How Leaflink CEO Ryan Smith grew Leaflink to $46M revenue and 1.3K customers in 2024.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is ryan smith he's now working on a company called leaflink the wholesale cannabis marketplace before founding the company successfully founded and exited two companies one of which he sold to a new york stock exchange public firm ryan brings his experience creating and managing b2b firms and online marketplace investing in a highly regulated space to leaflink as its ceo ryan you ready to take us to the top yeah let's do it nathan now did you found the company as well yeah i'm one of the co-founders of zach silverman who's our cto okay when do when you guys launch uh we raised the first million bucks in an angel round in december 2015 so the software actually went live march 2016. okay and why do you why do you why do you uh tie the start of the business to your first raise so uh after i sold the last company which was this investor relationship management platform there was a full year i had to commit to the next company and quit the day after that year and then zach and i started working immediately on this and once the capital was in we were both zach was able to leave his job and we were both fully you know committed so so when i guess when was the first line of code written for the platform uh january so january 2016 yeah i mean all the things that we were doing researching like q4 2015 was really none of that kind of carried over just more like starting to pencil it out and whiteboard it together so 2016 and when was your first dollar of revenue uh probably end of that summer so like yeah end of q2 end of q2 q3 of uh 2016. and so i mean when you when you sum it up i mean if i asked you how much total cash did you guys invest right in the mvp before your first dollar revenue what would your answer be probably around uh 200k okay 550 to 200k and what made it i mean where'd you spend that really just all engineering so we had um you know we had one engineer at the time we had two first hires and that was really the core team through the middle of 2016 and so that's a lot of what the capital was spent on the thing we really celebrated i remember though in like in that march 2016 was when the first order organically was generated between buyer and seller um because obviously you know the first few clients you give it away just get some feedback and then a little bit after that's when we started making you know beginning to charge a few clients well i want to dive into how you built the early stage of the marketplace because that's obviously critical yeah the chicken and egg problem um but what's the team size today how many people we have just under 90 people today okay um around 50 in new york just under 20 in la and then we have uh three satellite offices with you know less than four people in them okay how many engineers are the 90 uh we're we're just nearly doubled our engineering team size so about 30 um right now yeah and any quota carrying reps sales reps yep we have uh about 24 sales reps and client success managers within that with the next so well of the 24 how many actually carry a quota did the customer success folks carry a quota too yup they have uh quotas around churn engagement upsell uh and then on the account executive side they have like brand sign-ons and that's pretty much it's their quota what i mean when you when you set you know hiring salespeople and doing it at scale as an art because you have to get kind of guess on pro formas you have to guess on bookings target you have to guess on ramp up time you're you know you're fully matured aes today what do you try i mean what is healthy for them to be closing annually in terms of new revenue for you guys is like a million dollar quota or something else so we just recently transitioned to revenue quotas for the last like three and a half years it was really just around because we're going for market penetration and growth of the community on the network was a number of brands so brands of the sell side companies to retailers who do the buy-in the marketplace and so um in early compost number three but in early 2018 we were bringing on about 30 brands per month as a company and there was probably five reps so somewhere between like five to seven brands per rep um and now we you know have a vp of sales we've done a lot of education really teams leveled up in a significant way and we're closing on that number of that i mentioned earlier around we just broke 100 brands signed for the first time in a month i think reps are closing closer to like 13 to 17 brands a month now so last month you signed a hundred new brands yeah we first time we broke 100 new brands yeah like total or new signups that month new signups that month so we have in total almost 1300 brands on leafling's platform today yep and then fill out the market by stormway so you define brands at the sell side there's 1300 what's the other side retailers so the use case would be if you're a purchasing manager at a dispensary you need to buy from each state is its own marketplace because you can't go across state lines let's say you're in california you can buy from over 400 brands in one cart on leaflink hit submit and then all of the orders go out by their license number to those brands and then we have some sas tools in the back end to help them manage the life cycle of the order but that's like the use case so this is sorry name a real retailer like in la or denver so like harbor side would you know as a big client of ours up in northern california um in in denver medicine man is one of our great clients out there and so like there's a josh best i was actually a retailer of the year last year but he can order from all these different brands in one cart whereas previously he was calling texting emailing 30 to 50 brands and now all these brands are launching new products constantly it's highly competitive on the buy and sell side so this creates transparency how many buy side folks do you have retailers we have over 3 400 retailers so about four so four out of five retail licensed retail dispensaries in the united states have placed an order on leaflets and how do you define active so is at least a dollar through your platform over the past year yeah so at least an order one order through the marketplace every month one order marketplace every month and so 3400 did that over the past 30 days yes okay i mean that's that's great so i want to again i'm getting these so i can then dive into the early days but just to be clear give me also a real example on the brand side so uh a company like kiva or docest in california dixie or wanna in colorado um brands that we sell and what we really focus on though because it's one of the early bets we made is when you think about the cannabis industry think about like the physical flower like agricultural product we believe really in brands as the future that's where we know companies have real margin just growing plants isn't really the business it was three or four years ago even so we bet on cpg skus that are consistent to buy time and time again and that's where we see the future in the space so when you go on leafling's marketplace the vast majority of our 70 000 odd skus are products that are well branded and consistently packaged so those 70 000 skus those are published and uploaded the metadata everything from these 1300 brands exactly yeah okay so 1 300 brands sorry and then you just said the 70 000 skews you said yeah over 70 000 excuses from the platform interesting do you see power laws and others does one skew make up forty percent of total volume sorry you can cracked up yeah do you see any power laws ryan does one skew make up like 40 of your total volume we see pretty close like in and when you see like 80 20 split and some more traditional supply chains we see something closer to like 65 35 in terms of like how things are consolidated the one thing that's interesting about our space is the the space itself is an is a startup and a lot of our clients are startups too so the companies that we're talking about that had significant market share even a year ago it changes so quickly and so a lot of us is just like staying up to be with with those changes in space okay and what is the what is the total uh i guess how do i define this the total gmv of these kinds of skus right in in the world right now is how much over the past 12 months or how much annually for for the whole industry yeah so we the way we get to our like gmv market penetration is we think the 2019 um whole industry size was like right around 12.7 billion dollars in retail and those are all these numbers are reported like the retail to consumer retailer to patient numbers we know that a lot of our clients charge...