Episode #162: Chase Nobles, Kush.com, “I Think Other Ag Industries Are Going To Be Playing Catch Up With What We’ve Learned Through Hemp and Cannabis”
Guest: Chase Nobles is the co-founder and co-CEO of Kush.com, a managed marketplace dedicated to helping the legal hemp and cannabis industries thrive through a carefully curated network of verified and vetted buyers and sellers.
Date Recorded: 6/5/19 | Run-Time: 51:59
Summary: Chase kicks off the episode with some background, meeting his business partner, and how he went on to become the co-founder of Kush.com. He then gets into starting Kush Tourism as a resource for cannabis tourists during the early days of cannabis legalization in the state of Washington, showing them facilities, the industry, and educating them about cannabis and the business behind it.
Next, Chase discusses the phase of the business where he and his co-founder realized the value of their business was the network they built. That spurred the idea for a wholesale marketplace. That evolution of the business ultimately led to raising funds and meeting angel investor, Jason Calacanis. Chase goes on to describe the platform, and how it has grown into the marketplace we know today as Kush.com.
Meb then asks Chase to discuss the near-term hurdles for growth. Chase explains the backlog of applicants for the platform they are currently working through, and the work it takes to process them, as an example.
As the conversation winds down, Meb asks about challenges in the industry. Chase talks about the issues with payment processing, and the hope that things will change in order to ease the burden on that front.
Sponsor: Bar Nine
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Links from the Episode:
- 0:50 – Sponsor: Bar Nine
- 1:54 – Welcome to Chase Nobles and a look at the early part of his life in school and the Air Force
- 4:50 – How Chase met his business partner and where it led next
- 6:26 – A look at the early days of Kush Tourism
- 12:42 – The next phase of the business
- 15:42 – Scaling the media company and finding the next opportunity in the network that they’ve built
- 17:16 – Sponsor: Bar Nine
- 18:22 – How they identified the value for a marketplace business
- 20:52 – Meeting Jason Calacanis
- 21:00 – Episode #69: “This is a Little, Secret Way… A Dark Art of Becoming Truly Wealthy… Massive Wealth”
- 22:12 – The early phases of building the company and its growth trajectory
- 24:38 – The nature of the purchases being made on the marketplace
- 27:25 – Open communication with investors
- 28:53 – Main hurdles for growth
- 31:24 – Future opportunities they are exploring and thinking about
- 32:56 – The rebranding to Kush.com
- 35:42 – Hurdles with payment processing
- 41:25 – Biggest challenges of being a CEO
44:40 – The type of hires they are looking for - 47:45 – How to connect with Chase: kush.com, kush.com blog
- 48:29 – Most memorable investment
Transcript of Episode 162:
Welcome Message: Welcome to “The Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Sponsor Message: Today’s podcast is sponsored by Bar Nine, a cafe and roaster in Culver City, California, that believes everyone deserves the opportunity to taste the best coffees in the world. I love their coffee, has been a long-time subscriber, and lucky for you they have two subscription models, so you can have great coffee delivered to your home weekly.
Versus their classic subscription, a custom blend made for those who want a simple, a beautiful cup of coffee that evokes a sense of nostalgia. Apparently, that’s a 80% Columbian and 20% Brazilian blend, the blend changes seasonally and ships weekly.
Then there’s their Odyssey subscription. This is for the avid coffee lover looking to access truly unique coffees from the rare to the experimental. This is the ultimate experience for the most distinguished of palates. There’s a new shipment every other week. Visit barnine.us. That’s B-A-R-N-I-N-E dot U-S, and click shop and then subscriptions for more info. You can even use code Faber, F-A-B-E-R, checkout to receive 20% off your first month. Again, that’s barnine.us.
Meb: Welcome podcast listeners. We got an awesome show for you today. Our guest is the co-founder and co-CEO of Kush.com, a managed marketplace dedicated to helping the legal hemp and cannabis industries thrive through a carefully curated network of vetted buyers and sellers. Welcome to the show Chase Nobles.
Chase: Hey, Meb, how are you?
Meb: I’m awesome, man. So you’re based right now out of Seattle. But you’ve spent a little time growing up in East Coast and also some time in Colorado. Was Colorado undergrad, grad school? What were you doing there?
Chase: Actually spent a couple of years at the Air Force Academy. That was kind of the genesis of moving to Colorado. I moved there right out of high school. I was recruited to be on the gymnastics team there. Ended up after a little over two years decided the Air Force Academy and the Air Force in general just wasn’t the best fit.
So I dropped out, took a semester off, started kayaking on kind of a semi-professional level. And then parents convinced me to go back to school, finished up school at University of Colorado Colorado Springs. So I was ready to get out of town as soon as I graduate and move right up to Seattle, just because it’s a great place up here. I love it.
Meb: I do, too. I was there last year and spent some time downtown on one of those just rare, beautiful weekends where it’s just gorgeous every day and went over to the…is it called Hood Canal area?
Chase: Yeah.
Meb: And went down to Hama Oysters and went crabbing and cooked out some pizza, awesome time, big fan. Anyway, I’m also a Colorado guy, so that’s why I was curious. I did the summer CU Boulder, and I got a brother that did CU Denver, a lot of buffaloes in the family. Anyway, all right, so Seattle, you gave up the… What was your event in gymnastics? Is there such a thing? Is it a single event, or you just do everything?
Chase: Yeah, so I used to, like, in high school I was really strong on rings. And I ended up tearing my labrum, had a couple of surgeries on my shoulder, and became a pommel horse specialist and ended up doing pretty well on pommel horse and competed at a pretty high level collegiately.
Meb: Awesome. I love it. Well, all right, so you tore your labrum and said, “Screw this. I’m trading my pommel horse for a kayak.” So how did you get into kayak? Did you just start kayaking in Seattle? Or did you grow up doing this on the East Coast?
Chase: It’s actually related. Yeah. So I grew up in Knoxville, Tennessee, kind of the heart of Appalachia there. And my gymnastics coach actually taught me how to kayak, and ended up getting recruited to go to the Air Force Academy, but a big part of that was “Oh, I get to move to Colorado.”
Like, whenever you’re in high school, you’re thinking of the places that you wanna live, not necessarily schools you wanna go to, or at least that was my perspective. And fell in love with Colorado, and really fell in love with kayaking when I was in college, and then I realized after a couple of road trips that the Northwest is the mecca of white-water kayaking. So that’s what led me to Seattle initially. And that’s actually how I met my business partner. We met on the side of the river, kayaking.
Meb: It’s funny how this sort of meetings happen. I’ve certainly probably had more serendipitous meetings on ski chairlifts, and I don’t play golf, but golf courses and everything else than probably any formal meeting. All right, so your business partner was… So you actually started guiding at some point on white-water, too, didn’t you? But tell me about, you met your business partner sitting on the side of the river, and kind of what came next?
Chase: Yeah, so we’re kayaking at a pretty high level, too. So when we started kayaking together, it wasn’t like we were kayaking small rapids. We were going down pretty significant class 5, 5-plus rivers. And so we had kind of this friendship and this bond, and that…I like to say business is very closely tied to trust. And I think you’ll see a lot of that in our brand.
But when it comes to having a business partner you can really trust, kayaking was…you can really trust somebody that you’ve been down some pretty big rivers with. So we started actually a cannabis media company called Kush Tourism, scaled that up pretty quickly as, like, a tourism resource for travellers that consume cannabis. And then that led into building the marketplace, what we consider the largest wholesale raw materials, cannabis and hemp marketplace in the world.
Meb: Well, we’re gonna spend a lot of time on that. This episode is gonna be interesting, because it will blur the lines between entrepreneurship, between learning about start-up funding, as well as investing, and also, of course, the growing cannabis space. I’d love to hear about the early days of the actual tourism idea. Was this something where you guys said, “Look, let’s start a blog. Let’s start some sort of aggregator”? What was the general concept? What was the light bulb idea that started this whole world?
Chase: Well, we were on a very fixed timeline, because all we had was $5,000. And it’s not like we could really step back and build a full vision. We had to figure out how to make money and quickly, right, because I quit my job. I had moved to Seattle, and then come November, October, November, I met my business partner, Mike.
And then in January, I quit my job thinking I’d land another job, and that job didn’t end up working out. And I was all on deck to get married in May. So I quit my job. We started this company. I got married all within a couple of months. And I wasn’t making any money. So the focus of the business was to figure out how can we make some initial revenue.
And so we started a tour company right out of the gate. This was right at the beginning of recreational legalization, and people were traveling to Seattle from all over the world to learn about cannabis. We used to be their guide to show them the grow facilities, to show them the glass blowing and the art culture, and to show them the recreational dispensaries and teach them about what was happening in Seattle.
Because at that point, recreational cannabis was brand new, Colorado and Washington legalized and rolled it out in 2014. And that was the only two states in the country. So we had just had an influx of travellers, and we started selling tours to take people around the city and show them the industry.
Meb: And so I’m sure your new bride was pretty excited to hear that you said, “By the way, I’m gonna burn through this 5k, and then start to run up our credit cards on this new business.” I don’t know how that went, but I heard somewhere else where you talked about, you were laughing, where you said you quickly ran out of business.
What was the evolution of that sort of concept? Was it something where there was an immediate product/market fit where you said, “Oh, this is a cool idea if we do X, Y, Z,” or you said, “No, we need to pivot”? Like, how was the early days, how to grow from post-nuptials?
Chase: It was super rough, Meb, I’ll be honest with you, man. Like, those moments were what we figured out what we’re capable of. And I think innovation comes from scarcity. And we were making a lot of moves at that time, because it wasn’t a neat initial product/market fit. We were working to sell tours. And we actually launched our first tour on St. Patrick’s Day, and we became our own PR agency.
We told every news station in Seattle that we were gonna launch this tour in Seattle, it was gonna be the cannabis industry. And little did we know that the media ended up… We had three or four news stations come out and pick up the story, right, and travel around the whole tour with us. And the next morning, my business partner gets a call from a friend in St. Louis, because he’s from St. Louis.
And he goes, “I just saw you on the news this morning.” And we couldn’t believe because all my family’s from the Southeast, all his family’s from the Midwest. We couldn’t believe we were on the news in St. Louis. We were trying to figure out how. And apparently, we got picked up by the “Associated Press,” which at that point, we didn’t even know what the “Associated Press” was. And the story went pretty big. And that helped kick off the business.
But then we realized it’s really hard to make money operating a small tour company. And our biggest challenge was selling tickets to go on these tours. And so we built a content marketing strategy, because we were quickly running out of money. It was all based on cash flow, right? The money that we had in the bank was based on the tickets we sold right then and there.
And we built this content marketing strategy, where we started listing all of the hotels, bed and breakfasts that would allow cannabis consumption and the frequently asked questions about cannabis in Seattle and where and how to buy recreational cannabis. And that content marketing actually started to work really well, so well that we were getting calls to advertise on our site for the recreational dispensaries.
And so we actually became a much bigger media company out of that necessity to sell tickets, because we just built this kind of content giant. And that led to a whole nother phase of the business where…and it’s still in existence today…where we just reached a lot of people really quickly and started selling ads. And that dwarfed the tour company almost entirely.
Meb: Almost any entrepreneur listening to this can sympathize and relate to some of your comments, that just queasy pit in your stomach. I mean, how we’ve been at this 12 years, and I can’t tell you how many couches I’ve slept on and sleepless nights, but I don’t know that they’re over yet. That’s the hard part.
Chase: So that was January, started. March, we started doing tours. In June we ran out of money. In June we also started…
Meb: Chase, what year was this?
Chase: 2014. Well, May I got married. June, we ran out of money. And we weren’t taking a pay-cheque this whole time. And I had a pretty hard conversation with the wife. And the conversation was, “You’ve got three months to take home a pay-cheque, or you need to find a real job,” which I think for any entrepreneur out there, that’s so much fuel to the fire.
And it’s…because you do have a real job. But at the end of the day, you have to take home a little bit of money, especially because we were so cash-strapped. I was trying to just do side gigs to help pay a little bit, but we weren’t making any money from the business. And at three months, right on the dot, on the fourth month, the first day of the fourth month, Mike and I paid ourselves 600 bucks a month and we got to real job. Or that’s what we told ourselves.
Meb: I love it. Well, you know, it’s funny, some of this long tail, the internet lends itself to some of these content ideas. I mean, I know numerous people that have built content sites and make six, seven figures based on linking to booking.com or hotels.com and simply getting affiliate fees. Because when you get to some of these very specific content, corners of the universe, there’s not that many people searching for something particularly specific.
And you can do it without even having to do click-baity or even any type of shady way of doing it but actually just good content. Anyway… Okay, so we get through summer, you’re paying yourself the big bucks now. What comes next?
Chase: So we learned that, like, a dual-sided approach, because the cannabis industry has all these advertising restrictions, right? You can’t just buy Google ads for a recreational cannabis shop. And you can’t advertise on Facebook if you’re a shop, right? So they had to start getting creative, these retail shops had to start getting creative with the way that they advertised.
And we were a tourism brand. And so we worked for, I don’t know, probably eight months on opening up a distribution. You know, in a hotel, there’s that rack card stand in every hotel that talks about all the different tours in the city?
Meb: Yeah.
Chase: We ended up printing and distributing a map in those hotels, featuring all the different retail shops in each region. And we scaled that up very quickly into Washington, Oregon, Colorado, as Oregon came online, scaled up that printed distribution in addition to our online distribution for ads, and that started to grow really quickly as well.
And that led into a whole nother life cycle of the business where now you’re in the print and distribution game, which you learn a lot really quickly at that growth rate for two people that didn’t have an insane amount of experience there. My business partner had a little bit of experience in the publishing realm. And neither of us had that much experience professionally, because we were both pretty young at the time.
Meb: All right, so you start getting the word out. And, by the way, I’m laughing because the only experience we’ve ever done, and we did a direct mail once, to our local community here in Manhattan Beach, California. And I said, “You know, there’s all these people here. We don’t have any local investors. Let’s reach out and at least let people know we’re here. There’s a billion-dollar money manager in the neighbourhood, and they don’t even know.”
So we sent out this beautiful card to, I don’t know, a couple thousand people. We got zero responses. The only response we got was actually someone mailed the card back to us and said, “Don’t ever mail me again,” which I thought was amazing. So you live you learn. You go through these experiences, what works, what doesn’t, who knows.
Chase: Well, before we opened up the rack card stands in the hotels, we actually printed and laminated an informational card and gave them to every concierge in the city of Seattle, featuring a couple of different retail shops and got paid to do it. So that was, like, that was the MVP, the minimum viable product, “Should we distribute in all of these rack cards stands?”
Because we just didn’t have the money to even run the print run on the maps, right. So we had to make a little bit of money to get the initial capital to then do a much bigger print run in the rack card stands and figure out if it would even work on the sales side. It was pretty challenging. It doesn’t sound that, like, difficult now, but at the moment, we were under the gun with no money.
Meb: And that’s the whole thing. Like, when you’re trying, these ideas always almost sound obvious in retrospect once you find something that works, but at the time, banging your head against the wall. I mean, how we can relate, we have all these funds that I think are brilliant. And often no one on the planet agrees except for me. So we find out eventually. All right, so what’s the next evolution? What’s going on? So summer turns to fall.
Chase: Yep, summer turns to fall. Gosh, I mean, you’re taking me back here. We scaled that media company out for probably another 18 months focusing 100% on that. And we haven’t even really talked about the marketplace. But at a certain point, we realized that we were capable of so much more. And we were kind of just looking for that next opportunity in the market, because the cannabis industry has just blown up over the last five years.
And we knew that we were in such a good place with such a good network of businesses that there has to be something else out there, right? And we thought, “Since we have all these advertisers, if we do something special for them, they’re always gonna continue advertising with us,” right? And they were there with the retail shop.
So we started aggregating wholesale deals and specials for those retail shops from the producer/processor market in Washington, and sending those out and email the newsletter to all of our advertisers. And the first email we sent, it helped sell out a processor who had never sold a single product and just kept their business up and running. It helped them sell out within two hours.
And that’s when we realized our most valuable asset as a company is the network that we’ve built at this stage in the industry. And then that just lead on a whole roller coaster of, “How do we create value for the network and build a business around that?” And then you’re jumping into network effects, and what are the network business models, and what is an online marketplace, and how do those operate? And you’re just trying to learn as much as you can as fast as you can, because there’s a big opportunity here.
Sponsor Message: Today’s podcast is sponsored by Bar Nine, a cafe and roaster in Culver City, California, that believes everyone deserves the opportunity to taste the best coffees in the world. I love their coffee, been a long-time subscriber. And lucky for you, they have two subscription models.
So you can have great coffee delivered to your home weekly, versus their classic subscription, a custom blend made for those who want a simple but beautiful cup of coffee that evokes a sense of nostalgia. Currently, that’s an 80% Columbian and 20% Brazilian blend, the blend changes seasonally and ships weekly.
Then there’s their Odyssey subscription. This is for the avid coffee lover looking to access truly unique coffees from the rare to the experimental. This is the ultimate experience for the most distinguished of palates. There’s a new shipment every other week, visit barnine.us. That’s B-A-R-N-I-N-E dot U-S, and click shop, and then subscriptions for more info. You can even use code Faber, F-A-B-E-R, and checkout to receive 20% off your first month. Again, that’s barnine.us. Thanks for listening. Now, back to the show.
Meb: So, all right, so was there sort of an “aha moment,” or… Because I know you guys started to host some events, too.
Chase: Yeah.
Meb: Was there sort of an “aha moment” as you started to roll things out? Did the marketplace happen concurrently with the events? Was one first? What was the progression?
Chase: Well, yeah, so we started that newsletter, and the “aha moment” was whenever we helped somebody sell out, like, a significant amount of inventory in two hours. That was the, “We’ve found how we can create value for the network.” And with that, we launched a really basic wholesale marketplace listing website.
And when I say basic, it was really basic. And, but we got a launch within, like, three weeks, right? And from there we raised $70,000. And I remember it was, like, the biggest accomplishment ever, because we had bootstrapped all the way through so many hard times. Now we have 70k. What are we going to do with all this money?
Meb: And where did that come from, you said?
Chase: Two angels are here in Seattle. One of them owned another business in the cannabis industry on the tech side. And then one of them was just a great angel investor. And then the guy, Ryan Porter [SP], who wrote that 50k check, he’s on the board today. And he’s just a great partner in this business.
But there’s a lot of risk on that capital. We were starting to build a stronger business, but we were still a very early stage company. And so we had 70k. And the whole reason we raised $70,000 was to figure out, can we make money with this marketplace thing that we just invented, right? Can we actually turn a revenue stream on here that creates enough value to be sustainable?
And we had been doing media for so long, that mind set was, “Okay, how can we generate ad sales or media sales through this marketplace in this network, right?” And that’s whenever we launched a product catalogue in the Washington market, and actually…and started…and launched our first live wholesale marketplace event in Seattle. And both of those were really big successes. And it just continued to build the network bigger and bigger and bigger.
And about that time, when we had first started making money through the event and the product catalogue, we figured, “Hey, there’s something actually here. There’s a business here that we can grow. And we don’t have all the questions answered, but maybe we should throw some fuel on the fire. What does that entail?” And that’s whenever we came across Jason Calacanis, which I know you know pretty well.
Meb: So you met Jason and immediately thought, “This guy’s insane, thinks he’s the world’s greatest investor.” Jason’s been on the podcast, he’s great. But he would also tell you that, too.
Chase: Well, I think Jason was also looking at us and saying we’re insane. So I think there’s probably some mutual ground there.
Meb: And so at the point when you started chatting up Jason, had you actually launched the marketplace, or was it in sort of the germination phase?
Chase: No, we had the marketplace platform up and live. And we weren’t necessarily making money from the marketplace. But we ended up in live, and it was getting a lot of use, right. So you could kind of look at that. And Jason’s classic for…and again, in kind of a classic saying, Jason always seems to go to is, “Just squint. And if you can imagine something here, it might be worth really looking into.”
And Jason, I have so much respect for that guy, because he’s… And I think he saw a lot of what he’s done in us, because he’s built a really big media company that’s built a network around start-ups and start-up companies. And we were doing the same thing, except for we were building a media company that was helping us build a network of licensed-vetted buyers and sellers of legal recreational cannabis. And so there are a lot of similarities there between what he has built and is turning into an absolute monster and what we’re doing at the same time.
Meb: And so what was the original marketplace, the way that it started? So I assume, and feel free to correct me, you started out with maybe a website just in the state of Washington. I don’t know, could it have been…was it in a bunch of different states? And the goal being, “Hey, we’re just gonna connect. We’re gonna be a platform. We’re gonna connect buyers and sellers.” Was that the original kind of genesis of the idea?
Chase: Just Washington and just buyers and sellers, yeah, on the platform. And, I mean, when I say it was fairly basic, when you inquired about a product on the platform, it sent an email…and actually, it probably didn’t even send an email. We would see that somebody inquired, and then we would send an introduction email between that buyer and seller. So it was fairly basic, but it looked good. It looked good.
Meb: And so just give me the kind of the story of how that’s grown, what you guys are up to now, the journey of headcount, how you started hiring all that stuff. Go ahead and just tell me the story of the marketplace since the origin.
Chase: Yeah, so the platform initially was built for retail shops, and brands, and for brands to sell into retail shops. And that was doing okay. But then we noticed some really large potential deals coming together, and they were all between farms and product manufacturers. And we couldn’t ignore that. And they were very scalable, right.
Because in this industry, you have these brands that had this escape velocity, and they can’t produce all that material themselves or in house, and so they need to build a competitive supply chain really quickly, and so our company, our whole kind of model and thesis is that we’re building a supply chain out of the box for these large brands in the space in the hemp and cannabis industry. And that’s from farm to product manufacturer to the brands.
And so we pivoted, again, into being a wholesale, raw materials, trading platform that was custom-built for brands and farmers to…for brands to find raw material to put into their product and for farmers to find liquidity for their harvest. Because you got to realize, a lot of these farms in this space, they don’t have a full-time sales team.
And a lot of these brands, either they’re trying to put together procurement team, or the owners are doing it themselves. And so we can come in and say, “Hey, here’s the supply chain out of the box,” to the brand. And to the farms, we can say, “Hey, we’ll help you find liquidity for your harvest so that you don’t have to hire a sales team and do all the negotiations. You can do it right here on our platform.”
Meb: Such a no-brainer, where you have this patchwork industry that’s just growing from nothing to maturing very, very quickly and lots of money sloshing around everywhere. But having the ability to connect people seems like a very obvious platform solution. So tell me, what states you in? Are the majority of these transactions also just kind of one-off purchases, or is it facilitated where some of these guys are kind of coming back every week or every month? Or how’s it work?
Chase: Yeah, it depends on the user. The purchasing cycle is different for every user, it seems like. They fall into categories, but some people will buy enough for the next 30 days. Some people need weekly recurring orders. Some people need large farm buyouts. And so our platform is built to handle all those transactions and connect them in a, like, a competitive way, right?
So if you’re the farmer, you can manage all your different bids. And if you’re a buyer, you can manage all the different supply sources to make sure that at least the price is right. Because in this industry, there’s such little transparency into what is and isn’t a good price. And without a platform like ours, people have a hard time even figuring out what things are worth, right? And we help make that more competitive and fluid in a marketplace that is very fragmented and has a lot of different players doing a lot of different things.
Meb: So how many states in only domestic right now?
Chase: Yep, so just the U.S., but we’re in Washington and California on the recreational cannabis market. And then in hemp, hemp is becoming…it’s the 2018 Farm Bill, federally legalized hemp. So all these different… There’s a patchwork of state regulations. But there’s a lot of states already online in the hemp industry growing and selling raw material, and then kind of the derivative sides, the distillates, the isolates, the products that you would put into a lotion or a topical, or anything like that.
Meb: And so you eventually convinced Jason to participate in leading a syndicate, full disclosure invested alongside some other angel investors. What has been the process and the vision sort of to starting to scale up? I imagine you aren’t doing this with two employees anymore. Tell me about the growth, what’s been the progress of the business?
Chase: It’s been really wild, honestly, just watching this thing grow. I know you probably get our investor updates, and I’m sure you’ve seen a few of those. But when you’re growing quarter over quarter, it’s really, like, doubling quarter over quarter. It’s really hard to prepare for that. So since probably last October, we’ve grown to around 30 employees and keep scaling up. And then the numbers keep telling us to do that. So we have decent size office space up here in Seattle, and just keep growing. It’s really exciting to be a part of.
Meb: It’s interesting. The one thing I give you credit for, and Jason as well, is having invested in over 80 private companies. Now, the ability of some, like yourself, to communicate…I mean, for a while, and I may still be…it may be going in my spam at this point. But I was getting weekly updates, I think, at one point, but monthly or even quarterly.
But so many entrepreneurs don’t even send any, and it drives me nuts, because one of the biggest resources of any entrepreneur would be there investor base. And some of those people will be CEOs, some will be founders, some will be billionaires. Like, I just… It makes no sense to me not to interact with those investors or, for whatever it may be, people, and so kudos to you. I love reading them, both the wins, but also the challenges, too, because it’s not a straight line up.
Chase: It’s not easy at all. There are a lot of challenges. I think it’s really important to be honest with your cap table about that. We recently rebranded the whole company to Kush.com. And so I just changed my email address, so you might not be getting those. But I still send weekly emails every week to the cap table, just, “Hey, here’s the wins, here’s where the numbers at. Here’s how we’re doing. Here’s how maybe I could use a little bit of help.”
Meb: I was just teasing you. I read all of them. But I do like that you have the highest frequency of any of the ones we’ve invested in. But that’s better than the opposite. I mean, there’s some that I have to email them and be, like, “Dude, you haven’t sent anyone an update in, like, a year and a half. Like, are you still in business? Or, like, what’s going on?”
All right, so you’ve had some pretty solid growth. As you look around the landscape today, is the main sort of focus taking advantage of this opportunity in front of you as far as this marketplace? And if so, what are sort of the main hurdles or doors that need to open for this to continue growing? Is it just execution and finding more suppliers? Is it finding more buyers? Is it expanding into new states? Like, what’s the kind of landscape look like?
Chase: Hemp came out of nowhere last December, and we’ve been looking at it for a while and doing it a little bit of business here and there. I see CBD and hemp being such a big part of this industry, maybe even dwarfing THC and recreational cannabis at some point, just because it’s so mainstream. That growth has been just really exciting to see.
When it comes to building the network, we have to go through this whole validation and vetting process. It’s almost like an application to become a part of our platform. And so, you know, yesterday we did 97 new user sign-ups, right?
And to go through that, one of the challenges, and just speaking bluntly, is vetting and validating every single new sign-up. Because there’s a backlog of probably 5 to 800 new sign-ups that we’re still working through, and that is getting bigger and bigger. And now we’ve hired to cut into that. But I would say that’s one of the biggest challenges is dealing with that user growth on a pretty highly-managed marketplace.
Meb: And are those buyers or sellers, or both?
Chase: Both. Yeah. Well, you got to think about it. There’s these large farms across the U.S., and every single one of these farms is looking at the hemp industry and having a conversation with their team and saying, “Hey, maybe we’ll allocate a couple of acres to hemp this year.” And that conversation leads to “Well, what’s it worth?”
And whenever they start asking questions, like, “What’s it worth?” because we have a content marketing strategy that just is really effective, they end up on Kush.com and start exploring, and then end up signing up. And now they’re in the business. Now they’re in the industry and learning and figuring out, “Hey, maybe we can’t validate you right now. Your state requires this, this, and this license.” That’s a whole part of the process. There’s a huge educational aspect to our business that I think it’s a big part of helping the industry grow, I really do.
Meb: So as you kind of look…sounds like you guys got your hands full just kind of blocking and tackling on the opportunities in front of you. You mentioned hemp kind of fell out of the sky last year, which is a nice, pleasant positive surprise.
Chase: On top of growing markets like California and Washington, hemp coming out of nowhere is just, it’s really exciting to see that.
Meb: As you kind of look around the landscape obviously bad surprises happen, too. But as you guys kind of brainstorm, are there any other kind of areas that as you look out to the horizon of one, two, three years, as far as the marketplace and business that you guys are thinking about, as this becomes more mainstream and opens up more and more in the U.S. and internationally?
Chase: When you look three to four years out on an industry like this, it can be pretty challenging to say what exactly is gonna happen and you have to look at other big industries to figure out what’s happened there. The one thing that’s happened in this industry, that I think is really unique is that hemp and cannabis is being green-lighted in the United States at a moment where there’s been a lot of innovation and technology.
And so I think a lot of what we do applies to other large Ag Industries with large incumbents doing things the same way that they’ve been doing them for the last 100-plus years. Where technology, I believe, because it’s around at the birth of the cannabis industry on a much larger scale, it’s having a really big impact. And we’re building some of those features that I think eventually do apply to other Ag products.
And so to be a part of an industry like the hemp and cannabis industry, in its infancy, before the bridges are created, and to build really efficient bridges and be a part of that ecosystem, I think is fundamentally going to change and make cannabis and hemp different than other Ag Industries. And I think other Ag Industries are gonna be playing catch up with what we’ve learned through hemp and cannabis.
Meb: Interesting. You mentioned briefly in passing the rebranding. I would love to hear, you guys recently changed your domain to Kush.com, and four-letter domain, man, that’s pretty rare these days. How did you guys end up finding that one and taking it over and rebranding the company fairly recently?
Chase: Sure. Yeah. I ended up speaking to the original owner of Kush.com a long time ago when we’d first started Kush Tourism and were exploring the Kush marketplace idea. And that conversation didn’t go anywhere, just because we were highly undercapitalized company, really scrappy at the time, ended up growing really quickly and building a brand around Kush marketplace.
And having angel investors like yourself, like Jason, looking at a space and trying to consider what you think is gonna happen here and how big could it be, we ended up talking with a broker for hemp.com and the answer was, “No, our capital is tied up other places.” And then they ended up reaching out to Jason at one point, and Jason ended up negotiating a pretty good deal.
And then we decided, “Hey, maybe we can’t buy this with the capital in the bank right now, but maybe we can raise a quick convertible note to buy Kush.com,” and we had the investor support to do that. And then it was all about, “Okay, now we’re going to become Kush.com. What does that entail? What does that brand look like? And what does that mean for us in the industry?” because it wasn’t owned by an industry individual. It was owned by a family.
And, yeah, a four-letter domain, it’s a really big deal. Now when we call somebody, it’s “Hey, it’s Chase from Kush.com,” and that seems to resonate really well because it’s a very…it’s a serious domain, and it makes us an even more serious business.
And it’s been really good for us to become this brand because there’s always opportunities for a reset, and a business and a culture to become a different brand is a really big step. And I think the way we rolled it out seemed to have gone really well. We’ve only been Kush.com since May 15th, and doesn’t feel like that, but that was about 20 days ago. It feels like it was, like, three days ago.
Meb: Have you noticed any difference as far as just chatting with people in the branding or any sort of website? I’m not a tech guy on that side, so I don’t know if there’s any sort of website influx of new traffic, or it stalls out or it just same damn thing.
Chase: No, we’ve seen a pretty big influx, and it’s hard to say if it was the domain or not. When you start a new domain, you always start over an entirely new domain authority. We have a massive blog on kush.com/blog. And so there’s all this content that we had to switch over. So we saw a little bit of a content hit when it comes to traffic, but that’s recovered. And now we’re just cranking away, and it continues pointing up into the right for the business and for the website.
Meb: As we kind of cruise through the middle of 2019, what are some of the big challenges or opportunities you guys have coming into the summer? What’s next on your plate?
Chase: Yeah, we’re working on a couple of secret projects that I think is fundamentally gonna change the way these transactions are done in the industry. And I’m really excited to launch those out. Another big piece, another, like, on the challenge side is payment processing. There’s not really a… There’s a lot of regulation and just ambiguity in the payment processing.
We actually don’t even process the payments right now for any of the transactions on our platform. And that’s something that we’re hoping the federal government works through to help the banks and the credit card processors relax. And that’s a challenge that gets brought up on a weekly basis.
Meb: How does that work today? Are you able to operate outside of a lot of the rules and regulations? Or are you guys smack dab in the middle of it and have a whole…and this is spoken from someone who has to deal with one of the most regulated industries on the planet, where do you guys sit in that ecosystem? Are you outside of it, or are you fully stuck in the middle?
Chase: We have a pretty expensive legal bill, because there’s just so many questions that we got to constantly ask. But at the end of the day, we’re a communication platform to introduce buyers and sellers. We don’t process the payment. We don’t touch the product. We don’t touch the money. The transaction happens between the buyer and seller. At the end of the day, we get paid to introduce buyers and sellers per transaction.
Meb: And as far as the landscape today, you’re still hosting events? Do you guys still do a few events per year?
Chase: Yeah, we actually acquired the Oregon Hemp Convention. It’s on Friday and Saturday this week. So it’s been crazy around the office, because it’s just such a massive event that we’re putting on. It’s well over 1,000, probably pushing more like 2,000-plus attendees. And we sold out a really big space at the Oregon Convention Center. And we’re really excited to go down there and see that, because, you know, people from all over the country are coming out for this event.
But we also do events here in Seattle. And we look at it as network building. And bringing people together is our business model, kind of the physical manifestation of our online platform. And it’s always nice to have a lot of our users in one room and put a face to the name, because as much as we travel, we can’t meet everybody. And it’s really nice to have everybody come to one place. So it’s really great for doing business, but it’s also a really great event that brings a bunch of people that should know each other together.
Meb: Yeah, it’s always great to be a connector. Listeners, I had met Chase at that Cannabis Convention in Vegas, which was, like, the biggest shit show I’ve ever seen of any conference I’ve ever been to in my life.
Chase: In what sense? I’m really curious what your perspective of that… Because there was the industry BizCon, and it was a massive, massive show, right? I’m curious what your perspective of the industry was after that.
Meb: There’s a couple. So the sheer scale and size of it was overwhelming. There was, like, 20,000 people there, or something. I attended the Institutional Investor Day just to try to get a pulse on what’s going on that world. And you realize very quickly that there’s a lot of similarities to, in my mind, to the late ’90s internet sort of scene. And that’s good and it’s bad.
It’s good that you have this massive growing industry that is in many ways starting from scratch, and you have a lot of money sloshing around. And anytime you have people making millions and billions of dollars, it attracts all types. And so you’re gonna have the scam artists, and the frauds, and the hanger-ons, and the every single possible…and then tons of legit businesses, tons of old school people that have been around forever that are, like, small mom-and-pops. Like, it’s like a carnival, right? And…
Chase: It can be really distracting, Meb. You see these companies, and they come out of nowhere, and next thing you know, they’re one of the biggest companies in the cannabis space, just quickly. It’s so mind-blowing to kind of watch that happen in real time. And there’s a lot of distractions because of that. And so you’ve got to be really disciplined with the way that we think about the business. And that’s just, at the end of the day, we have to create value, and we have to build something long-term. But whenever there’s fireworks going off next door, it’s so strange.
Meb: Well, and that’s the thing is that it’s same for any start-up ecosystem that is very highly-funded. The enticement is always to spend a bunch of money and grow. And you see a lot of companies that essentially flame out, spend a bunch of money, and do something and… But that’s the way the creative destruction works. It’s capitalism, I mean, watching even on the public side, things like Tilray, which go up to the moon and then down, I don’t know, 80% from the peak, or something.
But anyway, so it was a lot of fun. And my sense was that there were many, many, many, very legit real businesses growing and expanding, and all sorts of that ecosystem. But also, like I said, you’re gonna find your crazies, too. I mean, my favourite sign…and I wish I remember what booth this was. It’s probably good that I don’t to publicly embarrass them. But above their booth, it said, “Money grows on trees,” and I was, like, “Oh, man, you’re gonna regret having this logo above your booth at some point.”
Chase: After the bubble popped in… After the dot-com boom, I was a kid during the dot-com boom, so I wasn’t even remotely aware of it. But, like, reading about that and reading about the entrepreneurs that really focused on value creation, like Jeff Bezos, some really great companies came out of that era. And we’re on a mission to be one of those for the cannabis industry.
Meb: Yeah. I mean, that’s so key that the sustainability, you know, is in, you know, it’s the agony and ecstasy of being an entrepreneur. You know, and that having been said that, what have been some of the biggest challenges, you know, as you look back over the last five years of going from a riverbank to a tourism, an event company, to a platform and marketplace? What, other than burning through your $5,000 limit, the first origin, what…you know, learning to become a CEO, what have been some of the biggest, you know, struggles?
Chase: Struggle wise, I think, entrepreneurship, you’re signing up for a struggle when you start a company, because even if the revenue is there, even if the growth is there, those actually create chaos themselves, right. So it’s not just that there’s all these challenges, and that’s kind of the way that a CEO operates is that you are expecting that you’re signing up for the mentality that no matter what challenges come along you can solve them. So I think I operate really well under that. But I’ve also had to learn a lot.
Being a CEO is like having a mirror on you the whole time, you’re looking at your reflection constantly. Because when something’s going wrong, it’s your fault. It’s your responsibility to figure how to help lead your team better or make… There’s a lot of learning that I think anybody would need to do, especially a first-time entrepreneur, about yourself, and the way that you lead to become a great leader. Because, look, we all have blind spots, right, Meb?
And I think the more you can be receptive to how to be a better leader and the more that you can listen to your team and understand, “Okay, I see that we have this giant challenge,” and asking the question, “What do you think we should do?” is really important. Because it’s so easy to take the reins and say, “Here’s what we’re gonna do,” right?
But I think it’s really important as a leader to ask the questions and to build that decision-making within the team. And, you know, I think those are lessons that any entrepreneur, any leader has to learn through not being perfect, right. And I guess that’s a little bit more of an introspective answer than you’re probably looking at. But I think that it’s super honest and right. It’s hard to prepare for the kind of growth that you see in start-up land. And the best way to prepare is to go through it, in my mind.
Meb: I enjoy reading a lot of your updates, in many ways, because it reminds me so much of the experience we’ve been through. Listeners, my advice about entrepreneurship is just don’t do it. It’s too much work. It’s too painful. Just get a nice nine to five and enjoy your nights and weekends that you will no longer have.
Chase: Well, you know, recently since we’ve been growing so quickly, we’re attracting really top-level talent. And to bring on people that have a lot of experience, that’s a whole different kind of transition, right? As a leader, now you’re not leading what you could afford. Now you’re leading people that really, really deeply wanna be a part of what you’re building because they think it could be great and they’ve seen it before. Those are different conversations.
Meb: And that’s the challenges of growth, too. I mean, sometimes when you start to grow a lot, you got to start add headcount. And that’s just a huge pain in the ass as well. What’s the main sort of hires you guys look for? Is it in the tech side? Is it sales? Is it customer relations?
Chase: We’ve made three hires in the last, I don’t know, week and a half. And a lot of that has to do with onboarding and validating on the platform, because our platform is…kind of the growth restriction played on it is, how many users can we validate? And validation isn’t just a very easy process, so…
Meb: What’s the main hurdle when you say validate? Do you have to validate that they’re, like, a licensed, like, legit business? Or how’s it work?
Chase: Yeah, that’s exactly what it is. Every state has their own set of regulations, and every state has their own set of licenses. And not only do we have to maintain and know exactly what users need to be validated on our platform, we have to keep up with all those regulations and regularly check through the whole network to make sure that we’re doing a good job at building a validated, verified…there’s a lot of credentialing that we do on these businesses that makes our platform so valuable, because it doesn’t exist anywhere else.
Meb: Sounds like a good side business, validating these companies for other companies. It makes me laugh.
Chase: Are you thinking about starting a new company, because…
Meb: No.
Chase: …I’m looking for a contractor, if that’s what you offering.
Meb: I’m a cheap bastard. And so back when we did a fundraising round years ago, I think we were…we may be the only asset management company that’s ever done a fundraising round crowdfunding, but certainly, there’s probably less than 10, if there are any others. I don’t know any others. Anyway…
Chase: We haven’t actually spoken that much. And I don’t know if this is the right forum to do it, but I’d love to hear your background.
Meb: Sure.
Chase: Yeah. I’d love to hear your origin story. I don’t know if an interviewee ever asked that question, but I’m super curious.
Meb: Yeah, the good news is we got 150 podcasts you can now listen to, queue them up, and it’ll take many walks with a dog and nights you can spend with me alone on your AirPods.
Chase: Just quietly whispering into my [crosstalk 00:46:28].
Meb: And I tell my listeners, you can listen to me at two to three times speed, because I speak so slow in a monotone. But back when we raised, I think, about three million bucks through a crowdfunding round and you had to do it through accredited. So it wasn’t the new crowdfunding rules, but the old ones.
And so I said, “Man…” They said you gotta verify the creditor status for all these investors, and so I just sent them the AngelList. AngelList if you’re listening I’m sorry. But the good news is I sent you a bunch of new investors, so you can’t complain. I said, “Go to AngelList, sign up, and send me your accredited investor link.” So they did all the verification for me, so thank you AngelList, but…
Chase: Oh, they built a giant company, so I wouldn’t worry too much.
Meb: But I sent them a bunch of rich people, they can’t complain. So, but I just laugh, because we were responsible.
Chase: Exactly, right. No, true. You know, you had to do all that credentialing. You’ve done Jason Syndicate. I’ve become a very small-time angel investor myself and done a couple of syndicate deals. And they’ve got the process pretty dialled over there for Jason Syndicate. But you don’t think about that when you’re going through it, do you?
Meb: Yeah, no, it’s interesting. There’s a lot of, in the financial world, there’s so many rules and regulations and a gazillion different…and for good reason. There’s probably more scammers and scumbags in my world than anywhere else, so a lot of rules and regulations. We better start winding down, Chase. Where’s a good place for people to find what you’re up to, what you’re doing? If they want to apply for a job, they wanna invest, where they go?
Chase: It’s so simple, Meb, Kush.com.
Meb: I knew the answer already.
Chase: So people looking to just even…I know you have a lot of institutional and family offices listening to this podcast. Look, if you’re looking to learn about the cannabis industry and the hemp industry, we have a great resource on our blog. I mean, it’s still a large part of our business is to produce quality content, that is our biggest marketing strategy. So if you’re looking to learn about the industry, check out kush.com/blog. And you’ll be able to learn a lot about us there and see what job listings we have, and contact the team if you wanna work with us.
Meb: I skipped my ending question of 2019. And as a non-traditional investor, you may have a different answer for this. When we ask the investors on the podcast, we say, “As you look back over your career…” Are you 30 yet, Chase?
Chase: Turn 30 in November, so…
Meb: Awesome, well, happy birthday. I ask the investors and say, “Look back over your career…” And this could be anything. This could be stocks, investments. It could be comic books. It could be marrying your wife, that’s a little cheesy. “What’s been your most memorable investment? It could be good. It could be bad, anything in between.”
Chase: And you’re including time as an…
Meb: It can be any… You can interpret this any way you want. Of the 150 episodes, we’ve had people answer it every possible permutation.
Chase: Wow, gosh, I wasn’t expecting that. I mean, I wanna give you a thoughtful answer, so I might need a second on that one.
Meb: Yeah, sitting on the bank of a kayak trip chatting up your buddy. That was pretty fortuitous, but it can be bad ones, too. You’ll be, like, “Son of a bitch, that one time I went to Mexico, man, that was a really bad investment.”
Chase: I have plenty of those. Most memorable investment so far, I think the most impactful investment, like, for me, personally, has been to not limit yourself. And a lot of times that involves the most, like, the biggest… Sometimes I think if my most valuable attribute is I’m not afraid to pick up the phone, and I’d say all the time that I spent on the phone with customers, with recruits, with investors even, being willing to pick up the phone I think has been probably, a lot of memories have been made picking up the phone.
This might be a longer story for another time, but we did a road trip through California to go meet a lot of our users on the platform. And that was a very memorable investment. You got that kind of the philosophical answer and you got a real memorable experience going down and driving through the Emerald Triangle, Humboldt, Trinity, Mendocino County, all the way down through the Bay Area in the High Sierras. And then going down to LA and San Diego and meeting all the different businesses that are starting up in the California cannabis industry. That’s by far, like, the most visually memorable experience that I’ve had.
Meb: Did you guys take an RV or what?
Chase: Well, we wanted to take an RV, and it’s tricky figuring out the insurance. And so we ended up settling for VW van again with the pop-top, right? Because we thought it’d be super cliché and fun to kind of take one of those on, like, a couple week road trip, three-week road trip. And that thing broke down by the time we got to Portland, thank God, because, I mean, we went out to some really hairy places in the Emerald Triangle.
We ended up in a… What was it? It was a Nissan Armada SUV and dated Airbnb. So we wanted to do an RV or, like, a trip where we camped out along the way and we ended up in an SUV, thankfully, because Northern California isn’t a place you want to be broke down, especially up in those mountains with all the chaos that’s up there.
Meb: I love it. The Kush mobile. Chase, this has been a lot of fun. I certainly look forward to following your journey. It’s certainly an interesting one and absolutely will be cheering for you along the way. Thanks for joining us on the podcast today.
Chase: Hey, Meb, I appreciate your time. Have a good one.
Meb: Listeners, we’ll post show note links to some of the things we talked about today at mebfaber.com podcast. You can always send us reviews, comments, criticisms, feedback@themebfabershow.com. Subscribe to the show on iTunes, Breakers, Stitcher, RadioPublic, anyplace good podcasts are sold.
Thanks for listening friends, and good investing.
