GE 220: How Meadow Acquires Customers When Paid Advertising Isn’t Allowed for the Cannabis Industry (podcast) With David Hua

David Hua - Meadow

Hey everyone! Today I share the mic with David Hua, CEO and co-founder of Meadow, a software company that builds products for the highly regulated cannabis industry.

Tune in to hear David share why he firmly believes in bootstrapping your way to growth, the many failures and successes he experienced on his entrepreneurial journey, and how they get the word out since paid advertising is not permissible for the cannabis industry.

Download podcast transcript [PDF] here: How Meadow Acquires Customers When Paid Advertising Isn’t Allowed for the Cannabis Industry TRANSCRIPT

Time-Stamped Show Notes:

  • 00:54 – Review and subscribe to the Growth Everywhere Podcast
  • 01:10 – Eric welcomes David Hua
    • 01:10 – Eric interned for David while in college, and is speaking to him after 9 years
  • 02:00 – Focuses on building software for the cannabis industry; works with delivery services and dispensaries
    • 02:12 – Compliance requirements are really high since cannabis is a regulated product
  • 02:42 – Two ways to interact with Meadow:
    • 02:44 – Non-users need to go through an online evaluation by a doctor
    • 02:54 – Existing medical cannabis patients can go ahead and order from the Meadow website
  • 03:09 – Covering 62% of California at the moment; aiming for 100% reach by the end of this year and working with 70 collectives across the state at the moment
  • 03:25 – Was named the “Best Bootstrapped Startup” at The Crunchies Awards
    • 04:15 – Instilling an appreciation for your capital allows everyone to operate frugally, and invest in the things that do matter
  • 04:48 – Tracing David’s journey so far…
    • 04:48 – Wall Street stint right after college
    • 04:51 – Moved to San Francisco to start GotGame, where Eric interned
  • 04:56 – GotGame suffered from first time founder problems right after its inception in 2008
  • 05:06 – Bad timing and rising expenses led to their eventual closure
    • 05:50 – Ended up working for a healthcare company called HealthCentral which was backed by Sequoia, Polaris and Allen and Co.
    • 06:19 – Met his future cofounders while working for Sincerely, Inc.
    • 06:27 – Prompted to look for a promising business once Sincerely, Inc. was sold off – knowing that health was a booming business, they started Meadow
  • 07:17 – Check out Bill Gross’s video: The single biggest reason why startups succeed
  • 07:42 – Encouraged to start Meadow in 2014, right after Colorado legalized sale of medical marijuana
  • 07:56 – California was the first state to have medical cannabis but wasn’t the first to legalize it for the adult use market.
  • 08:10 – Realized that the market was ripe for someone with technological expertise and security, compliance and operational efficiency
  • 08:25 – Gets paid for every patient appointment; other revenue streams includes a SaaS fee from software users and a percentage of sales that go through Meadow
  • 09:06 – Since paid advertising is not permissible for the cannabis industry, they have to rely on word-of-mouth publicity
  • 19:51 – What is the one big struggle you faced career wise, and how did you deal with it? – The biggest struggle has been patience. Retrospectively, David feels that it would have been good to get some experience before starting his business
  • 11:36 – What is one big change that you have made in the past one year that has either impacted yourself or your business in a big way? – His daughter Hazel was born last year. Having a child has made David more productive.
  • 12:31 – Caring for your resources, being mindful of the competition and the environment, and importance of collaboration are some of the lessons that David has acquired from playing strategy games
  • 13:26 – What’s one new tool that you’ve added in the last year that’s added a lot of value, like Evernote? – Front, Quip, and Slack
  • 14:24 – What’s one book that you recommend to everyone? Extreme Ownership: How U.S. Navy SEALs Lead and WinWritten by two Navy SEALs, this book is about giving your leaders ownership. You can also check out the audio version, narrated by Jocko Willink
  • 15:46 – Connect with David on his Twitter, email, AngelList or LinkedIn
  • 16:15 – Review and subscribe to the Growth Everywhere Podcast

3 Key Points:

  1. Timing plays a big role in the success of a startup.
  2. Care for your resources, be mindful of your competition and the environment, and actively collaborate with your teammates to achieve success in a startup.
  3. Sometimes it is better to practice patience while chasing your entrepreneurial dreams – it’s wise to get some experience under your belt before setting up your own business.

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Full Transcript of The Episode

Show transcript
David Hua: Meadow really focuses on building software for the cannabis industry. We have the ability of working with delivery services that deliver to your door. We work with dispensaries, powering point of sale systems and inventory management systems. With cannabis, it's a highly regulated product, so the software, and operation tools, and the compliance requirements are quite high, no pun intended. Meadow is meeting that demand and making sure everyone that we work with coming next year in California will be running really smoothly.

Eric Siu: Got it, okay. If I'm looking to get started with Meadow, is it just an app that I pull out and I just order whatever I want? How does it work?

David Hua: On the consumer level, we have two ways you can interact with Meadow. One, if you're not a medical marijuana patient already, you can request an evaluation from a doctor and get an evaluation online. Then if you are already a medical cannabis patient, then you can go to getmeadow.com and order a deliver straight to your door.

Eric Siu: Got it, awesome. What kind of numbers can you share around the business today, customers, growth rates, things like that?

David Hua: We're currently covering about 62% of California. Our goal is to get to 100% by the end of the year. We work with 70 collectives across the state.

Eric Siu: Great, okay. I want to back up a second because you went through YC and you got a Crunchies award as well. I want to talk about that first, Best Bootstrapped Startup at the Crunchies. How was that experience? What is that, and what has it done for you?

David Hua: I think the bootstrap mentality, A, we had no idea we were going to win that. We were in YC, and we went on a whim just to check it out. We thought the other groups would win. I think it was validation on the way we're building a company. I think most traditional startups you see end up raising money, growing beyond their means, raising more money, growing beyond their means. Our strategy has been you grow with the people that you bring on and that bootstrapped is everyone's willing to pick up a mop or a broom. Everyone's willing to do what's necessary to save money because every dollar spent is one dollar less of runway. By instilling that sort of appreciation for the capital that you have, then it allows everyone to operate frugally but invest in the things that do matter.

Eric Siu: Got it. Backing up a second, I usually ask people when I first ask about the company, what is your story? What got you to your point right now because I look at your background and your background is on Crunchbase. You've done all these different things. It just happens at the same time that Meadow, it's being executed at the perfect time because if you tried to do this 10 years ago, it probably wouldn't happen, right? What's your story? How did you get here?

David Hua: I graduated from college and started on Wall Street, moved from Wall Street to San Francisco to start GotGame, and that's where we met. GotGame suffered really from first time founder problems, but also we had horrible timing. Remember that?

Eric Siu: Yes.

David Hua: We launched November of 2008, which was right when Sequoia issued their Rest in Peace: Good Times, right? We ran out of money because we just built to the product launch. We didn't really build afterwards. That got crushed. We were streaming video games at the time, too.

Eric Siu: Oh, Twitch.

David Hua: The hosting costs were killing us. A huge lesson in timing problems. From there, I played poker for a bit, and then I met this guy, Zach, who ran this company called Triggit, a pretty close friend, introduced me to a healthcare company called Wellsphere. Then that was acquired by another health company called HealthCentral, and they were backed by Sequoia, Polaris, Allen & Company. They raised $60 million. The cool thing though for me was getting exposure to how many different conditions and wellness communities that were out there. I was able to learn about fibromyalgia, to IVF, to ultramarathoning and fasting. It was all over the map, which gave me appreciation for health. Then after that, I joined a company called Sincerely, and I met my co-founders. We're all Penn Staters. Sincerely was sold, and when it was sold, me and my co-founders started looking at other things to do. We were trying to figure out a space that we all felt passionate about and also was growing, knowing that health is a big part of the GDP. Cannabis is also a big part of that. It can play into a lot of the medicinal benefits there, so we jumped on Meadow.

Eric Siu: The first time with GotGame, that was basically you were doing a host of things, and that was basically Twitch before Twitch, right? That's a timing thing, right?

David Hua: We were doing components of Twitch. Don't get me wrong, I love Justin.tv and Twitch. They were down the street, and we give them all the props in the world. I think GotGame was just poor timing, poor execution, but was a hell of a lot of fun. I think it was a really good time.

Eric Siu: I was just going to say there's a video by Bill Gross about why startups fail, and the number one reason is timing. I recommend everyone check it out on YouTube. Coming up to Meadow, and before I even talk about Meadow, it's funny, I never knew that you played poker because when I was interning for you at the time, I was actually playing poker 10 hours a day, so I didn't get much time to focus on the internship. Anyway, how did you know Meadow was the right timing because that's the scary thing with something like this.

David Hua: For me, we started in 2014, and Colorado just went legal at that point even though they legalized it a year or two before. We just started seeing the writing on the wall. California was the first state to have medical cannabis but wasn't the first to legalize it for the adult use market. Being a patient in California, I've been smoking and medicating since high school, it felt that there was a huge need here to bring out expertise in technology, in security, in compliance and operational efficiency into an industry that has largely been in the shadows for a very long time.

Eric Siu: Got it. How do you guys make money right now?

David Hua: We have a few different models. We get paid off of every appointment that a patient goes through, we get paid through a SaaS fee through the partners that use our software, and then we get paid a percentage of orders that come through getmeadow.com.

Eric Siu: Got it. What does the pricing look like for this? What's the SaaS fee, what's the percentage, all that?

David Hua: It varies. It's really dependent on the dispensary. It's metered pricing. We don't have flat fee pricing models mainly because every dispensary is different.

Eric Siu: Got it. What's working for you guys in terms of customer acquisition today?

David Hua: Word of mouth. Unfortunately and fortunately, we can't do paid advertising ...

Eric Siu: Ah, yeah.

David Hua: ... in the traditional sense. I've had four Facebook accounts shut down. I've had three Instagram accounts shut down. I've had four Twitter accounts shut down. I've had two banking accounts shut down. Google AdWords, forget about it. We thrive on word of mouth. We try to deliver the best experience possible and then have people tell their friends and family about it.

Eric Siu: Great. No SEO?

David Hua: We could probably do better SEO. We have some good content marketing where we've created some educational materials for patients, but maybe you can help me with that.

Eric Siu: Sure, maybe. Anyway.

David Hua: No.

Eric Siu: Tell us about one big struggle you've faced growing this business. Maybe it's better to ask, because you've done so many things already, what's one big struggle you've faced just career-wise, and how did you deal with it?

David Hua: I think the biggest thing has been patience and knowing that I was in the driver's seat early on in my career with GotGame, but in hindsight it would've been probably better to keep learning from people that are already in it. I think oftentimes there are so many people that want to be captains of their own ships, and there's not enough crew members. I think if I was more patient, I would've been a crew member first, learn from the best, and then keep building. With that patience, in cannabis especially, this is a long-term play. For us, I'm not looking to start another company any time soon. I want Meadow to be a household name. When you think about cannabis, Meadow is there with it.

Eric Siu: Got it. How old were you when you started GotGame?

David Hua: I think I was 24.

Eric Siu: 24, okay. Wow.

David Hua: Yeah, 23, 24.

Eric Siu: Okay. The interesting thing about cannabis, you're saying it is the long game, and that's probably the more interesting thing, but I have these guys in my entrepreneurs organization forum. There's two guys that invested in cannabis, and they're at a 24x return right now on their money. They're just laughing at all of us because we had a chance but we didn't put in. Anyway.

David Hua: On those penny stocks?

Eric Siu: No, I don't think it's the penny stocks. I think they invested in a farm or something. I don't know what happened.

David Hua: Oh, cool. You can invest in cannabis and touch the cannabis, or you can invest in ancillary businesses.

Eric Siu: Got it. Cool, man. What's one big change you made in the last year that has either impacted yourself or your business in a big way, like joining SoulCycle, for example?

David Hua: I have a daughter. That's probably the biggest and most impactful thing that's happened to me.

Eric Siu: Congrats.

David Hua: Her name's Hazel. She's amazing.

Eric Siu: Cool. What have you learned from it so far?

David Hua: From being a father?

Eric Siu: Yeah.

David Hua: I think we underestimate how much time we do have when we don't have kids, and then when you do have kids, all of a sudden every minute counts. You actually end up being more productive with a child than necessarily without, in my mind.

Eric Siu: Got it. I could tell by how you operate and communicate through email that you're extremely efficient. I feel like that's also part of a gaming thing too because I'm really like that, too. What have you learned from gaming, and how has it affected where you are in business today?

David Hua: Gaming?

Eric Siu: Yeah.

David Hua: Let's see. I think gaming, it depends on what type and genre. If you're talking purely strategy games, I think it's important to understand the resources that you have at your command, to understand the playing field and what you're up against in the environment. What's cool is you can run through simulations to understand how this is going to play out. I think ultimately, especially with some of the solid games, if you're thinking about WoW back in the day, you couldn't really take down huge bosses without a solid team. Applying that to gaming, I really think about our team in champions. If we were playing LoL, each person is a champion that owns their lane. What can we do to support each other and making sure we're communicating? Oftentimes we're overcommunicating to make sure we know everything is going the right way.

Eric Siu: Great, great point. What's one new tool that you've added in the last year that's added a lot of value, like Dropbox or Evernote?

David Hua: One new tool, Front has been great. It's a shared inbox that we use often. We also use Quip for living documentation. Those are probably two that I like. Slack has been great, although oftentimes it can be pretty distracting with a lot of pings coming forward. I think it has to be used in moderation. Those are a few that we're using currently.

Eric Siu: Great. I've tried Front, but I guess I'm too dumb because the onboarding process just didn't work out for me, so I just gave up.

David Hua: Yeah, but Front's solid. For me, I still answer customer support. It's really important to leverage support as a way to help influence the roadmap and understand what problems are happening. What's cool about Front, you can comment with people, you can know what's going on, so you don't have to send emails. You can just comment within the interface.

Eric Siu: Great. What's one book that you'd recommend to everyone?

David Hua: Recently or just in general?

Eric Siu: Whatever comes top of mind. Usually that works.

David Hua: I recently finished Extreme Ownership. It's written by these two former Navy SEALs. They really talk about what it was like to fight in Fallujah and the different strategies and leadership principles that they had to instill, and really about giving your teammates and your leaders and managers ownership over what they're doing. Oftentimes it will come back and have accountability for whether it was a success or a failure.

Eric Siu: If you guys listen to podcasts out there, is it Jocko Willink? Is that his last name?

David Hua: Yeah, Jocko Willink.

Eric Siu: Yeah, Jocko Willink. Check out his stuff. Check out his video. This guy sounds so intense, like he's going to kill you.

David Hua: Dude, he's intense, man.

Eric Siu: Yup, yup.

David Hua: Think about it, the audio version is even crazier.

Eric Siu: Oh, he's reading it?

David Hua: There's an audio version of Extreme Ownership. Holy moly, you could feel the intensity when he talks about some of these battles that he was in.

Eric Siu: I had no idea that he actually read the audio book because you don't usually hear the authors read it. I'm going to pick it up for sure. I actually have the copy here but just haven't had time to read it. Anyway, David, this has been great. What's the best way for people to find you online?

David Hua: Twitter, email, AngelList, LinkedIn. I'm all over the place. Yeah, you can find me.

Eric Siu: If you had to pick one.

David Hua: Email is probably the best. I'm very responsive on that.

Eric Siu: Great. David, thanks so much for doing this, man.

David Hua: Oh, my pleasure. It's great to be here.

Speaker 2: Thanks for listening to this episode of Growth Everywhere. If you loved what you heard, be sure to head back to growtheverywhere.com for today's show notes and a ton of additional resources. Before you go, hit the subscribe button to avoid missing out on next week's value-packed interview. Enjoy the rest of your week, and remember to take action and continue growing.