Wyld CEO Aaron Morris on Marching to a Different Gummy | Cannabis Business Executive – Cannabis and Marijuana industry news
As we began a recent interview, Wyld CEO Aaron Morris warned me he was a very fast talker, and he was right. Conversing at the speed of light from Portland, Oregon, where he lives and where Wyld is headquartered, Morris was open and engaging and even displayed a refreshing impatience at being asked the same…
The post Wyld CEO Aaron Morris on Marching to a Different Gummy appeared first on Cannabis Business Executive – Cannabis and Marijuana industry news.
As we began a recent interview, Wyld CEO Aaron Morris warned me he was a very fast talker, and he was right. Conversing at the speed of light from Portland, Oregon, where he lives and where Wyld is headquartered, Morris was open and engaging and even displayed a refreshing impatience at being asked the same questions about Wyld’s rise that he has been asked so many times before. The story he tells is one of achieving an utter, almost brutal, efficiency, employing guerilla marketing, and tossing the middle finger at whomever from the beginning, and it has worked beyond the expectations of Morris, who, along with Chris Joseph and René Kaza, founded this producer of high-quality gummies in 2016. Today, as Wyld expands its big footprint across the country and into Canada, its sight set firmly on the future as it makes waves in this insanely popular, highly competitive, and consistently lucrative sector of the cannabis edibles market, Morris is optimistic about Wyld, realistic about the industry, and palpably enthusiastic about his job steering Wyld toward its ultimate destiny to change the world.
“When I was looking at industry access, I had been in the gray market, the medical market, for about 12 years,” he said of his entry into legal cannabis. “As far as an access point into the industry, I looked at retail, cultivation, and processing edibles – no, no, no. They’re commodities. I looked at Oregon. I’m from here, and I’m like, it’s an agriculture state that can’t export. I don’t want anything to do with commodities, but with edibles you can build a brand. Edibles is also the most difficult category, because you have the lowest price per unit and you have to do all these extra manufacturing steps, and there’s a lot more value-add. I looked at edibles for those reasons, and there were gummies on the market at the time. There was a company that is no longer even in business, but at the time, everyone said you can’t do gummies because this company owns it; don’t bother, it’s a death sentence to do gummies. I was like, ‘I’m good. Let me do gummies. It’s not a problem. It’s the medical market.’ I had just gotten out of liquor, where I started a distillery when I was 23. It was a first scrappy startup, no-funding distillery in vodka, and I’m like, ‘Guys, we came from the most saturated beverage industry in the world, and we started some scrappy vodka company. We don’t really care if other people are doing it.’ So, that was kind of our take. We just wanted to do it best.”
This was around 2016, when the edibles side of the industry was truly nascent, and the standards for quality were more or less obvious. “Just do it right,” said Morris of their intentions. “This is the day when people are still spraying gummies and everyone was looking for the cheapest input or whatever internet recipe, and there were no real products on the market. Whether it was the quality of ingredients, natural, artificial, real fruit, quality of cannabis inputs, or just operating practices, this was when everyone was in their kitchen, whisking gummies and hand-pouring them, which is what we started doing. That was our startup story, too, but I quickly knew that was a starting point. I was like, ‘We have to scale this and make this into a quality product and have a rhyme or reason for everything that we do.
“To answer the second part of your question, and I love telling this story,” he added, “when we started the company, our ambitions were low. We were basically, ‘Hey, man, how cool would it be if in six years – and six is just an arbitrary number – how cool would it be if we were the largest edible producer in Oregon? How cool would that be, and then, upon federal legalization, maybe we’ll sell to a Pepsi or something. That was as far as the ambition went. Maybe there’ll be 50 employees. I don’t know how much you know about our sales, but obviously, that’s not how it worked out.”
Did he think things would roll out similar to his alcohol experience? “Of course, I did,” he said. “I was 25 or 26, starting a cannabis company. It’s all I knew. I thought we would produce it, we’d find a sales organization, a distribution company, a partner to work with, we’d start in a region, we’d really do well in certain markets. Like when we started the liquor business, and we did well in the suburbs, something like that. There were spots where we did really well, and spots where we didn’t do well.
“So, I was ready for that normal thing,” he added, “but I wasn’t ready for all the cannabis chaos. Right away, I was like, ‘This isn’t how this was going to work.’ I talked to every distro, every salesperson in Oregon, and they’re all just brokers. I’m like, ‘It’s cool. We’re just going to go buy two vans,’ and I personally financed two vans so we could do our own distribution. It was out of necessity more than by choice, but now we self-manufacture and self-distribute in all of our states outside of Canada. We have the most developed infrastructure in all of THC edibles, and we expanded completely differently than the Wanas and the Kivas. So, it was by necessity and not by choice how we pivoted to bring the markets, but I’m a guerrilla marketer, so the way we did it was always guerrilla. We did it with our people, we did with our pop-ups, we never had a marketing team or marketing budgets; we literally did it door-by-door the old fashioned way, and started handing out a lot of gummies, if you will.”
Why exactly did they focus on gummies, which are really just sweet little delivery systems, albeit eternally popular ones. “Yeah, gummies,” concurred Morris of the ubiquitous product. “Gummies reign supreme, no matter how you want to look at it. 70 percent of the adult-use edible market is gummies, and there’s a lot of reasons for that. I think this is well-documented through plenty of people, but it’s the digestibility, how your body takes the solubility and how it binds with these gelling agents in terms of the THC. I think that happened by luck; I don’t think people knew about that when they started putting THC into gummies. I think they were just candied drugs. But as far as why Wyld is focused on them, and why we stick with just gummies, I wouldn’t say we’re always going to stick with just gummies. We just look at it as just being the most popular medium. We had some chocolates out and the gummies took off.
“We don’t make our own oil, and we don’t do our own cultivation,” he added. “We focus on what we do best, and the Wyld story is actually full of a bunch of irony. I’ve never written a business plan in my life or done any of that business stuff. Originally, I wanted it to be like the North Face of edibles – granola bars, peanut butter, drink mixes, a climber hanging off of a cliff as a picture – and then we turned it into the gummy company. But when we were first starting, when Wyld was getting going, the conversation was about infusing something. Customers want everything infused. Just find something weird. We were doing nuts. Everyone was trying all these different mediums, and I was sitting there thinking, ‘No. You don’t eat your pasta to get drunk. You don’t cook pasta and dump wine on top of it and eat it to get drunk. You drink wine with your pasta. I don’t believe that you should put cannabis in every food item, and with every one that is tried, seemingly the customer hasn’t wanted it.”
The answer was to be completely original. “Wyld does everything in-house from our emulsions,” explained Morris. “We also have a Wyld CBD line, and we do our own canning and beverages. We’ve developed all that in-house. We don’t work with formulators. We’ve tested the molecular size of our gummies and they could technically be considered nano as stock, but we don’t like the word and we don’t like marketing it. Right now, there is a lot of marketing around cannabis science. Another example is terpenes. Terpenes aren’t unique to cannabis, but the industry is very focused on the idea that it’s a cannabis thing even though they’ve been around forever. We try to stay focused. We explore all the new technologies. We’ve talked to everyone, and we brought these functions in-house where we thought we needed them. Right now, we are more focused on minor cannabinoids. I don’t want to get stuck on a talking point, but our gummies are formulated in a way that competes with all of the trends but as a stock item instead of as a marketing slogan, if you will.”
So, how does he explain what makes Wyld gummies unique? “I get asked about the product stuff all the time,” said Morris. “Why is Wyld successful? Some people have product opinions, some have business-offering opinions, some have early-to-market opinions. It’s kind of all those boxes. Product-wise, we use all clean ingredients, we source real fruit, we have bioavailability, we put lecithin in, we nitpick everything at eGMP standards, and regulate quality standards in-house. There is not a cannabis edible operator that is going to meet our standard of production, safety, quality, and just maturity on manufacturing, so check all those boxes. We do all that.
“And yes, our products are bioavailable through a process of aeration and emulsification, but that’s not what we push,” he continued. “We just want to deliver the most consistent experience and that is Wyld. Why is Wyld so successful in the market? I get asked that every day. It’s the people behind Wyld. It’s cliché. End of the day, we’re a $150k seed company that never did a Series A, and has no board of directors, no group of advisors. We kind of put our middle fingers in the air, and went and got it done, and that really resonated because there are real people behind the brand. We’re not fully legacy operators, but we have legacy backgrounds, and we’re not MSOs or publicly traded bankers.”
The presiding ethos is somewhat radical. “Guerilla marketing is just showing up,” said Morris. “The people that work for Wyld want to be a part of it and just show up.”
What about the Wyld consumer? Is there a demographic they are going after? “Yes, of course, the soccer mom cliche,” said Morris. “But Wyld’s success is so much broader than that, and we actually have some new product lines. We put out a Sour [gummy] to have a broader appeal, and we’re also opening up the archetype and personality of Wyld to a broader audience, because we used to speak to a sage, purity customer. Now we’re targeted for everyone. We designed it to sit somewhere in the middle. We don’t want to be the top shelf, we don’t want to be the lowest shelf, we want to be at a premium relatable quality for a good price.”
Speaking of price points, are gummies particularly sensitive to price swings, and has inflation impacting sales over the last six months or so? “In terms of what has changed in the last six months, “price sensitivity and all that,” said Morris, “yes, inflation has affected everyone. Supply chain woes, pandemic woes, right now, the liquidity drying up in the market has slowly moved up the supply chain to the point where suppliers are struggling to get paid, the stores have no money, there are no more lenders, there’s no more equity investment, and now that is penetrating every single part of the cannabis supply chain. It adds a ton of pressure on businesses, and it puts the most pressure on the smallest players. We’ve been in a really fortunate position to be able to weather the storm. Obviously, our costs are up, everyone’s costs are up – it’s a lie if they’re saying otherwise – but we haven’t had to lower prices in terms of what’s happening in the market.
“It’s a good thing,” he added of the turmoil. “Everyone’s freaking out. I mean, it’s not a good thing that the market is struggling, but it’s an agricultural product at the end of the day. As far as the new markets’ supply chain, supply-and-demand, all of those things, obviously every state is unique, some over-supplied cultivation, some over-supplied retailers, and vice versa. It makes it very unique, but at the end of the day, when I look at, say, Oregon and Michigan – because if we want to talk about price-sensitive markets, it’s Oregon and Michigan in the recreational cannabis scene of today in the lower 48 – I always say they’re six years ahead, because if your market is temporarily license-capped, at some point it won’t be, and you’ll face these same pressures.
“What it forces the industry to do is tier-out,” continued Morris. “For years, and in many markets that we still operate in, people look at cannabis – and let’s talk edibles because that’s my life – and they look at it like it’s one edible. They’re like, ‘I get edibles for this and that. And, being the CPG-slash-liquor guy that I am, I’m like, ‘Guys, there are categories. Like in everything in the world, there’s less expensive and more expensive, and on every shelf in the world and in every retail experience – whether it’s BTC, e-comm, or Retail CX – they’re all laid out the same way, so why are we talking as if there’s only one subcategory of a category?’ Slowly, you are starting to see cheaper products, but now you have everyone talking about all these low-price products. I’m like, ‘Yeah, but there’s always going to be a customer that buys at the lowest index of any product. There’s always going to be a customer that buys at the higher index of pricing any product. Where do you want your brand? Why does your brand fill that niche?’ Now that we’re getting into brand building, and all of our sustainability niches, and doing all this really exciting stuff that we’re way ahead of everyone in the industry on, we’re not trying to race to the bottom. I guess what I’m saying is, it doesn’t surprise me but what is really unfortunate is that regulations haven’t caught up and offered assistance, because it’s going to wipe out a ton of hardworking, smaller regional players that got no regulatory or tax relief, and it’s really difficult to survive those trends.”
Does all of that mean that Wyld, with its 800-plus employees, will have to work to keep costs down? “I look at it as efficiency less costs,” said Morris. “We just get a lot more done per hours. Yes, we’re disciplined because we haven’t raised money, but we’re also disciplined in the sense that we’ve always played with house money. You have to be profitable before you can build is the mentality around here. You have to make the money before you can spend the money.
Are there additional things the company may need to do if or as the market tightens. “Of course, we’re watching it,” said Morris. “What we’re looking at is simplifying instead of reacting and cutting sales expenses and just laying people off. It’s hard to be a veteran in cannabis. It’s extremely hard to make it to year two yet alone year five and longer. So, whether you’re a founder, employee, production, executive, it doesn’t matter, this industry is a crazy ride to survive in. Our response to it all has been how do we simplify all the deliverables and the duties and the tasks that we’re asking the staff to do?
“Instead of cutting,” he continued, “it’s a re-prioritizing of tasks. I’m going around to the team, going, ‘Guys, we might not be able to get all 10 of these done, so let’s choose the seven we can get done.’ Because we’re not going to hire more roles right now when we don’t know where the world is headed, and in particular we don’t know where the cannabis industry is headed. So, we’re not going to add to our cost right now, but we can have an honest conversation on what tasks we can remove that we don’t need to do right now, and how do we simplify all of our jobs. So, it’s a refocus, and honestly, it’s been great. We’re at about 950 employees now, we’ll have over 1000 employees soon, we’re launching four markets in the next four months, another brand, another line extension. So, we’ve got seven SKUs coming out, but no, we’re not spending money. I’m just trying to simplify every role I can, understanding that growth might take a hit.
“To answer your question,” he added, “we’re not trying to be on the selling side. We’re trying to be on the buying side. When you’re building for acquisition, it’s market-share and revenue and multipliers, and you’re just trying to be early market. But whether it’s retail and you’re doing land grabs, or you’re a flower company and you’re doing market share, you can play that game all day long and the end goal is for your IP to be acquired. That’s not our end goal. If I was running the company to be acquired, I’d do it differently. There is value in spending money to get market share, but we will sacrifice growth because we’ve never bought it. We’ve never spent money on customer acquisition and all that fun stuff – which would be hilarious and kind of creepy and scary to think about if we ever get to the scale and start focusing on some of those things – but that’s how we view it. Yes, costs are affecting us. Yes, we are looking at reforecasting. Yes, we are doing everything that is required to be a disciplined business right now. No, we do not need to make drastic cuts, because we’ve always been profitable. We’re less profitable, but we’ve always been profitable.”
Regarding the four new markets mentioned,” Oklahoma went live last week,” said Morris. “We have Illinois going live Q4, New Mexico and Missouri are going to go live Q4, maybe January, and then Massachusetts is going to go live in January or February. We’ll be in a total of 13 states and Canada. So, 14 total markets by Q2 of next year.”
It’s a lot of territory to cover for the DIY company. “I travel a lot, and I delegate a lot,” said Morris. “Ops people don’t get enough love in the business world, so I’m going to give a special shout-out to the operations team. We have field operators, food-safety teams, a ton of people that are on flights all the time, we have centralized command, and the ops team works because if you want to make one change, you have to get all 13 places to do it, and next year, it’ll be 17 places. In three years, we’ll have 35 places, and this doesn’t include our distribution warehouses, our offsite warehouses for storage. We run a lot more than 13 manufacturing facilities. We have over 20 facilities that we actually operate, because we do our own distribution and warehousing and all that fun stuff.
“It’s a real system,” he added. “Corporate is in Oregon, we try to centralize as much as possible from an oversight perspective, and then we are obviously trying to use technology, but quality is paramount, and we go through all these metrics with all of our facilities. It’s a lot, but I would say it’s harder to keep the culture the same in every building than it is to make quality products, because quality is a process, it’s an oversight of process. Quality is a process of accountability and checkpoints. If it doesn’t meet certain metrics, it can’t go on to the next stage. Once you get to the next stage, it has to go through this stage to get to the next stage. You can manage that through proper diligence of operations.”
The logistics alone can be daunting. “Our supply chain manages around 2800 SKUs, between all the inputs for all the facilities and all the places,” said Morris. “So, 2800 items they have to order and manage and get to all of our facilities just to produce product. That’s not finished goods. Our supply chain team is four people. We’re doing all those things, we’re hiring more, and investing in all the right spots, but it’s funny, because I get asked these questions all the time, and they’re not what stresses me out at all. That’s just work. I don’t want to come off the wrong way, but those are just processes and work and you can handle that. It’s input and output.”
What does stress him out? It is difficult,” he said of the cannabis business. “It’s very stressful. I think the thing that cannabis companies should really understand if they haven’t learned yet, is that you’re never going to do it 100 percent perfect. Every time you get something done to 100 percent, they’re going to change the regs, something’s going to happen. Something is going to happen. And also, the market isn’t ready for mature business practices, so there is streamlining that you can’t do because the retail market isn’t there yet. I could get into the 12 reasons of why, but I think it’s a whole different rabbit hole that no one wants to talk about in cannabis yet.”
The Wyld Beyond
If the plan is to build the stickiest, most solid company possible, is there anything off the table? Will we see Wyld-branded retail stores in the future?
“Nothing is ever off the table,” said Morris, “but I can tell you how we view it in terms of where we’re headed, which I think is also what you’re asking. Yes, we’re edibles because we’re brand people. As of today, we’re not looking to get in retail, cultivation, oil, processing. We’re focused on what we do best, and that’s manufacturing edibles, sales, distribution, marketing of edibles, and also brand activation and marketing IP. And then all the really cool stuff we’re doing on the back-end, which is basically keeping our customers happy and talking to our customer but also trying to change the world.
“We are launching another edible brand within the gummy category,” he added, almost as an after-thought. “It’s our solventless play. Packaging is on the way. We’re launching in three states. I won’t tell you which, but you can probably figure it out. It’s a wild, vegan, tropical, solventless cousin. I’ll save the name for the press release. We’re also having a couple of conversations with some brands, and then obviously beverages are very interesting. We’re a national player, though, and the problem with beverages is redundancy. We’re in about 6500 doors with our CBD brand, and about 2700 dispensaries in the country. I come from beverage, and canning beverages will happen someday, that’s our background and what we know, but it’s just hard to roll out a national beverage right now. It’s really expensive logistics, but the customer’s not going anywhere and the segment’s going to be huge.
“I also want to get into some smaller segments,” he added. “The problem, as everyone knows, is that money’s tight for retailers, shelf space is tight, so new subcategories don’t really exist. Now, the advantage we have is that we handle our own distribution. And we are the largest wholesaler in North America by doors, not by revenue, because we only sell our own brands, so I think we have an opportunity to bring some non-gummy products to market. You’re never going to do the gummy revenue, but you might get 5 percent here, 2 percent there. So, we’re looking at a couple of new categories.
The smaller categories involve “some microdose plays, some chocolate play, some savory plays,” said Morris. “We would love to see an edibles industry that is more than just gummies and chocolates. To every single edible producer out there that is not making gummies, I know how hard it is and props to you for surviving. But yeah, we want to look into the edibles category, we really liked the edibles space, and we think we can convey a much larger story and avoid market pricing pressures. We can control our own destiny, which is basically one of our values. Control your own destiny, do it your own way, middle fingers in the air, whatever you want to do. And then of course, we’re potentially going to sell other people’s products within our distribution networks and our fleets. So that’s kind of where we’re headed. Launch three to five markets a year and go international. I’m talking to a group in Thailand, and also in Germany, so international is on the docket. We’re launching Midwest, doing East Coast next year, will wrap up the South as it goes rec and then roll out a house of brands, go all in on our sustainability initiatives, and try to champion all of that.”
Will they introduce large brands in the house of brands? “Yes, ideally,” said Morris. “The problem is, we never take on investment capital, and we don’t have the ability to buy today’s biggest brands, so we’re always looking at rising stars. So, we’re going to throw our hat in the ring with a couple of new brands, and we’re really excited about the new one. People are really excited. I can’t say what it is, but it makes sense for our portfolio. We don’t want Wyld to be the category. No 100 product lines under one logo. We don’t believe that’s the future of consumers and marketing. We want to play more house of brands instead of putting the antlers on every single product line that’s ever been invented.”
Regarding Wyld revenue, they are private and do not want to talk numbers, but numbers were mentioned in a six-month-old New Cannabis Ventures article, where the company mentioned a $200 million revenue target for 2020. “I think that was a stretch goal,” said Morris. “We’re not going to hit $200 million this year, but we are not that far away. The company’s history has been six years of at least doubling [revenue], and this year we’ll probably see 60 to 70 percent growth instead of 100 percent, which I’m stoked about. It’s not sustainable to double [revenue] every year when you’re getting into the hundreds of millions of dollars.”
Our time running out, I asked Morris the obligatory what keeps you up at night question. “Some states have banned gummies,” he answered. “What happens if the regulators ban gummies upon federal legalization? There, I said it. How would I not be terrified of that?! The other thing is, how big can you get until the big players enter? I think everyone wants to think about that, but unfortunately they’re just trying to survive the cannabis industry. I’m trying to raise our entity and infrastructure and brand house and market share now because I know that the war hasn’t even started. I also think there’s so much infighting in cannabis. I stay out of it. I don’t network. I don’t really attend conferences. I don’t fundraise. I don’t really do a lot of that. I think the cannabis industry is focused on the wrong things whereas I think we should be unified in the fact that the war has not begun.”
For Wyld, will the war be with Big Food? “Big food, big alcohol, Pharma, but I think Pharma is going to take a pharma approach, and they should. I think a lot of that should be prescription and not over the counter, but from the recreational side, big food, big alcohol, and big tobacco. The sin players and big food. What’s the largest asset when you’re trying to launch things? It’s the distribution network, and I think, unfortunately, that a lot of people are underestimating how important that is.”
Did Morris believe that the big players are so sophisticated and have such vast resources that they will in short order be able to produce quality cannabis products? “They will be able to produce the product,” he said. “The question is if they can build the brand to connect to the retailer and the customer, and I think they’re going to struggle. I mean, I dream about if we ever get that size, that it would be amazing, but it’s hard to innovate at that scale. And the thing about cannabis is that every six months there’s another innovation that changes consumer preferences. I don’t know when that will end. We don’t know enough about this plant. So, I think they will be able to produce quality and quantity very rapidly, but they don’t have distribution to dispensaries. They run every other retail environment in this country, but they’re going to struggle with the dispensaries, and I think they’re going to struggle with innovation.”
Not being that size yet, these must be his halcyon days, when he can innovate and play around. “That’s why it’s so fun,” said Morris. “Everyone’s running around so stressed, but the unknown is what makes it fun. You can try things and I think being courageous in cannabis will go a long way. But absolutely, I’m an entrepreneur more than I am a CEO, so this is the part that excites me, more than managing.”
Will it soon be time for the entrepreneur who founded the company to step aside and bring on the CEO, which all growing companies must face one day? “The problem is, there’s a lot of tribal knowledge in my head,” said Morris. “And it doesn’t always have to be true. If I ever become a burden in the company, I will step aside, but we’re doing a lot of really cool stuff on the back end that I won’t speak on yet, but that I think people are going to be really stoked to read about, and that fulfill certain promises that I have pledged as a company.
“That said,” he added, “this is still an entrepreneur’s game. We’ve got M&A, we’ve got new brands, we got federal legalization – and upon federal legalization, I’ve got to figure out what to do with 31 to 100 facilities – so while there will probably be that day, I don’t see it anytime soon because I’m having the time of my life. This industry’s crazy. Everyone is so stressed, and when everyone is stressed, my team tells me – and that is my blessing and my curse – I am super calm. When everyone’s really calm and things are going well, I’m very stressed. I’m like, we need chaos.
“I am surrounding myself with all the skill sets that you need,” he added, “but we also hire a lot of people with a lack of experience for a reason, because we want to build something different. Does that also mean our business has to be sound and have processes and quality? Yes, but we want to do it our way while also running a sound and profitable business. So, I don’t see me running into that wall anytime soon. There’s too much to build and too much to do.”
Is Wyld looking for anything? New partners, capital, certain markets to enter? “We always are looking at new emerging recreational markets,” said Morris. “We have a combination of our own licenses and a combination of licensed partnerships. We don’t license IP in the traditional sense, but we are always looking for East Coast and now there are the southern markets. We’re starting to tackle Illinois, Texas, Arkansas, Virginia, Georgia. Basically, anyone who wants to talk to Wyld about potentially doing a deal, we want to get set up with zero capex on our partner. If you’re interested, call us. It’s a very unique way of expanding, but we don’t do just co-packing and we don’t do just licensing arrangements.”
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