Exclusive Interview with Flowhub Founder and CEO Kyle Sherman
Cannabis retail point of service software company Flowhub was founded seven years ago. Today, the company serves cannabis retailers in 14 markets across the U.S. Founder and CEO Kyle Sherman connected with New Cannabis Ventures to talk about his company’s platform, how it works with other cannabis technology players and its most recent funding round. The audio of the entire conversation is available at the end of this written summary.
Sherman lived in Los Angeles for a decade, spending a lot of his time in the entertainment industry. He saw the cannabis business booming in California before it became highly regulated. He also had personal experience using cannabis for medicinal purposes. In 2013, he moved with his wife to Colorado to explore opportunities in the heart of regulated cannabis.
In Colorado, Sherman worked as a consultant for companies like Weedmaps and Dixie Elixirs, searching for pain points that he as an entrepreneur could help to solve. By 2014, it became clear to Sherman that cannabis retailers needed a solution to help them scale their businesses. The next year, he launched Flowhub with the intention of offering retailers a platform with Metrc integration and tools to run their operations.
As the company grew, so did its team. Most recently, Flowhub added Leandre Johns, a former Uber GM, as its COO. Sherman also highlighted GM of Financial Solutions Kivanc Onan, who previously worked at PayPal, and CFO Craig Gomulka, who has extensive experience in SaaS healthcare and highly regulated markets. Sherman has made it his goal to build a team of smart people who have the right environment to drive the company forward.
The Flowhub Platform
The Flowhub platform enables cannabis retailers to transact in a compliant manner. The point-of-sale software facilitates inventory management, regulatory reporting, customer check-in and payments. The company builds its solutions with a mobile focus.
The retail management platform is designed to allow retailers to seamlessly connect with other software solutions. Flowhub has more than 80 partners, allowing its customers to integrate multiple different apps in the retail environment.
Clients and Market Reach
Across its 14-state footprint, Flowhub works with licensed retailers, such as Cookies and Good Chemistry. The company focuses on retail, but the software can also integrate with other parts of the supply chain. Flowhub is also considering expanding into more markets, such as New York, New Jersey and Illinois. Sherman is also excited about the possibility of adult-use in Florida.
Competing in the Cannabis Space
The cannabis technology space is collaborative in many ways. Flowhub works with a lot of partners, but it still has competitors. It integrates with companies like Weedmaps and Dutchie, but these companies also offer similar services. These companies are approaching challenges with solutions that work in different ways. Sherman compared Weedmaps to Yelp, a solution that creates a marketplace for cannabis shoppers, while he likened Flowhub to payments solution Square. Different retailers are going to want different point-of-service providers, meaning there is plenty of room for different cannabis technology companies, according to Sherman.
With so many players in the space, Sherman will remain open to the potential for M&A, whether it be acquiring another company, merging or being acquired.
In October, Flowhub announced a $19 million strategic round of funding with participation from investors like JAY-Z, Headline and Poseidon. Attracting a high-profile investor like JAY-Z , who is also a director at Block, the owner of Square, is a testament to the Flowhub team’s hard work, according to Sherman.
Over the course of the company’s history, it has attracted investors who have discovered Flowhub on their own, and Sherman has dedicated his time hunting for partners. He will continue to find ways to build relationships with new investors. The company will need capital to scale, and it will look for partners that bring strategic value as well.
Growing the Company
As Flowhub grows, it will be allocating capital to three main areas: sales and marketing, software development and its team. Sales and marketing help the company to grow in its existing markets and in new markets. Development is essential to ensure the platform continues to meet the needs of customers. And, the team needs to scale as the company does, though Sherman is focused on finding the right people that fit Flowhub’s culture.
The company has aggressive targets for 2022, according to Sherman. As Flowhub expands, the team is keeping a close on metrics like GMV, revenue and churn. Though Sherman is bullish on the company’s opportunities this year, he also recognizes the ongoing challenge of the regulatory complexities across multiple different markets. Flowhub must remain nimble in order to solve problems for its customers across its national footprint.
In addition to growth, Flowhub is also committed to social equity. The company has given approximately $2 million in grants to social equity-run retailers, according to Sherman. He hopes to see more companies in the cannabis business step up to support the communities impacted by the War on Drugs.
To learn more, visit the Flowhub website. Listen to the entire interview: