Michah Tapman is a Partner and Program Manager at CanopyBoulder, the first cannabis accelerator. In this interview we explore the big problems that need to be solved in the cannabis space, how entrepreneurs are picked to particpate in the CanopyBoulder program and more. Learn more at CanopyBoulder.com
[0:54] – What is an accelerator
[1:28] – Micah’s background
[2:24] – Growth of CanopyBoulder
[2:58] – Micah talks about class selection
[4:06] – Micah discusses opportunities in the cannabis industry
[5:30] – Micah talks about a couple entrepreneurs in CanopyBoulder now
[7:55] – Micah discuss the types of businesses that CanopyBoulder invests in
[11:28] – How can an applicant stand out
[12:31] – Micah talks about the current class of founders
[14:19] – The importance of networking
Our next guest is Micah Tapman cofounder of Canopy Boulder the first cannabis accelerator. Welcome to CannaInsider Micah.
Micah: Thanks for having me.
Matthew: Before we dig into everything that is going on at Canopy Boulder, can you review what an accelerator is for us so we can understand the model and why it is impactful?
Micah: A business accelerator is basically means for companies to get a little bit of a jump start in a new industry. We provide funding, mentorship and networking opportunities as well as a three month program with set deadlines and some guidance on building a business plan and pitch deck.
Matthew: Okay and what’s your background? How did you get into the cannabis industry and specifically into Canopy Boulder?
Micah: Well I guess my background is perhaps a little bit different than some in the cannabis industry. I come out of the military, the Marine Corps to be specific, also Fortune 500 consulting where I worked in cyber security for many years. I also was an entrepreneur and started a couple of companies as well as a few other ventures with some friends. I got into the cannabis industry primarily because of Patrick Rey who is a good friend of mine. We actually ride bicycles a fair bit, and he convinced me that the opportunity was real and that the industry was growing and that it was a real business environment, not just the old stereotypical playground.
Matthew: We had Patrick Rey on the show last year when Canopy Boulder was just announced. Where has Canopy Boulder come since that time?
Micah: Well we’ve come a long ways actually. I think Patrick was on November or December of last year if I remember right, and since then we’ve completed fund raising, raising $1.2 million for the accelerator. We’ve opened our offices in Boulder and we’ve launched the inaugural class effective March 30 of this year. We’ve got 10 companies in our office space right now.
Matthew: Great so you picked your first class. What’s that selection process like? Is it difficult to sort through them all and decide who is going to get in?
Micah: Absolutely. The selection process is really challenging because of the quality of applicants and the number of applications that we receive. We had over 115 applications. Many of the teams were very strong with very interesting resumes for the founders and great ideas for the industry. We had to narrow that down to a group of about 20 companies that we went through a due diligence process with before finally selecting the 10 that we brought in.
Matthew: Okay so there’s ten that you brought in. Is there more than one or two people on each team? What’s the average team size or is there some that are individuals?
Micah: Yeah we’ve got a couple teams that are sole founders, but on average we’ve got two people per team so about 20 founders are in the office right now, and our largest team is 4 people and our smallest team is a single founder.
Matthew: Okay. So if you were to break down the big problems that need to be solved in the cannabis industry, if they fall into certain categories, what would you say they might be?
Micah: Well I think there are actually a ton of challenges in the cannabis industry right now. A lot of interesting ones around branding, data, data analysis, business to business commerce, human resources, packaging. Those are some of the biggest ones in my ones in my experience here.
Matthew: You’re right. This industry needs everything any other industry needs and that’s a lot of what other industries need.
Micah: Yeah and it’s a really interesting space because the industry with its legal considerations right now is not being served by some of the largest businesses. So for example advertising would normally be… online advertising would normally be a core competency for a company like Google or Facebook or Microsoft. They do a lot of work in the advertising sector, but they’re not really serving the cannabis industry. So there room for an advertising network to spin up, focus on cannabis, willing to do the hard work to develop a compliant advertising network.
Matthew: Yeah great point. Can you highlight one or two of the entrepreneurs that are in Canopy Boulder now so we can get a sense or flavor of what they are and what they’re doing?
Micah: Sure. We’ve got a number of really interesting founders doing some really neat stuff, but to pick on a couple of them. We’ve got a team called Healthy Heady Lifestyles that’s doing a network marketing play for in home marketing of cannabis accessories. Helping people who are perhaps new to cannabis understand how to use accessories, how to consume correctly. And that team is lead by Holly and her husband Steve who come all the way to Boulder from Boston, Massachusetts actually.
Matthew: That’s really important because there’s a lot of people that are just not going to go to a dispensary or they’re just not going to go through the normal channels, but they will have a friend or acquaintance show them in house how a vaporizer works or what it even is, and that’s an interesting thing that they’re doing there. It makes a lot of sense.
Micah: Yeah it’s a really interesting piece of the market puzzle. And the evolution of the cannabis industry I believe. You know there’s talk about the cannabis industry just being the legalization of cannabis and how there’s already a marketplace for people to sell into. And it’s just a matter of changing the law and regulations. But I actually disagree with that pretty strongly, and I don’t really see the existing marketplace, the black market if you will being the market that we’re really looking to serve. Certainly those people will be part of the market, but as with any other industry there are a lot of people who really don’t understand cannabis yet and they don’t understand how to consume it correctly or if they even want to consume it. So Healthy Heady Lifestyles is really bridging that gap and that’s one of the themes that we’ve actually latched onto with Canopy Boulder is trying to make this industry more accessible to what I sort of think of as the average consumer.
Matthew: Sure. Now it’s important to distinguish between businesses that touch the plant and don’t touch the plant. Can you tell us the distinction between those two things and where Canopy Boulder falls in terms of business that you invest in?
Micah: Absolutely. We do not touch the plant. That means we don’t invest or work directly with growers, manufacturers of edibles or infused products or retail or medical dispensaries. So all of our companies, all of our portfolio companies are working in the ancillary products and services space. We like to refer to that as the picks and shovels of the cannabis industry.
Matthew: Sure. Yeah and that’s really important for investors too because there’s a lot of investors that for whatever reason cannot get over that hurdle mentally or legally or whatever it might be for an investment that touches the plant. So you open yourself to a much wider pool of potential investors that can help these companies grow.
Micah: Absolutely. That is one of the things that we have been most aware of in talking to investors is that concern over directly touching the plant. And we think that over time that will evolve and that concern will fade away a little bit and our investment methodology in 2016 and 2017 may very well be a bit different.
Matthew: Is there another entrepreneur team that you can highlight in addition to Healthy Heady?
Micah: Sure. Another team that is making a very interesting play in the space is called BDDS, and it’s going to be a market research firm. The founder Roy Bingham is one of our more interesting founders in that he comes from a very traditional business background. He’s a Harvard MBA. He ran an investment bank. Worked at McKenzie Consulting. So when you look at his resume honestly you think of him more as a vice president at a Fortune 500 company rather than the CEO of a new start up in the cannabis industry.
Matthew: You know that’s a really interesting point because there’s a lot of people and I encourage them to apply to Canopy Boulder, that say hey am I too old, am I too young, do I have the right experience, do I have this, do I have that. You know they think of reasons not to apply. What do you say to people like that?
Micah: I think that is a very reasonable fear to be honest. And while I think that the risk is not as great as people feel, it is a significant commitment and people do need to take some time to think about whether or not they’re really willing to jump into this industry. The industry thrives on personal networking and a sense of community. So people really need to commit to it and they need to attend events. They need to be very public about the fact that they’re getting into the industry in order to build those relationships. And actually that is one of the things that Roy Bingham, the CEO of BDDS really struggled with at first was that he knew he had to be public about jumping into this industry and becoming involved with it, and it took a little bit of time on his part to really make that decision.
Matthew: Well I give him credit then. Roy, good job. Now how can an applicant stand out. You went through over 100 applications as you mentioned and I’m sure you’ll get more for the next class. What is a way that applicant can really give you an idea of what their personality and charisma is like in addition to give you a really nice snapshot of what their business idea is?
Micah: Yeah so we ask every applicant to do a video introducing themselves and while it’s a short video, we think the video is actually really important to show their personality, to show their character. Just give us a little bit of a glimpse of their passion for their business idea and who they really are. We also actually look at their application structure. Do they have a cofounder? Have they done a lot of due diligence work on the application because to us that speaks highly of their ability to attract for example a cofounder to overcome the hurdle of reaching out to prospective customers and doing a survey. And those things are very difficult for many entrepreneurs at first, but they’re critical to the application looking good to us.
Matthew: Sure. Now you have a very busy schedule for the entrepreneurs over the 13 weeks. Can you talk a little bit about what they go through and the climax at the end?
Micah: The 13 week program is essentially divided into 3 sections. Month one is a lot of networking, getting involved with mentors and essentially revisiting all of their assumptions about their business plan and what they’re trying to do here. We really push them hard to think through ever piece of their business plan. They post their pitch decks up on the wall from virtually day. And we start walking through the pitch decks and trying to understand what they’re really aiming for. Then in month two they really settle in to doing a lot of the sort of grunt work. That’s the real hard work of getting out and talking to people, doing lots of surveys, validating their data, or building prototypes for their technologies or in one case, actually two cases, we have hardware devices and hardware products that are going to be built.
Then in month three we’re actually going to be pitching to a number of different investor forums which is going to be a very very exciting month of June here in the Denver area. We’ve got the ArcView investor network that we’re going to be pitching. We’ve got the Rockies Venture Club which is the Angel Investor Group in the front range of Colorado. And then finally we have our demo day which is June 29th just before the NCIA reception for their big industry event.
Matthew: You touched on something really important there that I would like to highlight and that is you want to get the entrepreneurs out and talking to prospective customers. What does that entail and why do you feel like it’s so important to do that?
Micah: One of the biggest problems that entrepreneurs typically run into is they build their business based on their assumptions, not so much based on data. We are big fans of trying to get the data first and putting aside those assumptions. For example if I wanted to build a new phone to compete with the iPhone I could dream up some new crazy design and make it bright green and think it’s going to sell really well and it may or it may not, or I can go out and I can do a survey of 5,000 people who might buy a new phone and see what they would like and then go build it. We strongly urge entrepreneurs to look towards doing surveys being data driven, instead of relying on their own assumptions.
Matthew: Okay great point. Steve Blank, a famous Stanford professor calls it getting out of the building. You know we’re all in our own heads. We think something is a good idea and then we talk to prospective customers and they say they don’t like it, but they do like this which is something you didn’t think of and you hear it ten times and you have this light bulb over your head and go oh my god I have to pivot to this because this is what they all want. Have you seen any pivots already possibly where the business idea has to be tweaked a little bit because it’s not really something that was optimal out of the gate but they’re pivoting to something that may be more optimal now?
Micah: Yeah so one of the companies that we have is called Highest Reward, and Scott Afable the CEO came in with the idea of taking Highest Reward in the direction of a human resources data play. So he was doing a survey of employers and employees to figure out human resources practices across the cannabis industry. Now this is a big business in sort of the normal industry space. Now let’s say auto manufacturing or consulting practices etc., but it’s really new in the cannabis industry. And Scott was running into quite a bit of resistance getting the data from employers and just reaching out to people and figuring out human resources practices. One of the things though that he found as he was trying to get this survey data was that a lot of the employers in particular needed help with human resources problems really in the human resources outsourcing field. So Scott pivoted from looking at his company as a pure data play to looking at his company as one division being a data play and the other division being an outsourced HR solution for cannabis industries.
Matthew: Great point. Excellent. That’s a pretty quick pivot. It was what the end of March that Canopy Boulder launched the first class and here we are in mid April. So that’s a pretty fast pivot. So that’s pretty cool.
Micah: Yeah and I think that the speed of the accelerator process is something that is really valuable for entrepreneurs to understand. Having started a few businesses of my own and been around a lot of people starting businesses, one of the biggest problems that I’ve seen is being very slow to bring your idea to market. And this happens a lot when you’re working alone or as a small team of two or three people. You just tend to work on it nights and weekends and a little bit here and there. And it will take you months and months to bring anything to market. In the accelerator world a day is a long time and we have teams that from Monday to Tuesday will execute on several tasks, maybe make a little bit of a pivot or an adjustment to their strategy and continue moving on.
Matthew: Now Micah as we close how can listeners learn more about Canopy Boulder and also apply to another class, the next class?
Micah: Yeah the application process is best started on our website www.canopyboulder.com where we have a little bit of information about the program and about the application process. I would encourage any applicant to go to our website, read some of the blog posts, check out the videos, see what we’re all about. Then they can go online and complete the application as well.
Matthew: Now is Canopy Boulder accepting new investors as well?
Micah: Yes we are. We’re actually just opening our fund raise for Canopy Boulder 2016 and also our second accelerator which will be opening in San Fransico in 2016 as well.
Matthew: Awesome. Well Micah thanks so much for being on CannaInsider today. We really appreciate it.
Micah: Thank you Matt.
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