If you live outside of California, you may not know about one of the best-kept secrets coming out of Silicon Valley. When the company Eaze, was first described to me, I was told it was the Uber of medical marijuana. Anytime someone describes a business as "the Uber of ...", I'm skeptical. But in this case, the description not only fits, but may even fall short of what Eaze really is ... the linchpin fueling the explosive growth of Medical Marijuana in the state of California for reasons I will explain.
Marijuana has many medical benefits, and along with the growing acceptance of legalization in the US, has helped build a $5.7 billion market that is projected to grow double digits for the next decade. Yet for several reasons, marijuana has not been fully embraced by the medical community. The end result is that consumers who want to try medical marijuana need to first get a doctor's recommendation (usually from a marijuana specialist), and then go to a dispensary in order to pick up their supplies. As the industry is somewhat new, there are all sorts of inconsistencies and inconveniences inherently built into the current system, and the customer experience is far from ideal.
Eaze has worked diligently to fill these gaps, with a focus on convenience and accessibility through the use of technology. To start, they built EazeMD, an app that connects consumers with a network of doctors that can issue medical marijuana recommendations via a Skype-like call in just a few minutes. For $40, a patient can describe their medical condition to an on-call physician who, assuming he concurs, will issue the license on the spot. Then, assuming you live in one of the 80+ California cities that Eaze currently supports, you can order directly from the app from an Eaze dispensary partner and receive a delivery (usually within 20 minutes). From vape pens to edibles to raw flowers, patience can select what they would like to smoke, vaporize or ingest and have it delivered in less time than it takes to get a pizza. Hence the "Uber of medical marijuana" designation.
Innovation & Big Data
Most would argue that just having a service that allows you to get a medical marijuana recommendation and a delivery in 30 minutes would be a smash success, and it is. But their explosive growth to 100,000+ registered patients in their first seven months (~10x the growth that a typical dispensary achieves in two years) suggests there is far more afoot. To know this and understand the power of Eaze, you need to peek under the hood at their Silicon Valley secret sauce.
It begins with the team. Eaze was founded by Keith McCarty, a Silicon Valley success story who was a key executive at Yammer before it was sold to Microsoft for $1.2 billion. From the early days of Eaze, Mr. McCarty crafted a team that included software engineers, data scientists, and digital marketing experts--three job titles that most marijuana companies don't even know exists, let alone becomes part of the core culture.
The technology-savvy team immediately sketched the design for a platform that would set a new benchmark for convenience and professionalism for the industry. 80+ cities later, the Eaze platform is used by dispensary partners to perform a wide range of advanced features--predicting demand levels for each region, optimizing product mix, adjusting demand in real-time, and giving drivers logistics software with state-of-the-art GPS tracking to ensured orders are completed quickly, safely, and efficiently. Controls in the software ensure that deliveries are only made to compliant areas (no schools, please), enforce city and state laws, and maximize safety for drivers, patients, and neighborhoods.
Using Data For Both Old School and New School Marketing
Understanding patient buying patterns and preferences in real-time, particularly among their "VIP's", has been critical for the Eaze marketing team to tap into growth. Unlike most companies in the mobile world, the nature of the marijuana industry means that Eaze does not have access to Facebook, Twitter, Google AdWords and other large advertising platforms that control the mobile ecosphere. Scott Dunlap, the Chief Marketing Officer for Eaze, must instead focus his team on proving brand essentials--consistent delight, trust, and a willingness to refer friends. The result has been a majority of growth coming from peer referrals.
Mr. Dunlap brings a fascinating skillset to the Eaze CMO role that balances the old school world of brand building with the new school world of digital marketing. I have had the pleasure of speaking with him a number of times about why he would take the less-traveled path of the cannabis industry, and have been very impressed. At his core, Mr. Dunlap is a marketing operations, results-driven, data guy, but paired with the "let's go do some deliveries" enthusiasm and pursuit of delightful consumer experiences that gives way to a-ha moments one can't find in the data alone. The magic, he often says, lies where these two styles meet. Mr. Dunlap displays his roots of working for some the great masters of Silicon Valley, whether it's a keen sense of marketing from lean start up guru Steve Blank, or the fortitude to build great products from now-VC legend Ben Horowitz. His unlikely entry into the marijuana industry came from careful analysis, his own 1:1 investigation with patients, and a willingness to take on an industry drowning in stigma. After a role as CMO at Pax Labs (the colorful iPod-looking vaporizers), he joined Eaze knowing delivery was the key to growth, and that Mr. McCarty was building a company that could be trusted to shape policy for the better.
Regulation and Shaping the Law--Where Data Really Shines
Through its growth, Eaze has amassed an incredible database of California medical marijuana patients. This has proven to be critical in working with lawmakers at the city, state, and federal levels to make informed decisions about policy at a time when 25+ states are passing laws for both medical and recreational use. When new legislation is either proposed or enacted, the Eaze team can work directly with city councils and state senators to provide exact numbers of affected patients, and prove safety through delivery. If proposed legislation may negatively affect a community, Eaze can rally a small army of supporters to come to the cause, sending tens of thousands of emails to policy makers in a matter of days. The few times this has come up, they have very quickly persuaded government officials to change the legislation.
"Making medical marijuana instantly accessible is a great business opportunity, but also a social responsibility that we take very seriously," explains Dunlap, "by focusing on the data rather than historical stigmas, we can represent patients accurately and help legislators make informed decisions. We are pro-legislation as long as it is done is a way that positively affects patients and communities."
Currently, Eaze is a privately held company, and any business would be thrilled to experience their level of growth. On an average week, they are growing at a double-digit rate and during peak periods, growing faster than Uber did. They are one of the few companies in the marijuana industry that has attracted institutional investment, and the who's who list of top tier venture capitalists, celebrities, and Wall St funds in indicative of where this industry is headed. Eaze is well positioned for continued fast growth in the medical marijuana industry, which is projected to top $40 Billion over the next 5 to 10 years.
Recreational Legalization: Friend or Foe?
As early as this upcoming November ballot period, California residents will be allowed to vote if they want marijuana legalized for recreational (not just medical) use similar to Colorado, Washington, and Oregon. It's unclear if this would further fuel or ultimately hurt the growth of Eaze. On the one hand Eaze has an incredible logistics network already well established which it could deploy for recreational sales if the laws are changed. It also has a solid database from which is could leverage to grow a new install base of recreational users.
However, if distribution becomes more commonplace over time (think coffee houses and convenience stores) will delivery still be as important as it is today? And where does that leave the true medical marijuana patients?
We live in extremely interesting times. The legalization of marijuana is our generation's equivalent to reversing prohibition. For a few years after prohibition, there were still bootleggers and speakeasies, but they ultimately faded into irrelevancy with the surging growth of bars and availability of alcohol at retail. While there will certainly be many winners and losers in the years to come, today Eaze is very much on top of the medical marijuana food chain--at least in the state of California. I look forward to watching them take their brand and growth beyond state lines, and perhaps globally.