Sunday, September 14, 2014

Interview with the Founder of Rolling Paper Depot: Unique Insight into Startups and the Medical Marijuana Industry has featured several articles on the medical marijuana industry, such as The Growth of the Medical Marijuana Industry and the Stocks that ParticipateMarijuana Stock Index Up 339% Last Year, and Rolling Papers Stocks: The Forgotten Medical Marijuana Play. This interview, courtesy of, will give additional insight to this industry and provide extensive information on the key factors that make a startup successful.

Readers who are interested in learning how a startup became very successful will find this interview fascinating. In a continuation of our series on startups, the following interview was graciously provided by Jarrod Smith of Rolling Paper Depot, a fast growing online company that was started with less than $2,500.

Why don't we start by briefly describing what the company does? 

Rolling Paper Depot is an online retailer of rolling papers and smoking accessories for the roll-your-own enthusiast.  We provide a wide selection of products that aren't always available at gas stations or smoke shops.  Our goal is to provide our customers with great prices and excellent customer service. 

How did you happen to come up with the idea for the business?
Believe it or not, the business idea literally landed on my desk out of the blue.  I own several e-commerce companies and somehow a catalog for rolling papers landed on my desk.  I thought to myself, "who would buy rolling papers online? Can't you just go to 7-11?"  My naivety of the situation was comical.  I did a good bit of research on the market and was surprised to find that the business is viable.  It is not the biggest company I have, but it is the most fun to work on.  

Did you get any venture capital to begin with or are you self funded?
We are completely self-funded.  In fact, I started this company with less than $2500.  Today that would not be possible.  The market is extremely competitive and I suspect "Big Tobacco" will eventually enter the niche because of the ongoing legalization of medical marijuana.  

This is outside of the scope of the question, but I predict that "Big Tobacco" will migrate from tobacco to medical marijuana. I'm not saying tobacco is going to cease to exist, but in the future it won't be as prevalent as it is today.  I think "Big Tobacco" is actually working to delay federal legalization of marijuana.  Once they find out how to package it and sell it in conjunction with "Big Government", the entire landscape of MMJ will change into something like the beer industry where the Coors and Millers of the world sell the majority of the product and the "boutique" MMJ shops will turn into micro-breweries of sorts.  The best product will be in the small shops, but they won't be able to produce as much or be as competitive on price as the big boys. 

How long have you been in business and is the company a corporation, an LLC, a partnership, or what?
The company is a LLC. We have been in business for about 4 1/2 years.  

The recreational and medical marijuana industry seemed to take off in January after the legalization in Colorado. Did that provide a substantial increase to your sales?
It's difficult to attribute legalization of marijuana to an increase in our sales because our sales have been growing steadily since we started.  However, I think the "buzz" around legalization has sparked an interest in some products we carry. 

Any thoughts on what  will happen with the upcoming ballot elections on recreational and medical marijuana?
 The legalization of marijuana isn't an issue that is red or blue.  Nearly three fourths of the people in the US are sick of the battle over marijuana.  Our government is spending tons of money fighting a losing battle.  People are being charged with felonies and going to jail.  Our jails are full and our citizens are struggling to find jobs.  It just doesn't make sense to fight it anymore and the majority of people are fed up.  My thoughts are that the states will continue to legalize marijuana and eventually the federal government will have to give in to the will of the people.  At least, that's how it's supposed to work anyway. 

How many employees do you have and do you use virtual assistants?
We have 7 employees and we do not use virtual assistants.  Everything we do is in-house.

How were you have to get the the top of Google search, and do you consider high ranking a key in being successful?
I have been doing SEO for nearly 10 years.  I own an internet marketing company also and that helps me stay at the top.  I think being on the first page of Google for keywords in any industry is extremely important to succeed. Most people know a little about SEO, but they fail to see the benefits of social media marketing.  In fact, when I launched my latest e-commerce company in the roller skating niche I didn't focus on keyword rankings at all.  Instead, I focused on a large social media following.  Interestingly enough, that is actually leading to higher keyword rankings because my social followers are linking to my website for me.  The more links I get the better my rankings are.  This technique isn't "cutting edge", but it is definitely the progressive way to market an internet start-up in 2014.  

Tell us a little about your background.
 I am an entrepreneur at heart.  I built my first business in the 6th grade selling blow-pops at school. I hid it from my parents because I didn't think they would approve. I'm not sure why.  As it turns out, the school didn't particularly appreciate the competition.  My candy was cheaper than the school's candy.  Eventually I got caught and I had to stop selling blow-pops. The principal called me to his office and then called my father to discuss my "business".  They had a good laugh about the entire thing while I sat scared to death of what might happen to me.  My parents were impressed with my work and gave me the obligatory scolding for taking the lunch money of my schoolmates.  Since then I've had a keen eye for business opportunities and I've kept solid ethical standards. 

I got my first computer in 1994 and I had a dial-up internet connection.  I was not particularly interested in "chatting with someone in Germany", but thankfully my mother forced it on me.  She definitely saw the benefits of being proficient on the computer.  The first part of my experience on the internet was mostly IRC and learning the Linux OS.  As I learned more I did some tech work with Windows machines, but eventually I got a job as a Linux System Administrator.   Though it was unrelated to my duties, that job led me to learn SEO and internet marketing.  I also got my first experience with e-commerce at that job.  Once I learned both the marketing and e-commerce processes, I set off on my own to build my own e-commerce companies.  Rolling Paper Depot is one of those companies.

I believe my technical background has proven to be extremely beneficial for my businesses. My competitors have to hire out internet marketing and SEO.  They also have to pay programmers and designers to keep up their sites.  These services are expensive and time-consuming.  We are lucky enough to have all of these services in-house.  I have also been able to develop proprietary software and shopping-cart modules that keep me ahead of the competition.  

What are your plans for the future of the company?
My plan is to continue to grow the company and increase my market share world-wide.  We have considered licensing our name to shops around the globe to build our market share. I am fairly private about the details of my plans because I believe that I am an innovator and that secrecy allows me to stay ahead of the competition. I like to be first with website features so I'll hold those cards close to my chest for now.  I believe my plans for 2015 will grow the company by 30% or more. 

What do you consider your biggest challenges as a startup?
 Wow!  Good question.  There are so many challenges these days.  Starting a business and being successful has grown increasingly difficult over the years.  I feel the answer to this question probably changes by the month, but as of today my personal biggest challenge is patience.  I see what this company can be and I see the growth.  I just want it to grow faster.  I want to push my people harder.  I want to see the legalization movement progress quicker.  Unfortunately for me, these things take time and some things shouldn't be forced.  Patience is my challenge. 

What one piece of advice would you give someone who is just at the beginning stages of developing a startup?

Predict the future. How can one do this?  I'll share a trick that I have found particularly useful.  You can never go wrong if you build a business based on pending legislation.  When laws change there are often new opportunities.  For example, when the credit reporting laws changed (Fair Credit Reporting Act) there were many start-ups that built a business that helps people clean up their credit based on the new laws. This opportunity did not exist before the change in the laws! These start-ups were wildly successful and the ones that were set-up and ready to service customers immediately after the laws went into effect are the ones that still stand today.  But, to compete in this market today is an act of futility.  One would need massive funding and a huge budget for marketing.  Barring some kind of revolutionary approach to the market, you will have a hard time competing in this niche. 

Build a business that will service the future needs of people.  It is difficult to start and grow a business in a market that is well-established.  This is especially true if the Wal-Marts of the world are already selling your product or service.  A start-up cannot compete with these huge companies.  However, if you spend your time and energy on a business that is going to be big in the future, your success can be virtually unlimited.  You will have less competition and you can actually set the standard for products and customer service in your niche.  If you time it right, you might end up with a FaceBook or Yelp.  What's the bottom line?  Lead.  Never follow.

No investment recommendation nor any investment promotion is expressed or implied by either the publisher, the interviewer, the interviewee, or any of the interviewee's companies..

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