Baker Technologies is a company offering a customer engagement platform especially designed for cannabis dispensaries and brands, often dubbed “the salesforce.com,
inc. (NYSE: CRM) of pot."
A couple of weeks ago, the firm, which is now active in 10 U.S. states and Canada,
announced it had secured a $1.6 million extension to a 2016 seed round, bringing its total raised capital to $3.5 million.
Following the news release, Benzinga had the chance to chat with Baker’s CEO Joel Milton. Check out the highlight of our
conversation below.
Get Cookin’ With Baker
Baker is “like a wing man for dispensaries [...] Our goal is to really help dispensaries look good, build their brands, connect
with their customers, and drive more revenue,” Milton commenced.
“There is a lot of competition in the cannabis space for the end consumer. Everyone wants John Doe, the shopper for cannabis.
There are more dispensaries in Denver than Starbucks Corporation (NASDAQ: SBUX) and 7-Elevens (SEVEN & I HOLDINGS UNSP ADR EACH REPR 0.5 ORD
(OTC: SVNDY))combined,” he continued. “What we noticed is that
dispensaries were spending a lot of money on customer acquisition by putting deals on websites, trying to drive foot traffic. But,
what was happening was that the customers would come in, take advantage of the deal, and then leave — and they would never come
back again until there was another deal; I call this the Groupon Inc (NASDAQ: GRPN) phenomenon.”
So, Baker has come up with a solution to turn foot traffic into repeat, loyal customers. The process starts by adding a products
menu to the dispensary’s website, so that customers are not re-directed to third party sites like WeedMaps or Leafly. “This lets
customers see what’s in stock; [take into account that] 75 percent of customers actually want to know that their favorite product
or products are in stock before they go to the store, and even order or reserve them [depending on whether delivery is legal in
that state or not].”
“Our online menu tool is similar to OpenTable (Priceline Group Inc (NASDAQ: PCLN)) or GrubHub Inc (NYSE: GRUB)'s Seamless [meaning it’s integrated to the customer’s own site],” he
concluded.
Beyond this menu service, Baker offers Apple Inc. (NASDAQ: AAPL) iPads for the stores, where customers sign in for deals and loyalty rewards.
“This is a great opportunity for the dispensary to actually capture their customers’ information, and it texts them to keep them
coming back.
Finally, the “salesforce component.” The third thing Baker does is collect data on clients and allows dispensaries to send
personalized messages to different groups of people based on their interests. This way, they can reach out to customers without
them feeling spammed.
“If you look at Amazon.com, Inc. (NASDAQ: AMZN), one of the ways it makes so much money is by those recommended products —
Every time you go on there they show you things that you actually want. Dispensaries do the same thing. And, not only does that
make more money because people want to buy the product that they like, but it also makes the customers feel like their dispensary
knows them.
High Results
Benzinga: Let’s talk a bit about results. Your press kit assures that clients have seen an average increase in order
size of 40 percent in just six weeks. You also mention a 300 percent return on investment in just 10 weeks. Could you explain these
figures a bit?
Milton: Like salesforce, Baker is a SAAS company; we charge a monthly software service fee. If you take our
average annual contract size — let’s just say $10,000. What we find is that within six weeks of using Baker, dispensaries will see
a $30,000 increase in their revenues, which represents a 300 percent ROI on the full year’s cost of the platform. And, we have
actual data to prove this.
BZ: How do you deal with finances in an industry that is underserved by traditional financial
institutions?
Milton: Fundraising is obviously a challenge; the majority of institutional investors are not able to invest in
cannabis. They have various vice clauses in the LPAs — So, the pool of investors is actually quite limited. There is a lot of
interest in the space. It is sexy, it’s growing really quickly, it’s interesting, there is a ton of opportunity — but there aren’t
as many deep-pocketed players in the space at the moment. [Unlike most other industries], the hard part isn’t getting an initial
meeting, but it is finding someone who can actually participate in funding or financing your company.
BZ: Let’s talk a bit about the recent raise. You completed a $1.6 million raise: who’s investing and how did you get
there?
Milton: We’ve been growing 20 percent month-over-month very consistently [...] So, while we were in the middle
of this pretty aggressive growth trajectory, we wanted to make several more hires and really beef up our engineering team and also
our sales and support team. I circulated the idea casually and within about a week we were completely subscribed in terms of the
round. Within a week, the round was essentially full, primarily from existing investors, although we did bring in one or two
additional outside investors to participate as well.
Related Links:
Rapper 'The
Game' Talks About His Cannabis Venture: 'Setting The Standard For Quality Medicine, Patient Care'
ArcView's Troy
Dayton Explains Why The Cannabis Industry Will Thrive Even If Trump Cracks Down On Marijuana
Why Education Could Be The Biggest Beneficiary Of
Cannabis Legalization
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.