“Consciously try to out-innovate the competition.” with Kurt Forstmann and Fotis Georgiadis

Hire excellent people. Don’t skimp on paying for experience. It is better to pay someone more money who gets the work done in half the time. We’ve spent more time running in circles because we failed to invest in human resources. Align yourself with people smarter than you. Take advantage of their perspective. I had […]

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Hire excellent people. Don’t skimp on paying for experience. It is better to pay someone more money who gets the work done in half the time. We’ve spent more time running in circles because we failed to invest in human resources. Align yourself with people smarter than you. Take advantage of their perspective.

I had the pleasure of interviewing Kurt Forstmann. Kurt is the Hemp Division VP at Dixie Brands (Aceso). Kurt is an expert on the commercialization and sale of hemp supplements. Kurt has worked in the cannabis space since marijuana was fully legalized in Colorado. Since 2012, his focus has been on the Hemp-CBD side of the industry, developing hemp-infused products for people and pets. He is expert in the complexities of product development from sourcing to selling CBD. Kurt is truly a CBD, hemp and cannabis pioneer and a business builder for rapid growth brands. Strategy, product development, commercialization and supply chain for high-risk products in dynamic regulatory environments are specialties of his.

Can you share with us the story about what brought you to this specific career path?

My background is project-based business, including commercial real estate and renewable energy, which requires extreme entrepreneurial skills. Because these industries are project-by-project, you literally need to launch a new business every 2–3 years. This requires everything from writing a business plan, raising money, organizing a team, designing a product and building it into a physical reality.

All big businesses start out small, and there’s usually an entrepreneur in the middle of it who got things going. Basically, I’m good at executing ideas and wearing a lot of hats. Sure, we hired people as we gradually became more successful, but it definitely took a lot of heavy lifting by a small group of dedicated people to get things off the ground.

Regarding my current path, I kind of “fell” into my current role about seven years ago when the founders of Dixie Brands asked for my help to bootstrap this new concept called “CBD” into their existing “THC” business. The timing was good for me because renewable energy was getting pummeled in the financial markets. I was looking for a change. The Dixie team presented me with some basic product prototypes, rough concepts, and the opportunity to bring it to life.

I lead a VERY small team through the paces commercialization and eventually brought this business and products to market. Even though it was a totally different industry, I found myself applying the same skills that I had developed in earlier careers. Because of my extreme entrepreneurial skills learned in project-based businesses, I embraced the challenge presented to me and agreed to come aboard to help launch the first nationally distributed CBD nutritional supplement in 2012. It’s been a fun ride ever since.

Can you share the most interesting story that happened to you since you began leading your company?

The most interesting story is seeing an industry I helped create go from $0 to $500M (New Frontier Data) in five years; and it’s expected to grow to $20B by 2022 (The Brightfield Group). In our first year, the demand for our products was so high — we hit $1M/month in sales pretty quickly. We realized at that point that we have an effective monopoly as we had the only CBD product on the market.

This was a good thing and a bad thing as we had more customers than we knew what to do with, yet not enough manufacturing ability to keep up with the heavy demand. Of course, other CBD companies quickly entered the space after we launched, and we’ve been giving back market share ever since. However, the market opportunity is big enough now, that even owning a little piece of it is significant. Being part of the early days of hemp and CBD, witnessing it’s amazing growth, and knowing where it’s headed is definitely the most interesting aspect of my story.

Can you share a story about the funniest mistake you made when you were first starting?

There are too many to list. Unfortunately, the mistakes I’ve made in business have been costly rather than funny. CBD is an emerging industry and keeping a lid on trade secrets is paramount to staying competitive. Hemp (and cannabis) at that time was disadvantaged, in that we can’t apply for patent protection, due to federal illegality. I was naïve when I first got into the space and viewed the sector like a social experiment rather than a financial enterprise.

No one was expecting this growth story. Very early market participants like myself tended to freely exchange ideas and concepts for the “better good.” One time I shared a new idea with someone outside of the industry for a method to prepare hemp oil. About 4 months later that person had entered the space and brought the idea to market. I’m not saying they or someone else wouldn’t have come up with the idea independently, but we definitely helped shortcut this guy’s path to market. Suffice it to say, we were shocked for being scooped, but fortunate in that they botched the launch and didn’t see much success.

Can you tell us what lesson you learned from that?

To keep my mouth shut!!!

Are you working on any exciting projects now?

A lot of excitement these days comes from launching our business internationally in places like Australia, Canada, Japan and Latin America. These locations are in early innings of market lifecycle compared to the US. It is exciting to participate in ground floor launches in countries that are just getting started with cannabinoids. Also, having to localize products for each market is very educational as certain ingredients and terms may not work from country to country. For example, Aceso (the name of my company) is the English language name for our product market in the US, and it refers to the Greek goddess of herbal wellness; yet in Mexico, Aceso could be translated as meaning an “emotional outburst” in Spanish. Clearly, we plan to make some changes before launching in Mexico.

Also, our innovation pipeline is exciting as we’re launching a dissolvable tablet version of our CBD drink mixes. The fizzy tablet is very convenient, because of its small size and comes in three flavors. To the best of my knowledge, we will be first to market with a plop-fizz-chill solution for waters and beverages.

Finally, we are undergoing several clinical trials with major universities to help develop products by analyzing safety and efficacy. One of these trials is ‘gold standard’ meaning, double-blind, placebo-controlled, and randomized for over 80 canine subjects; while another trial is just with a handful of endurance athletes in an informal clinical setting. This is exciting for a few reasons: it allows us to develop products that are validated by science; it allows us to publish interesting 3rd party research to educate the general public about hemp’s safety; it is a small first step needed for pharmaceutical development, which is where I think the industry is ultimately headed, for better or worse.

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?

I’d like to thank my parents who taught me about faith and perseverance. Not religious faith, but faith as in doing something you believe in and being passionate about it. There are several times when I’ve thought about throwing in the towel, but under the wise counsel of my father, I remained patient and stayed the course. He’s now retired but had a successful career in real estate in his prime.

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?

Not that I’d want to educate a larger competitor about what works for us, but we connect with our audience via compelling content. We consider ourselves an educational leader in hemp (and cannabis) by providing science and learning content through published articles, blogs, white papers and webinars. We design this content for multiple audiences, including curious public, resellers and healthcare professionals. Our process involves scientists, doctors, patients and subject matter experts. This team is first class; and our longevity in the field lends us an ‘authenticity’ that is hard to find at other cannabis companies.

Can you share 3 things that most excite you about the Cannabis/CBD industry?

CBD is going CPG. Hemp is expected to be a larger market than medical marijuana due to its recent legalization via the Farm Bill. As market access increases, more and more specialty and mass market retailers, including food, drug and convenience stores are onboarding hemp. I am seeing this occur on a weekly basis and hemp’s national footprint in general retail, versus traditional distribution channels of MMJ dispensaries and ecommerce, is growing rapidly.

Hemp is truly going from niche to mainstream and transforming into a bona fide Consumer Packaged Goods (‘CPG’) category. CBD is already growing at a rate faster than when fish oil first came out and will be stocked on store shelves like any other mass marketed supplement like multi-vitamins, and ultimately OTC drugs like ibuprofen. CBD companies are seriously stepping up their levels of quality, safety, compliance, marketing and merchandising to stay competitive in this new environment.

Helping people. Since I started in cannabis, a day hasn’t gone by when I haven’t heard from a customer whose life we changed for the better through cannabinoids. My favorite story is that from a veteran of Iraq whose vehicle hit an IED, broke his back, and left him with chronic neuropathic pain since the war. After cycling through every pain killer and enduring all their nasty side effects, the vet finally began experimenting with CBD. He was ultimately able to fully get off pharmaceuticals and manage his pain and depression using CBD. He has repeatedly told me that ‘CBD saved his life’. His last check-in was to tell me he had “gone on a ten mile walk for the first time in 10 years.” His pain had subsided enough whereby he could get active again and start exercising. Hearing that story brought tears to my eyes and gives me the spiritual bread to come to work every day knowing that we’re making a difference in people’s lives.

Innovation. The industry is evolving rapidly. As more and more sophisticated participants enter the market, new technologies will be introduced that improve performance, delivery and bio-availability of cannabinoids. A lot of these technologies will be transposed from the nutritional supplement and pharmaceutical world. I am excited to see how the industry evolves with the help of more and more major market participants getting into hemp and cannabis.

Can you share 3 things that most concern you?

The lack of clear regulations in the CBD industry. Technically speaking, the CBD industry lacks a clear book of rules and isn’t tightly regulated. Players have traditionally relied on a patchwork of federal, state and local regs and case law to advise operations. The best operators use ‘proxy laws’ such as the Dietary Supplement Health & Education Act or ‘DSHEA’ which is the FDA’s guidebook for nutritional supplements. Unfortunately, since there are no defined national standards for CBD, it’s likewise exceptionally easy to enter the space with a very low cost of entry and compliance. This is great for the entrepreneur, but not so good for the consumer, who’s safety should be their number one concern. However, this should be changing in near future as the FDA, who now has clear jurisdiction over hemp products, will promulgate a more precise set of laws and establish legal pathways for companies to participate in the category.

Big pharma. I’m concerned that pharmaceutical companies, their lobbyists and government agencies are going to make it very expensive, and therefore hard, for a majority of hemp companies to stay competitive. I’m fearful that one of the natural outcomes of the FDA taking over regulatory jurisdiction of hemp will create an uneven playing field for market participants and only those companies with unlimited resources can play. I do not want to see the ‘clock turned back’ on the hundreds of small businesses who launched the hemp/CBD category on their backs at great risk and ‘paved the way’ for big pharma to take over. This would be a miscarriage of justice and it feels like the industry is likely headed in this direction, particularly if you look at past precedent for similar products.

Mainstream consumer brands. Similarly, larger consumer product brands are jumping on the hemp/CBD bandwagon due to Farm Bill passage. It is very easy for a large brick and mortar retailer with 5000 points of distribution to put any size hemp company out of business overnight, even if they launch with inferior products. Because of their distribution footprint, they have a captive audience of millions of consumers walking in and out of their stores daily. They can convert this foot traffic pretty easily with CBD products branded under their own name. If you look at popular grocery items such as olive oil, toilet paper or peanut butter, ALL mainstream retailers have their own branded product on the shelves that are usually priced lower than the name brand competition. This is another sad reality of hemp going mainstream, but one we all need to deal with. This is a real threat to our industry and independent companies need to band together to provide a ‘category solution’ for these major retailers that incorporate outside brands.

Can you share your “5 Things I Wish Someone Told Me Before I Started”? Please share a story or example for each.

Raise more money than you think you need. Because we did not expect our crazy growth curve, we had no way of knowing the level of resources required. Good problem to have. If we had raised only twice the amount of capital originally intended, we would have significantly accelerated our market growth and been able to get out in front of several competitive brands. The demand in CBD is insatiable. Basically, everything you make you sell. Marijuana enjoys a similar dynamic. Therefore, you are only restricted by ‘scale’. If we had raised more money at startup, we could have been much further along than we are now. Of course, money came later from private and public offerings once we made a name for ourselves, but we would have liked to have condensed that runway to get to profitability quicker.

Create a scalable supply chain. Like I said before, we have never anticipated the crazy growth and likewise underestimated our supply chain requirements. We planned too small when we launched and got caught in a supply and demand imbalance. In nascent industries, the supply chain simply doesn’t exist. You have to build it from scratch and seldom can plan for an industry with rapid growth. For example, we experienced an average monthly growth rate of 30% for the first couple years at We literally ran out of ingredients several times and weren’t able to fulfill orders, which set us back with customers. Therefore ‘overplan’ for supply chain even if you don’t expect to reach that volume until later.

Hire excellent people. Don’t skimp on paying for experience. It is better to pay someone more money who gets the work done in half the time. We’ve spent more time running in circles because we failed to invest in human resources. Align yourself with people smarter than you. Take advantage of their perspective.

Be who you are — promote your own brand rather than do a market study to decide who you want to be. Great brands are unabashedly original, they do not imitate. Focus on what you do best, what do you do better than anyone else, and share it with the world.

Do something innovative. As a company, we consciously try to out-innovate the competition. If you look at CBD tinctures, they are the most popular format in the market. They are also close to becoming a commodity because price is the primary means of differentiation. The tincture market is a race to the bottom regarding profit margins. If you create something novel or that doesn’t exist, you can own that market and give yourself a long runway before competition enters. For example, we launched our CBD fizzy drink mixes at which is first of its kind form factor, but I know competitors are on our heels!

Marry a forgiving spouse. If you plan to get into this business and hope to generate success, expect to work long hours and spend a lot time away from your family. Without may family’s patience and strong support, I would have never got to where I am.

What advice would you give to other CEOs or founders to help their employees to thrive?

Invest in culture! The cannabis industry is growing at a torrid pace, drawing comparisons to the dotcom industry. Tons of competitors, lots of capital, not enough talent — makes for a challenging climate that fosters turnover. While compensation and job titles are important to attract new employees, culture is the most important differentiator when making a choice between employers. A candidate with high skills can demand excellent pay at any company, but their decision will be based ultimately on cultural fit and how they integrate within that company’s unique sense of identity.

The best cultures are companies who “know themselves” and make their employees feel safe, needed and connected. This is especially critical when looking at the current volume of mergers and acquisitions occurring in the cannabis sector. I personally see many decisions in cannabis made solely for “financial” reasons (ie: revenue, profit margin, etc.). While those reasons are totally valid, the decision-making rubric needs to expand and include “people reasons” and “culture reasons.” You will see, particularly with the Canadian cannabis firms who are M&A’ing like made, those companies who do the best are the ones who prioritize culture. Look for cannabis companies that have an actual position designated for “Director of Culture” to win the long game.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

Cannabis is a spiritual plant with therapeutic power. My professional crusade is for a ‘cannabis democracy’ that empowers people to put health back into their own hands. Cannabis has been part of the ‘people’s pharmacopeia” for millennia. Medicinal use has been referenced in hieroglyphics to imperial burial tombs, and even in the bible, as “holy anointing oil.’’ When it is incorporated meaningfully into a daily health regimen, along with proper diet, exercise and meditation, I believe we can truly heal our self from the inside out.

There is an emerging medical theory called “endocannabinoid deficiency syndrome,’’ whereby the impact of modern diets and increasingly industrial environments prevent us from experiencing optimal health. Our bodies include a biologic system called the endocannabinoid system (‘ECS’) that synthesizes ‘endogenous cannabinoids’ on demand when inflammation and pain are present. A healthy ECS helps maintain homeostasis.

By not ingesting cannabinoids regularly, we impair the performance of the ECS, which has been shown via peer reviewed research, to control these critical body functions of pain and inflammation, as well as energy and emotions. Without regular stimulation of the ECS, we put our bodies at risk and out of sync, while compromising our immune systems. The result is we get sicker quicker and longer. The theory purports — we need to ‘supplement’ our ECS with plant-grown cannabinoids like CBD because we just aren’t getting enough in our current diets. By supplementing our diet with cannabinoids (ie: CBD) we encourage a state of optimal health and homeostasis. Keep in mind this is a new theory. It’s not dogma (yet). However, I feel there is truth to this theory, and by democratizing cannabis, you reinforce the idea of putting health back into people’s hands.

Thank you so much for joining us!

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