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Courting Controversy
Five years ago this week, we launched The Hustle daily newsletter as an antidote to mainstream media. And from our earliest days, weâve never shied from taboo topics.
One of our most popular (and controversial) early stories explored how to buy LSD online. Years later, a German TV outlet showed up to interview Sam about tech workers microdosing psychedelic drugs.
Today -- 4/20, a day of celebration for weed lovers -- we bring you an entire issue devoted to taboos and vices. Hope you enjoy!
This Weekâs Lineup:
Letâs Talk About Sextech (Part 2): Two weeks ago we highlighted a highly underfunded billion-dollar industry that is set to explode as sexual taboos continue to lift. This week we bring you opportunities across 5 more key areas of the sexual wellness industry.
Strategy Corner: Bringing Difficult Products to Market. We highlight lessons for all founders from cannabis brands that have faced extra obstacles in early adoption, winning shelf space, and scaling distribution.
Flares: Mary Jane is on the move⌠Papaâs got a brand new bag of weed⌠Whatâs goinâ on with music NFTs?⌠and running the show with music CRM and events.
Tips and Tools: Lessons learned in the first 18 months of running a new business⌠how to earn $10k+ within a month of launching an online course⌠and the architecture behind a profitable one-man SaaS startup.
Now letâs get to itâŚ
-Brad
Trending in the Community
Donât miss these conversations happening in our 12k+-member Facebook groupâŚ
Two weeks ago we highlighted the extensive influence of sextech within sexual wellness -- a space that has doubled in value over the past 3 years, and is forecast to balloon to $125B by 2026.
This week we bring you opportunities across 5 more key areas of the industry, including the high-growth niche of sexual health -- which we dive into more below.
If you enjoy these breakdowns, be sure to check out 4 more mini-Signals in part 2 of our industry Deep Dive, including:
Overcoming Barriers: Sexual wellness startups still face an uphill battle in bringing products to market. Entrepreneurs could focus on a range of solutions -- from payment processing to compliance automation software.
Male Sexual Wellness: We spoke with a Trendster about the challenges and opportunities in a space that is highly stigmatized, and ripe for disruption.
Education: Inclusive programs for parents and teens are an untapped market. Adults will drive demand for alternative sexual knowledge. We cover the opportunities from app-based guides to pleasure coaching.
The Future of Intimacy: Is the future of sex digital? Addressing the pleasure and perils of integrating technology and intimacy, and the rise in demand for virtual experiences.
Sexual Health: Sextech is providing discreet solutions to common problems -- and ways for consumers to take control of their sexual health. This has opened up a number of opportunities for entrepreneurs in the space. We outline 2 below.
Apps and Tech: Platforms that aim to provide answers to common questions have their market waiting for them, as these Google search volumes show (data via Keywords Everywhere):
âWomen climax signsâ: 60.5k searches/month
âSex after pregnancyâ: 52k
âWhy does it hurt when I have sex?â: 18.1k
âSharp pain during sexâ: 12.1k
âDifference between climax and comingâ: 9.9k
âExercises for premature ejaculationâ: 8.1k
âWhy canât I orgasm?â: 6.6k
âWhy am I dry down there all of a sudden?â: 5.4k
In the vast majority of cases, solutions are available -- but the stigma around asking for sexual support means that most people donât seek advice or treatment.
Tech has the potential to revolutionize this (very nascent) space -- and people's sexual health.
One example is Lover, which provides advice and guidance for sexual issues and techniques. The app raised $5m in seed last year (Tinder founder Sean Rad was one of the investors).
Then thereâs Stamena, a Kegel exercise app for men, which Shaan estimates makes ~$100k annually in revenue.
Your app could provide support, exercises, and product suggestions for sexual health concerns. Niche down and focus on postpartum women, those with disabilities, those on specific medications, etc.
The transgender community is particularly underserved in healthcare -- and numbers ~1.4m in the US. Tailored tech solutions would be of high value here.
Menopausal women are forecast to reach 1B+ by 2025. Theyâre a tech-savvy cohort and carry significant spending power (read more about how to tap into menopausal femtech opportunities in this Signal).
Vitamins and Supplements: Dietary supplements for sexual wellness is another potential high-growth space. Subscription services with personalized D2C options and modern branding are likely to take off.
Think Care/of, but specifically for sexual health -- and to optimize it as you navigate big life events and transitions (young adults, those looking to conceive, etc.).
Google searches for âvitamins to increase female lubricationâ already number 12.1k/month, according to Keywords Everywhere. Other popular search terms:
âFoods to cure premature ejaculationâ: 12.1k/month
âSupplements for menopauseâ: 12.1k
âBest supplement for stamina in bedâ: 4.4k
âVitamins for erectile strengthâ: 4.4k
âSex supplementsâ: 3.6k
âVitamins for sex driveâ: 2.9k
Find our full (SFW) sextech industry Deep Dive below.
Bringing Difficult Products to Market: Lessons from Cannabis Brands
Building any company is hard, but itâs especially challenging for those in the so-called vice industries like cannabis, which face extra obstacles in:
Early adoption of products consumers arenât familiar with.
Winning shelf space in competitive or highly regulated markets.
Scaling distribution without access to traditional channels.
Thereâs a lot to learn from how they overcome these challenges.
So we sat down with Codie Sanchez, managing director at Entourage Effect Capital (one of the first VCs in the cannabis industry), to uncover the lessons and takeaways any business owner can use.
1) Early Adoption
CANN is a THC-infused cannabis drink positioned as a cocktail alternative that Sanchez recently invested in.
When CANN launched, they faced 2 key product challenges which innovators in other industries will recognize:
The idea of a cannabis drink was unusual to most consumers who were used to smokable or edible products.
Though legal, their product was barred from advertising on platforms like Facebook, Google, and Amazon.
CANN had to invent a market where there wasnât one, and do it without access to the most powerful ad platforms in the world.
Source: CANNâs website
They started by investing in a visual brand that was fun, approachable, and socially relevant, then used a creative approach to win celebrity endorsements.
âThey did a ton of cross-promos,â Sanchez said, partnering with the coolest brands in cannabis to make highly customized gift bags and shipping them to celebrities.
Rebel Wilson, Casey Neistat, Gwyneth Paltrow, and others loved the product, and rather than paying for ads, these celebrities ultimately invested in CANN and started hyping the brand to their audiences.
The big takeaway: Getting the attention of influencers is hard, but can more than make up for a lack of traditional advertising. Stand out and multiply your power by partnering with other brands in your industry who are facing the same challenges you are.
2) Winning Shelf Space
Having celebrity investors is only useful if customers can actually buy your product somewhere. While landing shelf space is always hard, itâs especially difficult in the cannabis industry, where:
Thereâs a limited amount of shelf space to begin with, since many brands must sell through a small number of licensed dispensaries.
Some products offer way more profit per square footthan others, making dispensaries slow to adopt new offerings.
For example, you could fit ~$100k worth of cannabis distillates on a shelf the size of a MacBook computer, Sanchez told us. That same shelf space would hold ~$50 worth of CANN drinks.
So CANN was battling for space with companies that could drive way more revenue for dispensaries in the same square footage.
Their secret: They mastered the art of the pop-up event.
The founders would convince a dispensary to let them host a pop-up, and put tons of energy into creating a fun experience that brought new customers to the store. When owners saw how enthusiastic people were about CANN, they were more likely to offer up shelf space to keep buyers coming back.
Source: CANN
The big takeaway: A low-cost product that brings customers in the door is better than a high-cost product that sits on the shelf. Show (donât tell) retailers that youâre a customer magnet, and theyâll be slow to turn you down. For more inspiration, check out our Signal on experiential retail.
3) Scaling Distribution
Like everything else in the cannabis world, distribution is a challenge. Companies arenât allowed to ship using FedEx, UPS, or other traditional carriers, and face a bevy of licensing, labeling, and testing laws (check out the Flares below for opportunities in this space).
Most solve this by partnering with licensed distributors in the cannabis space. CANN, for instance, signed a deal with Green Thumb Industries to get their drink into the hands of new customers.
But Urbn Leaf, a chain of dispensaries in Sanchezâs portfolio, went about it in a different way.
In addition to shipping their product to the people, they also decided to ship people to the product.
Urbn Leaf launched a fleet of branded buses that offer free rides to and from the dispensary, stopping off at popular beach towns and senior care facilities, solving the problem of marketing and distribution in one fell swoop.
The big takeaway: No matter what obstacle youâre facing, inverting the problem offers creative new solutions. As James Clear says: â[The] innovators who stand out are often the ones who overturn the standard in a compelling way.â
Shorter-form Signals based on Google, Amazon, Reddit, and other sources.
Mary Jane Is on the Move
Cannabis distribution is set to explode. We spoke to Vince Ning, the founder and CEO of Nabis, a distributor that ships ~10% of all cannabis products in California.
In the 3.5 years since Ning started the company, Nabis has grown a portfolio of 100+ brands, which collectively ship ~$300m worth of cannabis products per year.
There are 3 areas where Ning sees white space in the cannabis distribution niche:
D2C Delivery: Cannabis delivery is expected to be the fastest-growing cannabis sub-market. The proportion of cannabis delivery and curbside pickup sales soared during COVID and are still 10% higher than pre-pandemic levels. Itâs not surprising that Uber wants its piece of the pie.
D2C software: There are opportunities to create plug-and-play software solutions that help brands and dispensaries create a D2C experience for their customers. âWhether it be tackling it from a logistics angle or enabling brands to market better⌠Thereâs a real opportunity for companies to build D2C models with software,â Ning told us.
Data consolidation: According to Ning, âOne of the biggest things right now is providing the next layer of depth to the industry by connecting everyoneâs disparate data silos.â There are plenty of players both upstream and downstream (e.g., from raw materials to POS providers) with datasets that could be combined and leveraged to help brands grow faster.
The global cannabis packaging market is set to more than triple from 2019 to 2027 as more countries begin to legalize and formalize the industry. North America should account for 80%+ of the global cannabis packaging market by 2024.
As packaging regulations evolve with the industry, there will be opportunities to provide specialized products and services, including:
Advanced packaging technologies: As the market becomes more regulated, we will likely see more stringent requirements for safety (e.g., tamper-proof/child-resistant packaging) and stay-fresh features (e.g., that negate the need for preservatives).
Contract packaging and equipment leasing: If this ~100 page document is anything to go by, packaging and labeling requirements will be complex, from font type and size to warning statements. This presents an opportunity to provide packing services and equipment to producers, many of whom are small companies currently packaging and labeling by hand.
Materials: Different cannabis products use different types of packaging. Some will become more important than others as the industry evolves. For example, cannabis concentrates in vape cartridges are expected to be the most common format for legal cannabis, which means that demand for specialized glass packaging will increase.
Digital security: Cannabis companies like Akerna and KushCo are already partnering with and investing in anti-counterfeiting firms to enhance packaging with advanced digital security features -- e.g., the use of unique device identifier (UDI) codes that can be validated and tracked (by producers and customers alike) at each stage of distribution.
Whatâs Goinâ On (with Music NFTs)
Musicians are singing that sweet, sweet, NFT tune. Back in February, electronic pop artist Grimes sold ~$6m of music and art NFTs in ~20 minutes. More recently, The Weeknd sold $2.3m worth of clips of a new track as NFTs.
Though it may seem like hype, music is a genuine NFT use case. Why? Traceability around ownership, rights, and royalties matter⌠a lot.
The future of the music industry will address payment transparency among stakeholders, including artists, songwriters, producers, and session musicians.
One example is the merger of Bluebox and Opulous, which will enable artists to prove ownership and split copyright sales to raise funding.
Two opportunities that will sustain beyond the hype include:
Support and management: Just as musicians need professionals to manage anything from finances to PR, NFTs open up a new need for expertise. Musicians will need education, guides, and legal support for their NFT sales process.
Value assessment: The NFT music market will stabilize, relying on other valuation methods besides hype. Thereâs an opportunity to combine human appraisal and data-backed valuation (e.g., number of streams) to measure how much a music-based NFT is worth. For other art appraisal business models, read last monthâs Signal update on NFTs.
The Show Must Go On
Source: Graphtreon
Musicians are going direct to fans at a rapid rate. There are now 14.2k+ music artists on Patreon, and monthly individual pledges to musicians have increased 64.9% in the last year.
Two areas of innovation to streamline the artist-fan relationship include:
Customer Relationship Management (CRM): Many musicians have audiences across multiple platforms, making it hard to keep track of fan engagement.
Ear2Ground, the âSalesforce for artists,â allows artists to manage audiences in one place and create marketing campaigns to drive sales. The website doesnât look like itâs actively taking customers, so thereâs white space to revamp a similar platform.
Source: Ear2Ground
There are also opportunities to expand a CRM platform for musicians, with integrations like Apple Music, Spotify, and social commerce to track listens, gather audience feedback, and sell merch in one place.
Events: Help artists with online or in-person event logistics. When one concert platform, Side Door, pivoted to online shows last year, sales climbed 30x to $1m+.
To elevate the online concert experience, add a virtual waiting room where customers can purchase drinks and food for delivery, or integrate with an ecommerce platform to sell merch before and after performances.
For in-person events, take Sofar Sounds, which provides intimate shows in secret locations, one step further by facilitating connections between attendees, hosts, and artists.
Any time you talk with an expert, askâWhy do you think Iâm going to fail?â Pay careful attention to the answer and adjust your product accordingly.
Charge immediately. When your users have skin in the game, theyâll demand the best and youâll learn how to improve your product quicker.
âIf you have fear, derisk by talking to users. If you have uncertainty, build a prototype to rapidly rebuild your conviction. If you have sudden doubt, sleep. Try again tomorrow.â
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