Ross Lipson is the cofounder of Dutchie which is an online cannabis ordering platform that connects consumers to local cannabis retailers. The company has raised over $50 million from investors such as Thrive Capital, Sinai Ventures, Thirty Five Ventures, Casa Verde Capital, and Gron Ventures to name a few.

In this episode you will learn:

  • The first steps to starting a company
  • Ross Lipson’s top advice before launching your own startup
  • Going through the acquisition process
  • How big Dutchie is today

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Ross Lipson:

Ross Lipson career began 15 years ago when he founded one of the nation’s first online food ordering services. Finding success early on, his group scaled the service from coast to coast becoming one of the nations leading online food ordering services.

Ross Lipson successfully exited the company in early 2008. Ross Lipson then moved his concept and team to Canada, to found Canada’s first online food ordering service, GrubCanada. GrubCanada scaled across Canada, quickly becoming a household name and the leading destination for online food ordering. GrubCanada was acquired in 2011.

Ross Lipson has since moved to Bend, Oregon. Ross Lipson has taken his expertise in online ordering and applied it to the cannabis space. Ross Lipson founded Dutchie, an online ordering service connecting consumers with local dispensaries, allowing online ordering for both delivery and/or pick up.

Dutchie currently works with hundreds of retailers, facilitating thousands of orders to local dispensaries for delivery and pick up.

Connect with Ross Lipson:

* * *

FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have an interesting founder, definitely a founder that is going to teach us a thing or two about ordering stuff online, and what a remarkable journey. We’re going to learn the ups and downs, going through the full cycle as an entrepreneur, of building, financing, scaling, exiting, and you name it. So without further ado, let’s welcome our guest today. Ross Lipson, welcome to the show.

Ross Lipson: Thanks for having me. I appreciate it.

Alejandro: Originally born in Southeast Michigan. How was life growing up there?

Ross Lipson: I was born in West Bloomfield in 1987. I’m 33 years old today. It’s a suburb of Detroit and very sheltered and very comfortable, to say the least, but also had that grit being a suburb of Detroit and that hustle mentality. It’s a great time to say it on this show – looking at my business career, and when I take that zoom-out approach, I see the reason I’m sitting in my seat today and doing what I’m doing, a lot of it comes from day one and how I was raised. So, I definitely credit a lot of it to growing up in Southeast Michigan and to the two parents that I do have.

Alejandro: Tell us about your parents because I know they have always been very supportive.

Ross Lipson: Yeah. I was fortunate. A luck of the draw if you will. I’m not sure who chooses who. It’s a deeper question for a different podcast, but I was lucky to have my dad and mom, and still do, on my side. They both tackle both sides of the spectrum. My dad is an entrepreneur and always has been. He started his business over 35 years ago, longer than I’ve been around. He’s a successful entrepreneur in the automotive space. Especially being in Detroit, it’s super helpful being in the automotive space and very different from tech. What he did was, he implemented and instilled this mindset with me and my brother, Zach, who is my co-founder here – that there were no restrictions and limitations in our thought, and whatever we dreamed of, we should go after, and we could accomplish it. When looking back, it’s kind of funny now, at this age, to realize that when we were just 10, 12, 15 years old, my brother and I would have an idea like I’m sure most young teenagers do. I think the difference was, my dad, whether there was an idea, maybe an invention let’s say, he would call up a patent attorney, and we would be sitting in that office the next day. What seemed so normal at the time because you don’t know much more. You’re 12 years old. You have an idea; you’re talking to some guy at a table who is going to tell you about your idea from an IP standpoint. Now, at 33 years old, looking back, it’s crazy to think that. I hope more parents do this: take a 12-year-old to meet with an IP lawyer. It wasn’t necessarily that any of this was to make sure that we were protected and that this invention came to light and fruition. What really happened in hindsight was, he implemented and instilled this mindset and this mentality that led to success with both my brother and me in starting companies like Dutchie, which is, if you have an idea, go for it. And he brought this level of confidence that allowed us to push through, which I think is the hardest thing an entrepreneurship is just starting. Nine out of ten, 99 out of 100 people have the idea and don’t go forward with it. I credit my dad for bringing us up in a way that that wasn’t an option. We always went, and we always did, and we didn’t look at it as success or failure, it was just always, what’s the next step? Then my mom – it’s clique to say, but I’ve always got the world’s best cheerleader on my side, and it’s not just from a mother supporting a son’s standpoint. I put my mom through the wringer and put her to the test, and she was always fully supportive. Things like for example, I dropped out of University the first week of school. As soon as I called her, instead of a typical response from a parent asking why and pushing that child to stay in school, she understood. She saw the value in my leaving school, and she was fully supportive of it. So, from the highs to the lows, I want to say that I always found support in her and still do today. She’s been this, not only ongoing support, but I should say ongoing therapist for me, and it’s funny because that is actually her real profession now. I got lucky, to say, to summarize, marrying that level of support with that level of confidence is definitely what all entrepreneurs need from a foundational standpoint, and I was lucky to have it.

Alejandro: Absolutely, and the first week of school, you drop off. What happened?

Ross Lipson: From an early age, I had that side-hustle mentality going on, and I was fascinated by the world of business. It’s funny, drawing back, in third grade, I would go to Sam’s Club with my mom when it first came out and became mainstream, and I’d buy Warheads of candy. That was pretty popular amongst kids my age. I’d buy Warheads in bulk on the premise of I open up the bulk package, break it out per unit, or per candy. I could sell them for much more. I could sell them for a quarter. Once I sold through the package, I’d make a lot more money than what I had bought them for, which was like the foundation and fundamentals of business. So, from selling candy to sample colognes to signed burned CDs when that became popular, Beanie Babies, and Pokémon cards, I always had a side-hustle going and was fascinated by business. I did very well in school. It just wasn’t what got me going. It wasn’t my thing. As soon as I got to University, I was fortunately exposed to an opportunity, which was online food ordering. There was a group of students at Penn State University that were dabbling and dipping their toes in the water and finding success in online food ordering. When we found each other and partnered up, I was able to launch online food ordering for my university at Michigan State. That’s what led to what I’m doing today. That’s where my education, I would say, comes from. As soon as I had that idea, I reached out to my parents and said, “I have an idea that I want to go full-force with. School’s not for me, and that was when we made the shift and dropped out.

Alejandro: When going about building a business, because I’m sure that, obviously, this is the segue to your first company, I’m sure that you got one piece of advice from your dad, maybe after that call that you made saying that you had an idea and you wanted to go about it. What was that piece of advice that he gave you?

Ross Lipson: You know, it’s interesting. My dad has a great style that I admire that, unfortunately, I’m not able to do yet. Hopefully, I can get there. My dad has a beautiful style of management, where he does not micromanage at all. In fact, it’s almost a counterintuitive answer or the opposite answer you’d expect. He didn’t tell me anything. I think the beauty of it is that he didn’t have to. It was a mindset – to draw back to that first question, he brought this mindset on and instilled it at a really early age, so as soon as I saw the opportunity, I knew to jump forward, and just what are the next steps? What does forward progress look like? He’s done a really good job. Still today, with Dutchie, he doesn’t get stuck in the weeds – no pun intended there with my current company, Dutchie being in the cannabis space. He doesn’t micromanage, and he knows that it’s up to me to figure it out. He’s more there for that mindset and that mentality. When an occasional situation comes up, he’s a sounding board and bounce ideas off of, but he’s got a knack for not answering, and more for having that mindset and instilling that energy around the thought process and starting a business.

Alejandro: Obviously, here, you drop off from school, and what happened next?

Ross Lipson: I partnered with this group, a group of guys that had that entrepreneurial spirit and started to learn about online food ordering. Together, we started to dive deep into this new world of online food ordering. Keep in mind that this was before many of the companies we know of today, DoorDash, UberEats. GrubHub was launched but very small, just in Chicago, with a few restaurants. So it was a very uncharted territory. It was also a nascent industry that was soon to be explosive, and we all know that now. This was at a fun time where we were very scrappy, especially being 18 years old. With the current state of technology back then, there were no apps. Most people didn’t have computers yet, restaurants had no idea what technology could do for them or how to use it. There we were bringing FAX machines around to restaurants to just say, “Plug this in and let me send you orders.” The common response was, “Why? What? I don’t get it.” We would say, “Don’t worry about it. Let us just send you orders.” We knew that they would get hooked as soon as they saw the business come in. We knew that there was no reason to go too deep into explaining what we were trying to do. We just needed to get our foot in the door, and then the rest was history. It was your traditional grassroots, gorilla approach to pounding the pavement, knocking on doors, showing up at restaurants with FAX machines, taking their menu and saying, “Don’t ask questions. Let me send you orders.” Then on the flip side, getting the consumer, which was fun. I’ll never forget how my partner, Howie, and I were waking up at 4:00 in the morning on Tuesday mornings because we would run a $2 Tuesday special. What we would do is we would kind of break into every classroom – most of them were still locked. We would write on every single chalkboard of every single class at our campus, “$2 Tuesday. Go to gogreenmenus.com.” Or we would stick little flyers under the mousepads at the library. It was the scrappiest as scrappy can be, but it worked, and it was extremely cost-effective. It taught us that grit, that grind, and what it’s like to be in the trenches of the first days of a scrappy startup. I’m happy to have gone through that process.

Alejandro: How did you go about financing the operation?

Ross Lipson: Fortunately, back then, financing wasn’t as critical as it is today. We were able to bootstrap the company. The model that we had was very cost-effective. It wasn’t a capital-intense project, so we were able to self-fund and bootstrap it.

Read More: Taejun Shin On Raising $100 Million To Provide 100 Million People Access To Microfinance Solutions

Alejandro: Then, how big did it get because, obviously, it ended up getting a nice outcome; the company got acquired. How big was it at the time of the transaction?

Ross Lipson: Yeah. This is where the story gets a bit interesting, and we had to take a big left-turn. What happened was, as this group scaled to each university, as in each new market, the company fragmented itself and in a way that each market had its own brand. There was Go Green Menus, for example, at Michigan State, and Eat Blue at the University of Michigan, so on and so forth. Each market had its own little team that owned a piece of their market, like a licensee or franchisee model. It was really good out of the gate. There was quick traction, and we built a large team with a large footprint. But at scale, we came to realize quickly that there was a problem at scale here. In order for this business, as a whole, to take it to the next level. One is, you’ve got to raise capital, and the cap table was pretty messy with students at each market owning a little piece of their market, as well as a fragmented product, and you weren’t able to leverage one brand name from a marketing standpoint. What happened was, my partner, Howie, and I approached the group, our partners, and we left. We exited that group. What we did was we moved to Canada. This is where I think the story starts to accelerate. We were, first of all, in Michigan. So a quick jump over the border and now we’re in Canada, a new country. We saw it as an untapped market. We found that the thesis and the value of the model in online food ordering was proven. We proved it in the States. Our competitor, GrubHub, was showing that they were finding traction and success, as well. Once we had checked off the box of this model being successful and us understanding how this model works, we opened up our sights and saw Canada as an opportunity. It was an untapped market. Nobody was doing online food ordering up there. In 2008, Howie and I packed up our bags, moved to Toronto, and we launched GrubCanada, which was Canada’s first online food ordering service. We had a blank canvas, with a proven model. We bootstrapped it with the proceeds from the first project, and we really scaled this business quickly. We came streaming out of the gate. Within the first two years, we had thousands of restaurants, all major cities in Canada, and developed a household name amongst our consumer base and saw this business start to scale. To jump ahead here, that led to the outcome, which is what you asked. In 2012, one of the world’s largest online food ordering services, at the time and still is today. They were based out of London in the UK, a publicly-traded company on the London Stock Exchange. They moved into Canada and acquired GrubCanada in 2012.

Alejandro: Nice. Tell us about this acquisition process because this was the biggest significant deal that you had done until that date. You had not raised any money. It was all bootstrapped, so I guess the deal-making side of it was something new for you. I’m sure that you learned a thing or two, so tell us about the acquisition process.

Ross Lipson: Just Eat is a company that does growth through acquisitions. They had done it many times before, and we had not. It was definitely an eye-opener. I think acquisitions are not cut and dry, and one size does not fit all. Our acquisition was a very lengthy process, and it was with a direct competitor in the market that just launched in Canada. It was a bit unique in the sense of trying to be careful on information we gave up but also needing to expose ourselves to make the acquisition possible. It was a lot of song and dance. It took a lot longer than I would have expected, and the realization of an acquisition is, you come to understand: don’t let the cart get ahead of the horse, and don’t let excitement outsmart you; nothing is over until it’s really over. Fortunately, we got through it, but it was definitely a very lengthy process when running the due diligence. I learned after that; it’s always helpful to button yourself up from an earlier stage than a later stage. But the acquisition was great. It filled us financially and personally – it filled us up. There was an interesting spot where they acquired the company, but then offered Howie and me employment roles to help run Just Eat Canada. I was from 18 to 25 years old, had my head down, was full-on in the office and working. Whereas the typical 18 to 25-year-old is doing the opposite. They’re having fun socializing with their friends, hopefully, at parties if they’re doing it right, and learning the way of the world outside of work. Whereas I started to see the value in the world outside the office, and I wanted to make sure it didn’t pass me up. So, I actually passed on the employment offer. My partner, Howie, took it, and he’s still at Just Eat today as the country manager of Canada, which has been a phenomenal story and a Cinderella story of success. That led me to the next leg of my life. I bailed on the employment opportunity. We took the acquisition and went forward, and it was great. That led me to the next phase of my life, which was, of course, eventually led to Dutchie.

Alejandro: Nice. Now, the acquisition is wrapped up, and then what you decide to do is get in a car and become addicted to the road, and more than anything, you find yourself. Tell us about this process of finding yourself. 

Ross Lipson: Yeah. I think we’re all a concoction of everything that has led up to this point in time. You are who you are because of the people around you and your experiences. I think that’s fair to say that’s who we are at this present moment. When I look back at my life as a whole, there are a lot of impactful times. We’ve gone over a few of them on the podcast so far, but I would argue that the most important and impactful time in my life was what you just alluded to, which is, I sold the company. I was 25 years old. I was over the moon, personally and financially fulfilled, and I decided I’m going to pack up my car and aimlessly drive across the country, or aimlessly hit the road. Living in Vancouver B.C. – to backtrack, I started the business in Toronto but moved to Vancouver to build business out west. While living in Vancouver, which is a beautiful city, one of my favorite cities in the world. I got bitten by that beautiful nature bug. I found myself spending my weekends at Whistler and spending my weekdays dreaming about my weekends at Whistler, loving the heights, the outdoors, and the wilderness that surrounds Vancouver. When I sold the company, I hit the road, and fortunately, I crossed the border back into the States, and there I was in the Pacific Northwest. Anybody that’s been through it will know – and if you haven’t, I encourage it. To each his own, it’s one of the most beautiful places, I would say, in the world, definitely in North America. There I was on the road, nowhere to go, nowhere to be, no clock. And I started zigzagging from mountain to mountain. I’ve always been an avid snowboarder. It’s a passion of mine, and I married snowboarding with the love for outdoors, camping, and hiking. That was the guide for this road trip. I went from mountain to mountain, from Mount Baker to [20:00] to Snoqualmie Pass to Crystal to Washington, and then dipped down into Oregon to Mount Hood. There are two parts I want to highlight on this road trip. One, I met somebody in Mount Hood, a snowboarder, with whom I became quick friends, and we connected. They had learned of my road trip and that I had nowhere to be and nowhere to go, and was aimlessly driving. They shared with me the town of Bend, Oregon, which they said, “I have a house that’s where I’m from. You can come follow me and stay there. You’ve got to check it out. It’s beautiful, and there’s a mountain, Mount Bachelor, that you’ll love. I had never heard of Bend, Oregon. I followed that person the next day, and I had one of my first ah-ha moments in my life. I stumbled upon this utopic, small, healthy, happy town of Bend, Oregon. It’s absolutely stunning and surrounded by the mountains with the river running through it and lakes all around. I went snowboarding at Mount Bachelor, the local resort, and there was a bluebird powder at the end of April, and if you ski or snowboard, you’ll know what I meant right there – a picture-perfect day. I just fell in love and decided right then and there, this is home, and once done with the road trip, I would make my way back to Bend, which is where I’m at and where our business is headquartered today. But to go forward on this, on that road trip, I started to find myself and learn a lot about myself, and I value that greatly because I’m able to bring a lot of the lessons and the values I learned, not only about myself but about others and how to maneuver situations. I bring that to my present-day live every day, whether it’s with my relationships with my wife or my friends, but more so also now for this context, for my business, and for our team here. The road is a beautiful place to be, and you’re forced into situations that aren’t in your control. What you eat, when you eat, where you sleep, how you get from point A to B. There are a lot of curveballs that are thrown your way, and I’ll always bring back to one constant theme that started day one in my life, which is mindset. If you have the proper mindset going into any situation, it will greatly affect the outcome, and the outcome will be positive because, really, at the end of the day, an outcome is just a perception of what we believe, and that perception is based on our mindset. It really opened my eyes, and it implemented this beautiful mindset and willingness to understand what comes my way. Sometimes, it is out of my control, but it’s a matter of how we are going to get through it, and that’s what I find a lot of value in and definitely one of the more impactful times of my life, for sure.

Alejandro: Absolutely. I always say that life, at the end of the day, is a sequence of events, just like in business, and the only thing that matters is how you react to it. 

Ross Lipson: Absolutely.

Alejandro: Really cool. Tell us about Dutchie. Here, you decide that you’re going to go here. You have the headquarters there, but tell us about how you come across this idea and how you brought it to life because, also, you did this with your brother. So, tell us about this.

Ross Lipson: It’s a fun story. After that road trip, I made my way back to Bend, and I took a couple of years off. I ended up getting married, got the dog, got the house, child with the bet, and did the fun things outside of what was fun to me and important to me outside of the office. I was itching to get back in the driver’s seat. I think once an operator, always an operator, and I had that fire in me. Of course, I was still young and was younger then. At that time, I was 30 years old; I’m living in Oregon. To take one step back, I’ve always been extremely passionate about cannabis. From an early age, adopting the plant, the product, and consuming, to the people, the culture. I hated the stigma of it. I just loved what it did for me. I’m a Type A personality. Keep in mind that this was a time where it was illegal. But when I was exposed to it, and I saw the effects it had on me, being a Type A personality, I’m moving quickly physically, emotionally, and mentally. For me, I loved that it took the edge off, and it shifted my perspective on my thought at the end of a day. So, I had this passion for cannabis, and now I’m in Oregon; I’m 30 years old. Oregon was one of the first states to legalize. In fact, the first state to legalize delivery, and I’m in Bend, Oregon, which has now 30-35 dispensaries for a town of 100,000. Per capita, that’s pretty dense from a cannabis standpoint. A dispensary opened up, and the first day of legalization, just two blocks from my house, and there I am, excited, like everybody else – not everybody but most people, about this legalization of cannabis, this surreal idea that you can go to a store and legally shop and talk and buy cannabis. I get there, and I’m in line with 200 people. I’ll never forget it. I’m in a line out the door and around the corner, and I’m thinking, as you can imagine. And very quickly, the lightbulb goes off in my head: online ordering for the cannabis space, and who better to do it than me? I have the experience and the education. I used to joke around and say, “I have my Ph.D. in online ordering, and my passion is cannabis.” If I intersection those two, out came Dutchie. That was the first story. It was funny, I realized, then and there, not only the idea of how beautiful online ordering would be and fill a void for the cannabis space, and the convenience of it like in food. Online food ordering brings a level of convenience to the customer. You’re not using an online food ordering platform today to get the best meal in the city. If you go to New York City, and you want the best meal, you’re probably not going to order DoorDash or Uber. You’re probably going to go read some blogs or ask some foodies or some food experts and have a dine-in experience and pay a high-ticket price. Where these online food ordering services really come in is the convenience, where you have this optionality, this selection at your fingertips, and the process is efficient from tracking the order to paying and placing the order. In cannabis, there was that level of convenience there, absolutely, as I stood in line and realized how beautiful it would have been and how convenient it would be to skip this line and to be able to place an order. But more so in cannabis, I saw this value in online ordering ultimately that would become in the education because different from food, cannabis, the menus are forever changing, and they’re really long. There is a lot of important information for each product that lends itself to an educated buying experience. To dive a little bit into that, when you order food, pick a genre. Say I want a pizza. I’m good for pepperoni, mushroom, onion. That’s what I order no matter what restaurant it is, and it’s pretty easy. There’s not much education there. I don’t care what type of cheese it is or the type of pepperoni or the process that they use. But now shift gears to cannabis, you don’t just say, I want cannabis. First, you ask for the category. I might want flower; let’s use for an example. But now I want to learn the THC potency percentages. I want to learn the type. Is it sativa, indica, hybrid? I want to see a photo. I want to read a description and maybe learn about the farm and understand the effects this product is going to have because all products are different. They differ greatly, far more than maybe a slice of cheese pizza differs from another slice of cheese pizza. Furthermore, on the education of what I want, it’s what does this dispensary have in stock today because every single day, these dispensaries are selling out of products and getting in new products. I quickly learned and checked off my boxes that there was a void in the cannabis space, this nascent explosive industry – inevitably, it would be explosive. It didn’t take a rocket scientist to figure that out that there was an opportunity in cannabis, but the idea of online ordering really struck me, not only for the convenience but for the education that the consumers would have to help make their buying process and decision easier. That’s the start of Dutchie.

Alejandro: Let’s talk about, now, giving birth to Dutchie, and also, more than that, the team. I’ve heard you say that team and people are very important. Obviously, part of that in the initial pieces was bringing your brother to this. So, how has it been working with your brother?

Ross Lipson: Right away, whenever I have an idea or when anybody has an idea or anyone that’s listening, I would imagine has a similar process. When you have an idea if you think it’s worth if you’re comfortable and confident in sharing that idea, you go to your immediate network, and you look for feedback. Your immediate network could consist of friends, close friends, family, acquaintances in business, peers, and for me, my brother was always one of the first people, if not the first person, I go to in my immediate network for feedback on an idea. Keep in mind; I was always an idea’s guy. I was the type that had an idea every other day and would go to my brother, and my wife now, my friends, and tell my idea, and 99 out of 100 times, you go to this immediate network, and 99 out of 100 ideas get knocked out quickly. I’ll say the same of my brother. Zach is also a co-founder and has that entrepreneurial spirit from an early age. He founded many startups, all in tech prior to Dutchie, and a lot of them were very successful. He sees business also from a similar but different lens. His trade is, he was an artist growing up, and he had a knack for design, which transformed into an understanding of product and how product maps the business. He was the one that married business acumen with product strategy and vision, and I was more business acumen married to the energy and the sales in marketing of the business. We are, in a sense, two peas in a pod. Zach and I always said to each other, before Dutchie, “If we can only get together.” I always felt I could sell. He knew I could sell well, and he said, “If I could only design a product that you could sell – if you could only sell a product of mine,” and I always said, “If you could design and manage a product and build a product that I could sell, it would be a home run.” It was like two peas in a pod, a perfect marriage there. So that was the foundation. Then right when I called him with this idea, I said, “Online ordering for the cannabis space,” and unlike 99 of the last responses I got from Zach, he just quickly responded, “You have to do it. It’s a no-brainer. It’s perfect for you. It’s almost as if you read the Outliers book by Malcolm Gladwell, which is a phenomenal book. I fell into that bucket, right person, right place, right time. This is where it gets interesting. Not only did he quickly say with a level of confidence that I hadn’t heard from him ever when sharing an idea with him, he said, “Not only do you have to do it,” but he was in the 11½ hour of an acquisition of a company that he was the co-founder of. It was a FinTech startup. He said, “I’m in the 11½ hour of an acquisition. I’m wrapping this thing up in a couple of weeks to a month or two. I’m ready to jump. Let me join, and let’s do this together.” For me, just like his response to me, so quick, I was the same way back and said, “Let’s rock and roll.” We quickly jumped on the same page; we got together, and let the games begin. That was when the fun started, and like all good startups, start off around a kitchen table, and on the back of a napkin, we started designing, what we’re framing out, and coming up with the fun thoughts of what this business would be from a brand standpoint to a strategy and vision standpoint. That’s when things started cooking.

Alejandro: Amazing, and definitely cooking because, in COVID, things increased by a mile. What happened there?

Ross Lipson: We’re three years into the business as of today. We started in 2017, July. We built the business, the typical crawl, walk, run. We launched an NVP in 2017, smoothed out the kinks, moved across the state of Oregon, caught 50 dispensaries in the platform, maybe 50 orders a day at a show, the slightest bit of traction. Then we raised the seed round, and we’re fortunate to have a great group of investors behind us: Casa Verde Capital took the lead, which is Snoop Dog’s firm, which is great to have from a cannabis standpoint, but the people Karan and Yoni, to call the out are at the helm of Casa Verde and are phenomenal people to work with. They have a great insight into the cannabis industry. From there, we continued to expand, which led to a Series A round of financing a year later, and we started to build the team. To lead up to what happened with Corona, about six months ago, we were thrown the curveball that everybody else was in the world, and it was an unforeseen curveball, of course. In hindsight, we realize that. The reason why I got into the backstory, which led up to it, fortunately, we had time to build the product, processes, and a team, and had the resources to do that, and the foresight of understanding what scale looks like, so we could start to build that foundation and have that in place. Thank, God, we did because we got hit with the curveball, and as great as it is to say, I’m happy to say our business surged 700% overnight. We went from doing 10,000 orders to 70,000 orders literally overnight. Now, as great as that is, with that, there’s a positive and sometimes a negative. You are stressed as individuals at a company, as departments, as an organization as a whole, from people to process to product in your tech. Most tech companies don’t endure that surge overnight, and most times, when a surge like that happens, it could take down a company, whether it’s people, process, or tech. Fortunately, we had that in place, so we were able to turn it out in a positive way. What happened was, our business just started to explode, and we saw a heavy demand from dispensaries needing our tool immediately. We started onboarding hundreds of dispensaries week after week. Our implementation team knocked it out, and our sales team funneled them all in. Our customer support team was there to support all of this crazy influx and new clients, as well as new orders. Consumers started flocking to the online ordering. Menus of these dispensaries and most dispensaries started requiring the need that you must order online. And we started to become a larger size of the dispensaries wallet if you will. Before COVID, we were upwards of 30% of a dispensary’s orders would be online. With COVID, it was close to 90% to 100%. We shifted, not only in a surge and volume and all angles and stress-test across the board but what we realized is that we went from a nice-to-have value ad tool to a dispensary or an industry to a necessity. We were required and helping keep these dispensaries up and running. It was a wild ride, and a great story, and fortunately, we came out on top. I think the lesson there if I look back is – let’s go back to the road trip. You don’t know what’s up ahead. All we could do is have the right mindset and be prepared. So, if we’re prepared, and we put our people, our process, our product in place, and we have the right mindset, as fun as it is to see your orders skyrocket and spike like that, those are the most stressful days of our business, and arguably might be till the end. Those days, we all got on calls. We were working 20 hours a day, very little sleep. Everybody was strapped in, buckled in, communicating to a T, working together, and really put to the ringer in the stress test. It’s definitely a positive, but it’s important to be prepared and have the right mindset on things when that happens.

Alejandro: Very cool. How much capital have you guys raised to date?

Ross Lipson: Today, we’ve raised 53 million in funding to date.

Alejandro: For a business like this, what is the type of investors? Is it the typical VCs or who would finance, because, obviously, the cannabis sector is not the typical SaaS or marketplace type of stuff? So who would finance a business like this?

Ross Lipson: It was always a struggle and still is, but we’re starting to see some movement in the cannabis space. When we raised our seed and our Series A, cannabis was very young and still is today, but younger then, and we found that most institutionally-backed firms wouldn’t touch cannabis, and it would get to the LP level, and there would be a block there. It made fundraising quite difficult and time-consuming and quite inefficient. You would run a race with the firm to get to a level of excitement and then to realize they couldn’t make the investment. We were fortunate to find two venture capital firms, Casa Verde, which I mentioned before. The second one I want to bring into this is Gron Ventures that are focused solely on the cannabis space, but more importantly, have a very strong understanding, not only of the cannabis industry, but business as a whole, tech, and how to scale, and they’ve been there before and done it in other industries. We were fortunate to bring them on in a seed, and the Gron Ventures led in the A. Fortunately, we’re starting to see a bit of a shakeup in cannabis and a movement towards legislation to legalization and a willingness for more to move into this space. I think you’re starting to see companies like Dutchie prevail and show that there’s a huge opportunity there, that they have the right teams in place, that they’re filling a nice void in the space, and the uneconomic makes sense. We’re starting to see things lift in the sense that people are willing to work with the cannabis space. Fortunately, on our last round, we were able to bring strong investors from outside the cannabis space that we all know of today. Thrive Capital took the lead. We’re fortunate to have them. They bring a wealth of knowledge and understanding all verticals in tech and what’s worked and what hasn’t in the past, and their network and ability to connect us with people that we need, teams that we need, and businesses that we need has been invaluable to us. Then we were able to pair with strong angel investors like Howard Schultz, the former founder and CEO of Starbucks, who joined the Series B. I’ll close and summarize this by saying, there is a movement for investors moving into the cannabis space, which is great. For us, it always has been a struggle being really early on in cannabis, but we’ve fortunately done well there. When I look at our cap table and our investors, all investors are different. They all bring a unique perspective and unique skills to the table. It’s important to marry a few investors together that offer different things and have a unique perspective. We have, for example, Casa Verde and Gron, domain experts in the cannabis space. We have institutionalized investors like Thrive that have a deep understanding of tech at scale and what that looks like in our later stage. Then we have people like Howard Schultz that come on as a visionary and a leader that can help leadership and high-level values, and it really is nice to have all those pieces come together. It’s very valuable for us.

Alejandro: I want to ask you here, there’s one question that I typically ask the guests that come on the show. This is your second rodeo. This one definitely seems like your biggest one to date, and I’m definitely excited to see what the future has for Dutchie. Now, with all these lessons and this incredible journey that you’ve had, if you had the opportunity to go back in time and have a chat with your younger self, with that younger Ross, what would be that one piece of advice that you would give yourself before launching a business and why knowing what you know now?

Ross Lipson: That’s a great question. I’ll keep mapping back to the same theme here – it’s that mindset. It’s having the right perception and perspective on yourself. It’s going into it, obviously, confident, but not knowing, humbling yourself, and don’t be naïve. We don’t know what the road ahead is. Be open to understand that and watch as curveballs come in because they always will, inevitably. They might look good; they might look bad at the surface. COVID was a perfect example for us for that. It’s just to remain positive and have that mindset and have faith in the team. With that right mindset, you’ll get through it. For this podcast, we’ve covered all the noes we experienced in raising capital, persevering, and having the right mindset to get through it, stay optimistic and positive, and you will. To seeing the stress that COVID brought on outside of yessing and order volume surge, they were some of our hardest days. There were some days where you felt like throwing in the towel, but with having the proper mindset, you get right through it. The team comes together, and you see beautiful things happen. I’ll map back and keep the theme consistent here. It’s all about mindset, and make sure that you’re mindful of your mindset, always. Always check it because it changes; what you know today changes tomorrow. It’s just like the weather. Keep the mindset positive and optimistic, and keep having that outside perspective on yourself and what you’re thinking.

Alejandro: Very profound, Ross. For the folks that are listening, what is the best way for them to reach out and say hi?

Ross Lipson: You could definitely check out Dutchie.com. You can contact us from the site. Our social channels are live with links in the footer. Check us out on Instagram, of course, Twitter, LinkedIn. I would love to hear from you guys. We’re growing fast, and we need all the help and talent we could find, so let’s all stay connected, and I appreciate you having me on the show.

Alejandro: Amazing. Thank you so much for being on the DealMakers show today, Ross.

Ross Lipson: Thank you.

 

* * *

If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.

Facebook Comments