Investor Insight: Alex Thiersch, Chicago, IL
He’s someone who sees this industry for what it is, a unique opportunity, and he’s right on track with being part of history in the making. Alex Thiersch of Salveo Capital is here to give us his insight on the industry; what it takes to succeed in the space, why you’ll never catch him ‘shutting down’ a company due to failure, why he advises entrepreneurs to make two business plans. Is your interest piqued yet?
How did your entrepreneurial journey begin?
When I opened my own law firm about 8 years ago, I was working for a large corporate firm and just knew I would never be satisfied if I stayed there. In many ways, entrepreneurship is a personality trait – either you have it or you don’t. For me, the idea of working for someone else just wasn’t palatable. Not only was I not satisfied, but I felt that I wasn’t able to act on my own ideas. And for me, there’s nothing worse than having an idea in my head and not having the ability to turn it into reality.
And for me, there’s nothing worse than having an idea in my head and not having the ability to turn it into reality.
What was the motivating factor for you to invest in the cannabis industry?
There’s obviously many reasons – compassion, opportunity, profit, etcetera, but for me, the most exciting opportunity is to be able to be a part of creating an industry. How many opportunities in your lifetime are there where you can literally create not only a business, but an actual industry? What is so appealing to me about cannabis is that a massive marketplace is being created before our very eyes and we have the ability to help shape it. This was something I simply couldn’t pass up on.
One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?
Raising money is, in and of itself, a business. Entrepreneurs need to have a separate business and marketing plan dedicated solely to raising money. When we start a business, we have two plans – one for the business itself and a separate one for how to fund it. Also, you need to have a compelling story. Investors invest in people, not business. We see profit and loss sheets all day long, but what I really want to see is the person behind the plan. If the personality is there, if the drive is there, and the ideas are there, that’s the total package.
Investors invest in people, not business. We see profit and loss sheets all day long, but what I really want to see is the person behind the plan. If the personality is there, if the drive is there, and the ideas are there, that’s the total package.
What are the key reasons why start-ups fail?
The biggest reason in my mind is poor planning. Companies always need more money than they think and they often don’t have the right personnel in place to control costs. Start-ups tend to skimp on marketing as well, which is a big mistake. Marketing and PR should be a significant portion of the budget.
Can you share your thinking on how to identify a company as a great opportunity?
Very difficult to do, but it starts with the people. New ideas are great, but there’s nothing wrong with investing in a company that is entering an established space. Competition is natural, so it’s not always necessary to have a new and great idea. What you need is drive, passion, and work ethic. I’d much rather invest in someone I believe in who is operating in a competitive market than someone I’m unsure of in an emerging market.
What are the key cultural differences between successful and mediocre start-ups?
There needs to be proper planning, organization, and funding. Lack of organization and planning can kill even the best idea. If the company has a clear plan, goals that they are held accountable for, and a strong work ethic, it has a much better chance of success.
When a company is dealing with internal issues due to disagreements between multi-partners, what role and procedures do you play to save your investment?
That’s a tough question because it depends on the company, the number of partners, the industry, and the business model. Generally speaking though, we have to look out for our investors, so we need to be dispassionate about internal quarrels. We always try to work through the issue, of course, but in the end the company has to thrive; So if changes need to be made we cannot hesitate to make them.
How do you build a sustainable competitive edge?
Again, tough question, and one that really doesn’t have a single answer. It’s important to always be self-aware, but also to be aware of your competition. For me, I never believe that I’ve reached perfection – there are always things that can be improved, and it’s that drive to improve that gives me the competitive edge. The improvement could either be internally – more time at home, more travel, etc. – or it could be economically related. Improvement can also be related to new ideas and new ventures. I don’t think a true entrepreneur is ever satisfied, no matter how successful they become. There’s always another mountain to climb.
As an investor, what are some of the key things you wish cannabis entrepreneurs knew?
This is a tough, tough business. The term “green rush” is thrown around and, to an extent, is accurate, but this is not a land grab. There are far more failures than successes in this industry. You can’t go into this with one foot – If you’re going to be successful you’ve got to commit 100%.
You can’t go into this with one foot – If you’re going to be successful you’ve got to commit 100%.
What needs to happen in order to create a billion-dollar company in the cannabis industry?
We’re a ways off from that, but it won’t be long. I think the biggest issue now is the federal blockade. To create a company of that size you need interstate commerce, which is currently forbidden under federal law. Federal regulations will ultimately decide the outcome for this issue.
How do you decide between shutting down, keep funding, or selling your start-up?
It’s an emotional and an economical decision and one that’s very difficult to make. You have to look at your past and determine if what you’re doing has value or if the idea itself is the problem or if it’s a planning or personnel issue. For me, “shutting down” is never an option. I may wind down a company or “sell” it for a nominal amount, but no one will ever see me shut a company down because it failed. Further, the building of a company, even if it ultimately fails, almost always leads to other opportunities.