Exclusive Interview with 22Red CEO Harry Kazazian
Cannabis lifestyle brand 22Red is backed by the creative vision of System of a Down bassist Shavo Odadjian. CEO Harry Kazazian spoke with New Cannabis Ventures about the process of building a creative team, a slow and steady approach to growth and exciting opportunities ahead. The audio of the entire conversation is available at the end of this written summary.
A Team of Creatives
22Red was founded by Shavo, Mike Basteguian and Sean Oganesyan. Shavo brings his background as a musician to the company and approves all products that the company rolls out, flying to each state 22Red has operations in to talk to the people selling those products. Basteguian focuses on the apparel side of the lifestyle company’s business, while Oganesyan leverages his expertise in genetics and growing cannabis.
The three co-founders had a great vision, but they needed someone to translate that vision into a business, which is the role Kazazian plays. He met Shavo years ago through the System of a Down drummer. Though an executive with experience building a company from the ground up and taking it to north of $100 million, Kazazian is no stranger to the arts. He played music in the LA club scene and carried that love of music throughout his career.
When putting together the team at 22Red, Kazazian is looking for people with a similar passion for the arts, whether it is music, painting, graphic design or any other form. For example, the company’s current head of sales is a musician, and he reached out to the 22Red because of his interest in the brand. A love of art and a passion for the brand are core to what the company is looking for in its employees. Right now, 22Red has about 24 people on its team.
California, Arizona and Nevada
22Red has a strong presence in southern California. This summer, it launched in Arizona and Nevada. It plans to roll out nationally with its music and apparel products, but it will take a slower approach to reaching the national level with its cannabis products.
California, Arizona and Nevada neighbor one another. The company deliberately began its footprint as small and close to home. Its cannabis product portfolio largely focuses on flower and vape, positioned as premium products at an attainable price, according to Kazazian. 22Red may launch an edible in the future, but any new product will be carefully developed to support the brand’s credibility.
The company launched in Arizona through a partnership with Curaleaf and in Nevada through a partnership with Flower One. 22Red spent more than a year in conversations with both companies, getting to know their teams and ensuring their commitment to the brand.
The company is aiming to align itself with winning players in the industry. 22Red fields inquires about potential partnerships, many of which it has declined. Kazazian is guiding the company through a slow and steady growth process that will establish a strong foundation. After that foundation is laid, he expects growth will begin to accelerate.
The ultimate goal for 22Red is to be in every state where cannabis is legal, but it wants to get there with the right strategy and the right partners. Currently, the company is considering markets like Oklahoma, Florida and Michigan. It will stay the course of steady, deliberate growth without cutting corners. M&A does not seem likely at this point. Kazazian wants to remain true to the founders’ vision for the brand without the concern of bringing in another company’s culture.
In addition to measured growth in the U.S., 22Red is looking at an opportunity for international expansion. The company was planning to launch its brand in Amsterdam with Strain Hunters complemented by Shavo in concert this year. The plan has been delayed due to the COVID-19 pandemic, but 22Red is optimistic that it will go forward next summer, according to Kazazian.
A Close Circle of Investors
22Red has yet to take on any institutional investors. The company was initially funded by its founders. Then, Kazazian came onboard to raise seed round capital. Thus far, 22Red has been largely funded by a close circle of friends, family and business acquaintances.
This approach has been intentional. Kazazian and the founders do not take a dollar from the company, rather focusing on their investment in and love for the brand. This approach reduces the need for capital, according to Kazazian.
Thus far, the company has turned down an offer of institutional capital, ultimately deciding there would be too much pressure to grow. But, it may consider conversations with other companies about strategic alignments. If the company does decide to consider bringing in institutional capital, it will likely be when the company is more established with a footprint spanning 10 to 15 states.
Outlook on the Future
By the end of 2021, Kazazian expects revenue for 22Red to be up by 300 to 400 percent. The company has plans to further its establishment in its existing footprint and begin its entry into two or three additional states over the next year. By the end of 2022, the company is aiming to have some kind of presence in every state where cannabis is legal, according to Kazazian.
One of the biggest challenges Kazazian encounters is impatience for growth from his team. They are excited about the brand and want to see it grow. But, Kazazian is a careful, conservative steward of capital, working to stay true to the slow and steady philosophy of growth.
Though 22Red is careful about evaluating growth options, there are exciting opportunities ahead that will be the right fit for the company. Kazazian is excited about exposing more people to the brand, both in the U.S. and internationally, especially once the brand can make its debut in Amsterdam.
To learn more, visit the 22Red website. Listen to the entire interview: