January 30, 2020
Joining us on the Marketing Mix Podcast is Chad Bronstein, Founder & CEO at Fyllo. In this episode, Chad discusses breaking into the unknown of cannabis advertising, how Fyllo is creating safe marketing automation for cannabis brands, and his strategy for shaping company culture from inception to acquisition.
Jeff Ragovin: Fyllo is a cannabis marketing platform that essentially powers compliance. Is that right?
Chad Bronstein: Yes. Powering compliance is the nucleus of our business, but we do a multitude of different things working closely with brands. So compliance automation is one of the things we’re heavily focused on in Fyllo’s offering.
Jeff Ragovin: That’s something that is really timely because with all of the laws and regulations a lot of brands are questioning “how do we market?” So, kudos to you and your team, one for launching in the last year and two for your recent acquisition. I think it was in the news a week ago that you guys acquired a company called CannaRegs?
Chad Bronstein: We announced that last Monday, actually, so it’s been a little over a week and we’re very excited about it! We’ve been talking to CannaRegs for quite some time.
Jeff Ragovin: Really amazing to see how fast you guys have been able to do that. Talk to us a little bit more about the acquisition?
Chad Bronstein: Amanda, who is the CEO of CannaRegs, and I met a while back and met through one of our mutual friends who is pretty high up at MSO. As a company, our whole mission was to provide compliance automation to the brands so, from our world, they don’t have to have the same troubles as cannabis brands have. We wanted to continue to figure out a way to automate the compliance factors so that a brand would have a safe environment to be able to market the same way a Fortune 100 brand would do.
CannaRegs is a technology that’s built by attorneys, paralegals, and engineers where they went out and built relationships and scrubbed a lot of the local government websites and had local partnerships where they had 40,000 municipalities that were coming up into their platform. A lot of MSOs, a lot of real estate firms, a lot of private equity firms were using CannaRegs and licensing CannaRegs to understand the market. If they were to jump into the Hamptons, for example, they would have to really understand the local government, the laws, the municipalities, when a meeting is happening regarding cannabis. It gave them insights to make smarter decisions and understand the regulations and laws in those specific areas, which obviously helps Fyllo. As we’re running a lot of brands that have a national and geo-targeted presence and we have to make sure we’re really following the regulations in those areas.
Jeff Ragovin: Why did you decide to move into the cannabis industry?
Chad Bronstein: That’s a great question and could be a long-winded answer, but I’ll try to keep it short. I’m an entrepreneur, just like you Jeff. When you become an entrepreneur, you grow companies, they become larger companies. The last company I was at we started to get a lot of cannabis companies asking, “Hey, can we run with your platform? Are you guys willing to work with us?” The worlds that I come from and you come from were not willing to accept any cannabis advertising because there’s this large unknown.
I founded the company with someone I grew up with and we went out to market to understand the need for what we wanted to build. We spent some time considering the decision to just go to another large tech company and become a CRO or a president of some sort, my wife said to me, “Chad, it’s time for you to go be an entrepreneur again.” When she said that, I had the support of her to go full blast into the cannabis arena. I’m not a big smoker, never really smoke that much weed. Some of my friends were like, “There’s a lot of irony in this because you jumped into the cannabis arena and you’ve never really smoked when we knew you growing up.” I really loved the challenge that was in front of me.
I’m a big guy for challenges and doing something with people that I really like to work with. I went and hand-picked those co-founders based off of experiences I’ve had with them. You and I both know when you’re starting a company, you have to have people around you that you love working with as well as you know with the challenge and infrastructure, you can count on them to take it down the field in those challenges. I jumped in because my wife told me to be an entrepreneur and cannabis was something I had my eye on.
Jeff Ragovin: How did you guys come up with the name Fyllo?
Chad Bronstein: We were in my lake house in Wisconsin. We have offsites there. We’re a startup. We’re sitting, doing our all-hands offsite just when we started the company and started to raise some of the capital. Aristotle, who is my Chief of Staff, sold his company which was a Greek eyewear company which I had invested in and so we were all sitting in a room talking about what’s important to us as a company. What was relevant from that conversation is that we are all friends. We wanted to create a family-like culture and our mantra is “All in, all out, all together”. Fyllo is Greek for “friendship” as well as a term to describe the root of a leaf. We’re in cannabis, we’re all friends, we wanted our company culture to be family-like, so Fyllo incorporated what we were doing in cannabis and what we wanted our culture to be. We came up with it in 15 minutes.
Jeff Ragovin: As we enter a new decade, what are some of the best ways to market cannabis?
Chad Bronstein: A lot of the brands are starting to define who they are. MSOs have grown really fast, but they did so from a grassroots perspective. Now, these brands are starting to develop brand equity. Fyllo is working really closely with them to be able to give them a voice. When we started, there wasn’t really much space outside of them running billboards or local promotions. Part of why we started Fyllo was down to our mission to help brands have a voice and to tell their stories. A lot of people have a stigma against cannabis, but it helps a lot of people. It helps people with cancer, epilepsy, autism, sleep, pain, etc. It’s really exciting for us to work with them on getting their voice out there. Fyllo is launching an ecosystem, and from our world you have data-logics. We are very focused on being able to allow brands to target consumers knowing they’re in market, and you’ll be seeing some pretty cool press around this over the next couple of weeks.
Jeff Ragovin: Are there still taboos around marketing cannabis?
Chad Bronstein: There’s a lot of unknown and nerves. We meet with all the brands and even sizable ones get a little scared. There’s a lot of different CBD laws and there are a lot of rules enforced by the FDA. When you’re running digitally there can be fines that come from the way you are packaging and even on the ways you are selling digitally. There’s always different factors. There’s a lot of taboos too. As more people get educated, the taboos will go away but I think it will take some time. A lot of people want to jump into the space thinking it’s going to be easy, but it’s very difficult.
Jeff Ragovin: What has really evolved from a marketing perspective for cannabis advertising?
Chad Bronstein: When we first started it was very hard but now people are starting to test the water. If you are a big company working with Fyllo that’s powered by CannaRegs you can feel confident that if you are running advertising you will be compliant.
Jeff Ragovin: You guys just completed the acquisition of CannaRegs. How are you planning on merging the cultures of the two different teams?
Chad Bronstein: You have to combine cultures. They’re both pretty young cultures which is good. The synergy is really exciting because the companies together are going to launch V2. V2 will be integrated into the CannaBrain. Most of the people that use our platform are lawyers. The good thing about Fyllo is that Fyllo is talking to the brand team, then CannaRegs is talking to the legal team, but when you marry them together you’re creating a much easier situation for the brands. CannaRegs data is now powering our algorithms.
Jeff Ragovin: Any tips for companies thinking about an acquisition?
Chad Bronstein: When we dived in with CannaRegs it was more of a relationship-building first before we even got into the terms of the acquisition. You have to make sure that the companies are synergistic and complementary to one another. You want to make sure that when two companies marry, there aren’t going to be any quick divorces.
Jeff Ragovin: Thank you for joining the Marketing Mix Podcast.
Please note, the above has been paraphrased for editorial purposes