This may sound cliche, but you’d better not lose your appetite for learning new things. There’s value to being an early expert in an emerging industry, but no industry can stay emergent forever.
As part of my series about the leadership lessons of accomplished business leaders, I had the pleasure of interviewing Dan Roda, co-founder and CEO of Abaca, a digital financial platform connecting cannabis businesses with bank accounts, payment processing, lending, and more. Dan has over a decade of private and in-house legal practice experience and serves on the boards of the Arkansas Cannabis Industry Association, and the Emerging Markets Coalition, and sits on the National Cannabis Industry Association’s Hemp Committee.
Thank you so much for joining us! Can you tell us a story about what brought you to this specific career path?
I’ve been fascinated by the cannabis plant for about as long as I can remember — long before I ever had the opportunity to partake. My father was an oncologist and, while this was very much taboo for many years, it would not have been unusual for him to recommend off-the-record that a patient might benefit from the medicinal properties of cannabis. Likewise, I didn’t think it particularly unusual when I wrote a term paper arguing in favor of California’s Proposition 215, the landmark 1996 medical marijuana ballot question. My 9th-grade social studies teacher in faraway Pennsylvania, unfortunately, found my arguments something less than persuasive, and I was promptly sent to the principal’s office.
I didn’t understand the senseless fear surrounding cannabis then, and I didn’t understand it much better 20 years later when, as an attorney in private practice in Arkansas, I had the opportunity to represent several aspiring entrepreneurs looking to participate in our state’s new medical cannabis program. While working on each application package, the topic ultimately came to such matters as banking, payment processing, and cash management. While my clients innately expected that the banks where they maintained personal accounts and accounts for their other businesses would also work with their new state-legal marijuana enterprise, a phone call or meeting would quickly make apparent that this assumption was incorrect. I had the displeasure of attending or participating in several of these meetings, wherein I witnessed clients be told by perfectly sane-seeming banks that they’d have to take their money elsewhere simply for participating in a new and emerging industry. It was then I realized that cannabis businesses and their owners deserved better and that I might just have what it takes to make that happen … with the help of several partners, advisors, and a great team, of course.
Can you tell us a story about the hard times you faced when you first started your journey?
Early in our journey, we participated in an accelerator program, which is a great option for an early-stage company looking to validate its assumptions and find product-market fit. Accelerators are very competitive, and typically only one or two in a cohort of 10 companies will make it to maturity. While the programs are typically collaborative, they are also somewhat competitive in nature, in that the companies are typically competing against each other for additional funding that is awarded at the conclusion of the program. Well, at the conclusion of our program, despite what we viewed as nothing less than stellar participation and tremendous growth and maturation of the company, the program’s investment committee decided against awarding us additional funding, very much to our surprise. This was certainly a disappointment, but we kept at it and we ultimately succeeded in oversubscribing our round. Many months later, the group that had passed on awarding us additional funding at the end of the accelerator program came back and decided to invest after all. While we’d been disappointed with their decision to pass on us at the end of their program, we were nevertheless quite happy to have them participate in our later round. And, as an added bonus as a result of our patience, the later investment came at a more favorable valuation to our company.
Where did you get the drive to continue even though things were so hard?
The thought of re-living even my most difficult days as an entrepreneur doesn’t scare me even a fraction as much as does the idea of having to go and get a job. So, I keep at it.
So, how are things going today? How did grit and resilience lead to your eventual success?
Today, Abaca provides banking and payments services to over 150 cannabis businesses, and we’re growing fast. We’re powered by partnerships with several great banks across the country, and we support some of the best brands in cannabis.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Like many startups, the path to finding product-market fit was not exactly a straight line. We originally conceived of the company as a B2C service, then pivoted to a B2B model but didn’t update our brand identity to match. We didn’t realize the problem until exhibiting at a trade show in Tulsa, Oklahoma, when, over the course of two days, a dozen or so different people asked us some version of the question, “What do y’all do, exactly?” We re-branded shortly thereafter and haven’t had that specific problem since.
What do you think makes your company stand out? Can you share a story?
We’re at the intersection of two emerging industries, cannabis and fintech, each of which gets us a fair amount of attention in their own right. But what really makes us stand out is a capacity to identify, decipher, and reduce risk. By carving out a path for ourselves in demystifying verticals like cannabis and CBD, we’ve placed ourselves in the path of opportunity, and now find ourselves presented with opportunities to apply our technology to new verticals like cryptocurrency, gaming, nutraceuticals, even adult entertainment. You wouldn’t believe the mailing lists we’ve found ourselves subscribed to as a result. Our systems administrator, Sean, is rarely bored — you might say he’s seen some things.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Startup-life is stressful, which is why I recommend that early-stage companies maintain a ratio of at least one dog per 10 employees in the office at all times. This ratio is flexible and can be increased to two dogs per 10 employees if desired, or even three dogs if they’re relatively small. No matter how stressed we get, a few minutes of dog time can usually help put things in perspective. As an added bonus, introducing prospective new hires to our dog squad is usually a very quick way to determine whether or not they’re going to be a culture fit.
None of us are able to achieve success without some help along the way. Is there a particular person whom you are grateful toward who helped get you to where you are? Can you share a story?
I graduated from law school in 2008, right at the start of the Great Recession, which was generally considered to be terrible timing on my part. What’s worse, my grades were mediocre, I didn’t make Law Review, and my summer internships had been in the legal department of a mayoral administration that had just been resoundingly voted out of office — meaning, nobody who worked with me (or even remembered me) was around to provide a reference. So, like many recent grads of the era, I struggled to find full-time employment in my chosen field. That was until the week before my wedding, when I received a phone call from Skip Davidson, managing partner of a great law firm, informing me that he was “ready to move forward with this deal,” by which he meant he was ready to take a chance on me. I worked for Skip for about five years representing prominent local businesses, banks, and entrepreneurs, appearing in courts across the country and working on all kinds of transactions — mergers, real estate developments, airplane acquisitions, and, one time, five million dollars worth of Grade A tomatoes. While I ultimately caught the entrepreneurial bug myself and ventured off to do my own thing, I wouldn’t be where I am without the vast experience I got working for Skip.
How have you used your success to bring goodness to the world?
While our contributions may pale in comparison to those of the doctors and scientists in our field, I do take pride in the knowledge that Abaca makes it easier and safer for cannabis businesses and their customers across the country to transact. The coronavirus pandemic found the cannabis industry declared essential in many states, and operators had to adapt in order to keep the supply chain moving and serve customers while maintaining appropriate safety precautions. We’re proud to be among the only companies nationwide providing banking, payment processing, and other core financial services to the essential cannabis businesses that have worked tirelessly to help patients and customers during these trying times.
What are your “Five Things I Wish Someone Told Me Before I Started Leading My Company” and why. Please share a story or example for each.
- Take however long you think it’s going to take to raise your seed round, and just go ahead and double it. Hell, maybe even triple it. Deals take time, and early-stage entrepreneurs have very little leverage to push things across the finish line.
- Don’t hire wildly overqualified people, even if you think you’re getting a great deal. They’re going to be looking for their next move from the moment you hire them.
- Do hire people who seek out your company because of your mission and/or culture, even if they don’t seem to have the requisite background or experience. They’ll make up for it in hustle and passion.
- It’s hard to strike the right balance between too many meetings and not enough communication, but it’s your job to test that balance until you get it just right.
- This may sound cliche, but you’d better not lose your appetite for learning new things. There’s value to being an early expert in an emerging industry, but no industry can stay emergent forever.
You are a person of great influence. If you could start 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. 🙂
As part of the cannabis industry, I believe Abaca has a role to play in normalizing the role of cannabis in society. The cannabis plant is amazingly powerful, with an incredible array of uses, and it’s frankly quite sad to think about how it’s been criminalized for most of the past century. While we can’t change the past, we can help show the world that this is an upstanding industry full of professional people and that when cannabis businesses come to your city or town, the effects are overwhelmingly positive. Still, today, the perceptions many hold about what they view as the typical cannabis consumer can sometimes skew negative. So, the movement we want to start (or at least contribute to) is one that legitimizes cannabis consumers the way we have begun to legitimize cannabis commerce. We’re not all just sitting on our couch and eating snacks (not that there’s anything wrong with that in moderation) — some of us are out here founding high-growth startups.
How can our readers follow you on social media?
@danieljroda on Instagram
@danieljroda on Facebook
https://www.linkedin.com/in/danieljroda/ on LinkedIn
This was very inspiring. Thank you so much for joining us!