence and looking at a company, that group-think is extremely powerful. That's what Arcview offers. It's this ability to connect with others that are like-minded or have like-interests in types of companies but bring in different experiences so you guys can rely on each other to do that due diligence.

One thing that we did start this year, Matt, which I think is brilliant and something I am a big believer in, is this collective fund. It's a member-managed fund. It's run by Jeanne Sullivan, who you probably know in this industry, and also Jeff Finkle. It's for members to invest and then manage these deals together. They've made seven investments in the space already, and it's a great way to go for first-timers.

Matthew: That's great. I watched that, firsthand, at Arcview events, people coming for the first time and they're thinking about what they want to do and then they meet someone that's made investments, that's been to many of the events, talked to many entrepreneurs. They sit in and listen to the questions they ask to the entrepreneurs and then slowly, you start to develop patterns where you say, "Oh, okay, this is a good thing to ask. How come they can't answer that question?

"Maybe it doesn't mean they're a bad startup founder, but they just haven't thought about it, and they need to, and that's a hole they need to fill in their business before I can invest." Then you can whittle it down to, "Hey, I need these questions answered before I can get to yes." It's an interesting thing. I also think that the startup founders have a tough job because the investors ask a lot of tough questions, and you can't know everything.

What do you advise a startup founder if they don't know the answer to something or they get confronted with a difficult situation? Because sometimes investors, most investors are nice and very polite but some can get a little bit-- I don't know how to say. I was like, "I feel like this has gotten adversarial, and I don't know why." You have to learn how to handle those things, but it's good to know how to do it because they come up over and over.

Kim: That's part of our Investor 101 course, right? That's how we learn how to be a shark. If you think about that personality of the shark and what they're trying to get at, they're trying to get you rattled on stage. The question and the answer aren't as important as how you respond, and they want to see how you act under pressure. I always say there's a power to the pause.

It's okay to take a beat, think about it and come back with even an answer that's something like, "I don't have the answer for your exact question, but I'm going to connect with you after this meeting, and I'm going to make sure I answer that question in more depth for you," or something along the lines of, "That's an excellent question. Here's how I would answer this today but given a little bit more research because you brought up some great points, this is the way I would approach this in the future," something around there.

You want to acknowledge that they have a good question, but you don't want to get rattled, and you don't want to show a lot of animosity, which I see a lot of entrepreneurs do. They get pissed off [laughs] because they're like, "Weren't you listening?" or "Hey, why do I have to answer this?" or "Why are you asking this question? I think it's a stupid question."

Don't go there because then you're creating this situation that is unwinnable for you. They have the right to ask you anything, and you have the right to not answer. I would just be respectful and take a lot of notes. You'd be lucky to get an investment on your first pitch. I usually say it takes a ton, a 100 sometimes, to get to the right message, to get to the right delivery, and to get to the right investor.

Matthew: Those are great points. I'm hearing you say you're honest about what you don't know, but then you're going to take accountability, "I'm" going to do this to get you the answer," instead of deflecting and doing something else.

Kim: That's what they would want to see as a leader of a company that they're investing in, as the CEO. They don't want you making up stuff as you go along, they want you to be making decisions based on data and analysis, not just winging it.

Matthew: It seems like there are seasons in investing in cannabis, and sometimes ancillary products are hot, sometimes extraction is hot, and things come around, and they come back again. What season do you feel like we're in right now in terms of what investors are really interested in and looking to invest in more?

Kim: You mean besides being in the winter season where everybody's-

Matthew: We're in the winter, yes.

Kim: -indoors, bundled up?

Matthew: Winter is here.

Kim: Yes, winter is here. I think that's part of being a really good entrepreneur right now is to recognize that seasonality, not just in the investor cycle but in the consumer cycle too. My husband plays hockey, so I'm going to give him a shout out, but he always says, "Skate where the puck is going, not where it is." We as an industry and I believe as entrepreneurs and investors, we need to really look at that.

If you look at the things that are happening right now, literally today, edibles are up, flowers down, delivery is kicking ass right now, and touchless technologies are hot.

A lot of these areas of our industry that have been ancillary businesses or great ideas or hoping that consumers adopt them someday, that day is today. If we can start really looking at that consumer behavior today, that's going to dictate a lot of what happens in the future.

I had an e-comm company back in the early 2000s, and some people were like, "Ugh, everybody's going to want to continue to go to the store. Why would they ever buy online books?" Come on, right? These things change consumer behavior permanently. We are going to see a permanent shift in our cannabis consumers and how they're going to want to have product delivered.

Another thing that I found really interesting in talking with Dennis at Caliva, for example, he said that brand loyalty is starting to become prominent, and it hadn't been, before. People were looking for deals. They'd go into a dispensary, right? If it was there, it was there. If it wasn't, they'd get something like-minded or like-product, but now they're asking for brands because those brands represent something to them.

It represents a good experience, but also it's safe, and we're looking for safety right now. We don't want to take risks with our health, so if you find a brand that is going above and beyond not just sustainability but organic and clean and this, you're going to stick with it right now.

Matthew: Yes, good points. It does seem like delivery is crushing it right now. It also makes me skeptical about how and when people return to a retail environment, a dispensary. Is it going to have to be like a Cirque du Soleil experience inside of a retail environment for me to want to go there? I don't know.

Kim: You know what, I believe it probably will. If you look at just general retail, they're trying to outdo each other with pop-up shops and all these other things that are happening. There's an amusement park, literally, like you're saying, in the malls now to attract people. I was listening to your last podcast about Andrea from Sava. She was the winner on our stage back in Santa Monica.

She's crushing it right now. I believe that the consumer wants the products delivered. They want that curated experience. They want to know that there is a quality behind that and that the brands are vetted. I think her business model is right on, and I think that she's going to be very successful not just now but as this new paradigm of cannabis consumption happens.

Matthew: Yes. She does have an interesting angle. For people that haven't listened to that episode, her business, Sava, and her name is Andrea Brooks, her focus is not on getting the product there as fast as possible but getting it there quickly and having a real relationship with the customers they deliver to, so much so that they know their name, they have conversations, and they only recommend products they really believe in or have some value.

It has a feel of like a co-op whereso it's kind of they've gone the opposite way to just speed, speed, speed, and it just feels more like family. It's like a family delivery-type network vibe to it. That is interesting when people say, "I'm going to try the exact opposite," but there's a reason for it, and then it works because I know in San Francisco, on the Peninsula there, there's ridiculous delivery times like, "Okay, I just placed my order for--" and there it is. It's so fast. It's like, "Wow, I don't even know how they manage this." It is interesting because sometimes convenience trumps all, interesting about the pop-up.

Kim: You have to listen to the consumer, in my opinion. The net new consumer to cannabis is going to be less interested in speed than they are, like you were saying, in this quality and the conscientiousness of the product selections and knowing who is coming to their door. Let's be honest. I'm 52 years old, Matt, I have children, and I don't necessarily need someone who is a little random coming to my house and delivering marijuana and cannabis.

Having that discretion and knowing that the person showing up at my door is someone who I would actually invite in for lunch, that was actually the entire [inaudible [00:23:09] MyJane model that I started two years ago was to have that kind of experience. We call them brand ambassadors, and they are female drivers who deliver products to women. We were a little early.

Matthew: Yes, ahead of your time. That's another way of saying it.I just want to press you a little bit more on Andrea Brooks because she won the Best Pitch at the Arcview event in Santa Monica, as you mentioned, but what specifically do you feel resonated as you watched the investors listen to her pitch and how she was delivering and that fit there? Why did it fit on that particular day, her message with that audience?

Kim: I think a couple of things that she did really well. She was extremely prepared for her presentation. She had all of the high points that investors are looking for, the establishment of the team, the inner workings of the company and testing theses out and then having them working, repeat customers, cart size, unit economics. She had everything really laid out well, and she told it in such a succinct way that she wasn't jumbling things around.

She was carrying that investor audience through that story and very well and hitting the high points of what investors are looking for. The team, the product, the traction, the longtime customer value, or the lifetime customer value, all of these things she had really identified, how she stacks up against her competition. Like you said, she's not there to deliver it in half an hour. It's going to be timely, but it's going to be quality, and how she differentiated then. She really nailed it with regard to that.

She was very respectful with the questions and very knowledgeable, not just about her industry and what she was doing, but I would say about the industry as a whole. Because we all ride together here, if there's trouble with the supply chain, there's going to be trouble down the road. She was just really able to nail that. The other part is that the pitch on stage isn't where all the action happens, it's when you walk off that stage and you start to create these one-on-one connections with people.

I can't emphasize that enough. So many people go to these pitch events, like an Arcview event even, and they don't work the room. They come offstage and then they go hide in a corner or somewhere. You can't do that because people still want to ask their question. They may not have asked it publicly, but they certainly will privately, and they're going to want to hear from you directly. Sometimes that one-on-one connection is the most important.

She worked the room afterward, then she came to our women's lunch, which is such a cool thing. By the way, with Arcview, we have this thing called WIN, which is the Women's Investor Network. It's a separate group part of Arcview, and we focus on women investors and women companies, and she worked that room like nobody's business. She was able to get more connections out of all of those than she was just on stage.

Matthew: That's great. That's like a little whitepaper we just did on Andrea.

Kim: We did. [laughs]

Matthew: I hope you don't mind, Andrea. There's people listening that are going to say, "Okay, I'm a startup founder, I have a good business, or I have a good business plan, and I want to get up on stage and pitch to investors. What does that process look like? How do I get into consideration?" What do you say to that, Kim?

Kim: I'd say, first of all, our stage has really changed in the last couple of months. It's now Zoom, Zoom. We are all on the Zoom stage. We are doing this now every other week. It's a rapid fire. It's actually really exciting now. I love it. We don't have to wait for three, four months to go by to bring more companies up in front of investors, we're doing it every other week. What I would say to entrepreneurs is, make sure you connect with us.

We are on LinkedIn, Instagram, Twitter, you name it, but also hit our site, put in an application, get in queue, be on our new platform, which is called Proseeder. That's where you're going to get visibility in front of all of our investor members and then every other week, we select companies to present in a webinar via Zoom, and we call it Arcview Access, and you get a chance to showcase your company. To me, this is really how I think, to be honest with you, I think this is how the world's going to be from now on. Why wouldn't it be?

Matthew: Yes. Can you record those [unintelligible [00:27:44] Zoom and then people can watch highlights right after [unintelligible [00:27:47] they can watch them? Is that how it works?

Kim: Absolutely. As a member of Arcview, you get access to your own profile, and part of the platform is that we record and store, for the companies, all of these presentations, so they have that as their legacy document library to be able to add things to. The platform is amazing. Full disclosure, I'm an investor in Proseeder, and I actually helped that company launch when they were working with Golden Seeds.

It's a platform that angel investors use. There's hundreds of them, different organizations. If you think about having your company on a platform that is being used by hundreds, if not thousands of other organizations like angels, small VCs, family offices, we can share those deals across that platform. It's called syndication. We do it all the time. For an entrepreneur now coming into Arcview, this is a new world. We've opened up digitally, so you get exposure to not just our members but all of these others that we syndicate with. It's brilliant.

Matthew: That's great. Now, switching gears a little bit to Arcview Market Research, which is the data-gathering and report arm of Arcview, is there any interesting data right now that's coming on your radar? You mentioned flowers down, edibles up, anything else that you feel is important to know?

Kim: Yes. We have a deep relationship with BDS Analytics, and we produce reports cobranded together under the Arcview Market Research segment of our business. We're coming out with our new intelligent report, which is the State of the Legal Cannabis Market. I think that's coming out next week. That's going to be a very lengthy report. One of the things we're working on with BDS is, how do we do this in bite-size?

How do we make data available to our members on a more frequent basis and more relative and more relevant? Because this market is literally changing every day, sometimes it's a little hard to keep up. Data analysis from a month ago may not be as relevant, but we're working toward delivering that data differently and bringing it to consumers and our members, both, and opening it up to the public. It's pretty exciting.

Matthew: Everything is moving to virtual, you're moving more to real-time data with BDS, everything's becoming shorter and more relevant to the moment and less to the in-person. That's a little trend we're drawing on right now here right in this interview, and we're doing it virtually. Everything's moving in that direction, so there's probably a lot of business opportunities just around that, creating the infrastructure for those type of experiences.

Kim: That's a great business idea.

[chuckling]

Kim: To be honest, I think a lot of industries have moved that way. I think for us, as an angel investor group, as a network of investors and companies, that technology has existed, we just haven't embraced it that much. We really have enjoyed, and we still do, the personal interactions. I don't want to say we're going to lose that, but we need to supplement it and complement it, so when we can't be together in person, we can still get that same feeling that we're in the room together.

Technology is advancing quickly to be able to do that. There was an interesting story about Starbucks recently and how they had put their whole mobile app together and order ahead and pick it up and everything. It was okay. Some people were doing it but not as much of an adoption as they'd hoped. It is now massively being adopted.

Matthew: Yes, it's true. It's a very good app too, I will have to say. The first time, I was like, "Why would I want to order ahead?" Now, I'm like, "Why wouldn't I?" It's crazy in that way. By the way, did you know there's more than three sizes of drinks at Starbucks? There's tall, grande, and venti, everybody knows that, but there's a secret fourth one. Did you know that?

Kim: I didn't. What is it? Can you share?

Matthew: I forget the name of it, but more than one person has told me like, "This isn't on the menu, but you can order it, and it's even bigger." That made me think, Kim, how big does a drink have to be before it's ridiculous? If someone ordered that fourth size that just seems huge, what if Starbucks, as a joke, made it 30% bigger than they were expecting? At what point would they say, "I want it big but not that big"?

Kim: [chuckles] I think they do. It's the craft that you can buy. I think I'm going to start moving in that direction because, after my third cup of coffee, I probably do need the gallon size.

Matthew: It's a big gulp.

Kim: It's a big gulp. I was going to say, they're probably taking a chapter out of the 7-Eleven book. That's the point is consumer behavior sometimes needs a push to get to a place that we go, "Oh, yes, for sure. Why wasn't I doing this before?" Like the Starbucks app, unfortunately, this is a really devastating push, but I think what we're going to find is that we don't feel like we need to be in a room together as Arcview members to make really good decisions and to support this industry and to bring capital to these companies that not just need it but we want them to be here.

We want them to be here, long-term, because they're changing our health and wellness in this country and in the world, to be honest with you. We need to be there, and we need to fund them now. We can't wait to see how they survive because they're not going to, right?

Matthew: Yes. Do you have any ideas on, once it's federally legal in the United States, how that might change things? I know it's just a hypothesis, and we're just subjectively going out into randomness here and we don't know, but how do you think that would change things?

Kim: I don't know if it's all that random, to be honest. During the Great Depression, one of the things that pulled that out was alcohol prohibition being lifted so the federal government could start making tax money on that, and that really filled the coffers and got the country back on track. Could that happen with cannabis? Maybe. If it becomes federally legal, think about the barriers to entry that absolutely just evaporate.

Banks now to fund, this Care Act, we'd now be able to apply for as an industry. I think the black market or illicit market would be diminished dramatically because if you could go to your local store and buy cannabis with showing your ID like you do alcohol, I don't know about you, but I don't really buy alcohol on the street anymore. I'm over 21. [laughs] I have it available pretty much anywhere I need to find it, and the price, it's a true market system. Prices will come down. I think there's just so much benefit, obviously, for that happening, and I think in this state that we're in right now, it makes a lot of sense.

Matthew: I do wonder about, will big brands become more prominent then, in a federally legal environment? I know they're in Southern California and really all of California, some brands do have an identity where they've taken off, but I wouldn't say on a national level, I see that yet, whereas if it's federally legal, do you think that's going to happen, we're going to have a Coke and Pepsi-type situation or a Dr. Pepper in the cannabis space, people want one brand they can get everywhere and have it be predictable?

Kim: I think here, we were going to see a little bit of everything, and it's the build versus buy analysis that all the brands will do. Coke isn't just coke. Coke has a lot of brands that are underneath the Coke umbrella. I think you're going to see the same thing here, just like you do with craft beer and Budweiser. There's a market niche for each of these types of products and brands and even just a provincial brand in California. That's [unintelligible 00:36:08] started. They wanted to be identified as the cool hobby in California, and they didn't want to lose that.

I think we're going to see big brands stepping in. I think they're going to keep the brand names of the companies that they're going to want to acquire for a while and build those out nationally or globally, for that matter. That's the other tipping point, is that the World Health Organization and others, I forgot which governing body it is, but they've got Schedule I on cannabis too.

If we can get that done, globally, look at what the market then can do. I think brands are going to do both. They're going to try to come up with their own products and then they're going to also scoop up good, solid companies. Again, get your house in order right now, making sure you're doing the right things because they're looking, trust me.

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

Kim: Interesting, Matt, I've been listening to your show for a long time, and some people are really smart, and they've got great books that they can recommend. I have one that's really near and dear to my heart and actually one that I've recommended to my staff at almost every company I've started. It's a Tony Hsieh's book and it's called Delivering Happiness.

Matthew: That's very good. I've read that. Excellent.

Kim: You know what, pick it up right now, because I started rereading this last week, just because, and it is such a parallel to what we're dealing with right now, what he went through at Zappos, and really focusing on not just profits but the passion of the business and the purpose. What he had to go through, my gosh. He had Y2K, he had the dotcom bubble burst, no venture money at all, real estate going in the toilet.

He had all these things happening at the same time, and he just believed that he was on the right path. He really believed in his employees, his customers, and his vendors, and he treated them all very equally. The customer success that he does is just incredible and the focus there. That's what I believe too. You start really focusing on the customer, and all of a sudden, things start to really happen because you're listening.

Matthew: There is those famous stories around Zappos where they said you can talk to any customer as long as you want, and there's stories of talking hours with customers just about anything random.

Kim: Delivering pizza. They do all kinds of great stuff. They even do tours, still, at their facilities in Las Vegas, and the employees get to decide what the inside of that tour looks like. They do crazy stuff. They'll dress up the popcorn machine as a robot. One part of the staff might be all dressed in Dracula gear that day. It's fun but they also just keep their eye on the prize. He was early in the cultural revolution of companies, and I think we've all followed, and there's still more to go. I really appreciate them.

Matthew: A tour sounds fun, I have to check that out.

Kim: I need to go to. I haven't been.

Matthew: What's the most interesting thing going on in the cannabis field, apart from what you're doing in Arcview? If you had to jump into something else, just out of pure interest and passion, what would it be?

Kim: This essential claim in the cannabis business has really gotten me thinking of how that could be really expanded on, I would say, from an industry perspective. To me, data, I'm a data junkie. Everything I do is based in data and analysis.

I think we've got a huge opportunity with the data we're collecting, the consumer behaviors, the tools that we have right now. If I wasn't doing what I was doing, I would certainly be in the data and the science side of this industry, because I think we're just-- We've not even scratched the surface. I don't even think we can even say that. We've identified that there is a surface, and I think there's just so much that we're going to be able to do. Because this is essential now, we can start using that to our advantage to learn more and to find out more.

Matt: Here's a Peter Thiel question for you, what is one thought you have that most people would disagree with you on, a controversial thought you have?

Kim: Let's see. I don't know if it's controversial at the moment, but I always thought this before, which is, a crisis creates opportunity. A lot of people put their head in the sand, and they retrench when a crisis is happening, and I think that you need to step out, and you need to really look at what's going on, and you need to control what you can control. This world, COVID is here and yes, we're at home and yes, we need to take care of ourselves and our families, but there are so many opportunities out there to start a business, build a business, recreate a business, and we need to embrace that.

We need to stop running scared sometimes and start moving in the right direction and forward. I think the Rockefellers made their most money during the Depression or something along those lines. Then also Isaac Newton invented calculus during the bubonic plague. Let's stop running scared and look at crisis and create opportunity from it.

Matt: Well-said. Kim, as we close can you let accredited investors know how to reach out to Arcview and also let startup founders know how to reach out to our Arcview so they can connect?

Kim: Yes, for sure. Hit our website arcviewgroup.com. We have areas of the site that are designated for both founders and potential members. Send us just some quick information about you. We've got a team really on standby. In fact, we just launched our chatbot. We're able to literally live chat, and it is someone there. We've got a few people in our membership team who will answer questions and engage you right there.

The other thing we have is called Arcview Access, which is now this weekly web series that we're doing, that allows both members and nonmembers to get education, to listen to things going on in the industry. We've got some amazing guests and celebrities and talent that are coming on to impart words of wisdom, and we're collecting all of this and creating a library and adding more so that we can really deliver to our customer not just happiness but real information to make real decisions.

Matt: Kim, thanks so much for coming on the show and educating us. That was really helpful to get a snapshot of what investors are thinking about and what startup founders are thinking about. Thank you and good luck with everything for the rest of 2020.

Kim: Thank you so much, Matt, and please take care.

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Matt: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at cannainsider.com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at cannainsider.com/trends.

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