Dan Nelson, Founder & CEO, Wikileaf
Dan Nelson is best known for having launched the world’s first legal and medical marijuana dispensary price comparison website in January 2014. Wikileaf, dubbed by some media as “The Priceline of Pot”, has since grown into one of the industry’s largest consumer resources in North America. In 2016, Wikileafbecame a part of Nesta Holding Co., a private equity firm that creates wide ranging partnerships and brands within the cannabis industry.
Today, Dan is CEO of Wikileaf, and has built it into a one-stop, user-friendly platform to compare dispensary and delivery prices as well as research strains in your area. Dan oversees the company, helping it grow to 1.6 million monthly user sessions and over 3,500 legal recreational and medical dispensaries on the platform.
https://www.wikileaf.com/
https://twitter.com/Wiki_Leaf
https://www.facebook.com/Wikileaf/
https://www.instagram.com/wikileaf_/
EPISODE TRANSCRIPT
[00:00:01] You're listening to Thinking Outside the Bud where we speak with entrepreneurs investors thought leaders researchers advocates and policymakers who are finding new and exciting ways for cannabis to positively impact business society and culture. And now, here is your host Business Coach Bruce Eckfeldt.
[00:00:30] Are you a CEO looking to scale your company faster and easier. Checkout Thrive Roundtable thrive combines a moderated peer group mastermind expert one on one coaching access to proven growth tools and a 24/7 support community created by Inc. Award winning CEO and certified scaling up business coach Bruce Eckfeldt. Thrive will help you grow your business more quickly and with less drama. For details on the program visit Eckfeldt.com/thrive. That's E C K F E L D T.com/thrive.
[00:01:06] Welcome everyone. This is Thinking Outside the Bud. I'm Bruce Eckfeldt. I'm your host. And our guest today is Dan Nelson. He is founder and chief executive officer of WikiLeaf. And we're going to talk a little bit about the history of Wikileaf, what it's do, what it does, the work that it does in terms of creating a strong platform for the cannabis community to helping cannabis consumers find product, find dispensaries, find information. They need to really understand the market and get access to good quality product that is close to them in the right locations. We're gonna find out a little bit about what they're doing now with the product roadmap is kind of the story and the exciting things that they've gone through recently. So with that. Dan, welcome to the program. Thanks for having me. So why don't we start with a background on let's start a founding story. How did the idea come about? How did you get started? What was the original kind of concept behind WikiLeaf? And then we'll kind of we'll take it from there.
[00:01:57] Yeah, for sure. So I guess to kick off the founder's story, if you will. We should probably head back to about two thousand eight. I was actually running an interest rate comparison website at the time that compared anything that was FDIC or NCUA insured. These are savings vehicles here in the United States. So in that time, you know, interest rates were a lot. It was a lot different market than it is now. Interest rates were significantly higher than they are now. You had a ton of money moving out of equities and the stock market because of the financial collapse and banks were in need of cash. This money was coming over to these safe haven vehicles. So I had set up a Web site to capture this traffic. Things like CDO rates, money market accounts, online savings accounts. Any of these products were trending on Google. A lot of people were searching for them and looking to open these products. So we created a Web site that kind of highlighted where the best rates were. We focused on focused on smaller regional banks and credit unions, where a lot of our competitors were just kind of primarily focused on the bigger players, the big banks. And that's kind of how we formed a niche there. The site was doing very well. We were sending a lot of leads to banks. Revenue was coming in. So I was actually able to pick up and run the site remotely for three years. So I I left and traveled for a little bit, went a bit over Europe, Asia and Africa. I mean, when I had come back to Seattle in 2011, I noticed something pretty a pretty interesting development had happened while I was gone. And that was that there were all the sudden medical cannabis dispensaries seemingly on every block.
[00:03:30] When I came here. So needless to say, you know, I got my medical card, started shopping around in these places and quickly noticed that there was a pretty vast price disparity. The next and even when you're talking about the same strains and the same products, I mean, I could go down. I was living in South Lake Union at the time, which may not mean anything to you, but it just kind of a northern trendy part of the city. And I could go down to one dispensary down the block, find a gram of o.D. Kush for 10 bucks and then go to another dispensary that was just basically kitty corner to that one and see that same old kush priced at $20 per gram. You know, what's the rhyme and reason here? How are these dispensaries charging their products? Know, how can we bring this out in the open and sort of a transparent way for the consumer to be in the know of how these products are priced? Yeah, that's kind of the inception of the idea of Wikileaf. I took a lot of the framework that I was using from the interest rate comparison site and kind of kind of use that to to formulate the initial concept of Wikileaf. And that and that was basically that we were up and running on January 22nd, 2014. We just had Washington and Colorado at the time and they were both medical at the time that the legal legalization had just passed, but the framework hadn't really rolled out and the legal dispensaries hadn't rolled out. So we were still in the medical environment at that time. But that's basically how we kicked off the site. And the company had just been growing and growing ever since and explained the basic business model.
[00:04:52] Like how the end of the day how do you make money? Who are you charging? Where does the revenue come from?
[00:04:56] So we're gonna be charging dispensaries and brands. The product suite that we're gonna be actually taking in money from is being launched in December of this year. So next month. And this will give the dispensaries and brands an ability to have increased visibility within their their local market. So we have a one point two million people on the site every month. And we want to give the dispensaries and the brands that are our premium clients exposure to all of those people that are in their their local markets.
[00:05:24] Got it. Got it. So this is primarily serving people who are looking for product giving. The tools they need to find the right products, best prices, best locations, reviews, ratings, things like that, 1 percent.
[00:05:35] Yeah. We're connecting consumers with local dispensaries and brands. And what we're finding actually a trend that we're seeing here now as the market matures is that, you know, in the in the early days, you would kind of hop into a dispensary and kind of leave it up to the bartender, hey, you know, I want some some pot or whatever, you know, and they would kind of ask you a series of questions and find something that might fit for you. But now that the market's maturing, we're seeing that people are actually having favorite strains and favorite brands and even favorite specific products like down to the SKU level. And we see that people are actually seeking these out and looking for dispensaries that have these in their inventory. And so that's what we're trying to bring out into a transparent manner to is who has which products in their inventory.
[00:06:12] How are they pricing it compared to their competitors now?
[00:06:15] Interesting. Talk to us about the growth as the industry has grown. As the market has grown. As you've grown.
[00:06:20] What are some of the kind of key points or what step in like and what are some of the challenges that's put upon you and the company? And how do you overcome some of those things?
[00:06:28] Yeah. So, I mean, growth has been has been pretty solid. Like when we say growth, we focus on two things. We focus on increasing the number of dispensaries and brands on our platform and then increasing the number of consumers on the front end, shopping around for these and looking for strains and various other things. So it's the dispensaries and brands growth and the consumer growth that we're that we're primarily focused on. And, you know, when we launched and obviously in January of 2014, we had, you know, no one was using the site right off the bat. But it's quickly grown to you know, we were at one hundred thousand people using the site at the end of 2015. And then since then, we've gone up to 1.2 million people using the site for dispensaries. We've got a little over 5000 dispensaries on the platform and brands where we're quickly growing with them to some of the factors that have kind of hindered or just made a few obstacles in growth. Big one has been like state by state compliances. So we've had back in 2015 and 2016, we had a number of dispensaries that hadn't actually had their their state licensing up to snuff requesting to classical.
[00:07:33] And we we cater to them for a while. But a couple years back, we made the decision to try not to not go down that path and only showcase dispensaries that have their state licensing and all that information up to snuff with the state. So so compliance has been a big obstacle, but we've overcome that. And yeah, that's kind of how we've progressed.
[00:07:53] Tell us about the organization in terms of how that's grown. How have you kind of built out the team and what does the team consist of? How out of the operation is going to look at this point?
[00:08:02] Yes. So we've built out we've invested significantly in engineering and development. We have that side of the company up in Ottawa, Canada, about I think close to 20 people up there are maybe like 18. I think actually. And then here in Seattle, where we're largely sales and marketing, we've got 10 people here and then we have a remote development shop that sort of handles sort of the other some of the other engineering in India.
[00:08:28] So we've got we've got five people out there with the latest raise with our 6.8 million Canadian that we raised when they go public offering back in September. This is going to be used to build up the sales team with the product suite that we have coming online in December and continuing to to find the best engineers in the area to build, you know, full speed ahead.
[00:08:48] Yeah, it's been a big turn of talent. Crunchies, the engineering side.
[00:08:51] Yeah, that's been a bit of a challenge. But we've got a great team in Ottawa and they've been able to source from some some good companies over there. So. So it's it's been a challenge that's been met, but certainly a challenge, indeed.
[00:09:02] Yeah. Tell me about the race process. I mean, I'm curious about the decision, how the process went, choosing to go to the Canadian market.
[00:09:09] Tell us. Yeah, just give us some insights on that story. How how did that play out?
[00:09:12] Yeah. So that was I mean, it was quite a process. We received a lot of advice that the Canadian side of the border was the route to go nuts. And that's right or wrong with that's the decision we made. I guess the first thing to note is that, you know, we've seen the market kind of in general come down a little bit. And I think the big caveat that a lot of companies want investors to understand is that, you know, you make the right decision for the company at the time. So we decided that, you know, we could raise 6.8 million going public. So that's that's what we did. And that's a 9 to 12 month process. So, you know, we can't really see what the market conditions are going to be nine to 12 months out. We just have to make the best decision for ourselves in the time that we do. And that's that's what we did.
[00:09:56] So you're mainly that most I'm going to goes sales and marketing, really building up the volume and getting getting traffic and getting companies on there. What else is kind of on your kind of strategic roadmap in terms of where you're investing, what you're what you're putting into the focusing on putting into the market? Give us some insight there.
[00:10:12] Yeah. So the most crucial piece that we're building out now is we're trying to bring in with our price comparison value that we bring to the market. We're trying to bring that down to a very granular level, to the SKU level. So as I mentioned before, you know, we're noticing that consumers are starting to have favorite. Favorite brands, we can see this through Google Trends, we can see that the search volume for specific brands for specific products is going up into the right. So we're trying to address this trend with the Wikileafproduct. And that's that that's the thing that we're building right now. And so that you can you can go into Wikileaf, you can search for a brand, you can see all of their products, you can click on any individual SKU and then you can see in real time who has that in their inventory and what they're charging for it. And the way that we make this operation sort of successful is that we have to connect with the point of sale software of the dispensary to get that real time inventory. So we've got a little over seventeen hundred syncs menu things with dispensaries out there so that we can get their inventory and capture those where those products are and how they're charging for their products and at the SKU level.
[00:11:17] And so that's how we're facilitating this push on the development and that we're doing to to bring the price comparison down to this this product level.
[00:11:23] Yeah, I'm curious, what what else have you made to the data that you have is pretty interesting. What other insights or what else have you noticed or what other what else have you been able to kind of tease out from the user data around either at the market or dispensaries or trends, things like that? What are some of the things you've learned?
[00:11:40] Yeah. So that's actually what we're just starting to dig into now with our with our data, as you know, because we're getting all this live inventory into our databases on a regular basis. We can actually see basically the velocity at which individual products are coming in and out of inventories. So we can make sort of determinations on what's selling well, what's selling quickly. And in the future, we may be able to make recommendations to dispensaries and brands and say, hey, this is what the consumers are asking for in this market. This is what you should be stocking your shelves with. These sort of business insights are things we want to make a parent and obvious to to our clients. And we've got this slated for our for our roadmap here in 2020 to be able to open that up to dispensaries, clients and brand clients alike.
[00:12:23] I mean, at some point you're almost an Amazon and you can start developing your own products based on based on insights you have. I mean, is this are you pondering, you know, taking this data and actually using it to do your own product development or feel that process?
[00:12:37] Yeah, we've discussed that, you know, white labeling, different products, even ipsc yen. But, you know, it takes because we are a public issuer now, you know, it's going to take a lot of legal work to make sure or a lot of legal blessing, I should say, to make sure that we're you know, we're doing everything in bounds at the state by state level because know the laws are so, I guess, fragmented as with every state that, you know, we got to make sure that that we're in bounds in each state that we operate. And we're live right now in 20 states plus Canada. So we've got got a lot of different different legal frameworks to look at.
[00:13:09] Yeah. Tell us more about that, because I think that's I mean, I think of it from just from a kind of taxonomy point of view. It's gonna be difficult. But then, you know, regulatory wise, like how how is this whole legal context that we're operating in in the US? How has that impacted, you know, either the kind of the strategy or the operations, you know, in terms of how you had to kind of build the technology and build a site?
[00:13:29] Yeah, I mean, the biggest one is so we made the decision back in early 2013 that we required everyone's state license. So we actually have the license number and then we corroborate it with the database to make sure that they all they are up to snuff. That's been the biggest one. There are new challenges that are coming on board, but we've actually hired a compliance officer just a couple weeks ago to meet those those challenges. So, you know, we're going to leave it to her to kind of identify any issues that we may face and get ahead of those before we do.
[00:13:59] What else in terms of, you know, the team that you've surrounded yourself with, in terms of being the leader, being the founder, as you moved into this kind of, you know, formal CEO position. How have you looked at your leadership team and kind of the structure of it and you've put in place?
[00:14:13] Yeah, we've made some some big hires. I mean, we just brought on a V.P. of sales. We'll be issuing a press release on that for some time. But we just kind of went through that process. And that that's going to be I mean, that's a huge, huge hire for us because we're we're gonna be bringing in revenue here in a month. And, you know, this person will be leading that charge. So that was the biggest hire. The compliance officer obviously was crucial to make sure as we are bringing in revenue state by state, that everything we do is, you know, obviously within state state bounds. So those two people have been the biggest additions to our, I guess, management team over since we since we listed as a public company in September.
[00:14:50] And how would have you noticed in terms of where you're spending your time and focus or even just kind of style?
[00:14:56] What have you had to kind of change and do differently as the companies grow and as you've gone public? I'm curious what your what your kind of experience has been as a leader.
[00:15:04] Yeah. So I guess the way that my day to day has changed since we've gone public is that I have a lot more of my day has been dedicated towards discussions at the board level with investors, with our early investors on the major rounds that we had before we actually went public and less sort of like in the in the day to day managing of all the day to day operations within that company. I mean, I'm still the. And that, you know, a lot of the time, but the board level discussions have definitely increased since we've gone public.
[00:15:35] I'm sure the different contacts having a board versus it being the being the controlling shareholder and being able to do your own thing.
[00:15:43] So tell me about how much time do you spend kind of with the dispensaries themselves? What have you noticed in terms of the dispensaries? Any changes or trends that you've you've seen and the kind of the retail side of the business?
[00:15:54] Yeah. A big thing that we've seen on the retail side of the business is the the online ordering that we're seeing. I guess it's more of like it's delivery technically in California, but it's also the pre-order for pickup here in Washington state where where we are and a lot of other states. And that's been a that's been a big driver for our business, for the dispensaries. It's also something that we've got on our on our roadmap to be able to have this in our offering to them. But that's on the technology side of the retail operation. We see. That is a very interesting, interesting piece.
[00:16:26] In terms of the how it either impacts you or your dispensaries, you know, in this process out of the banking regulations and merchant services and stuff like that, what I guess is that ended up affecting or are you kind of one step removed from that?
[00:16:39] So really doesn't impact well at the moment where sort of one step removed because we are pre-revenue. But we're you know, we're we're deeply waiting into that now as we gear up for monetization month. So we'll kind of see see how it goes. But from our understanding that the market is that, you know, even though things like the safe banking bill hasn't been passed, we're still seeing that a lot of dispensaries are able to use credit card and banking services for payments as well. Obviously, there's still a bunch that operate with cash and money order, but we're seeing an increasing number move to banking legit banking systems. That's great to see.
[00:17:16] Yeah, I know, because I know that's been a problem for for a while. And both in terms of not being able to bank or, you know, running into issues and having switch banks. It's been a pain for so many companies. From your point of view, it's starting to change. People are finding banking services pretty regularly now.
[00:17:30] Yeah. From our dispensary and onboarding team, we've got five guys that work with dispensaries every single day. And they're telling us that over time more and more of the dispensary are able to use credit cards and wire transfers, things like that.
[00:17:42] Tell me about the relationship, the brand to how I guess how do you structure that relationship? What are you offering them? What do you need from them? I mean, it's branding is fascinating in this space for many reasons. But I'm curious what you've kind of how you interface with the brands and what are you what you're looking to do for them, do with them from a Wikileaf point of view.
[00:18:00] Yeah. So the big challenge with brands is that, you know, once they've sold off their their products at wholesale to dispensaries, they kind of don't know anything past then. They don't know what how much is left in their inventory. They don't know when they run out of the product. They don't know if they're still stocking it. So what we're building out for the brand is what we call brand pages, but they list all of the SKUs that the brands offer in the market. And if you click on any of these individual SKUs, you can see which dispensary has these in real time based on our point of sale syncs with the dispensary market. So what we're offering the brands is we're solving this problem for them where they being able to see now where their products currently are in real time or they didn't have that insight before. So that's the brand offering that we've got coming out now.
[00:18:43] So you can actually give you're actually providing them sort of data inside of where where their product is and market. What are the what are the inventory level sales levels and how did they end up using that? Like, what's the advantage or what's the what's the benefit to them to having this data?
[00:18:56] Well, they can sit so they can point their customers to it. It can be a piece of their own marketing materials so that we know we know that consumers are seeking out individual brands now and we give that we empower the brands to be able to show these consumers where their products are. And then the brands can also use it for their own insight. They can know they can see when certain SKUs or are no longer in dispensary inventories. And this could prompt them to reach out so they can make those determinations as well.
[00:19:21] Interesting. What do you see in terms of the future? You know, we've got a couple of different pieces of legislation being discussed, some of them being passed, at least at committee level, SENO for legalization for banking, things like that's my guess.
[00:19:33] What are the big ones for you that you see, you know, kind of coming down the pike that are really going to impact the industry or any kind of change in the industry that people need to be looking out for.
[00:19:41] I think for any company operating in this space or even a technology company like ourselves, the biggest one is going to be banking, even though we're seeing an increase of dispensaries and Bransby having access to that system. You know, we need to see it adopted at the federal level. So was a little bit discouraging to see the safe banking bill kind of kind of die out there. But I think that, you know, within the next six months to a year, we'll see some some serious gains there.
[00:20:05] Now, in terms of it's kind of curious what what you've noticed or what you're feeling is about kind of the more the social cultural aspects of all this.
[00:20:12] I mean, you know, when we started all this, you know, 10 years ago or so, things started passing four or more kind of medical events or more expensive medical and recreational, you know, adult use.
[00:20:23] How have you seen that market kind of develop or shift as the market has gotten bigger and kind of new?
[00:20:29] Segments we know as we move beyond kind of the traditional pop culture folks to, you know, new folks coming into this market, where have you seen kind of the trends going? Any particular segments that are interesting for you or that you think are particularly ripe for for growth?
[00:20:43] Tell me about that. That's kind of the market side of it for you. From your point of view, yeah.
[00:20:47] Sure. So the most fascinating trend that I see just personally and our team here discuss a lot is that we're seeing a lot of people that have you know, it's beyond the quote unquote, stoner culture that's now using the product. We're seeing a lot of older people, a lot of people that have never considered cannabis in the past. We're seeing people that are using cannabis for the first time in their 40s and 50s. And this is really interesting. And I think it's gonna be helpful for the industry as a whole.
[00:21:12] And I think that, you know, when you diversify products like you see what candidates going with their 2.0 products were, now you can buy stuff. That's just it's not the flower anymore. Right. You're going to be edibles, drinks, things like that. And I think that opens cannabis up to these these older people that probably don't want to inhale, you know, smoke in their lungs. And now there's other ways to ingest. So I think the market's only going to grow as the products themselves diversify. And we get away from just, you know, smoking it in pipes and bongs and joints and things like that and be able to consume all different sorts of ways.
[00:21:45] Yeah. Any other segments? I mean, I I'm curious if you've seen this kind of the health and fitness and that side of it, is that showing up in our platform? Is that part of the market showing up for you?
[00:21:56] It's not necessarily showing up in our platform, but we do have a blog of a lot of industry coverage. So we do see things like, you know, CBD plus THC products being used more for athletes, especially for the rehabilitation and for post workouts to kind of ease any sort of any sort of stress there. So that's been kind of interesting because I know, you know, at least from my own personal perspective, growing up, it's always kind of like, you know, athletes kind of, you know, they stay away from the quote unquote, drugs or are cannabis. But now we're seeing that, you know, this may actually have medical or therapeutic benefits for these athletes. And we're seeing that it's more not only are they using it more out in the open, but it's become more socially acceptable, which is nice to see.
[00:22:38] Yeah. You know, we've had a few a few athletes, sports and athletic folks on the program that have talked about that. And it's interesting. It's a challenge. I think the social kind of stigma, the reputation is certainly a huge factor. You know, for anyone getting into the business. And I think for the athletic side, that's certainly been a big problem of it. What do you see, as you know, as you look at kind of the cultural adoption or the social adoption of cannabis, where I guess what have you noticed? Where do you think we are or where where do you think we still have to go around kind of the stigma associated with cannabis products?
[00:23:10] Yeah, I mean, I think the stigma has come a long way just since 2014, since we launched Wikileaf. But that said, I still think it has a long way to go. I know you see things like you've seen like major developments, like just corporations that have flat out said, you know, we're not testing for cannabis. These sorts of things where 10 years ago this would have totally barred you from a position within that company. We've just seen movements like that. And it's it's really nice to see how quick we've come in in so little time. But, you know, we've got we've got a long way to go still.
[00:23:39] Any other sort of piece of advice or insights that you would give to either people who are thinking about starting or getting into a cannabis business or people that have cannabis businesses that are looking to kind of grow and scale them? What what can you offer them in terms of, you know, piece pieces of information that would be helpful for them as they go down their journey?
[00:23:57] Yeah, I mean, I think people that are just kind of starting to get into the industry or maybe even contemplating getting into the industry, I would encourage them to talk to people that are in the industry, reach out to people that are in companies that they admire, attend some events, just kind of get any firsthand knowledge you can of really what it's like to be into the industry, because I know that, you know, it is a big industry. It's blowing up. And, you know, people see all these huge dollar values of where it's supposed to be, you know, five, 10 years down the line. And it may be very exciting, but I think you should also talk to people that are are in the industry and kind of really see what the day to day is like or where the where it's going and the, you know, the next one to two years for beats that are already in the industry. I mean, I would just say, you know, focus on your customer, do what's right for them. Pay attention to data. You know, get data on the industry and incorporate it into into where you're headed with your product. And, you know, you should be in good shape.
[00:24:49] Now, any other big things coming up for you as you kind of look look to the future here, the things you're excited about, things that you're launching, new things for either regularly for you see happening in the community, just really are getting our monetization on board in December and January.
[00:25:04] The products and beginning to to reach out and upsell the dispensaries that we've already have data partnerships with them to be able to really offer them. Are our product offering more eyeballs in their region is going to be really exciting for us in the next two months and seeing where we can go with that.
[00:25:19] Yeah. No, I'm sure it's exciting.
[00:25:21] It's a big it's a big shift for a company when they move into that kind of heavy monetization side. So I'm sure I'm sure it's going to be a. I'm curious to see how things play out. Not really. If people want to find out more about you, about Wikileaf, what's the best way to get that information?
[00:25:34] Just go to Wikileaf.com on Twitter, Instagram, Facebook, and you can even go to Google News and just look for Wikileafand see any of the recent developments about the company. Yeah, that's kind of the best way.
[00:25:45] Perfect. Oh, make sure that those links and the handles are in the SCHOENER so people can click through and get that done. This has been a pleasure. Thanks for taking the time. I think that Wikileaf is a fascinating part of this industry. You know, getting the data, helping consumers find the products they need, you know, a huge part of it.
[00:26:00] I'm excited to see how things play out for him.
[00:26:02] Thanks, Bruce. I really appreciate you having me.
[00:26:05] You've been listening to Thinking Outside the Bud with Business Coach Bruce Eckfeldt to find a full list of podcast episodes. Download the tools and worksheets and access other great content. Visit the Web site at thinkingoutsidethebud.com. And don't forget to sign up for the free newsletter at thinkingoutsidethebud.com/newsletter.