What Cannabis Companies Can Learn From Airbnb, Uber, and Netflix

Six strategies your company needs to reshape global industries like the behemoths who came before you.

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Take a moment to think of the used car sector before Carvana came along, the hospitality pre-Airbnb, entertainment before Netflix, transportation before Uber. 

You'll notice there were some similarities in all these industries before the big guys came along and disrupted everything: They were all highly fragmented, not just in one geographic region, but globally. There was a great deal of inconvenience for users. There was much opacity, and correspondingly, less trust. Things seemed to work in silos, without efficiency or standardization. And these players understood and addressed the market gap so well that they disrupted the entire industry.

In general, I believe that industries that are positioned to grow fast share all these traits. One industry that caught my attention was industrial cannabis. It had thousands of applications but remained plagued with a lack of transparency, standardization, and infrastructure that kept it from realizing its true potential (and kept cannabis from becoming a commodity like coffee or sugarcane). There was a lot of room for innovation.

My experiences as a founder of Canxchange and my observations of other successful platforms have shown me that applying specific key strategies in approaching entrepreneurial opportunities allows founders to make serious dents in their industries. Here are six principles to follow.

Related: Actually, There's Not an App for That: Innovation and the Physical World 

 

1. Identify the fragmented industries  

Fragmented markets are easier for new players to enter as compared to industries that are mature and consolidated. Why? Because there's a lot of room for disruption. Incumbent players have likely been too busy fighting amongst themselves. If you're able to succeed in building a foothold, you'll be onto something big. 

Here's how to identify a fragmented market: 

  • No dominant player is influencing how the industry moves 
  • Entering the industry is relatively easy or inexpensive  
  • There's room for innovation or customization
  • It's possible to build scale quickly and economically

 

2. Know the market's pain points 

You may have heard that 9 out of 10 start-ups fail, but you may not have heard that 4 out of 10 start-ups that fail do so because there's no need in the market for what they create. 

Every great business venture begins with true identification and not an assumption of what's amiss in the industry. Here's what I mean:

  • Carvana saw that 99 percent of new car buyers expected a troublesome experience buying a car. 
  • Slack figured out that people needed a better way to communicate at work. 
  • Peloton got the pain of working out alone at home. 
  • Apple knew that users wanted an intuitive experience with their computers. 
  • Airbnb reasoned that staying in unique properties with friendly people could be a fantastic accommodation alternative. 

 

In my case, I saw that suppliers and consumers on either side of the industrial cannabis equation were looking for ways to safely exchange products in a notoriously opaque industry, making for an excellent entrepreneurial opportunity. You want to begin by articulating your exact market need.

Related: The Biggest Mistake Is Ignoring the Law of Supply and Demand

 

3. Re-envision end-to-end user experience 

A commitment to improving the user's journey on your platform can set you miles apart. My advice is to look for points of friction affecting buyers and sellers. 

  • Offer onboarding support. 
  • Offer post-sales services. 
  • Identify bottlenecks. 
  • Follow up. 
  • Implement feedback. 

The more you can understand your users' needs at all stages, from discovery to awareness to deliberation to decision to advocacy, the more you can refine what you're building. 

You'll notice this in the value proposition of any of your favorite companies. Netflix's tagline is "See what's next," Uber says "Move the way you want," Carvana promotes "The New Way to Buy a Car," and Airbnb shows you exactly how to "Belong anywhere." That's why we label these companies as 'disruptors' rather than tech, product, or service companies. They deliver an end-to-end experience that a user has never imagined or expected of an industry before.

 

4. Build a connection to win loyalty 

Whether you're the first to build a tech platform in a new industry or a late entrant, your success will depend on how much your users keep coming back to you. To win loyalty, I suggest you keep an eye out for:

  • Buyers and sellers on either side of the platform engaging directly (cutting out your platform)
  • Users who simultaneously join multiple platforms that offer a similar service, jumping from yours to your competitor's for the slightest cost or quality advantage 

The best platforms can figure out ways to build stickiness, whether it's by keeping identities confidential (Airbnb), charging for lead/listing fees (Thumbtack), or conversely, allowing free discovery while earning from advertisements (Taobao). No matter how you choose to do it, the idea is to keep your users coming back. 

 

5. Find new ways to keep delighting users 

It isn't enough to redesign user experience and build retention; to truly get your customers hooked, you want to keep offering value no one else does. 

Think about why your users love your platform, and then go one step further. Do they come to you for the range of products or services you offer? Build more comprehensiveness. Do you offer what no one else does? Be more exclusive. Is everything in your market cookie-cutter? Offer more customization and better curation. 

Related: Why You Should Consider Starting Your Next Business in a New Market 

 

6. Don't think of it as competing; think of creating a new market 

You might believe that entrepreneurship requires identifying a competitive edge with which to beat out an incumbent rival. In my opinion, if you truly want to make waves, think in terms of creating new markets. Envision how you could do this for your industry. For us at Canxchange, this meant building a platform that acted as a real-time exchange pricing index, enabling cannabis to be thought of as a commodity that buyers and sellers could track to see where the real market lay.

When you take a market-building approach, you're not thinking of the next new platform or product – you're rethinking how an ecosystem works, and how your solution impacts its participants. What you build may land up taking a life of its own over time, one you can't yet imagine. You'll agree with me when I say that Airbnb, Uber, and Netflix, amongst several others, didn't enter their respective industries as direct competitors to incumbent players. They didn't want to offer slightly lower prices or marginally better quality. Instead, they figured out how to solve long-existing problems in new, different, and viable ways, which changed global industries forever.