Exclusive Interview with Backbone Founder and CEO Rajesh Chandran
Cannabis operators have struggled with a lack of visibility into their supply chain, according to Backbone Founder and CEO Rajesh Chandran. Backbone was launched with the intention of unifying that data and enabling cannabis companies to run efficiently. Chandran sat down with New Cannabis Ventures to talk about how Backbone serves its customers and how the company will continue to expand.
Listen to the entire interview or read the summary below:
Chandran has a background in machine learning. He first entered the cannabis space as an investor about six years ago. He and a small group of friends put together a small fund to invest in the emerging cannabis market, but it became clear that it was difficult to gain visibility into cannabis operations. Chandran, embracing his love of data, pivoted to find a solution.
Backbone is run by a team with a wide range of talent from the technology and cannabis worlds. The company’s CTO, Vic Patil, comes to the team with experience from Intuit. The team also has leaders, like COO Peter Huson, PhD, with experience in the cannabis business.
Backbone has software solutions and IoT devices that help its customers identify bottlenecks across the supply chain and improve operations. Customers can use Backbone to gain visibility into their supply chain in every state where they operate across biomass, extraction, manufacturing and retail. Armed with this information, Backbone customers can determine profitability of products.
Backbone is a continually evolving platform, according to Chandran. The company’s ultimate goal is to create sticky features that users will want to adopt. It has the core framework in place, and now, it is listening to its customers to solidify the platform based on their feedback.
The company currently operates in five countries, including the U.S., Canada, Portugal, the U.K. and Israel. Within the U.S., its footprint spans 15 states. As more states adopt legal cannabis frameworks, Backbone will be poised to offer its solutions. The company views each new state and its unique regulations as an opportunity to refine its platform.
Backbone’s customers include contract manufacturers, brands and multi-state operators. The company has created an ecosystem that allows high-efficiency operators to understand their supply chain across their footprint and scale as they enter new markets. TerrAscend and Cookies are among the company’s clients.
Approximately 40 percent of Backbone’s customer base comes from referrals, according to Chandran. Beyond that, the company acquires customers via outreach. Thus far, it has not done a lot of marketing. The team shows prospects what they can achieve with Backbone within days. Even the most complex sales close within 30 to 60 days, according to Chandran.
Legacy seed-to-sale systems are Backbone’s primary competition, but the company tends to play nicely with other technology companies, according to Chandran. Often, the company takes the opportunity to integrate and collaborate.
As a repeat entrepreneur, Chandran has learned to plan ahead. Backbone is open to the possibility of M&A, whether it be acquiring or being acquired. The company’s long-term goal is to create a stable company with decades ahead of it.
Investors and Funding
In April, Backbone announced it had raised $14 million in funding. Over the company’s five-year history, it has aimed to show investors that cannabis is a worthy market, according to Chandran. It has a combination of angel investors from Silicon Valley, pure SaaS investors and cannabis technology investors. Chandran expects to see more traditional venture capitalists, private equity firms and larger family offices recognize the opportunities in cannabis as the industry moves forward.
The next wave of investors in Backbone will be those with an eye for the long-term. Chandran anticipates these investors will understand the value of the cannabis space and its implications for the global supply chain.
Backbone is tripling last year’s revenue, according to Chandran. The company’s challenge is not spurring growth but rather managing the wave of demand. As Backbone grows, Chandran wants to ensure the company’s customer-driven culture is not lost.
As the company scales, the team carefully tracks user engagement. They want to know that customers are using the software and finding value in it. Backbone has internal metrics to track the value it is bringing to customers through how much time and money is saved. In addition to growth as a business, Chandran also wants to find opportunities to address the harm done by the War on Drugs. He views social equity as an important part of doing business as a profitable company.
To learn more, visit the Backbone website. Listen to the entire interview: