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Ep. 413: Cy Scott, Headset

Cannabis Economy Podcast
Ep. 413: Cy Scott, Headset

Ep. 413: Cy Scott, Headset

Cy Scott covers the normalization and de-stigmatization of cannabis from a data and analytics perspective. Increasing entrepreneurial tendencies in the industry have built up business through partnerships across the country, focusing on improving how retail systems work and how they interact with customers. The cannabis industry has unique opportunities for testing new ideas and new systems to really optimize the business side of things.

Transcript:

Seth: Cy Scott joins us. Welcome to Cannabis Economy. I'm your host Seth Adler. Download episodes on Canneconomy.com. That's two n's and the word economy, or wherever you get your podcasts. For a word from Wana Brands. And then Cy Scott.

Seth: Wanna know with Wana Brands. Nancy will be talking about global expansion. And really other industries are starting to realize that cannabis is really an industry of innovation.

Nancy: Yes. Um, I think that's gonna be one of the major trends that we're gonna see over the next couple of years is ... somebody said to me recently that we're moving from gross science to grow science. Which I love. But I think that, we're getting a lot more sophisticated about the plant itself, how to extract more specifically, how to separate the various terpenes and cannabinoids and how to recombine them in different ways.

Nancy: Additionally, you're gonna see a lot of people working for different ways to increase bio availability, to make sure that more of the THC and other substances from the plant get into the body efficiently, so I think just in terms of the plant itself, we're seeing a ton of innovation. And then I think we're seeing a lot of innovation from ancillary businesses that support.

Cy: Yeah, people don't wanna be sold, "Sign up today." (Laughs)

Seth: Yeah. Yeah exactly, just get it right now. Cy Scott.

Cy: Get a headset.

Seth: Yeah so, but here's the thing. I mean that is your current deal, you know. You also started something else, I mean you're one of these guys, you're already have done like a big thing, now here's another big thing.

Cy: Yeah.

Seth: In this space.

Cy: Certainly.

Seth: It's all like, well you should hear about what I did before I got into cann ... you're, let's hear about what you did when you were already in cannabis.

Cy: Yeah. So, uh, in 2010, myself and my two partners, co-founders, Scott Vickers and Brian Wansolich started Leafly. You know, it was very much ... we were in California at the time ... very much an opportunity that we saw. We started going to dispensaries, we saw this number of strains on the dispensary shelves.

Seth: Yeah.

Cy: And not a lot of information about it. So, we were on ...

Seth: 'Cause you're just supposed to know.

Cy: You're supposed to know or you're supposed to ask the bud tender.

Seth: Sure.

Cy: You know, they would recommend, "People seem to like this." And you know, you'd try some different strains and some would make you pretty sleepy and some wouldn't, and we thought there needs to be a place where people can share this information and if we want to create something like that, we came from the consumer internet world, startup world, we wanted to create something that, you know, would resonate with us as an audience. Little more mainstream, and that became Leafly. And we really wanted to de-stigmatize and kind of normalize cannabis. We saw this trajectory of consumption and acceptance and we thought, you know, this is a normal thing, right?

Cy: New York Times.

Seth: New York Times. Yeah, that's right. We did the New York Times ad. That was with Privateer, so we ended up selling Leafly to Privateer a few years after we started Leafly, stuck around with those guys for a number of years. Great partners. Really helped us with things like the New York Times ad. That was right after they passed their medical bill. And it made a big splash. You know, New York Times ...

Cy: Meaning Canada.

Seth: What's that?

Cy: Meaning Canada. The medical bill. Is that what you're talking about?

Seth: No. The New York one. The New York Times when we did the ...

Cy: Oh, The New York Times ...

Seth: We did a full ...

Cy: So, okay.

Seth: Yeah. We did a full page ad in the New York Times. It was the first cannabis company advertisement in the New York Times and they actually had to run that all the way up the chain to get approval.

Cy: Right.

Seth: And the New York Times had just, at that point ...

Cy: Is that what the ad was was congratulations to New York?

Seth: No. Well, sort of. Sort of.

Cy: 'Cause I don't remember that. I just remember it being very, lot of white space. Right?

Seth: No. It was like a brownstone view, and there was like a jogger and she was thinking about a strain and there was a guy on his steps, and he was thinking about a different strain.

Cy: Uh huh.

Seth: And it's that, you know, had the mention of the medical bill that had passed. And the New York Times had just taken the editorial position that cannabis should be legalized.

Cy: Right.

Seth: For adult use and nationwide.

Cy: So, perfect timing.

Seth: Yeah. Exactly. Exactly. So, that's kind of how we got our start in the space.

Cy: Yeah. I've wonder what ad I saw that wasn't that ad.

Seth: Yeah.

Cy: Because I'm thinking about something else I guess.

Seth: Well, there's a lot of Leafly ads now.

Cy: Now there are. Yeah. My goodness.

Seth: Right.

Cy: So, okay. Let's talk about you as an entrepreneur.

Seth: Sure.

Cy: Um, before you know, okay hey, Privateer this makes sense. You had to conceive of that idea. Had you done this before, now I will ask you, had you done this before to any scale of note, or ... ?

Seth: With Leafly or ... ?

Cy: Before Leafly.

Seth: Oh, yeah. Not to the same scale. Not to the same level of success, but other startups.

Cy: No, no. It would be tough to do that, right?

Seth: Sure. Sure. So, yeah, before kind of jumping into the cannabis industry, I'd done a couple startups. Mostly, you know, tech, internet based, mobile games for a little while. You know, this is, like, pre-iPhone days, so old history ...

Cy: Oh wow.

Seth: So, yeah, ancient.

Cy: So you're ancient. Totally.

Seth: Yeah. Yeah. Post Snake, but pre-iPhone.

Cy: See, now I don't even know what you're talking about.

Seth: Nobody remembers those, like those old Nokias that came with Snake, that little game. See, you don't even remember.

Cy: Yeah no.

Seth: It's ancient, ancient.

Cy: I also ...

Seth: Might as well be Atari. (Laughs)

Cy: Exactly. I remember that.

Seth: (Laughs)

Cy: So, are you a computer scientist? What was the ...

Seth: Yeah. Yeah exactly. Yeah computer science.

Cy: So, you went for computer science.

Seth: I did. I did and so ...

Cy: Where?

Seth: At San Francisco State and then down Cal State Fullerton, so ...

Cy: Okay.

Seth: Went there. So, always building stuff. You know, coming out of school with a computer science major when I did, you know it was really great, you could really create things, right?

Cy: Sure.

Seth: It's kind of right on that wave of post internet one dado, and kind of moving into two dado, and so, it enabled us to do things like create Leafly.

Cy: Okay, so you see the opportunity. What year what is roughly?

Seth: When we started Leafly?

Cy: Yeah.

Seth: 2010.

Cy: So, that's still before anything.

Seth: It was pretty early. There certainly were dispensaries and ...

Cy: You could've been paid much more is my point. I ...

Seth: Sure.

Cy: At the time ...

Seth: Sure.

Cy: If you just went and got a job anywhere.

Seth: Oh, yeah, yeah.

Cy: As the computer scientist.

Seth: Yeah. Oh, certainly.

Cy: Why would you do that to yourself at that time?

Seth: I think it's just the entrepreneur story, you know. You see the opportunity and you wanna go for it.

Cy: Are your parents, either of your parents entrepreneurs?

Seth: Yeah. Yeah. Absolutely. They ...

Cy: So, that's ... it's bred.

Seth: Maybe.

Cy: Yeah.

Seth: Maybe. It's funny. A while ago on Twitter, there was a thread, some people were chiming in about entrepreneurs and kind of their, when they're younger, things they do that kind of indicate, like, okay, you're definitely gonna go down this path and I realized, I hadn't really thought about it, but I realized when I was a kid, I used to sell ... I'd take the school bus to school to you know, elementary and middle school and I would sell Jolly Ranchers, right? And I would just rake in all these quarters from Jolly Ranchers and I'd go and play Street Fighter or something. But it was a good hustle, you know, and all the other kids started doing it.

Cy: Right.

Seth: And then the school shut it down, right? 'Cause it's just all this commerce happening on the school

Cy: This racket.

Seth: Exactly. But it kind of is that, okay, well maybe I'm a little broken in that way right? And see an opportunity and go for it.

Cy: Now I, you know, don't mean to nitpick, "broken in that way," what do you mean?

Seth: Well, I mean, you know ... It's not the path most traveled I would say, right?

Cy: No. Yeah.

Seth: To go out and take those risks and go ...

Cy: Something's gotta be a little off.

Seth: Right.

Cy: Is what we're saying.

Seth: It just ...

Cy: Or is it that something's gotta be little on?

Seth: Yeah, maybe. Maybe both. You just have to you know be prepared to do it.

Cy: My point being, and now, I'll take this tangent, you as an entrepreneur are allowed to speak your mind in a different way than someone that works for a you know, Fortune 500 company and just does the thing. You know, you can just kind of say what you want, do what you want, and you know, 10am, you're either in the office or not, but you're maybe working, or probably are, it doesn't matter, whatever ...

Seth: Cy Scott joins us. Welcome to Cannabis Economy. I'm your host Seth Adler. Download episodes on Canneconomy.com. That's two n's and the word economy, or wherever you get your podcasts. For a word from Wana Brands. And then Cy Scott.

Seth: Wanna know with Wana Brands. Nancy will be talking about global expansion. And really other industries are starting to realize that cannabis is really an industry of innovation.

Nancy: Yes. Um, I think that's gonna be one of the major trends that we're gonna see over the next couple of years is ... somebody said to me recently that we're moving from gross science to grow science. Which I love. But I think that, we're getting a lot more sophisticated about the plant itself, how to extract more specifically, how to separate the various terpenes and cannabinoids and how to recombine them in different ways.

Nancy: Additionally, you're gonna see a lot of people working for different ways to increase bio availability, to make sure that more of the THC and other substances from the plant get into the body efficiently, so I think just in terms of the plant itself, we're seeing a ton of innovation. And then I think we're seeing a lot of innovation from ancillary businesses that support.

Cy: Yeah, people don't wanna be sold, "Sign up today." (Laughs)

Seth: Yeah. Yeah exactly, just get it right now. Cy Scott.

Cy: Get a headset.

Seth: Yeah so, but here's the thing. I mean that is your current deal, you know. You also started something else, I mean you're one of these guys, you're already have done like a big thing, now here's another big thing.

Cy: Yeah.

Seth: In this space.

Cy: Certainly.

Seth: It's all like, well you should hear about what I did before I got into cann ... you're, let's hear about what you did when you were already in cannabis.

Cy: Yeah. So, uh, in 2010, myself and my two partners, co-founders, Scott Vickers and Brian Wansolich started Leafly. You know, it was very much ... we were in California at the time ... very much an opportunity that we saw. We started going to dispensaries, we saw this number of strains on the dispensary shelves.

Seth: Yeah.

Cy: And not a lot of information about it. So, we were on ...

Seth: 'Cause you're just supposed to know.

Cy: You're supposed to know or you're supposed to ask the bud tender.

Seth: Sure.

Cy: You know, they would recommend, "People seem to like this." And you know, you'd try some different strains and some would make you pretty sleepy and some wouldn't, and we thought there needs to be a place where people can share this information and if we want to create something like that, we came from the consumer internet world, startup world, we wanted to create something that, you know, would resonate with us as an audience. Little more mainstream, and that became Leafly. And we really wanted to de-stigmatize and kind of normalize cannabis. We saw this trajectory of consumption and acceptance and we thought, you know, this is a normal thing, right?

Cy: New York Times.

Seth: New York Times. Yeah, that's right. We did the New York Times ad. That was with Privateer, so we ended up selling Leafly to Privateer a few years after we started Leafly, stuck around with those guys for a number of years. Great partners. Really helped us with things like the New York Times ad. That was right after they passed their medical bill. And it made a big splash. You know, New York Times ...

Cy: Meaning Canada.

Seth: What's that?

Cy: Meaning Canada. The medical bill. Is that what you're talking about?

Seth: No. The New York one. The New York Times when we did the ...

Cy: Oh, The New York Times ...

Seth: We did a full ...

Cy: So, okay.

Seth: Yeah. We did a full page ad in the New York Times. It was the first cannabis company advertisement in the New York Times and they actually had to run that all the way up the chain to get approval.

Cy: Right.

Seth: And the New York Times had just, at that point ...

Cy: Is that what the ad was was congratulations to New York?

Seth: No. Well, sort of. Sort of.

Cy: 'Cause I don't remember that. I just remember it being very, lot of white space. Right?

Seth: No. It was like a brownstone view, and there was like a jogger and she was thinking about a strain and there was a guy on his steps, and he was thinking about a different strain.

Cy: Uh huh.

Seth: And it's that, you know, had the mention of the medical bill that had passed. And the New York Times had just taken the editorial position that cannabis should be legalized.

Cy: Right.

Seth: For adult use and nationwide.

Cy: So, perfect timing.

Seth: Yeah. Exactly. Exactly. So, that's kind of how we got our start in the space.

Cy: Yeah. I've wonder what ad I saw that wasn't that ad.

Seth: Yeah.

Cy: Because I'm thinking about something else I guess.

Seth: Well, there's a lot of Leafly ads now.

Cy: Now there are. Yeah. My goodness.

Seth: Right.

Cy: So, okay. Let's talk about you as an entrepreneur.

Seth: Sure.

Cy: Um, before you know, okay hey, Privateer this makes sense. You had to conceive of that idea. Had you done this before, now I will ask you, had you done this before to any scale of note, or ... ?

Seth: With Leafly or ... ?

Cy: Before Leafly.

Seth: Oh, yeah. Not to the same scale. Not to the same level of success, but other startups.

Cy: No, no. It would be tough to do that, right?

Seth: Sure. Sure. So, yeah, before kind of jumping into the cannabis industry, I'd done a couple startups. Mostly, you know, tech, internet based, mobile games for a little while. You know, this is, like, pre-iPhone days, so old history ...

Cy: Oh wow.

Seth: So, yeah, ancient.

Cy: So you're ancient. Totally.

Seth: Yeah. Yeah. Post Snake, but pre-iPhone.

Cy: See, now I don't even know what you're talking about.

Seth: Nobody remembers those, like those old Nokias that came with Snake, that little game. See, you don't even remember.

Cy: Yeah no.

Seth: It's ancient, ancient.

Cy: I also ...

Seth: Might as well be Atari. (Laughs)

Cy: Exactly. I remember that.

Seth: (Laughs)

Cy: So, are you a computer scientist? What was the ...

Seth: Yeah. Yeah exactly. Yeah computer science.

Cy: So, you went for computer science.

Seth: I did. I did and so ...

Cy: Where?

Seth: At San Francisco State and then down Cal State Fullerton, so ...

Cy: Okay.

Seth: Went there. So, always building stuff. You know, coming out of school with a computer science major when I did, you know it was really great, you could really create things, right?

Cy: Sure.

Seth: It's kind of right on that wave of post internet one dado, and kind of moving into two dado, and so, it enabled us to do things like create Leafly.

Cy: Okay, so you see the opportunity. What year what is roughly?

Seth: When we started Leafly?

Cy: Yeah.

Seth: 2010.

Cy: So, that's still before anything.

Seth: It was pretty early. There certainly were dispensaries and ...

Cy: You could've been paid much more is my point. I ...

Seth: Sure.

Cy: At the time ...

Seth: Sure.

Cy: If you just went and got a job anywhere.

Seth: Oh, yeah, yeah.

Cy: As the computer scientist.

Seth: Yeah. Oh, certainly.

Cy: Why would you do that to yourself at that time?

Seth: I think it's just the entrepreneur story, you know. You see the opportunity and you wanna go for it.

Cy: Are your parents, either of your parents entrepreneurs?

Seth: Yeah. Yeah. Absolutely. They ...

Cy: So, that's ... it's bred.

Seth: Maybe.

Cy: Yeah.

Seth: Maybe. It's funny. A while ago on Twitter, there was a thread, some people were chiming in about entrepreneurs and kind of their, when they're younger, things they do that kind of indicate, like, okay, you're definitely gonna go down this path and I realized, I hadn't really thought about it, but I realized when I was a kid, I used to sell ... I'd take the school bus to school to you know, elementary and middle school and I would sell Jolly Ranchers, right? And I would just rake in all these quarters from Jolly Ranchers and I'd go and play Street Fighter or something. But it was a good hustle, you know, and all the other kids started doing it.

Cy: Right.

Seth: And then the school shut it down, right? 'Cause it's just all this commerce happening on the school

Cy: This racket.

Seth: Exactly. But it kind of is that, okay, well maybe I'm a little broken in that way right? And see an opportunity and go for it.

Cy: Now I, you know, don't mean to nitpick, "broken in that way," what do you mean?

Seth: Well, I mean, you know ... It's not the path most traveled I would say, right?

Cy: No. Yeah.

Seth: To go out and take those risks and go ...

Cy: Something's gotta be a little off.

Seth: Right.

Cy: Is what we're saying.

Seth: It just ...

Cy: Or is it that something's gotta be little on?

Seth: Yeah, maybe. Maybe both. You just have to you know be prepared to do it.

Cy: My point being, and now, I'll take this tangent, you as an entrepreneur are allowed to speak your mind in a different way than someone that works for a you know, Fortune 500 company and just does the thing. You know, you can just kind of say what you want, do what you want, and you know, 10am, you're either in the office or not, but you're maybe working, or probably are, it doesn't matter, whatever ...

Seth: (Laughs) Sort of, sort of. Still a lot of work.

Cy: No, no. But of course you're gonna work your tail off ... my point being, being an entrepreneur, there are freedoms to that ...

Seth: Oh, absolutely. Absolutely and that is nice that we all, with Headset and other companies I've started, you know, you raise money ...

Cy: Yeah.

Seth: And you have capital.

Cy: Yeah.

Seth: And you're answering to, you know, investors and groups like that, so it's not total freedom, I just do what I want and you know, maybe I show up to work or not. Like, you've got a job to do and you know, if you're gonna be investing time, you're really working hard. Yeah.

Cy: Well that ... so, to finished kind of, my concept here, entrepreneurs will work 80 hours a week so that they don't have to work 40 hours a week.

Seth: Exactly. Exactly. And that's a great point and then it's kinda like, you do that 80 hours a week and you get to some successful exit and you're like, "Let's do it again!" You know ... ?

Cy: Yeah, so what is that with you people? What is that kind of serial entrepreneurialship?

Seth: Right.

Cy: Like, how do you have that much energy?

Seth: Yeah. Yeah. It's ... everyone of 'em, it's kind of like I would say, "Well this will be the last one, right?" 'Cause it's exhausting. Sometimes it's hard to have that much energy. But I think there's something really rewarding about doing it and seeing some success and building something and you know, taking something like Leafly from three of us with the funny idea to have a website about cannabis strains and dispensaries into something that is pretty well recognized, especially in this industry with ....

Cy: In the industry, certainly, out of the industry too.

Seth: Exactly. And then you know, building up and team and people have careers, we're at this convention here and Leafly's got an amazing booth and there's a number of Leafly employees that are now working there that I don't know personally and that's really neat to see, you know. So there's, I think, I think a lot of that. Obviously there's the financial success as well. There's a lot of risk, but a lot of reward if you can do something successful.

Cy: So, the Privateer thing would be some of that financial reward. You mentioned the kind of added value that they just brought that you inherently didn't have. That's my assumption. But you did credit them with the thinking behind, you know, that helped get the New York Times thing going. When that opportunity first kind of came to you or you came to it, how did that occur and was there doubt, I wonder?

Seth: Yeah. That was, you know, kind of definitely coordinated with the Privateer group.

Cy: How did that begin I guess is my question.

Seth: Privateer...

Cy: See, this is the point here, the phone's ringing, he's gotta check it, right?

Seth: Yeah. Should've muted it. Yeah, so Privateer had the similar vision that cannabis was gonna be mainstream, and so, when New York legalized medical, that was a big deal ...

Cy: Yeah.

Seth: You know, even though it was relatively slow roll out in the end, it was a really big deal because up until then it had been this west coast thing, or west coast and Denver.

Cy: Without question.

Seth: Colorado, right?

Cy: Without question.

Seth: And so to see some growth on the east coast was a big deal, so we really wanted to celebrate that and really raise awareness of Leafly and what we were doing.

Cy: Oh, I'm not saying about the New York Times thing.

Seth: Oh.

Cy: I'm talking about Leafly and Privateer. How did you guys come together?

Seth: Oh, how did those come together? Yeah.

Cy: Yeah.

Seth: Okay. Sure. So, we met Christian Groh one of the partners, and he came to us and said, "I've got a friend of mine," we're gonna start ...

Cy: Probably named Brendan.

Seth: Exactly. Brendan Kennedy. They were working together at a certain point ...

Cy: Mm-hmm (affirmative).

Seth: At Silicon Valley Bank ...

Cy: Right.

Seth: And they saw the opportunity in the market and they had similar vision and they wanted to go out and do something so they created Privateer Holdings, Private Equity Group to, you know, invest and build brands in the space that can support that, so when they were just starting out, they didn't really have a lot. They had a great vision. And so, when we came together, it made a lot of sense.

Cy: Timing.

Seth: Yeah, exactly, and timing is everything as they say. You know, really we couldn't raise capital at that point. Back in 2010, 2011, you know, we would talk to Venture Capital ...

Cy: Yeah.

Seth: Financial investors, and you know, people loved it, and they loved the vision, we had great traction, we had great metrics for ...

Cy: But you're gonna get arrested 'cause it's federally illegal, so ... get out of my office, please!

Cy: Right. Exactly.

Seth: Take a cup.

Cy: Exactly. And it was very much a ... maybe it's just a California thing, we don't really know ...

Seth: Right.

Cy: And then in 2010 California actually, we tried to legalize and it failed.

Seth: Yup.

Cy: And we had thought, oh, you know, maybe we were wrong, right? Maybe this isn't gonna be this normalized thing and then you know, 2012, obviously with Washington and Colorado, really changed the game. And so, they came around and so there was an opportunity for us to work together. We didn't have to worry about the financial side of the business. We could really focus on Leafly itself and building that up. And so, it was great. And we ended up moving up from Southern California to the Seattle area where they were based, in a big way to be closer to them, but also to see the Washington state market go from zero to one. Because there really was a reset.

Seth: Yeah.

Cy: So, we're still there now with Headset.

Seth: You know and Washington state is still at one, they have not progressed. That's my point, not yours.

Cy: Yeah.

Seth: That's a dig. It's a dig on purpose, I think. You know, it's out of love.

Cy: Well, you have to get out there. The stores, the products' performance, it's unreal.

Seth: So, we're back. We are doing better.

Cy: Oh, yeah. It's fantastic out there. Yeah, yeah.

Seth: Okay. It took a long time for Washington state.

Cy: Sure, and the medical, you know, doesn't really exist at this point.

Seth: That's my point though.

Cy: Medical yeah. But even Colorado, when you look at the numbers, the medical, it's just on a decline.

Seth: But that's a different thing.

Cy: Right.

Seth: You know?

Cy: Sure.

Seth: And I think that that's something that we should keep talking about.

Cy: Sure.

Seth: But not in this conversation because we have too many things to get to.

Cy: Right.

Seth: So, but basically, it was like-minded people, the timing was perfect. I've spoken with Brendan Kennedy on this program, couple different times, a couple different ways. Never spoken to Peter Thiel, have you?

Cy: No. No I have not. And I think ...

Seth: 'Cause he's a backer of Privateer.

Cy: Right. Founders Fund came in. I think that that was Jeffrey Lewis at the time who was one of the founder's fun partners.

Seth: Yeah.

Cy: I'm not sure if he's with Founders Fund anymore or a lot of the details, but I know he spearheaded that. Brendan did a lot of press with them when they announced it.

Seth: Yeah. Yeah.

Cy: But that was great, you know, it's just another one of those moments where you start to see the industry normalize ...

Seth: That's it.

Cy: ... more and more. That was a number of years ago at this point. Maybe four or five years ago.

Seth: Oh my God, it's decades ago.

Cy: Yeah. Yeah.

Seth: Right? You know.

Cy: And it's fantastic and you know, they since that point, you know, they've had a lot of success. Not only with Leafly, but with things like Tilray, you know, Tilray commanding a lot of ...

Seth: You might have noticed on a major exchange near you.

Cy: Exactly. Exactly. So, you know, they're doing great job.

Seth: So, so you're sitting there in Washington, and you're at your desk at Leafly, working your tail off, and you're like, "Wait a second." When did you start to say to yourself, "Okay let me try again? Let me do something different." What was the incarnation of that?

Cy: Sure. Sure. So, you know, it's kind of this serial entrepreneur story. You know, you have a successful exit, you hang out for some time with the company that acquires you. And then you, you know, go on and do something else, and it really was kind of these ... we saw this trajectory happening. We saw the product manufacturers, the different brands starting to ask around on data, you know, like, where can I find data on the market?

Cy: And you know, at Leafly, they thought maybe we would have data, and Leafly definitely does have data. Things like strain information and what strains people are looking at, what dispensaries people are visiting, but didn't really have good transactional based data. So, we thought there's gotta be something here, you know, looking at cannabis as this emerging market, very similar to you know, CPG or alcohol, they have market intelligence services, companies like Nielsen, companies like IRI, so we though there needs to be something like this for cannabis, so that was the real impetus to go out and start Headset.

Seth: Mm-hmm (affirmative). So, lets just get into the ... let me press the button here. Okay, here it is. Just come on in, we're in the elevator.

Cy: Ahh, very good.

Seth: Go ahead.

Cy: So, we're a data and analytics company for the cannabis industry. Really focused on retail data and driving informed insights from that, so the way we do things is we work with the retailers, we connect with their systems, the point of sales specifically, so we support about 16 point of sales at the moment, and we give the retailers business intelligence, so that's insight into their own data, so what is their inventory carry look like or do they have any sales trends that are happening, how are their bud tender staffs performing.

Cy: And it's a great service for the retailers, right? They can really better understand their operations, they can get quick answers to the things that they need to know, and just really streamline their business. And what we do is look in aggregate across all these transactions and then we normalize the data, or we code the data which basically means if two retailers are selling the same product, there's no UPC, so they have to type it in, so there might be some misspellings, or they might enter the processor name, instead of the vendor name, or what have you.

Seth: Mm-hmm (affirmative).

Cy: So, we normalize all the data, down to the skew level, so the product level, and then from there, we know the brand and we know the category, the subcategory and so on and we can really paint a picture of what's going on in the industry.

Seth: So, great and thanks. Really appreciate that because you know, organization helps.

Cy: Yes.

Seth: No UPC codes, huh?

Cy: I mean, not yet, there's bar codes certainly, a lot of it is like traceability.

Seth: No, of course, there's the metric and every ... we know from seed to sale every single thing.

Cy: Right. Exactly. Right.

Seth: What is the situation as far as industry standardization of ...

Cy: Sure.

Seth: ... skew levels to identification?

Cy: Right. Right. I mean, it's still got to get there, and markets like Canada, you are seeing, you know, barcodes ...

Seth: Sure, well because you know ...

Cy: ... which is ...

Seth: ... federal legalization, that's ... it's easier that way.

Cy: Exactly. Exactly.

Seth: (Laughs)

Cy: And so, you know, even with UPC it can still be tough to normalize, depending, so I've heard from groups that do this in the CPG or the consumer packaged goods world.

Seth: Yup.

Cy: Especially depending on how you get the data, but one of the cool things, we've built this system to do this all in real time. You know, when we think about the cannabis industry and one of the things that's so exciting about it is that we're building a new industry for a product that's always had demand, but just hasn't really had an industry built up around it.

Seth: Hmm.

Cy: You know where something like alcohol, they've been doing the things the way they've been doing them for 100 years at this point, so it's really hard to introduce new ideas or new ways of doing things that might be better because, you know, they've been doing it a certain way this whole time and it's just kind of worked for them.

Seth: "We've always done it this way," is never a good answer.

Cy: Never a good answer, right? And so in cannabis, it gives us a chance to do it entirely differently, so what we decided to do, when we went out to start Headset, we kind of looked around and we did a lot of research into companies like Nielsen and IRI and how are they getting the data. And you know, they're working with some big box retailers and they spend a lot of money, you know, getting Walmart to send them data in a flat file like as CSV or an Excel file of all their product sales.

Seth: Oh yeah?

Cy: Which is great, you know, and then they clean that data up and normalize it. They take their other data from other retails that they get and map it like what we do.

Seth: Mm-hmm (affirmative)

Cy: But the big difference with us, is by connecting directly to the point of sale, while we're having this conversation, we're here in Las Vegas, there's stores all around us connected to Headset, you know, their transacting all that is getting sent through the system, aggregated, anonymized and normalized and then we report on it, so, if you wanted to know the best selling beverage in the Nevada market yesterday, you can look that up. Which is really great, so when you think about, even when you're looking at month over month trends, we're in the middle of November here, it's gonna be December soon, December 1st you can go in and see, you know, how did November play out. So, you can see right away.

Seth: Mm-hmm (affirmative). Mm-hmm (affirmative).

Cy: Companies like Nielsen, what they'll do ... is it usually takes six to eight weeks depending ...

Seth: Mm-hmm (affirmative)

Cy: ... to turn around that data, and that's just the way it's always been done.

Seth: Because they don't have point of sale.

Cy: They don't have point of sale and they don't have systems to do the normalization like we do.

Seth: Well, how is that possible if they have all the money in the world compared to you?

Cy: I think it comes down to you know, just they've done things a certain way and it's really hard to move to something that's ...

Seth: That old chestnut.

Cy: And you know, to be fair, they do track, you know, very massive markets, like CPG, I mean we are looking at cannabis, which is a good sized market, certainly, but ...

Seth: Yeah. Sure. Nothing ...

Cy: Nothing ...

Seth: Close.

Cy: Nothing compared, right. When you're doing global CPG sales, you know, we're tracking the Nevada market, right? Which, you know, good market, but only so big and it's also, you know, one vertical. We don't have to worry about cannabis price. And it makes it a little bit simpler to do things like that, but also we've just invested in the technology to be able to do it. Now, they may have stuff like that, you know, just kind of some research that's available online, when we kind of saw, okay, this is how they do it.

Seth: Mm-hmm (affirmative).

Cy: But it's really great. It's a good differentiator for us in the market. It really kind of gives people access to the numbers when they need them, and it does matter in the space, because things change fast, right? Like in California ...

Seth: I've noticed.

Cy: Yeah. Exactly. In California, you know, 2018, they legalized and they could sell products, so the first six months you could sell medical grade products, there was the same stuff they were selling. And then come July 1st ...

Seth: July 1st.

Cy: The new regs went into place ...

Seth: There we go.

Cy: And then you could only sell products that you know, met potency restrictions, packaging requirements, things like that. And so if you're making decisions, come, you know, August on June data, you're gonna be making the wrong decisions. 'Cause you're gonna see crazy trends that do not exist 'cause those products don't exits.

Seth: Right.

Cy: So, you need to be making, you know, those decisions on the July numbers or what have you, so it really is a pretty powerful tool for operators in the industry that want to stay ahead of the competitive landscape ...

Seth: Oh my God. Wait. Hold on. We're out of the elevator.

Cy: (Laughs)

Seth: But thank you so much. No, no. That does obviously clear things up.

Cy: Sure.

Seth: Right?

Cy: Now you're busy enough with Headset, right? You're busy.

Seth: A little busy.

Cy: Yeah.

Seth: And you're, it's not ready, in other words, you haven't exited.

Cy: No. No. We have not.

Seth: So, you're still busy for a long time.

Cy: Yes.

Seth: Or at least a little bit.

Cy: Oh yeah.

Seth: What is missing as far as technology in cannabis?

Cy: Oh, boy.

Seth: Because you can't work on it, right? So.

Cy: Right.

Seth: What should, what do we need here?

Cy: Yeah, you know, honestly I don't have a good answer. I get asked that quite a bit and I'm so just focused on Headset. I'm not thinking about, you know ... those [crosstalk 00:22:13]

Seth: Then let's go bigger. As far as the industry is concerned, what is needed? Because we've got a nice trajectory here, going, right?

Cy: Sure.

Seth: It's not 2010.

Cy: Sure.

Seth: This is a whole new world.

Cy: Whole new world.

Seth: Right? So, but what do we need to be paying attention to? What do we need to do more of? What do we need to do less of? What's a really bad thing that people keep doing?

Cy: (Laughs)

Seth: You know, stuff like that.

Cy: Yeah, you know, I'm not sure that there's some missing service out there. I mean we're at this ...

Seth: I'm not saying service, now.

Cy: Oh, I gotcha.

Seth: Now, I'm saying just industry.

Cy: Industry wise.

Seth: How the industry thinks, what the industry is doing, the, you know ...

Cy: Right.

Seth: We have always done it this way is never ... (laughs) ... if only that could be answer in cannabis.

Cy: Certainly.

Seth: You know?

Cy: Yeah, I think that it's really, really kind of gonna come down to changes at the federal level in the US, I think it was what we really need to see ...

Seth: Sure.

Cy: And what we really need to do better. You know, spending a lot of time in Canada, we have a Canada office now in Toronto, you know, Canada is a very exciting market for a number of reasons. You know, particularly having it legal nationwide, really opens up other opportunity for more traditional organizations to get into the space and get involved in the space and its really ... it feels like a very grown up industry in a lot of ways.

Seth: Certainly.

Cy: Not that it's grown up in the US, but I think given ...

Seth: No, it's boring, I think is what you mean.

Cy: Yeah. (Laughs)

Seth: Like you just go into office buildings and that's the cannabis industry.

Cy: That's the cannabis industry. That's right. That's right.

Seth: Yeah.

Cy: And but that's what we all thought it was gonna go to. You want it to be boring, right? You want it to get there?

Seth: Yeah.

Cy: And so, I think you know, seeing that is exciting and then, you know from Canada, some international expansion into places like Europe or South America on the medical side.

Seth: Sure.

Cy: So you know, that's really exciting and you know, I think it would be great to see that in the US, and I think that you know there are some organizations that are pushing at the federal level that are lobbying, but I think that we could do a lot better.

Seth: Sure.

Cy: And be a lot more organized around that.

Seth: I think that's a fair statement.

Cy: Yeah. And you know, I know back in 2010 with Leafly there was no money really around, or no way to kind of get people organized and involved at that capacity. And there've been a number of industry associations that have, you know have came up and tried, and it's a tough problem certainly, and you know, get anything through politics, but I think that with our neighbor to the north, what we're seeing there, with the number of states that have legalized, whether medical or adult use, it's just, it's pretty wacky that we haven't seen changes at the federal level, and I know, you know, things like the States Act will really help.

Seth: Yup.

Cy: But I think once that does and it's inevitable it will, it's just kind of when. Then I think you know, we can I don't know, accelerate everything more, more capital will come into the space, it will give operators more opportunity to kind of scale up, continue to normalize, you know, maybe we can do a little marketing as a consumer brand, you know, where ...

Seth: Would that be interesting?

Cy: ... people can. Yeah. Exactly. People don't think of it as, oh it's such a scary thing, we can't even put and ad out there, you know?

Cy: So, you know, I think that's probably the biggest issue right now, still. And we're getting there, right. It's this bottom up approach where each market that comes on, it does better and better and is able to stand up on its own, it's gonna really help.

Seth: And this election day with both sessions leaving, democrats coming into the, you know, house and the realization that someone must own the cannabis, you know, issue.

Cy: Right.

Seth: On the presidential election stage.

Cy: Sure.

Seth: Or no one.

Cy: Right.

Seth: Is ... has accelerated that remarkably.

Cy: Right and then you know, just interest from both parties, right ...

Seth: Mm-hmm (affirmative).

Cy: Democratic, republican, the acceptance rates are through the roof. I saw a recent Gallup poll or ...

Seth: 66.

Cy: Yeah. Amazing, right? Amazing. So, it's just a matter of time, and hopefully we get there soon, maybe we'll be sitting down this time next year and have some good news.

Seth: Ahh. From your mouth, Cy.

Cy: That's pretty ambitious right?

Seth: From your mouth. It is ...

Cy: Ten years from now maybe.

Seth: Well, no. I mean it's two though is maybe what it is.

Cy: Yeah, you know, everything in cannabis, time is compressed, right?

Seth: Cannabis years are god years.

Cy: Yeah, it's crazy and they seem to accelerate more and more and more, 2010 to 2011, a lot happened for us and now ...

Seth: Now, but this is crazy.

Cy: This is crazy.

Seth: And it ... 2019 is the year of international cannabis, you kind of said that.

Cy: Right.

Seth: Final three questions: I'll tell you what they are, I'll ask you them in order.

Cy: Okay.

Seth: What's most surprised you in cannabis. What's most surprised you in life? And on the soundtrack of your life, one track, one song that's gotta be on there. First things first.

Cy: Oh, man. That last one's hard.

Seth: Of course it is, it's 'cause you're a music person.

Cy: You gotta give me a heads up on these things.

Seth: Well, you know, it's in every episode, but whatever ...

Cy: Yeah. That's fair.

Seth: (Laughs) So, Cy, not a listener.

Cy: (Laughs) Busted.

Seth: Yeah, a friend, but not a listener, that's okay.

Cy: Friend for years.

Seth: Yeah, exactly.

Cy: What's most surprised you in cannabis, since 2010 to now, what's most surprising in cannabis?

Seth: I think it's just where we're at. You know, when we started Leafly, we thought, this is gonna be a mainstream thing, this is gonna be a normalized product like anything else, I don't think we would have seen it so fast.

Cy: Yup.

Seth: I think that was really surprising.

Cy: Yeah.

Seth: I think Canada legalizing was really surprising.

Cy: I ... so that, it was surprising and then, just that kind of Oh, it's a G7 nation and it really did happen.

Seth: Right.

Cy: You know, like when they were deciding it, it was, oh wow, I can't believe it. But then it just happened and it was almost a non-event and like, this is reality and no one seems to mind.

Seth: Right.

Cy: What's most surprised you in life?

Seth: I don't know, that I'm doing this I guess.

Cy: (Laughs)

Seth: You know, I don't think ... a lot of people don't know where they're gonna end up or what kind of vertical they're gonna be operating in or what they're gonna be doing.

Cy: Yeah.

Seth: I don't think that you know, I was destined for cannabis. I think it was always an interest, just like I have many interests.

Cy: Yeah.

Seth: But yeah, to be so involved in it. And I think you know, after Leafly, or we were thinking about new opportunities it was really of a matter of we want to stay in this industry. There's a lot of room here, a lot of room to grow into.

Cy: Yup.

Seth: And so, you know, being so entrenched at this point, like 8 years we've known each other for a number of years.

Cy: Yeah.

Seth: It's kind of cool. It's something that I'll look back on in my old age as like, I made lot of friends, I met a lot of people and we went through this experience together, so I don't think ... I think it's probably most surprising that I'm here doing this.

Cy: Yeah.

Seth: That's also a very well said, so I appreciate you taking the time to ...

Cy: Oh, yeah. Thanks. 'Cause I'm not gonna have a good answer for this last one, so at least I ...

Seth: We're gonna figure this out ...

Cy: Oh my God.

Seth: Just let ... Here, I'll help by taking your mind off of it for a second. What are the chances you're related to George C. Scott?

Cy: Yeah. I think zero.

Seth: Okay.

Cy: Scott is very popular last name.

Seth: I hadn't noticed.

Cy: Yeah.

Seth: It's also a pretty good middle name, F. Scott Fitzgerald, of course.

Cy: Yeah, yeah. And if you ask my co-founder, it's a good first name, although, you know, I don't know. I prefer last name.

Seth: Yeah, it's better as a last name.

Cy: Oh, easily.

Seth: It's less expected

Cy: Exactly.

Seth: You know, although popular, less expected.

Cy: Exactly.

Seth: So, on the soundtrack of your life, one track, one song that's gotta be on there. Don't get caught up with one.

Cy: It's impossible.

Seth: So, let's just kind of go to a .. okay so here it is, right, you get home ...

Cy: Mm-hmm (affirmative).

Seth: And from the week, right? And so maybe you're going to the office on Saturday, but you probably are, you've gotta work on Saturday, whatever it is ...

Cy: Sure.

Seth: But that Friday night kind of, "Aww, this is nice. It's Friday night."

Cy: Yeah.

Seth: So, the mindset, right for a Friday night, would it have you, maybe you're gonna cook some dinner? I don't know what you do. Right?

Cy: (Laughs)

Seth: Maybe you're gonna go out to dinner. But there's like a minute here ...

Cy: Uh huh.

Seth: ... where you're maybe in a car, or in an Uber ...

Cy: Right.

Seth: Or in I don't know how you get around. Maybe you're an [inaudible 00:29:53] driver.

Cy: It's private jets.

Seth: Private jets, of course, yeah. 'Cause there's so much money.

Cy: That's right.

Seth: So, you know, like in that ...

Cy: Um.

Seth: ... in that type of mindset, what might you put on?

Cy: Yeah. You know, I don't know. I like so much variety of music, it's really, really hard for me to say or pick one. I'm not a good person that people say, tell me your favorite movie, you know, I just ...

Seth: Yeah, okay.

Cy: There's too much good stuff out there.

Seth: That's fine.

Cy: I think it depends on the mood.

Seth: So, I'm giving you a mood is my point.

Cy: Yeah.

Seth: Give me a different mood then.

Cy: Well, you know, like when I'm working ...

Seth: Okay.

Cy: You know, I like stuff like John Hopkins, kind of electronic music, kind of lower key.

Seth: Okay.

Cy: That's great stuff for like, the office.

Seth: Interesting.

Cy: Yeah, yeah. Certainly you know, it allows you to kind of focus on what you're doing, which these days just seems to be writing a lot of email. Boy, I don't, I don't know, you know, like ...

Seth: No, that's good. That's a good answer.

Cy: Yeah.

Seth: That's not something I know. I'm gonna check it out.

Cy: Okay. John Hopkins. Groups like Four Tet are great. So, kind of low key.

Seth: Yeah. There we go. Four Tet?

Cy: Yes.

Seth: Not Vortex.

Cy: No, no, not Vortex.

Seth: Four Tet.

Cy: Four Tet.

Seth: I feel like they could've done better there.

Cy: They're pretty well known. You'll dig it, but it's ... maybe that's. It's hard to pick a song. But maybe an album. Those are good albums.

Seth: That's fine. That's all I need is information. And then we can go from there.

Cy: Okay.

Seth: You know what I'm saying?

Cy: Well, check it out. Yeah.

Seth: Cy Scott. It's finally happened. We did it with microphones.

Cy: We did it. We did it. On the last day of the conference.

Seth: That's it.

Cy: You made it.

Seth: Thank you so much for your time. We'll check in with you down the line.

Cy: Sounds good.

Seth: And there you have Cy Scott, very much appreciate his time. Very much appreciate your time. Stay tuned.

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Cannabis Economy is a real-time history of legal cannabis. We chronicle how personal and industry histories have combined to provide our current reality.