Latest Interview (Click Here)
Most Recent Interviews
Michael Kadonoff is the Founder and CEO of Braingrid. Braingrid allows any non-technical person to hang little devices around your grow room and immediately start collecting data about your grow. Including temperature, humidity, CO2 and more. Learn how growers are harnessing this data to build the grow rooms of the future today.
– Michael’s background as an inventor and at GE
– What growers think they know about their garden is actually not wrong but incomplete
– How Braingrid’s Sentroller collects data and presents that data as insights
– Will this system increase your yield or your efficiency
– Preventing mold and equipment failure
– Creating redundancy in your grow
– Traceability and health compliance
– Michael’s favorite book and tool
One of the most helpful and powerful new tools in the cannabis cultivators toolbox is data. Data that can help growers understand all the variables of their grow at a glance so they can react, pivot, and plan their way to an abundant harvest. Here to tell us about the latest in the connected grow room is Michael Kadanoff of Braingrid. Michael, welcome to "CannaInsider."
Michael: Thank you so much, Matt, for having me. It's a pleasure to be here.
Matthew: Michael, give us a sense of geography. Where are you in the world today?
Michael: Braingrid is based in Toronto, Ontario, Canada.
Matthew: Okay. And what is Braingrid at a high level so people can understand?
Michael: Braingrid is a technology company. It would be considered an IoT company, I guess. But it spans vertically, everything from hardware, our own design hardware, produced hardware, all the way through to visualizations, and reports, and dashboard, the whole the whole kit caboodle.
Matthew: Okay. And can you share a little bit about your background, and journey, and how you came to start Braingrid?
Michael: Well, my background is, well, I'm truly an inventor by night and an engineer by day. My last life, I was a designer, a hardware designer for General Electric. I was responsible for designing things that kept the lights on on the energy grid, a fascinating role. And now, I'm into the IoT game with Braingrid. I started Braingrid because I realized that technology is hard. Getting data is hard. Understanding how to use that data and interpreting that data is hard. And at GE, we make great products, a very difficult to the commission and install. And I set out to answer the question of how can you know your role better? Because if you know it, you can actually affect it, you can control your destiny inside of it. You can reduce your cost. And we'll get into all that, of course.
Matthew: Sure. Well, tell us a little bit about your flagship product, the Sentroller. I mean, since we're in a audio medium here, maybe you could tell us a little bit about how big it is, what it does, and why it's important to have in the grow room?
Michael: Okay, sure. Well, it starts with a Sentroller. Although, that's not the only part of our product line of course. The Sentroller itself is a little white box as I tell my daughter that tells you if the plants are happy or sad. It's about the size of an iPad mini.
Michael: It's a little thicker. It's rounded in shape. You can visit it on our website. It's a pretty different looking device because it's meant to actually exist in a grow environment or outdoors. So it's pretty tough. But it doesn't look like your traditional box.
Michael: I'm a little biased but I think it looks great.
Matthew: Yeah, it's pretty sleek, okay. And so it's important to have in the grow room because at a high level, it gives you data on your plants?
Michael: It's meant to blend into the background and not just in the grow room. It can exist in any part of the facility. And commonly, we go to the drawing room or the vault. It can be placed outdoors, if need be, to capture other conditions like weather.
Matthew: Okay. I think it would be helpful for us to talk a little bit about maybe what a legacy grow room would look like, one that doesn't have all the bells and whistles, and technology, and the Internet of Things, and everything you do with Braingrid, and then contrast it to kind of a fully connected grow environment that has Braingrid. And you can kind of walk through the differences and the kind of the benefits, if that sounds good.
Michael: Sure. Sure, sure. So growers or growing facilities today are met with a myriad of ideas and opportunities to control and monitor the room. But traditionally, they're dealing with control and automation company. So that's the systems that are very heavy, very hard to install, large panels on walls, a few sensor points that require, again, a lot of commissioning and an installation effort from very skilled people. Well, think of electricians and technicians and that, you know, data acquisition people, building automation people.
So the end result here is that we have very expensive and pretty rigid system meant for controlling a building more than it is for monitoring a grow environment. So what that results in is that we have very expensive systems that offer very little data and requires that the grower, a person who's not necessarily an IT guru or a technology guru, to understand and interact with the system. And often, the system doesn't rely information outside of the building. So when everybody goes home for the weekend, you don't even know what's going on. So you'll basically see at a high level, you'll see a master guru running a, you know, 25,000-square foot facility being thrust into a campus of hundreds of thousands if not millions of square feet with their old SOPs, like manual processes and fixed growing recipes.
They were basing their whole life around anecdotal results and inconsistent outcomes. And they're not even considering energy yet. So all they have in their toolbox is usually one sensor, two sensors per room and rooms of thousands of square feet. So it's okay for today. And what investment in this market now wants is more scale, but the growers want easy to use systems, and no one really cares about efficiency. So that, you know, I don't know if you want me to get to the next step but what we really do here is comment on the three main things responsible for growing, okay?
Matthew: Yeah. Let's talk about that. What are the three main things?
Michael: You could group them inside of quantity, quality, or time. And I'll explain what each one of those means.
Michael: Quantity is just sheer number of grams or ounces or pounds, it doesn't really matter. You know, if you have more pounds, you have more product, you have more money. So that's obvious. But it's more than that. There is quality. So a lower yield in terms of THC or even CBD, even though you have lots of grams may not actually work. So you now actually have to get the yield as well as the number of grams. And then finally, assuming you have quantity and quality, what about time? If it takes you, you know, four months to put out a yield, which is obviously silly. That's not good either. So as an extreme storyline, you know, you can have lots of quantity in a short time. But you actually have very poor yield.
So we try to impact any one of those three metrics in a variety of ways. What we really do is just make it easy to buy, easy to install, and easy to use to get data that affects any one of those three things. So it's now a reality to put in hundreds or even thousands of measured points in a grow environment, all the way through the facility to understand microclimates, to use us like an early warning system or scout to protect and act against bad things like mold or equipment failure before they happen. We can validate growing recipes, provide redundant real-time measurements of existing systems when they're in place because they usually are.
We can tie in the supply chain into the growing practice and really what that means is identify best and worst in class not just in the rooms, not just the facility but across a country or even a state or province. And then finally, I think it's a little not exciting is traceability and health compliance. We can bring a level of awareness to auditors and the governments, and the regulators that is so needed for this industry to take off properly to provide that legitimacy. So that was a long-winded answer.
Matthew: No, no, that's good. Tell us a little bit about what variables are measured in the grow room in terms of, you know, humidity, and temperature, and all those different things?
Michael: Well, so there are a variety of things to measure. And let's just establish one thing. Braingrid is not a sensor company. We're a data acquisition analytics knowledge company, really. Of course, we have to collect the data to deliver that but the straight answer is the typical default solution is temperature, relative humidity, and carbon dioxide in the air. And that's an in grow environment. It can get more advanced. You can have air flow, oxygen, even trace gases being monitored in the air quality, again, other zones of interest or things like energy quality like consumption or equipment use, nutrient quality, electrical conductivity or EC, volumetric water content, DH, total dissolved solids, nitrogen, phosphorus, potassium, level flow. The list goes on. And frankly, there are thousands and thousands of opportunities to measure anywhere. But the defaults, the go-to solutions because they work in so many possible ways is temp humidity and CO2 usually.
Matthew: Okay. So at the center of this Braingrid is the Sentroller or is that like the...it's the brain that takes all the data from the sensors that can be third-party, and it collects them and puts them into actionable data so you could have insights, and you could take action, and learn about what's going on your grow which is a...is that a good summation?
Michael: It is. And I'll add only just one more thing that makes it really different. And remember, the Sentroller is just the tip of the iceberg.
Michael: The special sauce of our hardware product, the Sentroller, is the fact that anybody can install it. It requires little to no maintenance, it's online in minutes, truly minutes. And it requires no IT support or Wi-Fi passwords or anything really. It usually just sticks to the wall magnetically and it's up. So it's like instant awareness, instant bionic eyes right there for the grower.
Matthew: Okay. So it skips Wi-Fi it goes over some sort of other wireless medium?
Michael: Yes, that's right. Locally, we use a very long range transceiver. It's based on a Lora, L-O-R-A. And that whole infrastructure relays to a cellular gateway, which looks exactly like a Sentroller, again, which we call the Synapse. That takes the data from the facility to our, you know, through very, very rigorous security practices to our stack, or network stack, and our data leak for further analysis, analytics, representation, alarming, you name it.
Matthew: Okay. So you have the Sentroller installed. It's wireless, it just sticks to the wall, and then the Synapse is the cellular gateway. And so let's just kind of walk through, let's say I'm a grower or a business owner, I've just implemented some Braingrid solutions. I was kind of just doing everything by kind of a stare and compare before, and just kind of anecdotal evidence. And now, install everything that's suggested, do it myself. Do you have an app or a web dashboard? What's next?
Michael: Of course, it's a web dashboard that accessible anywhere in the world, allows you to, at a very high level, see the facility for its status because no news is good news, and a lot of the times you don't need to stare at a graph. You just need to know if everything's okay based on the alarms the grower or cultivator sets out. So our dashboards are there for them to log into anywhere in the world, and it's mobile-friendly, and it just gives you straightforward answers about what's going on, red or green, good or bad.
What we find, that's really interesting, is because we can measure so many things with a granularity that is unprecedented, we find that the growers have this sense of disbelief, you know, especially after they spent about a million bucks on a grow system or from building automation system, they simply don't believe that microclimates can exist in a premier growing environment. So the absolute disbelief in their eyes is great to see, but it's telltale that there's so much room for the understanding of microclimates, and the nuances of a room, and degradation of equipment. So it's really not about the data, it's about how easy it is to get the data. That's clearly the statement of the day.
Matthew: And is there a common theme you see for someone that's looking at the dashboard for the first time, or they say, "Wow, you know, just for my first visit, this is the most helpful thing. You know, everything is helpful here, but right away, this is helpful."
Michael: Right away, the first thing they notice or tell us is, "Wow, this is so easy. I can understand it so much easier. It's all here," are the statements we hear time and time again.
Michael: Nobody really wants another engineering-focused engineered product for only engineers. This is a product for growers. It gives them eyes, new eyes. Doesn't tell them how to do their job, it doesn't even replace them. That's not the point. It's enabling. That's the message I want to leave you with.
Matthew: Okay, that makes sense. So if I'm staring over your shoulder as you walk me through the dashboard, what does it look like? What am I looking at?
Michael: When you first logged in, you're met with a heads-up display of the devices and their zones as a...just a heads-up. So this is what's going on. And you'll see alarms above the zones if there are any, which you can click on and dive deep on. They can pull up charts, graphs, reports. You can also go into a more advanced alarm view where you can start sliding things around to tune in your critical and your warning levels for any of the metrics we collect for humidity, temperature, CO2.
There are kind of heads-up warnings. So one of the things is kind of cool that the growers like is a distribution of humidity for instance. It's like a pie chart, and it tells you what was too high, what was okay, and what was not like, you know, warning, critical, and okay, and the ratios of that. That's kind of a really great way to tell if your HVAC systems is fighting or it's well-controlled. So it's really about turning the data into insights or into knowledge really quickly, taking a sip from Niagara Falls is the analogy I like to use. And the dashboard just facilitates that. It's about getting right now what's going on. And if there are any issues, the grower or the finance body can just dive in and understand what's going on. The last part of the dashboard I should just share is reporting.
Michael: If an auditor shows up, you need to be able to demonstrate, for instance, the last six months of the environment, like, can you split? You can't pull out filing cabinets and paper records, it has to be demonstrated immediately.
Michael: So with one-click, we can deliver that through the dashboard as well.
Matthew: Okay. And give us a sense of how many Sentrollers and what's needed for, all let's say an average grow?
Michael: Well, okay. Sentrollers are capable of measuring multiple points. So every grower environment, every facility is very different not just because of that...Every facility is dependent on the growing situation, their municipal water supply. I'll cut to the chase and just say, we usually see about 10 cents a square foot or about 2 cents a gram, and we're subscription model. So they don't really pay for the product, the Sentroller, they pay for the data, which is really great because, again, it's easy, you know? If ever there's an equipment problem where somebody smashes one of our devices or lands in a puddle or whatever. It's just another replacement, it's not a big deal.
Matthew: Okay. That brings my next question. This gives an idea of cost here. So, you know, growers and business owners can understand, you know, what it would take to invest in this and to get started.
Michael: Typically because the sensors are something we have to buy as well, there's a small upfront fee to match the sensing requirements that they have. And then after that, it's about $30 a point per month indefinitely. However, because there's a sense of disbelief about these prices, we're doing a trial program with Ample Organics, our partner right, now to do two basic air quality Sentrollers for two months and gets about a cycle to really help you understand what's going on your grow without any risk. And that delivers temperature, humidity, and CO2.
Matthew: So, you know, we talked a little bit about microclimates, and there's hot spots and stuff and grows, and if you look at like an infrared overlays, you can see like, "Wow, this this spot shouldn't be hot but it is." I mean, it looks like there's air flow, and, you know, the lights are placed evenly. But if this is bright red right here for some reason and then...well, why do you think that happens?
Michael: Oh man, do you have a minute?
Matthew: Yeah, yeah, let's hear it.
Michael: Oh, man. Microclimates are a real thing. Namely, I think the first reason that it happen is because the room is a dynamic thing now. It's literally a biological entity. Plants grow, they start out as little things in the veg stage just after they've been cloned or, you know, when they're babies, effectively. But then they get much larger. And then the airflow conditions change because their stores are different, the HVAC is loaded heavier because the transpiration rate is higher. The amount of CO2 changes because they need to consume more. The amount of water then changes, the nutrients change. Everything just a moving target. There are thousands upon thousands of variables. And I'm not excluding the people that enter the room and exit the room.
So microclimates and the results of microclimates are a function of how the ecosystem there changes dominantly with the plants as they grow. I've heard some crazy numbers where there are liters per plant per day being transpired into the air. An HVAC system has to be able to deal with that at times however many thousand plants there are.
Matthew: Yeah, you can feel for sure in there when you go into a grow room.
Michael: And we can see the...sorry, we could see the signatures of that when an HVAC system shows signs of stress where it can...it's got the set point and the building system is doing its job, but it's struggling to keep that humidity in check or that temperature in check because as there's thousand HBS lights in a room or something like that, and there's new plants or, you know, they spray the room down with a fungicide. It creates huge spikes to the plant, and that can actually can really affect yield. I've heard some interesting outcomes from keeping the room consistent. Our own master grower suggests that, you know, it's very important to keep room consistent.
So microclimates are kind of the evil enemy of these growers. And they can lead to crop ending outbreaks and mold. They can lead to burnt sections of the room. They can lead to disposal and cleanup efforts. It's not fun. And it's important to catch it before it happens. So really, we're dealing with is, and I'll get to what we're gonna deliver soon. I'll leave it there.
Matthew: Yeah. Mold, fungus, insects, these are all problems. And they do happen. I've seen them myself and it's a tragedy. So let's say we're like a few weeks in or a month into to some clones, and we can see our HVAC system, we're saying, "Hey, this is looking like it's already starting to struggle as these plants get even larger, we're gonna have a breaking point here where it's not gonna be able to suck the temperature humidity out at the rate we need." How would this system recognize that the HVAC system is struggling or perhaps a dehumidifier or something like that?
Michael: It's when the measured point, let's call it humidity, goes above the threshold, that the growers establishes for a period of time that is not acceptable. That's a fancy way of saying it alarms.
Michael: It just alarms. And it's, again, green and red, good and bad. More advanced things in our roadmap are to understand trends, deeper trends, deeper learning through watching thousands of cycles and hundreds of HVAC systems to see that, yeah, this thing will fail in two weeks, better call your HVAC company and here's the number. You know, that's the kind of knowledge and service we wanna deliver to our customers. We're not there exactly yet, but we've already uncovered some really alarming things that we've saved a few rooms on already, I'd say. I mean, avoiding our crop failures, $800,000 in a small room, that's just the product, you know?
Michael: The size of the product is definitely there.
Matthew: Yeah. Yeah, this is a good business to be in here because, you know, all you have to ask is like how much can you afford for your crop to fail? And everybody's gonna say, "Oh, I can't." So there needs to be some sort of measure. And now, what about in terms of alerts, like, if I see that humidity or temperature in the middle of the night has crossed a threshold, can you get alerted by about that or how does that work?
Michael: Yes. Of course, you can get alerted not just you, anybody you set to be alerted and based on the criticality of it. So there are warning levels and then there are critical levels. And clearly, it goes up the totem pole when it gets too critical. The alerts come in the form through our dashboard, of course, and through emails, text alerts are also a possibility if a customer requests it. So the whole message here is awareness, catching it before things go off the rails is really...an ounce of prevention is worth a pound of cure is the analogy.
Matthew: So we've heard about the Internet of Things, is this considered the Internet of Things. I know that's kind of a nebulous concept to some extents. I mean can we call it that?
Michael: Yeah, you can call with that. It's absolutely a wireless sensor note in the most basic version of life. However, I think Braingrid is really honored IoT, in the fundamentals of IOT, because it is low cost which means it's for anyone. And it's many of them. We can literally go to any plant, multiple points per plant or any part of the facility and measure things that matter to the bottom line of the business. It's extremely low-power, which means we can go to the table and we don't need a plug, right? That has to happen. Doesn't need batteries. Doesn't need anything. And frankly, it should be forgotten, it should just disappear into the background and just be that ever watching on to protect the investors, to protect the growers, to increase the peace of mind.
And that my favorite...And this is where the patent lies inside of the Sentroller, and not to say that that's the only area of our innovation, is that it harvests energy, it's always available. It never ever stops watching stuff. And that's critical for such a valuable product that is creating jobs and using a ton of energy. And is really bringing in a new market that hasn't been seen a new capitalist market that hasn't been seen for many, many years now, so it's necessary.
Matthew: Yeah. It reminds me of this quote I heard that said, "AI won't replace humans but humans using AI will replace humans that don't use it."
Matthew: So it's like once you get these tools that leverage technology, and a connectivity, and can do things that's just like it's a super tool in your tool belt. So what kind of bump in yield can growers expect and the business owners expect? Because people wear different hats, sometimes they're growers, sometimes they're the business owner and they look at this from different perspectives. And so if I'm a business owner, I'm saying, "Well, I do want to avoid the worst case scenario and I wanna get alerted if temperature, you know, humidity gets too high. That's a huge, you know, that would be kind of the stick." What's the carrot [SP] in terms of, you know, increased yield or healthier plants?
Michael: Okay. So what you gotta know about Braingrid is that we're not one of those companies that says, "Up to X percent is coming out of us," for sure, you know up to. That's not a statement that we wanna make or we will make in the immediate sense. Of course, we're working towards it with Ample, our partner again, our own master cultivator that we've retained, and the growers we service right now to actually deliver even 1% yield results in an ROI that basically pays for our product for a number of years in fact. The biggest bump comes from not really yield but efficiency.
So what we can say right now is $10,000 in energy savings is the same thing as one kilogram of high-quality yield. Predictability and finance in a, you know, financial context of plus or minus 15% on your badges to plus or minus 1%, like, that's where we wanna go. We wanna be able to predict. Again, crop failure, if you, you know, yield a 0, well, that's minus 100%. You know, that's something we have to be very, very vigilant to and watch out for. So, you know, catching and heating it...like, here's a good example, catching, heating, and cooling at the same time, it's like thousands of dollars per day, thousands. That happens. Sometimes things go haywire, we can catch them. And let's not forget that if you pump too much CO2 in a room, you can kill people, you can literally kill people. It could be a liability issue. And that will shut down a business. Who cares about yield when your business cannot run?
Michael: So these are really important things. And there's a huge list reducing touch time, manual watering is a good example, contamination risks from people entering and exiting. You just wanna eliminate all that. And my favorite is legitimizing and demonstrating best practices through traceability to the governments, to the regulatory bodies, to the people, the population that have still think this industry is taboo. I'm an engineer. I'm a data junkie. I feel it's a shame to demonize this industry with empirical results, you know, I really think bringing some science, some rigor, some stats will really reinforce the value of bringing medicine, good medicine, and good products to this population. I think it's fantastic stuff that what cannabis is doing.
Matthew: So when you look out in the horizon, what kind of trends do you see driving the grow room of the future three to five years out? What does it look like? How is it different? How has it evolved? We won't hold you to it, but where do you think it's going?
Michael: You can hold me do it. I haven't folded.
Matthew: I'm looking at calendar not right now, hold Michael. I'll tweet this out in three to five years. Was Michael right?
Michael: Do you know my wife? Yeah, she holds me to account on everything. So I think the easiest way to answer this question is look at the other industries where there's agriculture, where there isn't high value in the crop or at least not as high. You know, look at tomatoes, that's not even high value crop, it's like $70 and 50 cents a year or you know cannabis is $750 or I think that's that might even be old now. So what I think will happen is you'll see a few dominant LPs, federal conglomerate of probably acquired facilities and campuses that look kind of like these coops, these farms, these large-scale production facilities with very few people in them, lots of square feet, but very few people, all automated, all robotic. And the people really only exist to maintain the equipment not really there to cultivate the plants.
And you'll see all this data that we provide and other companies provide, for sure, being piped into their head office which isn't the facility, somewhere out there through, you know, supply chain metrics and ERP, and business intelligence, you know, as a commentary. And it'll just be bubbled up into one succinct clean message that is this business is good or this business needs something. That's the future to me. It's making machines do what people don't want to is another way of saying it. Our devices are there because it's a mundane task to collect data. It's a mundane task to analyze, it's a mundane...or owners task to report on it. So let computers do what they do best and enable the humans to understand, to gain knowledge to ensure their future through this intelligence. I hope that answered it. I think that's how it's gonna look.
Matthew: Well, tell us a little bit about where you are the capital raising process of the Braingrid.
Michael: So we completed an arm's length transaction in 2016 and for about a half-a-million dollars. But more recently, about $2.6 million was raised, again, with an arm's length transaction in February of 2018. It's been really great. And I don't know if you've heard, we made a public announcement where we're going to be doing a reverse takeover in September of this year. And we're presently in a raise for about $2 million to $3 million. And it's apparently going really well, subscription-wise. So we're very happy with this. The message behind all this money is to really enable us to pick our strategic partners very carefully, be able to merge or acquire, wherever necessary, and to exercise our ability to market our business within the states throughout the rest of this year and into next year because that's where there's so much demand for a product like ours to regulate, let's call it like it is, quite a fragmented market in the States.
Matthew: Yes. Yes, it is. That's a nice way of saying it. Now, if there's investors that are accredited that want to, you know, participate or invest with you, are you looking for accredited investors, or is that ship sailed, or what can you say?
Michael: Yeah, it's never too late. I think the subscription is pretty good right now, but accredited investors can speak with EMD in Montreal. It's run by fellows named Perry and John. And I can connect anybody who's interested. And EMD is not...They are exempt market dealers, but it's just a coincidence that their name is also EMD. Yeah.
Matthew: Okay. Well, Michael, I 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 has had a big impact on your life or your way of thinking that you'd like to share?
Michael: Yeah, yeah. It's actually a short story by Isaac Asimov.
Michael: He's one of my favorite writers because he's such a dreamer. The name of the story is "The Last Question." It actually discusses how perhaps Google will look in a number of years. And the reason I love that story is so much is because at some point, if you zoom out far enough and you ask the right questions you understand enough, everything just gets really simple and the knowledge becomes your existence. It's a little mind-bending, but if you read the story, it's only maybe 15 or 20 pages. But it's so powerful as a storyline about what it is to discuss our existence in this universe. How and what entropy means to us? Whether the stars will run out, whether we'll run out of energy, because my personal passion is energy. I think that's one of the issues we face as a society now is how we fight, and pillage, and grab at all the resources we can when really we have more than enough abundance here for everybody. So the Asimov story really discusses how it's all very renewable and flat, and we can all play nicely in the sandbox. That makes any sense.
Matthew: Okay, "The Last Question" by Isaac Asimov, is that what it is?
Michael: Yeah, that's right.
Matthew: That's cool. Is there a tool web-based or, otherwise, you consider vital to the productivity of your company or yourself individually apart from the Sentroller?
Michael: Well, I assume you're talking about a technology tool.
Matthew: Sure, well, any kind of tool. I mean, it could be the wheel. Unicycle.
Michael: One of the tools that I really like using is something that helps me quiet my mind in such a noisy world. And I don't mean auditory, I mean there's just so much information coming at me. It's kind of the name of our business, right? So a meditation tool. It's a headband called a muse headset.
Matthew: I've seen pictures of this, but I never know anybody to use it. Tell us what it's about.
Michael: Well of course, being the data junkie I am, it measures a variety of signals coming from your head, frankly, alpha, gamma, beta, all these waves. Even knows if you're blinking or not, it's pretty crazy. And really, it's just a tool to help you practice mindful meditation, get really...not calm because there's nothing to achieve or attain when you're meditating, but just help you and coach you along. It gives you auditory feedback about what's happening right now in your head even though you may not be aware of it. So when your mind drifts off or you're kind of nervous or anxious, or thinking about anything, it helps remind you gently with auditory feedback in the form of a storm. You can actually hear storm or some sort of noise. And it helps you recenter, is a loose way of putting it. And it's cool because it's got a ton of data coming out of it. And it's also cool because it helps keep people sane and level. And that's great.
Matthew: And so since there's feedback loops in there, have you noticed yourself getting better? And how long did that take, if so?
Michael: It was immediate, but just like lifting weights, it takes time to get that mind muscle to keep the duration of your focus longer. It's not about whether you can or can't, it's how many recoveries, they call it. How can you recover to a quiet state? And how long can you keep it for? That's the game, if you will.
Matthew: I would think this would be a super popular stocking stuffer come the holidays. That's like, here, yeah, everybody will give this to their spouse, like, you could even be kinder gentler person if you just use this muse.
Michael: Yeah, yeah, yeah. I think it's a ways off yet because it seems almost too impossible that it's measuring your brainwaves, you know? But it really works.
Matthew: Well, Michael, as we close, can you tell listeners how to find your website and connect with you online? And if looking for accredited investors how they can connect with you as well?
Michael: For sure. Let's start with the website, braingrid.io. So that's brain, like the one on your head, grid, grid.oi. And anybody who's interested in speaking with me about investment opportunities, or integration opportunities, or partnerships, whatever. My name is firstname.lastname@example.org.
Matthew: Well, Michael, thanks so much for coming on the show today and telling us about the connected grow room and painting a picture of what it looks like in the future. We really appreciate it. And good luck with everything you're doing with Braingrid.
Michael: Appreciate it, Matt. Really enjoyed being with you.
Because vape pens are so convenient and discreet consumers love them, but cannabis and CBD companies are struggling to keep up with demand for vape pens. To help businesses streamline their workflow and eliminate bottlenecks a resourceful entrepreneur created a machine that can fill 100 vape pen cartridges in under 1 minute.
– Transitioning from a traditional degree in finance and investments
– How vape pen manufacturers are struggling with the wave of demand
– The specifics of how The Shark filling machine works
– Automating workflow after the vape pen cartridges are filled
– A look ahead at robotics and automation
– Mark’s days a face-painting Boston Red Sox fan
– A book that has had a big impact on his life
As was the case in the great gold rush to the American West, it was the merchants that sold the picks and shovels to prospectors that often made the most profit. Today, I'm going to highlight a pick and shovel company called Convectium that has developed a machine that automates the process of filling cannabis or hemp oil vape pen cartridges, Mark Adams, the CEO of Convectium, and I'm pleased to welcome to the show today. Mark, welcome to Cannainsider.
Mark: Thank you very much for having me. We're excited about being here.
Matthew: Give us a sense of geography. Where are you in the world today?
Mark: So our physical offices are in Rancho Santa Monica, California, which is in Orange County, about an hour south of Los Angeles LAX. And we have other offices. We have sales reps in all the legalized states today, and we also have offices. We have three offices in China where some of our production is done in Shenzhen, China. So we're pretty spread throughout the US and in China right now.
Matthew: Shenzhen has undergone a tremendous transformation in the last decade or two. Have you witnessed some of that?
Mark: Yeah, it's amazing to me. We started going over there. I joined the company about a little over a year and three months ago. And my first trip over there, it's developed so much in only a year. And what they do there is they actually build a city and then move the people in after. So there's a whole city built with large buildings and hotels, everything and they start to migrate the city. And so you'll see that city blossom more and more over the next three to four years.
Matthew: That's an interesting way of doing it.
Matthew: Tell us, what is Convectium at a high level?
Mark: So at a high level, we're a workflow automation company in the CBD hemp oil, and obviously the main part of it is a marijuana space. What we do is we automate solutions and workflow, so people can actually use machines to do things that they've been doing by hand today. And we have various products that allow you to do that. We also now just entered the vape pen industry with our own customized pen that I'll talk about a little further into the interview.
Matthew: Okay. Can you tell us a little bit about your background and journey and the impetus to start Convectium?
Mark: Sure. I kind of go through these two ways. I joined a year and three months ago. I'll walk through how Danny started the company, and then I'll talk a little bit about my background.
So Danny started the company back in 2013, mostly as a pen company. He was making customized pens at a company had the nickname of Blackout X. And what he found was after about a year of doing this, the biggest problem people had was filling these things. It wasn't the fact that there were many competitors out there. But he found that if he could find a filling machine that could do many of these at a time and automate the back end of the industry that was a way to go. Danny has a engineering background and also in technology companies, working in technology companies. So he had a good background to start this and developed our first machine in 2015. And that's kind of how we came to where we are.
I joined last year, and my basic background is I'm more of a finance guy. I'm from Boston Mass. I moved out here. And my background was...in technology I worked for Delly MC [SP] for a while, for five years actually. I was in the hedge fund space and the investment management space. I have a Harvard MBA. So I was a traditional finance guy that had some technology background that really understood what needs to be done in this industry and found that Danny had a great solution and a great way to get involved in the industry, and really take advantage of what we knew about technology.
Matthew: So you went to Harvard in the hedge fund space, more traditional finance. And what is it about the cannabis space that you find exciting or different or how would you compare and contrast it?
Mark: So I think the issues you have and, you know, you're either right or wrong when you picking a stock. Either it goes up or down. So there's a much more leeway here in terms of developing customized solutions and doing other things to try to automate the backend of the business for folks.
The other part of the industry, you know, when you're managing money, it's more about you and understanding stocks and how they're gonna move up and down. This industry is more...a lot about people and the interesting folks that you have as customers, a lot of customers with different wants, needs, and other things. So, you know, this space is quite different. But my technology background, from before I was in the hedge fund industry, really perked my interests in terms of getting into this industry.
Matthew: How is it working with an actual physical product or automation products that create a process for your customers? Is a different thing when you're having to iterate physical product. How do you feel about it?
Mark: Yeah. So I think...you want to get a win in the investment industry, say you hold a stock, a big position and now you're gonna acquire or something great happens then we get a big increase in the stock price. That's terrific and it's kind of a one-time feeling. But it's...I think it's much more enjoyable to have a company come in that's producing a lot of oil, their own capital putting into this, and really having trouble trying to automate the backend, and just seeing their happiness and what they're seeing in terms of our products and what we can help them out with. And then watching that eventually get to the dispensary shelves. Watching the whole backend automation process is a little bit more rewarding in terms of putting the time and effort in and just watching the stock go up. Although the money...the capital is probably better in the investment business. It's a little bit more rewarding on the whole side of it.
Matthew: Okay. And can you tell us the spectrum of types of companies that are purchasing your filling and capping systems? Is it all the CBD pen companies, or do you have the THC for dispensaries and what kind of customers do you have?
Mark: Yeah. So it's kind of state-by-state in terms of what you have. We have actual growers who are buying our products. We have pro-soil producers that are buying our products. We have some distributors that are buying our products and dispensaries. So, it depends on what the state laws are in terms of what the integrated solution has to be. But we have a plethora of customers. But our traditional customer is a grower who will do some seed to sale the whole way through. And, again, we're from California, so I'd say 70 to 75% of our customers are from California. But as everybody knows, there's more states coming on and we're adapting our business model, different states that are out there today.
Matthew: Okay. And since...I mean, this is an audio podcast, so it's hard to visualize what your filling machines look like. But if I was looking over your shoulder and you're explaining to me what this machine is, how would you describe it?
Mark: So what you do is...how the machine works is there's 100 pins and a piston that basically drops down into an oil base and it holds many milliliters of cannabis oil. And, basically, there's a dual heating system where the needles in that piece of the equipment is heated, and also the oil pan or bin is heated as well up to about 120 degrees Celsius. So you can get very viscous oil in there. It basically drops down, comes back up, and sits for about maybe five seconds, then migrates over to where the cartridges are.
They can either have posts on them or no posts or they could be disposables. They could actually be tincture bottles. We can fill anything. We can customize the machines to do anything. And then it drops it down in a very...it's all very heated obviously. Drops it down into the device that we're gonna fill. The Pistons drop and set in and you fill up your device. And from the soup to nuts on the filling side, you probably have anywhere between 20 and 40 seconds, average about 30 seconds, to drop down, extract, move over, and fill 100 cartridges at a time.
Matthew: Okay. Wow. And so how long did it take? You said the gentleman that created this was Danny? And how long did it take him to get this thing to a point where it was working for him?
Mark: Yeah, you know, so Danny started selling these in 2015. And the issue that he had to be honest, and this is coming from a technology company, is service and support is as important as the technology itself. You learn more about your machines when they're in the field and you're also servicing them. Danny would...back in that day was a one-man band. So the machine is now on a 7.5 version iteration, and we have great success now. There were successful with some older machines and it was hard to do it. So we now have a full staff to help service these machines in the field. That makes a big, big difference. And the feedback that we have today has been terrific over the last nine months.
So we really hit the inflection point of our filling machines really serving...And we have some new R&D things going on with that new machine, which we hope to...We have an e-shark coming out in the third quarter, and we hopefully have what we call...our main part is called the 710shark filling machine by the way. And we have...we're all aquatic nature by our product names here, and we have what's called the whale, which is gonna be a fully automated system filling, capping, and packaging hopefully available by end of the year into Q1 next year. So we have a lot of R&D going on to further make our products even better and serve the industry that is growing so fast.
Matthew: And where do you see this kind of fitting in in the landscape of different ways to fill with oil, to fill cartridges, because, I mean, it's just such a big part of the industry now. People want vape pens. They're so convenient. They're so discreet. It's not going away and it's very profitable because, you know, if you can automate this, you know, this is a very tiny, tiny little cartridge and you're selling them for a good chunk. So there is good dynamics on both end for the consumer and the business owners. And I'm trying to understand what the landscape looks like, and do you see a divergence in how the delivery mechanisms for oil are kind of manifesting?
Mark: So I think that the big thing we're seeing now, and if you've seen it with jewel...jewel, and packs, they're kind of the pod business. And that's gonna really pick up some speed now. And we think that that's gonna...we're adapting our machines now. The trick to fill the pod is even harder than to do the cartridges. But, you know, we see in our customer base today, our potential customer base, probably 80% plus don't have a filling solution, and they're having people do it by syringe and by hand. So they're filling them by syringes, which isn't nearly as exact as using an automated machine.
And also they're capping it by hand, which also causes other problems. We can probably increase the spillage and other things by about 42% from our testing of using our automated machines versus doing it by hand. So we're trying to basically create new machines to, as I said, work with the packs [SP] type pod companies, and also increase the speed and lots of oil that's gonna be out there. But we see this growing further and further. And as new states come on, we go to shows. We just did a show last week in Detroit, Michigan, which isn't...the machine is not quite legal yet.
We had one in New York which is illegal. So, they look at our machines and they say, "Wow, this is great, but we probably are only gonna sell 50 to 100 of these a day." And we just sit back and say, "We're from California. Just wait. Wait a year or two and you'll understand what the demand is gonna be." So we see as it goes on state by state a lot of opportunity. But we wanna teach people early, "Here's the benefit for using these machines and why it's so important."
Matthew: And so if I have a vape cartridge I need to fill, the oil I put into this it might be different from the next guy, is that where the heating element comes in to try to get this to a uniform viscosity? I mean, is there any difficulty in terms of one company's oil is thicker than the next or is more viscous in terms of how the machine operates? Or how do you get it to a point where you make sure the customer can feel confident that their oil will be able to work in this machine? Is there any questions or on that?
Mark: Yeah. So we have a cleaning element. And our new machines have an automated cleaning thing. So if you go from one oil to another, the last thing we wanna do is have someone mix oils. It's like any their product in the world. If you use the same machine to do one type of milk, and you use it for another type of milk, 2% nonfat versus something else. So we wanna make sure that our elements, our heating elements, are completely clean. We have ways that we have our customers...we teach them how to clean the machines between fills.
So our goal is, you know, make sure that it takes about maybe three minutes in between if you're gonna go from one viscosity to another in terms of...or one type of...We have a company...a customer called Flavor X that has a bunch of different machines and different flavors they're doing. They don't wanna mix their strawberry versus their blueberry versus their other products. So they'll buy multiple machines. They could do it on one, but they just found it easy to do it by separate machines. So different ways to skin the cat. But our cleaning solution, our cleaning system works great. And our new e-shark, that I talked about coming out, has an automated cleaning system that basically you just press a button, it's all clean, and it takes about three minutes to do. So, we're very aware of not going to mix other people's oils.
The other question you have on viscosity. Obviously, we have tested in all our machines that are probably 95% plus that are...it's more than honey how thick it is. And we understand...we actually have...recommend having a heat gun to get it into the trades. But our machines can heat it up and work tremendously well. The problem we have is getting it from the actual oil bin, it's like a brick, to heat it enough to make it viscous enough so it gets into the oil bin. And we have different ways to be able to heat that and preheat as well. So those are things that we're working on to make sure that we can basically fill up any thick distillate in the country today.
Matthew: Okay. So let's talk about what happens downstream in this automation after the cartridge is full. Can you tell us about the capping system?
Mark: Yeah, sure. So we just developed, and we're releasing this month, our new capping machine. It's called "The Captain", again, an aquatic term. And what we can do is it's basically our proprietary cartridge, which again is called "The Cove [SP]", which is a top airflow cartridge and it's very unique to what we're doing. So we basically can cap ours. We have a more of a press-on snapping cap with top airflow. And I'll explain both reasons why we designed it this way, and Danny did a great job doing this as well. So we traditionally...we tried doing the vape cartridge business last year when I just got in here. And we found out between 25 and 30% of the carts coming out of China were leaking through the air holes in the bottom of the cartridge. And if you're spending all this time growing, cultivating, extracting, doing depesticiding and everything else, and you have a $2.00 cartridge that's leaking, you're not too happy.
So we basically left the cartridge business and said, "You know what, let's develop our own proprietary cartridge." Danny took about four to five months to do this and did a great job. So we have a top airflow cartridge that really can't leak. It doesn't leak. It can't leak through the bottom. And the way we also design it, which is a snapping. We have an eight-ton capping press system that basically once you fill it up, it marries the top of the cartridge, which is the mouthpiece and the stem, with the bottom piece, which is the cylinder to hold the oil, and an eight-ton press presses it in, and in about 10 seconds your carts are now filled and capped. So with under...so, we'll give it under a minute that you can have this whole thing done between filling and capping 100 cartridges versus...we think it's a 60 times output improvement by doing it by hand. We've tested it many times, and that's what we think we can get. So that's where the new cold carts meets the new capping machine. Again, it's the captain and the cold carts.
Matthew: Okay. So now we've got the cartridge filled and capped, any plans to further automate the downstream processes?
Mark: Yeah. So today we sell a blister pack machine that can do...you can do either 2, 4, or 16 at a time. Basically, we can design the surrounding around the blister pack that usually comes with the cartridge, potentially a battery, and maybe a charger, whatever you wanna have. So our customers do this. They come in and work with our web content people, and design how they want to get this to the shelf of the dispensary. We're also working on a box packaging product. We actually have it with a third party. We gonna have our own soon as well.
So today we're doing blister packs and some type of boxing, and we'll have more packaging on the backside. We also plan to partner with some of the larger packaging companies out there. We're right down the street from Kush Bottles and some other folks that we're working on doing that. But our focus over the last 12 months has been perfecting the filling machine, getting the capping machine going, getting the cartridge going. We're gonna be kind of fully done with that this month, and then we're gonna look more in the backend packaging. So it's kind of a...we wanna make sure our products are all quality, we know how they work, customers are happy, then we're gonna move more into the package side.
Matthew: Okay. Now with all this talk in the news and in media about robotics and AI and how they're are coming for all the jobs and automation is gonna happen. And it is already happening. You can see these robots making burgers and stuff now. It's...there's...If you look in some modern automobile factories, everything happens in the dark because there's no humans in there. So the robots don't need light. So it's pretty crazy looking in and it's a dark room. So how do you see robotics impacting this industry when you look down the road?
Mark: Obviously, I think it'll have a big part. The big thing is it's still...the big boys who are robotics now are mostly publicly traded companies and they, either through their shareholders or through the SCC or other things, can't really get involved in this industry yet. It depends. Everybody has different opinions if this is all gonna became federal legal. If it does, what the timing is. So, eventually, you'll see more and more robotics come in. But I think, for today, we're working on developing solutions that are impacting the market today and allow our customers to get the best results they can possibly have. I think, like, in another industry robotics will be more important.
But in this industry as well you have different viscosities, different things of care that you need to do. You kind of equate it to the wine industry. You still need a big human element in terms of testing, tasting, and making sure that things are done the right way. I think it's very similar to most of the cannabis industry. So I think it's gonna be a long way until robotics takes over, and you'll still gonna need a human element in this whole process.
Matthew: We talked a little bit about Shenzhen and their prowess in manufacturing. Do you see more manufacturing coming back over to North America and maybe some more expertise kind of boomeranging finally back over here as China is really not a low-cost geography anymore?
Mark: Yeah. I think you'll see a lot going back. Actually, our new Captain, which is a capping machine, has been produced in the US and manufactured here. We'll do a new filling machine. We're weighing the opportunity in the US. So based on two reasons, they can...our costs here have become more comparable with the Chinese costs. The quality if they're near you, you can monitor them rather than having factories in China. You have the language issues. You have quality delivery issues. So we're trying to do more, more coming stateside from China.
The cartridges probably will remain there for a while because just the human capacity to make these and the cost savings. That's probably not gonna change for a while. But we're trying to bring more and more back to The States where we'll hopefully have, again, where our cart machines all US. Our filling machines will now possibly be in the US. And the other piece is Mr. Trump has the thing going on with China right now where there's levies and taxes and other things going on. So we don't wanna bring our costs up to our customers because we have a 25 to 30% increase from China from a US-China trade war. So we're trying to, basically, hedge that and we're spending a lot of time getting our production based in the US.
Matthew: And where are you in the capital raising process?
Mark: So Danny, who founded the company, had done a couple of rounds to get us off the ground and really get him really rolling on this process. And last year we did a convertible note for about $1.75 million that closed in December. We had our first institutional money come in in March, end of March of this year. And so we have...we've raised, in those two rounds, $3.25 million. And we're actively...probably we're good for at least through the end of the year and to next year where we'll explore and see what we have to do. [inaudible 00:23:49] another round or what that might look like.
Matthew: Okay. And are you open to investors and listeners reaching out to you if they're interested in learning more?
Mark: Absolutely, yeah. I love to talk to them. We're actually contemplating doing what's called a reverse merger in the US over the next probably 30 to 90 days. And what that entails is you buy a company or they buy us, it's reverse merge into, and we have a vehicle, publicly traded vehicle, that will hopefully have by...into the fourth quarter this year. And the good news about us is, again, we don't touch the plant.
So all though it's federally illegal, some of our customers obviously are in the business. But we're basically, as you introduced us, we're selling the picks and shovels and overalls to these folks. So we're actually not touching any cannabis at all. We just supply those who do CBD, hemp, whatever it might be. We supply them with all the equipment. So we have no federal issues at all. So we think we shouldn't have a problem having a public traded stock by the end of the year.
Matthew: Great. Well, Mark, 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 has had a big impact on your life or thinking that you'd like to share?
Mark: I think going to HBS, I had written...I mean sorry, I had read Clayton Christensen's books talking about management of change. I think anything he's written was a big influence on my life early on, understanding technology and how it impacted change really can impact a business and one's own growth rates. So that was...to me, at the age of 26 to 28, his books were really positively impacting my life.
Matthew: Is there a tool web-based or otherwise that you consider vital to your productivity?
Mark: We do a lot of things with Asana because we have so many different clients. Our Asana tool book and we did a lot of freebased apps, and we're getting more into...a more CRM and other things today, but Asana in terms of working tools and having tasks for our people, because we're so spread out, there's so many different products, and making sure that customers are all aware of them. That's been a great tool for us internally here as we...As I said, I came here last year and there were three of us in Danny's garage. Now we have 4,000 square foot office with over 20 employees growing fast. So having things under control in this type of environment is pretty tough, and that's kind of a good tool for us.
Matthew: If you were doing something else totally not in this industry at all just for fun or for the challenge of it, what would that be?
Mark: I'm a big sports fan. So, I did spend some time...I had worked for the Boston Red Sox [inaudible 00:26:53] from Boston, so something in the sports and marketing entertainment industry. Now I spend 90% of my time on Convectium in this industry where I find it it's a challenge every day and it's a lot of fun and you see all the growth. But my other part of my life is a lot around sports and sports marketing and following that. So it'd probably be something in that realm.
Matthew: Okay. And when you go to a Red Sox game, are you a face painter?
Mark: I used to be. Not anymore. [inaudible 00:27:19] the World Series on Friday [inaudible 00:27:21].
Matthew: Would you consider putting your LinkedIn photo as a face painted version of yourself? I'm just kidding. I'm just kidding.
Mark: [inaudible 00:27:28] joke. Maybe on Halloween.
Matthew: At 4:20 maybe we could do that. Okay.
Mark: Exactly, that's a great idea.
Matthew: Mark, thanks so much for coming on the show. As we close, let listeners know how they can find out more about your business, and for accredited investors, how they can reach out to you as you go through the capital raising process.
Mark: Sure. So our website is www.convectium.com. And that will have all of our products. It'll have demons on there. You can see our machines running. You can see our capper and our...more importantly now our new cartridges. Again, we have kind of what's called a Gillette or an HP model now where we're doing...we can say our machines are razors, and our cartridges will be the razor blades. We'll be buying them monthly. So that's kind of our new business model. We're excited about that. Again, our phone number here at Convectium (800) 605-3580. And any investor questions or anything you might have, you can email me directly and I will always respond. It's email@example.com. And I'm always free to answer everybody and reach out. And we'll probably do a lot more investor shows going on in the back half of the year as we hopefully get this public offering completed.
Matthew: Mark, thanks so much for coming on Cannainsider. We really appreciate it and good luck to you.
Mark: Thank you very much. It was a great pleasure being here and thanks for the opportunity.
Please do not take any information from Cannainsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Emotional consideration may be provided by selected guests, advertisers, or companies featured in Cannainsider. Lastly, the host or guests on Cannainsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening, and look for another Cannainsider episode soon. Take care. Bye-bye.
Alan Gertner is the CEO of Hiku Brands (HIKU) in Canada. Listen in as Alan goes deep on why cannabis consumers choose brands and not products. Hear how Alan’s background at Google, baking sourdough bread, and being a ski guide in Japan forged him into the brand building Jedi he is today.
Fun fact, the president of Hiku brands is Trent Kitsch who co-founded Saxx underwear. Matthew geeks out a little on this underwear and it’s fun to hear why.
What are the five major trends disrupting the cannabis industry
Find out with your free report at http://www.cannainsider.com/trends
– How Alan’s father grew the first legal cannabis in Canada
– Why Alan left Google for a meaningful life in cannabis
– The way Alan measures happiness
– Why customers choose brands not products
– The evolution of cannabis preferences
– Alan’s favorite book and business tool
As cannabis companies grow and prohibition ends, consumer choices abound. Our next guest believes as more and more options become available for cannabis consumers, having a brand that resonates with customers becomes increasingly important. Here to tell us about brand building in the cannabis space is Alan Gertner of Hiku brands. Alan, welcome to CannaInsider.
Alan: Matt, thanks so much for having me. I'm a longtime listener, and I'm excited to be here and have a chance to chat.
Matthew: Great. Give us a sense of geography. Where are you in the world today?
Alan: I'm in Toronto. Toronto, it's unseasonably warm, which is beautiful today. So it's in the mid-20s. I'm sitting in our office, which is our fourth office in about one year. But now, our newest and latest home for Hiku.
Matthew: Okay. And I'm in Edinburgh, Scotland today and for those who are Celsius challenged like me, you're probably in like the mid-lower to mid-70s. Is that right, 20 degrees Celsius is like 68 degrees Fahrenheit, so...
Alan: Yeah, I think that's right.
Matthew: Yeah, cool. Okay, well, tell us at a high level. What is Hiku?
Alan: Okay. So Hiku today is a publicly listed cannabis company in Canada. We are one of the only vertically-integrated cannabis companies in Canada, which means that today we have four facilities that grow cannabis and two licenses to sell medical cannabis. In addition to having a full stack retail platform, we have seven stores today across the Great White North that today sell coffee and cannabis paraphernalia. But by the end of the year we expect to be the largest chain of dispensaries in the world.
Matthew: Wow. And what's your background and journey? How did you get to this point? What were you doing before? What culminated in creating Hiku?
Alan: So, Hiku is effectively three years old. The three years ago our business was called Tokyo Smoke, which is one of the brands under the Hiku banner. And three years ago, I was incredibly lucky to begin my journey with Tokyo Smoke with my father Lorne. So I'll tell you a bit about my story first and I'll get to how Lorne convinced me to work in the cannabis industry. You know, maybe then against my better judgment, but I'm incredibly lucky to have the opportunity to be here today.
But before that, I worked at Google for the better part of a decade and worked on a corporate strategy team with Google in San Francisco and California. And then, I managed a multi-hundred million dollar business unit for Google across Asia, Singapore, Bangkok, Tokyo, across the continent. Before that, I was a management consultant. And I was 30 a couple years ago. I found myself reflecting on my life and my journey till that point. I was incredibly lucky to work at Google.
I went to computer camp as a kid. This was somewhere that was my dream to be. And I found myself in a situation where my life wasn't as meaningful as I wanted it to be. I had chased this corporate ladder and career path that seemed to be the right narrative, honestly. And I think it left me in a situation where I was happy and my life was, you know, great from an outside perspective, but it wasn't as meaningful as I wanted it to be. I didn't have the kind of fulfillment I was looking for.
I was incredibly lucky at the time to have a mentor who, you know, guided me to challenge the way I thought about life. And instead of trying to focus my life on winning at work, you know, he gave me a push to try to focus on winning at life. And I wanted to [inaudible 00:05:43] try to understand what that would be, how could I make my life more meaningful? How couldI focus my energy on winning at life? I was lucky to, you know, take a break from Google. I worked as a backcountry ski tour guide in Japan.
I bought a 20-year-old Toyota with my friends and we drove from London to Mongolia. And along this way, I had this big spreadsheet that I filled out every single morning. And the goal of the spreadsheet was to try to find out what would make my life meaningful. So every day I scored how meaningful my last day was, how fulfilled I felt. I wrote about who I talked to, what I talked to them about, what the weather was like, everything, just trying to capture what made my life meaningful.
As someone who spent too much time at Google and as a management consultant, data seemed to be the answer. And I discovered two things from this exercise. One, that my life is more meaningful when I take on a challenge. And two, that my life is more meaningful when I'm part of or building a community. So I found myself in this situation where I had these two pieces of data.
And I was talking to my father, Lorne. Lorne, for those who don't know, is one of the earliest entrance players, contributors to the Canadian cannabis industry. So 20 years ago, my father had a share of what was the only legal licensed producer of cannabis in the country. There was, 20 years ago, only 1. And we had one. We had one in a mine in the middle of our country that produced legal medical cannabis because the government wanted to sweep it under the rug as much as possible.
And Lorne was a partner in that business and they took that business public 14 years ago. He then was a co-founder of Pharmachem, which is now Kronos. So, he's co-founded two major cannabis companies along the way, and has long been a very strong believer in the value to society of medical cannabis. And so, he's been stumping this belief and disbelief in cannabis and this power to change the world for, you know, a huge portion of my life.
And when we were talking about my journey forward this desire to take on a challenge and be part of a community, and we talked about how he saw the cannabis market unfolding having been in it for a long time. But also having been someone who has, you know, truly integrated cannabis in their life, and I think really understands both the consumer journey and the, you know, continued evolution of cannabis in society.
We talked together about how we imagined this world evolving, how we imagined cannabis evolving with it. And we started on this journey and with a singular belief in thesis, which was that cannabis is a consumer product. And so, when we thought about this idea of cannabis being a consumer product, we thought that the key would be to build brands.
Because ultimately in consumer products, consumers choose these brands and they choose retail. So three years ago, with that singular thesis, my father and I together co-founded this business called Tokyo Smoke. So that's the journey in some ways that brings us to today. There's always lots of steps along the way. But that's how I ended up here.
Matthew: Wow, that's quite a background and legacy to build on in the modern era. So, when you were at Google, it seems like, you know, I worked at a big tech company and it's great because it's...there's a lot of adrenaline, and things are moving fast. And it's like, hey, you're part of this wave that's kind of changing the world. But then it's hard to sustain that, perhaps over the long run. Is that what you found, and you felt like, "Hey, I'm moving fast, but is there meaning behind it?"
Alan: So, I'll sum up my, the contrasting experiences in a simple example. When I worked at Google, I constantly dreamed of doing other things. I was lucky to be there and lucky to be part of the incredible momentum of the business. But I dreamed of the ability to live all these other lives and contribute all these other different ways to society.
Today as the CEO of Hiku, I never dream about doing other things. All I have is nightmares about this thing. This is something I believe in and I'm so incredibly lucky to get to be a part of and to work on every day. And I truly believe in what we're doing, I believe in the legal cannabis economy and the opportunity to contribute to that and play a small role. And that is so much more fulfilling and meaningful to my purpose and my higher cause than working at a big company I think ever could have been.
Matthew: Your background sounds a little bit like a Wes Anderson movie, like the guy who made "The Royal Tenenbaums" and those, you know, "Rushmore." "Oh, I was a backcountry ski guide in Japan and then did a tour to Mongolia and..." You know, that's what it sounds like to me.
Alan: I've been lucky to go on lots of journeys. And I've always been eager to take on a challenge and do new things, and it's part of my narrative and who I am. And, you know, I think part of what's fascinating to me about the cannabis market and why I'm so passionate about it is I really truly believe we have a chance to change the world. And I'm so excited to be in Canada, which to me, in some ways, is the, you know, the epicenter of the momentum that will help normalize and legalize cannabis all over the globe.
Matthew: So your grow has a bit of some interesting characteristics in kind of Canadian history from what I understand. Can you tell us about where your grow is and kind of the context of why that's important for agriculture in Canada?
Alan: Yeah. So we have two locations for our grow. One is in Kelowna, which I think is the one that you're talking about, and one is in Ontario, just outside of London, Ontario. So, just as a quick recap, we recently acquired and merged with a company called WeedMD, which has a large scale greenhouse just outside of Toronto and an indoor facility. But our first grow was our partnership with a company called DOJA. DOJA is based in Kelowna.
Kelowna, for those who haven't been there I would encourage you to go because it is one of if not the most beautiful place in Canada. It's one of the warmest places in Canada. It's one of the sunniest places in Canada. It's one of the most fertile places in Canada. And as you can imagine, with all of those factors at play, it also happens to be one of the homes of black market cannabis in Canada.
It is this beautiful town in the middle of the mountains. And it has in some ways been one of the epicenters or Ground Zeroes for the black market. Some of Canada's best cannabis, this competent BCBud has historically come out of the Okanagan, which is the region that Kelowna is in. Today, the best wines in Canada also happen to come out of the Okanagan. And a couple of months ago, we started a dialogue, as Tokyo Smoke, with a company called DOJA.
DOJA was founded by a couple of amazing entrepreneurs who have worked on Incredible products before and they built this business, DOJA, around the West Coast lifestyle and attribute to the amazing history of Kelowna and the reach and incredible work that people in the Okanagan have done to help push the legalization of cannabis. So let's pay tribute to that. Let's recognize how important cannabis can be to the west coast lifestyle. And let's create a product that is truly emblematic of and representative of the incredible cannabis that comes out of that region.
Matthew: Alan, circling back. How do you get products to customers in Canada? I know it's different than, you know, the dispensary model. Can you tell us a little bit about that?
Alan: Yeah. Great question, Matt. So,let's talk about today and how it works today. And then let's talk about how it will work come, the legalization of adult use cannabis in the fall. So, today there are around 250,000 medical cannabis patients or customers in Canada. And those 250,000 legal cannabis customers order their cannabis today from one of a number of licensed producers, so you get a license to grow and sell cannabis from Health Canada, our regulating authority.
And then, the only way for those 250,000 people to legally acquire cannabis today is to go on the website of one of the licensed producers and order cannabis and have it shipped to their door typically using Canada Post, our government mail service. So that's today, how you acquire legal medical cannabis, direct mail from the facility, from the cultivation site. In the future, come September, October when legalization happens, you'll be able to walk into a dispensary. Now, depending on the province, it may be a private or government-run dispensary, and you'll be able to buy cannabis in a process that's more analogous to what's currently happening in the U.S.
Matthew: Okay. I bet the postal carriers have never been more popular in Canada than they are now.
Alan: I think that it's been very, very good for also propping up the Canada Post system. I think it's a great function to get cannabis quickly around the country.
Matthew: Okay. And so, you think really deeply about branding and you and I talked offline a bit about this. And it's interesting because there's a ton of movement and capital and people coming in, and they're thinking about spreadsheets and profits and things like that. But perhaps the most important thing is, where do you fit in the customer's mind as they're making their decision process? Can you tell us how you think about branding and how perhaps others could be considering branding their own companies?
Alan: Matt, we tend to think it's one of the most important parts of a company's relationship with a consumer as the brand is the experience of the product. And I think oftentimes when we think about a consumer experience, we tend to dive right into the product itself, i.e., is the product quality good? And that's an incredibly important part of the experience. Don't get me wrong. But if we look at other consumer products, I think we can start to take a bit of guidance in the cannabis space. You look to something like coffee, I'm a huge coffee drinker. Matt, do you drink coffee?
Matthew: Oh, yes.
Alan: I love coffee. And, you know, I have a tremendous amount of love for Starbucks, right? Starbucks did to me this really, truly unbelievable thing, which introduced effectively the whole world. But let's start with North America, it basically introduced America to the latte. At scale before Starbucks, we just really all drank black coffee. Now, did Starbucks do that because their coffee was fundamentally better than everybody else's? I don't know.
People seem quite quick to malign Starbucks coffee right now, as coffee snobs. I think what they did was, they created this incredible experience. They built a nomenclature. They built this safe space where you could learn about coffee, and where your coffee purchase was, all of a sudden, less about the caffeine in that drink, but equally about the community, about what the brand said about you, about the interaction that you had in that store.
Starbucks built this additional place in life for people to spend time, for people to interact. And when you look at Starbucks, and you look at how coffees evolve, you see that it evolved, in some ways, away from and became abstracted from the agricultural input coffee beans, and became a lot more about community, and a lot more about a secondary experience than the primary input. Let's even think about frappuccino.
A frappuccino is pretty abstracted from coffee, right? But it's an experience you opt into for so many other reasons. Now, it's not a perfect analogy for cannabis, but I think it starts to provide us signals, right? Why as a consumer you choose one beer over another beer? Is it purely about taste? Or is a lot of it about the signal of that brand and what it says about you?
I think that those are critical factors to a consumer making a decision. And I think that's even more important in cannabis. Because in cannabis, we live in this world where it still has an immense amount of stigma. And if we think about overcoming that stigma, I think we need to tell stories, and hold up icons, and build brands that feel normal to help consumers understand how cannabis can integrate into their lives as opposed to them feeling like they have to move towards a pre-existing cannabis culture.
Matthew: Right. So, you don't feel like you're doing something shameful, like the company that made this doesn't believe in shameful things, this is a normal natural act. So, that makes sense. It's funny that you mentioned Starbucks because I was just reading an article about how their online rewards system, an app, is more successful than any other virtual currency out there.
Alan: Oh, it's truly amazing.
Matthew: Yeah. Once you're successful in creating that experience and trust, then you can lead in other ways that you wouldn't normally be possible.
Alan: I love your use of the word trust. I think a lot about trust, especially for a first time cannabis consumer or someone who's used cannabis before but doesn't necessarily have a relationship with it yet. I think the tipping point for them is going to be trust, and they're going to establish a trusted partner in their journey. You know, I obsess over this idea. In Canada, about 25% of Canadians currently consume cannabis, which is a lot, a quarter of Canadians.
But 85% of Canadians consume alcohol. And around 85% of Canadians consume coffee. So, there's this 60% delta between people who are otherwise willing to live a high life, because that's what you do if you consume coffee or consume alcohol. They are psychoactives, they change the way you interpret and exist in the world. But they have yet to figure out a way to integrate cannabis into their lives.
And I think there are a lot of use cases where they would be better served by using cannabis, they would be better served and we would be better served as a society. So how do we build brands? How do we tell stories? How do we offer products to those people who are comfortable drinking a glass of wine at night to relax, but would probably be better served by using cannabis?
Matthew: Good point. Well, you've got a lot of upside there, 25% is a lot, but there's still a lot of room for upside in Canada. So that's good news. So what do you think is the most important thing we talked about trust? But what's the most important thing you can do to connect your brand with prospects and existing customers if you were to focus on just one thing initially, what do you think that one thing should be?
Alan: To me, it's all about education. I think I have trusted partners built through education. Let's think about Lululemon together, another business I have an immense amount of love for and I think has done a pretty incredible thing. Lululemon in some ways helped bring yoga and that wellness category to the masses, right. And I don't think it did that because it necessarily had the world's best yoga pants, it did that through an incredible sense of community.
If you go into a Lululemon store, they're positively buzzing. The stores are often community centers for education where they often throw events and they help people understand how yoga and the wellness movement can fit into their life. You can go to the Lululemon in Toronto and the space above the store, they often have meditation classes, they'll have yoga classes or Pilates classes. They help bring this experience directly to your door and make it safe for you to understand and onboard, for you to dip your toe in a world that you didn't otherwise live.
I think education is part of that key, and I think that applies to cannabis, in some ways, even more for all of these people who want to or could benefit from cannabis but just don't have the understanding, don't have the route, don't have a path today that appeals to them. So I think education, whether one-to-one me to you or a retail store to a larger group of people, I think that's... If you're going to do one thing, to me, that's the thing that I would do.
Matthew: Yeah. Now, let's talk about authenticity. How does a brand scale without losing its authenticity? When I grew up in Chicago there was this sub sandwich shop called Potbelly, and there was only one of them. And they would heat your subs for you, and make milkshakes and put a little cookie on top of the milkshake and it was just full of all these little touches and...
Alan: It sounds great.
Matthew: Oh, it's still really good but it's now blown up into this huge franchise and they're in airports and different places. And they're still good, but in my mind I'm just like, "Gosh, I kind of go back to my experiences when it seemed like...it seems small." I mean, for how big they scaled. They've done a good job, but it's like, how do you keep the spark? How do you keep that little, that essence of what the brand is when it starts to what it scales because the company has to change because there's more people, there's more gears, there's just... it's different. How do you feel about the scaling argument?
Alan: That's it. It's a really interesting fact. And Matt, can you think of a company that scale that has remained authentic? Like, so, can we find a counterpoint to the Potbelly example like that you can think of?
Matthew: I feel like that brand TOMS, the Shoes company has done a pretty good job.
Alan: Right. Oh, I like TOMS as an example. Right? TOMS is, in some ways, about this singular founder, Blake, right, and his story, and his journey. And he still seems to remain the face of that business. And they have a very, very authentic goal in mind, right, that I think they have managed to keep and hold tightly. And for me, the key to Van der Pop remaining authentic, and Van der Pop at the time and now has cultivated this incredible community. These people who believe in April's story and message, and who are part of this subculture because they want to because they identify with it, and are willing to share, proselytize to other people about this story that means something to them because they believe they fit into this idea, this concept, this community. I think, the way we're able to keep Van der Pop, Van der Pop is April, and empowering April to continue to tell her story. To make Van der Pop, not about me, Matt.
Not about Hiku, not about this public company, but for it to continue to be about April, and for April to continue to tell the story, and tell a story that resonates with her. And then, also to bring people on to Van der Pop who that story resonates with them, and they have their own unique spin, but people who identify with that brand, not corporate soldiers who just want to milk a brand or a business for money. But instead, people who want to continue to build on a movement.
And so, when we look at the Van der Pop team, you know, we have a member in Toronto of our organization named Odessa, who I can see from my desk here. And Odessa was the fashion editor of the "Global Mail," the largest newspaper in Canada. And Odessa spends the majority of her time working on Van der Pop because this brand also resonates with her. And she can help Van der Pop tell additional authentic stories and help build that subculture even larger and larger.
But it still remains focused on these individuals who the brand is authentic to who the story resonates with. That's how we tend to approach it. And that applies across all of our brands from DOJA, the team in Kelowna that continues to build a brand about West Coast to Maitri, the team in Montreal that continues to build a brand that resonates with Quebecois. That's how we tend to approach this idea of remaining authentic.
Matthew: That's, you know, a lot of people might say, "Well," you know, "by limiting the brand to just women that you're cutting out," you know, "half the marketplace," but that's still a huge segment. And also it allows you to focus in a way that a brand that's going after a larger market segment may not, and so you can speak more directly, you know, to your customers.
And it sounds like with Van der Pop, there's a bit of an aspirational quality there too. Aspirational, both in making cannabis have less of a stigma, but also into kind of a lifestyle choice. Do you think that's accurate or no?
Alan: No. I think that's right. I mean, I think, in order to break stigma, we often will tell a narrative about lifestyle, just like in alcohol or in coffee, other psychoactives in our lives, where the majority of the storytelling is about lifestyle because I think that's often how consumers think about and understand consumer products. We tend to go down that route.
I would say with Van der Pop, it's not necessarily that we're only telling a story to women, but we're telling a story from women. So, we're making sure that the story comes from people who believe in the narrative, and I think that's what's key to authenticity. You ultimately need to have a team or an organization or individuals who truly believe in what you're doing, and their belief needs to be unmoored from money, and their belief needs to be about a higher purpose.
Matthew: Yeah. It's funny because you and I are talking about the stigma because we remember, you know, when this was all mostly black market in North America. You know, when I talk to much younger people now, they don't have that stigma at all. Like, they don't think about it, that it's like, there doesn't appear to be there. Like there's a generation that's coming up now, where it's just like, yeah, it's you know, they just don't think about it that way.
And it's refreshing to see but it's also like, I never thought in my lifetime, that would be possible. Like it just, "Wow, this is crazy." So...
Alan: Oh, it's truly amazing. I, man, I'm so spoiled. I get to stand on the shoulders of giants and participate in this industry. And the amount of work, sweat, blood, tears that people in Canada, the U.S. and around the world have put in to putting us into this situation, it's unbelievable, even talking to my father. You know, I mentioned earlier that he co-founded one of Canada's first legal cannabis companies. He'll tell stories now about 16 years ago, sitting down in a dinner with a potential investor, telling them that he was building a medical cannabis company, and the potential investor, a longtime friend saying, "This dinner is over. You are a drug dealer. We're never talking again."
And I compare that to my experience now which is so transformed and really different. We're on a podcast openly talking about, in some ways, the marketing and branding of cannabis, something so second to order relative to legalization. It's unbelievable, I'm... In fact, it's hard for me to even express how lucky I am as an individual to get to be part of this. And it's part of why we work so hard because we have a fundamental belief in Hiku, that cannabis is good. And we will work hard to prove that belief.
Matthew: Any other kind of experiences you have you think that are not typical because your dad was so involved in this business and you see it a different way. I mean, you've got all this background and anything. Has that changed your view at all? Or how does it affect you as you run Hiku?
Alan: I'm sure so much. Right? I'd like to say I'm probably one of the only legal second-generation cannabis entrepreneurs. You know, I'm so influenced by my father and the incredible work that he did. And I think part of the thing that impacts me the most is an incredibly strong desire to see this happen everywhere because I think about all the sweat that my father and just, you know, my father's played some very small role, especially relative to activists who spent their whole life in this.
But he believes this so strongly. And I've been so lucky to watch him work on something that he believes so strongly, that he's still passionate about, and a chance to contribute to that, to be part of that in some small way, really motivates me because I feel very grateful that because of the work of someone that I love, and know, I get to do this. And I said because of the work in some small way of someone I love and know, I get to do this. And that motivates me very much on a day to day basis.
Matthew: Tell us about your president that came over from DOJA into the Hiku family because I'm a little bit familiar with him and his other business he founded, which is really an incredible story in itself. So maybe you can tell us a little about that.
Alan: Yeah. So DOJA, D-O-J-A. So Trent is the...Trent Kitsch. It came from... DOJA...is one of the founders of DOJA. Trent is one of the most inspiring unbelievable people I'll ever meet.
Trent is a lifelong entrepreneur who has really incredible vision to see three, five years out and imagine this world we don't live in today, and he's done and demonstrated this a couple of times. One of the ways that he's contributed to our world and demonstrated his ability to have vision and execute against it, is SAXX Underwear. I mean, Trent, in some ways, single-handedly disrupted the underwear category. Think about a category that [inaudible 00:32:46] brand. It's crazy, Matt. Go ahead. Sorry.
Matthew: But here's the thing about SAXX. It's just so crazy. It's underwear for men. And the problem with traditional underwear or the boxer brief as you put it on and it kind of smashes everything like a pancake. The SAXX creates this cove for your man-parts, so they can be safely protected in their own world and not bounced around like a speed punching bag from your legs. So, sorry, any ladies out there. That's too much detail.
Alan: I thought that was quite an eloquent explanation. I liked that.
Matthew: I mean, I don't know why someone else didn't think of this. It's amazing, but then it's like you're creating a category, people aren't sure why they'd use that. He's kind of a gritty guerrilla marketer in getting the word out.
Alen: Trent honestly is an amazing guy. Think about a category that could be harder to get into than underwear, wholly unbranded, unsexy thing, and men's underwear. Something that people historically don't even really care about, because every pair is effectively the same. And Trent comes along with this different product, and then a wholly different marketing strategy. Trent thinks, "Okay, well, where would men buy underwear if they don't currently buy it?" "Well, I bet you, they'd buy it at the golf course."
So he figures out a way to sell underwear at golf courses, right? I bet you, they buy it at the baseball game. Let's figure out a way to get underwear sold at the baseball games. And then, let's do advertising to men directly. How do I tell them a story about why they should buy my underwear? I mean, it's really unbelievable.
And you can imagine how Trent can contribute to cannabis, given the rant I went on earlier about how I think this is so much of a consumer product and about brand and about experience, and the chance to offer something different, and offer a story that's new, that's refreshing, and a story that's about education. Matt, you just basically educated me on SAXX, so clearly Trent is able to get that message out there, right? It's amazing.
Matthew: Well the funny thing is is that, I heard him on a podcast, gosh, long time ago now, like at least a year or two, maybe more, and I still remember it. And I was thinking, "I haven't gotten a pair but the moment," like, "I want to get a pair." I think once I get back to the States, I'll get one because I don't see why I should be living in the underwear dark ages anymore. It's ridiculous. I was like, "My underwear now feel like a medieval torture garment, like a chastity belt. Like, I gotta some SAXX here." Okay.
So tell me, how do you see... We're kind of evolving quickly here, very quickly. The market is changing, dispensaries are coming in Canada, you're going to have to move pretty quick. I mean, not that there's like a stopwatch on you but the market's going to be moving all over the place, preferences are going to be changing, things are gonna be happening. How do you kind of orient yourself on how you wanna build this brand? Is it kind of like a build, measure, learn? Are you talking to customers or what are you thinking about there?
Alan: I'll give just two thoughts, one, perfectly okay with the stopwatch. You know, we've had a wild three years. And the chance to continue to move fast and, and evolve is part of why we get up every day. And a year and a half ago we were one coffee shop, and you know, we had done our first raise at a $4 million pre-money valuation. And today we're north of $500 million business that has nearly 100 employees. We have been lucky to move fast, and we have, you know, I think, really big aspirations.
And so, one, I'm actually excited by the pace of the Canadian cannabis movement is happening because I do think Canada will set the pace for the entire world. So it's just my first thought. Second thought in terms of like how we think about our evolution, so much of it is about this idea of launching and iterating. I think as an individual, part of my guiding light is this idea of progress over perfection and making sure that we push forward and recognizing that every step forward is a step in the right direction for cannabis legalization and cannabis normalization.
And that the integration of cannabis in society will take time, and it will be a learning process, both for businesses and for consumers. And we need to be willing to if we believe that education is key, we need to be able to be willing to teach, to learn, to react, and to evolve. And it's part of, Matt, why we're a retail business. And I think retail is the best path to do that.
It's the only way for us to really interact with one-to-one with consumers. I'm so passionate about the chance to talk to a consumer in Winnipeg or in Vancouver or in Calgary in our retail stores directly to build a relationship with them and to learn from them about how we can tell stories better and how we can help people join the legal cannabis movement.
Matthew: Yeah. It's interesting when I talk to people at dispensaries, and mostly in Colorado, there's still such a broad spectrum of what people want and identify with. Some people go to like there's one place that considers itself like the Costco of cannabis where it's premium grade, not the best top shelf, but it's premium grade, but kind of discount pricing and there's no fluff for marketing and it's very bare bones.
Then there's other people that are identifying with brands, other people that only smoke, consume vape pens and it's just like, "Wow, this..." I imagine there's gonna be some consolidation and the market's going to move towards maybe just a few things. But it's just amazing watching this happen, this starburst. So I think it's gonna be interesting watching you build this brand, and I wish you all the best. But before we close, I want to ask you a couple personal development questions, help listeners get a better sense of who you are as a person. So with that, is there a book that has had a big impact on your life or way of thinking that you would like to share?
Alan: Oh, I love that question. I'm a huge fan of reading, it's one of the ways or the best way for me to decompress at the end of the day. I find often I get so excited about what's going on in Canada, and just in cannabis generally, that I, you know, need a chance to decompress. And I often tend to move towards science fiction books because they challenge my mind and also give me this, you know, new problem or this new world to think about. So, I can think about a recent book that's been impactful for me. It's called the "The Three-Body Problem." Have you heard of this book, Matt?
Matthew: No, no. I haven't.
Alan: All right. "The Three-Body Problem" is a Chinese science fiction book. It's one of the more prolific Chinese science fiction books. And "The Three-Body Problem" is, I won't give it away but it's very briefly about this idea exploring the thought, what happens if we do contact other life in the universe? And it explores this idea and how that might work out both positively and negatively for society. And it does it in an incredibly realistic, interesting way.
And I have had lots of love for both a thought experiment and the way it asked questions about society, about who we are, about what's important to us, about why we do the things we do, and how we would react in times of happiness and times of crisis. Because I think sometimes we think as a society as people that the way we live today is the only way that people have ever lived. And we forget that almost all of our habits are new, and even something like tobacco, I mean, tobacco is only hundreds of years old in terms of its adoption in mainstream society.
There's an argument that tobacco was effectively discovered by Western Europeans who came to North America, who historically had never really even seen tobacco. And then we see how quickly both the adoption of tobacco can happen all across the globe, and then how quickly we can work to reduce it. Our behaviors are very, very, very new.
And because I'm in the cannabis industry, I have lots of love for thinking about how our behaviors could change. If we had different information, if we had different challenges, we might make different decisions. And let's be open to that, and let's recognize that the thing we do today may very well not be the thing we do tomorrow. And the thing we do today was definitely not the thing we did 100 years ago.
Matthew: Yeah. So true, especially when you look at something like Uber. It wouldn't have been possible without total smartphone immersion of the entire culture. But then as soon as it's there, boom, taxi industry transformed.
Alan: Totally gone.
Matthew: It's like...totally gone. Yeah. People used to pay 500 to 800 to a million dollars for a medallion in New York City. And now they're just plummeting, you know, people don't want them anymore, It's a liability, and it's just like, "What happened?" That was just a phase transition. Amazing how that can happen. You're right.
Alan: Yeah. It's incredible. So, "The Three-Body Problem."
Matthew: Yes, the three body parts. Haven't heard of that one.
Alan: "The Three-Body Problem."
Matthew: "The Three-Body Problem." Is there a tool you consider helpful to your business productivity that you'd like to share?
Alan: Also a question I love. Okay. So, one very practical. One is Trello. Do you know Trello?
Alan: So, I love Trello. So Trello is like, just in terms of being productivity oriented, and having a list. Trello to me by far best digital list and project management piece of software that's out there. It's incredibly good at allowing me to say, "Here's what I need to do." Here's...I'll just very explicitly say the way I organized it. I have things I need to do in the next hour, things I need to do in the next day, things I need to do in the next week, things I need to do in the next month, things I need to do in the next quarter, things that I do in the next year.
And, you know, I have a running list of things, and probably shift between boards, because Trello is organized by boards. So it gives me this very simple way to visually see what's at stake. When I get up in the morning, what I have to do, and what I need to be ready for and, and think about. I I love Trello. So that would probably my core tool. That and I make sourdough bread. I really like baking. So, I have to work on my sourdough starter every day.
So, I think the process of getting up and getting to feed my sourdough starter and looking forward to every weekend, baking bread, is a really nice grounding mechanism for me. It's something simple, something I get to contribute, something that's in some ways both instant and takes time, something that evolves every time because it's a living thing, a sourdough starter. Every time it's sort of different but something that I can count on. I don't know, it's part of my day to day.
Matthew: You know, we're kind of in a carb bashing culture. But I've heard that there's a tremendous health benefits to the sourdough bread if made the right way. Can you talk about that at all?
Alan: Well, and there's an argument that sourdough because it's a living bacteria potentially eats a lot of the things in bread that are potential, sort of, potentially in this sort of negative bucket of things we don't necessarily want to consume a lot of. So I think there's less gluten in sourdough bread or less harmful, gluten in sourdough bread.
Honestly, I eat it because I think it's delicious. But I recognize that, you know, carbs are not for everybody. For me, it's one of the true joys in my life, is a chance to bake a loaf of bread, share it with people, get to eat this fresh living thing that I made with some butter and, you know, enjoy a sunny Saturday morning.
Matthew: Man, I'm getting hungry now. There's a huge difference between, like a store-bought, you know, Saran bagged and the fresh is just massive difference in the sourdoughs I've consumed where I don't like kind of the store in a bag version, it just doesn't taste good. And then you go someplace that's like, "Oh, I just made it fresh." And it's close to a religious experience when you get the right bread.
Alan: I love it, and so a live sourdough starter, also integrates local bacteria, right? So there is something about my sourdough starter that's local to my home or local to Toronto. And I guess I have so much love for that idea as well. Like, it's something that's both very personal as in my sourdough starter is nothing like anyone else's, and something that I can really easily share. I don't know why, but for some reason it's a part of my ritual that I find very grounding and satisfying.
Matthew: Well, Alan, we covered a lot today. Thanks for coming on the show. Before we close, can you tell listeners how they can find out more about Hiku, and your brands, and how to follow you and to see your sourdough recipe?
Alan: Matt, thank you for having me. I'm really thankful for the chance to chat. As I said, I have listened to your podcast a lot. And at some point along my journey as I was trying to understand all of the different facets of the cannabis industry, someone gave me printed transcribed notes of your podcasts.
Matthew: All right. I can't hear that enough. That was great.
Alan: It was amazing. They're like, "This is the source of truth." It's like, "Oh, okay. Well, I guess I got a lot of reading to do." So, in terms of finding Hiku, we're available at hiku.com, H-I-K-U.com. We are a publicly traded company in Canada, our stock ticker is H-I-K-U, as you could guess. We have multiple different brands, whether Tokyo Smoke, DOJA, Van der Pop, Maitri, M-A-I-R-T-R-I. So you can find all of those brands online, their individual Instagrams.
There's lots of Hiku content out there. And, you know, I would love for anyone out there to, you know, to visit Hiku, to visit our brands. And also tell us what you think. You can always email info@hiku, which I often read. And, you know, as I said earlier, and I stand by this, we have lots of work to do. And a huge part of that is learning from our consumers, our potential customers, our community, and continuing to be better.
Matthew: Alan, thanks so much for coming on the show today. We really appreciate it. And good luck to you in everything you're doing up in Canada. Keep us updated.
Alan: Thank you again, I really appreciate it. I'll come back anytime.
Karson Humiston is the founder of Vangst, a multi-state recruiting company focused on the cannabis space. Karson is on the Forbes list of The Top 30 Under 30 entrepreneurs on the rise.
Listen in as Karson describes how to hire the perfect candidate to help your business grow. Karson also lays out how to create a successful career in the cannabis industry and what kind of candidates are getting hired.
– How Snoop Dogg’s VC fund invested in Vangst
– Common mistakes employers make hiring
– The devastating math behind misfiring
– How to ensure employees are successful in their new roles
– Enticing executives from other industries
Learn more at:
What are the 5 trends disrupting the cannabis industry right now?
Find out with your free report at http://www.cannaInsider.com/trends
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 cannainsider.com. Now here's your program.
If you're a cannabis brand or retailer, you need to be on LeafLink, the largest wholesale marketplace with over 600 brands and 2,000 retailers. Leading brands use LeafLink to streamline their business, including Kiva, Incredibles, Wana, Openvape and more. When Ryan, the CEO of LeafLink, was on the show last year, they were doing $100 million in sales through the platform. And now they're doing over $500 million a year and adding more states every month. LeafLink is a bustling hive of cannabis commerce that brands and retailers are flocking to. Don't miss out on joining the platform where the top cannabis companies are doing business. Each month, LeafLink rewards the first 100 "CannaInsider" listeners that sign up with a free month when they use the promo code "CannaInsider". Learn more at cannainsider.com/leaflink. Now here's your program.
As the cannabis industry mushrooms in growth, businesses are struggling to find talented individuals to fill key roles. Here to tell us how companies are solving this problem is Karson Humiston, founder of Vangst, a multi-state staffing agency focused on the cannabis industry. Karson, welcome to "CannaInsider."
Karson: Matt, thanks for having me on "CannaInsider." I'm excited to be part of this.
Matthew: Give us a sense of geography. Where in the world are you today?
Karson: Well, Vangst is based in Denver, Colorado, and Santa Monica, California. Today, I'm actually in Washington, DC for the NCIA lobby days, but typically I split my time between our two offices in Denver and Los Angeles.
Matthew: Okay. And I'm in Edinburgh, Scotland today.
Karson: Wow. Not bad.
Matthew: Not bad. Yeah. Give us a little background. What is Vangst at a high level? Give us a sense.
Karson: Sure. Vangst as a recruiting resource for the cannabis industry. We started in 2015 and since that time, we've connected over 5,500 people with jobs at leading cannabis companies around the U.S. and Canada.
Karson: We connect these people, these professionals with jobs for direct hire, employee on demand in our job board, which I'm sure I can get into a little bit later on in the podcast. But that's how we go about connecting people from all different industries with jobs in this industry. And we think it's very critical that as this industry continues to move forward, the best and the brightest from all different industries are bringing their skills, bringing their experience, bringing their talent, bringing their passion into this space.
Matthew: Well, tell us a little bit about your background and journey and how you got started with the idea for Vangst and how it kind of matured and evolved.
Karson: Okay. I was a senior in college at St. Lawrence University in upstate New York. And I was running a student travel company that I founded called On Track Adventures. And as the end of my senior year came around, I sent an email out to my network which consisted of current students and recent college graduates, and I asked them which industries they were most excited about, most interested going and attempting to get a job in. And there was a huge overwhelming response to the cannabis industry, which looking back on it, it's very forward thinking of my age, millennials, to be thinking that the cannabis industry would be where it is even today and in the future because, in 2015, it was nowhere near as popular as it is today. But this is, you know, this intrigued me to go to a cannabis trade show.
And I went to a trade show and I was really impressed and surprised by the types of businesses that were there, the types of professionals in the industry. Obviously, my own stigma to the industry changed and I asked the companies, "What positions are you hiring for?" and it was mad. It was every type of position. It was chemical engineer, sales manager, CTOs. I mean, just every type of position that you can imagine was needed in the industry, which of course, I didn't realize. I thought it was growers, budtenders, dispensary managers, and there were so many more. Accountants, CFOs, controllers, everything along the financial side. And this was still very early. So, I asked the companies, "How do you go about finding your employees?" And they said, "It's tough. Right now if we post on traditional job boards, our job postings are taken down and flag because of the cannabis industry," which since that time that has actually changed. But they said, there's not an industry-specific search firm. There's not a firm that helps us with temporary employees. And so it was very hard to find employees outside of our own networks. And I let them know that I have a very big network of students and recent grads, so if they're interested in hiring one, I own a company called Gradjuana which was just something I made up on the fly. Green jobs for grad, Gradjuana.
Matthew: I like it.
Karson: And the logo was completely ridiculous. A graduation cap with a weed hat coming off of it. And I went back to St. Lawrence and I made an inexpensive website on Wix and started reaching out to all the people who I had met and I said, "I'm moving to Denver, and let me follow up. Let me help you find that in Turner recent grad that you told me that you need." And so I graduated, I moved out to Denver to start Gradjuana. Of course, my friends and family were horrified that I was starting a weed hiring company. And it was off to the races from there. Our first plan was Openvape, and we found them an accountant named Chiara. Our second client was CannaAdvisors. We help them find a construction project manager, a technical writer, and an executive assistant, and I was able to use the revenue from those first searches to start hiring recruiters.
And since that time, we're a team of 40 now. Then we've hired recruiters with all different recruiting background. And so we have recruiters that focus on all the very scientific, very technical roles, so those high-level cultivations high-level labs, high-level chemists type roles, and they know how to ask those questions that a lot of times our clients don't know how to ask. We've hired recruiters who solely focused on retail. We've hired recruiters who solely focused on all of the ancillary position. So, accounting, finance, back office. And that's a little bit about...I know I kind of went out of ramp, but that's a little bit about where we are today.
Matthew: Well, it's clear that you lack ambition, Karson, and you're lazy. Tell me, how old are you? I don't even know.
Karson: I'm 25.
Matthew: Oh, my gosh. That's great. You're busting. This is great. This is unbelievable. So you're 25.
Karson: So, someone said to me the other day on...I get asked this all the time. And so someone...I'm in the meeting the other day and the client said, "Okay, we're gonna sign up. This is all great. How old are you?" And I said, "Sixty-three. How old are you?" And the guy just started laughing and I said, "No, I'm just joking. I'm not 63. I'm 25." But I get asked this all the time and, yeah, I'm 25.
Matthew: That's great. I mean, you could be peaking here, like, what if your...this is like the peak of your existence now and it's all gonna be downhill until you get older. I mean, have you considered that?
Karson: No, no, no. I'm not...I'm so far from peaking, so let's not...That's depressing.
Matthew: I'm totally teasing. What kind of person would I be to say that? But I just...Of course, of course. So, one thing I'm curious about here is you've raised capital, correct?
Karson: Yep. Recently, for the first time.
Matthew: Now, how do you go about learning that? I mean, do you reach out to people that have done it? Do you just say, "I'm just gonna start reaching out to people and see what they say?" I mean, how did you orient yourself before you started that process?
Karson: I think the first thing to note is to get an understanding of if you actually need to raise capital. And so we got to a place where we had been going for two years and things were looking great and I hadn't thought that I was going to need it. And we realized that the opportunity in this industry is so big and the time to grow is right now. And because of how quickly we wanted to scale and to dominate in several more markets that we were gonna need some upfront capital to do so. And so I think the first step is getting an understanding of, "Do you even need to do this?" I think a lot of people think, "I'm starting a business. The first thing I need to do is go and raise money."
For us, we had a proven concept, we were well-liked and well-known in the market, and we knew exactly what it was that we were going to do. And so I would say that that's the first step, getting an understanding of if you need it. Step two is, how are you going to use it? How are you going to put it to best use? What are...Yeah. Just how are you gonna use it? How are you gonna put it to best use? So those are the first two steps that my team and I identified internally, and then, of course, from there, it's going out and finding the right investors, right partners to be part of this with you. And I think this is the most important part.
In this industry, particularly, there's so much money coming into the space that I don't think the issue is finding the money. I think the issue is finding the right people who you align with, who your values align with, who have experience doing what you're attempting to do. And that's exactly what we were fortunate to find. Our lead investors, Layer Hippo, out of New York City, and our other investors, Casa Verde, Los Angeles based cannabis firm. And I'm so excited to have them both part of this team and they both fill in gaps of areas that I lack and they complement each other very, very well. So, that's a little bit about what I have to say about raising capital.
Matthew: So, it's Casa Verde Snoop Dogg's venture capital arm?
Karson: Yep. Yep.
Matthew: Cool. Did you had an opportunity to meets Snoop?
Karson: I have not met Snoop yet, no.
Matthew: Gosh. That's fantastic. Okay. So let's dig in a little bit to Vangst here. Now, what states are you probably primarily focused on than it would just say it's mostly...I mean, California is just so big. Are you focused on that, primarily, you're based there and you're kind of you're looking at other states but that's the focus, or what's your strategy?
Karson: For direct hire, we're live in 13 states, and the states that we're in right now are Colorado, California, Washington, Oregon, Illinois, Nevada, Arizona, Massachusetts, Maryland, Ohio, Pennsylvania, Florida, and New York. Those are the 13 that we're in. Out of those states, the ones that we're most dominant are Colorado and California. And actually based on our data, one of the awesome things we have is our job board, and the job boards going great and we're able to collect so much data. And so through our data, what we were able to find was that last year the majority of the jobs that we were filling were in...I'll tell you the five most popular cities. It was Denver, LA, San Francisco, Seattle and Portland.
You know, to that extent, if you look at how many jobs exist, the market with the most jobs is California. There's right now around 41,000 people full-time employed in California, and the market behind that is Colorado with about 26,000 employees. And so it makes sense for us to be based in those two states, have the majority of our focus on those two states right now. And as additional states continue to grow and legalization continues to move forward, we, of course, will be there, meeting new clients, meeting all different types of candidates and helping those states grow. But right now the majority of jobs are in Colorado and California, and therefore the majority of our clients and our candidates are there, so it makes sense for us to be there.
Matthew: What differences do you notice between the Colorado and California markets in terms of business environment, the jobs that are being offered, maybe the style and approach of the business owners? Anything you can tell us there?
Karson: I think the main difference for us and our business is the difference in regulation around employment between Colorado and California. One thing that's very important to us, especially for our on-demand business, on-demand meaning when employers need temporary labor, they can call Vangst on-demand employee whether it be a trimmer, a budtender, a packager or somebody who works for us. There are W2, we provide them with workers compensation, we take care of all the payroll taxes, there are employee. It's very important for us to remain up to date on each state's regulation and remain compliant. So, there's a difference between who's qualified to work in Colorado than who's qualified to work in California.
So, for example, in Colorado, in order to work in a business where you're actually touching the plant, you need to have what's called MED badge. You apply for the MED badge through the MED. And the basic criteria is a clean background and being up to date on your taxes. If you meet those requirements, you're eligible to receive a badge, then every couple years, you have to get the badge renewed. It's our job to ensure that people that we're employing are up to date on their badge, their badges and expired and that they continuously check all the boxes in order to work in the state.
And California, I would say the main challenge is, the rules are still somewhat unclear. We know that there's not...1099 is not allowed with any cannabis business. This is something that recently came out. But the general rules of who's qualified to work in California cannabis continue to be somewhat unclear. Right now the standard has been clean background. So, I think the main challenge is just remaining up to date and compliant around employment regulations between the two markets.
Matthew: Okay. So, I didn't realize. You actually...They're the employees of Vangst, so you handle all kind...Do you handle the benefits and all the tax and paperwork and all the things so that the employer can just say, "Okay. I want to hire this person or not, and then here's what I pay monthly," and then Vangst takes care of all the back office paperwork?
Karson: So, there's two ways that we...Like, I was talking about a little bit earlier, there's direct hire searches, where a company says, "We need a COO. We'd love someone from consumer packaged goods. Here's all the requirements that we need." And then one of our executive recruiters will go out and actually head-hunt that individual. So they'll find them on LinkedIn, they're probably currently employed somewhere else. From there, we'll do all this interviewing, reference checking, background checking, present our clients with the top couple candidates. And then when the offer is made, the candidate goes directly on that client's payroll and that client's responsible for taking care of the benefits, etc.
What I was just referring to is our on-demand component, which is the component of our business. It's actually growing the quickest right now and that it gets me very excited. And this is for companies that have short-term seasonal needs which, as you can imagine, is pretty large in the cannabis industry. We have clients who have a harvest and they need growers for 12 days and they will be able to hire Vangst growers. So, as you were just talking about the Vangst employees, we verified their I9s, their RW2s, we're handling the benefits, we're handling the workers' compensation, we're handling all the state-federal taxes surrounding that employee and we're actually managing that employee telling them, "Hey, today you're going to be going to native roots. Tomorrow you're going to be going to good chemistry," and giving them their schedule for the week based on the demand that our clients need.
Matthew: Okay. That makes sense. That seems like it would be a popular model, that on-demand. And how long is the typical on-demand? Are you seeing that more like you mentioned in trimmers and growers and things around actual harvesting of the plant? Is that worth the on-demand the most popular?
Karson: One segment that's very popular is these entry-level positions, exactly what you're talking about, trimmers, growers, post-harvest staff. On the processing side, extraction, technicians, packagers, those types of positions. What we're really seeing kickoff is higher level on-demand longer-term needs. Let's say that somebody wins a license in Maryland. They need a Director of Cultivation to come and get them set up. They need someone to come in, help them source nutrients, help them source equipment, help them write their SOP, sometimes even help them design their facility, help them hire staff, help them train staff, and then move on to the next project. So we're getting much longer-term engagements with companies that say, "I need a Director of Cultivation. Somebody from large-scale commercial agriculture who has a scientific mind, who's then transitioned into the cannabis industry and has at least three years of large-scale commercial cannabis cultivation and management experience. I need them to come and help me get set up." We have these people who work for us. We have a great bunch of them. And we essentially lease them out to our clients for sometimes six months, sometimes six-week engagements.
Matthew: Okay. So, I imagine more for the direct hires, you're having to reach out to other industries to find talent. Can you tell us some of the other industries you find yourself reaching out to?
Karson: Sure. I think a really big one for us has been in pharmaceutical space. Another one has been large-scale commercial agriculture or consumer packaged goods. And then, you know, kind of a surprising one, I think, maybe some people would think but it's very big for us is technology startups. Technology in this space is really big. We have clients like LeafLink technology and they're recruiting engineers out of Snapchat, BuzzFeed, lots of mainstream technology companies. You know, an example I like to give is a company called Baker Technologies.
Karson: We work with them. We placed over 50 or 60 people with them and their Director of Sales, Carter, who's a total rock star, she came out of Salesforce and she's built out a team of inside sales, outside sales, and customer success, and she's pulled it in top talent from all the different technology company. So, the technology scene in this industry is exploding and it's amazing to see the type of talent we've been able to attract into the cannabis tech startups.
Matthew: I know it's a hard question to answer. But what is the relocation package look like? Is that happening a lot? Is that more the direct higher level and where do you see that going on? And then how do people put together attractive relocation packages?
Karson: Great. So, I'm gonna answer your question in two-fold. One is, we do see a lot of relocation happening particularly on the plant touching roles director level. Again, to that example that I just made, somebody wins a license in Maryland, maybe they..rather than doing the on-demand platform, maybe they would like to hire somebody full-time who can be with them and help them grow for the next five years and they need to relocate somebody from Colorado, Washington, Oregon where they've been part of the large-scale commercial legal compliant cannabis industry for the past few years, help them bring that expertise to Maryland. We see that very often.
Typically, we're seeing 20% pay increase to do so to have someone essentially uproot their life and move. And we're also seeing a lot of stock options. And so employees can have skin in the game and really be part of the new company that they're joining. In my opinion, people treat things better if they're an owner than a renter. So in our business, we are rolling out of stock option plan where everybody in the company will be part of it because we're all building this together and I think that a lot of companies in this industry have adopted that mentality and it's been able to help them get top level talent.
Matthew: Talk about turnover for a minute. How big a problem is that? And what can employers do about it?
Karson: Turnover is a huge problem and it's a very expensive problem. And in my opinion, turnover comes down to...Of course, it comes down to making the wrong hires and that's what everyone always says, "Oh, I hired this person, they're terrible. That's why I'm having turnover." But if you look inside of your company, I believe a lot of turnover comes from lack of preparation and not making necessarily a bad hire for the person, but hiring the wrong person with the wrong experience, the wrong skill set who was not set up for success to do what you need them to do. So, while I completely agree that hiring the best people is critical, more so critical than that, I think, it's setting people up for success and making sure that as employers you know who it is you want hiring. If you want, I can elaborate more on that.
Matthew: Sure, yeah. Please, do.
Karson: Okay. So, I think that sort of a recipe for success and making a hire is, step one, figuring out who it is that you need to hire, and in order to figure this out, I think, the best way to do so is getting an understanding of what needs to be accomplished through this person. What is the gap that you're looking to fill? So an example I could give is, maybe you're looking...maybe your company needs to grow sales by 10% month over month and you need to bring in sales reps to do so. Figuring out what exactly that salesperson needs to do to help you reach that larger goal. So maybe the salesperson needs to bring in $50,000 in new business a month. That needs to be clearly thought out and explained that you can get an understanding of, "Okay. My need is, I need to increase sales by 10% month over month. In order to do this, I need five salespeople who are all bringing in $50,000 worth of new business per month."
Now that you have what the goal of these hires are, it's easier to work backwards. So now we're understanding that we need to hire a salesperson, the salesperson needs to bring in $50,000 worth of new business per month. How do you anticipate them going about doing this? Are they going to be expected to create their own list of people to call? Are they gonna be going to trade shows? How many calls a day do you expect them to have to make? What kind of marketing material are they gonna have? And really putting together these things as an employer that you can...You know, so you're setting the expectation for the employee and then, you know, to that point, you are now figuring out, "Where is this? Where in the world is this person right now?"
Let's think about companies where a person would be expected to make $50,000 in sales a month, obviously, finding someone who's selling something similar to what you're currently selling whether it be a product or a technology, and so then you can identify, "This is the type of candidate who I'm looking for. I'd like to find someone with five years experience at a SaaS startup who's had to hit these goals." And then at least you have a clear picture of what you need the new hire to do, and who the new person potentially is, and where they potentially could be working right now.
Matthew: Okay. And you mentioned the expectations a little bit. That's a key thing. How do you...I mean, you mentioned putting numbers around expectations, but is there anything else you would share about creating expectations for a new hire that's coming in?
Karson: Well, it doesn't always have to be numbers, of course, because not everything is sales. That was just the example that I was using. But I think it's very important to let a candidate know in the interview process how there'll be judged. And so in that last example I was using, it would be important to say, your goals may be after three months ramp-up period are going to be to $50,000 in new business per month. Talk to me about your last company's quota. Talk to me about how you went about ensuring that each month you met your quota. Talk to me about a time you missed your quota and what changes you made to ensure that didn't happen again. And finding somebody who's done in the past what you need them to do, again, is critical and also laying the expectation out for them that, "This is how we're measuring you. This is how we're going to determine if you're successful or if you're not successful," so that you're very clear and you have communicated to people what you're expecting from them, because people, employees cannot read minds.
They're not mind readers and I've made this mistake myself where I think that if I just, you know, wave a wand in the air, the team is gonna know what I want them to do. And it's not the reality. So, setting the expectations upfront, I think, is very cool. And then, of course, when they start in the new job, giving them a clear roadmap and timeframe of, "This is what I'm expecting this month. This is what I'm expecting this month. This is what I'm expecting this month." Clear timeline, deadlines so that it's easier to keep track of and manage.
Matthew: You mentioned to me before that you consider on the job learning laziness. Can you tell me what you mean by that?
Karson: Did I say that?
Matthew: You did. You did.
Karson: No, I don't think...I think I meant when employers are expecting their employees to just come in and completely figure it out, that's laziness on the employer.
Matthew: Yes, absolutely.
Karson: Yeah, yeah. That's what I mean. I mean, how can employer... I've seen it happen all the time where they put all the blame on the employee, "This employee sucks." Right? "It's all their fault that this job isn't working out." And we asked them, "Did you lay out the expectations? Did you tell them what you were expecting them to do? Did you tell them the resources that are available to them?" "No, they should just be able to figure that out on their own. That's why I hired them." I think that that is a blame and a cop out for lack of preparation on the employer's end.
Matthew: Yeah. How bad...
Karson: And I'm guilty of it. I'm not...I guarantee you, if anyone on my team is listening to this, they're saying, "Oh, my gosh," because I'm working on improving it and so is my management and team. And fortunately, I have a great team of people around us. But we're all startups. Everybody is learning on the fly. We're all trying to do the best that we can, and so not...Of course, this isn't gonna be completely perfect, but we've found in our business and we've seen in our clients business that setting clear expectations and giving your team the tools that are needed for success has made a huge difference, and it also makes everyone happier. I mean, people want to be successful. Nobody wants to fail. And so when you can lay out a plan that foster success, I think it's a win for everybody.
Matthew: Any suggestions on how to check in on performance with employees without being too overbearing and finding the right balance? Because some people, you know, they like to be handled, you know, tenderly and other people just say, "Cut to the chase. What am I doing wrong? Give me three bullet points and that's all I need."
Karson: Sure. I think timelines and ongoing check-ins, just regular check-ins, maybe it's 15 minutes at the end of the week, whoever the direct manager is. So you've laid out the timeline, you've laid out the expectations. At the end of the week, whoever the direct manager to the employee is, there's a 15-minute check-in where you go over the progress made that week to just ensure that you're on track. And then that way, if there's a problem with them, you can catch it before it's necessarily a problem. And, of course, bigger meetings, maybe on a month, maybe on a monthly basis, every other month, but just a standard consistent check-in so it doesn't feel like an employee randomly gets an email notification, "Need to meet with you to talk about missed goals." If there's a standard recurrent check-in, I think that it's a great time to catch problems before they necessarily even become problems.
Matthew: What can you tell us about trends in pay in the cannabis industry? Any generalizations you can make or anything you can say that would help would-be employers, and also give prospective employees kind of the proper mindset how to think about compensation?
Karson: I think right now everybody thinks the cannabis industry is a gold rush. I'm gonna go into the cannabis industry and I'm gonna make it big in two years. I'm gonna have an insane salary. And that's not the reality. The cannabis industry is still faced with dozens and dozens of challenges and hurdles. Like, I mentioned, I'm here today in DC speaking with various members of Congress talking about the challenges we face. And the majority of our clients are affected by 2ADE which virtually sucks away all of their profit. I mean, there's many things working against us in our industry that don't allow our industry to pay as competitively as many other industries though there's this misconception that everyone's printing money right now. That said, employers in the industry are really starting to value bringing in top talent from other industries and they're cutting expenses and other areas to ensure they have a larger payroll budget to be able to hire the best and the brightest.
So, what we've seen and what we...You know, the clients that we work with are people that are gonna work in line with the hire that they're going to make. So if they're going to hire a retail store manager, they're gonna hire in line with where are the candidate is. So, maybe the candidate is a manager of a bar or a restaurant, they're gonna hire in line or potentially even a little bit better if the candidate is expected to take, you know, in updates minds, they're taking a small bit of a risk going into the cannabis industry. So we are seeing parallel pay and sometimes a little bit better pay. And what we're really seeing companies valuing, hiring and understanding the importance of bringing in top talent from different industries.
Matthew: Sometimes people say, "Well, I'll just hire him or her and see how it goes." But there's a real cost to hiring the wrong person. How do you think about that?
Karson: Completely agree. I mean, there's statistics out there that it can be five times the bad hires pay. If you think about... If you add up all the costs and a lot of the intangible costs, if you think about the time it took you to recruit the person, interview the person, hire the person, the time it took you to onboard and train the person, the time that the person spent not doing the right job, not to mention all the mistakes that the person made adding up those costs. And then there's the negativity that goes into having to let somebody go, the negativity to the manager or the owner who actually has to do the firing, the negative energy that this person could have cause to the rest of the organization. The majority of statistics say five times the wrong hires pay, which, again, you would think if you say to yourself, "Okay, $50,000 times five," that number in my head I'm thinking, "Oh my goodness. That is such a gigantic mistake."
But I think because there's so many intangibles that people don't often think that way and they think, "Whatever, I'll just hire this person. I'm only paying them X. It goes bad for a couple months and I'm not out that much money. Who cares?" And that's the wrong mentality and it will affect organizations in ways that employers and entrepreneurs have no way to foresee. So, again, of course, my advice and our entire business is based around making the right hire and making sure part of that is getting...You know, making sure you're hiring the right person with the right skill sets, the right background, then you're hiring the right person and then you're setting them up for success.
Matthew: So some employers suffer from, "We are special" syndrome where they think, "Hey, we've got this great organization that someone would be lucky to come in, and sure we pay last, but the upside to couple years from now is so compelling that they should recognize that." How do you level set expectations in that situation?
Karson: I think everyone thinks they're special. I think that Vangst is very special but I'm not asking people to work for us for free. I think that organizations that value hiring and value bringing in top talent need to figure out a way to have the resources to provide their staff with compelling compensation especially given where the industry is right now and how it's maturing and where the industry is going. That being said, I definitely do think it's reasonable to ask employees to take somewhat of a potentially been in pay, but there has to be a tradeoff. Maybe we're asking you to take a 20% decrease in salary, but in exchange for that we're gonna give you X amount of shares in the company, but in exchange for that, we're gonna give you an opportunity to be a manager in six months if you hit these goals. And so I think there are ways that you can offer...there are ways that you don't have to say, "Take a 20% pay cut. Come work for us. We're the best." I think there's ways you can show them that, "Hey, financially, this is where we are, but here's what we can offer you in exchange, and here's the path to getting you back to where you were previously pay-wise."
Matthew: You know, when someone's being hired, is there any suggestions in terms of how the team should evaluate the person that they go around like, "Okay. Culture, check. Skills match, check."? Is there any other kind of check marks or boxes to check that you would think about?
Karson: I think their previous experience is huge. And when doing interviews, getting concrete examples and concrete, excuse me, stories. Again, to the example I gave. You're hiring a salesperson. Good examples of, "Hey, how do you go about finding new clients? How do you go about taking on cold calls? How do you go about closing meetings? Give me an example of a time that you had a client that you knew are super-interested but they just wouldn't call you back. How did you go and break through that barrier? How did you get through gatekeepers?" And asking very open-ended specific questions so that the candidates can give you real-world experience answers.
It's very easy to say, "I can increase sales by 10%." "Okay. How did you go about doing that? Talk to me about what each month look like." And so that's one. And two, getting an understanding of, the question is, "What did you do?" People often talk about their team, people often talk about their organization. "I helped grow the organization from 2 people to 1,000 people." "Okay, that's great. But obviously, a lot of people were involved in growing the organization from 2 to 1,000. So, talk to you about some things that you specifically did. Were you involved in hiring? Were you involved in managing? Were you involved in budgeting? What were the actual things that you did?"
So, I think open-ended questions are in experience are very key. And then to piggyback off that culture is, of course, very important. Finding people who can mesh well with your team. We've seen a lot of success and people who have come from startups, who have come from wearing multiple hats, who are used to a fast-paced high-growth environment because this industry is a...The entire industry is a startup. It's a startup industry, and then every company is a startup company, so you're toppling startup industry, startup company. You're pulling somebody from a huge corporate America job where they have 5,000 people in their department and with any given problem they can pass it off to somebody else. That's not going to typically go well in the cannabis industry.
Matthew: What advice would you give to employers that don't have the funds to hire candidates they need? They go, "Urgh, I'm listening to Karson here. She's speaking to me directly. I know that I could take my business to the next level except I don't have the funds to hire the people." It's the sharpen the saw problem, like, I wouldn't have to saw as much if my saw was sharper but I don't have the time to stop and sharpen it. So, it's like a circular problem. So, what do they do?
Karson: Yes, it's a tough question. I mean, I've been there. I sell more, make more money, raise money. I mean, like, I don't really know what to tell them. I would say, increase your sales. I mean, companies go out of business because they run out of capital, and so it's important to consistently keeping your eye on the ball on sales and revenue. And so, increase sales and revenue could lead to an increase payroll budget. Beyond that, if you're very passionate about what you're doing, and you believe that maybe you could hire somebody and within three months, you would have the funds to pay them what they need, maybe you'll find a rock star and say, "Listen, right now here's where our company is. If we do one, two, three, we'll be here, and at that point I will be able to afford to pay you." So, that's a second alternative in try to find the right person and paint them a clear roadmap of, "If you do these things together, we'll be able to get the company to a place where we can afford to pay you."
And I've seen plenty of candidates take a risk. I'll give you an example that's obviously close to home for me. Our first employee named Jordan Smith. She started working for us and me, and I could only afford to pay her $15 an hour, four days a week. She was working at a company called SignPost where she was doing cold calls majority of the day and that's what I needed. I needed somebody to help us open doors and find new clients. And I said, "Listen, Jordan, I really can only pay you $15 an hour, four days a week, but if we do X, Y and Z, I'm gonna be able to get you on to a salary, and ultimately, we're going to hire more people."
And Jordan did it, and now Jordan is pretty much running the show at Vangst. Like I said, we're a 40-person team. She's making a lot more than $15 an hour. I'm pretty sure she's making more than I am. And she's killing it and she got to go through this amazing experience of taking the company from the two of us to a 40-person team and we'll inevitably get to 500 and 1,000-person team and she's gone through the whole part. And so I do think that there's a component of experience that you can't put a dollar amount on. And so if you're an employee listening, maybe you'll find that right entrepreneur who you're willing to take a risk on and as long as the employer sets clear expectations of how you can ultimately pay them, you know, sometimes it can work out.
Matthew: Let's transition to a few personal development questions, Karson, that will help listeners get a better sense of who you are, personally. Is there a book that has had a big impact on your life or way of thinking that you'd like to share?
Karson: I read a book in college called the "Seven Habits of Highly Effective People." And that was really impactful to me. And I listened to a podcast that actually my dad shared with me when I was a senior in high school called the "Strangest Secret." It's like only about a 40-minute...It's only about a 40-minute podcast, but I really listened to it every once in a while. The general message is, "You become what you think of." If you think about plants, if you plant poison into the ground, poison will grow out of the ground. You become what you think about and you get out what you put in. That's a principle that I tried to lead my life by, and I'm gonna continue trying to do that.
Matthew: Yeah, that's great. And is there a tool you consider vital to your productivity that you'd like to share?
Karson: A tool that I consider vital to my productivity. I think waking up early is something that is so important because in the morning, you don't have a lot of noise and distraction and it's a great time to think higher level without being bombarded by emails, text, calls and having your mind be cluttered. So, for me, I wake up early and I exercise and I leave my phone on airplane mode and it's just a nice time to think and basically not be harassed.
Matthew: Now, final question here. If some young people are listening or people that are in other career path that wanna get into the industry and they're really thirsting to, but they're not sure the best way to do it. Maybe for the young people first, where do you think there's the most jobs where they could, you know, if they graduate with such and such a degree or have an internship someplace that they have a really good chance of getting hired into the cannabis industry?
Karson: Great question. And, you know, I think there's so many different verticals and so many different ways you can go. I always say, keep your career changer industry. People that say, "I just really wanna work in the cannabis industry," that's not enough. You need to say, "Here's what I'm good at. I just graduated with a degree in accounting. I really understand accounting. I wanna be an accountant in the cannabis industry." And then go out and research companies that are hiring in the cannabis industry. And I bet you, the majority of them have a need for an accountant. So I think it's more a matter of determining what it is that you're passionate about and then you're able to apply that into the cannabis industry.
I mean, Matt, look at you. You're running this crazy successful podcast out of Edinburgh, right? It's not like you had a degree to do a podcast in cannabis. You're great at doing podcasts and people in this industry love you and you're able to find this awesome cool niche. There's so many opportunities like this and it's a very exciting time.
Matthew: Oh, thanks for that, Karson. Well, as we close, tell us, how can listeners find you connect? How can people looking for jobs find out more about jobs in the cannabis space and how can employers that are looking to fill an on-demand job or to have a direct hire reach out to you?
Karson: Vangst.com is the best way to get in touch with us. Vangst.com, as a candidate, you'll get redirected to a place where you can build a profile. Actually, excitingly, we have around 35,000 active candidates that have build out profiles on the platform and about 600 open positions with companies all across the country on the platform. So, if you're a candidate, go to vangst.com, build a profile, scope out the open jobs. If you're an employer, reach out to us directly through vangst.com. We'd love to get on the phone with you, get an understanding of where your business is, what your hiring needs are, and ideally meet you in person and get a plan together so that we can help you plan for hiring the best people, hiring the best people, and then, of course, retaining the best people.
Matthew: And Karson, I...
Karson: Sorry. That was the salesperson in me coming. I know I'm not supposed to sell on this thing.
Matthew: No, you gotta do it, you gotta do it. And you're good at it. Now, before the interview, I said, "Hey, Vangst, is that Dutch?" and you said, "Yes, it is." Tell everybody what Vangst means.
Karson: Vangst means "catch" in Dutch. And the idea is that we're catching talent from all different industries. But my favorite part about Vangst is that if you get place, if you find your job with Vangst, you're considered a Vangster. And if you're a Vangster, on your first day of work, you get a box from us in the mail with some Vangster swag, a cool hat that says, "Damn, it feels good to be a Vangster." And we invite you to lots of exclusive networking event just for Vangsters." We're actually launching a platform Just for Vangsters where many companies will offer discounts. And it's just a great way to connect professionally with... In our opinion, we think Vangsters are the best and brightest in this industry, and it's amazing to have this ecosystem of people that are working amazing jobs and amazing companies. And so that's a little bit about why we chose Vangst and we have this cool network called Vangsters.
Matthew: I like it. Vangster.
Matthew: Well, Karson, thanks so much for coming on the show today and educating us. And I encourage everybody that's looking for a job or that needs to hire someone to reach out to Karson and let her know that CannaInsider is where you heard about her. So, Karson, thanks so much for coming on the show. We really appreciate it.
Karson: Thank you, Matt.
Matthew: If you enjoyed the show today, please consider leaving us 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. Have a suggestion for an awesome guest on "CannaInsider?" Simply send us an email at feedback at cannainsider.com. We'd love to hear from you. Please do not take any information from "CannaInsider" or its guests as medical advice. Contact your licensed physician before taking cannabis for using it for medical treatments.
Promotional consideration may be provided by select guests, advertisers, or companies featured in "CannaInsider."
Lastly, the host or guests on "CannaInsider" may or may not invest in the companies entrepreneurs' profiled on the show. Please consult your licensed financial advisor before making any investment decisions.
Final disclosure to see if you're still paying attention. This little whistle jingle you're listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another "CannaInsider" episode soon. Take care. Bye, bye.