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🎢 #50 - How to build a CBD startup
+ How Amanda Goetz built House of Wise
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🔥 Startup Story
House of Wise
(Image credit: House of Wise)
Lately, I have been fascinated by the entire Cannabidiol industry (CBD). Despite its rise in popularity in recent years, CBD still has stigmas around it. Coming from a traditional Chinese family, I also had the same aversion to CBD as I was socialized to think that anything that had any association with drugs was vile and would become the root of my downfall if I were to ever try it. This perception slowly shifted as I began to educate myself by talking to startups and learning from friends who know more about the industry.
During this learning process, I found out about House of Wise - a startup that enables women to take control of their sleep, sex, stress through their CBD gummies and drops. I had the opportunity to chat with Amanda Goetz, founder of House of Wise, to learn more about her unique story building a CBD startup.
Amanda grew up in a conservative household in the Midwest. Unsurprisingly, there were a lot of stigmas around cannabis where she was coming from. She didn’t use cannabis products until recently.
“I was working as VP at a major wedding industry brand and it was getting acquired. While the acquisition was happening, I had three kids under the age of 4 and I filed for divorce. I realized that therapy and mental health only go so far - you actually need help with the physiological stress, ” Amanda said.
She initially turned to alcohol because it was a more socially acceptable way of dealing with stress but it brought with it negative impacts on her sleep and stress. She eventually found the solution in CBD.
“Most women, myself included, were taught that the thing that’s acceptable as a career woman or a mom is a glass of wine. Like all of my friends, I turned to wine. I couldn’t sleep at night or get a good workout because of alcohol and my anxiety attacks. Out of desperation, I started researching cannabis and started micro-dosing THC at night and using CBD during the day when I was at work.
It helped immensely. My sleep was better, I was more focused at work, and I was even getting better workouts due to better recovery. My anxiety became more manageable. At that point, I realized there’s not a brand out there speaking to a woman like me, so I quit my job in the middle of a pandemic to go help and provide a better solution to all the women that want to improve their sleep, stress levels, and sex lives. ” Amanda said.
🚗 Product Journey
First Validation (2020.09):
Amanda first validated the demand for CBD products and the best sales channel by becoming a brand ambassador for a few CBD brands in the market.
“Whenever my friend asked me how I was handling things, I would tell them about cannabis. They would ask ‘tell me more and what products are you using.’ I became a massive brand ambassador for a few brands I had found and my friends would go buy them based on my recommendations. Women are looking to hear about this from someone they trust. A lot of cannabis brands are unregulated white-labeled products that lacked an original formula or proper quality control. I validated that women selling to women they trust is the best way to sell the product.”
Research and partnership:
After validating the idea, Amanda went all-in on research to figure out the nuances of the industry and how to build the best product with an original formula. She talked to over 20 farmers, extraction facilities, chemists, and lawyers to understand the right ingredients, the manufacturing process, and the regulations in the space.
Another key for Amanda was to find the right partner to grow and produce the cannabis product. She was able to secure one of the leading cannabis manufacturers for her company.
“Luckily, I found one of the leading cannabis growers and manufacturers from Israel. They have many top chemists and product developers and a great farming technology from Israel. Everything is at the highest quality of excellence. Partnering with them was a no-brainer.”
Building a brand and distribution:
After finding the right partnership, Amanda started crafting a brand and creating a distribution strategy.
“House of Wise was named after Brownie Wise, the creator of the Tupperware party. Women come together and buy Tupperware from their friends. They discuss their first-hand experience with the product. Plus, hosting Tupperware Parties was also a great way for these women to make money, especially in the 1950s through the mid-90s. Wise grew this huge feminist movement after the war. Earl Tupper fired her and sold the company a few months after so she got nothing after making the company a multi-million dollar brand.
I named House of Wise after her intentionally because I believe that MLMs are predatory on women, but I also believe that women are influential, whether they're influencing their three best friends or 50,000 people on Instagram. Every woman influences someone else. I studied MLM to understand this modern approach to direct sales.”
Read more about it here.
The Launch (2020.11):
She did a Beta launch by first trying to find “Wise Women” on Twitter.
“Six months before the launch, I started tweeting and finding Wise Women- what we call our ambassadors and affiliate sales team members- asking people if they wanted to get behind the scenes of me building this company. I treated them almost like investors - I sent updates every single month and brought them along on the journey. When we went live with our soft launch on December 1, 2020, we already had 300 Wise Women talking about House of Wise, sharing their affiliate links. We hit our first-month goal of sales within the first week of being live.”
Current traction - They reached 100K in sales soon after the launch and have been growing rapidly since.
Quickly changing regulatory environment
“Regulatory environment in the cannabis industry moves lightning fast. One day you're shipping to California and the next day you wake up and they say ‘oh we passed Prop 65 now you have to print labels to put on the bottom of your cart’. Every state is now realizing that they can create their own Distribution License so you have to stay on top of all the new regulations. Luckily, all the big cannabis founders all look out for one another. ”
Scaling with limited resources
“You can scale in multiple ways - you can get more people to buy your product, or you can attack your costs to optimize your profit margin. I only have three full-time people on my team, myself and two other people. Thus, on any day, I'm going from selecting the right 3PL provider to keeping up a relationship with different packaging suppliers in the network in case any of their price drops in the future. Every day is a constant exercise of ruthless prioritization especially when fundraising is also happening.”
“The vision is to become a household brand that women trust and build a massive community of women that are empowering each other to feel like they are not alone in anything they are tackling.
Hopefully, three years from now, we continue to grow our products and build a brick and mortar retail presence, a physical safe space for women to go and experience CBD, connect with others, and just be their full selves.”
Check out House of Wise 🔥 !!
👨💻 What I’ve been reading
The great DTC re-bundling - how the Amazon roll-ups might affect the future of retail
Bessemer shared a great article on the distribution and conversion model for early-stage consumer startups
Genies CEO reveals his mental health struggles with depression and how digital avatars are helping him
Ramp’s jouney as New York’s fastest-growing startup
😍 Jobs & Internships
Lumos - Product Manager (Remote)
Cantos Ventures - Analyst (Remote)
Sapphire Partners - Associate (Palo Alto)
Immeasurable - Chief of Staff/Product Manager (N/A)
Webflow - Chief of Staff (Remote)
Flex - Chief of Staff (NYC)
Fifty Years - VC Summer Fellow (SF) **priority deadline this Monday!
Gorillas - Expansion Intern (NYC)
Curology - Product Dev Intern (SF)
Zoom - PM Intern (San Jose)
Thrasio - Paid Search Intern (Boston)
Zuora - Customer Strategy Analyst Intern (Redwood City)
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