Editors’ Note: This is the transcript version of the podcast. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast, embedded below if you need any clarification. We hope you enjoy!
The Point-of-sale system is at the center of the value chain. Treez offers a unique and intuitive way to personalize the retail experience with a heavy focus on leveraging data for actionable insights specific to the need of the team. Data is valuable when it is clean, accurate, and provides actionable insights that are easy to understand and beneficial.
Understanding best practices, ideal inventory levels, SKU counts, and tracking basket size can be the difference between being in the black or in the red.
This week on The Dime, we host John Yang, CEO of Treez, to discuss
- Leveraging Data-Based Insights for Action
- Challenges of scaling with partners as the industry scales
- Focusing on metrics that matter
About Treez
Dedicated to growing the cannabis industry At Treez, we’re united by our passion for building amazing tech and services for cannabis businesses everywhere, at every stage of growth.Cannabis retailers grow on Treez.Get the technology, insights and support you need to streamline operations, increase revenue, and drive profitability in an ever-changing industry.
#Cannbabisindustry #cannabisinsider #Treez
Follow us: Our Links
https://www.linkedin.com/in/john-yang-6138896/
https://www.linkedin.com/company/treez.io/
https://www.treez.io/about-treez
https://www.instagram.com/treez.io/?hl=en
At Eighth Revolution (8th Rev), we provide services from capital to cannabinoid and everything in between in the cannabinoid industry.
8th Revolution Cannabinoid Playbook is an Industry-leading report covering the entire cannabis supply chain
The Dime is a top 5% most shared global podcast
The Dime is a top 50 Cannabis Podcast
Sign up for our playbook here:
🎥 YouTube: The Dime
📸 Instagram: The Dime
🐣 Twitter: Bryan Fields, Kellan Finney
[00:00:00]Bryan Fields: What’s up guys? Welcome back to another episode of The Dime. I’m Brian Fields, and with me as always is Kellen Finning. And this week we’ve got a very special guest, John Yang, c e o of trees. John, thanks for taking the time. How you doing today?
[00:00:13]John Yang: Doing great. Thank you for inviting me,
[00:00:14]Bryan Fields: Brian. Excited to dive in.
[00:00:16] Kellen, how are you doing?
[00:00:17]Kellan Finney: I’m doing really well. Really excited to talk to John. Really excited to learn about trees. Um, you know, really excited for the West Coast
[00:00:24]Bryan Fields: over here. Yes. Uh, I guess it’s, I guess it’s fair to ask John your location for the record, please.
[00:00:31]John Yang: Uh, in Northern California, uh, Oakland specifically, sunshine out there, just got through, uh, a storm, but it was just a little bit of rain, a little bit of wind.
[00:00:40] Um,
[00:00:40]Bryan Fields: we survived and I’m hopeful that there’ll be some East Coast conversations today, cuz obviously, uh, New York is always in the news and it’s, it’s important for us to try to spin it always to the East Coast space. So, John, before we dive in, it’d be great to get a little background about you for our listen.
[00:00:55]John Yang: Sure. C e o and founder of Trees, you know, trees is the premier point of sale [00:01:00] software solution for cannabis retailers. Uh, started this a little over six years ago now. Uh, we expanded quite a bit over the last six years. We’re now in 15 different markets, uh, particularly strong in California, Arizona, but we’ve migrated eastward into Michigan, into Jersey, into Massachusetts, and hopefully soon into new.
[00:01:21]Bryan Fields: Perfect. So I’d wanna stay with those early days. With building trees. Obviously in those six years, a lot probably has changed. What was the early origin of the idea? What sparked you to kind of come into the cannabis and build trees?
[00:01:32]John Yang: Yeah. So, um, I’m always a, uh, problem solver, solutioning type of mentality.
[00:01:36] My personal background actually didn’t come from one of, uh, cannabis, right? It’s more of, uh, using some technology to solve for s m B problems, uh, that those were in my teen years, uh, growing up in a very small town called Reno, Nevada. Father owned a computer shop. You know, you used to be able to buy personal computing for, um, $4,000 and then soon you have to figure out, well, what do you do with that [00:02:00] box that just cost me $4,000?
[00:02:02] Uh, quickly I learned that, oh wow, you could do a lot for these small businesses. Right for the lo uh, for the lawyers, for the dentist offices, connectivity, displacing pen and paper processes. Uh, it was actually at the, um, you know, around the mid nineties, uh, where internet emailing, networking all came to be.
[00:02:21] So I just got to see how much technology could solve, uh, pain points and then, Transitioned my career into more of the consulting variety, doing the same, but doing it for Fortune 500 companies. So I had the luxury of understanding technology for SMB technology for more of the dinosaurs in the Fortune 500 space.
[00:02:39] Uh, and, you know, come full circle for the cannabis market where it’s emerging, it’s largely SMB trying to grow into the Fortune 500 s into the future, but without purpose-built software. So lucki. Uh, ran into my co-founder who does come from the cannabis space, a vertical operator doing that for almost two decades.
[00:02:58] Uh, and met him at his [00:03:00] very busy dispensary here in Northern California. Hayward, to be specific, at that time it was, you know, how do you transact more? Tickets within a four, 500 square foot retail space. You were tapped out because you didn’t have technology. You know, pen and paper could only take you so far.
[00:03:17] Um, so just a lure of solving for an entire industry, solving from the ground up had not having a lot of competitors and doing it with a purpose-built software. Here we are on this, on this show.
[00:03:29]Kellan Finney: What was your biggest hesitation jumping into cannabis? I mean, I know it’s a, a non plant touching business, but it, it still is cannabis.
[00:03:36]John Yang: Yeah, no whatsoever. Um, because every everywhere else you’re gonna run into, uh, competitors, uh, moats and, and just a lot of dinosaurs that’s already in place. Yeah. In cannabis you didn’t have that, right? Like, and the point of sale, my first question when I was waiting in the lobby trying to meet my co-founder is, why aren’t you guys using, uh, Clover?
[00:03:54] Why aren’t you guys using Square? What’s going on? Um, but you have to understand traditional point of sales software [00:04:00] that really, it’s a receipt printer, but a payment process. There’s no payments in the cannabis space. There is no incentive for these bigger companies to, um, solution for the uniqueness and the challenges of a cannabis space.
[00:04:12] So I saw that as a, that’s a lot of, uh, opportunity to create and create our own moats before, um, the industry is big enough for and before there’s federal legalization for the other companies
[00:04:22] to truly care. .
[00:04:24]Bryan Fields: I think one of the areas that I don’t think gets kind of exemplified enough is the ability for problem solve.
[00:04:28] And I think kind of coming from that idea exactly like you said is, is critically important, especially in Canada because unfortunately, like you were saying, there are issues all around the, all around the past. So when you’re getting started with trees and then where we are today, you know, where did we deviate and what ideas kind of took us from the origin, the idea to, to where we
[00:04:44]John Yang: are today.
[00:04:45] Sure. The origin of the idea is, you know, we were able to use software to transform the same square footage limitation of that first shop of our, my co-founder shop. Uh, from, from 400 tickets a day to at the peak, 1200 tickets a day. The only difference, [00:05:00] right, is software. Um, so early years was a growth issue.
[00:05:04] how do I get more customers in? I have the, uh, bandwidth, I have the customer account, you know, I have some geographic advantage that wasn’t as much, uh, or many competition. Um, so reducing just clicks, right? Like workflow, workflow, workflow. If I could get a customer in with two clicks versus one click versus.
[00:05:22] 10 clicks and apply that across my inventory management, apply that across online, apply that across all areas of the business. It was a growth issue, it was a volume issue, it was a speed issue. Um, so those were the early years. Uh, the difference these days is well, . Unfortunately many, especially in the West Coast, many operators are not worrying about growth and top line.
[00:05:43] They’re worrying about bottom line as they should. You know, from day one of starting a business, you need to worry about the bottom line. You need to worry actually about loss prevention, more about efficiency, right? Uh, maybe these days the only access to capital is through your own bottom line. , uh, and we maybe just forgot about that [00:06:00] because reaching profitability is really difficult, especially with the tax issues and the regulatory issues.
[00:06:05] But some are able to achieve it. Um, and that’s just good business practices. And luckily, once we’ve solved the growth issues and the workflow issues, in the early days, our mindset was always about data. Our mindset was always about how do we then also use the data to influence that bottom line.
[00:06:21]Bryan Fields: So with the data,
[00:06:21]Kellan Finney: how are, uh, some of the operators utilizing that data to influence their bottom line?
[00:06:25] Could you kinda walk us
[00:06:26]Bryan Fields: through some
[00:06:26]John Yang: of those? Yes. First, first and foremost, it’s about buying the right SKUs right? Like early years, just buy everything you can and just have 500 and thousands SKU Sometimes you still see it, right? Kellan like you go to, into a dispensary, you’re like, wow, that’s a lot of menu.
[00:06:40] That’s a lot of items. What? Walk me through all of it. Might take the whole day to walk you through it, all of it. , um, now you don’t no longer have the cash to buy all that. Right? Right. Uh, even though some of the items might be on, on terms, um, having too much SKU results in a lot of, uh, theft, a lot of loss, a lot of spoil, uh, you know, just spoilage.
[00:06:59] Um, and, [00:07:00] and a result in just confusing decision making for a lot of the, not only your employees, but also to your, uh, consumers. Using data to inform what to buy, when to buy the right assortment, reducing that SKU count. Some of the best operators we’re seeing that actually has a positive bottom, bottom line impact are carrying only about 200 SKUs.
[00:07:19] I mean, that might be the right amount depending on how big of an operation and how big your retail, uh, square footage is. So that’s one area. Uh, another area in a big area is loss prevention. You know, I was just at. Just chasing a prospect of very large prospect, um, that’s over 3 30, 40 stores. Uh, my first question on the discovery call is, you know, what’s top of mind?
[00:07:42] And the top of mind is like, if I could reduce a percent in loss prevention and through theft, through just shrinkage, through all that, like I would be making a profit. , and that’s, that’s, And that’s big, right? And everybody should think about that because this is still a traditional retail and you may not [00:08:00] assume so, but you’re probably losing around 5 to 10% of your top line just through a lot of what’s going on behind the scenes that you’re not aware of.
[00:08:08] So understanding, you know, are you losing dollars because people are, just taking advantage of adjusting reward points. Um, uh, are they taking advantage of not doing the right counts at the back of house? Um, and, and just tying that to the SKU conversation earlier, how long does it take to count, you know, a thousand different SKUs probably too long.
[00:08:25] You’re probably going months before you’re doing a full cycle count, right? But making sure you have the right practices in, in doing your SKU counts, uh, in, in counting in general, and reducing that SKU that all ties it together in helping with the laws prevention
[00:08:39]Bryan Fields: what, what percentage of operators are using data to make, let’s say, informed decision and what percentage of operators have no idea and are not using any sorts of data?
[00:08:47] Just from a generalization
[00:08:48]John Yang: standpoint? I think a hundred percent would claim that they use data, right? Obviously the data’s there, , like in some, in some shape or form, it’s there. And if you, if you pull or survey or ask anybody that’s employed, like are you using data? [00:09:00] And the answer is no. Like their job is at risk, right?
[00:09:02] So fair , generally it’s a hundred percent. Um, How are they using it? How tough is it to use it? Uh, those are the key critical, uh, questions to, to kind of drill into. Um, cuz data can just take into a lot of different pigeon holes, right? I would have to guess that, you know, only 20%, typical 20, uh, 80 rule, but only 20% using it correctly.
[00:09:24] And, and those rely on a, uh, on somewhat of, A good, uh, team to put it together cuz just putting things together takes a lot of time and that’s what trees really aims to, to solve, right? Like we know the pain points, we collect all the granular data across all the workflow pain points that we addressed in our early years.
[00:09:41] Now how do we present it in a, a really just simplified manner? And our goal for our data products is to empower every stakeholder. And that’s really important, right? If I say 20% I’m using, it’s because 80% are being told what to do with it. There. and that’s not gonna fly. Right. You’re not empowering everybody that makes an impact into their [00:10:00] bottom line.
[00:10:00] Yeah. Buder makes an impact to their bottom line. If their goal is a o V and their goal is speed and transition or uh, transaction time, they need to know about it. They need to know what the goalpost is. They know need to know. Every day they start to shift where they are at, how far away are they from the gold goalpost, um, and ultimately how they help the company achieve its bottom line goals.
[00:10:22] Right? And that’s a lot of times that’s. So when you guys
[00:10:25]Kellan Finney: onboard, uh, clientele, um, is there like a whole education period in terms of like, this is how you guys wanna use this data? Or do you kind of like let them kind of sink or, or swim if you will, and then kind of work with them? How’s that process working?
[00:10:38]John Yang: Uh, it’s a, it’s a great question because it’s also our maturation in the early years. Yeah. It’s here have, it presents it, do something with it, hopefully, right. Cause we’re not, ultimately, we’re not a consulting agency and there are some consultants that we work with that will take it a step further. Uh, but these days, going back to empower every stakeholder, our idea is let’s just drop it into every square [00:11:00] footage on the digital screen possible.
[00:11:02] So if you’re a bud tender, you start your shift. Here’s the presentation. You could tweak it as management Ray, as a gm, as a as corporate to what a bud tender should see, what a receptionist should see, what a inventory manager should see. But you log into. This is what you need to do. This is where you’re at, you are at today.
[00:11:19] This is where the company or the store is at today. And how do you through, by the end of your shift impact that? Um, and so we’re trying to simplify, uh, we’re trying to simplify what we’re showing, but also empower every stakeholder, uh, by just presenting it to them from, from the moment they log.
[00:11:36]Bryan Fields: That’s So Go ahead, Brad.
[00:11:38] That’s so powerful, right? Because the idea of data is so like intoxicating you, you can figure out so much, but if you don’t know how to leverage that for actionable insights, it can almost be a distraction. It can take you down the wrong path. So having the ability to open up a dashboard and have, let’s say, key metrics that everyone can be aligned with.
[00:11:54] is such a critical starting ground for so many that they can take the right steps forward so that it’s an easy [00:12:00] success metric, so they understand exactly where they need to go.
[00:12:02]John Yang: You know, and that’s exactly right, Brian. You know, like it’s interesting. People say the market’s struggling, the market’s in decline.
[00:12:08] They’re absolutely right. But when we’re analyzing, uh, our aggregate data, it’s showing that the transactions aren’t actually slip slipping as much as the raw dollar. . So customers are still going back as almost as frequently as they used to. Um, what they’re not doing is buying as high of a, of average order value and buy or buying as much.
[00:12:28] Or maybe that’s the discount. Maybe that’s, there’s some other incentives. But right now all the retail operators are wanting to make sure that the AOV is the metric that a Bud Center cares about. You know, what is the average, what is their average in comparison to the shop, and where could they, you know, elevate that throughout the course of, of their.
[00:12:47] ships
[00:12:48]Bryan Fields: Yeah. And that can lead to really critical, let’s say end, end purchasing decisions at the end, maybe offering like a, a BOGO buy one, get one free offer on top in order to push people over to that average order volume because they know that number in their mind they’re looking [00:13:00] to shoot for. And as they get, kind of get close, they can use kind of incentives and tricks in order to achieve that.
[00:13:04] Without that number, it’s purely a guessing game, right? Kellen can be pushing for $60, I’d be pushing for one 20, but we really need to know exactly where that number. .
[00:13:12]John Yang: Precisely. Precisely. And simplifying. Maybe that’s only metric that matters to them, right? Throwing 10 or 15 metrics, how do I impact all
[00:13:18]Bryan Fields: that?
[00:13:19] Right? And then one person can go to the right, while the other person can go to the left, and ultimately no one’s going in their correct decision for management. You
[00:13:24]Kellan Finney: got it. How long did it take you guys to get to that simplicity from a, uh,
[00:13:28]John Yang: maturity perspective? That’s a great question. I would say within the last two years, um, it’s really where we took that journey.
[00:13:35] Like we, we’ve always simplified the workflow, the clicks. Yeah. Introducing the clicks, you know, making the ease of use. Like you could pull someone on the streets and use the tree system and it would take maybe to five, 10 minutes and just make it intuitive. Just do a good job at that. We didn’t do a good job is making sure that data also flew.
[00:13:50] Um, you know, or, or also like, uh, was as easy to use as the rest of the software. So, uh, over the last two years, we’ve really invested heavily into our data products. [00:14:00] Um, we showed, uh, our new retail analytics that we released, uh, MJ bis November, um, last year. We’re rolling that out as we speak through, uh, all of our customer base.
[00:14:10] And I think it’s gonna make a, a huge. ,
[00:14:13]Bryan Fields: do you think there’s any correlation between training and kind of getting a bud Tener up to speed and understanding that there’s certain, let’s say, one or two metrics early on in their career that you can kind of focus on to help them kind of get acclimated to the industry?
[00:14:25]John Yang: Yeah. I think training largely is, you know, s so p driven that meets certain corporate needs or, uh, store needs, right? We, we as a software provider just needs to make it as dumb, simple as possible, but also make it, uh, just multiple towards the various goals and, and SOPs that a ty, uh, a particular org might have.
[00:14:46] Um, so it’s less training on the tree software. It’s more training on how do you make an impact to, to the. Do those same
[00:14:52]Kellan Finney: kind of, uh, changes need to be applied as you go from state to state based on the different state
[00:14:58]John Yang: regulat. [00:15:00] Yeah, that’s a, it’s a great call out. Yeah, some, sometimes you can’t do that BOGO if you’re just going and exceeding your purchase limits.
[00:15:05] So there are nuances across different states, um, and that’s part of the pain, but also part of the joy of creating this software. Uh, we’re fixing markets. You know, the investors ask, why aren’t you in every market? It’s really hard, right. To get it right. Um, we, it takes surgical, uh, uh, precision. It takes a lot of just late nights to, to make sure that we get every state’s regulations right.
[00:15:28] Every city’s regulations. Right, right. And then the start of every year, we’re recording this in January. Um, we’re always surprised by something new that starts, you know, on the 1st of January for a particular state. Oh,
[00:15:40]Bryan Fields: the, the Joys and the funds of cannabis . That’s
[00:15:43]John Yang: right, that’s right. And, and you don’t get the phone phone calls on the, on the first, cuz you know many out winners are busy.
[00:15:48] You get the phone calls the second week or third week of like, oh wow, there’s not change. Is it in the system yet? Have we reacted yet?
[00:15:56]Bryan Fields: So we talked about average order volume being a key metric. Does that vary [00:16:00] state by state? And is that location by location, how, how specific and how, let’s say wider can these data
[00:16:04]John Yang: analytics get?
[00:16:05] It certainly does, uh, vary state by state. In New York, uh, I think I’d read that the, uh, half a gram vape was going from $95 or something. Like something crazy like that. Right? Only one
[00:16:15]Bryan Fields: store.
[00:16:17]John Yang: That’s right, that’s right. Buy that. Uh, maybe it’s a novelty item. Um, and then you drive what, three hours or whatever hours it takes to get to mass and you know, the prices have crashed in half.
[00:16:28] Um, so it’s gonna vary state by state. I think. Uh, obviously like gas prices vary state by state, right? Just consumer wallets vary state by state. So yes, it’s absolutely going to be different. ,
[00:16:39]Bryan Fields: are there purchasing trends too that you can kind of identify between it saying that if someone buys, let’s call it a AANA gummy, that they sometimes buy a car also, is there any sort of correlation between different products that your team can identify, or is that more of just kind of an individual by person basis?
[00:16:53]John Yang: We can identify it, but I think it’s more about empowering the procurement officers, um, to make those decisions. Uh, certainly [00:17:00] there’s trends of certain brands resonating with consumers. I think brands, especially on the West Coast, is really starting to resonate, like going to buy Wana Wild, et cetera. Like those are known, um, improved in brands that resonate with consumers.
[00:17:12] And you see it in the repeatability of, of when they come back, they. might Explore and take about 20 or 25% of the wall share to start to explore other, uh, uh, maybe complimentary types of brands. But they’re still sticking, A lot of times they’re sticking to what they trust.
[00:17:28]Bryan Fields: Do you see certain types of companies being more interested in the data analytics, like the bigger companies, or is it small ones or It’s kind of a mixed bag of
[00:17:34]John Yang: all.
[00:17:35] big companies, um, definitely are, uh, curious and, and have invested a lot of time and money into, into their data. Many of those have their own data teams to consume it because they also have to tie, you know, like for us, we wanna make sure out of the box we have everything the retail team and the retail management team has.
[00:17:52] Um, but the larger companies are vertical, right? So they may take what we have in our retail platform and compile. [00:18:00] The vertical side or other data sources. Um, so they do a lot with it on the smaller, wouldn’t say smaller side, that’s relative, right? These, some of these SMBs are doing very high volume. It’s about more about the culture within there.
[00:18:11] Um, if you’re still getting way in, in, in certain markets you can, with the growth side, with just dollars coming in, you may care less about that bottom line still depending on the markets you’re in. Um, but I think increasingly even the smaller teams are asking us about, you know, what could we do more, uh, with your.
[00:18:28]Kellan Finney: With the bigger companies, do you guys integrate your data into like their E R P systems
[00:18:32]Bryan Fields: as well?
[00:18:33]John Yang: Yeah, so we, we also released the integration hub. So e r P is a big one, like whether it’s going to odu, s a p, et cetera. Yeah. You have to connect to, you have to connect on several fronts. You have to connect to the financial side, uh, for reporting purposes, but also, you know, down, uh, up to the supply chain.
[00:18:48] Like what do you have in the warehouse, right? And. What’s the cost profile? What’s the tax, what’s the, uh, the product concept? Let’s, let’s make sure we streamline down to all the retail shops, because typically if you have [00:19:00] a, a good e r p, you’re probably operate in more than a single store. You’re probably operating in multiple stores and possibly multiple markets.
[00:19:06] You wanna make sure you have that visibility across all your uh, entities. ,
[00:19:10]Bryan Fields: has that proven to be like additionally or harder than an originally thought when kind of building that out? Because obviously you’re pushing forward and then you need to connect in various applications and then there’s probably layered with different challenges from state by state.
[00:19:21] That can’t be an easy solution as you’re kind of scaling that up.
[00:19:24]John Yang: Industry in if itself isn’t easy, . Um, but we always have point of sale as the center of value chain, right? The good thing about the point of sale is there’s no sale that unlocks until it’s reported within the point of sale, whether it’s online, whether it’s in store, whether it’s wherever, um, and all of that activity that happens in the supply side, that tends to be within the er, p or MRPs.
[00:19:44] That’s great. that’s creating a lot of product, that’s putting a lot of resource and, and dollars into it. It still has to unlock in terms of sales, right? So we’ve always thought that being that center of the value chain being that no, that connects all, uh, kind of counterparties and entities within the space.
[00:19:59] You know, we [00:20:00] hold a lot of power, but we also hold a lot of responsibility to make sure the data flows up and down.
[00:20:05]Bryan Fields: And especially being accuracy, right? Because if your team is making decisions based on that data, it has to be accurate and valuable. If not, it’ll lead to other people making, let’s say, incorrect decisions, which is one of the biggest challenges with data, is that if you aren’t leveraging it correctly, you’re, you’re necessarily could be using it to harm yourself.
[00:20:20] It has
[00:20:20]John Yang: to be clean. So where, where’s our focus this year? Um, our focus this year is just cleaning that data up, right? How do we make sure the workflows impact cleanliness of the data, uh, d duping, um, as much as possible. Uh, because a lot of times, you know, where do most people spend their time with data?
[00:20:36] It’s cleaning it up before they’re able to, uh, use it or report it. ,
[00:20:41]Bryan Fields: what’s one of the biggest hindrances of not being in all the states? Like what, what’s the biggest obstacle? Is it different state by state challenges to get into all of them? Or is there something indi uh, different.
[00:20:50]John Yang: That’s right. I mean, a hindrance for us as a company, it’s, you know, can we tackle and have all those MSO type of conversations?
[00:20:57] I think now that we’re in 15 states, there’s enough coverage, um, [00:21:00] to ha to be, uh, to resonate with those MSOs, uh, because we’re proving it in select states and soon enough for the next two years we’ll be in all the states that matter to them as as well. Uh, but I think the advantage of. being in all the states is you’re not waking up to fires across every state.
[00:21:16] Right. And doing it right, having focus, having precision. Um, that’s, that’s our claim to fame. Like getting California right out of the gates took a lot, it took many years. Uh, but, uh, some of the largest volume operators, some of the best brands, some of the most sophisticated type of nuances, we figured it out.
[00:21:32] So when we take that and explore, uh, a New York or New Jersey or wherever have solid the foundations to hopefully, um, reduce the amount of effort it takes to open up yet another market.
[00:21:44]Kellan Finney: Do you guys get, uh, pushback from some of the MSOs that wants you to kind of take the ride with them? They’re like, Hey, we’re going to Maryland.
[00:21:51] We use your software and. , Arizona, can you please get into Maryland? Is that some pushback that you guys struggle
[00:21:58]John Yang: with? For sure. We used to for sure. [00:22:00] Um, and that’s why we raised the capital round that we did. Um, so we raised 51 million series C last year, last. Congratulations. Thank you. Thank you. Very fortuitous timing.
[00:22:10] Um, oh right. . Very, very, um, and we take it to heart and, and, you know, where, where do we spend that money? We’re spending into r and. Uh, first and foremost, um, cuz we know we need to get it to, across all these markets and all these markets are going to have to pay. I’m gonna, we’re going to have to address them and in every market we have to have the right support structure.
[00:22:29] You know, we’re still one of the few that offers 24 7 support cuz that’s important, right? Like getting something out there. Day one, you’re gonna, you’re going to have fires, you’re going to have issues. And you, you need to depend on someone you can call at any hours of the night. And certain markets are operating in 24 hour fashion, right?
[00:22:45] In Nevada, for example. So, um, that takes resourcing, that takes commitment. Um, but you know, luckily we raise around and we’re putting that, uh, that resourcing across every. ,
[00:22:56]Bryan Fields: that’s an under-recognized problem. I didn’t even think about that, Karen. Cuz you’re right. If John has a, [00:23:00] a very big MSO partner who’s scaling extremely quickly and they’re dependent on your software, their expectations are that you’re gonna scale with them as fast as they need.
[00:23:07] Because if they are in Maryland, they’re gonna be like, Hey John, like we wanna use tree software. And you’re like, well guess like we’re going to Maryland .
[00:23:14]John Yang: That’s right.
[00:23:16]Bryan Fields: So on the website I read, we build fast and listen closely because our success is tied tiers. Why is that critical and what does that mean?
[00:23:24]John Yang: Uh, we just, again, hold a lot of responsibilities, right? Like I, I, I joke a bit about getting phone calls second week or third week of January about things that change, but we have to pay attention and keep up to speed while ahead of that, because via tell point of sale or any software company that there’s things that need to change and it has to change tomorrow.
[00:23:41] Inevitably the answers no because if we wanna do it right, um, it’s, it’s gonna take more than 24 hours of turnaround. Um, but we also understand even from our, you know, found foundational days early in the early years, uh, we had to listen to the customers. Our, our, with the, the one main advantage of trees is we just have a singular focus on, [00:24:00] uh, our customer.
[00:24:00] And that’s the. We don’t listen to the suppliers. We don’t listen to anybody else. We’re now multi-track. We’re just the great point of sale that serves our retailers. And if, if we do that well, then we also need to listen intently to our customers and their needs across markets, across operator types, and be as fast as we can to, to their needs, um, within the software.
[00:24:22]Bryan Fields: It would, it’s very smart. It’s easily to get distracted and by listening to some of these other vendors and take you on the path that might not be as valuable for your customers and putting the resources exactly where you need. So you were talking about being ahead of curves. How do, how do you do that?
[00:24:33] How in an industry that changes as fast as ours, how do you stay up to date on those initiatives and how do you prioritize the resources in order to put out the most pressing fire when one occurs quickly?
[00:24:43]John Yang: Also through their customers, Brian, right, to have the right customer types, the anchor type of customers, the ones that want to give you the feedback cuz they know you listen and you’re fast to, to the responses, to their needs, they’re gonna feed you more because they’re at the grant level.
[00:24:56] We’re not. , right? The only way we can get, uh, a close enough post [00:25:00] to the industry, to the changes is through our customers. Um, you know, we definitely spend time with consultants. We definitely spend time with the states. We definitely spend time with the traceability systems like Metric and BioTrack.
[00:25:10] That’s great. But a lot of the intel there typically is a little too late. Um, and many of our customers are actually lobbying and fighting the good fight to influence some of those decisions that may come six or 12 months later. And so staying engaged there is the only way we have. So it’s
[00:25:27]Kellan Finney: a, a collaborative kind of relationship that you have with your clients.
[00:25:29] You, you, they’re feeding you guys information on regulatory things and kind of what’s happening, boots on the ground. And then you guys, are you guys feeding them information as far as the data that you’re collecting in terms of trends and, and those kind of things, and kind of telling ’em, Hey, you wanna look at this, this part of the data and this.
[00:25:44] Can you kind of talk us through some of that? Uh,
[00:25:48]John Yang: Yeah, absolutely. Um, we don’t have to have a, a very robust conversation. Again, we’re not consultants, but we have a lot of visibility to different workflows, different operations, different trends, and wanna have and empower our customer [00:26:00] successful work to have those type of dialogues with our customers.
[00:26:02] And sometimes it’s within our product org, the product managers read, the product marketers that’s having those conversations with our customers. It’s a good balance of a conversation. If you have needs, we have visibility. , we might have some thoughts as well. Ultimately, if we want to influence the software, let’s give you good partners together and get more customers on board to talk to each other.
[00:26:21] I think that’s another trend that you’re seeing here that at least that we’re seeing here, is when market conditions are tough. Um, resellers are dropping their egos, they’re actually wanting to collaborate more on, on a various, uh, uh, you know, variety of topics. Um, software is maybe one of them, but generally influenced by, uh, some regulatory needs or.
[00:26:41]Bryan Fields: Did the Cassius ATM crackdown hurt change, alter your business at all?
[00:26:46]John Yang: Uh, no, because you know, on the payment side, what we’re doing is. We’re pretty particular about the processors and partners. We work with it. While we have a very open ecosystem of integrations, I think that’s more so [00:27:00] for P Systems, loyalty, et cetera.
[00:27:01] But when it comes to payments, and especially in our space, many have come, more have, have just died out, right? And cash is at TM is a category, uh, that’s finicky, that’s Ben Finicky. Um, and you know, what would we, what do we do there? We wanna make sure that we have good backup solutions that could cut over quickly, whether it’s a different ca cashless, atm.
[00:27:19] But more so maybe just a different processor type altogether, like pandemic, ach, h et cetera. We just want to make sure and understand that these fires will happen every single morning. I might wake up to another outage of sorts, uh, on the payment side. And, and hopefully as easy as a flip of a switch, the resellers are still transacting on a alternative solution.
[00:27:39] So with the team, you guys
[00:27:40]Kellan Finney: have that you ton of different opportunities that you could kind of, uh, embark on. How hard has it been to just kind of stay laser focus?
[00:27:48]John Yang: Yeah. Uh, it’s, it’s within the lens of our retailers that we’re able to focus. Right, right. Like early years. You have to understand the tam, the total addressable market is small for any, [00:28:00] uh, software vendor in this space.
[00:28:03] So it’s very easy to chase. Like I got data stream revenue there. I got payments, I got point of sale, maybe supply chain. Then I got loyalty. It’s like lot of shiny objects, , let’s do it all. And yes, absolutely right. We, we had to learn that lesson too now that we tackled all of that. But you can chase it all.
[00:28:17] But if you chase everything at a surface level to a 10% degree of need, what does that actually serve? And who does that actually? , right? And typically then you get into a building, a house of cars that collapse pretty quickly when times are tougher. Um, so we’ve learned those lessons early, early on, and we said we’re, you know, we’re, what, what’s the exact lesson we learned?
[00:28:37] Being a C to sale is not easy. We attempted it. It’s doesn’t generate the value, certain doesn’t generate the value and gives us the pace that we need to deliver for our retailers. And we course correct it. We. being a point of sale is the absolute need. Let’s just laser focus on our retailers and think that’s pain dividends over the last few years.
[00:28:54] Was that
[00:28:55]Bryan Fields: a hard, uh, adjustment to make at that time,
[00:28:58]John Yang: uh, for any entrepreneur [00:29:00] that thinks they could do at all? Absolutely. . Absolutely .
[00:29:04]Bryan Fields: What’s one feature request? You get a lot, but you’ll never build.
[00:29:09]John Yang: That’s a good one. Uh, sending text messages. I love that. . Um, . We do get my favorite though, . We do get that a lot.
[00:29:18] You know what it is though, like when I look at my phone, I, and I, you know, I just shop, uh, and just kind of just be a. Consumer, um, and just figure out like what, what we could do better on the software side. You know, I sign up for all, I see a QR code, I scan, I see something, I could sign up. I sign up, so I wake up to a lot of spam and all these text, text messages, does it really drive that much, that much repeatability because it looks.
[00:29:41] It reads just as spam. And right now the struggle is if I sign up for something, it may take hours, sometimes even days delayed for actually get that message right, because just routing and all the carrier issues with our space, just something that, you know, we’re not experts in. We’ll never be experts in, and hopefully we have some good loyalty partners, c r m partners or just text messaging [00:30:00] partners that can fill those gaps.
[00:30:02] I, I
[00:30:02]Bryan Fields: never want to get text message with promos ever like that would just, all the time, the most, all the time. Do you get those now? Yeah, I mean,
[00:30:08]Kellan Finney: it’s crazy if I go to a new dispensary, they like ask you for your cell phone number and like build you like a little frequent shopper profile. And like I walk out of the store and 10 minutes later I get a text message like, oh, here’s the deal, 10% off.
[00:30:22] And I was like, I’m literally just visiting here. I’m never going back to that store. It’s frustrating. I, I really am not a big fan of the
[00:30:27]Bryan Fields: text message thing. That’s why I laughed. John, what’s one factor? Statistic building in the cannabis industry that most. ,
[00:30:37]John Yang: what’s one factor statistic about building software in in our space that most would not know.
[00:30:42]Bryan Fields: Yeah. Well, that would surprise or shock somewhere or most that wouldn’t know.
[00:30:46]John Yang: Huh. That’s a good one. Um, that’s a good one. Is it more related to the consumer or to the businesses? Either works? Yeah. [00:31:00] Well, I mean, Tax rates is, is super high if you add a tax rates closer to 80%. I don’t know how shocking that is to to, to the trio here on the call, but I think that would be shocking if someone, no one ventured into cannabis space.
[00:31:14] Yeah. That jumps at me as a, as a stat. Yeah. I mean,
[00:31:16]Bryan Fields: those are the important ones to hear because sometimes PE people listen to this podcast not inside the cannabis industry, and they’re, they’re kind of shocked to hear, let’s say that there’s, there’s caps on how much you can spend at dispensary, that there’s all these various state by state challenges.
[00:31:27] And hearing that information, I think sometimes is, is very powerful. Even though we take it as common knowledge, I think other people are like shocked to hear that.
[00:31:35]John Yang: and just the way, like if we say it’s, uh, you know, simplified to say it’s 50% rough tax, the breakout of it, the compounding of it. Then to go through all the audits to make sure the, you know, the states are getting their money, money, it’s a lot to unpack within just a, a very large tax rate.
[00:31:51] What’s the future
[00:31:52]Bryan Fields: roadmap for trees?
[00:31:54]John Yang: Uh, as I, as I said earlier, um, how do we further reduce, uh, the [00:32:00] labor, um, needs on, on the, our side on just, uh, the employee side, you know, give back to some of our roots on the workflow, right? Like, if we can impact the industry today, it’s, it’s reducing labor, reducing hours, reducing manual inputs, uh, having even cleaner data now that we.
[00:32:17] Really figured out, honed in now, had to simplify, had to empower every stakeholder. There’s still that element of cleanliness of the data, and that can only be impacted by automating some of the workflows, um, before it becomes a report, before it becomes a dashboard.
[00:32:31]Kellan Finney: Does the automation, do you think that that is gonna include like more R F I D chips and that kind of stuff in products in order to like decrease to automate the inventory and those kind of aspects
[00:32:39]John Yang: associated with it?
[00:32:40] It actually could, right? We’re talking to some prospects that’s still investing in the R I D. Um, the biggest issue with metric is they have A R F I D. No one uses it. Those tags. Yeah, the tags are just a barcode. It’s the nuance. Um, but even, uh, the opportunity to work with metric together to, to figure out how do we really reduce the, the needs to relabel is [00:33:00] something, is some, some, sometimes it’s going to eliminate like millions of dollars of pain within a given
[00:33:04]Bryan Fields: market.
[00:33:06] When you got started in the cannabis journey, what did you get? Right? And most importantly, what did you get? ,
[00:33:12]John Yang: we definitely got right on, on the workflow. Definitely just affecting the co consumer journey from start to finish. And then us also affecting, uh, the retailer, um, journey from start to finish, uh, across the different, uh, employee types.
[00:33:26] I mean, we definitely got that right. Um, what we got wrong is absolutely trying to build too mu too much trying to build up to see the sale and all that, and chasing what we thought is a shiny object, what we thought is needed to open up a vertical state like Arizona and elsewhere. Um, being the best of breed is still the right path, regardless of the TAM issues that exist in our space.
[00:33:47]Bryan Fields: Before we do predictions, we ask all of our guests, if you could sum up your experience in a main takeaway or lesson learned to pass onto the next generation, what would it be? ,
[00:33:56]John Yang: the next generation of us.[00:34:00]
[00:34:02] Um, yeah. So, so like, like just an advice for the next generation. Don’t go through the same pain points. Yeah. Life advice. Life advice. Gotcha. Um,
[00:34:17] having a, like, having an open mind and, and, and just, Discussing things with even your competitors, Earl very early on, and just figuring out how to be best of breed. Like I think that would’ve solved a lot of our pain points. It would’ve would’ve reduced a lot of unnecessary competitors and or, um, just companies in general cuz we’re wasting very valuable, uh, resources.
[00:34:41] Right, like access to capital is so difficult these days. It wasn’t that difficult three or four years ago, and that’s why you saw so many versions of us at some point. I think in a cannabis space there was like 30 or 40.0 vendors across all the markets, and we’re all chasing at that point, five or 6,000 doors.
[00:34:56] That’s just not enough to go around. Right. Um, just being [00:35:00] open-minded, having those discussions, even, uh, with your competitors directly, um, that just having that open mind, um, is definitely an advice I would give future versions of myself or.
[00:35:12]Bryan Fields: prediction time. John, sometimes negative events influence a company to take measures to improve in the future.
[00:35:18] What events could arise in the future that will draft drastically shift cannabis companies to adopt database insights aggressively
[00:35:26]John Yang: to adopt database insights? Aggressively what? What events would shifts? Um huh. Uh, I think like any drastic changes and, and I don’t think of it as database adoption, but I think drastic changes will still come in more of a regulatory sense.
[00:35:43] Like are you prepped for interstate commerce? Are you prepped for some, some more like payment solutions? Are you, are you prepared for a variety of different tax changes that’s upcoming? And they will all come and they will all surprise us, right? Um, so those are things that, uh, will influence some [00:36:00] form of adoption, uh, negative, positively or negatively.
[00:36:02] Um, so I, I think it’s less on the database side, but I think it’s just all around, uh, awareness.
[00:36:10]Kellan Finney: Uh, I would agree. I think, uh, I’m gonna favor kind of federal legalization though. I think that if that domino falls, I think you’re gonna see just. A group of more sophisticated individuals starting retail locations and people that are already operating in retail locations need to kind of either step up to the plate and increase their skillsets to compete with individuals that were, say, operating in other traditional retail spaces, that it’s kind of par for the course to utilize this kind of data, and they have that experie.
[00:36:43] Already implementing it. And so I think that that is gonna be a catalyst that’s either gonna drive people into it to, to be successful or that you’re just gonna see ’em kind of die off. Um, what do you
[00:36:54]Bryan Fields: think, Brian? I mean, I remember some of the stores, the first store you took me and two Kellen into Washington at, I [00:37:00] was thinking of that.
[00:37:00] So many product skews, , thousands. Clearly. Thinking of that, I, John, I walked into my first dispensary with Kellen in Washington five or six years ago. And in Seattle. Yeah, . There was thousands of products, like it was the most products I’ve ever seen in my entire life. And I was just like, almost. Shelf shocked, right?
[00:37:16] Like I couldn’t get past the flower side and Kell’s like, you don’t even want this. He’s like, you want the No, you lit. You were
[00:37:21]Kellan Finney: like, what brand? And I was like, I don’t know, 95% of
[00:37:23]Bryan Fields: these and I operate in Washington . It was madness. So in my mind, I think what it’ll take is a store like that who would lose like a batch or have some inventory issues that has a massive financial loss.
[00:37:34] To recognize that maybe if we get ourselves under control, we can make better financial decisions. We are not gonna get, you know, products that expire. We’re not gonna get, uh, you know, worse areas here. Plus we can double down exactly on the products that are selling faster because those are the ones you wanna invest your capital in.
[00:37:48] Because it turns out now it’s not growth at all costs. It’s figuring out what’s go working well and pushing towards that. US pay.
[00:37:55]John Yang: Think I might know the exact one you visited in Washington . They, they, they prided themselves on the [00:38:00] warmer model. He was wild.
[00:38:02]Bryan Fields: He was wild. I, I was almost frozen. Uh, . So John, for our listeners, they wanna get in touch, they wanna learn more about trees.
[00:38:09] Where can they find you?
[00:38:10]John Yang: Yeah, go to our side. Trees do I, otr, e e z.io. Um, new site, new face lift, but just more content. Uh, we have a big dedication this year to just having goods. Good content from our blogs, from, you know, within LinkedIn, which is within the social airwaves. Uh, but with content that has substance, right?
[00:38:28] That’s driven by data, that’s driven with some trend analysis and hopefully just be in good steward for, for this industry
[00:38:34]Bryan Fields: overall. Awesome. We’ll link it up on the show notes. Thank you for taking the time. This was fun.
[00:38:38]John Yang: Awesome. Thanks Brian. Thanks.
