At a time when large multistate marijuana operators are ascending to new heights, Whole Foods Market co-founder and CEO John Mackey has a critical message for smaller cannabis entrepreneurs: Make the most of your business intuition to build strong, sustainable brands while you still can.
“If you’re a small business starting out, you have to realize … you know the market better than anybody else because you’re living it, you are the market, you embody it, you know the customers,” Mackey told Marijuana Business Daily CEO Chris Walsh during a virtual fireside chat at MJBizCon 2020 on Wednesday.
“And that gives you an authenticity that these big players will never have.”
Mackey said cannabis entrepreneurs now have the opportunity to build their businesses based on where the market is headed, keeping one step ahead of larger firms that rely on market research to understand current consumer preferences.
“And that’s how they’re going to win,” Mackey said.
“They see further, they see deeper, because they understand the market, they understand what the customers want at a depth that marketing research cannot show.”
But that window of opportunity for marijuana entrepreneurs won’t stay open forever, warned Mackey, whose own company was purchased by Amazon for $13.7 billion in 2017.
“The great thing about cannabis and CBD right now is that it’s not too late, but it will be,” he told Walsh.
“There’ll be a shakeout that occurs in the next 10 to 15 years, and a lot of the people that can’t scale up and get their scale and get their prices and get a brand out there – even though they might have really good products – they will slowly start to fall away.”
Drawing on his own business experience, Mackey highlighted the natural food industry’s evolution to “become more and more of a product-dominated industry,” a journey that could see parallels in the cannabis sector.
“The retailers are almost secondary because the products are being sold everywhere. … If you could create a category, and you can create the brand that would dominate that category, you could make a ton of money. I’ve seen it.”
Mackey cited examples of natural food brands such as plant-based meat substitute supplier Beyond Meat and pasture-raised egg company Vital Farms.
“I see no reason why that can’t happen in the cannabis industry, but as long as cannabis is seen as just a large category, then that will limit the potential for brands to stake a claim,” he said.
“If you can create categories and get your brand out there and dominate that category – be the category king, so to speak – I think you can create a lot of value for investors and a lot of value for all your stakeholders.”
Mackey told the virtual MJBizCon audience that those stakeholders include more than just owners and investors.
“Business has been defined as creating value for its investors by maximizing profits, and that’s why it exists,” Mackey said in his MJBizCon keynote address, an overview of the business philosophy put forth in his book “Conscious Capitalism: Liberating the Heroic Spirit of Business.”
“‘Conscious Capitalism’ is arguing, yes, it has to create value for its investors, it needs to create profit for investors or the business will die.
“But it’s also creating value for customers who are exchanging voluntarily with the organization – if you don’t create value for your customers, they’ll go to your competitors.”
Solomon Israel can be reached at [email protected]