How to Protect Your Startup Dreams in Uncharted Waters
When serious startup dreams involve an emergent and untested marketplace, there are five core dangers you should be aware of. Learn about them through the prism of the newly-minted U.S. hemp industry.
A Brief Introduction For Context
The image above is of a map drawn in 1601 by Theodore de Bry depicting early searches for a Northeast Passage to Asia. In this article it serves as an introductory historical reminder - building a better tomorrow is never easy, yet always a worthwhile and remembered venture!
Trouble only arises because innovation is dependent on resources, and back then there was one almighty resource ships wouldn’t dare brave those uncharted waters without...used for sails, rigging, rope, cordage, tar for caulking...hemp!
Today hemp’s making a come back.
Said to be worth well over $20 billion by 2022-23, the American hemp industry is wrapping up its first official year after the 2018 Farm Bill put an end to hemp farming prohibition. There’s much to be gleaned because make no mistake, generations of families, entrepreneurs, farmers, and startups are heavily invested in this agricultural paradigm shift.
5 Key Takeaways
The first year in any new market with huge upside/downside potential and tons of risk is going to be absolutely nuts; hope for the best, prepare for the worst.
Because the hemp industry hasn’t existed in any real sense for close to a century, and the plants themselves are based on relatively new genetics, many underestimated the amount of hard work and human labor involved.
Regardless of whether we’re talking new plants or fresh technology, if your startup involves untested resources you’re in the weeds! Building new supply chains from the ground up is usually a slow process fraught with landmines.
Don’t wait until it’s too late to take security seriously. You don’t farm gold next to a highway! The amount of theft and safety issues arising for hemp farmers is alarming and many have been caught unprepared.
The nature of American hemp between 2014 and 2019 has created this heightened sense of leaning into the wind. How's the weather been for your startup?
And with that, let’s dig right in.
See how your venture might relate to what new hempsters are dealing with.
Dust Off Your Wayfarers for First-Year Blues
That’s right, invest in a couple pairs of Ray-Ban Wayfarers and rock’em like the Blues Brothers. It’s not about being pessimistic or depressed, but having a mindset that’s prepared for road bumps, obstacles, and everything that can go wrong...going fantastically wrong.
The first-year blues are a reality for many in American hemp as yields didn’t turn out as rosy as expected for an assortment of reasons. Overall the 2019 harvest is unlikely to reach profitability, but that isn't putting any damper on the 2020 outlook whatsoever.
State, Local, Federal holdups and hangups. The USDA has failed to release official growing guidelines in the first year.
Lack of available and location-specific high-CBD/low-THC seed (genetics). Is the source of your startup’s resources secure?
Delayed planting schedules combined with harsh climate conditions. How might climate change impact your startup aspirations?
General inexperience with the crop, combined with limited access to conventional resources like banking, insurance, investment capital due to risk aversion, etc.
Endless drama for online merchants in the hemp-CBD space: sourcing issues, marketing and advertising restrictions, shipping problems, compliance uncertainties, bad PR thanks to unfavorable watchdog reports, etc.
Regardless, the American spirit for business and agricultural success is fierce!
If you need inspiration, look at what hemp farmers and people involved with the industry are shouldering through. You’ve got to have grit, passion, and vision to survive.
This next part will help in that department...
Stack Pallets of Elbow Grease
We all know innovation is risky and uncertain business. New markets, new industries are unsteady ground. You’ve got to be prepared to lather on the elbow grease for your startup dreams yes, but it helps to be realistic.
Are proper tools in place? How about proper infrastructure? How much uncertain science is there chained to your profit margins? What’s the level of inexperience with new resources?
The hemp being farmed in America immediately after the 2018 Farm Bill has been almost exclusively for CBD production, not to make hemp shirts or hemp seed milk. Not by a long shot. To put it simply fiber and grain cannabis are large-plot crops, ideally hundreds of acres per farming operation. New hemp-for-CBD farming is far more artisanal, like hand-crafted wine.
We're talking smaller plots, small-farm-friendly but lots of manual labor. The plants require a lot more TLC. They're more delicate. Work required is similar to any other artisanal cash crop dependent primarily on hand labor.
Don’t underestimate the amount of labor required to enter an uncharted marketplace!
Invest in Tall Lace-Up Work Boots
As almost all the hemp was farmed for CBD in 2019, consultancy firms and companies are researching the end products and results haven’t been hot.
Products with less than the amount of CBD listed, more than listed, or none at all.
Products with isolate or synthetic CBD, rather than ‘full spectrum’ plant extracts.
Small armies of shady unscrupulous sellers showing up online.
The presence of toxins in so-called hemp CBD products - solvents & heavy metals.
Not to point fingers, but rather to make light of the fact this kind of stuff goes on when supply chains are largely unregulated and un-systematized. When your startup is in a market like this, you’d better have some heavy-duty work boots on because you’re in the weeds!
A supreme focus on quality in the short term can mean taking financial hits, even staying in the red initially. If you stick in there though these kinds of darker market forces carve you into a shining beacon; the dependable choice.
Don’t Mine for Gold Next to the Highway
Security has become a very serious issue for hemp farmers with the demand for hemp-derived CBD reaching into the billions. When you combine the demand for CBD and THC, cannabis in general can be an extremely valuable crop. Many haven’t the slightest clue what they’re doing (seriously, never farmed a thing in their lives, not even a windowsill herb garden).
An easy example would be the sheer amount of theft, robbery, and destruction taking place because of:
People mistaking CBD-hemp for THC-marijuana or traditional cannabis because they can look and smell almost identical. Some are stealing it to sell, others think they’re going to get high.
People who understand it’s hemp-CBD and are stealing it to make and sell black market CBD. Perhaps add to their production after crops didn’t perform as expected.
It’s likely competition is driving some people to attack other farmer’s crops to a) drive up demand for their crops as buyers are still somewhat hard to find, and b) drive up the price of CBD when it’s being threatened by overproduction.
How about the entrepreneur who invests their nestegg on a hemp-CBD farming operation and then places it within sight of the highway? In some areas it doesn’t matter, locations of cannabis farms are becoming easier to find as more and more pop up.
What's the security environment like surrounding your venture?
In untested marketplaces there can be such a lack, you can't even dial 911. Police departments don't care about your hemp field being ransacked, they have more serious crimes (in their opinion) to deal with. And in some areas it's becoming so commonplace, local resources simply aren't available.
At the end of the day though, you just learn to...
Lean into the Winds of Evolution
These days disruption is more commonplace. It’s not quite as novel to be part of rapidly evolving or new-state marketplaces anymore. When you look at how the people behind the highest performing brands get by and deal with it, you’ll find there’s this ‘lean into the wind’ approach.
That image is from a documentary called ‘Leaning Into the Wind’ by Thomas Riedelsheimer about Andy Goldsworthy, a visionary sculptor, photographer and environmentalist known for site-specific installations involving natural materials and the passage of time.
The thing about the wind is, you can’t just turn around and let it sweep you away. You can’t stop it either. And, you can’t hope to somehow outlast or sprint into heavy wind and make it far.
You just got to lean into it.
Like the farmers and legitimate small businesses putting their startup dreams on the line taking tremendous odds on the chin. They see the end goals. They see the outcomes and immense potential this resource holds on so many fronts…they're believers.
If you're facing incredible odds for your startup dreams, consider this another reminder to keep finding a reason - don't give up.
Thanks for your time, and mega-props to the American farmer. Everything you're doing with hemp is making an incredible difference. You're making history. You're the reason children of the future will live in a much cleaner, healthier, and sustainable human society.
Before you go...
Thanks for your time. Supporting the hemp industry in America is our calling and we couldn't do it without you. If you'd like to get involved, Cast your lot with us anytime you're ready for just $1. It keeps the lights on, and assures our continued growth as a movement.