The best advice I can give is to be curious and go deep into a subject or interest. Not only with regards to your core business, but also in life. In today’s environment it seems like most people’s attention spans are shrinking and everyone is looking for quick hits. My curiosity in biochemistry twenty years ago gave me the foundation to study CBD and ESC on a deep level, and now that knowledge is being applied to Spero.
As part of my series about “5 Things I Wish Someone Told Me Before I Started Leading a Cannabis Business” I had the pleasure of interviewing David Allred, Co-Founder/CEO, created SPERO CBD, a non-GMO organically-produced CBD brand that is completely sustainably made and a brand that consumers TRUST. SPERO CBD is committed to spreading a new standard of CBD wellness the highest quality ingredients available on the market. Each product is rigorously tested for potency, pesticides, microbials, heavy metals and solvents, and then tested AGAIN with a third party for total assurance, so you get all of the good stuff and none of the bad. SPERO CBD is known to be the perfect way to integrate ultimate health + wellness this year with their pure CBD line that contains zero TCH and zero impurities.
Thank you so much for doing this with us! Can you share with us the story about what brought you to this specific career path?
No problem at all, I am happy to share. My path to this point has been a long and winding one but the idea for Spero began when I was living in Brazil. My partner at the time had an old dog that was suffering from seizures. It was heart-wrenching to watch a dog go through this because the seizures are intense and cause the dog immense anxiety. The vet recommended a medication to help stop the seizures but said it would have a lot of negative side effects and was not guaranteed to work. I decided to research alternatives which lead me to CBD and the endocannabinoid system (ECS) since CBD can help with epilepsy and anxiety in both dogs and humans.
I went down the rabbit hole and studied everything I could about CBD and the ECS. Once I really understood how important the ECS is to our health and well-being I started taking CBD and was shocked by how well it worked for me. I saw that there was an opportunity in a new industry for something that I really believed in. My project in Brazil had ended, I had previously launched companies and have a degree in both biochemistry and business management, so it just made sense to me to launch Spero. I reached out to my personal network of talented people I have known throughout the years and started putting a team together. Once the 2018 Farm Bill passed legalizing hemp production and CBD we got to work.
Can you share the most interesting story that happened to you since you began SPERO CBD? Can you tell us what lesson you learned from that?
We formed and opened the company with funding from our founding team. We were in conversations with some institutional investors about raising capital when I received an unexpected call from Start Engine, an equity crowdfunding site, about raising capital through crowdfunding. They had seen our pitch deck and thought we could do well on their platform. Equity crowdfunding is still relatively new and differs from platforms like KickStarter or Indiegogo in that people can invest money into your company in return for actual shares in the company, so they have a long-term interest in the company rather than only receiving a one-time discounted product.
We ended up being one of the few companies that maxed out our Reg CF raise which allows you to raise up to 1,070,000 dollars in a twelve-month period. We have over two thousand investors with investment amounts ranging from 250 dollars to 10,000 dollars. That one phone call and one decision to go for crowdfunding completely changed our entire company structure and strategy. The lesson here is that you have to be open to new ideas and be willing to adapt your strategy if you find opportunities that you believe could help the business grow. This can even include pivoting your initial business proposition if you find opportunities you didn’t know existed beforehand. Most of today’s most successful companies started off as something different than what they are today. Amazon started off as an online bookstore and now they are one of the world’s largest retailers and their most profitable business is in cloud-based internet services. You only need to compare Barnes & Noble’s 2019 revenue of about 3.5 billion dollars (down 2 billion dollars since 2012) to Amazon’s 280 billion dollars (up 220 billion dollars since 2012) to see what happens if you don’t adapt your business along the way.
Can you share a story about the funniest mistake you made when you were first starting SPERO CBD? Can you tell us what lesson you learned from that?
I can think of a particularly funny moment. Once we decided to do equity crowdfunding, we needed to create a video for our campaign. Turns out, everyone on our founding team is camera shy. Not only was it difficult to get everyone to agree to be on camera but watching everyone film was quite funny because of how many takes we needed to do. We couldn’t even get through saying our names without having to start over. If you want to start a company from the ground up, you are going to have to do some things that may not come naturally or easy to you. That video helped us raise 1 million dollars.
Are you working on any exciting projects now? How do you think that will help people?
Yes, we will soon be launching new exciting gel cap products to give people more wellness options when it comes to productive sleep and keeping your immune system functioning in top shape along with your endocannabinoid system. I think people will be surprised at how well they feel and how less often they get sick when both their immune system and endocannabinoid systems are functioning at peak levels.
We also are finalizing the formulation for a new plant-based skin cream infused with our CBD and arnica that athletes can apply directly to sore areas and joints. We have had to go through many formulations to get a cream that is infused with our whole-plant extract rather than needing to use CBD isolate, which most skin creams on the market currently utilize.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Well, I first need to give credit and thanks to our founding team, my family, and the more than two thousand investors that believed in the idea of Spero to create a CBD company focused on quality, education, and the long term. Without them Spero would not exist.
There have been numerous teachers, professors, mentors, authors, and entrepreneurs that have inspired me to get to where I am today. If I had to try and focus on one in particular, I would mention Dr. Sarah Green who was a new associate professor at MTU and taught my analytic chemistry course. I have applied her analytical process to attack difficult problems to so many of my own projects in life, including Spero.
Dr. Green hired me to do field research for a new research program she was launching to study the environmental effects on Michigan’s Lake Superior. It was amazing to watch her launch this program because she had to design it, raise the funds for it and bring together a team of top researchers from multiple universities. If it sounds pretty similar to launching a startup you would be right.
Her research program was a huge success and spawned numerous studies on the Great Lakes that are still happening today. She then went on to become the chair of the chemistry department at MTU and is now a world-renowned climate scientist working with the United Nations. She taught me more about chemistry than any other professor by far and without her help I never would have graduated with honors.
There’s a funny story associated with my work with Dr. Green. To gather lake data, Dr. Green secured the use of Michigan University’s 120-foot research vessel for a week. There were about ten of us on board and all of us research assistants had to operate lab equipment in the bottom area of the ship. One day was particularly stormy and wavy and all five of us in the bottom got extremely seasick but we had to continue because we needed to utilize every day of the boat. Imagine five seasick people trying to run lab equipment and read gauges while constantly vomiting for about eight hours! That was over twenty years ago, and I still remember that day very well.
This industry is young, dynamic and creative. Do you use any clever and innovative marketing strategies that you think large legacy companies should consider adopting?
Marketing is extremely difficult in the CBD space because you are not able to directly advertise and sell anything cannabis-related on any of the usual major sales platforms — even if our products contain 0.0% THC. Instead of sensationalist marketing tactics, we’re focused on sharing accurate and up to date educational content about CBD and the ECS with our community.
We’ve worked diligently to provide our current customers and anyone who is thinking about adding CBD to their wellness regimen the opportunity to hear directly from our dedicated advisor team that currently includes Dr. James Talley (Johns Hopkins trained doctor with a specialty in pain management), James Blake (tennis champion and Olympian), and Carlene Thomas (renowned dietitian nutritionist). Our advisors are experts in their respective industries and it’s fantastic to know that they believe in what Spero stands for while fully supporting our mission to set the CBD standard in a largely unregulated industry.
Can you share 3 things that most excite you about the CBD industry? Can you share 3 things that most concern you?
Three things that excite me about the CBD industry:
- The potential to help so many people feel better and be healthier with a natural plant supplement. I am constantly amazed by how many people have said that CBD has changed their life and hearing that never gets old. Some people have also been able to stop using some medications that can cause harmful side effects over prolonged use. Many think that CBD is something new, but in reality, humans have been using it for thousands of years and it is only recently we stopped because of prohibition laws which were meant to target THC and would not even allow the production of hemp with almost no THC content.
- The industry is still nascent with tremendous growth potential. It’s still illegal to sell CBD in many countries including some of the world’s biggest markets. However, many of these countries already have legislation moving forward to allow CBD sales which will provide opportunities into large virgin markets.
- The expansion into other cannabinoids. CBD and THC are the most widely known but are only two of the more than one hundred and forty known cannabinoids. Research is constantly coming out showing the benefits of other cannabinoids that are non-intoxicating like CBD and I believe in the near future you will have more options to choose from. You are already probably hearing about CBG and CBC.
Three things that concern me about the CBD industry
- Low-quality products without testing. This is by far my biggest concern for the industry. It is currently flooded with low-quality products that have not been tested. Many products don’t contain what they have labeled on the bottle and some even contain dangerous toxins. Low-quality products can really turn somebody off from CBD because they try them and don’t see any benefits and then think that all CBD products are the same. It’s probably funny that as the CEO of a CBD company I am actually hoping for federal regulation. We already third-party test for potency, heavy metals, pesticides, and residual solvents even though we are not required to.
- False claims about what CBD can and cannot help with. CBD can do some amazing things so there is no reason to say it can do things that it can’t. There is a lot of misleading information out there just trying to sell people products and this can have dangerous consequences especially if someone is taking CBD for something, they should be getting medical treatment for. I have even seen claims that CBD can help prevent COVID-19 which is completely false.
- Prohibition. Yes, even though the 2018 farm bill signed in December legalized CBD, it has only been two years after decades of prohibition and there are still some grey areas within its legalization. There are still some lawmakers that don’t believe CBD should be legal and it would be naïve to think that it would not be possible for CBD to become illegal again.
Can you share your “5 Things I Wish Someone Told Me Before I Started Leading a CBD Business”? Please share a story or example for each.
1.) Forget everything you know about marketing.
Planning on marketing with Facebook, Google, Instagram, etc? Good luck. Most major platforms will not allow CBD ads on their platforms yet so getting your name out there is going to be tricky and there is a lot of competition for few spaces you can market on. You will need to get creative on how to market and build a customer base. Yes, you may have seen some ads on those platforms, but that doesn’t mean they didn’t get an ad account ban a few days later.
2.) Regulations can change rapidly.
You will have to be nimble and adapt quickly to a constantly changing environment. What is legal today may not be tomorrow and many of the regulations won’t make any sense at all. For our launch, we were excited to have several dispensaries carry our products; but the agency that controls dispensary licenses sent a letter to all dispensary owners in California saying that CBD produced from hemp cannot be sold in dispensaries and doing so would jeopardize their license. So, you can buy federally illegal cannabis with THC in a dispensary but you cannot buy federally legal CBD without THC, go figure.
3.) Banking is an issue.
Many banks will still not allow accounts tied to any business related to cannabis even if you only sell CBD. This will catch many people off guard especially when it comes to online payment processing. If you think you can just throw up a Shopify site and start selling CBD, you will want to think again. You could build your entire site out, stock your inventory, drive traffic to your site, get your first sales, then wake up to find out Shopify has closed down your payment processing because they don’t allow CBD sales. You will need to use a third-party processor that specializes in allowing CBD sales and the process can take a while. Our launch was delayed for some time while we had to switch payment processors.
4.) You can’t say the best things about your product and can’t share your best customer success stories.
We have so many amazing testimonials and stories from customers that have said our products have improved their lives and we can’t share them. If a customer references any sort of ailment that your product helped them with you cannot share it publicly. By doing so the FDA will consider it making a false medical claim and send you a cease-and-desist letter. This is not something you want to receive, and it will be there in the permanent record. We have never had any issues because we are very careful about what we share and what information we put out about our products. You are also very limited to what you can say your product can help with.
5.) People still don’t know what CBD is.
If you know about CBD you probably see it everywhere, however, most people still have no idea what it is and why you would take it. Don’t believe me? Ask ten random people what CBD is, why you take it, and what it does. You might get one that can answer all three of those and there will be some that have never heard about it. For a bonus question ask what the endocannabinoid system is. You will have to do a lot of education about CBD especially about why a high-quality CBD product is different from a low-quality one, assuming you will only be working with a high-quality product.
What advice would you give to other CEOs or founders to help them thrive?
The best advice I can give is to be curious and go deep into a subject or interest. Not only with regards to your core business but also in life. In today’s environment, it seems like most people’s attention spans are shrinking and everyone is looking for quick hits. My curiosity in biochemistry twenty years ago gave me the foundation to study CBD and ESC on a deep level, and now that knowledge is being applied to Spero.
If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be?
I wish I could convince everyone to live in a foreign country where they don’t speak the language for a couple of years. After studying in England, I knew I wanted to live abroad again someday and, in a country, where I could learn a new language. I ended up choosing Brazil where I learned to speak Portuguese fluently, met my fiancé, and got the idea for Spero. Leaving your comfort zone opens up your world view, enriches your life, and humbles you in a way that I think everyone could benefit from. We need to find ways to get out of our tribes and bridge the gap with people we consider different from ourselves. Only by working together are we going to be able to start solving some of the pressing global issues we are currently facing.
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