In the mid ‘90s, when Topics Entertainment was still a small business entering the CD ROM industry, I recall sitting down with the owner of another company to enjoy a beer. We were discussing how difficult it was to find really good sales people. He then said something that stuck with me for years: “Greg, I don’t try hiring guys who know the CD ROM business, I just look for people who can sell widgets. I can teach them the CD business in an afternoon.” Simple. It was just one of many “words of wisdom” I absorbed from folks in that business, and it stuck. As it turns out, my top salesperson for a period of about 10 years during our growth from $5 million annual revenue to $60 million ended up being a guy named Jason in his early 30s whom I knew from riding motorcycles. He was working as a bartender and wanted a new career. I hired him. He knew nothing about software, but learned quickly and worked like there was no tomorrow. In a relatively short period of time he was selling to Staples, Best Buy, Target and several other major retailers. He made $250,000 a year in commissions. The lesson for me was simple: Hiring “go-getters” you can train usually yielded greater results than hiring “experienced” people who thought they knew everything, and came with pre-conceived ideas and work habits.
The CD business in the ‘90s and today’s marijuana business have many things in common: Both are “sexy,” fueled by venture capital, and seem to attract a variety of people with varying degrees of skills, ethics and business smarts.
Another little gem that’s stuck with me for years came from an article I read decades ago in Forbes. It was an interesting piece on the statistics of small business failures. Bottom line: Bars and restaurants had the highest rates of failure, and dry cleaners the lowest. It’s not hard to figure out why: Dreamers everywhere want to own a bar because it’s seen as cool and fun. Dry cleaners — not so much. That said, there are thousands of successful restaurants and bars; however, the vast majority are owned and run by people who spent years learning the restaurant business (business being the important word here) from the ground up, and very few who suddenly decided to jump in because it sounded like fun.
Last month I wrote about an ever-increasing supply of legally-grown marijuana looking for a home in a limited number of licensed retailers. I got a fair number of emails and responses. The writers made some great points. However, most seemed to agree that as the business matures, and the competition becomes more fierce, the good operators with a real plan will prevail, and the “dreamers” will not.
I worry that my opinions might sound too negative once in a while. Am I scaring investors and operators who might otherwise want get into the industry? Are my stories about the large number of failures in the CD ROM business a downer to folks in the cannabis industry? Maybe. But then again, while I see Marijuana Venture as a great place to highlight all the wonderful opportunities that exist in the nascent marijuana industry, I also believe it’s our job to inject a dose of reality once in a while. Make no mistake, the opportunities are big — but so are the risks!
Let me end by saying this: If I were approached by two people who both wanted me to invest in their marijuana retail store, and one had years of experience managing and running a 7-Eleven, and the other had the same amount of time becoming an expert in the pot world, I’d pick the guy who ran a 7-Eleven in a New York second. And sometimes, hiring a bartender who will work his tail off can pay off big time. I’m just saying…
Greg James