Helping People Cultivate Cannabis And Reaching $50M/Year [Update]
This is a follow up story for Growers House. If you're interested in reading how they got started, published almost 5 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
Hi everyone. Nate Lipton here giving you an update on my original Starter Story, which got way more traction than I anticipated. Thank you all for your interest in my life story.
As a reminder, I co-founded and run a few separate, yet related companies: GrowersHouse.com, GrowersNetwork.org, VentanaPlant.Science and CannaCribs.org along with the CannaCribs YouTube series.
My overall focus is to help people cultivate cannabis, from hobbyists to commercial grow operations. We help by providing the equipment, supplies, expertise, consulting, and video-based education to make cultivators successful.
We’re now just shy of doing $50M a year in top-line revenue between the companies and have launched a few new services and product lines I’ll elaborate on below.
I highly recommend running experiments based on the feedback you’ve received from potential customers because they are your source of truth.
Tell us about what you’ve been up to. Has the business been growing?
Our company has evolved along with the cannabis industry. Commercial cannabis operations have gotten larger and more sophisticated. Along with it, our team has brought on some of the smartest minds in cannabis cultivation to form CannaCribs Horticulture Consulting.
This team has multiple PhDs in cultivation-related disciplines, including one of them being the first Ph.D. in cannabis cultivation in North America. This team focuses on consulting commercial cultivation operations on tasks such as business plan writing, financial projections and pro formas, design, engineering, SOPs, staff training, hiring, maximizing quality of the bud while reducing the cost of production, and general help on any issues that may arise–and there is a lot in a growing operation.
The reason for starting a consulting division is to begin having discussions with potential clients early on in their process. When our first Starter Story came out we were just selling equipment. We met cultivators after they already built out their business plans, raised money, hired architects and engineers, etc.
We realized that many of the operations were given imperfect and/or costly information when designing their business plans and building out their facilities. Issues like not installing enough HVAC in their facility, incorrect assumptions in their business plans, and spending too much on certain aspects of the facility while underspending on more important aspects.
Many times the engineers and architects hired for these projects have never built a production indoor cannabis cultivation facility, so they make some costly mistakes. We know how to avoid those mistakes. For these reasons, we decided to get involved earlier in the process of our clients.
The strategic add-on of the CannaCribs Horticulture Consulting division helps us make our customers more successful, which in turn makes our business more successful. We came to the stark realization that the cannabis industry is a crowded industry with more commercial cultivators farming more cannabis than there is demand for in the market.
This overproduction leads to supply being much higher than demand and prices of cannabis falling. An overcrowded market will lead to less efficient producers going out of business over time in the natural maturation of the industry (read: consolidation).
It’s important to work with the ‘winners’ to ensure you have a consistent business, so why not become an integral part of their success and help create the winners? When you make your customers more successful, you add value to their business and they value you as a partner. That’s our philosophy.
It’s also great to develop a relationship with a customer as soon as possible. Much like big-name banks offer free checking accounts to teenagers in the hopes they become customers for life, we like to engage with customers when they’re at the beginning stages of their endeavor.
Our last StarterStory came out in December 2019. It’s now Spring of 2023 and we’ve grown from about $35M to close to $50M. We’re proud of this growth in that time, especially when we note that many of our peers are having trouble due to current market conditions.
We’ve focused on strategic partnerships, launching our own products, and influencer collaborations as we move forward. The best way for us to increase our margins and customer retention is to offer products that are unique, effective, and exclusive to us. Some of the products we’ve launched are our own plant nutrient line VentanaPlant.Science, propagation plugs, and a few other products currently under development that will come out as patented products.
What have been your biggest challenges in the last year?
There have been a few challenges in the last year. One is reeling from the pandemic. The E-commerce business for us was great during the pandemic because people were bored at home and wanted a hobby. They couldn’t go into retail stores, so they shopped online.
Post-pandemic, things are returning to normal so we have had to right-size our business, which was hard. We invested in resources upon the increased demand, but now they are not needed.
From a macroeconomic perspective, the cannabis industry is facing the struggles of the overproduction of cannabis leading to falling prices. Falling prices mean a farm that used to get $2,000 for a wholesale pound of cannabis is now getting less than $1,000.
When a farm is earning less for the same amount of work, they don’t expand their facility and fewer new facilities are started. This causes less demand for our products. This is happening industry-wide, and you can see some of the public company comps stock prices getting hit hard because of it (stock tickers: SMG, GRWG, HYFM, AGFY).
Lastly, there has been a big push in our company to form transparency and collaboration between all departments including sales, marketing, operations, accounting, etc… so our new initiatives and goals are executed properly with all departments moving in tandem to actualize our goals.
You want to show up to meetings with your team, customers, vendors, etc.. at as close to the best version of yourself as possible.
We’ve had teams that operated a bit more silo-like in the past, which can cause half-baked outcomes. An example is launching a new product.
You want your sales team to have all the assets to speak to the product properly, the website team to have it prominently displayed and have an email campaign ready, marketing to make a video and other assets that help customers see how the product solves their issue, accounting to know how much inventory we need to invest in, and the warehouse to make room for it.
You want all of these things to happen proactively and often concurrently, instead of people scrambling to get organized reactively. We’ve relied pretty heavily on Monday.com as our company's project management and CRM software to help us actualize these movements.
What have been your biggest lessons learned in the last year?
I’ve come to internalize that a manager's behavior is modeled by their team. As a manager of people, you implicitly show your employees what behavior is normal and acceptable in your company.
If you are quick to blame, react, scold, etc… then expect your team to do the same. Alternatively, if you are kind, understanding, helpful, and empathetic, then your team will absorb those character traits.
Along the same vein, if you are working 12-hour days 6 days a week, your team will tend to gravitate towards long, hard hours. While some crazy weeks may be needed, that schedule is tough to do sustainably for the long term.
You will end up with employees that are burned out, resentful, not happy and not creating the cultural environment you want–one full of creative, happy, and collaborative teammates.
The problem with working extremely long hours consistently is that you don’t show up to work as your best self. Yes, you might check a lot of tasks off your to-do list, but are you setting up yourself and your organization for employee retention and long-term growth?
The answer in my case is no, you’re not. One comment that has stuck with me came from my business-focused therapist. She knows I work a lot. I’m sometimes scattered in meetings, multi-tasking to get things done and putting more on my plate than any one person should reasonably take on.
She asked if I was showing up to work as my best self. I told her I believe I was. She said, “As your therapist, what if I showed up to our weekly meetings and I was working twelve-hour days and was generally tired, a bit scattered, and multi-tasking?” This struck a chord with me because she’s the opposite of that.
She shows up to our meetings engaged, actively listening, giving thoughtful responses, and being constructive. If she showed up to our meetings at 50% capacity, I wouldn’t want to work with her and would probably discontinue her services.
You want to show up to meetings with your team, customers, vendors, etc.. at as close to the best version of yourself as possible. If you’re not, ask yourself what’s keeping you from being that person.
For me, being that person meant having a healthy lifestyle of exercising in the mornings, getting time to have fun dates with my fiancé, DJing, and doing other fun activities. As a founder, you can often relegate these activities as non-productive.
Many founders need help re-framing these extracurricular activities in service of them being more productive rather than taking them away from being productive. If these activities and a balanced lifestyle help you show up to work as the best version of yourself, then those activities outside of work are indeed quite productive–I’m arguing that they are more productive than an extra two hours at your computer every day working down that to-do list.
What else is happening? Well, I’m getting married to this wonderful woman named Camille. She’s pretty awesome. We have a dog named Chili. He’s a rescue from Mexico and is generally scared of everything and sleeps all day.
I’m also pursuing a passion project with some friends starting a company that throws events focused on The Science of Psychedelics.
What’s in the plans for the upcoming year, and the next 5 years?
In 2023 one of the biggest projects we’re focusing on is the launch of our new beneficial predatory insect subscription website: GrowersHouseAuto.com. What are beneficial predatory insects you ask?
Well, they are insects you let out in your cannabis garden that eat the insects that eat your plants, such as thrips, fungus gnats, spider mites, white flies, etc…
So if you have an infestation of the aforementioned bugs attacking your crop, you let these predatory insects out who will feast on the aphids and spider mites and not eat the cannabis plant. The concept is pretty cool. We like to say they are like infantry protecting your inventory 24/7 even while you’re Netflixing and chilling.
The reason we launched this site is that these beneficial predatory insects (sometimes referred to as biological control agents [BCAs]) are often ordered on a subscription basis every 2, 4, or 6 weeks and we didn’t see any other e-commerce store online that had a very user-friendly portal using the latest e-commerce applications and that focused on serving the cannabis cultivator.
We incorporated easy features to self-serve and manage your subscription, like changing the delivery window, pausing the subscription, cancel the subscription, all from your customer dashboard. It’s important to make customer portals as seamless as possible to ensure stickiness with your site.
All the other companies out there are using very old website technology and focused on big ag, like lettuce, strawberries, wheat, etc… Basically, we saw white space in a market that needed a better, more focused service offering.
It’s also a great business because most farms that use beneficial insects are purchasing them as subscription consumables–one of the best types of businesses to have. After all, customer retention and lifetime value (LTV) are very high.
By the way, for those of you who don’t know, these businesses also get comparatively high valuations upon exit.
To market this site, we leaned on one of our tried and true forms of advertising and awareness building: launching entertaining and educational video content that helps make our customers smarter. You can see that video here: Beneficial Predatory Insects for Cannabis - How To, Myths & Best Bugs.
The video content must first be valuable to a viewer and second valuable to your business. Most businesses mess that up by primarily being valuable to their business, but in the process being ‘off the mark’ to the viewer.
You’ll see that the title of the video, the description below it, and the links are all focused on people learning about our new subscription website.
We launched this on our YouTube channel which has 210k+ subscribers, which helped us gain traction for this new offering very quickly. Not to mention, there’s a lack of good video content about this topic anywhere online. There are a few videos, but nothing very professionally produced.
Looking beyond 2023, we’re going to continue to focus on being less of a retailer and more of a strategic partner to our customers who helps them be more competitive in a competitive landscape. We want the cannabis cultivators who work with us to have a leg up versus those who work with our competitors.
Our team is so incredibly smart. My job is to harness their brainpower into actionable operating procedures for cultivating high-quality, low-cost cannabis and creating unique, new, and patented products that help them accomplish that goal.
The future of our company will be focused on pushing the envelope of what’s possible in cannabis cultivation. This means we need to be doing R&D of new products, running side-by-side trials with our customers, and putting out videos to raise awareness and promote them online.
What’s the best thing you read in the last year?
Not going to lie–I haven’t done much reading this past year. I do listen to podcasts like a fiend though.
My favorites at the moment are: Hidden Brain, Stuff You Should Know, Daniel and Jorge, Explain the Universe, Freakonomics, No Stupid Questions, and How I Built This. You’ll see the majority of the podcast I listen to are not business focused. That’s mainly because I listen to them while in bed as I’m going to sleep. They help me disengage from my always-thinking-about-business mindset that is so hard to quiet.
Advice for other entrepreneurs who might be struggling to grow their businesses?
Sales. That is the lifeblood of a company. If you don’t have the customers or sales, focus on that and almost only that. Be like a dog with a bone, so to speak.
Don’t spend time organizing your QuickBooks to be perfect, or design your invoices to have the right logo and font–focus 100% of your energies on acquiring and maintaining your customers. All the other administrative stuff will get done eventually.
A strategy that has worked well for me is throwing shit at the wall and seeing what sticks i.e., run experiments in acquiring and maintaining customers and double down on the ones that work. I highly recommend running experiments based on the feedback you’ve received from potential customers because they are your source of truth. Don’t make too many assumptions about your customers. Let them tell you how they think.
You’ve heard it before, but I’ll say it again–fail and fail fast. Don’t be afraid to lose money by choosing the wrong form of advertising. You won’t lose money. You’ll either find a form of advertising that works or you’ll learn that it doesn’t work and you won’t do it again, so you ended up learning something.
You need to make mistakes. It’s part of the learning process. I’m a believer that the business owner who has made the most mistakes is also probably the most successful because they’ve tried more things that have failed and won once you add them all up. And they’re smarter for it.
Are you looking to hire for certain positions right now?
We’re always looking for strong salespeople that have experience in the cultivation and equipment side of cannabis production. Apply to any open positions here.
Where can we go to learn more?
Since we have a few companies, I’ll like to them all in categories:
- GrowersHouse website
- GrowersHouseAuto.com (subscription insect website)
- CannaCribs website
- YouTube
- GrowersNetwork website + growers forum
If you have any questions or comments, drop a comment below!
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