Meet One Of The Largest VC-Backed Cannabis Companies In The U.S., Generating 300% ROI In 10 Weeks

Baker Technologies is a company offering a customer engagement platform especially designed for cannabis dispensaries and brands, often dubbed “the salesforce.com, inc. 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 said.

“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 SBUX and 7-Elevens 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 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 PCLN) or GrubHub Inc GRUB's Seamless [meaning it’s integrated to the customer’s own site],” he concluded.

Beyond this menu service, Baker offers Apple Inc. 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. 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.

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