Everyone Should Have an ‘Uncle Frank’

Investor Insight: Leslie Bocskor, Las Vegas, NV

Do you have an ‘Uncle Frank’ in your circle of advisors? Do have a solid realm of self-knowledge? Have you evaluated the longevity of your business model? These are the types of puzzling questions that Leslie Bocskor, Managing Partner of Electrum Partners, dives into answering for us. His fresh perspective on how to grow our businesses and our industry as a collective movement is something we have yet to see brought to the table. Seeing the legal cannabis industry through his eyes is an experience of its own and one that everyone remotely involved in the industry should take a moment in soaking up.

How did your entrepreneurial journey begin?

I’d say, it started when I was in middle school when I started to sell sandwiches. I made my own sandwiches at home and sell them at school, like buying wholesale and selling retail. So, my first entrepreneurial endeavor was in the ‘food and beverage’ industry when I was 5 years old.

What was the motivating factor for you to invest in the cannabis industry?

It’s the single biggest opportunity for entrepreneurs and investors that we’ll see over a span of lifetimes. Nothing like this has ever happened before and I don’t know if anything will happen like this again, on this scale, ever, in the history of mankind. That historic perspective, opportunity, and being there at the beginning and understanding it while being aligned with it is what really motivated me.

I also have to say that I do credit a particular person to my involvement in this industry, Joseph Brezny, who came to me in 2012 and he said, “Watch what’s going to be happening! There is going to be some incredible things happening in the legal cannabis industry.” And I told him, “Joe, we’re not really going to see any major traction with this…” and he said, “No. Just watch! Things are going to happen.” I thought he was just being an activist at heart and simply wanted these things to happen, but I soon realized he was right all along. It was all because of him that I ended up taking a much deeper dive into the industry. I have to thank him on a continuous basis because it was due to his ‘firing’ that inspired to be to involved at the level that I did. He got me to take that first look and after that, there was no going back!

There is going to be some incredible things happening in the legal cannabis industry.

One thing many first-time entrepreneurs struggle with is raising money. How would you suggest someone to overcome this problem?

Well, that’s a big question. The simple answer for that is this: You need to really evaluate the opportunity you’re presenting to your investors with a very objective eye. You can’t look at this with any type of softness in your vision. You have to be very critical of yourself! So first, you have to evaluate your team. Does your team have what it takes from an investor’s perspective? Not your own perspective, but from an investor’s perspective. If they evaluate your team, are they going to say, “These are people who have a track record of success. These are people who will be fiscally responsible with my money. These are people who will get me to liquidity at some point in the future, whether it is through profit or distributions, to a liquidity of some sort. Are these people the type who will pivot away from the most common exit strategy which is failure?” If your answer to that is ‘I don’t know’ then what you need to do first is expand your team to fill in those gaps.

They always say to bet on the jockey, not the horse. I’d rather bet on an A team with a D project, rather than betting on a B team with an A project because if the team isn’t good enough, they can pull failure from the mouth of victory easily; whereas a great team will be able to turn lemons into lemonade over and over again.

They always say to bet on the jockey, not the horse. I’d rather bet on an A team with a D project, rather than betting on a B team with an A project because if the team isn’t good enough, they can pull failure from the mouth of victory easily; whereas a great team will be able to turn lemons into lemonade over and over again.

Ok, back to raising money. Find the value and find out how to make it work. That’s the first thing! Secondly, know that it takes money to make money, it takes money to raise money. You’re going to need to hire the right accountants, the right attorneys, and you need to structure your package properly. If you’re going to pay to go to the doctor and see a doctor for yourself; If you’re going to pay an attorney to deal with things that important to you like closing a house or representing you in court; So why wouldn’t you pay professionals like an attorney, an accountant, an investment banker to represent you and structure your package in the best way possible?

The number of entrepreneurs that think that they should just get people to work for raising money on the cum, which is illegal by the way, is manifold. So, I’d say approach it professionally and invest in structuring your offering in the best way you can. The difference between an investor looking at it, liking it, and showing it to his advisors, is knowing that when those advisors look at it, they are going to say, “Wow! This is well done. This is well structured. This looks like an opportunity that is attracting my capital.” Being able to do that, with an objective view, is critical. So, I’d say first, the team and second, the offering. Make sure it’s done well and don’t cut corners. If you skimp and cut corners when you’re raising capital, you end up never raising the capital. You just end up spending time on the treadmill wanting the money, chasing the money, but never getting anywhere with it. Everyday you spend running on that treadmill is a day someone else is executing on your ideas and eating your lunch. So, the faster you execute on your business, that’s what you should be working on. If that means hiring the right professionals, putting the package together to be able to raise money, then that’s what you need to do!

What is your best advice to cannabis entrepreneurs when they pitch their project to you?

Team, first. Idea, second. Value proposition, third. Intellectual property, barrier to entry, market competition, next. And exit strategy, last. I’d say hit those basic points. Make that distinct and easy to understand because that will make my life easier and we can get to the more meaningful conversations pretty quickly. I would say to be incredibly prepared with your due diligence. The more research you’ve done before you’ve spoken to me, the more likely our conversation is going to do well.

A prepared entrepreneur isn’t going to come to me and tell me that they’re making a new vaporizer and think it’ll be very great. They’ll come to me with reports of trends that show that people are becoming more interested in higher quality devices and that people are asking for things that are made in the United States, rather than in China. They show me the trends and that’s what they use to justify why they’re doing what they’re doing. So, do your research before you even start pitching to people and focus on the points I mentioned above as well.

Can you share your thinking on how to identify a company as a great opportunity?

Well, I can, but maybe I shouldn’t. I’m kidding. The great opportunities are ones where you can see first and foremost, that you have an all-star team in front of you. They have their operational excellence. They have their strategic vision. They have their financial oversight. They have their marketing and advertising knowledge all tied up. And then, a great opportunity is when a great team has an idea that could extend into being one of those disruptions – Something that can fundamentally change the way we do business on a massive scale. They have an idea that could go from being a $2 million dollar a year business to being a $2 billion dollar a year business. When you can see that particular path of going from A to B to C to D to Q to Z… then you’ve found yourself a great opportunity!

What are the key ingredients in building a successful start-up?

The first thing, and I say it again, is the team. It’s ALL about the team! Which gets you to another question: How does an entrepreneur build a great team? Entrepreneurs are usually jacks of all trades. They’re part salesmen, part operator, and they wear many hats. An entrepreneur is someone who starts their own idea and usually starts executing on their own. So, I’d say that one of the great skills in an entrepreneur that is a differentiating factor is self-knowledge – Know what you do well, but more than that, know what you don’t do well.

Know what you do well, but more than that, know what you don’t do well.

This is important because there is something we call ‘Entrepreneur-Syndrome’ which is, as your business starts to grow, your success becomes your weakness. As you start to grow, delegation becomes more and more important and so if you suffer from that syndrome, it won’t be a successful start-up. You have to delegate successfully and build a team that you can delegate tasks to and have faith that delegating to them is going to be better than doing it yourself. That is what makes the difference between someone who can build a small, good business and someone who build a large, great business! So, I’d say that at the core of a successful start-up would be an entrepreneur with great self-knowledge.

How does the role of the founder evolve as a company goes from seed to early growth to later-stage scaling?

That is a fantastic question and it’s not one that I normally get asked. Now, let me tell you why it is such a fantastic question. The role of the founder disappears as soon as the project is started. “Founder”, if you’ll notice, is not an operational title. It is entirely a honorific. So, let’s look at the operation. There’s the president, who’s the top executive; There’s the chief financial officer, who watches the money; There’s the chief operational officer, who is charge of operations; There’s the director of business, And there’s the director of marketing. All of those roles are very clear. What’s the founder’s job? There’s the board whose job it is to speak for the shareholders. The executives each have their own roles. The founder isn’t an operational role. It’s just a honorific for the person who helped start the project. How they transition from founder to being an operational part of the team is up in the air. They could be president, they could be on the board, or they don’t have to be an officer at all! They could just be the director of sales. It’s important that founders don’t let their ‘title’ get in the way of operational roles.

The role of the founder is to transition into a role that will be the right decision for the business as a whole. Become part of the operations, part of the board, or don’t become part of any of it! That’s how I see the role of founder evolving from seed to early growth to later-stage scaling. Specifically, it’s very important to remember that entrepreneurs understand that their role as founder doesn’t hold any operational value because it normally doesn’t.

What is your new knowledge in regards to investing in the cannabis industry?

That the dream I’ve always had of being able to easily have my investing and business decisions be value-based is now the way the rest of the industry operates. The people around you are focused. Let’s talk about Troy Dayton of ArcView Group. The thing I love about Troy so much is not just that he’s a great entrepreneur and executive, but it’s because he’s never ever lost sight of the fact that his primary driving force is the social justice issues and writing societal law is at the core of his being and his actions. And so, my new knowledge is really looking at someone like Troy and saying that this is how it can be done and this is how it should be done! We should never lose touch with our core values or our sense of culture. That is the first and most important thing. If we can do that, we won’t just be building the fastest growing industry, we will be building a new type of industry, one that is built on values and culture.

We should never lose touch with our core values or our sense of culture. That is the first and most important thing. If we can do that, we won’t just be building the fastest growing industry, we will be building a new type of industry, one that is built on values and culture.

As an investor, what are some of the key things you wish cannabis entrepreneurs knew?

The one thing I wish they knew is that as our industry transitions from black market to white market, professionalism and hitting a higher standard than any other industry in the entire country is the most important thing to know. We can’t just operate as good as other people do; we can’t afford to cut corners. We have to do better than any other industry out there because we’re transitioning from the black market to the white market. I wish that every entrepreneur knew that their professional presentation and being a representative of this industry is making a difference and an impression. If they’re sloppy, they’re going to hurt the industry. If they’re crisp, they execute well, and they’re professional… then they’re going to be able to show how we’re working to create the highest standard of any other industry. You have to be exemplary to be in this industry.

What needs to happen in order to create a billion-dollar company in the cannabis industry?

The answer to that seems simple, but it’s got a great answer. First, I’m going to start out by saying some names: Lycos, AltaVista, Excite, DogPile, Pathfinder, MetaFilter; those were all multiple hundred-million dollar companies and were primarily search engines of the late 90s. Where are they now? They’re all gone. None of them exist. Search engines we use now are Yahoo, Google, and even AskJeeves. The others are all gone. The important thing to know about building a billion dollar business in the cannabis industry is to think about the future and to start thinking about where you’re going to be in 3 years. What do you actually have to do to be able to survive the coming change as this industry goes from being collaborative competition to straight competition? That transition, when it comes, is going to be a shake-out and a lot of people aren’t going to make it. You definitely want to create a business that can last. So, it’s not about creating the billion dollar business, it’s about creating the billion dollar value. Luck doesn’t hurt either.

How do you decide between shutting down, keep funding, or selling your start-up?

Fail fast. Having been the guy who kept a business running far beyond what it should have been, I speak from experience. Knowing when to quit is very hard. Knowing when to change and let go and to pivot and to adapt is very difficult. I read a book called The Little Book That Saves your Assets and in it, it says that everyone needs to have an ‘Uncle Frank.’ And what they mean by that is that you always need that someone in your circle who is a trusted advisor that you go to and who gives you the straight, unvarnished opinion. The way you decide is by having that Uncle Frank who you really trust. If you’ve lost your perspective, go to those trusted advisors. Get their opinion. Put together a decision matrix. It’s better to fail at something and be done with it and to move onto something else, than it is to spend your years trying to make something work that just won’t.

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