Have you ever wondered what two cannabis founders talk about on their monthly catch-up call? Founder & CEO of Vangst, Karson Humiston, sits down with Founder & CEO of Headset.io, Cy Scott, to discuss the past, present, and future of cannabis. They also address the elephant in the room: layoffs. With a lack of federal momentum in banking for the cannabis industry, leaders are forced to make tough economic decisions for their businesses. Cy and Karson give deep insights into leading their organizations though these industry headwinds. Produce By PodConx Karson Humiston - https://www.linkedin.com/in/karson-humiston-64572b97/ Vangst - https://vangst.com/ Cy Scott - https://www.linkedin.com/in/cyscott/ Headset.io - https://www.headset.io/
Have you ever wondered what two cannabis founders talk about on their monthly catch-up call?
Founder & CEO of Vangst, Karson Humiston, sits down with Founder & CEO of Headset.io, Cy Scott, to discuss the past, present, and future of cannabis. They also address the elephant in the room: layoffs. With a lack of federal momentum in banking for the cannabis industry, leaders are forced to make tough economic decisions for their businesses. Cy and Karson give deep insights into leading their organizations though these industry headwinds.
Karson Humiston - https://www.linkedin.com/in/karson-humiston-64572b97/
Vangst - https://vangst.com/
Cy Scott - https://www.linkedin.com/in/cyscott/
Headset.io - https://www.headset.io/
Karson Humiston: [00:00:00] Hey everybody and welcome back to another episode of the Proud to Work in Cannabis podcast. I'm your host, Carson Humiston, and today very excited to have my friend, fellow founder in the Space SA Scott on with us. SA is the founder and CEO E O of headset. Prior to thats was the founder of Leafly. SA has truly been a pioneer in our.
One of the best entrepreneurs in the space and Cy and I were chatting a little bit before we got on today and we're gonna keep it real. I mean, Sy and I have these monthly, every other month, founder to founder catch call. So like, we're gonna do our catch call and just know that we have an audience listening in So ton to dig into today.
Sy, how are you? Thanks for joining me.
Cy: joining me. I'm great, Carson. Thanks so much for having me. And, and thanks for all the nice things you just said there. I, I love it.
Karson Humiston: Before we kick offs, What? What made you decide to start Leafly?
Cy: So in 2010 we launched Leafly. It was about June of 2010. And that was my first foray, into the, this category. And. Have been here ever since, kind of moving from the [00:01:00] consumer side to more of the data and analytics side with the, the latest business here, headset.
But yeah, got involved as early innings I think, and I mean, still is in many ways, but there were no adult use markets yet. California had a pretty robust medical market and we kind of saw. Some, some of the trajectory, I think arguably, very early. But I like to think that, what we did with Leafly and what Leafly continues to do, helps push it forward helps demystify it a bit for, consumers that have it now legalizing in, in their markets, like places like Missouri this year, places like New York right now with the stores opening, just giving some people some, some information so that they can come into the category.
And that's what we really want. We want more people to come into the category. We want it to be. Not so scary and to kind of yeah, remove that, that stigma that still exists in a big way. So that's, that's kind of, my origin story.
Karson Humiston: And then at what point did you decide that the idea for headset came to you and and what's the origin story there?
Cy: Yeah. So, during our time with Leafly, [00:02:00] before, or shortly after the acquisition we stuck around. So we sold it back. Late 2011 to a group and we, we hung out with them for about three years. That's kind of the common story. You, one of the reasons we sold so early was there was just no capital.
There were no investors in the category. We talked to a lot of angel investors and being a consumer internet play, our numbers were great. Right? Things like daily active users, monthly active users the engagement numbers were, were solid and we were getting a lot of traction, but no one wanted to put money in because they were like, well, we don't know if this is just like a.
Strange California thing, if it's really gonna go anywhere, if it's all gonna get shut down. And I think they, they obviously had a good good point. And, and at the time in California, there was an adult use legislation that failed, right? It was trying to be the first state to have adult use and it failed.
And then, Colorado and Washington shortly followed a couple years later. So anyways, we, we did the acquisition. We were running the business for a few years, and then we just kind of were ready for something different. [00:03:00] I mean, that's the common entrepreneur story. I mean, you, you know how it goes, like it's your, your baby.
And then after a few years
Karson Humiston: don't know because no one's, I haven't sold, no one's tried to buy my company yet, so I, I, I, I, I, I do hear this though.
Cy: you'll get there in no time.
Karson Humiston: Yeah, I've heard, I've heard that it's hard for founders to go and attempt to be employees somewhere else.
Cy: Yeah, the, the, the unique thing about the situation with Leafly was, these guys were like a private equity group called Private Tier. They don't exist a anymore, but they became Tilray and spun out some other companies, but it was really just three of them, three of us. It wasn't like we were merging into Google or something and we're this little division.
So we were all kind of running it in in different ways and I don't know. Frankly, like it was an interesting problem to work on in the beginning. And then we feel like we really cracked it, like we did something pretty good. And then it became, the problem we were working on was just how to get people to look at more ads, like, just monetizing it to maximize the revenue and that problem, isn't, [00:04:00] Particularly interesting for me.
There are a lot of people that work on this type of stuff and enjoy it, but I was ready for like a, a bigger challenge. And, and the data stuff really came from, people coming to us and starting to ask questions that were kind of data oriented. Leafly had some good information on, what strains were, were quite popular.
Kind of sentiment of the different strains, but it kind of stopped there, but people started asking us about, well, how well does this sell? Or, or what, what's the kind of, average discount on these things? And it was hard to kind of answer those questions. And at the same time, we saw this trend, this maturity coming into the category.
It's, it's really hard to remember back in 2010 when it was the dispensaries, they were totally unregulated. They could just pop up as collectives. They weren't doing any testing in a meaningful way. There was no requirements. There were a few that were testing, but it's pretty rare. The strains, you really didn't know what they were, where they came from.
They were just kind of, they would be delivered in like duffle bags, from vendors. And the vendors would say, oh, this is a blue dream and this is a granddaddy purple, whatever. So real wild west. And then it started to shift pretty [00:05:00] quickly. Started, started seeing investment coming in. You start to see brands being built and more sophisticated, people getting excited about the category.
Particularly after legalization in, in Washington and Colorado. And so we kind of saw the, that trajectory, right? These people asking like, actually, you important questions that I think every company should ask regarding, regarding data. And then, People coming from other industries with that kind of data experience.
So we thought, well, let's, let's tackle this problem. We looked at parallels in, in like the consumer packaged goods category. So like Nielsen has a very robust business. A company called I r I has a very robust business in the data space that, that track consumer goods. So like stuff that you'd buy at the grocery and there's co there's companies like that that track other types of goods like sporting goods and all of that.
And, and, and all the data comes from retail. So we really wanted to do that and. Leverage what we've learned about working with retailers and dispensaries and source the data from there. And that, that became headset. And it's continuing to, to expand. We continue to get data from more and more locations.
We're [00:06:00] tracking, new markets. And, and that's one of the nice things about this category is that it just keeps growing. And so we just keep growing.
Karson Humiston: Let's talk a little bit about your fundraising journey. I know you mentioned that back in the days of Leafly, of course. funding and investors was come hard to come by. I would say not a ton has changed, but there's certainly more investors in our space today. So how did you go about funding headset and, and what has your funding journey been like?
Cy: Yeah, so it changed quite a bit. Back when we were starting headset in about 2015 there were a number of of. Funds that had been developed that were with a focus on like the cannabis category. So a thesis around investing like good traditional venture groups, kind of boutique venture groups that have a certain amount of dollars that they can allocate to companies like ours.
And so companies like Poseidon were early investors. I think you work with Poseidon or, or, Poseidon. Anyways.
Karson Humiston: yeah. Love Emily.
Cy: Emily Emily's great[00:07:00]
Karson Humiston: I wish that Poseidon was investors in, in banks. They're, they're actually not. But Emily is an, I think one of the best investors in the entire space.
Cy: entire space. Yeah, she, she's awesome. And it, it's been, they've been a longtime champion of headset, really seeing kind of what we were trying to accomplish. We talked to another, another number of other groups and we brought some, in, in that first round. And then we've kind of done, know, subsequent rounds since then.
And, and it really has been very much targeting. Organizations that are, are really focused on the, the cannabis category in particular. I think that's not for lack of trying, we did reach out kind of earlier to more traditional venture firms, more traditional venture tech firms. Given we're more of a tech company in the category, and just like any venture firm, they'll, they'll back companies that are in the food space or restaurants or gaming or whatever, right.
You just have tech around those categories. So we, we obviously went early days. I went to, Sandhill Road and, and, and did that whole thing. And I think, I think it was interesting, but it was like, [00:08:00] well, the, kind of the same story, well, we don't know about the category, but, but more, even more so, lot of limitations from their LPs.
So the people that fund these venture firms, right. They have. Kinda rules around the types of business that the businesses they can invest in and, and restrictions. And a lot of these funds, especially the big ones, are, are backed by big institutional money and they have restrictions. And so a lot of it is, is is due to that.
Like a lot of the, the reason they can't get involved, even though we're tech, even though, we're. We're not like a plant touching company, as many people say. It still was like tough. And so just kind of going with the, the traditional cannabis venture groups have, have been kind of our bread and butter and continue to be as far as, raising capital over the, the years we've been around.
Karson Humiston: And it's also helpful when you have cannabis investors on the cap table, at least in my experience, from an introduction standpoint and just from an understanding what's going on in the industry. So I, I, we, we've taken that ac actually the, our lead from our seed and the lead from our series B [00:09:00] were non-cannabis.
But ha having the mix has been pretty helpful.
Cy: Yeah, I remember that it was LA Hippo, right? That you guys
Karson Humiston: Yeah. So Lear Hippo led our seed round and they've been just incredible investors and they've continued to participate in the A and the B. And then in our series B, this group called Level One Fund, they non-cannabis, we were their first cannabis investment.
They, they did our Series B, but our series a Casa Verde, which is a cannabis specific fund. And so, in the, and then we've had a bunch of other cannabis investors come in. So there's been like a. dynamic between the cannabis investors and the investors who are, are more traditional technology investors coming in.
So, so that's been good. I, I think one thing that you, that you pointed out, Around the restrictions of non-cannabis firms. We had the same experience, right? A lot of investors said to us, we love the business, we understand the model, but we can't invest in cannabis. I feel like since our industry and entrepreneurs like us have always had a hard time [00:10:00] raising this most recent like tech VC down cycle, whatever you wanna call it, isn't really that as big of a shock to us because we've kind of always been operating under the assumption of we might not be able to raise.
More capital. So talk to me a little bit about just like the mental, your mentality around you. You kind of never know where your next funding is coming from, so you always have to run the business lean and, and how you think that's helped you in this navigate this market.
Cy: Yeah, yeah. This current condition that we're in. Yeah. I would say the cannabis industry has its ebbs and flows and it, it's exuberance and its pullbacks of. We've seen it, back early days with the states opening up new markets like California that commanded a lot of excitement markets like Canada with federal legalization, happening back in, in 2018.
At those points you saw a lot of this exuberance, a lot of. I earn a lot of money coming into the category, right? And and then when things kind of, the dust kind of settles, then it, it kind of pulls back. [00:11:00] So like Canada for example, I remember companies like the operators were getting funded on just how much like, square footage they had to grow.
Product. Right? And that was like, okay, well you've got a, a facility that's, so many acres and you're worth this much money. Even though there was no market to sell into, no one really knew what it would look like. And it was very competitive. And so money was just kind of everywhere. And and then it, it, it pulled back quite a bit when like Canada didn't wasn't necessarily as successful, I think as everybody had thought.
There were a lot of constraints in the beginning of form factors, a lot of limitations in, in the market. And that impacted it. Right? And then we see the same thing kind of with the federal position, right? We're all waiting for some legalization. Last year the, the, the mantra was safe banking.
Oh, it's gonna happen. It's passed the house however many times and six times it's amazing. And so it's finally gonna go in the Senate. And the Senate wanted to do their cannabis Opportunity Administration act. And that didn't go through. Safe didn't go through. And then kind of another, kind of, pullback.
And so, [00:12:00] for a long time at headset and probably, similarly at at banks, we've been operating under this capital constraint model. We've been really working towards building good solid unit economics to become a profitable company. We've been working. Towards that, I'd say for the last couple years.
And, and we're just months away at this point. Which is great to to finally get there. And I think it, it's really funny to, not funny, but it's, it's interesting to see kind of the broader tech world kind of coming to the same realization. And I think it's the, the, it's the same catalyst. It's a lot of the capital limitations.
Like it's harder and harder to get funding for your business. In tech, just like it's been harder and harder to get funding for your business in cannabis. And we saw, years ago, and so, we're ahead of the curve there. For, for being a, a technology and cannabis company, it makes it extra hard today because not only do we have like the, the challenges with the cannabis market, but we have the challenges just in the broader tech market.
And that's impacting things like valuations, right? And, and [00:13:00] multiples on your revenue, which used to be. A lot more than they are today. And you can see this in some of the public comps and all of that. And it's, it's, I mean, that's impacting everybody. And certainly it, it impacts us as well.
It, I know we, we were talking, it's funny how I see a lot of Twitter kind of like, welcome to the new world here. It's time to work hard. It's time to work as a team. It's time to focus. Or whatever message that's going out there it's time to survive and not, not die and all that.
And it's like, we should have been writing these tweets, months ago, , it's got a broader audience, right? But we, we've been doing this and we've known this. And so I'm kind of like, well, wow. What, what have they been doing all this time? And certainly, operating in a different landscape, board capital is just more available and maybe it just, it breeds.
A, a bit more in the sense of inefficiency. And I, and I'm a big believer in, constraints can be good. Constraints can, encourage great things. And when you have no constraints, maybe, you build these orgs that are too big and aren't really contributing to growth [00:14:00] in a meaningful way.
And so now, you, you're seeing a lot of what we have all been doing for some time, right? Is just really focusing on those unit economics, making sure we can survive in a world where, where capital might be limited in a world where we don't see any sort of federal legalization anytime soon.
And, and I think that's gonna. Or is paying dividends for us. And I think the tech world is, is finally kind of catching up to that. But, seasons change and who knows, in a couple years we might be right back into the exuberance. We might have some federal change, and then there's a bunch of money pouring into the category.
And It's, it's a different, a different scenario. But I do feel like cannabis in a lot of ways is kind of a leading indicator. Just just what we've been dealing with, what we've gone through, what you've gone through, and to see, the, the, the macro environment like this, it's, it's a little some ways kind of VDI indicating, cuz it's like, well, that, that party over there always looked.
Pretty good, right? Lots of money coming in and all that. But like, we're all here at the end of the day to build businesses and build efficient businesses and I think, we've been forced into it and it's very [00:15:00] much, I think about cannabis as like this crucible for building businesses.
It's like the hardest category to build into for so many reasons. But it's in a lot of ways it's like the most exciting category to build into. So I feel like, if we can do it here everything else will be easy after this.
Karson Humiston: Yeah. I, I one of our advisors told me the other day, like, I, he was like any founder in cannabis that has Right, started their business and 20 13, 20 14, 20 15, 20 16, and is in the game today, still growing their business. Servicing customers. I would reback in any industry that they wanted to go build in without doing an ounce of diligence like that would be enough.
That's what he told me and I was thinking about it. I was like, that's actually such a good point. I mean, just like to have the stamina to stick through the ups and downs of this industry for the last five to 10 years in your, in your case, more than that, really says a ton about you and I, and I think that it's one of the things that I wanted to address kind.[00:16:00]
I wouldn't even say elephant, elephant in the room, but layoffs across the cannabis industry, right When you open your link, when we open our LinkedIns, we see layoffs, angsted, a round of layoffs. Other, other companies have have done layoffs. I think it would be helpful for people listening for us to kind of explain the rationale as to why it's so important to.
To, to right size the business for the survival of your company. So I, I don't know. I, I'm happy to speak to it in my experience. I'd love for you, I'm not sure if you guys have done any reductions, but for you to speak to it and we can just kind of like talk through how we went about doing it and, and kind of give the audience some transparency around this.
I think there's a lot, a lot of things on LinkedIn, so we'd love to kind of clear the air for people.
Cy: Yeah, no, definitely. We recently went through it ourselves. Looking at the year ahead, I think that The industry has still a fair number of headwinds, particularly in, in the more mature markets. Markets like California that, that have some scale, have so much opportunity yet, [00:17:00] but the, the legislative framework, it just is, is so artificially limiting.
I think the illicit market is still, thriving in a big way and. When we struggle to get access to, to capital, our, our clients struggle to get access to capital. And I think that we looked at the year ahead or we, we kind of were frankly surprised by 2022 coming in. We came off of.
The end of 21, just with, with fantastic growth. And then 2022 just seemed to, to have a lot of headwinds. And, and for a lot of these reasons, a lot of our, our clients were, found themselves in, in challenging places. Maybe they had, had leaned on too much investment weren't getting into profitability.
Maybe they were building brands that just weren't connecting with the consumers. There's all sorts of reasons. It's as hard as it is for us. It's, it's just as hard for these. Raiders, the, the license holders, the people, running these stores, running the, building the brands to, to really be successful.
And so, there's, there's been a, a fair amount of attrition. We think that there's gonna be more this [00:18:00] year as far as companies just maybe not making it. And we need to make sure that we can account for that in a, in
Karson Humiston: Si one, one question about 2022. W you, obviously, you're sitting in a great seat where you're seeing data w overall, w what were you seeing from a data perspective or, or were people
Cy: That's a great,
Karson Humiston: less cannabis?
Cy: yeah, great question. So setting the stage, right? So 2022, I mean the, the broader macro tech, I mean the, this narrative of like, investment capitals drying up certainly drove kind of the back half of the year. In 2022, same, same problems, right? It's just this inflation, runaway inflation, they raise interest rates, everything costs more, capital dries up.
So that, that's certainly a big part of it. But when we looked at the year from a data perspective, so yeah, we track data at retail, right? We're in thousands of thousands of stores across the US and we can see store patterns. We can see what we call. What's called like store sales. So we, have these samples of stores that look very similar, [00:19:00] similar profile, do kind of similar revenue.
And then we can see kind of, trends emerging in those like store sales. And then top line when we, we aggregate everything up and we can kind of see how, how sales do and 2022. In 2020 there was the pandemic, the start of the pandemic, right? And, and back in April and May, we saw this huge spike in sales.
There was a, a lot of fear about the cannabis category or, or stores getting closed. Like, if we can all remember way back, when restaurants weren't open, right? It seems like forever ago, but this was happening, so there were real concerns, okay? Cannabis dispensaries, retailers are gonna get shut down.
In Massachusetts, they were shut down for a moment. And that drove a lot of kind of panic buying and then from there you couldn't do anything, right. You couldn't go out. There are no movies, shows any, any activities. So I think a lot of people were just kind of turning to cannabis as a, a, for recreational purposes or whatever.
But sales went up significantly. It's kind of like, if you look at like a DoorDash or an Uber, I don't, I don't know their sales, but I'm sure their sales went through the.
Karson Humiston: right, right,
Cy: In [00:20:00] 20 20, 21 and,
Karson Humiston: my, my personal usage on DoorDash went through the roof during the pandemic.
Cy: Yeah, so you, you must not be alone in that. And what happened was it kind of set this new bar of sales and a lot of people were talking at the time, like, the pandemic is the great accelerator.
It's building trends, purchase behaviors in, in consumers that were gonna take decades to get there. Things like food delivery, things like weed delivery, things like pre-order and, and pickup and online shopping for cannabis. These kind of. . And so that was the, that was the narrative, right?
And it's like, yeah, this is great. Everyone scales up to meet this new demand. And then the world kind of comes back around, right? 21 summertime and it was like kind of back, and then it ki there's another kind of wave. There's always these waves. And then finally, in 22 everything opens up. And actually, like when we look at store sales, everything was down.
When you look at 21 versus. 22 year to date versus year to date for full year. Sales were down pretty significantly across every [00:21:00] market. There, there are some exceptions to that. Like these emerging markets like Michigan, where you know, more and more stores are opening up, that's like a natural thing, right?
The, in the beginning there's not a lot of stores and not a lot of sales. And it grows. Yeah, it goes crazy. But once it's like at this maturity, the
Karson Humiston: actually, Michigan. sorry. I was gonna say When you say Michigan, it's funny, we have our board meeting this week, so of course I'm looking through all the data of where the most hiring, what's going on. Michigan 2022.
Cy: Yeah, yeah. But wait till this
Karson Humiston: what you just said.
Yeah, yeah, exactly. Wait till this year and you could see it towards q4 kind of, trickling down and I mean, just kind of circling back to the original question, it's like all of us as founders got to the end of the year. This year, we see sales down significantly. We see in, in our case, hiring down significantly.
Right. Businesses are hiring less people and we look at 2023 and. We're, we're overstaffed right now based on where the demand of this industry is. And so, I think it's important for people to know that it's not like, one day [00:22:00] everyone woke up and said that we're overstaffed. The industry had a down year, sales were down.
In our case, hiring was down. There is a slowdown. And therefore service providers like angst like headset, have to readjust in, in, in accordance. We help the industry at large. So when the industry struggles we feel that struggle and we gotta be there. On the other side of it, I, I said to our staff, we will get through this, right?
The industry's going to pick up hiring again. There's gonna be new markets that open up where brand new jobs are created, and we wanna be there on the other side stronger than ever, and therefore we need to right size so that we're protecting the long. Of the business. And I think that so many founders and business owners were faced with those same decisions.
And it's I responsible and the right, right thing to do.
Cy: Yeah. Yeah, I couldn't have said it better. It is very much the case and, and to Michigan in particular we're pulling some data like store sales for January versus December this year down. 13.2% which is significant, right? Going, that's just looking [00:23:00] at their sales in December versus January now to, all this data.
There's context and the thing is in December, sales are generally higher than in January holidays, people traveling, vacation, whatever. So last year it was actually down, 7% into January and 2022 is still a good year for Michigan. But I think this year you're gonna see that market saturation.
You're gonna see. Enough doors have opened up. Detroit just opened up, I think. And so that'll, that'll drive some, some tailwinds, but eventually there'll be enough stores. And then you get that supply demand, right? And then it starts to, there, there's pricing pressure for all these guys so that you start to see the price of.
Products going down and so our job at Headset is to help people become more efficient with data. And so that that way they can navigate, you know this, but a lot of 'em don't, right? And they're, one day they're selling flour, and ate the flour at 50 bucks and the next thing you know, they gotta sell it at 30 bucks.
And they're like, okay, where'd that $20 go? Right? And that just makes it hard and a lot of 'em don't make it out of this. And yeah, I, I exactly what you said, [00:24:00] right? Like as, as companies that service this industry, if our clients are having a hard time with it that impacts us, right? That turns into slower growth for us, and we just have to make sure that our companies can weather this com combined with the lack of capital,
Karson Humiston: And frankly, the legislation is doing us no favors. Right. And, and, and it's like you're, you're dealing with these businesses that don't really have access to funding being taxed at effectively 70. And the operators are barely surviving. I mean, like they're, they are just trying to keep their heads above water.
And so then to actually use a tool, like a data tool or a staffing tool, that in any other industry would be a no-brainer. They're having to decide, am I gonna pay my rent next month or am I gonna pay. Headset for this thing that's critical to my business, but it's, it's more of a nice to have than paying my rent.
Or am I gonna post on Craigslist and pray to God that someone comes in? Or am I gonna work, post on banks and find a credentialed, [00:25:00] trained, qualified, ready to go worker? And it's just like they have to make these super hard choices. And so, we're in the cannabis industry, we're dealing with no legislation.
Our customers have be, are basically being taxed at 70. And no investment. And so again, to the point around if you're a founder at the game still at this point, like you're doing a pretty great job. And so like, I feel like people like you and me are just so hard on ourselves and we think that our businesses should be doing so much better.
But when you take a step back and look at all the headwinds that our companies are up against, like I'm personally so proud of our team for just continuing to plow through no matter what the headwinds are. And I know you feel the same about your team. I mean, we're unstoppable.
Cy: Yeah. Yeah, absolutely. It's yeah, it's, it's, it's probably the, one of the tougher times that we've had to, we've seen in, in the industry for everybody. When you're talking about, yeah, the, these tough decisions that our clients have to make. We see. We hear stories, I hear stories about, retailers struggling to pay their vendors who bring the products to the store and, talk about nice to have versus must have.
If you don't have products on your [00:26:00] shelves, those customers are gonna stop coming in and they're gonna go to someone else. Right. So it does make it, it makes it really tough and yeah, it's, it is kind of the perfect storm there. There are some good. Things happening. I think that if if this inflation stuff does get tamped down, they don't have to keep ratcheting up.
Maybe we don't get into like a significant recession. That'll be good. Obviously, new markets, like your Michigan experience, you're gonna have that experience in New York here. You're gonna have that experience in Connecticut. You're gonna have that experience in Missouri this year. So there's always these new markets and, and that's good for you guys.
That's good for us. And then again, back to constraints. I mean, having to make some tough choices around what, what the team looks like forces us to make some tough choices around the business and the direction of the business and the products and services we provide, and making sure that those are, like the core things, the things that really matter.
And so all the, the little stuff that we would be maybe. I don't know, just kind of pursuing here and there and just a little this, a little of that, it really forces you to have like a laser focus to just deliver, what you need for your customer. [00:27:00] long ago. We used to be really always talking about competitors.
And, and don't, don't get me wrong, I still hear it from, sales from time to time. But, but at the end of the day, it's like you gotta take the the Bezos, model here where it's just like, what can you do for your customers today and this climate? Like if it's so tough for them, how can we provide things that, that do make them successful?
And then, These services like headset A must have. So yeah, it, it, it's, it's certainly challenging, but I mean, this is why we're here. Right? And I think that this is something for like, anybody who's considering starting a company I, I think you need to be ready for like, all of it, right? And and, and it's not I mean, it sure looks maybe nice.
Maybe it doesn't from the outside, but I know, for a long time, running a startup, building a startup has been a very attractive thing to a lot of people. But it, I've always said it's like the hardest thing. There are like way easier ways to make money if you're just looking to make money. Like a decent return, year over
Karson Humiston: make money, if you're just looking to make money, I probably wouldn't [00:28:00] become a cannabis entrepreneur. I think there has to be a little bit more of the why be behind it. And that's one of the things that I love the most about, like our group of our cannabis entrepreneur friends.
Like everybody has such a strong why, which I think has driven us to all keep going through all these ups and downs. And, I think we've talked a lot about the, the challenges that we face, but I, I'd like to turn the conversation a little bit. For, the rest of our time together.
And you talk a little bit about like, what are you the most excited about and like, what keeps you getting outta bed every single morning and being like, I'm gonna do whatever it takes to make this company successful. And to have headset here in 50 years from now when the cannabis industry is, is wherever it is, 50 years.
Cy: Yeah. Great, great question. For, I guess for me what, what's really interesting, what kind of keeps me going. There's always the, the basics of like, like every company, like our customers being here for them and, and supporting them, our team and all of that, right? But those are table stakes, I think.
I mean, those are just kind of like, you gotta [00:29:00] have that kind of mentality no matter what in any, any company, any, the industry. But for me in this. Particular category. There's a lot of things like one, the story's not written yet, right? So we don't know what this whole thing's gonna look like in 20, 30 years.
And that sounds like a long time, but again, since I've been in it for a hundred years already, what's another 20 or 30? So, so I think that, I think that that's gonna be pretty interesting to, to watch the story and not that I was here at the beginning. There are certainly a, a large number of, of individuals that, really helped get this thing going.
But I still consider
Karson Humiston: You were here pretty, pretty early though.
Cy: very early, right? So I wanna, I wanna see how the, the, the movie ends here, right? And what it looks like in, in 20, 30 years or, or more. Who knows at this, at this point. And, and another, for me that's so fun is just watching. Like these, the innovation in the industry, like what these stores start to look like, what types of products are being developed, even legislation.
Like, I always talk about the Minnesota [00:30:00] stuff, where now in Minnesota, beverages are totally legal and you can buy 'em and, and. , get a 10 milligram drink at like a restaurant, just like we, if you were to order a beer, which is wild And Minnesota's gonna probably legalize a little more traditionally this year.
But I love stuff like that. Right. I love kind of seeing that. I love what's going on in Nevada right now with the consumption lounges. So they're gonna be opening consumption lounges without connecting to retail, like any sort of consumption lounges now have a, a retail store connected to it, right?
And you can just go to an area and, and consume. But this is something. Is, is is pretty wild to think that, it's been legal for so long now in Washington and Colorado and, and it's really hard for a, a person to buy it and consume it unless they go to their own home. Right. But if you're visiting or, or traveling or, or just wanna go out.
Right. It's completely illegal in most places. Like in in Washington state, I'm in Seattle. There are no consumption lounges. I know Denver. , you guys are a little head there, but you're like a rarity. California has a handful. So seeing what's going on in Vegas with or, or Nevada in general. [00:31:00] But what will happen certainly in Vegas is like you can go to a consumption lounge and it's not a retailer.
It's more like a restaurant, right? Or like a bar instead of going to I don't know, it's like connecting the two. So like, that kind of innovation is, is really neat. Keeps me going. And finally, like, for, for me from like a technical. Perspective and like the kind of company we're building, like the data that we sit on at headset is, is arguably better data than in any, any consumer category out there.
Like certainly this type of data is available, right? When you think about companies like Target, companies like Walmart, they've got a lot of customer records. They know what their customers are doing. They know. A lot about, about that, but, but it's very siloed, right? So like, if you are a, a consumer goods company, maybe you're, you're FritoLay and you sell Doritos, like you don't really know what the target customer looks like, right?
When they come in to buy Doritos, what else do they buy at Target? Target knows that. But for headset, we know that. Right, because we're able to, to connect and, and access this information from the retailers, so we know a lot about what the consumer is [00:32:00] doing, and we, we normalize all that data across all these stores.
So it's like the, the most interesting lens into the industry, I would say, like for what's going on, but also at the same time, It's like, it's so unparallel un unparalleled when you think about just traditional verticals. And that is because cannabis is so new. And so because it's new, people are willing to try new things, or like to kind of throw out old models.
With headset we're like, we don't want people to wait for data. We wanna deliver it as it's happening. So as soon as January ends, we'll tell you how January sales went. But the old model is January ends and you're waiting till. March to get January data, and that's just not good enough, right?
And so we were able to rewrite a lot of that, just like we're able to rewrite the kind of data we get. So that's always exciting for me, just kind of, what can we do with this? It's like there's nobody to look at and say, okay, well, company X did it like this in the consumer packaged goods world, we're gonna do it like that.
It's like, company X never had this kind of information. Like, what can you do with that? Right? So it's.
Karson Humiston: like you don't have to like, [00:33:00] I think we always. You're really not disrupting, you're defining, right? Like there's no, there's no way that it's been done before. So it, it, it's, I always say to our team, if nobody told you how to do your job, how would you do it? Like, if you weren't ingrained in your mind that this is the way to do it, how would you do it?
And a lot of times that's where like the best ideas are, because sometimes the way that things have been done for the last several decades aren't like the most efficient way. And in cannabis, You have the choice to say, okay, here's how this industry has been doing it for a hundred years. Which would obviously be hard to change cuz like once things get started it's harder to change.
So I think it's actually easier to define than disrupt. So that's certainly one of the reasons why I, I feel good keeps me going up and getting up in the morning. And I also think like, always the hardest things end up having the biggest reward. And so I feel like for, for [00:34:00] me, like I love the challenge of.
Doing what everyone says is impossible. Like I remember when I started banks, when people said, going into cannabis, you're gonna ruin your career. You're never gonna be able to get another job. This is the worst idea. This industry's never gonna go anywhere. And like so many people had that sentiment. And even to be able to look back and see where we are today, like imagine a decade from now.
Like a decade's gonna go by pretty quickly, and so much is gonna be accomplished and like the reward will be really big for people that can stick it out. But I really don't think most people have the guts to stick it out. And like you said, like if you're just trying to make money, you can go make money doing something a lot faster.
So I, I love just like how hard it is and one will look back and say, wow, we really did something here.
Cy: Yeah, that's a good, a good point. No, only the, the hard things are worth doing. Right. So at the end of the day, ultimately, yeah, it comes down to that just. Putting in the work.
Karson Humiston: why take the easy road
on anything that you do?
Cy: Right. Right. We're, we're not on this planet for very long. Right. So, so do the tough thing and, and feel good about it, [00:35:00] whether it works out or not.
Right. It's just like you did the work. And I, I think that's, that's huge. And I love the defining, not disrupting, that's a perfectly concise way to put it. And yeah, I think that we're gonna see a lot of, a lot of definitions between, now and that decade you're talking about like the, it's, it's gonna be, again, the book isn't written and like, I wanna be here for it.
And so that's definitely what, what keeps me
Karson Humiston: We, we'll definitely be here for it, and I feel like we should definitely do an annual update on this, this podcast. It'll be fun in like, I don't know. 20 25, 20 26 to look back on 2023. Little bit of a challenging time for the industry and to come back on the podcast. We can actually listen to this before we go on and be like, Those were some hard times.
And look at how the industry persevered and made it through and look at how our teams grew. And speaking of teams growing, when you guys start hiring again, where would people be able to find you if they wanted to put the, if they, if they're someone that says, I wanna be here to define the industry.
I love what Sy and the team at headset are [00:36:00] doing, and when they begin growing their team, again, I wanna be there. Where could people find you?
Cy: Yeah. On our website it's headset.io. I encourage everyone to just pop over there. We've got a lot of cool resources on data that we make available, so if you just kind of wanna see some of this stuff like, The Michigan numbers we make all that in a certain way, publicly available. So take a look there and then, we're on LinkedIn, Twitter, and everything, so you can follow us there and you'll see anything when we, when we get back to kind of scaling the business and, and hiring again.
Yeah, that's, that's probably the best channels for us.
Karson Humiston: Great. Well, I, I think we're running outta time here. Si. But this was a great conversation that one by very quickly per usual. So thank, thank you for joining me and I'm excited to see you. Are you going to that the data conference in Miami next?
Cy: No, no, we're, we're pretty heads down right now. Yeah, but let me know how it goes.
Karson Humiston: Yeah, well, I'm sure I'll see you at one of the conferences at some point this year. Inevitably we'll run into each other.
Cy: I'm sure. Thanks for having me, Carson.