Two potheads out to build a big business

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So long are the days when marijuana, or cannabis, evoked images of VW-buses, flower prints and flower crowns. Mary Jane has a new image and it is tied to the tech sector.

It was once impossible to imagine a weed-related IPO, but in early December 2016, Innovative Industrial Properties Inc. debuted the first marijuana startup on the parquet of the New York Stock Exchange.

Innovative Industrial Properties Inc. is a very young company that invests in cannabis farms and has only a handful of employees – yet has a market capitalization of €52 million (54.3 million USD). On an almost daily basis investment opportunities related to marijuana spring up – on and off of the stock exchange.

“At first cannabis was a huge legal uncertainty. But today it is a sustainable business model,” Mark Williams says during an interview with the Heureka. Williams is the founder of the California-based Cannabis startup Firefly Vapor. The fledgling company hopes to enter into the the lucrative cannabis market with its vaporizer, without having to deal directly with the legality of the substance itself, for now at least.

Williams is betting on the success of these handheld smoking devices, which release the intoxicating substances found in cannabis without the accompanying cancer-causing ones.

Everything is controlled via smartphone to ensure the right temperature. Since April, the company has been selling a second, better version of the vaporizer. 100,000 of these vaporizers have already been sold to customers.

The vaporizer is also available in Germany in specialty shops. Verdampftnochmal, located in Treptow, a city district of Berlin, is just one example. However, 80 per cent of Verdampftnochmal’s customers are from the US.

Williams first came in contact with marijuana when he was in college, he says. Legally, of course, as he had a medical card that allowed him to consume the drug. Then he essentially turned a hobby into a career.

He first started making and selling ceramic bongs. This wasn’t enough to make him rich, but it was enough to help him buy a car. In the meantime he created a name for himself as an interface and product designer in Silicon Valley. For 22 years he did this, working for companies like Apple where he was responsible for the user interface of Mac OS X. He was still using marijuana during this time, Williams says. Always legally, he emphasized.

When it comes to marijuana use, Williams was dissatisfied with the way most people use the drug – and he was especially bothered by the negative health implications.
mark_and_sasha_1024“That kept us so preoccupied that we quit our jobs,” Williams says. Together with his friend and colleague Sasha Robinson, he left Apple to establish Firefly. They financed the startup themselves.

He is especially proud of the method he created, which heats the marijuana almost instantaneously without it coming into contact with a heating material and only when an individual is inhaling. This is also what’s supposed to differentiate Firefly from its numerous competitors.

Financially speaking, Firefly’s competitors are a few steps ahead: Pax, the main competitor that entered the market with its own portable vaporizers, already secured $45 million in funding.

In the coming year, Williams wants to find investors that are willing to enter into the marijuana market. “We want to raise several million dollars,” the founder says. As interest in marijuana continues to grow, Williams wholeheartedly believes he will quickly find individuals willing to invest. And with fresh capital, the product selection will be increased. “There are several price points, where you can sell these devices,” Williams explains. At $300, Firefly vaporizers sit snugly at the the top of the middle range.

The breaking point, however, will be marketing. “How much should we give out for that?” he asks rhetorically. Too much investment in a newly developing market is inefficient, but if you come in too late, odds are you’ll end up giving out more money. Also inefficient.

And Williams has no doubts that the market will grow. “Now is a great time to expand. Marijuana is being legalized in more and more states,” he says. In Spring 2017, marijuana is also to be legalized for medicinal use in Germany.

But marijuana is by no means a widely used commodity and that could partly be due in part to a lack of technology development. “We actually invent stuff at Firefly!” Williams says. The founder is counting on a stabilization of cannabis technology in the next five years.

Even marijuana research is still in the early stages. “Today we know there are 175 different cannabinoids. But no one knows how they interact with one another, not even regarding taste and efficacy.” In the future, William’s company will not just sell vaporizers, but will provide mixtures of different cannabis compounds.

A few years from now, Williams wants Firefly to be one of the dominating providers on the market. This could feasibly happen with Firefly’s eight-person team, which is much more efficient than competitors.

US competitors, like the design-focused Pax, set up shop in the heart of San Francisco: the Mission District.  But a new competitor from Tuttlingen an der Donau, a Swabian supplier named Storz & Bickel, is looking to make waves. The German company has already brought a number of vaporizers to market and long ago opened their own office in California. The US is by far the largest sales market, even for a German manufacturer.

Williams does not want to be influenced by this development. Firefly will need less money for development, he says.  And most important is that Firefly is positioned well to adapt to the lifestyle of their target consumers, which are young and on the go. “Our vaporizer is ready to use. You can always take a puff,” Williams says. Their motto seems to be ‘Smoking on the go.’ Williams does not see his target consumers as the conscious connoisseur who enjoys smoking in the evening. His vaporizers are for immediate use: “After a stressful meeting, for example, I can come down [by smoking].”

Photos via Firefly Vapors

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