Jake is the Co-founder of Cann, a cannabis-infused social tonic that provides a refreshing social buzz without the baggage of alcohol.
Briefly introduce us to Cann and your journey to founding the company.
Cann is a microdose cannabis-infused beverage designed especially for social experiences. Conventionally, alcohol has been the primary social beverage. Cann is not looking to replace alcohol, but instead provide an alternative that is better for you, tastes great, and has simple and clean ingredients (it only has 5!), while also not sacrificing the buzz.
We launched in California last summer and have just expanded to Nevada. We are growing our product line with liquid packets and Hi-Boys that have a slightly stronger dose of THC for folks that have developed more cannabis tolerance and are looking for a greater buzz.
My Co-founder [Luke Anderson] met during our first week at Bain and became fast friends. Over time, we realized that we loved the social experiences where we would drink alcohol, but didn’t like the mental and physical side effects that alcohol would cause. So we began this process of researching what alternatives could provide social experience without the baggage, and promised we would only make a product that we absolutely loved. After months of hard work and iterating we had our product and our brand.
How are you connecting with the non-cannabis consumer market since Cann cannot be shelved in grocery stores?
The most significant challenge that we face is that our core customers do not go to dispensaries. They buy their alcohol from traditional retailers. So, the question becomes, how do you attract these customers while also making our dispensary channel partners happy?
We believe over time that these channels will merge. Products like ours are the lowest dose and safest cannabis products out there, and I don’t think it will be long until we see Cann being sold at liquor and grocery stores.
Interestingly, we have been really successful conveying our value proposition as a consumer brand. But, from a cannabis standpoint, it’s a bit different.
Today, the highest volume cannabis products are those that have super high concentrate in the forms of flowers and oils. And in some ways, it’s sort of like prohibition. We are trying to go into speakeasies and sell everybody light beer. That’s not necessarily what people are consuming at this moment, but that’s because the industry is incredibly nascent.
So, keeping in mind how we see this space heading, we are trying to be uniquely consumer friendly and have designed our brand as something that could sit on the shelves of Whole Foods.
What is more difficult, being a beverage company or a cannabis company?
Both are really hard. Beverage is a really heavy product, takes up a lot of space and is hard to move around. Structurally, production margins are low unless you are manufacturing soft drinks at the scale of Coca Cola or beer at the scale of AB InBev. Distribution is also very difficult since every step along the way you are paying a little bit more to move the product.
But what is great about beverages is that for thousands of years it has been a social product. We have seen from the more specialized beverage products like kombucha and functional tonics that there is a ton of space and there will always be demand for innovation.
The major point of friction with cannabis is how highly regulated it is. It doesn’t help that there are inconsistent regulators across states and countries. These regulatory factors add in a ton of costs, and it is wildly capital intensive even for a company like us which is a capital light brand.
Another challenge with cannabis is that it doesn’t know exactly what it wants to be yet. It has this long history of constraints and legality which has pushed it in one direction, mainly higher concentration, but the future is all in branded products and will look like things that we already consume. The question is, what is the bridge to get there?
Right now, the calculus of the cannabis market is off. Most of the companies are calculating how much THC is in their product and created a buying experience that looks at price per gram of THC. But, when you buy coffee or a bottle of wine, you don’t consider the price based on the milligrams of coffee or percentage of alcohol. So, there is work to be done on how products are presented to the market, and that is part of our overall strategy of being a bridge between these two spaces.
What do you think is the most important part of a business to get right first?
There are so many things to get right — the hard part is that the stuff that you have to get right first is the hardest until you’ve done it. Then it’s like ‘Oh, wow that was easy!” and rinse and repeat.
But to answer your question, the product is the most important part to get right. In cannabis and regular CPG I sometimes look at products on the market and scratch my head. You would think that it would be pretty straight forward — but it is really hard to do that because you are under so much pressure to figure out what people want.
In the past, the formula was different. Coke had mastered it. They figured out that people either wanted a 0 calorie diet soda or 100 calorie soda. In terms of health, consumers really just considered calories, and if they were okay with a less healthy option, Coke didn’t make the product difficult to understand.
But then something changed.
Millenials like us were taught that soda was bad for us. We want things that are healthy, but having low or no calories alone isn’t enough. We don’t want fake sugar or artificial ingredients. We want real sugars and real ingredients, and if that means that the beverage is 30 calories instead of 0 calories we are okay with that.
A way that many beverage companies slip up when it comes to product is that they are trying to design for a formula. But when you are designing for a formula, you are losing. Instead, we went out and met with a food scientist and wanted to create this product that we had envisioned, and if we both didn’t end up loving the product or formula we weren’t going to do it.
What KPIs or metrics do you pay attention to?
The single most important thing for a consumer product company is repurchase rate. Understanding how and why customers buy your product again and if they are paying full price or influenced by promotions is huge.
The way CPG companies have gotten this wrong is that they have spent a lot of time optimizing their customer acquisition and have gotten really good at it, but they haven’t validated whether their customers are coming back and repurchasing their product.
Companies should be understanding how their customers are returning and why they are buying.
Data is key for that. We are getting data from wholesaler and distribution partners as well as our own DTC channel. Obviously, we are drilling deep into repurchase rate information, especially with our ‘power users’ who have high AOV and are buying multiple cases to stock up their fridge with Cann. So for us, we really want to understand the behaviors and habits of these customers.
If you could drink a Cann with one person, who would it be and why?
I think what I love about Cann is at its core it’s trying to remove certain pressures and help you be more yourself while being social. I love the ability to have a Cann with people I don’t know and meet them for the first time, and be able to engage in those environments without feeling a need to drink alcohol and the loss of control that it causes.
So, I would say there is no ‘one person’, it’s more about drinking a Cann with a customer who is able to authentically enjoy that experience.
How are you trying to interact with your customers from a non-commercial standpoint?
It’s interesting, you have a lot of imperfect sources. From a data standpoint you are getting bits and bobs from data partners and your own website. Something that I didn’t appreciate as a consumer investor in the past was as Instagram gained relevance, this direct conversation you have with customers via direct messaging is really valuable. What’s been great is that a ton of customers DM [direct message] us, and we can go really deep and learn from these conversations and contextualize them.
But while having these dialogues is crucial, we have to be careful not to design our product based on committee or consensus. You can’t create a product that everyone loves, and it is important to realize you don’t want to. But, you can distill the emotions that are conveyed during these conversations how they are authentic to the brand you are trying to be.
At the end of the day, it is important not to lose focus on the big picture and that friction point you are trying to solve.
You recently sold your one-millionth Cann. What is a particular moment since you sold your first Cann that stands out to you?
The first moment that comes to mind was when Cann first went on sale, Luke and I bought a six pack from one of our retail partners. It was an incredible moment to see this product — which was once just an idea we cooked up in our heads — to be on the shelf. It wasn’t until that moment that I could shake off this imposter syndrome. I still have that six pack today.
For me, starting a company and making that choice to leave private equity and get into cannabis came with a lot of skepticism from the people close to me. Their intentions weren’t antagonistic, naturally they just want you to be less risky and safe. But, once we had our product on the shelf, it really validated my decision, especially in the eyes of those who care for me.
Six months from now, what is going to be your biggest challenge?
The cannabis space operates in dog years. So, six months is like twenty years. With that said, our biggest challenge in six months is going to be similar to the same challenge we always have, which is focus. How do we focus across new markets?
We want our product to be in everyone’s hand where it is legal. We are currently in Nevada, California and (soon to be) Rhode Island. But, we are also getting calls to go all over and we have to decide where we enter first and how we do so.
If you could join the crew from Inception and implant one fact or idea about cannabis into the minds of consumers, what would it be?
The idea that I want to put into consumers’ minds is that they don’t have to choose between going out, drinking alcohol and experiencing all of the negative effects — emotional regret, hangovers, etc. — to be fun and be yourself. Products like Cann are out there and let you choose who you want to be when you socialize and not feel bad about it the next day.
What we are offering people will be successful if people actually try it and take the time to consider the type of experience it fosters with family and friends. That’s the idea that I want people to start thinking about, not the escapism and stigma with cannabis that makes you think about getting high, sitting on your couch and being paranoid. Instead, the focus is on being yourself and being more social by including Cann, and it doesn’t have to completely remove alcohol. You may be having a glass of whiskey and having a Cann afterward.
What is a memento from your childhood that you still keep and how does it serve you?
I have gone through a number of Marie Kondo inspired cleansing sessions. I have a small box that I try to make smaller and smaller. So, as you can imagine, I am not a big keeper of possessions.
But one thing that I don’t throw out is books. There is something about the rule of selection that stops with books for me, and I am comfortable accumulating them because they have a real power. Especially the books from my childhood, it allows me to hold on to certain relationships with my past self.
What is the weirdest thing you’ve ever done?
Luke and I started this company together after having been friends for almost eight years. Throughout our friendship, even when we lived in different cities and were doing different jobs, we always went on these handful of incredible trips centered around music festivals.
We’ve been to Coachella every year and have gone to festivals in Montreal, Texas, Sweden, and other places. At these festivals we really just let loose. We have these insanely strange outfits and try to tap into the local vibe (and maybe get the attention of fashion blogs).
But besides being great fun, it also was another way for us to realize that alcohol was a major friction point. We wanted to maintain this weirdness and fun, and felt that we had to drink alcohol to do so. But we asked ourselves, why did we have to make this trade-off? Why can’t we have this amazing experience going to music festivals while also still feeling comfortable and safe?
Cann is our answer to those questions. We are the biggest fans of the product and its ultimate customer.
If you could live in any civilization throughout history, what would it be and why?
I have been more and more interested in what life was like before the ‘modern era’. Through starting Cann and even from my prior experience as an investor, seeing how food & beverage products are made and the types of ingredients that are put into the things we eat and drinks is honestly terrifying.
The local local food movement was formed as a reaction to this. But, it mainly exists for one type of people — those who can afford it. So, we have gotten to a point where only wealthy people can save the food system.
I have this nostalgia and yearning for what food looked and tasted like before we, for lack of a better term, messed it up. The saddest thing in the world is that we consume products thinking that it’s real when it’s not real at all.
It’s almost like how a couple generations ago have thought about extinct species — we may be approaching extinct food. I think it would be incredible to live in pre-modern South America and eat a pineapple and see if it tastes anything like the pineapple we are using in our Hi-Boy.
What is your creative outlet and how does it help you channel a flow state?
I have been trying to get into drawing. I love how it forces me to focus on one thing and be super present. But, it takes me forever because I am not trained!
What is the last:
TV show you binged?
I am watching The Wire. Despite being set in the early 2000s, it is widely relevant today and I am so glad that I get to watch it in today’s context.
Movie you watched?
Song you listened to?
The One by Tailor Swift.
Podcast you listened to?
Nice White Parents from Serial.
Book you read?
I just finished a book called A little Life by Hanya Yanagihara. Definitely recommend it.
Up Next: Justin Kolbeck, Co-founder & CEO of Wildtype Foods.