Ep.17 - The founder Disrupting How Millennials & Gen Z Socialize Without Alcohol

0:04Yesterday I'm talking with Jake Bullock the Co-founder and CEO of CANN the the THC infused social beverage company revolutionizing the way people socialize. Can offers a range of microdose beverages that serve as alcohol alternatives made with simple all-natural delicious tasting ingredients. Prior to launching Can, Jake was an associate at Bain Capital evaluating potential investment opportunities with a specific focus in the consumer space. um hello jake it's great to have you as a guest um i actually remember during covid going to dinner and someone being incredibly proud that they literally carried in their luggage from california some can and i was like oh my gosh this really is pretty groundbreaking an amazing alternative to alcohol.

1:05For people who don't know the brand, can you give us the elevator pitch? Yes. So first off, thank you for having me. I'm excited to be here. And we really started Can as an alcohol alternative, even though it has THC and CBD in it and it comes sort of from the broader cannabis industry. The goal was not to get folks high. The goal was to get them to drink a little bit less booze. And we designed it largely for people like me who were getting into the 30s and realizing they couldn't drink alcohol, anything like I could in my 20s. And the sort of concept of a two day debilitating hangover became viscerally real.

1:45And we need an alternative, you know, for a lot of people, that alternative is, well, you slow down and you move to the suburbs, you have a family and you stop drinking as much. But that wasn't really what my journey was going to be. I wanted to still be social. I wasn't going to give up on that part yet, at least. And so it kind of created this dilemma of, well, how do I socialize now in this new world? Or my body's telling me alcohol is not the only option or it can't be the entire option. And I had grown up in Colorado and I'd followed the legal cannabis industry there. And, you know, it always confused me a little bit because you had these gummy candies.

2:16And if you ate the head of the gummy bear, you would be fine. But if you ate the whole thing, you know, you would have a miserable experience. It's like this. This probably is not where we're headed here. if we're going to be successful at normalizing cannabis and using these new ingredients coming into the fold in social ways. And so for me, it was obvious it was beverage. And we decided, well, can we take THC and CBD and put it in a drink? You make it kind of similar to alcohol in terms of its strength and potency. And if it tastes delicious and feels like a special treat, can we actually develop something that really is a one-to-one substitute for an alcoholic beverage?

2:51and we did just that yeah amazing I mean it's interesting we do a ton of work with a very very large alcohol global company and I do remember you know I do strategy and we did a big project where we were thinking of things that could disrupt the business multiple brands and you You know, there was this provocation that, you know, this is so long ago, like pre-can, pre a lot of the sort of cannabis market growth. But where we did say that if, you know, if things like cannabis and other nootropics start becoming mainstream, like what if you can get it from Walmart? And that was a little bit far.

3:39But, you know, alcohol, the calories, the hangover. I mean, when I saw it for the first time, I really was like, shit, I wish I'd done that. So at the time you were at Bain or, yeah, like talk to me about how did it go from, wow, that's a smart opportunity to I'm actually going to do this. I'm going to make the leap. I'm going to leave my big job with benefits and become a founder. Yeah, yeah. Yeah, so I'll try to set the stage to some degree. I think the initial environment in which I started thinking about this was at Bank Apple doing private equity. And I had seen these companies, you know, at sort of their fullest expression, right?

4:25These are real businesses that have demonstrated growth and are of a certain size. And it was interesting because we were making decisions whether to invest in them or partner with, in many cases, the founders of those businesses. And the question was, is this brand going to grow? or is it still cool? And it's kind of an amazing experience sitting around the table trying to figure that out. And there's all sorts of ways you could think about it, but you kind of boil down to those questions. And I was excited by that prospect. I was like, I want, knowing kind of what it looks like at its fullest expression, I want to go back to the very beginning and go build something that can answer that question.

4:58Yes, it's going to grow. And yes, it's still a cool brand. And so that was really motivating to me. I actually went to business school at Stanford. I applied there with the intention of starting a company in the cannabis space. I put it in my application. I wasn't exactly sure what that looked like, but I thought I might go back to Colorado and do it there because at the time you had legal adult use recreational marijuana in Washington, Oregon, and Colorado. And so I'd grown up in Colorado. I thought that might make sense. When I got to Sanford, California had passed its law, essentially rolling out a similar program for adults.

5:33Obviously, California had a long history on the medical side, but this would be the first time you could go into a dispensary with an ID and purchase these products. So I said, okay, well, let's spend the two years here at school really figuring this question out and talking to hundreds of people, whoever would meet with me from the industry, which is kind of an exciting time to do that because it was all new. So you didn't have this sort of like a set of incumbents and credibility. Everything was kind of happening in a fluid, exciting, dynamic way. Now, because of that, it was also really challenging.

6:01And I think many brands that started out in that environment found it challenging to grow or to grab hold. There's all sorts of other structural issues with that program from a tax regulation standpoint. There a few have survived over the last sort of six or seven years. But it was a great learning experience. And it helped me, to answer your original question, get a little bit more down the road, a little bit more comfortable. You're not going to go back into private equity and you're going to turn down these sort of crazy salaries and benefits. And one of the things I joke about being really challenging about starting a company seems sort of obvious and simple, but it's figuring out your healthcare, right?

6:41In this country, it was me buying healthcare on the exchange. And that was not an easy process. I'm like, how does anybody do this? And you forget these little things that, you know, kind of help support the culture around taking a job and staying in a job, right? And so having to shake that off was really challenging, even at a place like Stanford, right, where the business school is geared towards, you know, founders, and there's such an entrepreneurial element to it. Everyone tells you, you know, there's two kinds of people in the world. There's people that can start companies and people that can't.

7:11And, you know, which one are you? And, you know, it's obviously not that black and white. But that culture really does kind of help support you as well. So I think that was the other thing I had. I had time to really think about it, to get a little bit of space away from the corporate world. And I had a really supportive environment in that school. Even then, it was really hard to imagine, you know, graduating without a job and saying, I'm going to work on this full time. yeah i mean it really yeah so interesting we actually so my day job is at a company called anomaly i'm a partner their chief innovation officer and we actually created um dosist um which obviously was similarly an early kind of mover within the medicinal cannabis space um starting out in also in California and then Colorado but it really was the wild wild west what what was the most surprising element of becoming a founder and moving into this market because I feel like it's not whereas you know alcohol and beverages two massive fragmented you know hugely competitive markets you're creating a category like there's so many red flags and like you know from regulations to literally creating new behaviors like talk to me about the most daunting or the things that surprised you most about the process yeah we definitely had our work cut out for us i mean one beverages is just hard in cpg it's structurally harder because of the sort of weight of the product, the logistics, the freight, all those things means your margins are lower.

8:55Moving the product around is more challenging. Then we added on top of that natural, it's a natural product. There's no preservatives in our product, right? That makes things even more challenging. It narrows dramatically where you can manufacture the product, how it can move. Maybe it opens up a few places where you can sell, which is exciting, but it's also what we believed in. We were consumers of natural products, so we weren't going to make something that wasn't. And then we add on top of that a highly regulated active ingredient, right? And so one that is even has like pretty unclear regulations at the federal level.

9:25And so a combination of those things made it really, really challenging. Just looking at the business that we were getting into. And people told me this, right? Like I kind of like had these early conversations and they're like, well, you know, it's gonna be really hard for this reason and that reason. I think what drove us to do it were consumers. We were actual people that we tested prototypes of this product on that one were blown away by the fact that they actually enjoyed what it tasted like and the effect of it was exactly what they wanted. Even to the point where we would have friends that would look me in the eye and say, Jake, please tell me you're doing this.

10:03I need these products to exist. And it was those moments, those interactions I think that were that kind of were our North Star when we had those tough times in the beginning. Things were difficult. Can you make this a business? Does this actually make sense? And just going back to those folks, those friends that sort of said, we need these products. We knew that there was going to be some consumer demand for it. We had no idea how challenging it was going to be. And I mean, I would have told you six years ago that we would have launched in the regulated dispensary market in California. And by three to five years, we would have some sort of federal legalization of cannabis that would allow these products to be sold in more places than, you know, a few hundred dispensaries in various states.

10:43That obviously has not happened. I think I've updated my thinking that will probably not happen, at least not while I'm running can or maybe in business at all. But we other avenues have opened up. Right. And we think of it. So I think, you know, there's something you need that sort of driving force. There has to be a why. I wouldn't say that you have to be like unreasonably passionate and like so much so that you aren't able to understand like important things about the business and economics and how it works. But I do think that there needs to be that driving force, that North Star that says, OK, why am I doing this?

11:15And am I still right about that? And if that hasn't changed, then let's keep moving forward. Do you have that why articulated? Is it actually a statement? We do. It's about changing the way people socialize. It seems kind of like a simple concept, but when you when you peel it back a few layers, it's actually a really big idea. Right. We have seen the monoculture disrupted in so many other parts of society. Right. I mean, we're talking about Gen Z a lot these days. And the idea that everyone would be listening to the same top 40 songs, you know, that wasn't that long ago that that's what we did.

11:47Right. And now your phone is delivering you every any type of music you want, you know, from around the world instantly. It's incredible. And so I think we're seeing a similar thing, right? We had a monoculture around how we socialize. Yes, alcohol, but all of the things that alcohol enabled, the way it was built in our bars and our restaurants. And one of my favorite things about being in this business today is going to restaurants and seeing how their drinks venues have changed. And they're changing. And they're changing pretty amazingly to the point where there's, you know, dedicated sections, in some cases, entire pages for no and low alcohol options.

12:21And that's like really exciting. So we're starting to see some of the shifts, right? maybe if we're not all drinking alcohol all the time, the bars don't need to be loud and dark. You know, maybe they look a little bit different. Maybe the way we interact is different. So I think there's all sorts of really exciting things that come into the fold when we think about how we socialize. And really what we're doing at CAN is we're providing consumers another option. And what we found is whether it's CAN or it's other THC products, or it's adaptogenic products, or it's wider access to, you know, controlled substances like psilocybin, which is more in our communities now than it was 20, 30 years ago.

12:55Consumers, when presented at other options, will choose those other options. Not all the time, right? Our best customers still drink alcohol. Yeah. But we're helping them moderate that and we're giving them choices. And those choices are really exciting.

13:11Yeah, I think, I mean, so many, in so many ways, I feel like you've been very smart and have kind of whether intentionally a lot kind of leaned into quite a few different trends uh whether it's people drinking less or being more concerned about mind body or you know artificial ingredients um the kind of rise of things like microdosing and stuff i yeah so smart and you've also pivoted and been pretty nimble. So starting with a small amount, moving to the kind of hemp version so you can go into retail from dispensaries, you made it look pretty easy. I mean, are you surprised how long the market is taking to develop?

14:07In some ways, yes. I think, you know, it would have, like I said, it would never have imagined. It would have not seen some real progress on sort of federal legalization of marijuana. But I think as we've been in this business for, you know, almost a decade now, one of the things that we've seen is just how the politics, you know, both at the national level but also at the state level work. And, you know, for better or for worse, I'm learning quite a lot about it. And there's just so many more complexities than we would have ever imagined, right? As much as we like to think that products that consumers love ultimately become available, it's not really the case.

14:43We saw this with folks that were in the nicotine vape category. They're an amazing product that consumers loved. It was banned somewhat silly, I think, by the government. And now everyone uses these very dangerous Chinese imports. It's like, how did we get into a worse situation that's more dangerous for consumers with products that aren't American? It's kind of wild. And so these things can happen. There are bad examples of how policymakers screw this up. And I think they have been screwing up for a while. But there's also a lot of bright spots, right? One of the things that happened because there was so little federal action on this issue is states took into their own hands the regulation of hemp.

15:23And they did it in a way that allows, largely allows safe access to low potency hemp products and particularly drinks. would have never happened. Had the federal government acted, the prior administration to legalize marijuana, we wouldn't have the same, I think, effort and energy around what's happening on the ground in various states as it relates to hemp. And that's really unlocked our business because what it's allowed us to do is extract the THC and CBD from hemp, sell under those regulatory rules, and get products into liquor stores, which is where alcohol is sold. And so here startups pivoting by taking some sort of ip or work that had been done and changing the market or its application to a different segment we actually kept the product to the you know from the consumer's perspective identically the same you know there's no difference but we changed we pivoted our active ingredient and we pivoted our regulatory framework that opened up all these new distribution channels to get to that that same product to the same consumer yeah it's kind of unorthodox but is really working and is providing a new model for states that don't want to stand up a California style, you know, Department of Candidates Control and all the challenges that we faced in that market.

16:32Yeah. And I feel like it opened up. Yeah. So you could be distributed, A, widely, like without stigma, not necessarily. There's something much more mainstream when you can get it at the, you know, at the liquor store versus having to go into a dispensary. Yeah. Kind of amazing. in terms of can you see yourself going into psilocybin and other types of actives i guess we get asked this question all the time i you know my my common response is we've got enough on our hands with our our currently you know unclearly regulated active ingredient the idea of taking on another one with maybe even um more challenging dynamics doesn't make a ton of sense.

17:21It's definitely alluring though, right? It's, it's in our, you know, when we think about ourselves as a social beverage company that doesn't restrict us to THC or CBD only. Um, there, I absolutely believe there are social beverages of the future that will incorporate, you know, different types of, of adaptogenic or, or in some cases, you know, um, psilocybin, it could be in that mix. Right. Um, but there's also ongoing clinical trials for psilocybin, It could be very easily approved as a drug. I think one of the weird things about marijuana is despite its ubiquity, has had a prohibition on any medical research unless it's to research the harms.

18:00And so that has kind of created a dynamic where there are no drugs outside of a seizure medication that incorporates CBD and Marinol, which is used, I think, on the appetite side for folks dealing with cancer. outside and that's a synthetic THC. So you don't really have the, you know, what should have happened here, I think, is probably a robust set of research around how this can be used either as a supplement over the counter or as a prescribed drug and it hasn't happened. And so that's, again, because of the lack of that structure, you're seeing states step up and really develop and be on the front lines of good policy in this space.

18:40Yet I'm hoping for the sake of Americans, that doesn't happen to these other compounds, but it very well may. We'll see. Yeah. Yeah, I think you've got, there's so much to grow within cannabis without having to figure out a whole new level of active. I do think it's interesting. I mean, like you did create a market and now that you've kind of helped establish a kind of behavior in a market, Can you talk to me about how you think about your brand and how you make sure that you stay elevated and leading versus all of the potential kind of copycats coming in? Because it is still, yeah, I feel like you've opened the door to a whole new category of beverages.

19:31Yes. It's always fun for us to see the new versions of whether they're copycats or fast followers or whatever it is. you know, some cases using our same flavors. I actually get a kick out of seeing folks pairing citrus fruits and, and more adventurous herbal extracts because no one was doing that before we launched Canon. And, you know, we've somehow gotten people to drink things like cardamom and lavender and rosemary. And that's pretty cool to me. That kind of, you know, formulation and innovation around the product is, is, is infectious and consumers love it. And so it doesn't surprise me that folks are jumping on, although I sometimes wonder about their combinations.

20:10We have to stay disciplined, right, to answer your question. We had set out these brand guidelines, both sort of values around the brand and who we are as a company and what we care about, but also around the product, right? It's like we don't use concentrated juices. We don't use preserves. We use all natural herbal extracts, not with other natural flavors. Those things really matter. They matter to the taste of the product and consumers, whether they're keenly aware of them or not, are benefiting from the quality of the product, you know, and the decisions that we make around it. So we stay disciplined to those values as well.

20:44And, and, you know, even when you see pressure from others, and there's, there's brands that are getting, gaining traction in this market or that market, or they're doing this thing or that thing, you know, we pay attention to it, but we don't let it distract us from sort of fundamental goal, right? Our, our job isn't really to outcompete other cannabis beverages, right? Our job is to convince an average person walking down the street that's going to have two glasses of wine tonight that maybe they should only have one and have a can as well, right? That's kind of a different proposition. But I think it's one that we're well positioned to succeed in.

21:17And so we're more focused there than we are on, you know, who's launching a blood orange flavor this week or whenever. Yeah, you're very generous to all these copycats. But I do love that you hit on something that I think is does seem very key to your brand which is you've modeled more on you know you haven't looked to the cannabis category you've looked to premium natural gourmet flavors that you see activated whether it's mixology or premium alcohols and beverages so that's part of how you've kind of thought about your brand can you tell me as a brand strategist any other kind of key pillars have been important to making can the kind of brand that you uh you know aspire to yeah so we um you know if you remember and i think you will being with with doses in those early days there were a lot of first movers that wanted to be ultra premium it was like the barneys for weed and and um you know it was the brand was a font um and and we kind of were like well that doesn't seem right either so we had to figure out some sort of value set of principles to help guide us through, we knew we weren't going to be, you know, rolling out old tropes from sort of the like stigmatized stoner culture, right?

22:32We also knew we weren't going to be the Barneys for weed. And so how do you think about that? And we wanted to make sure that we were approachable. That was really important that we weren't, we didn't feel so out of reach, but we were still communicating the premiumness of the product, the ingredient choices we were making that it was elevated in that sense right we wanted to take a stand like we often talk about being editorial as a brand and there's certain issues where we would really take kind of like a vocal stance line in the sand whether that was on social justice issues right which are really important to the brand or on preservatives or stevia right we get actually a lot of uh of folks fight us on the stevia issue and i i you know they they they're convinced they like it i think they've somehow habituated themselves to it it's it's awful and has a bad mouth taste and we don't use it in our products And that kind of that sort of helped us right as we as we chart territory of that that balance sticking to those principles.

23:26We also don't take ourselves too seriously. Right. I think one of the other traps brands can fall into is they become so co-opted by the environment that we're in, which is often very scary and and and uncomfortable. We we sort of take the offbeat. Right. We're going to be a little bit irreverent about what's happening. We're going to try to find the humor in these situations and show up in a way that's maybe a little bit more quirky. At the end of the day, we're selling drugs. This is going to change the way you experience the world. It's mild, right? And one of the lowest potencies, lowest strength, lowest risks products on the market.

24:00But we are kind of shy away from the silliness of that. And it's a social product. We're not trying to cure any of your illnesses, although folks use these products for all sorts of, you know, kind of reasons that kind of can include those. But it's a social product. And so we also, you know, tried to imbue the brand with that character and that humor, which I think also helps balance some of those questions of how do you make this thing feel approachable to a new customer? You don't want them to feel like it's out of reach and also not something that's going to kind of, you know, make them feel uncomfortable either.

24:34Yeah. Yeah. No, it's so many balances. The premium and the accessible is definitely one that I think you've done a great job. on. It's interesting. What I mean, do you have what are your favorite brands? Like, what makes a good brand for you? Yeah, it's funny, because I, as a result of starting this company has spent a lot of time following brands. And, you know, that's not a normal thing, right? I have to keep reminding myself that like, most people don't follow brands, they aren't like actively engaging with brand content, they don't like go through the motions of on TikTok or Instagram, you know, like adding this brand to the content that they want to see.

25:17And that matters, right? Because I think sometimes we get so into our branded world that we're like, you know, constantly focused on it. We're saying, oh, what is this brand doing? What is that brand doing? Right. And, and it can affect us in not a good way, right? That then we start behaving like in a way that, um, take it too seriously. Yeah. Taking it too seriously. And almost like I feeling like the urge to copycat something successful. We love, for example, liquid death. They do like the most amazing collaborations with brands. They make us laugh. There's a quirkiness. There's an irreverence.

25:43There's like a very strong sense of brand and voice and who they are. So that's one that we're always looking at. And I have to remind myself like, okay, you can't, you're not doing a, you're not going to do the canned version of this, but it is also fun to have that inspiration because we will take ideas and we'll say, okay, this was cool. What was cool about it? Let's identify the, the sort of like salient motivating that emotional thing behind it. And then take that emotional thing and say, okay, well, how does Can show up on this point, right? And that's a great way of driving a creative process that's going to keep us from, you know, trying to rip or copy something that someone else has done, but find our own way through it.

26:17And what's really cool about this brand is we have license to do that in some ways because of how we built the brand and also in some ways because of the nature of the product, right? I joke, we're not selling toothpaste. You know, this is actually something interesting that people want to have in their lives or understand and talk about. And that's an advantage as well yeah how do you fit the kind of there is something you know there has to be something fun and uh about socializing about you know being a lubricator literally of of a situation um i'm curious you know you've also i feel like you've done so many different stages of types of brands and business from from you know state-specific dispensary to DTC to moving into kind of more mass retail presumably a lot of your marketing is a little more kind of normal alcohol playbook of in-store sampling like talk to me about how you think about marketing and growing the brand now yeah yeah it's a good question I mean six years ago when we're in the dispensaries, right?

27:25We're highly restricted. We can't really do anything digitally. We can't really do anything in the dispensaries. For the most part, they had their own sort of ambitions and aesthetics. And so we were stuck going out into the community and doing kind of old school word of mouth, like event-based marketing. We had a, I know Dosis had its Abbot Kinney location. We did like a pop-up down the street and that was great. And it was right next to the MedMen and we sent people there to buy the product. So, you know, we did creative things like that, that was really all we could do to try to drive that sort of word of mouth and virality in a geography.