Internal documents reveal Amazon sees this as a health and wellness product that’s voice-activated and controlled via a smartphone app.
2 min read
This story originally appeared on PCMag
It seems Amazon is preparing for a push into the wearable device market with a voice-activated gadget capable of detecting human emotions.
As Bloomberg reports, the in-development wearable, which goes by the codename Dylan, was revealed by internal documents the publication has seen. While it’s unclear what type of wearable this will be, a fitness tracker-style device or smartwatch seems most likely. It will be equipped with microphones and require pairing with a smartphone app to function.
The device is being developed by Lab126 and the Alexa software team internally. Lab126 is known for having developed the Kindle, Kindle Fire, Fire TV, Fire Phone, Echo smart speaker, Echo Dot, and Amazon Tap, so it certainly has the required experience to create an Alexa-using wearable (beyond Alexa Earbuds).
Internal documents alone are not enough to prove anything beyond a hardware experiment is underway, however, a person familiar with the program who requested anonymity told Bloomberg that beta testing was underway. Clearly Amazon has something worth trailing already, even if the company is refusing to comment at the moment, which is understandable.
Consumers are very willing to have an always-listening smart assistant present in their homes, but how will they react to a device that can sense emotions being felt? We’re already used to wearing fitness trackers and having our body’s data collected, so this probably isn’t a massive leap for people to accept. What’s key is how Amazon uses the emotion information to enrich our lives, but just as importantly, how it uses the data for its own benefit.
Both segments have become catalysts to female financial independence worldwide and are a springboard to a career in tech.
7 min read
Opinions expressed by Entrepreneur contributors are their own.
At a time when female entrepreneurship is still the exception rather than the rule, there is a bright light in the sharing economy where women are flourishing: short-term rentals.
Related: Essential Tips for Being a Successful Airbnb Host
The rise of platforms such as Airbnb, Booking.com and others helped create a $169 billion short-term rental market in 2018 alone, according to SKIFT Research. That market encompasses major female players — a reflection of the fact that when women are unencumbered by traditional hierarchical structures, they thrive.
A global equalizer
Online accommodation-sharing websites, including the ones just mentioned, have acted as “an equalizer in a world where women have to fight for equality every day,” South African telecom executive Liz Hartley told Forbes. I’d agree: New technology in the short-term rental space is providing people a means for making a living managing properties, where they otherwise might not have been able to do that.
What’s more, because the experience of using platforms like Airbnb eliminates income disparity based on gender, short-term rental industry technology opens the door for women around the world to turn what used to be a typical “side hustle” into a full-blown, flourishing career, with no need for initial capital investment.
In fact, anyone can start a new business in the sharing economy. Travelers choosing a short-term stay through an online travel platform choose according to the facilities advertised — and nothing more. What (thankfully) gets ignored are factors like the host’s gender and race. Hosts and property managers succeed based on the quality of their offerings, without somebody’s bias.
And data shows that the short-term rental industry not only creates gender parity, but also creates the perfect opportunity for economic empowerment. But don’t just take my word for it.
Women as short-term rental hosts worldwide
Airbnb noted in a March 2017 report that, looking back over the company’s history, female hosts had made up 55 percent of its global host community, and had hosted at 120 percent the rate of men. The company also estimated that over 50,000 women around the world had used income from Airbnb to support entrepreneurship for themselves or as direct investment capital for launching their own businesses.
Related:8 Initiatives That Show Tech Wants to Solve Its Diversity Problem
The same report showed that globally, 62 percent of Airbnb hosts who are single mothers had used their income from this platform to help them afford their homes.
This short-term rental factor is particularly strong in foreign countries. Case in point: In India, a female Airbnb host can earn enough money to cover 31 percent of her average annual household costs, and in Kenya it’s closer to one third.
Belinda Bowling, a 43-year-old humanitarian aid worker from Cape Town, is an example. Bowling created a micro-business for herself by renting out her home on Airbnb. She then took things a step further, hiring a female business partner to look after the property on a daily basis. She also trained other unemployed women within her community to help her during busy seasons.
So,how can more women participate in the short-term rental sharing economy?
Three tips stand out:
1. Find and understand the opportunities. The rise of short-term rentals, travel as a commodity instead of a luxury, remote work and the desire to “travel like a local” are all current trends. So pinpoint what opportunity fits you best and define where you can add the most value
Your area of strength could be in: operations, marketing and channel distribution, communications with homeowners or site searches for the best locations. Build a business that highlights where you shine most.
2. Understand the commitment. Calculate the time you will need to dedicate to this role and how much you stand to earn. While short-term rentals are attractive, they require serious commitment — from constant guest communication work and marketing to cleaning and check-ins.
3. Plan for growth. As you grow and scale your business, look for software and automation tools that enable you to do so efficiently to ensure you don’t bite off more than you can chew. Guesty, a short-term rental property-management platform, of which I am COO, grew out of the need for technology to help streamline the many tasks that property managers face on a daily basis. Features include task automation and a unified inbox to centralize all guest correspondence, so nothing slips through the cracks.
Guesty of course isn’t the only technology in this space serving property managers and ultimately guests. Other smart home and third-party tech solutions include PointCentral — creating home automation solutions that facilitate keyless entry and staff coordination; Beyond Pricing, an automated dynamic pricing tool that utilizes real-time data to maximize revenue and occupancy; and NoiseAware, a noise-monitoring solution that alerts property managers when volumes in their rentals exceed reasonable levels.
Then there’s Properly, a marketplace of cleaners and service providers paired with resources to train and develop skills based on your needs. All of these companies and more are helping to grow the short-term rental industry while creating more employment opportunities.
In addition to relying on technology to aid in your success, be sure to create a business plan that outlines your projected costs, headcount needs and income as you scale your business. Ultimately, stick to a plan that you feel you can realistically execute.
What this means for travel tech.
The surge of female empowerment that the short-term rental arm of the sharing economy has prompted has also appeared in the travel tech space. The latter term describes those companies that have responded to the need for tech solutions to support the short-rental industry. Here are two reasons why:
1. The tourism workforce is 50 percent or more female, with about half of director-level employees at hotels being women, according to a World Travel and Tourism Council 2017 report. So transitioning into travel tech is an obvious step for women already familiar with the travel space.
In this context, I would go far as to say that women’s involvement in the travel tech and short-term rental segments has made it easier for them to step into the tech scene, a predominantly male ecosystem, and to gain a healthy share of leadership in these fields.
Take Gillian Tans; she’s CEO of Booking.com. Tans has advanced the company’s operations and sales across more than 224 countries and territories, according to a profile in Businesswoman Media. And I’d be remiss if I didn’t mention that my own company, 42 percent of our workforce is female (including over 40 percent of mid-management and top management).
2. If you compare Airbnb’s employee makeup (48.94 percent female in 2018) to that of tech giants like Facebook (36.3 percent female in 2018) and Google (30.9 percent female in 2018), the travel platform segment comes out on top. These and the aforementioned stats are just a few reasons why it’s easier for women to find their place in travel tech, compared to tech in general.
Related: You’d Be Surprised Who Most Sharing and On-Demand ‘Super Users’ Are
How a career in travel tech can benefit you, too.
The tech solutions and platforms that support the travel and short-term rental ecosystems are catalysts to female financial independence worldwide. They’re enabling women across different cultures to boast successful careers, fund their various passions, support their households and segue into tech.
These trends will only be amplified as travel becomes more of a commonplace than a luxury, resulting in an increase in travelers and simultaneously making it more and more clear how the travel tech industry is opening doors for women as well as being powered by women.
This CEO hit a dead end when looking for information on company culture for women, so she created her own solution.
2 min read
Opinions expressed by Entrepreneur contributors are their own.
In this video and latest episode of Resilience, Entrepreneur Network partner Jason Satlzman talks with Georgene Huang, the co-founder and CEO of Fairygodboss.
The founder of the career website for female professionals describes how her company began when Huang was laid off unexpectedly. She was two months pregnant at the time. Huang then discusses her journey through the professional world, how she navigated the interview process and saw gaps in the type of information she was curious about. By starting Fairygodboss, Huang learned how impossible moments are opportunities for entrepreneurs to gain personal clarity.
Click play to hear more from Alley and Georgene Huang.
Related: Why This Entrepreneur Stuck With Her Startup Even When Her Employees Told Her to Quit
Entrepreneur Network is a premium video network providing entertainment, education and inspiration from successful entrepreneurs and thought leaders. We provide expertise and opportunities to accelerate brand growth and effectively monetize video and audio content distributed across all digital platforms for the business genre.
EN is partnered with hundreds of top YouTube channels in the business vertical. Watch video from our network partners on demand on Roku, Apple TV and the Entrepreneur App available on iOS and Android devices.
A deal between the world’s two biggest economies looks less likely.
3 min read
Opinions expressed by Entrepreneur contributors are their own.
The U.S. Purchasing Managers Index (PMI), which measures business activity in the manufacturing and service sectors, fell to its lowest level in nine years this month. At a reading of 50.6, the PMI suggests the economy may currently be close to flat.
Interest rates and the price of oil plunged on the weak economic news. So did stock prices. The major indexes were all down sharply with the Nasdaq Composite index falling 1.58 percent. The Entrepreneur Index™ closed the day with a loss of 1.69 percent.
Technology stocks were once again hammered on the trade front. There is growing fear that the blacklisting of Chinese telecom company Huawei Technologies could cause a “tech cold war” between the two biggest producers and consumers of technology products. Stock prices were down across the sector.
Twitter had the biggest decline, dropping 3.6 percent after posting the biggest gain yesterday. All four FAANG stocks on the index were down sharply with Facebook (-2.4 percent) falling the furthest. Chip-makers NVIDIA Corp. (-3.22 percent) and Analog Devices (-2.67 percent) both fell as did software-makers Adobe Systems Inc. (-2.69 percent) and salesforce.com (-2.49 percent).
Hess Corp. had the biggest loss on the Entrepreneur Index™ today, falling 7.93 percent. Growing inventories of crude oil in the U.S. reported yesterday and renewed worries about future energy demand from slowing economies led to a 5.3 percent drop in the price of oil. It is down nine percent in the last three days. Hess shares are still up 45.7 percent so far this year.
Other large losses on the index today included Chipotle Mexican Grill (-5.51 percent), casino-operator Wynn Resorts (-5.05 percent) and apparel-makers Under Armour Inc. (-3.34 percent) and Ralph Lauren Corp. (-3.15 percent).
Shares in L Brands jumped 12.79 percent today after the maker of Victoria’s Secret lingerie reported an unexpected quarterly profit. The company beat revenue estimates and slightly raised its guidance for 2019 earnings. Same-store sales at Victoria’s Secret continued to slide–down five percent in the quarter–but they rose thirteen percent at the company’s Bath and Body Works stores. L Brands closed another 35 Victoria’s Secret locations. Its stock is down 5.5 percent this year.
Only eight other stocks out of sixty on the Entrepreneur Index™ had gains today. The most notable was Tesla, which rose 1.43 percent after sliding precariously for the last week. The REIT sector was generally up with Apartment and Investment Management Company (1.01 percent) and Equity Residential (0.61 percent) posting the biggest gains.
The Entrepreneur Index™ collects the top 60 publicly traded companies founded and run by entrepreneurs. The entrepreneurial spirit is a valuable asset for any business, and this index recognizes its importance, no matter how much a company has grown. These inspirational businesses can be tracked in real time on Entrepreneur.com.
Opinions expressed by Entrepreneur contributors are their own.
This article was originally published on Feb. 2, 2017 and has been updated.
We all know the importance of setting goals — they hold you accountable, tell you what you truly want and help propel you forward. Whether we strive to get started on that new project, spend more time at home, launch a new product or want to lose weight, many of us simply state our goals but fail to set deadlines and track our progress toward achieving them.
Integrating your goals into your digital life is an easy way to keep them top of mind and keep you motivated. Some apps even allow you to make your goals public, helping to hold you accountable and to garner support from friends and family.
Try these six apps and finally cross some goals off your bucket list:
Want to invest in the cannabis industry but barely have enough to buy your own weed? Cody Sanchez of Cresco Capital Partners has suggestions.
15+ min read
Cannabis stocks are all the rage. IPOs valued at billions of dollars are popping up on Wall Street and the Canadian Stock Exchange, and private equity funds are investing multiple millions in cannabis companies.
If you’re watching all this from the sidelines, wondering if you’re missing out on a golden opportunity but not sure what to do about it, you’re not alone. Many potential investors believe they don’t have the cash to get in the game, and in some instances they’re correct. Due to regulations, many funds are not even permitted to accept investments for less than $200,000.
On this week’s Green Entrepreneur podcast, we talk to Codie Sanchez, a partner at Cresco Capital Partners, about how to invest in cannabis companies even if you don’t have a lot of cash. This is a full transcript of our interview.
Related: Why Former NBA Star Al Harrington is Betting On Cannabis
You started your career with lots of spreadsheets and more traditional investing, and have now transitioned to the cannabis industry and business. I’m curious to know why you made that change.
I think there might be some parallels to a lot of people’s story in this space in that once you figure out investing, and particularly if you’re trained to do it, once you figure out how to find dislocations in markets – something where everything just doesn’t fit together perfectly so that people smarter than you and who have more money than you do can take advantage of it – when you see those dislocations, you learn to jump on them quickly. In investing we call this arbitrage. That’s when something typically costs less than it should or costs more, and you can take advantage of those things happening.
So I saw that happening in this space. I’m certainly no genius or clairvoyant in it; it really just came down to the math and looking at math in this space as an investor and saying there’s a real, tangible generation of wealth creation event happening here.
But I have to say that probably math would not have been enough if I was going to call my mom and tell her I was going to go into the cannabis game. [laughs] It was a little bit deeper than that.
I started off my career, even before I was traditionally investing at firms like Goldman or State Street or Vanguard or doing some of the venture stuff, I was actually an investigative journalist. I don’t know if we talked about this before, but I worked at the U.S.-Mexico border. We were writing stories about human trafficking and drug smuggling.
Wow, that’s intense. What part of the border?
The part that you would probably know is right across the border is a place called Juárez, [across] from El Paso, Texas.
Yes, it’s notorious.
Exactly. They call it Ciudad de la Muerte, the city of death. It’s a pretty tough place to be young and female. Thy have hundreds and hundreds a year of murdered women there for some reason.
But what that taught me, besides to be relatively jaded, is that as an investigative journalist you really don’t take anything at face value. You have to question everything, find the root of why things happened, and then dig deeper. You really can’t let stigma get in the way, or people’s assumptions; otherwise you’ll never write a good story.
This tendency taught me to do this deep diving, and that’s when I got to the math, and also a little bit of the heartstrings. I think anybody in this space has a story – and I know you’ve shared some of yours too – about the impact that it’s had. I dug into that a little bit in particular with veterans, which we can talk about later. We fund an initiative called Texans for Veterans, which is trying to give veterans in Texas access to research and medicinal marijuana.
How many times in your lifetime do you get a chance to be a part of a generational wealth creation event where there’s massive dislocation so little guys can play too, because the big guys aren’t all allowed to with their legal background, and then in tandem you get to make a huge impact – I think in multiple areas, but certainly with mental health and veterans, which I’m very aligned with since my partner is one.
Your partner is a veteran?
Yeah. My significant other. He’s active duty military right now, in the Navy.
Has cannabis made an impact in his life?
No, they’re very, very highly regulated. He does some particular things for the military in which that’s not allowed. Actually, for the military overall, if you use cannabis, you can lose your VA benefits, be fired. There are huge repercussions. But what he and I both have done is be a part of this nonprofit that essentially is trying to push for access for veterans.
He’s the first one to say, “Gosh, if I could use it, I absolutely would,” for the chronic inflammation that you get from being deployed so many times, and certainly from – everybody comes back with some type of hyperawareness and certainly that stress that comes from being in a warzone.
And you’ve seen firsthand that cannabis has helped veterans with those symptoms you’re talking about?
Oh, absolutely. There’s one gentleman whose name is Keith who’s a bronze medal winner. He served in three different branches of the military, lifelong veteran. He was actually here in D.C. when the Pentagon was hit and was one of the first responders because he was a trained nurse. He’ll very publicly say – so I can say his name – that without cannabis, he doesn’t know if he’d still be around because of the opioid cocktails that they were giving him. He just wasn’t reacting well to them. He had a lot of anger and anger issues.
Now with cannabis, he has a lovely family and wife and a cute dog. I think, while that is not quantifiable because there’s not enough research on it, there is certainly a lot of qualitative human interaction that you can see that it makes a difference
I know there’s no such thing as easy money, but I think people who are not necessarily directly involved in the industry, whether they’re touching the plant or not touching the plant, might have some interest in investing, at least, in the industry. That is what you do. Your clients are generally big spenders, right? To get into your fund – tell me a little bit about the fund that you work with.
It’s called Cresco Capital Partners, and it’s a private equity or growth equity fund in the cannabis space. What’s interesting is due to the regulations around a lot of how these funds are structured, they actually mandate that you have higher minimums, typically because you’re only allowed so many investors in the fund and they have to be accredited. So even if I wanted to allow everybody in at $5 or $10, it’s very hard to do that at this stage.
Now, that changes, and as you get more funding you can create a more complex fund business. But at this stage, this is our second fund, which is $55 million. The first one was around $25 million. We have co-investments, so we’re probably right around somewhere like $100 million in assets. The minimum is $200k, so that does make it difficult for everybody who wants to invest. It’s still one of the lowest in the space. I’ve tried to keep it lower. It’s an administrative nightmare to do so.
Image credit: Codie Sanchez
But I think the whole point of this industry is democratizing access, right? I think that’s what we’re going to talk about today – how to do that, whether it’s investing with somebody like us, or ramping up to invest with somebody like us, or doing it on your own. We can talk about all of the above and how I started investing in cannabis.
Let’s talk first of all a little bit about what you do with the money that people invest with you. Who has Cresco invested in and some of the companies that are under your purview?
This is where I get excited. There’s nothing more fun than giving the lifeblood, which is capital, to really incredible organizations. In this industry in particular, it all moves so fast, you get to see what that money does that you give these companies quickly and all the people you’re able to serve one way or the other.
We’ve invested in a lot of interesting companies. We’ve had about seven exits thus far, which means companies that have been sold or gone public or done some sort of merger. We invested in some names probably people know, like Acreage, one of the biggest companies out there, who’s had a little bit of news.
They recently merged or were acquired by Canopy Growth.
Yeah, for a tiny amount, $3.5 billion. We’ll see. It’s the right to buy them, so it’s pending that legalization happens – but you covered that well.
Then we invested in GTI, which other people probably know. We invest in a company called Ebbu that was bought by Canopy Growth for just shy of $500 million. We invested in another company called Form Factory, which was also sold. That one’s interesting. It’s kind of a co-packing business and a branding company. And then we have lots of up-and-coming companies in the portfolio, like Prohibited, which is a big media company. You guys have done stuff with them. I think that company is fascinating because they’re doing brands too and leveraging this medium platform to maybe figure out who will be the future brands of cannabis. And then we invest in another company called Sublime. Great product.
I love their music.
Oh, the music? [laughs] Well, these guys are not of the ’90s. They were probably born around that time period. But they do these little things called Dosies, which are micro-dose, almost. They look like Tic-Tacs. They’re manufactured by the same manufacturer of Tic-Tac to do the candy coating that they do. So they taste like orange Tic-Tacs, and they’re great for sleep. My grandmother has a problem with her hip and she can’t sleep, so she uses Dosies now. I got turned onto it. One of my partners, who’s another woman and a mom, said after you have kids you really never sleep again, and these helped her. So I thought it might work for my grandma, too.
You oversee a $100 million dollar fund. I’m sure you get pitches all day long. What are some of the main things that you look for in a company?
I’ll tell you one thing, my inbox never gets to zero, that’s for sure. We’ve screened over 1,800 companies and hundreds a year, and what we look for is twofold. One, we’re not seed stage, meaning we don’t invest on the early side of the business like a tech company might when there is no revenue yet or no product. We invest in the growth equity space. Typically we’re looking at companies that are already generating anywhere from $1-$20 million in revenue. We need them to be revving a lot in order for us to invest.
We definitely are interested in companies that first and foremost – which I think any good investor will tell you –you’re really betting on the team. The idea is important, but as any entrepreneur knows, there are going to be pivots, there’s going to be heartbreak, there’s going to be backstabbing. It’s like Lifetime TV if you want to go run a company. You have to pick people that are resilient to do it. So we do a ton of time on due diligence on the teams. I was just talking to a big MSO today, actually, and one of the sales points for them –
That’s a multi-state operator, for those taking notes at home.
Good one. The thing that sold me was they are a multi-state operator and their COO is one of the smartest operators I’ve ever seen. That’s always a good trick if you’re looking to invest: figure out, can they actually operate? Because cannabis is not a simplistic business. It’s highly complex. You want to make sure you have somebody that can handle it.
Let’s get to the million dollar question, which is: I don’t have a million dollars, but I want to be a player in this business, or at least I want to invest in this business. Where do I start? What do I do? If I know that a lot of the really successful funds such as yours have a pretty high bar of entry, unless I have $200,000 – which I don’t.
I think the goal here is to do just that, to get your seat at the deal-making table and to get you deals and access into the space that really outstrips your network. The secret is, I really believe wealth is made on the private side. If you look at anybody who has accumulated wealth – not just rich, but real wealth – it’s because they’ve done investing either on real estate or in their own company on the private side. That’s just the “why” of this even mattering.
Explain that a little bit to me. On the private side, meaning they’re not public companies that they invest in?
It’s very hard to make generational wealth or real wealth by investing in public stock markets. You can see that very quickly. Say you put all the faces from the Forbes 100 list, billionaires out there, on one page. What you would notice if you went through all their bios is not a single one of them made their money from smartly investing in public stocks.
The brilliant Warren Buffett, Carl Icahn, they only move when they have three things. The first one is an unfair advantage. For instance, Carl is an activist . He can go bother the founders of the company until they make changes to the actual company and make him money. So you need an unfair advantage in some way.
Your unfair advantage, Jon, might be that you have really incredible deal flow because all these entrepreneurs want to pitch you all the time. So you might be able to see trends and know people and be a connector because of all this deal flow that you see.
So one is your unfair advantage. That’s what you need. The second thing that you need is intimate knowledge. Not insider knowledge. You can’t have anything illegal. But you need intimate knowledge of the industry, the company, whatever you’re investing in. You really can’t get that with public stocks because otherwise it would be insider information.
So intimate knowledge meaning you have some access to their financials, or just that you know an industry intimately?
I believe access to their financials or access to the actual founders or access to their actual distributors. Something beyond what the news and Jim Cramer could scream at you on CNBC. So you need that.
Then the third thing that you need is the ability to affect the outcome. That’s how we invest on the private side because by giving them capital, we can talk to them about how they’re going to exit, who’s going to buy them, if we could help them structure the exit on the backend, all of that.
Those three things are really key to massively investing. But we’re talking at a super high level. We’re not all going to have that on Day 1, but you should always have that in the back of your mind. It’s why I’m really worried about anybody who’s a price speculator.
What does that mean?
Price speculator basically means – everybody knows about the cryptocurrency crisis. The housing crisis really was no different, and there was also the internet bubble, and then if we go way back there was tulip mania, which was where people were paying hundreds of dollars for a tulip bulb. Nuts.
It’s all the same thing, though. It’s all called price speculation, which basically means people invest in something just because they think the next guy is going to buy at a higher price and they’ll be able to sell after he gets in. But they don’t believe that there’s real value in what they’re investing in. They’re price speculating that the price is going to go up no matter what.
We’ve got to be careful about that. There’s a little bit of that in cannabis, so on the public side I’m really cautious about investing. We talk about price a lot. Warren Buffett talks about that too.
It seems really out of whack right now on the public side, the valuations of the companies.
Yeah, I think so. I think you’re nailing it. I don’t have a crystal ball. If I did, we’d be on my yacht while we’re recording this podcast. But what I think is important to think about on the public side, or any time valuations or the price of stocks is concerned, is it might be really exciting the numbers that they’re at, and they might do all the things they need to do in order to grow into that price, but I’m always looking at the downside.
Does it make sense for the top 10 cannabis stocks to be worth 4x more than the top 10 biotech, tobacco, pharma, or healthcare stocks, from a price-to-sales perspective (which just means the price that they’re worth versus how much they actually sell)? I would say I don’t know. It’s a growth industry; it could be, but probably not. The key to investing there is always buy low, sell high, and train your brain on that, to focus on price first before excitement.
You gave us the three attributes or the three keys to think about and ways to position yourself. You had also mentioned you need to make relationships, you need to network outside of your network. How do you recommend doing that?
Codie: I think there are a couple different ways. One, if you want to invest, in my opinion, or if you want to do anything – say you want to play baseball. The first thing that you should probably go do is watch a baseball game. Then you should probably go try to play a baseball game amongst you and your friends. Then you should probably try to figure out who are the reporters that cover baseball. Then you should probably try to go to three or four conferences of people who are talking about baseball or selling baseball gear or something related to baseball.
It’s not dissimilar to investing. You go where the game is played. In cannabis, in my opinion, that would be places like ArcView, which is kind of like AngelList, if you know what that is. AngelList is where you can go and invest in lots of different startups, but at very low dollar amounts. ArcView is similar but for cannabis, and they also have conferences. So I think you go to a couple ArcView conferences, you join that.
They should be, in my opinion, getting smart. They’ve got to listen to all the podcasts on Green Entrepreneur, and then go over to CannaInsider podcast, and then go and look at some of the investor intelligence reports like Cohen. Don’t spend a lifetime; do this in a weekend. You can binge-listen to a couple podcasts, binge-read all the investor intelligence on MJBiz or Green Entrepreneur or Cohen.
Then you start reaching out. Then you try to go to an ArcView event. Schedule one. Then you email all the speakers at the ArcView event. Give yourself a timeline. You have 30 days to get smart on it.
What’s crazy is, after you do those three things – listen to a ton of podcasts, read as much as you can about the industry, and then get hooked up to an industry group and go to one of their conferences – you are smarter than 90% of the population on cannabis.
What’s the conversation you have with these people that you connect with through ArcView or these different platforms that you have recommended? Is that the moment when you present yourself, about who you are and what you have to offer?
I think you have to first have a belief that I’ve found to be true across every industry I’ve been in, which is that if you go where the game is played because you want to be in the game somehow, you will have opportunities presented to you that you never otherwise would.
That’s my promise to you. If you do these three things and you go to where the game is played with a curious and open mind and dig in, you’re going to have stuff come up that you didn’t exactly realize how the opportunity was presented to you, and you wouldn’t have picked it exactly this way, but it’s even better than you thought.
If you have that belief, then when you go, I think there are two things that are super important. One is curiosity. We’re all egoists, right? I like to have my ego stroked. I’m sure you do [laughs] Never. But the truth is, if somebody comes up to me and says, “Codie, I’ve been reading your stuff, listening to your podcast here, I saw you speak here, and I’m really curious as to what you meant here” or “I’m really curious, what do you think about this?” or “how would you enter this space?” or “why did you do this particular move?” – those small, tailored questions to somebody’s ego, showing that you’re truly curious, not faking it – that goes really far. If you do that to five or ten people, the likelihood is you have two to three to four who want to engage with you. So that’s where I’d start. Curiosity.
But then I think the second thing you’ve got to do if you actually want to get in – I just interviewed an analyst today, actually, for our firm. The way he came to me was similar to this. Reached out, said he had listened to a few things. But he did something different that I loved, which was “I’ve been doing research and analysis on the space. I’m in grad school right now and did some models on vertically integrated companies” — which are companies like Acreage, let’s say.
So he said, “I did some research on these guys. Would that be useful to you?” I was like, “Huh, that’s interesting. Yeah, sure, I’ll take a look.” I looked at it. The models were actually really good, so I followed up with him. Right now I’m looking at the lab testing space, for example. Every time somebody wants to sell you cannabis, they’ve got to go make sure that they take it to a third-party lab to see if it has any sort of pesticides in it or if it actually is THC at the level that they say it is. I’m interested in that space. So I said, “Why don’t you try to apply your thought process to this lab space?” He did it, did a great job, and I’ll probably offer him a job.
So that second key is not what they can do for you, but what you can do for them. If you provide value to people who are in positions of power, that is so rare – so rare – that they are going to want you in their circle.
Right. There’s an example of somebody who might not have had $200,000 to invest in the fund, but had an expertise that you appreciated and needed.
Absolutely. And if you’re an employee in a fund, you get an allowance where you can invest much less, so you don’t have to put in $200k if you actually work at one of these funds. Even if you’re in admin.
What are some common mistakes that you see people making?
First is be careful with public stocks. If you’re going to do it, be fine losing the money and be prepared for a lot of volatility. I say that because there are also some great public stocks, so I’m not saying you shouldn’t do it; just be cautious.
The second thing I see people do that makes me nervous is they just go and invest in one company right off the bat. Everybody’s raising for cannabis something or other these days. Even if it’s just the $1,000 that you have to invest, it’s really risky to throw that out there. It’s called angel investing, but it’s risky to do that with the first couple companies you’ve seen especially.
So I think the biggest thing you’ve got to get used to if you want to be an investor is saying “no” upfront. You’re like the hot girl at the bar. “No, no, no, no.” You want to go on a lot of first dates, but you don’t want to get married to somebody – you don’t want to give them your money – until you’ve gotten a feel for this weird industry and how to do some investments. Don’t make your first investment when it’s been given to you.
And Lord, I made some bad investments when I first started, so don’t feel bad if you did. But I think they say that the best way to make a million dollars in angel investing is to start with three, which is the same for vineyards too.
So diversify. Do a fund.
Yeah, do a fund. ArcView is the only one that I know of in the cannabis space. I don’t want it to feel like I’m doing a commercial for them. But you can go to these angel investing groups. The goal that I had when I first started investing was to invest alongside somebody that’s smarter than I am
How do you do that? Well, you can go to something like ArcView and listen to all of the companies pitch. It’s like YCombinator, which is famous in tech circles as being an incubator. Go to ArcView, listen to everybody pitch, and then see and ask them what other investors are investing in their company besides you. Then you very easily reach out to those people and say, “Hey, I’m Codie and I’m looking to invest in XYZ Cannabis Company too. Do you have a minute to talk so I can understand why you’re investing?”
Once you are in the investing circle, it’s much easier to get doors open for you. So invest alongside people that are smarter than you. You can do that by starting at something like ArcView, or I think you can do that in a fund structure.
Or you can do that by following some of the big names in this space, like what is Steve DeAngelo investing in? He probably has interesting insight, being in this industry for a long time. What is Jonathan investing in? He’s seen a lot of different cannabis companies. So look for those influencers and then see if you can get a little piece of the pie and put in a small amount of what you can.
Should we apply the same sort of criteria that you apply when you’re looking at companies? You said that you say “no” a lot. What are some red flags that you would say “no” to? What would you see in a company that you would be like, “no”? Or what should I see in a company where I might have second thoughts?
I think when you’re an early angel investor, you should never invest in a company that doesn’t have revenue. There’s too much deal flow, especially in cannabis, there’s too many companies to invest in somebody that has never made a dollar. So I would not do that. Look for companies that at least have a couple hundred thousand dollars to a million plus in revenue.
What you’ll be amazed by is they’ll take your money – you might not have much, let’s say, but if you can provide some other type of value, some sweat equity – these startups are usually strapped for cash and for help. So you can probably even leverage your sweat equity a little bit there. But I would start with don’t invest if they’re pre-revenue. I think that’s way too much risk upfront.
Then I would say also, be really careful about investing in friends who are not absolute rock stars who have already done this before. Maybe they had already run an alcohol distribution company, so now they’re going to go into cannabis distribution. That makes a lot of sense. But otherwise, be careful about funding friends early on, before you really know how to analyze if they’re capable or not. That’s where a lot of people lose money.
You said that you want to make sure that you like the team and are impressed by the team that is running a company. Will you have that kind of access as somebody who’s new to the game? It’s not like you can call up every CEO. You’ll have access because of who you are and your status in the industry, but how does one – should you just do your own research online? How do you find out more about who these people are?
One way you can get access is through special purpose vehicles. What a lot of people do when they don’t want to invest or don’t have a ton to invest is they might pool their assets. It’s pretty inexpensive. You create an LLC, which basically costs nothing online these days, and that LLC allows you – say you have $10,000 that you could invest, and a couple other people have $10,000 that they could invest, and you pool it together and now you have $100,000.
You can make yourself sound very fancy. “I am in charge of Cannabis, Inc., which is an LLC of investors in the cannabis space. We’re analyzing companies.” So with very little work and with very little money, you can actually get a seat at the table and say “We have $100,000. We’re looking to deploy it, and maybe it’s with your company.” Then you can get better access, certainly.
Or you can join into somebody else’s syndicate or join angels groups. There’s CannaAngels – almost every city has a cannabis angel network, and if you join one of them and you pool all your resources together – but you don’t have to do the actual work – then you can get real access.
How quickly will you see an ROI?
Well, in cannabis it’s been faster than it typically is. Most venture capital or private equity funds are 5-year funds, so your money’s locked up for 5 years with a 2-year extension, meaning they can extend that 5 years by 2 years if they want to. That’s typically because it takes that long for a company to have a liquidity event, which means when they sell or you get your money back in some way.
So the typical thought is 5 to 7 years, which I know to all of us who use Uber Eats and expect our food to get delivered in 7 minutes, seems like an eternity. [laughs] But that’s standard. If you’re going to do this, it has to be long money, and in my opinion, you have to want to learn and make money.
Our first fund, we returned the capital in 3 years because cannabis is moving so fast. But that is what draws people to public stocks, I think, a lot. It’s short-term, there’s an ability to make money, and it’s a lot more rewarding to that endorphin-heavy brain of ours that wants immediate feedback loops.
If you’re seeing it too quickly, there might be something going on here that’s not right?
In my opinion, yeah. I don’t like price speculation, which I think is entirely what crypto is about. I think blockchain is different, but yeah. You always worry if you’re at an airport somewhere and the shoeshine guy is giving you stock tips about cannabis companies or about cryptocurrency companies.
The stock market is really there to help investors beat inflation over the long term. You earn your 10% per year, which helps you beat inflation, and compounding investing over time leads to you making enough money to retire, theoretically. So I’m always nervous if the stock market is looked at as an immediate cash cow. That’s probably not sustainable.
As far as the type of cannabis companies to invest in. Tell me the top 3 that you should be looking at and top 3 that maybe you should pass on?
I got offered a really interesting deal in Colombia, actually, by descendants of Pablo Escobar to grow cannabis in Colombia [laughs] I passed on that one. But in all seriousness, cultivation is something that I worry about as the price of flower or the actual cannabis smokeable plant goes down. That’s just natural. It is a plant and it is agriculture, so that’s going to happen as the markets get more efficient. So I’m not running to give money to people who are purely doing grows. I would stay away from that. I don’t think I’m the only one doing that.
I would stay away from brands that are not amazingly executed and with the ability, proven and actual, to scale. There’s a lot of little micro-brands around, and I think many of those will die a death of a thousand papercuts with California regulations and others. So be careful about that space.
I also think I would be careful about any sort of tech that mimics something that’s done by a company outside of the cannabis space. People say to me, “I’m going to be the oracle of cannabis,” and my response is, “Oracle will be the oracle of cannabis.”
I wouldn’t do that because eventually this game will change and those companies – perhaps they get bought, and there are some instances where that could be the case. But I’m hesitant of that space. So those would be the three I would stay away from.
And the three that seem to have a lot of opportunity?
Up until now — and I think it’s still the case — multi-state operators have done incredibly well. They’re out there doing a land grab, trying to grab as many different dispensaries and the grows associated with the licenses in each state for them.
So these are cannabis brands that operate in many different states because they have, like you said, dispensaries and grows in a bunch of different states?
Exactly. It’s not dissimilar to a company that distributes, like Whole Foods for instance, across multiple state lines and grows all their own produce and has a ton of white label brands and everything, like you see in Whole Foods. Not dissimilar entirely for these multi-state operators. Those I think are going to continue to have a lot of value, if done really well and if they scale. I think the small one-off operations I wouldn’t be as interested in.
The second space that we’re really focused on is everything to do with biotech in this space and the ability for cannabis to be used for medicinal purposes, whether that’s biosynthesis or being able to actually create cannabis in a lab through things like yeast or algae. It’s way above my paygrade from a science understanding perspective, but we have somebody on the team that that’s their specialty, so they dive into those companies. So I think anything in biotech and that sector could be really interesting if you get the real plays.
Then the third area is really well-executed brands who are able to scale nationally and hopefully globally. We’ve made a few of those bets in the brand space, but gosh, we have to see a lot.
Explain to our audience exactly what you mean by brands in this context.
That basically means who’s going to be the Coca-Cola, Pepsi, Frito-Lay, Blue Moon of cannabis. These are cannabis brands that will become household names, hopefully. We don’t really have any of those right now. I don’t really think you could argue that there is a nationally recognized cannabis brands
I can’t tell you the amount of times I get pitched, individual small CBD brands or THC brands, and they might have really nice packaging or make you feel good – I mean, a lot of times it’s the same product. We’re all dealing with the same brands, so why is this one product going to break out as opposed to the other hundred that I get pitched? It’s very hard as an investor to know. Is it the people attached to it? It’s the difference between RC Cola and Coke. How do you know which is the one that’s going to stand out
Sometimes it’s very hard to tell whether it’s all hype or if there’s something real there. What would be your way to dig a little deeper?
First, I would want to see real revenue. If we’re dealing with a company like Sublime, for instance, we’re talking about double-digit millions in revenue, so then you know that there’s something there. They’re able to operate, people are buying these companies.
Then the second thing — I have two good friends that run a company called Windy Hill Brands, and they sold an alcohol company that I’m blanking on, but it was something Moonshine, to the guys who created Deep Eddy Vodka. They’re just brand geniuses. So one of the things is having people in your corner who understand this space.
The most important part there is also their ability to distribute. I’ve made mistakes before in investing in brands – not at Cresco, but when I was investing at different venture funds. There was a brand that I loved and I wanted this product to exist in the world, but I realized that the management team didn’t have the distribution chops. So they weren’t able to get it on the shelves of Whole Foods, for instance, or CVS or whatever the case may be – and they didn’t have that crazy sales drive to do it.
What you really need in the brand space is it’s all about your distribution, and can you actually get your product in the hands of the distributors, or can you get your product, through ecommerce, sold online in a big way? A lot of founders are pretty lazy about getting their sales out in that way, and they want to do some of the fun stuff. Nobody likes cold calling.
Say you have no money to invest in cannabis. Not a dollar. I’ve totally been there; my dad didn’t get to go to college, so I remember having nothing to invest and worried about my debit card not going through.
The one thing that you can do is look for sweat equity into these companies. That is basically where you start doing all the stuff we talked about – meeting people, reading about it, reaching out to them via email – and then you say, “I’m Codie,” for instance, and say I’m a graphic designer. “I could do some graphic design work for you. You don’t have to pay me. I’ll just do it for you, but how about I work for some percent ownership in the company, and you pay that to me over this time period?”
Or you could say, “I, Jonathan, am really good at copywriting because I’m a journalist. Why don’t I help you write some of your copy for your website or to your clients, and in exchange for that you give me some equity?” So there are certainly ways to use your skillset as your capital. I would think about that. If you google “sweat equity,” you’ll get a million different ways to do it.
That’s great advice. Is it helpful to make a list of what you have to offer? Like, are you a graphic designer, are you a good publicist? What are a lot of these companies looking for?
I think everything. Totally all of them are looking for help from a marketing – the two things that almost every company needs immediately is sales, so they need somebody to go out and bring them more revenue, and they need help with marketing. They need, just like you said, people to pitch publishers, people to write copy.
Social media somewhat, because social media is tricky in this space. But yeah, somebody who’s good with social media in a way that won’t get them banned from Instagram.
Exactly. And you can always say, “What are things that you need to have done that are terrible, that you don’t want to do? I’ll do that.” You can also offer it more broadly if you don’t have a direct solution.
I would say what they don’t need is like “I’m really good at strategy. Let me give you strategy.” Nope, we’re executing. We don’t have time for third-party strategy. So that’s probably not as useful. But introductions to capital, sales, marketing, graphic design, anything like that is really valuable to a startup.
Would you recommend having a formal agreement with a company? What I would be concerned about is that – most people are good people, but there’s going to be some bad apples, and they’re going to take advantage of you and then sell and not give you anything. Should you have some sort of contract with them?
Yeah. We all watched the Facebook story, right? How I’ve done it in the past, before I was a bigger investor, was I would have a little something drafted up. Again, you can find this online, like a sweat equity contract.
But essentially I would have a little contract that basically says “Codie is going to provide the following services. For these services, she is going to be given X percent of equity,” for them to fill in – and it’ll be vested, which means I actually own it – “over a 6, 12, or 18 month period,” whatever period you choose.
But what I would say upfront is, “Hey, why don’t I do this for you, work for you for the next 30 days for $free.99? Free, totally. I’ll do this work for you for 30 days. I believe in what you’re doing. This is the contract that I’d like to sign at the end of 30 days for me to keep helping you like this. Does that sound good?” Typically they’ll be good on that front. You might get burned once, but you’re going to learn a ton, and then you’ll learn who not to trust next time.
I think in tandem with that, then you can actually start adding some cash components of it. Once they see your work and how useful you are, if you crush it for them, people don’t want that to stop. Entrepreneurs aren’t stupid. So if you’re doing good work and you had your little equity thing drawn up, you can ask for cash as well so you’re not slaving away for free for 5 years.
The famed writer and director shares the creative philosophy that has helped raised more than $1 billion for charity with his organization Comic Relief.
4 min read
Richard Curtis, the writer and director of films including Four Weddings and a Funeral and Love Actually, is also the co-founder and vice chair of Comic Relief. He started the organization after visiting Ethiopia for a month during the 1985 famine and felt compelled to raise awareness about it.
Today, Comic Relief and its various campaigns, including annual television special Red Nose Day have raised more than $1 billion for projects in Africa and the United Kingdom aimed toward fighting poverty and providing access to physical and mental health services. While the goals of the organization are lofty and potentially daunting, Curtis said that as he’s gotten older, he has learned to appreciate the fact that grand projects aren’t tackled all at once, and that there is value in the process
“I’ve realized that in life, you dream you’re going to go up the whole staircase, but you end up climbing a stair,” he said. “With Red Nose Day, our aim is to end child poverty. You have to contrast the size of the task with the extraordinary amount that you can achieve with small things.”
He said the impact of those small things, whether it’s an individual donation that leads to life-saving vaccinations or a school working together to raise money for meals for families in need, keep him focused on his big goals.
Related: To Get Your Team Brainstorming Great Ideas, Start With Crazy
Since 2015, a Red Nose Day special began airing on American television on NBC, 27 years after the first one premiered in the U.K. Today, Red Nose Day in the U.S. has raised over $150 million. Curtis said that when he started Comic Relief, he knew he wanted to help, but wasn’t sure how to go about it. So he started with what he knew.
“When you see how tough life can be, it does change your life. I just came back and tried to do something in my area of strength, which I suppose is my big recommendation on charitable things,” he said. “Go to where you’ve got a bit of power. I have a bit of power in that I knew most comedians in the U.K. We did a stage show and we did a TV telethon. The first year we raised 15 million pounds. After that it was very hard to say no, because that’s more money than I’ll earn in my whole life doing my own job. It was really just noticing what is going on and believing you can make a difference.”
As the organization has grown, Curtis said the biggest lesson he’s learned is that when you’re working to accomplish big things, you can’t limit your imagination. For Red Nose Day, the plan has always been to add something different to the organization’s roster of fundraising methods, whether it was selling red noses or releasing books, hit singles and documentaries or simply fundraising in communities or online.
Related: 5 Ways to Unlock Your Entrepreneurial Creativity
“I have this motto, which is to make things happen, you have to make things,” he explained. “So it’s important to treat it like a proper imaginative enterprise rather than a sort of solid and serious charity thing.”
Curtis said that the common thread between Red Nose Day and his work telling stories is that both involve that step-by-step approach. He said that he finds there is a rhythm to his creative work. He describes his process as having a day of ideas, dreaming and putting post-it notes on the wall and then a second execution phase of battling through the practicality of making it all work.
“A proper writer writes for a day and sees that 2 percent of what they’ve done is good, and they are absolutely triumphant,” Curtis said. “An inexperienced writer writes 98 percent rubbish and thinks they’ve done badly. Whereas actually, it’s a success. I think the thing to do is to be exhilarated by what works rather than be demoralized by what doesn’t.”
The Red Nose Day Special airs on NBC Thursday, May 23, at 8 p.m. EST.
Trace amounts of THC are costing people their jobs.
4 min read
Opinions expressed by Entrepreneur contributors are their own.
Now that CBD products are on the shelves in many states, it’s only natural that people might wonder: Can using CBD get me fired?
The short answer is “yes.” Stories have already surfaced in the short time since CBD products began hitting the shelf about people losing jobs or failing drug test screenings that are part of the hiring process at some companies.
The results depend on the type of product you are using and the level of THC it contains. Unlike CBD, THC is the chemical ingredient in marijuana that gets people high. But without checking the packaging, some people might not realize how much THC is in their CBD product. It could be enough to fail a drug test, as multiple cases have shown.
Related: Why Athletes Are Using Cannabis for Training and Recovery
Examples around the country.
It’s a bigger issue than many might realize. Recently, in Missouri, school worker Lorraine Jeffries said she got fired from her job as a school bus monitor after failing a drug test. The drug in question, according to Jeffries, is a CBD oil her doctor had recommended she take for joint pain.
She said a school official told her, “You must have been smoking marijuana,” Jeffries told WTKP News. “I said, ‘No, ma’am, I don’t even know where to get marijuana at.’ I love my job. They took it away from me.”
In another case, a video producer in Reno, Nevada, told Consumer Reports he lost the chance for a job because the drug test he took as part of the pre-work screening came back positive for marijuana. Like the school employee in Missouri, he said he had not used marijuana.
In Pennsylvania, a woman has sued a CBD products maker after losing her job over a failed drug test.
There’s also the issue of the test itself. In Alabama, a police department recently dropped a field test it was using to check for marijuana use. They made the move after they experimented with the test and found it registered a positive result for CBD-infused bottled water that contained no THC.
All of this has happened in a relatively short time. Congress just made hemp-derived CBD products legal late in 2018.
Related: Is There Actually Any CBD in That CBD Oil You Bought?
Reading the Labels
If you are using CBD products, the best step to take is to thoroughly read the label. Companies are required to list what is in the product, including the levels (if any) of THC, which is usually just a trace amount (far less than 1%).
However, you may also be rolling the dice, because apparently not every company is doing this accurately.
In a case involving truck driver Douglas Horn in New York City, a lawsuit has been filed alleging that the CBD product the driver took for pain had a higher level of THC than what was on the label, according to a lawsuit Horn filed.
For entrepreneurs in the marijuana industry, this is an increasingly important topic. Lawsuits such as Horn’s are likely to become more frequent, especially since many consumers might be unaware there is even a possibility of THC in the CBD products they buy.
However, the answer might involve improvements made to testing equipment and changes in government regulations. That latter issue is one that is coming up frequently.
“If you aren’t regulated and you don’t manufacture under strict standards for testing, we are seeing that there are people coming out with a lot more marijuana THC in it than what people thought,” University of Illinois at Chicago toxicology expert Frank Paloucek told the ABC affiliate in Chicago.
To stay up to date on the latest marijuana-related news make sure to like dispensaries.com on Facebook
Opinions expressed by Entrepreneur contributors are their own.
It’s fundamental, the raison d’être, the very purpose of running a business: profit. But you don’t need to look very far to see companies securing massive investments while losing billions. Some are even raising further investment despite previous rounds yet to bear any returns. So why is there such an insatiable appetite to invest in unprofitable companies?
Companies that have a massive user base/revenue/other impressive sounding metric, but don’t make any money, make me skeptical when it comes to investing. There’s good reason: revenue is vanity; profit is sanity. While it’s true that unprofitable companies can become profitable given time, these tend to be the exception rather than the rule. Yet investors seem to be gung-ho on investing based on impressive sounding vanity metrics without properly looking under the hood. Let’s take WeWork (or “The We Company” as it now goes by) as an example.
What we can see from the above is a net margin of -105.3 percent (2017) and -104.4 percent (2018). So despite scaling its revenue by over 100 percent, its profitability is flat with negative unit economics. The more money it makes, the more it loses. WeWork even created its own financial measurement; “Community Adjusted” earnings, which is before interest, taxes, depreciation and amortization. Terms such as these seem to be created only to further obscure the reality of unprofitable businesses.
Economic factors at play
The current economy is one of low interest rates, and quantitative easing programs resulting in trillions of dollars of liquidity sloshing around the globe. Could this explain the uptick in investors betting on riskier, unprofitable companies?
Data compiled by the University of Florida showed that 83 percent of U.S. listed initial public offerings in 2018 involved companies that lost money in the previous 12 months. This is the highest proportion on record, which goes back to 1980. It’s more than double the four-decade average of 38 percent. The data provides worrying similarities to the dot-com crash where mal-investment happened on the back of speculative mania, and it was all the craze for investors to plow money into unprofitable businesses hand over fist.
It’s important to note that the current crop of IPOs are a bit different from those back in the 2000s. Those public today are generally more mature, with customers who are more open to new technology businesses, and with higher revenues.
There are also other factors at play. VCs are outspending the overall IPO market, which has led, in part, to the number of companies going public to decline, according to The Wall Street Journal. Meaning, there’s less to invest in to start with. So, when the latest disruptive technology comes onto the market, a feeding frenzy ensues. Investors are willing to take risky deals to get in on the hottest new IPO, seemingly at any cost. I mean, what kind of investment portfolio do you have if there’s not a meal kit or disruptive ride-sharing technology startup of some kind on the books?
Take Lyft for example. The company lost $911 million in 2019 (with losses of $688 million in 2017), and according to The Wall Street Journal is “the biggest loser” of all U.S. public startups. Despite this, investors were so keen to get a slice of the world’s “No. 2 ride-hailing company” that Lyft oversubscribed the IPO and priced their stock above the initial guide. Everything looked rosy. Four days after their listing however, Lyft stocks plunged 12 percent, leaving analysts and investors stunned. Analysts have reportedly suggested the “lack of visibility on profitability” could be to blame.
Where bubbles are occurring however, is in the layered nature of the current startup scene. New companies are launching purely to service other (non-profitable) startups; think Greenhouse, the poster child of B2B SaaS businesses, which services startups as they scale. Pretty fragile ecosystem if a big player ducks out.
But the biggest problem with all of this? Three-fourths of economists are predicting a recession in the U.S. within the next two years, according to research by the National Association of Business Economics. Whether you run a profit-making company or not, all businesses will feel the pinch if a recession hits, perhaps not at the same scale as in the 2000s, but it should be on the minds of every investor today.
Are technology startups to blame?
Technology startups have popularized business trends such as MVP and blitz-scaling. These are employed to get a product out to market as quickly as possible, which is perhaps why shareholders have become more use to growth over profit. You just have to look at Amazon, the world’s most valuable company (around $810 billion), which focused on gaining global market share, all while its profits over the past 20 years accumulated to around $8 billion.
These approaches to growth can come at a cost. Products and services that are built and refined for early-adopter customers (e.g. startups in the B2B market) can inflate early indicators of the business’s future potential in the wider market as a whole. When considering this, it’s easy to see how unrealistic projections might come about from early stage startups and how unprofitability is overlooked in the excitement to invest in “the next Facebook.”
A lenient approach to profit over growth has led to pretty much every startup today trying to pass itself off as a “technology company,” hoping to get the same treatment and terms when it comes to profit expectations, when they probably shouldn’t.
To avoid a repeat of the dot-com crash, investors need to ensure that there’s not only a path to profit, but that companies are actually prepared to make the journey. Too many companies forgo profit for growth past the stage where it makes sense.
While investment is all about taking calculated risks, some seem to have underestimated the human factors that influence decisions. Investors need to ensure scarcity and hype don’t lead them to make speculative bets on high-risk businesses.
Overall however, we are living in a time of fantastic innovations happening across industries and markets. New applications and services are changing the way we buy, consume, communicate, travel, etc. These innovations hold fantastic potential and with the right assessments up front, will make phenomenal investments.
Everything that’s worth it in life takes hard work.
7 min read
Opinions expressed by Entrepreneur contributors are their own.
In this series called Member Showcase, we publish interviews with members of The Oracles. This interview is with Satish Gaire, CEO and founder of LogicXY, which operates hundreds of SaaS platforms like WooAgents and DirectPay. It was condensed by The Oracles.
Who are you? Satish Gaire: I migrated to the U.S. from Nepal when I was 12 years old and started my first business selling website architecture when I was 14. I bought a sample website template, modified it, and then resold it.
Today I am the CEO and founder of LogicXY. We have founded and acquired multiple software companies in various industries. The most well-known is WooAgents, a customer relationship management platform for real estate agents in the U.S. and Canada. We are also the team behind Podmio, which helps people create and distribute podcasts, and payment transfer software DirectPay.
I founded most of our software companies to fill a major gap in the industry or because I didn’t have access to something I needed.
What are you more skilled at than most people in the world? Satish Gaire: Many people assume that I know how to write computer programs, but I don’t. I have learned a lot from my team, but I haven’t actually coded anything from start to finish.
My job is to find the problem in a specific industry and fill that gap with something that is better than what’s already out there. If a solution doesn’t exist, we create it. But my work doesn’t end there. We might have the fanciest software with many features, but it won’t sell unless I can show value and persuade the market to use it.
What excites you the most about your business right now? Satish Gaire: If you want the easy route, go to school to become a doctor, lawyer, or engineer. You are pretty much guaranteed a good income and a decent life.
When I started as an entrepreneur, I was not generating substantial income. I could have gotten a job in biotechnology with my biochemistry degree and easily made $300,000 a year. But I opted to make much less in the beginning — because the business would be mine. It would take years, but I knew that if I kept at it, I wouldn’t have an income ceiling.
I didn’t get into business for money. I got into this because I get to meet and work with the brightest minds on this planet. I get to enjoy the rollercoaster ride that most people only see in movies. I sleep like a baby every night knowing that our software is helping someone pay their mortgage or send their kids to college.
What did you learn from your favorite mentor? Satish Gaire: In my first year pursuing my biochemistry degree, I really struggled with organic chemistry. One day I went to one of my professors, Mr. Greenwood, and told him it was too difficult. His response was, “Satish, everything that’s worth it in life takes hard work.”
That has stuck with me ever since — throughout college, my initial days in business, and when I was at rock bottom. Everything that’s worth it takes years of hard work. I don’t just apply this in my business; I also apply it in my personal life to build better relationships with my family and friends.
What was your biggest, most painful failure? Satish Gaire: I started a magazine business when I was 19, and it wasn’t doing well. Everyone, including my family, told me I should quit and focus on my studies. But I kept at it.
In my free time, I would drive to businesses attempting to sell advertisements. One day, I pulled into a gas station after being rejected by businesses all day. When I swiped my card to pay for gas, it was declined. I thought it was a mistake. But I called the bank, and for the first time in my life, I had a negative balance.
I called a few friends to ask for help, but they disappointed me. I couldn’t call my family, because it would prove that I was just wasting time with my business. I walked almost 26 miles from Irving to Frisco, Texas. I got home, stole money from my dad’s wallet, and took a taxi back to the gas station. That day, I learned who my true friends were — and that while money might not bring me all the happiness in life, I certainly wanted a lot of it.
How do you define great leadership? Satish Gaire: A great leader doesn’t sit back and demand things. A great leader joins his team to do the dirty work and treats them like family.
One of the most attractive qualities of a good leader is how they treat their lowest-performing team member. As long as the team member is willing, a great leader will always find their strengths and see what they cannot see in themselves. They will then use it to leverage their performance.
How do you identify a good business partner? Satish Gaire: Finding the right business partner is the most difficult part of starting a business. And it’s important because you will probably spend the majority of your time with them. One of the factors I consider is how quickly they can recover from an argument. I have had nasty arguments with my business partner, but in the end, we shake hands, hold no grudges, and continue with our shared goals. The debate or argument ends there.
What’s your daily routine for success? Satish Gaire: I don’t have any crazy routines where I wake up at 4 a.m. to work or read 100 books a year. I sleep until I am ready to wake up on my own, without an alarm. Then I don’t go to sleep until I finish what I planned for the day, even if that means I stay up until 4 a.m.
Many people say “the early bird gets the worm” but maybe I like to wake up for lunch! We even have a rule at the office: don’t come to work unless you are ready to give 100 percent.
What would you like to be doing in five years? Satish Gaire: Within the next five years, I would like to triple our revenue and take our company public. I would also like to have more SaaS platforms in our portfolio.
What do you want to be known for, or what do you want your legacy to be? Satish Gaire: I am a simple person at heart. I couldn’t care less what anyone else thinks about me — except my parents. I value them and want them to be proud of me. I am a product of them and their love lives in me. It’s my duty to use that to uplift humanity.
I want to be remembered as someone who helped others realize their dreams and supported them at both their lowest and highest points.
Connect with Satish on Instagram, Facebook, and YouTube, or visit his website.
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