I co-founded an online marketplace in the booming legal cannabis industry in California.
asterisk* marketplace was designed to be a centralized online platform where verified licensed businesses could securely trade tested cannabis products at online auctions.
At the time the emerging cannabis industry was highly fragmented and without any transactional standards.
There were high risks for buyers and sellers due to trading with unverified “grey market” businesses and middlemen, the process of getting product to market was highly inefficient.
There was also lack of quality assurance and abundance of fake lab test certificates flooding the market and affecting consistency of product prices.
Along with my technical co-founder we saw a huge opportunity in this "Wild American West" that would eventually spread across the world.
We began with secondary market research and conducted dozens of contextual interviews with individual cannabis cultivators and members of cooperatives, producers of cannabis concentrates and edible products, wholesale distributors and storefront retailers.
Research revealed that all of them shared similar pain points, namely having complicated access to market, abundance of manipulated lab test certificates, questionable business practices of unverified sellers, lack of clarity about sources of product, and many other problems that needed urgent solutions.
With these insights on hand we proceeded with analyzing existing and potential competitors, and prepared a competition matrix as well as a SWOT analysis to help us find most promising opportunities in the market.
By creating a licensed platform for legal wholesale cannabis auctions we would be able to bridge huge gaps and solve many pain points in the new industry. It also seemed to have great potential for growth.
Compared to traditional marketplaces online cannabis auctions would be able to provide an efficient price discovery mechanism where sellers would get fair market value for their products and buyers would always be able to find good deals. A true win-win scenario for all participants in the industry!
To help us stay true to our course over time we drafted this mission statement:
“Our mission is to provide fair opportunities for businesses in the cannabis industry. Our online cannabis auctions platform is a transparent centralized marketplace where qualified businesses can connect with one another for trading tested cannabis products."
Having a longer term vision in place we continued with developing product strategy and a near term roadmap. These helped us clearly set the timelines and gather requirements for MVP.
After synthesizing research findings and having product strategy in place, we moved on with developing personas for every market segment, mapped main user journeys and use cases to work through.
I sketched individual screens for each flow, designed low fidelity wireframes and created simple prototypes for early testing with potential users.
We captured feedback from the prototype testing sessions and quickly iterated based on these new insights.
Shortly after we had a design system with fonts, colors and simple user interface elements that could be used for responsive web application and scale to be used across platforms in the future.
While working closely with our front- and backend engineers on a daily basis we continued business development going door-to-door and establishing relations with potential platform users.
When MVP was ready for field testing a tight group of select cannabis cultivators and retailers was introduced to the marketplace. I encouraged first users to test every platform feature and identify any gaps in the flows.
These businesses provided valuable feedback that helped us quickly introduce a few small changes to product filtering, as well as demonstrated the team a successful “proof of concept” ahead of beta release.
We launched a beta version of our online marketplace connecting small batch organic cultivators in the Trinity and Mendocino counties with retailers in the San Francisco Bay Area.
In the next few months we used our first-to-market advantage and quickly expanded to the lucrative San Jose market.
Continuous feedback from our users helped make changes and add missing features in the shortest possible time.
With our userbase and GMV exponentially growing month-to-month, several investors expressed their interest in participating in the seed round.
While we were in the process of finalizing due diligence and deal terms, California state regulations changed requiring software companies like ours to become licensed cannabis distributors responsible for storage and testing of all product sold through the marketplace.
That was automatically flagging the platform as "high risk" to our investors due to the fact that we would have to be "touching the product" rather than providing a software-only solution, and unfortunately our deals fell through.
We had a few brainstorming sessions and discussed possible pivots in the legal cannabis and other industries, but none of the options aligned with the long term plans of the founders and the team.
As a CEO of the company, after many months of hard work from all of us, I had to make a tough decision to dissolve the company.
I strongly believe that every startup failure is a great opportunity for learning crucial hands-on skills that eventually open new doors.
My experience launching and running a startup of my own opened up multiple opportunities to share my knowledge and help other early stage startups, as well as became a springboard to my product / service designer career.
So here you go, if you have a startup idea worth pursuing, in my personal opinion, you should definitely go for it. Let me know if you need help with the product vision or strategy!
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