How I Started And Grew My CBD Oil Company To $3M ARR
Hello! Who are you and what business did you start?
Hey guys. My name is Gunhee Park and I’m the founder of Populum. We’re a direct-to-consumer CBD oil brand that offers a collection of premium, high-quality products designed to be a part of your daily wellness ritual.
Our best-selling product is our CBD oil tinctures, and we also offer a topical and pet product line. Having started in late 2016, we’ve been fortunate in our growth over the past two years. We’ve grown from $650K in annual revenue in 2017 to $1.4M in 2018.
We’re now doing $220K in monthly sales with a ~ $3M ARR.
What's your backstory and how did you come up with the idea?
After college, I got a corporate job in Austin, TX. I graduated with a business degree, so I was pretty excited to get to work for a Fortune 500 company. I feel like that’s the main thing business school teaches you - how to network, polish up your resume, be professional, ace your interviews - essentially how to excel in the corporate world.
It was when I stopped “asking for permission”, but rather aggressively pushed the envelope that I started making progress. I set up meetings with local banks, where I could personally sit down and explain how hemp is different than marijuana.
But once I got started, I quickly realized how much I disliked it. I didn’t like the prospect of climbing up the ladder, and I wasn’t happy playing politics or navigating the bureaucratic nightmare. I wanted to quit. I ended up working there for close to 3 years, but I set my mind pretty quickly to find a way out.
That’s around the time I first encountered hemp. While checking out a farmers market in Austin, I tried some hemp protein bars and learned about the nutritional benefits of hemp. After that experience, I just started getting more interested in this plant and realized how many benefits it had, yet how much stigma was behind it due to its association with marijuana.
Having zero association or knowledge about hemp (or cannabis), I decided to create a blog and start writing about hemp. I did my own research to write about various topics about the plant, its history, and the wider industry. At the same time, I also started reaching out to experts and professionals to seek out interviews. I’d drive to hemp conferences that were happening in nearby cities to meet people.
I've since taken down this blog as Populum grew. But I have included some screenshots of all the materials I had:
Over several months, I tried out so many different hemp products and eventually became quite knowledgeable about the industry. This experience also helped me realize opportunities and gaps.
Among all the products I tried, I found CBD oil to be the most helpful, yet the most dubious. At the time, when you surfed the web, it was easy to get overwhelmed by exaggerated claims from poorly designed brands that promoted CBD oil as some form of cure-all.
So I recognized that there was an opportunity to create a product and a brand that helped reframe how people view CBD, by offering high-quality, trustworthy hemp products with stellar customer service.
Take us through the process of designing, prototyping, and manufacturing your first product.
There are a few ways to break this down:
- Product dev.
- Coming up with the name.
- Designing the brand & product.
I knew there was an opportunity in this product category since I had such a poor experience when shopping for it myself. One of the main reasons was that the CBD oil that I had tried tasted like crap and it was hard for me to tell how good the quality was. Most brands were sourcing their hemp extracts from Eastern Europe at the time, and they wouldn’t even reveal which specific country it came from.
One thing I have learned through all this is to not be afraid to ask for input and feedback from your close network. You don’t have to try to do it all alone.
So I put a lot of focus on taste and quality. Unflavored CBD oil can have quite a bitter aftertaste, and I wanted to make sure that people would be able to look forward to taking our supplement every day. So I experimented on testing out different flavors - I partnered with our manufacturer to customize various tastes, such as lemon, peppermint, and orange. I narrowed down the option from my own preference and from getting feedback from friends and family (One thing I have learned through all this is to not be afraid to ask for input and feedback from your close network. You don’t have to try to do it all alone.)
In parallel, I thought we could improve the transparency of the raw materials by working 100% with US farmers. Starting in 2014, the Farm Bill had also allowed US farmers to start growing hemp again.
When it came to our brand name, we spent several weeks brainstorming. We’d spend hours doing online searches and digging through the dictionary to see if anything caught our attention. We dumped a lot of ideas onto a Google Doc and narrowed it down until we landed on something we felt sounded right. The list of ideas ranged from “Ananda”, “Arwen”, “Ovid”, to “Populist Co”. Ultimately, we landed on “Populum”, which was inspired by the Latin phrase “Ad Populum”, meaning “For the People”
When it came to design, we knew that people today expect visual quality. You can see that in brands like Allbirds, Away, and Warby Parker. They evoke a feeling and have personality. That's what we tried to focus on — using visuals to show trust and quality.
Describe the process of launching the business.
When we were getting started, I invested my savings and completely bootstrapped everything. This made us be scrappy in everything we did. So before actually launching, we were focused on getting a MVP (minimum viable product) to test the market.
We did this in both our product + website. I was lucky enough to find a manufacturing partner who allowed us to dropship products for a limited time.
So after getting this arranged, we developed a landing page and tested the funnel by promoting the page on forums/blogs. We initially built out a product page through Wordpress - we found that to be the most customizable with both development and in utilizing various plugins. At this stage, we were very scrappy, so we even photoshopped all our product images. When it came time to test out the funnel, the relationships and network I had built in the industry while blogging came to be valuable. I was able to leverage their blogs and sites to get our page listed to get some initial traffic.
When I saw early promising results, we went all in and started the full development process of building out an official website, operations, etc. When I think back, doing the exercise of testing out an MVP product was critical to our official launch. It not only validated the market, but also gave us valuable insights from customer feedback that we would not have considered otherwise. I’d highly recommend to everyone to find similar ways to validate the market before going “all in”, especially those bootstrapping and being scrappy.
Since launch, what has worked to attract and retain customers?
As mentioned before, the biggest opportunity I saw in this category was building a transparent brand. The main way we did that was by focusing and investing in the customer experience. Especially with CBD oil being such a new product type, where many people have never heard of or tried it before, we wanted to help customers overcome their uneasiness and stigma through a 30-day risk-free trial — a first in our industry.
Being in somewhat of a taboo industry, we’ve had to find unorthodox and alternative ways of getting the brand out there. Facebook rejected promotions and ads that focus on hemp. Google also blacklists accounts that use Adwords to promote. So we had to get creative.
A lot of our early strategies were very manual -- engaging with individual blogs, forums, even directly with customers to spread our brand via word-of-mouth. Although a lot of these early methods were non-scalable, it did help us grow organically without any paid ads.
As we’ve grown, we’ve been able to turn some of these non-scalable tactics into scalable ones. For instance, we built out a completely automated subscription platform that helps us generate monthly recurring revenue (MRR). In 2018, we started off with around 150 monthly subscribers that have grown to over 700 by the end of the calendar year. Separately, our referral program has matured to be much more automated, and the early relationships we built with other blogs and forums have helped us scale our affiliate partnerships.
Here's a snapshot of total sessions on our site (per month) over the past 2 years:
How are you doing today and what does the future look like?
We’re currently doing about $200K-$240K in monthly sales with an ARR of $3M. Our 2019 forecast is to hit $5M in revenue, which would be 3X growth from 2018. We see a huge opportunity to continue to grow our e-commerce platform and to become one of the most recognized online CBD brands in the industry. Yet, we also see the value in diversifying our distribution, so we’re building up a sales strategy to be available in more retail outlets.
Here’s an overview of how our revenue has grown over the past year:
Through starting the business, have you learned anything particularly helpful or advantageous?
One of the top things that really helped me was when I was able to shift my mindset to go against conventional wisdom. In the hemp industry, especially back in 2016, there were so many roadblocks to starting a business - some as simple as opening a bank account, getting a payment processor, or finding ways to do paid advertising. The conventional wisdom of the industry at the time was that a lot of these things couldn’t be done.
It was when I stopped “asking for permission”, but rather aggressively pushed the envelope that I started making progress. I set up meetings with local banks, where I could personally sit down and explain how hemp is different than marijuana. I pursued creative marketing tactics, while not scalable, that were effective for us in the early stage.
In all, my advice would be to always challenge the status quo, especially in industries where things seem set in stone.
What platform/tools do you use for your business?
Here’s some of the platforms we use:
- Sketch, Photoshop (and other Adobe Suite apps) for design
- Slack for communication
- Asana and Quip for project management
- Dropbox & Google Drive for file sharing
- HelloSign & HelloFax for documents/signatures
- Taxjar for sales tax
- Klaviyo for email marketing
- Olark for customer chats
- Helpscout for customer emails
- Yotpo for customer reviews
What have been the most influential books, podcasts, or other resources?
I try to lead around 25-30 books per year, which comes about to be 2-3 books per month. Since last year, I’ve also gotten into a lot of audio books, which I’ve come to like a lot better than podcasts.
If I had to pick the top books that have inspired me over the years:
- Can’t Hurt Me - David Goggins: I’d highly recommend listening to this book on Audible. It’s done in a really cool podcast format where the narrator interacts with David Goggins, the author, while narrating the book, so you’re able to get a lot of insights that are left out of the book.
- Shoe Dog - Phil Knight: Just an amazing story of how Phil Knight grew the iconic Nike brand.
- When Breath Becomes Air - Paul Kalanithi: This is a book that was really hard to put down. A story that’ll really make you reflect on what’s really important.
- Losing My Virginity - Richard Branson: Richard Branson is probably one of my favorite entrepreneurs, and it’s inspiring to learn how he created a brand and culture that could be adopted into so many different verticals (airline, music, mobile, rockets)
- Traction: A Startup Guide to Getting Customers: A great guide on how to think and brainstorm marketing strategies, especially helpful for those who don’t have a background in marketing.
Advice for other entrepreneurs who want to get started or are just starting out?
Oftentimes, people try to tackle too big of a problem, and then that task can seem insurmountable - which makes it easy to give up and push it back to another day. My experience has been to try to divide that up into more actionable milestones that you can manage. For me, that was creating a MVP and landing page to test. That gave me the motivation (and incentive) to move on to the next stage.
At the same time, I think it’s important to dive into things without treading water for too long. The prospect of not having a regular paycheck is really scary. But the inaction caused by the comfort of having a salary is real too. It was only once I officially left my corporate job that I knew I needed to make things happen.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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