Show Notes
With adult-use cannabis products legal in 11 US states and several countries,
the industry is poised for massive growth over the next several years. Tech
startup [Apex Trading](https://www.apextrading.com/) is aiding in that growth by
providing a wholesale business management and sales platform for businesses in
the US cannabis industry.
In the latest edition of the Silicon Valley Momentum Podcast, Roland Siebelink
speaks with Apex Trading co-founders John Manlove and Rob Fess. They discuss the
goals and challenges of a young company that was founded in early 2018:
- How far the cannabis industry has come, as well as the challenges it still faces.
- What John’s experience with another startup taught him about the dangers of a CEO burning out.
- The importance of co-founders understanding one another and understanding the dynamic between one
another.
- How keeping a “plant-first” mentality has allowed Trade Apex to connect with the cannabis community and
earn the trust of clients.
- Finding product-market fit when your product is needed but not required.
---
Transcript
Roland Siebelink: Hello and welcome to the Silicon Valley momentum podcast.
My name is Roland Siebelink, and I'm a scale-up ally for tech founders and I'm
so excited this week to have with me John Manlove and Rob Fess of Apex Trading.
Hello, guys.
John Manlove & Rob Fess: Hey Roland, how are you?
Roland Siebelink: Thank you so much for joining this podcast. I've heard so
much about you and the inroads that you're making and do the supporting
technology for this booming Cannabis and hemp business. I'm all excited to talk
more about that. But before I say too much about your company John, can you
introduce Apex Trading to people who have not yet heard if possible about your
company?
John Manlove: Yeah, absolutely. And thanks for giving us the opportunity to
be here and excited to have a chance to talk about our company. So, Apex
Trading, we founded Apex Trading in early 2018. And what we provide is, we're a
wholesale business management and sales platform specifically for the cannabis
industry that addresses the entire wholesale supply chain from seed all the way
to, you know, to your farmers to your processors to your shelf ready products
down to retail.
So what we do is we provide a comprehensive platform for wholesale businesses to
not only be able to conduct sales in a more efficient and streamlined manner
online, but also power those wholesale businesses with back-end features like a
CRM and various other Business Management Tools that help teams leverage and
streamline their operations to really run their, their operation very
efficiently.
Roland Siebelink: That's awesome. Okay. So, Rob, can you tell us a little
bit more about those clients, the wholesale business? That must be a whole new
industry that's come about in since some States started legalizing cannabis and
hemp products, would that be right?
Rob Fess: Yeah, absolutely. So you know we solve problems for the wholesale
cannabis producers that would be cultivators, extractors, and infuse good
makers, genetics and seed companies. And then on the other side, the retailers,
the dispensaries, or stores or provisioning centers, as we like to call them in
some markets. We've created the product to be designed for small or large
businesses alike, you know, priced accordingly and able to scale as the business
grows
And one of the things that we like to look at is a quote from Bill Gates, where
he said "a platform is when the economic value of everybody that uses it exceeds
the value of the company that creates it." And that's kind of where we like to
see ourselves sitting
Roland Siebelink: Really love that. So, John, is this like an industry still
very much in flux, I imagine? Are people still figuring out what works and what
doesn't. Can you talk a little bit about that and the stability or the on
stability that you work with. John Manlove: Yeah, absolutely. You know, so I've
been fortunate enough to have been in the cannabis industry, specifically from a
technology landscape since early 2014. That's really when the industry started
to kind of gain this momentum that we all kind of know it as today.
And that was with the first adult use market coming on in the state of Colorado.
And obviously, we've seen so many States come online both the medical and adult
use since then. You know, when we look back at how much the industry has matured
over the last six years. It's really been, they've made a lot of strides.
I think we're seeing more of, you know, in the early days, it was a lot of
illicit market growers that, you know, wanted to come into the legal market. And
I think that, although they, maybe, possessed a lot of knowledge on how to
produce a great product or a quality flower, whatever that might be, they
sometimes lack some of those business operating skills, right?
They weren't really having to pay taxes before. They weren't having to run
marketing and sales campaigns and leverage the business, and deal with HR, and
everything else that inherently comes with running a company, right?
So I think as we've seen those businesses evolve, so many have made strides,
right? so we've seen a maturation in this space from a business ops and acumen
standpoint. And, they’re bringing in more traditional business operators to help
their companies scale and grow into the future, both in their State but also
expanding into new markets as they build their brands.
But I think there's still a lot of challenges. These businesses face, right? I
mean, some of it inherently is just created by the landscape we're in, right?
So there is a lack of accessible banking and insurance, right? So you look at
all of the wildfires that have happened. We've had several clients who had their
dispensaries burned to the ground in Oregon recently. They have no insurance.
Because they couldn't get insured.
So a lot of these businesses are still very much so, while it's legal in their
State and they're abiding by the rules and regulations that the State has laid
out, they're still very restricted and dealing with a lot of areas that
traditional businesses don't have to go through.
Roland Siebelink: you were telling me in the pre-interview some interesting
stories about the previous company and how the founder was not quite mainstream
in many ways. Can you talk a little bit about that?
John Manlove: Yeah, you know, when I first jumped in this space back in 2014
as I previously mentioned, you know, I helped start a company called Tradiv and
we had the dream of becoming the Amazon of cannabis.
And I wasn't one of the initial founders of the company, but I was the first
employee and brought on for being responsible for growing the operations and
sales when we first started out. When you think about the fabric of the founder,
especially in a startup, you know, first you have to be able to raise capital.
To be able to raise capital, It's really, really challenging. Anyone who's
raised capital, myself included, understands how extremely challenging it is.
We were fortunate enough that the founder of this company had a persona that
when he walked into a room. Everyone gravitated to him, not only was he like six
four, so that helps. I'm a smaller guy. So it's a little harder for me to gain
people's attention.
But he had an outgoing personality, extremely intelligent. Just could vibe with
really anybody. No matter where you came from you'd find something in common,
and he would connect with you. And we raised a significant amount of capital,
right. So this founder is able to do that.
But I think inversely, right, we think about the pressures that a founder goes
under. It's really lonely at the top.
You have the weight of the world on top of you. Not only responsible with your
shareholders but your employees, the community, your clients. And you can
sometimes feel like the weight of the world is on top of you.
And unfortunately, back in the Tradiv days, you know this founder, you know,
just recently got married and I think he was going through some life changes. He
had this company and raised this money. We had scaled the growth of the company
of up to 35 employees, were managing three times as many people as we previously
had manage
And ultimately, you know he needed a break. So he went to Alaska, did some acid
and then literally thought he was the second coming of Jesus on this planet.
Now, I have nothing against organized religion. I think it has its place in
society, obviously. And for a lot of people, you know, is really, you know, done
wonders for them.
But I would say that, ultimately, right, it didn't really belong in our work
environment. And resulted in, you know, not only the employees losing faith in
him, as the founder visionary, the company, but the board, the same. This on top
and a few other mistakes within the company ultimately led to the downfall of
that.
So I think when we look at founders - personally, me, you know, one of the
lessons I really came out of is that – you have to surround yourself with the
right support group right, so your co-founders, you got to make sure they always
have your back and you can rely on them. So when you're going through ups and
downs, issues, whatever it is you know that you have those people supporting
you, right? Just as important in your personal life as well. And whether that's
your spouse or your friend or whoever is you need that support system.
And then from that, you have to create that balance. So you have to get to that,
as hard as it is, and especially in American society and our capitalistic driven
kind of society. You just want to put in as many hours and as much as it takes
it all the time. And always be working. I mean, yesterday I worked a 10...
almost 10 hour day, I felt guilty, leaving the office early.
It's a very unique thing to a start up in a founder, typically. So I think for
the, one of the things I really learned from that is I felt like if you create
that balance if you're willing, if you're able to really force yourself to
disconnect and take that time for your personal life and create that balance,
maybe not get to the level of that breakdown.
It was a very unique experience to go through. But honestly, I learned so much
from that founder CEO as a friend and as an employee.You know, both within
business as well, how to navigate that with a board and investors, which I was
responsible for after taking over the company.
You know, I learned so much that it really positioned me as a leader and I think
us as a company Apex Trading and Bushel44 to be successful, sometimes those
failures, while you're going through them, are the most painful things and
horrible.
But they're the best experiences to learn from. We got to go through that right
and we got to go through it.
From that, It really started with, you know, why did I found this company with
Rob and our other founder Willy? Because I knew and I trusted them. I knew that
anything if I ever needed something no matter what the time of the day was
whether it's business or personal both those guys were there for me. And I was
there for them.
And I think all too often, you end up kind of seeing someone who founded a
company, they have a co-founder and the co-founder just doesn't really hold up
their end of the bargain sometimes It's a very common type of occurrence.
Be very selective of your co-founders and ensure that you know they possess
those skills and same ethos that you have.
Roland Siebelink: I wanted to come back a little bit to the co founder
dynamic because that's such a frequent topic when talking to startups, Rob, what
do you do as a co-founder and what's the the mindset that you bring to work as a
co founder and being the best that you can possibly be at it?
Rob Fess: So, you know, fortunately, I have several years of background in
startups. So I'm kind of familiar with how you have to operate. And because I've
worked from home now even prior to Covid, for a few years you know I'm based
down in San Diego, and the company headquarters is up in Portland.
I'm kind of always on. I'm never really off because I'm in my home and I use my
personal phone so like John said, you know, it doesn't matter if I'm awake. And
that's the only thing that stops me from not answering or talking to, especially
John or Willy, is if I'm asleep. Otherwise, if my or my phone's not there. I do
a lot of trail running but I even have my phone there. And I know that John and
I have had conversations where I'm breathing heavily and say yeah.
OK, cool. We'll take care of that. Because you know I'm running along a trail 10
miles out in the wilderness.
So, you know, as he mentioned you just (one), you always need to be there and
then (two), there's this sort of relentless forward progress mindset of you
know, even if I don't necessarily have the skill down 100% or the product if we
said it's going to be finished tomorrow, I will put something up tomorrow.
if I tell him there's going to be an email going out tomorrow. It's going to go
out tomorrow, no matter what, you know, so that's how we kind of, you know, just
continue to drive forward.
The other thing is we've known each other. John, Willy, and I have known each
other. I joined Tradiv in 2015 and Willy was there already.
So we've known each other now for several years. So we understand each other's
dynamics, you know, I can yell at John. John can yell at me. Willy can yell at
both of us. And none of us are really upset. We know why we're doing it.
It's all, you know, with good intention. So, you know, just having that
understanding of who the person is and you know where our limits are really
helps but again just always being there for the other person is the way to get
it done like in the opposite.
I can call John anytime I call Willy anytime I can slack them anytime and I know
that they will answer. And if they don't, I know they have a good reason. I
don't doubt or second guess them and I feel that that's what I'm getting back in
return.
Roland Siebelink: That's awesome. Very good. So let's switch a little bit
too. You know how the company's doing traction. Let's maybe start with how many
employees do you have, and some other metrics that you may be willing to share
how, how are things going John?
John Manlove: Yeah, you know, the company is doing really well. You know, I
think that we've really caught stride. This year, I'll be at it all. You know,
Covid related issues to the side.
The company's doing really well. So we're a team of 12 right now. That includes
our engineers sales support staff team, so very small company.
But what's really exciting about that is, you know, while we're small we're
supporting over 2,400 clients, licensed clients across 11 state markets.
Roland Siebelink: Wow
John Manlove: we've really expanded with our model and technology standpoint
and footprint wise, even with a very, very small team; so we look at our last
two years, right, the first year was "let's achieve product market fit."
The second year which was last year, "let's begin to scale" and we've had
revenues since day one of the company. So that's unique for us to start up but
you know let's begin to look at our revenue model.
Let's begin to scale and roll out the platform and additional markets and we're
kind of at this exciting phase now where we've just rolled out our 2.0 platform
or new version of our technology with enhanced feature sets and functionality.
And we're gearing up for our next raise, which is going to be more growth
capital focus. So it's been a great time for the company and we're doing really
well.
Roland Siebelink: I have to jump on the product market fit that you
mentioned, because every single founder that I talked to always wants to know
how do you know when you have product-market-fit. What would be your answer,
John?
John Manlove: You know, I think, simply put, especially from a platform
standpoint is increased usage over time.
Right. So if we start to see that incrementally each client that we sign up,
whether that's a seller or buyer is using the platform more as they get used to
it over time. Right. You're starting to see that you've achieved some product
market fit, you know.
For us, you know, we're in this very unique position where you know our software
isn't required to be used. Right. So in cannabis right if you're running a
retail operation, you have to have a point of sale software.
If you're running a wholesale company, you have to have the state track and
trace system right that tracking software. Everything else is just kind of
tangibles that depending on what you know what the business might want right so
we're not required, but we are very much so needed.
So i think we're kind of in this unique position where we had to come up with
number one:
Where do we want to fit within the niche? What are the needs of your problems
within that specific part of the supply chain? and then how do you build a
product to address those?
And I think we've been really successful at doing that And that really comes
back to, you know, our plant first mentality of, you know, very much so.
Being part of the community caring about the plant, caring about the individuals
who have, you know, pioneered legalization and ensuring that we're not
forgetting about those individuals saying and ensuring that, you know, we're
really listening to the client. Understand the markets and build the best
product possible to address those nuances.
Roland Siebelink: I mean plant-first mentality. Can you expand a little bit
on that.
John Manlove: Yeah. You know, I think all too often, um, you know, you kind
of get in these gold rush mentalities
Look at cannabis. This is where a lot of people from Silicon Valley and nothing
wrong with that, jumping in at right you have a great tech there's so much
talent and and knowledge and expertise in in the Silicon Valley area. Like, why
wouldn't you come and build technology for cannabis right
The other is you have people, you know, kind of commodity or hedge fund people
or out of New York base that are coming in and let's build a commodity exchange
just do these things right. I think traditionally, you know, that works in a lot
of industries.
And in cannabis, I think it does to an extent, but you have to keep in mind
that, you know, it's still a very small tight knit community. The owners and
operators who and then this space are still extremely anti corporate you're
worried about corporate takeover of the industry.
Roland Siebelink: Right.
John Manlove: And I think from a technology standpoint for us to come at is
You have to be able to put yourself in their shoes, right? So I've cultivated,
I've run a distribution company, I've gone and stayed on the farms and stayed
humble. To understand the culture, the people and what it is right? I'm very
passionate about that.
So when we think about plant-first. Plant-first means that everything we do from
a decision standpoint of a company is with regard and we're still considering
the plant.
So how is this feature. How can this enhance the small business in the large
business alike?
What are we doing from a messaging standpoint to connect with the community. So
we don't come across as this outside kind of money grab company coming in.
How do we really identify? How do we support them? Whether that's donating to
certain causes being involved in local fundraisers or events, etc. Like, how do
we become part of that?
Really identify with us. So I think when we think about plant-first It's this
thing of yes we're a tech company. Yes, we've raised venture capital. Yes, we
have people in our team that haven't been cultivators their whole lives or even
really in that part of the business.
But from a sales standpoint, from a marketing output from an engineering
standpoint, right, everything we have. We do have to be in consideration of that
plan and ultimately right that tends to create a community or well we like to
call our Apex Trading family, right, which is our clients as well as us.
So it's creating this family atmosphere. This community atmosphere is inherently
part of cannabis. It's such a tight knit community. It takes a lot to get into
that community. But once you're in it. It really is where they'll support you
and they're your biggest advocates.
Roland Siebelink: also in terms of the description of all the big trends
that we're seeing and, Rob or John, what does this mean for Apex Trading? How
big will it be? How many plants will be under management? How many clients do
you envision having 10 years down the road?
Rob Fess: Let me start out with that one and then I'll let John give a
serious answer.
I think hemp and cannabis will be so large in 10 years that you know the
Superbowl Budweiser commercials are going to be, you know, rocky garden
commercials or you know, you never know who's going to be putting something out
there, right. So, you will have that, you know, there's also the food side of
it, you know, the protein coming out of the hemp side. So, curing world hunger
and all these different things.
And I just want us to be there along the way to support it in whatever capacity,
the industry needs us to support them. So that may mean we are a massive you
know multinational conglomerate company or that means we just dominate a
specific market or a specific aspect of the market and maybe we kind of refocus
and say let's not look at that big giant picture. And let's just really support
the craft industry or lack of support. So it just depends. I mean, but yeah,
that's kind of where I see it going
Roland Siebelink: Very good, and then we expect the serious answer from John
right?
John Manlove: Yeah, right, with somebody I know and say,
You know what I think about the future of our company. You know, obviously,
we're very much so focused on the now as a startup, we have to ensure that each
day we're taking the steps we need to drive things for an ultimate outcome that
results in long term success. You know, I do very much expect us and the next
year to expand across the entire country. So up opening offices on the east
coast and in, you know, entering all legal US state markets.
From a hemp standpoint and from a cannabis standpoint, there's great
international opportunities. I think the biggest market still remains to be the
United States and it will continue to do so for, I think, a period of time. But
ultimately, right. I think there's a great opportunity for national expansion
for us as a company and really connecting those global supply chains.
From an exit, public, M&A standpoint, I mean every. that's the dream of every
founder of a startup, right? Whether you remain private and you just continue to
do what you love and you have a great company and you're paying dividends to
shareholders and they're excited because you're profitable and life's good right
maybe we continue down that path right maybe that's where we want to be.
Maybe it's something where a merger acquisition or an excellent opportunity
comes across that is just too good to pass up right or makes a lot of strategic
sense for us as a company, and whoever that acquire would be.
You know, I think, for us, you know, I don't, I'm not tired of this space by any
stretch of imagination. I love what we do. I love getting to innovate and build
an amazing product to address this ever evolving and changing industry. I
couldn't really imagine going back to a kind of a nine to five desk job, right?
I love what we do.
But in the same sense right is as the future, you know, there's so many things
up in the air. We just have to ensure that we remain focused on today.
You know, looking at those opportunities and take advantage as they as they come
along and we'll see you know we'll continue our current success. And hopefully,
you know, expand upon it and the future should be very bright for the company
and all of our employees and of course our clients as well as we continue to
innovate.
Roland Siebelink: I'm going to ask both of you as well. In closing, what is
one one key goal or challenge that you're currently looking at and how can
listeners to this podcast potentially help you with that.
John Manlove: For us and our success, right, we've, you know, it's going to
come down, of course, to our next fundraise right so we're dumping into our
series A here in January.
And, you know, for us it's a growth capital raise so you know we've been able to
build a phenomenal product and will continue to innovate, build features and
functionality within our system and enhance it more and more as you have to do
as a platform, right.
But on the other side, right, is, you know, if you're interested in this
opportunity of what we do and it's intriguing and you'd like to learn more,
especially about our upcoming raise right as we raise capital is growth capital,
being able to use that money to expand and continued exponential growth of, you
know, between two and 500% of every KPI year over year that we've hit.
That's a great opportunity. Right. So as a startup obviously for us to continue
growing and be successful comes the injection of capital. As a technology
company right were like many not profitable out the gate right so investors to
to support us right and be part of this be part of this this ride that we're on
and take advantage opportunity that cannabis presents and uniquely our position
our company provides so uh yeah if there's any investors out there be interested
in that piece. I would definitely encourage them to reach out and would love to
have the conversation and speak more about what we're up to here.
Roland Siebelink: That's awesome. And of course, investors. If you know me,
I'm happy to provide an intro directly to John as well.
Well, thank you so much Rob Fess and John Manlove of Apex Trading Bushel44 for
joining this week's podcast Silicon Valley momentum. I really enjoyed this
interview and I wish you all the best of luck with your fundraise and with the
changes in society. We all need to see
John Manlove: Thank you so much Roland it's a pleasure.
---
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders
across the world.
