How Two Founders Built LeafLink to Over $2B in Transactions
Who is Ryan G. Smith?
LeafLink was founded by Ryan G. Smith and Zach Silverman. Ryan G. Smith is a serial entrepreneur from New York with a background in finance and startups, and he studied at Colgate University. Zach Silverman, also from the East Coast, has a background in electrical engineering and software development and gained experience at eBay Enterprise before co-founding LeafLink with Smith.
What problem does LeafLink solve?
LeafLink solves the problem of fragmented and inefficient ordering processes in the cannabis industry, streamlining wholesale operations for retailers and brands. This alleviates the pain of managing inventories, multiple sales reps, and compliance for cannabis businesses, which are often burdened by regulatory complexities and lack of infrastructure, making it a highly valuable service in a rapidly growing market.
How did Ryan come up with the idea for LeafLink?
Ryan G. Smith and Zach Silverman came up with the idea for LeafLink after recognizing the fragmented and inefficient state of the cannabis supply chain. In 2015, they saw that as legalization progressed, cannabis businesses lacked the basic tools and systems other industries took for granted. Both Smith and Silverman had extensive backgrounds in technology and startups, which helped them identify the gap and envision a solution.
Before diving in, they conducted thorough research by visiting states like Colorado and Washington, analyzing how cannabis retailers and brands operated. They observed that many businesses were manually managing inventory and sales, often using rudimentary methods like whiteboards and text messages. These inefficiencies highlighted the need for a streamlined, digital B2B marketplace.
They initially refined their idea through continuous dialogue with potential users, incorporating feedback to better address real-world challenges. This iterative process helped them design a platform tailored to the specific needs of cannabis businesses. While they faced initial skepticism and the complexities of adhering to different state regulations, their persistence and ability to listen to customer needs enabled them to create a product that significantly improved operational efficiency across the industry.
How did Ryan build the initial version of LeafLink?
Ryan G. Smith and Zach Silverman developed LeafLink by leveraging their combined expertise in technology and finance. The initial product was built using a minimalist tech stack, primarily focusing on a robust web-based platform to connect cannabis brands with retailers. They spent considerable time in cannabis facilities, transitioning operations from manual whiteboard tracking systems to a centralized digital marketplace.
The first version of LeafLink took about six months to build, utilizing agile development practices to quickly iterate based on user feedback. They faced significant challenges, particularly in adhering to different state regulations, ensuring compliance, and educating an industry unaccustomed to such tools. Despite the complexities, their deep dives into user needs and continuous iteration enabled the rapid success of their platform.
What were the initial startup costs for LeafLink?
- Seed Round: In spring 2017, LeafLink raised $3 million in its first round of funding, led by Lerer Hippeau Ventures.
- Investment: Over the past three years, LeafLink secured approximately $50 million in investments.
How did Ryan launch LeafLink and get initial traction?
Direct Outreach to Early Cannabis Businesses
Ryan G. Smith and Zach Silverman, the founders of LeafLink, knew that entering the fragmented cannabis supply chain required direct engagement with their potential clients. They set off on trips to cannabis-friendly states like Colorado and Washington, where they met with dispensary operators to understand their pain points and showcase how LeafLink’s platform could streamline their ordering processes.
Why it worked: Direct face-to-face meetings allowed Ryan and Zach to build trust and gain a deep understanding of the industry's needs. Their on-ground presence demonstrated their commitment, which was crucial in an industry that was used to operating informally.
Colorado’s First Client Success
Ryan and Zach’s hands-on approach paid off with their first client in Denver. They spent significant time in their facility, integrating their operations with the LeafLink platform. The client was dealing with orders via whiteboards and text messages, which were inefficient and prone to errors. By digitizing this process, LeafLink made their inventory tracking and order management far more streamlined.
Why it worked: This practical, hands-on assistance provided immediate value to the client. Demonstrating success with their first client created a case study and word-of-mouth promotion that was invaluable in convincing other companies to join the platform.
Metrics:
- Over time, their initial client in Denver moved to larger facilities, showcasing growth, which indirectly painted LeafLink as a growth enabler.
- Initial onboarded clients characterized higher operational efficiencies and better data tracking capabilities, encouraging further word-of-mouth recommendations within the industry.
Networking and Attending Cannabis Conventions
To expand their reach and credibility in the burgeoning cannabis industry, Ryan and Zach attended cannabis conventions and conferences. They used these platforms not just to pitch LeafLink but also to listen to the broader industry concerns and connect with potential clients and partners.
Why it worked: Conventions provided a concentrated audience of industry insiders and potential clients. It enabled them to grow their network quickly and efficiently by reaching many businesses in one place, fostering relationships that would lead to future customers and partnerships.
Local Market Adaptation
With a state-by-state regulatory framework, LeafLink created customized, compliant versions of their platform for each market they entered. Early on, they geo-fenced their platform so that businesses in Colorado, for instance, wouldn’t cross paths unnecessarily with those in Washington.
Why it worked: Tailoring their platform to meet specific state regulations and local business needs helped gain the trust of operators in each market. This customization ensured compliance with local laws and simplified the process for buyers and sellers in each state, making LeafLink a valuable tool tailored precisely to their needs.
Metrics:
- Within the first year, LeafLink expanded to several key states, gaining dozens of clients in each market.
- By 2017, they had surpassed $100 million in transactions, a crucial metric showing their growing influence and integration into the industry.
What was the growth strategy for LeafLink and how did they scale?
Inbound Marketing
LeafLink primarily utilized inbound marketing strategies to grow its platform. This included creating educational and value-driven content targeted at cannabis businesses. By providing resources such as data insights and industry reports, LeafLink attracted businesses in need of reliable information and tools to improve their operations.
Why it worked: This approach positioned LeafLink as an industry expert, helping them earn the trust of potential clients. Businesses saw LeafLink not just as a service provider, but as a thought leader who understood their unique challenges. This made the platform more appealing and likely to be adopted by their target audience.
Partnerships
LeafLink established strategic partnerships with other technology providers in the cannabis industry. For instance, they connected with sales and CRM systems to integrate more seamless operations for clients. Additionally, partnerships with logistics companies allowed them to extend their service offerings without becoming a logistics provider themselves.
Why it worked: These partnerships expanded LeafLink's capabilities and value proposition without requiring large investments in areas outside their core competency. They offered comprehensive solutions that addressed multiple parts of the operational process for cannabis businesses, making their platform indispensable.
Direct Sales and Networking
LeafLink founders Ryan G. Smith and Zach Silverman invested significant time in direct sales and networking. Early efforts included meeting potential clients face-to-face, understanding their needs, and tailoring the platform accordingly. They also attended industry events and engaged in constant communication with cannabis retailers and brands.
Why it worked: Direct interaction with potential customers allowed LeafLink to build strong relationships and trust. This personal touch was crucial in an industry that was still skeptical about digital solutions. Such direct engagement also provided invaluable feedback for product improvements.
Client Education and Training
LeafLink offered extensive training and support to its clients to help them get the most out of the platform. This included helping clients understand how to use data analytics for better business decisions and how to streamline their ordering processes.
Why it worked: By investing in client success, LeafLink ensured that businesses using their platform experienced tangible benefits. Satisfied clients were more likely to stick with the platform and recommend it to others, driving organic growth and word-of-mouth referrals.
Financial and Logistics Solutions
Breaking new ground with LeafLink Financial and LeafLink Logistics, the company provided net terms to facilitate smoother transactions between brands and retailers and established partnerships with trusted logistics providers to ensure reliable product delivery.
Why it worked: These solutions addressed significant pain points in the cannabis supply chain, such as financing and logistics. Ensuring reliable payments and product deliveries built deeper trust and reliance on the LeafLink platform, translating to higher customer retention and increased platform adoption.
What's the pricing strategy for LeafLink?
LeafLink charges a monthly platform fee of $500 for basic services, with optional premium features like LeafLink Financial and Logistics that range between $100 and $1,000+ extra per month.
What were the biggest lessons learned from building LeafLink?
- Adapt to Unique Industry Challenges: The fragmented legal landscape of cannabis required LeafLink to operate as multiple localized marketplaces across different states, not one unified platform. Adapting to these unique regulatory environments was crucial for their expansion.
- Valuing Relationships: Building strong relationships with industry players, including potential competitors, proved beneficial for acquiring the business and sharing collective insights. This approach helped in demystifying paths and viewing competition as a means to collaboration or potential acquisitions.
- Prioritizing Execution Over Ideas: LeafLink’s success underscores the importance of execution. The co-founders highlighted that while ideas are common, it’s the ability to execute effectively, pivot based on feedback, and continuously improve that drives business success.
- Building Trust and Transparency: Ensuring compliance and establishing trust was central to LeafLink’s operations. They ensured all companies on their platform had valid licenses and maintained transparent operations to build reliability and trust within the industry.
- Focus on Core Competencies: By concentrating on solving specific problems like marketplace logistics and financing within the cannabis industry before expanding into new verticals, LeafLink ensured they perfected their core offerings, which substantially benefited their growth and market positioning.
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More about LeafLink:
Who is the owner of LeafLink?
Ryan G. Smith is the founder of LeafLink.
When did Ryan G. Smith start LeafLink?
2015
What is Ryan G. Smith's net worth?
Ryan G. Smith's business makes an average of $1.6M/month.
How much money has Ryan G. Smith made from LeafLink?
Ryan G. Smith started the business in 2015, and currently makes an average of $19.2M/year.
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