SaaS Interviews with CEOs, Startups, Founders
735: Sell Cannabis? He's Raised $3m To Be Your Payroll Management System
29 Jul 2017
Chapter 1: What inspired Keegan Peterson to start a cannabis payroll management company?
his company, Work. You can find it at enjoywork.com, specifically helping folks, again, get their, well, really cannabis-focused, right? But cannabis, HR stuff, taxes, making sure they're doing things the right way, measuring things properly across 17 different states. They have over 200 companies using them
and well over 1,000 actual employees in those companies, up to potentially 10,000 total, doing more than 40,000 bucks per month in revenue, potentially way more, again, $3 million raised, 18 people, five which are sales reps, still figuring out some of these unit economics, but in a exciting, growing space. This is episode 735. Coming up tomorrow morning, I talk to Sunil Thomas.
And his mobile analytics company went from zero to 4 million in 12 months. The question is, what weird thing did they do to make that happen? Tune in to find out. But first, here's today's episode. This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base.
You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million.
Chapter 2: How did Wurk secure $3 million in funding for its operations?
He is hell-bent on global domination. We just broke our 100,000-unit soul mark. And I'm your host, Nathan Latka. Hello, everybody. My guest today is Keegan Peterson. He is a technology entrepreneur blazing a trail in the legal cannabis industry.
He's worked for many, many different software and services company called Work, or that's what he's founded, this company called Work, which helps cannabis businesses pay their employees while adhering to federal and state regulations. He's also a former Division I athlete from Florida Atlantic University. Keegan, are you ready to take us to the top?
Absolutely. Thank you for having me today.
They hear cannabis and my audience is rolling their eyes. Keep them hooked. Why should they listen to the rest of this interview?
Cannabis is a fascinating industry right now.
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Chapter 3: What unique challenges do cannabis businesses face regarding payroll?
It's a fascinating experiment. And it's a great place for the technology industry to really play a big part in solving some of these issues. It's federally illegal and it's state legal. And that provides a pretty interesting environment with a lot of challenges. And folks like myself are creating software technologies to help bridge that gap.
Have you smoked this morning yet? I have not. I asked that because that's what everyone thinks, right? They think if you're in cannabis, you must eat it for freaking breakfast, which is not true, right? That's why I asked.
Tell me real quick, before we get more into the story, I'm curious, have you been able to convince traditional kind of investors to get behind you or have you self-financed this?
For the longest time, almost a year, I self-financed it. And then we've now raised $3 million of traditional funds from VCs and folks like that. We are an interesting vehicle in the cannabis industry. It's been hard to get traditional investment vehicles to come in.
Chapter 4: How does Wurk differentiate itself from traditional payroll companies?
However, our business model is so familiar outside of the cannabis industry that we were that vehicle that made a lot of traditional conservative investors come and take a plunge into this industry. So we've been very fortunate to have some funds and VCs that come on.
And for my grandma that's listening right now, that doesn't know what I mean when I say cannabis. I mean, we're talking like weed, basic marijuana, like marijuana. Like what, what does it cannabis include?
So cannabis touching businesses either grow the plant, they sell the plant or they extract the plant. So they take the plant, put it into a machine that presses it into oil and they bake that into cookies or into vaporizers, things like that. So those are businesses that are actually touching the plant. And those are the businesses that we service.
So this is like, like our marijuana and weed, the same thing.
Marijuana, weed, cannabis. Marijuana and weed has had a negative stigma from the past, from the war on drugs. So I think the industry is now focusing on the word cannabis because that still has a positive light in a lot of people's minds.
Okay. How do you make money?
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Chapter 5: What metrics determine the pricing structure for Wurk's services?
How do we make money? So we sell a service to our clients and we help them pay their employees, pay their taxes, and they pay a recurring fee by the amount of employees that they have.
Why don't they just go use Intuit for this?
So we take on a lot of the responsibility of making sure their taxes are paid correctly and calculated correctly. Intuit's like an advanced Excel. So we take on that liability for them and make sure that they're doing it correctly.
Shade, Intuit, he's throwing shade. He said, we called you an advanced Excel. No, I'm just messing with you. So just to be clear, what I was really asking there, traditional payroll kind of companies, right? HR companies, Gusto, for example. Yes. It's true or false. It's difficult for them to touch this space because of the PR aspect.
You're taking advantage of that and saying that's exactly only what we're going to do.
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Chapter 6: How does Wurk ensure compliance with federal and state regulations?
Yeah. So it's not only the PR aspect, but they're backed by big national banks and those banks can't touch cannabis cash and they need those banks to run payroll through. So because of that hurdle, they cannot service this clientele, which leaves a big opportunity. And right now we're the only national reaching payroll HR technology in this industry.
So is it fair to say, I mean, you think about this like a SaaS company?
Yes.
Okay, got it. And so how many kind of customers do you have on your platform to date?
We have quite a lot. The number that we share is we're in 17 legal cannabis states right now.
Okay, you're in 17 legal cannabis states. Now, are you selling to the states though, or literally will the business owner find you online and sign up?
The business owner. We're selling directly to the business owners.
So give me, it sounds like based off your face, you want to be vague here, which is fine, but give me a big range.
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Chapter 7: What is the customer acquisition strategy for Wurk?
Like, are we talking 10 or 10,000 or 100 or? We're in the hundreds. Okay, got it. In the hundreds. So call, you know, more than 200, but less than a thousand, right? Something like that. Yeah. All right, cool. And then take me back to the story on this, man. So when did you launch the company?
I launched it two years ago. A friend of mine owned a dispensary and been dropped by seven different payroll HR vendors. And this is my background. I've been doing this for seven years in the traditional big box retail space. And he said, hey, you've got to figure this out for me.
Chapter 8: What insights does Keegan share about the future of the cannabis industry?
I'll bring you a limited number of customers. You just have to find a way to do this. And that's how the business was launched. And we've been doing this now for two years.
So this is 2015.
Yeah.
Yes, August 2015. And then fast forward us to today. So how many folks are on your team?
We've got 18 people. We've got three offices, one here in Denver, Indianapolis, Portland, and we're growing into California quickly.
Do you have people on the team that don't smoke cannabis? Or is that a requirement? You have to understand and be a user and love the product in order to love our software.
No, it's not a requirement. We're a compliance business, so no one consumes here during the day. No one consumes before work. What people do in their personal time is what they do in their personal time. We don't drug test. But we do look for folks that are advocates and believe in progressing this industry. This is a passion-driven industry. We're a purpose-driven organization.
And those are the folks that really enjoy working here.
Yeah, I can't be empathetic with you because I haven't run a business in this space, but I imagine you get caught a lot probably trying to explain that, right? Like, hey, we're not always high all the time. Like people probably just assume that, right?
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