Tommy Truong: [00:00:00] So you help companies turn their business around.
Dennis O'Malley: Yeah I think, myself and my partner, Hannah O'Brien are generally brought into companies by either an investor group who's looking for a change. And needs a conduit for that change. A board of directors that is looking to bring, expertise and different type of skillset in terms of the executive team or really just CEOs who are looking for, some type ofexperience judgment what the future may look like if they haven't gone through that before which is a lot of time on.
Either new CEOs or first time CEOs. So the work that we do is really to help get companies from where they're at, to breaking through a milestone. Sometimes that's a turnaround, sometimes that's a scale up, and we're fortunate to be able to work with companies that are going through both trajectories.
The scale up is certainly more fun for sure.
Tommy Truong: Yeah, scale up is way more fun. How did you get yourself into this [00:01:00] position?
Dennis O'Malley: Yeahit wasn't necessarily by anything that you map out. You don't map out and say, Hey I'd like to be a strategic advisor or a CEO co-pilot. Frankly you do that from just experience and, outside of cannabis I was a CEO in a technology company for four years, and we had a really good run and were able to, have a successful exit after that time,
You learn a whole bunch of different things, while you're, in that fog of war. And then you have time to reflect on all the other things that you would, wish you would've known or wish you would've had a thought partner for. And then in cannabis it's really challenging because it's still relatively new on a commercial legalized basis.
There just hasn't been enough. experience and just time for people to learn and grow and everything else. So in cannabis, going through what we did at KVA for, again, those four years from 2017 to 2021, it was another, four year sprint to growth.
And again, the Same amount of learnings and scar tissue from mistakes and those [00:02:00] types of things. And really the companies that we work withthey appreciate just understanding what to do, but also what not to do.
Tommy Truong: If I was a dispensary owner with say, eight locations, and I'm looking to scale my business and I come to you, Hey, I want to grow to 16, what does that conversation look like?
Where do you start?
Dennis O'Malley: Yeah on, on one level there's nothing on a rocket science, basis or anything that I'm gonna pull outta my hat that they haven't known or tried or anything else. So at the end of the day, our job and myself and Hannah tried to make things simpler than complex
At the end of the day, a retailer, they're buying a product. They're marketing a product. They're selling and supporting a product. They're doing that all in service of a specific consumer, and they're probably world class at doing that. That's why they have eight dispensaries and to go So there's no way where I'm going to come in and give them a retail 1 0 1 of, how to, trade in their bud [00:03:00] tenders or to merchandise their stores or those types of things. But what we do find is that the really good merchants have a lot of in real life or IRL experience, but they may not have had that experience in terms of consumers these days in terms of awareness, 90% plus of consumers are looking at their iPhone to be able to make an awareness decision.
What are those key words in the search terms and how are they finding that location? And then once they're on the website and the e-comm footprint of that company, what are they actually searching for? And then how do you actually use actionable insights to inform the decisions that you have?
And so there's just a lot of disciplines and cannabis that don't exist because of the challenge of having a full-time person there or having, an agency who has that. And hannah and I filled some of those gaps in and if they say, Hey, how do we grow? Or how do we become profitable?
we are operators. We operate a dispensary in San Francisco, one of the most competitive, places around. [00:04:00] And while it's only one location, we've been cash flow positive, for about three years now. And so we know the equations in terms of where and how you need to spend.
But we would never, tell a merchant in terms of what to buy or how to buy, but we know the playbooks in terms of how to be able to get new customers online, what to do with that data, and then how to run a fiscally conservative business to be able to generate cash regardless of the amount of revenue you're bringing in.
Tommy Truong: You made a really good point. Ultimately, at the end of the day each position or each company that you work with is unique in their skillset in the owner skillset. And you are looking to see, okay, what are the holes that maybe this team has, and how can we help fill in these holes to grow for the future?
Dennis O'Malley: Yeah. exactly. So if you look at technology wise if I go back into the tech company I had before cannabis, the sea changes that we saw was the adoption of Instagram versus Facebook. [00:05:00] And, the companies that were able to capture what that looked like earlier had a much broader kind of footprint.
And the same thing with just the adoption of the iPhone. So there are sea changes within consumer behavior that are important that you don't always see. If you're an operator, you're just, seeing through the trees and you have a thousand different things to go do all day.
Boy, it would've been helpful for me to have a thought partner of somebody who had the luxury just to look at more macro trends and saying, Hey, here's the things that are coming up. What are you gonna go do about it? How do you scenario plan around it? And so those are the types of things that we try to bring in, in cannabis too.
And we do that because we have a lot of exposure in terms of outta state basis, whether it's mature states in the Washingtons and Californias or emergent states like the, Missouri's or, Minnesota's, a lot of those states follow the same type of, it's the, famous Gartner hype cycle in terms of what that all looks like.
And you have to know where you're at within that hype cycle within the market to make some, informed decisions. And those are the things in terms of [00:06:00] we help as a thought partner in a CEO co-pilot to be able to help companies through that.
Tommy Truong: I don't envy operators in our space. You have eight locations. You're probably very much involved in the business. And I find myself to, when we're scaling our business, it was really difficult to, because every business is understaffed to an extent. And, you're filling in the holes in your organization and you're pretty much walking through the forest.
But do you, how much planning and how much time do you have to take a step back and just to 20,000 feet? Make sure that your strategy fits where you wanna go, and what you're doing today is tied to where you wanna be tomorrow.
Dennis O'Malley: I think, Tommy, you just nailed it as the number one challenge that we see specifically in the cannabis industry today. Is that even if you're a scale up company and you're growing you likely have not been able to afford the disciplines that, most other [00:07:00] companies your size or your trajectory would have.
And those things could be a head of product management, right? Or a head of product development or somebody running product marketing and, given the emphasis of product many people have, jumped in to be able to go do those things. And sometimes they are. Unconsciously competent at being able to go do those versus, formally trained and have, a background to go do that.
It just, ask anybody who's in retail and retail marketing, larger retail companies outside of cannabis will have somebody dedicated to, in store marketing and eCommerce marketing and there's just, it's been so challenging in the. Cannabis marketplace. 'cause the margins are so tight for many different reasons to be able to afford, really important roles like that.
And so people wear a lot of different hats. We're also seeing, especially, if you look at B2B sales, there's a real change from hiring a lot of W2 salespeople to really [00:08:00] focusing on 10 99 and independent salespeople. It's really hard to hire and manage 10 99 salespeople though it, it looks like it's a, great economic basis, but there's a lot of trade offs so I do think that is the future though, is that you'll see these, fractional roles continue to pop up and companies say, Hey, I need a product management lead for two days a week, not five.
And I, still need some salespeople full time, but I would love 10 PE salespeople, on 10 90 nines. But boy, I'd like somebody to help me recruit 'em, hire ' em onboard, manage them. And I think that's where Hannah and I are really looking for some templated, ongoing solutions. So that we've seen these repeatable patterns that we can introduce to, more and more companies.
Tommy Truong: What should a, if I was planning for growth, and maybe this is a two part question. What should be the [00:09:00] rhythms that I should have in place to ensure that the executive team is taken a step back and just, Hey, are we going the right direction
Dennis O'Malley: Yeah.
Tommy Truong: are we doing the right things? What is our North Star and are we getting there?
Also, you mentioned something that's really insightful is what are the skill sets that. An organization should have when they're scaling.
Dennis O'Malley: Yeah, two great questions and I appreciate the lead in on it because it's the work that Hannah and I do with every single. Client that we take on we take on four to five clients at a time and, most of 'em we've been working with for years now and have formed great relationships with them we've really enjoyed the amount of change that we've all seen together.
But the first thing is doing exactly what you said, which is, can you properly articulate why your company's there, what your company does? And how it actually operates. it's an [00:10:00] unfair challenge, but if you took every executive, they're gonna tell you something different.
it takes a lot of work to make things simple and concise. the work to be able to facilitate and just take out from the executives to get to something that is a vision and then a strategy. what are those strategic pillars what are your values and what are your competitive differentiation those are things that.
Tommy Truong: You want to be able to spend enough time to go through, get alignment on and then communicate that out to your teams, but you have to be able to do that first. Why is that important for everyone listening? Why is it important that we distill down what you know, what we're all about and what's the North star and have
Dennis O'Malley: especially, and especially in cannabis, because no executive has the luxury of being a, a air traffic controller and just moving things around. Every executive is rolling up their sleeves and doing a thousand things, and I have so much respect for people who are running cannabis companies.
They're working a [00:11:00] hundred hours plus a week. It's just nonstop. So when you do that, you have to have a way to communicate to every single person in the company of what's important and what they're working towards. And you have to give them the ability to be aligned with what that vision is.
And so their initiatives that they have to ladder up to what the goals are, what the strategies are, and so they can prioritize the initiatives. and when you have that framework, then as an executive you can check in with the prioritization of those initiatives and see if they're successful or not see what's under-resourced.
But at least, there's alignment and consistency on it. Otherwise, you're gonna have people working on things that just aren't gonna move the needle. And people are gonna be super confused as to what the priority is. So that upfront work around that goal, strategies, initiatives, working on your strategic pillars, your competitive, advantages.
One way to be able to facilitate that, whether you're fundraising or not, is to be able to go through an investor deck. And if [00:12:00] you say, Hey, how do I build something that you know, isn't a show up and throw up and, put everything on a page, you don't have two hours to explain something to investor, right?
You have, call it a five minutes and. Can you show pictures to represent things? And can you do a strategy on a page? And can you really even without a PowerPoint, can all three four of you executives say the same thing around, here's what type of company we are, here's what our differentiated advantage is.
Here's what we want to go do in 2025. Here's the three things that are most important to us. Here's some of the initiatives that our teams are taking to be able to hit those goals. But if you can do that, you're far more efficient than most companies.
Tommy Truong: I love that you mentioned that when we adopted scaling up mythology internally, we saw a huge jump in our growth. And you mentioned something that, oh, actually I wanna talk to you some of the growing pains that we had, maybe you can elaborate It was when we first, started doing this.
[00:13:00] Who we're about, what is our North Star? What should we focus on and build out the OKRs that we're working on quarterly to tie into our annual goals. The biggest mistake that we made was there were too many goals. So instead of going deep into things that were truly gonna the needle and putting all of our focus to 1, 2, 3 things, we went too wide and we were a little bit too ambitious with what we can do, given the resources that we had.
and it really slowed us down until we figured out, okay, there's an opportunity here that we're not accounting for. What are some of the mistakes that you see? Companies do when they're adopting this mythology.
Dennis O'Malley: Yeah. And kudos for you for using that objective and key results, the OKR framework because the companies that have the luxury to do that are thinking 18 months or more ahead of time. And that's a great framework on a long-term basis to go do that. I would say two things.
One is that. It's really hard on a cross-functional basis to [00:14:00] identify the core key challenges to the problem. So if you came out and said, I'm a fast-growing company and my hindrance to growth is actually working capital. How do you actually have a initiative to go solve working capital? And so framing that out is really challenging to go do.
So you have to unpack it and you have to be able to really, truly. Go after what that challenge is. And sometimes that's moving to an asset light type of model. Sometimes that's moving from a licensing model to a reverse licensing model where you want to, invert the actual cash flow.
And so then you can have an OKR of being able to say, I would like to create, a business model that would change out our, working capital footprint from something that is. below net 30 in terms of, owing vendors to actually, we're getting paid upfront for, and we have the working capital to expand.
W without something like hey, I'm gonna take in product from my vendors if I'm a [00:15:00] retailer not pay 'em. So I think the first thing is can you challenge yourself to be able to have a goal of tackling what your biggest challenge is? And so to be able to do that, you need to set your goal, and then you need to understand what the critical path is from you getting to the goal.
The second thing is and we just were going through this yesterday, is as an exec. I'm super uncomfortable taking something on and saying, I would like to have accountability and ownership of something that I don't fully control. So when you go from a quote to cash process or a procure to pay process or inventory turns, it's really hard to say, Hey I'm gonna be the person that's gonna own that, even though there's a whole bunch of interdependencies and everything else.
But if you don't have one owner of that goal and somebody who's really pushing it and owning it. Yeah, no one's gonna own it. And so it can be an executive sponsor, it could be a tiger team. It could be a lot of different things. But in order for you to make progress against those ambitious [00:16:00] OKRs, if you solve those OKRs, like if you meet those objectives, you should be able to meet your goals in terms of what you're going to, otherwise, your objective was wrong.
And then you have to have somebody owning it or otherwise you're gonna get into that room and everybody's gonna point fingers and say, I thought so and so was doing this, and I thought so and so was doing that. And in a utopia world, the entire leadership team would own the OKR.
But that's just not reality that I found. I found you really need one ownership level person to be able to say, I'm gonna sponsor this OKR, and this is what I'm gonna care about.
Tommy Truong: I love that you mentioned that, and that's really insightful. if there's more than one owner, there really is no owner, and the owner oftentimes is not the person that's responsible for doing the work. If I were to plan, let's say I'm starting today. Hey, you know what, We need more alignment across organization in terms of where we're heading and what are the major [00:17:00] buckets that.
Will get us to where we're going. What is the framework that I should use in setting, the initial planning session and what the rhythms? That businesses as they're scaling, How often am I meeting with the executive team to plan?
How often am I meeting with them to see whether or not we're on course?
Dennis O'Malley: Yeah, it's a great question. I think the first thing to think about is. My challenge to every executive is to take five or six of your people and have them write down what they think the vision of the company is how would they describe the company?
What is the company? And then, what are the top three initiatives, overall for the company this year. And I would see where all those answers are. Right? So at some point as an executive, you should be auditing whether. You've done an effective job or not in terms of communicating what that is?
If you did awesome, great. You're in good [00:18:00] shape. I haven't seen that in many companies and certainly it's rare in cannabis. Then if you say, and you need alignment from your direct executive team, right? To be able to say, Hey guys do you believe that? We should go through a 12 week, effort to be able to get aligned on a strategic basis for the next 18 months.
And I say 12 weeks, it can be compressed to three. If you had the cadence, go, do, go do that. But normally people don't have the hours, within that time period to go do that. And sometimes some space to give you a week or two to, think about things are also helpful. So after you get alignment on that, the hardest part is then how do you hold yourselves accountable to go do that?
And internally it's really challenging to always prioritize and saying, Hey guys we all said that we were gonna do this strategy thing together, so let's all get together and go do that. And that's just not the case. And so I think anybody should look for an external third party to be able to hold them accountable.
And when you make an investment in somebody like that, and [00:19:00] there's. In addition to us, there's great people like Wolf and Meyer who are great, strategic expertsand I'm a huge fan of Anna Rain. What she's doing. But you need somebody to make that investment and go do that so that they know they're on the hook.
And frankly, when you have somebody who's independent. We don't have any agendas or biases or any type of political, care as to what the outcome is, where everybody else is, generally pushing for, something that they want to be able to do internally. And so at least the feedback that we've heard is because we can be so blunt and straightforward and get things out of people, we help teams make decisions quicker and nobody feels like somebody else won.
And gaining alignment like that has tended to do two things, accelerate the decisions, and then two, codify 'em. Once you come out with this stuff, who's taking notes? Who's putting in meeting minutes? Who's putting in PowerPoint? Who's actually sending it to the teams? Who's auditing that?
Who's [00:20:00] helping you with your all hands? And so all of those things matter. And if you haven't done that before at multiple times as a CEO it's hard to understand. What the impact is, but those are all frameworks and there's EMPS scores and there's, other types of meeting cadences that you all set up.
But it's in general, we found a 12 week process is generally what people fit into. And then. Once you have the plan, you gotta go execute it. And so then it's do you have the teams and do you have to hire or, are there places that you need people to fill in different roles to go execute the plans that you guys all agreed to?
Tommy Truong: It's funny, we adopted scaling up the mythology, and initially what we did was we did it ourself.
We hosted the meeting, And what we found was this is actually very ineffective because I'm not an expert in this mythology.
Dennis O'Malley: Yep.
Tommy Truong: we were learning it as we go along.
And what we found that really was the propellant to our growth was bringing on Dean, who's our coach, and he's still with us today,
Dennis O'Malley: Oh, that's awesome.
Tommy Truong: he [00:21:00] hosted the meetings. And so our cadence is we do an annual. Our annual is always three years out, but also the annual, and then we do quarterly planning.
And it all rolls up to where you wanna be in three years, where you wanna be in one year. And, our monthlies are the strategy. Our weeklies are we on track? Are we off
Dennis O'Malley: That's great. Yeahkudos for you for doing that because There's something magical if you get through that really hard cold start problem, to be able to get to a place where you have that cadence. Because the companies that we've been able to track and see the progress around OKRs for 18 months, you feel really accomplished that 18 months ago you actually picked a goal that you've still, you know, aspirationally sought after.
And as the OKR methodology on it's okay if you don't, hit or achieve those goals. You meant to put something out there that's a stretch goal. But there is something magical when you go do that and then you say, okay, wait a second. 18 months was not as far off as I thought.
[00:22:00] How do we go do this again? And having an accountability partner within that. And then in our cases it's really just been the CEO experience to another CEO. It's really hard if you have not been, a multiple, CEO to be able to have some empathy as to what. Somebody's going through.
Right? Andcannabis is so challenging and I've, made a ton of mistakes in terms of, going through it and have battle scars and scar tissue and, judgment and experience and reflect on all those things. But those are the things that at least you can pass on to other entrepreneurs and other, CEOs and say, Hey, you don't have to make the same mistakes.
here's the implications. Here's what happens. Here's some things to think about. And I think as cannabis matures, you'll see more of that. Certainly within technology. I had a lot of people who were able to help me, through that when I was a, first time CEO in tech.
Tommy Truong: What are some other mistakes that you've seen companies do as they're planning or looking [00:23:00] to scale their business? What are some pitfalls that you see?
Dennis O'Malley: Yeah, I wanna be careful about just, putting 'em on cannabis and have a broader kind of, scope on that. And I say that on cannabis specifically because it is such a hard industry and there are so many challenges as to, how to get through and to overcome, whether it's a long-term lease or whether it's just, regulatory environments or whether it's just true fix, costs that you have.
While there's always some options it's very difficult for, a cannabis company to say, okay, great. Here's how and where I'm going to go scale. I think if you look at some of the challenges it's more in a basis of, somewhat outside of cannabis in, call it any type of technology company any technology company, they're usually, you have economies of scale.
And if you have a broad enough whether it's user base or distribution platform or developer ecosystem, you [00:24:00] then have served a right to be able to go have some type of economics and have some type of sell through on that. I would just say you can't outmarket a bad product.
And companies. And I would use it mainly outside of cannabis that focus more on trying to solve for their distribution or their user base or something else like that versus just their core product. There's an issue there, that can absolutely apply to cannabis as well.
And it probably more applies to. Companies like vape pen companies or edible companies, not so much of flower companies or oil companies, or, even retailers. But if you're producing something and whether it's, software or consumer packaged good, if you're not solely focused on that great experience and you're looking to scale before a product adoption rate, that's where companies are cutting some corners.
Tommy Truong: That's so true. [00:25:00] And you do have to get past product market fit. you have to have a superior product and that's essentially, what you do. So when I talk to My business partner Danny. Shout out to Danny. He's our CTO. And we talk about this all the time in that customers come to us because of our technology and they stay because of customer service.
Dennis O'Malley: That's
Tommy Truong: So how much. Emphasis do we have on product and being customer obsessed. And if everything that we do is about sales growth, expansion and it doesn't come back to those two things and we're gonna lose in the long term.
Dennis O'Malley: Yep. Yeah. And I think you're, you hit the nail on the head there, right? I should have said services too, right? because you can absolutely have competitive advantage in terms of service, delivery of your product and to be able to nail that down. Certainly, in cannabis in terms of a lot of what we did in learning lessons is we had a very, a great service offering and a great product offering [00:26:00] and scaling that out in terms of the right way and the right, timing to go do that.
Many times we took on too much and did things too fast. And that, that's still a challenge today in every industry. Specifically. if you're not focused on those two things of what you said, your product and services and having competitive advantage of that
It doesn't matter how big you scale, you're gonna have a challenging time. And it doesn't mean you have to have the best product out there and the best being, the top rated, highest value, premium product. It could be a value product or it could be a product that is priced appropriately for the quality on that.
It just needs to be positioned appropriately.
Tommy Truong: Yeah, what is your customer universal? Truth. What is a segment that you are selling to and what do they care about?
Dennis O'Malley: Yeah. And that's hard in cannabis too, right? so many different growers in different states, are always trying to say, Hey, here's the best top shelf flower on that. But there's many successful companies that found a different niche and a value niche, or.
Some type of, value, premium niche. And I think, knowing that in the customer segmentation [00:27:00] and having the right pricing and packaging, those are all, great things that, product experts do. And I was fortunate to work with, a couple of them at Clefa Steve Winchell and Mike V who were just geniuses at that.
And that was, probably our strongest point along with our. Brand marketing. that was really the brainchild of Rosie Rothrock who's gone on. All of those people have gone on to do great things outside of cannabis. But, those are disciplines that, many cannabis companies don't always get to have.
Tommy Truong: One of the biggest growing pains or the biggest mistakes that we had when we were scaling was trying to serve too many masters, if that makes sense. we weren't. Focused on who is our customer that we're serving and what are their problems? And that led to maybe custom development work in a segment that we weren't serving.
And do you see that as a problem with brands or with companies in the industry in chasing something that's not core [00:28:00] to who they are?
Dennis O'Malley: YY, yes. All the time and every time. And I certainly did that multiple times. But I would go through and say the basis of it, in cannabis, it's just very hard to market to people. It's very hard to understand and have a ongoing dialogue with people, in a.
In a very different industry around technology. You have the ability to progressively profile who somebody is and they're opting in and they're gonna give you as much information possible 'cause they want the relevant, information. All of that. Many people, who are consumers and cannabis prefer to keep their, their either health issues or what they're medicating for or their purchase histories private.
And so respecting that privacy for your patients and consumers I think is a big deal. And while you can have, generic, second party research. A lot of the interactions that you have with consumers are coming from budtenders as well or yourself if you're going through some of that basis.
So I think that's hard. What I've [00:29:00] found is the best source of truth is the meritocracy of online searches and purchases and what people search for and what they buy. And you can make some conclusions outta that, but you don't always get to understand, what was behind their purchase.
And, a greater understanding of, what all their demographics are. So I think in cannabis it's certainly challenging and when you see companies looking for different growth areas, they're gonna try different things. And that usually shows up in a new type of product line or a new type of form factor that they haven't had before.
And they have some type of thesis that their brand will carry over into that form factor. Sometimes it works great, sometimes it doesn't.
Tommy Truong: I see there are definite limitations in the B2C. Obviously, and particularly in our industry too, you also help companies turn around. Dennis and I want to talk a little bit about this in, a business that maybe had success, but is having [00:30:00] cash flow problems When you are talking to an entrepreneur that has brought you on, What are you trying to uncover and what are some of the general symptoms that you see a business not succeed?
Dennis O'Malley: Sure. To be clear, when it's a scale up, usually the CEO's bringing us on when it's a turnaround, the investors are bringing us on. we have not had a CEO come in and say, Hey I'm underwater. I need help on this. They've said, Hey I got a rocket ship and I haven't done this before and help me get there.
on the investor side it's. The first thing is just expectations, right? And this happens especially out of state. California has had a, I call it a very long history of, legal cannabis use and a general, I think, acumen from people in terms of what cannabis is and isn't.
And you've had, some pretty sophisticated investors, within the California market. I think you get outside of that in some of the newer states and the investor expectations are that, oh my God this green rush is on in my state. And all I've heard is that it makes money and that [00:31:00] everybody's gonna be rich and, here's what my expectations are.
So I think the first thing is just always expectations from investors as to what, back to, how we open this conversation, what success looks like. And then once you get aligned with what that is in terms of being able to say, okay. Are the investors patient or not in terms of what their timeframe is?
And then you act accordingly based on if they are long-term investors and they're willing to invest in, in the company, or if they have some short-term expectations. And so investor expectations really drive a lot of CEO decisions. And whether there's short-term thinking or whether there's a lot of pressure to grow.
You'll see CEOs make riskier bets. And if those riskier bets don't go well, that's a challenge. But they are forced to take those because that's what they're being asked to do from their board or their investors So I think first thing is just working with the investors.
Second thing is we're still working for whatever the, board of directors are or are not in, in those cases. And then it's coming in with the CEO and just trying to understand the thousand challenges at one [00:32:00] time that they're trying to. Tackle and then really working with them to say what are the things that they have a superpower on and really love doing, and what are the things that they don't love doing?
And a lot of cannabis CEOs don't love building an operating plan. They don't love holding people to a budget, right? They don't love being able to tell people no or renegotiate against this. Colleague that they've had for 20 years and different things. But all of those parts a turnaround are needed.
And I just say that there are companies that ask for help way too late and there's just nothing anybody can do. about it. And that's where all of these receivers and receiverships, up and for some companies I think you'll continue to see that be a vehicle for them.
But if you're catching early enough, you can always make decisions to be able to get, to be cashflow positive. But you have to work with your investor base to understand what those implications are.
Tommy Truong: Ah, I see. It's true. A [00:33:00] lot of it is poor budgeting. I think you've, mentioned something that, you take a bet and maybe the bet was too expensive or miscalibrated in terms of the financial consequences of it.
Dennis O'Malley: Yeah I think a really easy example was when we went over and took over management of that San Francisco dispensary. It's probably doing about 50% of the revenue today than it was, three years ago. But it's wildly more profitable. And that was, simply a factor of really two main things is understanding and tracking the overall discount percentages.
It's harder than you think to do with, some POS systems and what are vendor funded discounts and, store funded discounts. But really having a discipline around discount percentages to meet the right gross margin and then being able to hit that opex as once you get the margin, right?
And so part of that is [00:34:00] outsourcing some of the things that you traditionally insource. And lastly on working capital is how do you have a budget of open to buy against what your, 12 week or three week or even sometimes one week, revenues were. So that you can have two weeks on stock, on shelf versus, two months.
And within that we made a bunch of decisions that were much harder for the owner to go do at the time because of relationships and what they've always done and a challenge. And we're able to come in and objectively say, if your goal is to get to cashflow positive, here's the way to go do that.
And once you agree to that. We can execute and help you go execute against it. And so those have been the types of engagements that we do. But it is challenging sometimes to know the path to be able to get to profitability. And then sometimes it's even harder, even if you know the path to go make those decisions because you're telling vendors you're no longer working with them or you're negotiating with them, or you're telling people that they no longer have a job [00:35:00] and you may not know the, the right type of fractional people or other services to bring in.
That would be. Sometimes more confident than the PP you have today. So it's not easy. And we have a, again, a ton of respect for any cannabis operator and I carry no judgment on anybody 'cause it's so challenging. But those are, sometimes it's, it helps to get a third party, view of it versus what you're seeing on a daily basis.
Tommy Truong: I hope you guys enjoyed that conversation. If you did please like, and subscribe wherever you're listening, it really helps us out a lot. Until next time, take care.
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