Chase Terwilliger is the CEO of Balanced Health Botanicals, a Denver-based company that’s considered as one of the largest CBD and hemp-derived product manufacturers in the US. Balanced Health Botanicals has operations and growers in nine different states who distribute to 15 different countries. Chase has some unique insight into the CBD industry's evolution as well as CBD distribution as impacted by COVID-19 shutdowns.
This episode is sponsored by Juhll. They are a full service digital marketing consultancy that has over 20 years of experience helping your business grow sales online. They've helped most of their clients grow more than 50% year over year by helping them meet their digital marketing goals.
Juhll Digital Agency works with companies who are doing $50 million in top line revenue that have a marketing budget of $2 million. They build your company from the ground up and they also help you in creating a strategy that will work best for your team.
"And one of the individuals had an Instagram following because he was expert at extraction, and said, 'Hey, we're selling CBD on the Shopify site. Yeah, come check it out.' They sold $100,000 in one weekend." - Chase Terwilliger
"We were also fortunate that we have certifications for cGMP, which are good manufacturing practices. Most food companies have them; very few companies in the CBD industry have them." - Chase Terwilliger
"But those two hours in the morning before really anybody else signs on are my most productive two hours of the day." - Chase Terwilliger
Welcome to Snyder's Marketing Showdown and original Juhll Agency production. In this show, you'll discover which elite business executives hold the strongest hand in business marketing and operations. Listen to Epic no holds barred showdowns debating the latest groundbreaking strategies this side of the internet WARNING This show ain't for rookies. So check your ego at the door with your host president of Juhll Agency and founder, operator, investor in Banks.com - Chris Snyder.
Chris Snyder 0:43
Hello everyone. Chris Snyder here hosted the Snyder showdown president at Juhll .com and founder of banks .com. Although we usually talk with industry leaders and entrepreneurs about what's working and what's not with their growth programs, we actually decided to pivot a little bit on this show and hear how industry leaders are guiding their teams through this tough time of COVID-19. Of course, we'll still address all the same business issues. Just a quick message from our sponsor. Juhll is a full-service digital consultancy and we focus on helping executives solve their toughest digital growth problems. While working as an extension of the executive team. We focus on three things we quickly identify the biggest problems impeding growth. We have over 25 years of experience in doing this. So we've seen a lot of patterns. We also propose solutions that give you the best opportunity for success. Finally, the work has to get done so we bring a private marketplace of vetted world-class talent to execute that plan. Of course, we manage this whole process. If you'd like to learn more go to Juhll.com that's JUHLL .com or you can email Chris directly that's Chris@Juhll.com Okay, without further ado, we have Chase. He's the CEO of Denver based Balanced Health Botanicals. One of the largest CBD and hemp-derived product manufacturers in the US balanced health botanicals has operations and growers in nine different states with distribution in 15 different countries. Chase has some unique insight on the evolution of the CBD industry as well as CBD distribution as impacted by COVID-19. shutdowns. Welcome, Chase.
Chase Terwilliger 2:32
Thanks for having me, Chris. Excited to be here.
Chris Snyder 2:33
Absolutely, great to have you here. You know what, before we get started, if you could walk me back to your early years, kind of where you grew up before Balanced Health Botanicals, you know, how did you get your name in this business
Chase Terwilliger 2:47
Yeah, yeah, I grew up in Edina, Minnesota. So right outside of Minneapolis. And right from a young age, my parents brought me To Vail Colorado to ski. We go every single spring break. So I fell in love with Colorado and specifically the University of Colorado. So when I entered my senior year I applied to one school and one school only. And that was at Boulder. So I knew I wanted to come out here and, and ski. So I ended up going to University of Colorado and pursued a degree in integrative physiology. So studying everything about human physiology, exercise physiology. After that I wasn't bright enough to get into med school, like most of my peers, they're not bright enough but didn't want to go through the MCAT and all that that jazz and got into medical device sales. And so, orthopedic medical device, I got a job in Chicago and got very fortunate I performed really well the first couple of years there and there was a territory that opened up here in Colorado where they needed a distributor for at the time I was working with Johnson and Johnson. And so came out here helped start a big distributor and we grew that distributor from just a couple guys to over 30 people in a couple, two and a half years and then ended up getting bought out by Johnson and Johnson. Wow. So yeah, got some medical device and kind of the human physiology side, kind of all of my experience there and then completely got out of medical devices and got into tech and helped start a company called Silvernest. It's kind of a crazy idea. It's a roommate matching for baby boomers and empty nesters.
Chris Snyder 4:58
Okay, so match.com or eHarmony, before match.com and eHarmony, right.
Chase Terwilliger 5:04
So you get it. I should have come to you for money a couple of years ago or five years ago because you got the idea like that. It's, it's like eHarmony, match.com for an Airbnb mix. Essentially addressing people who aren't prepared for retirement. So 50 plus and want to rent out a room in their house, it helps them. We built a platform that helped them navigate that whole process from finding a match, doing all the lease preparation, taking in rent payments, dealing, you know, mediation with roommates, you name it. And that was that's actually still around has been pretty successful. But through that program, we were funded by a group called 500 Startups. Yeah, in San Francisco. Yeah. So I was fortunate enough to go through that program, you know, left my family back here in Denver, and we had a one-year-old at the time. So my wife wasn't in love with the situation. But I'd commute out to San Francisco every weekend and be part of 500 Startups and which is a world-class program. Yeah. Basically, they bring all their investors in to help their portfolio businesses succeed.
Chris Snyder 6:17
A six week kind of a six-week program, right? And then every Wednesday or Thursday, or was this one 12 weeks?
Chase Terwilliger 6:24
This one was a little different. This one was five months. Oh, geez, we're there every day for five months. And you talk about people with a good work ethic. I mean, they're there 24/7, 500 Startups headquarters. They're on 4th & Mission in San Francisco.
Chris Snyder 6:44
I think they have to pay you like 25 grand total, or something like that.
Chase Terwilliger 6:52
Right? Exactly. This could be a little off but they put about $100,000 into each company for, I think 5%. You go in and negotiate. Yep, this isn't really an option here. And then they give you some living expenses as well. But I actually lived with my aunt and uncle about an hour and a half outside of the city and just commuted in and out. So it was, it was a crazy time. Certainly, but I can't tell you how valuable that experience was. And so I learned all this technology, digital strategy, which I really didn't have in my, you know, my box of tools at the time. And that kind of led me into CBD. And the reason being I got out of it, I heard about these, these guys had just really started a CBD company, and they, they had a little success. And I came in and said, you know, let me tweak a few dials and it was kind of off to the races with CB Distillery in our digital strategy.
Chris Snyder 8:04
Let's um, let's talk about 500 Startups a little bit. I mean, obviously there's Y Combinator. There's a lot of these programs now, but I think, I don't know how long ago this was, but they weren't as prevalent maybe 10 years ago as they are today. Right. You think the competition, although it's fierce today is probably really hard to get into that program. How did you get into that program?
Chase Terwilliger 8:27
Yeah, we, to be honest, we were a little surprised that we got into it with the typical startup where we were banging on every single investor's door, having conversations I mean, I talked about knowing your pitch inside and out. And they were willing to give us a chance. And so we were pleasantly surprised. We had we also got into actually Techstars, which is another big one. I think they're much bigger actually than 500 Startups now, but I could be wrong. Yeah. And, and we decided to go the 500 Startups route. And it was, like I said, a great experience, I would really suggest it and recommend it to any entrepreneur out there. Just the assets that they bring in. It's expensive, right? They take a decent chunk of your company, especially if you have a tiger by the tail. Yeah. But it is worth everything to be in one of those programs.
Chris Snyder 9:25
So did you guys get funded? I know they gave you the initial but did you get Did you ever? Did you ever get the follow on funding and make a company out of it?
Chase Terwilliger 9:34
Yeah, so they didn't do the follow on but we did make a company out of it. You know, I think that the company raised about, I think I could talk about it, about 4 million or so. A very successful company. You know, we made a lot of pivots within the businesses. We built it because it was really we had the platform to allow it to scale but it. We didn't have the marketing dollars to do so. So what we ended up doing was just containing it to the area. So Denver being our home base, and Boulder, just started there and really did a lot of guerilla marketing, you know, boots on the ground, and then built that up. And then we'd also do partnerships with communities - 50+ communities around the country as well and started building those out. And I stepped out of the active role about two and a half years into it. And so in about 2007, early 2017.
Chris Snyder 10:36
Yeah, well, it's interesting. I mean, you know, 99% of the companies out there are not VC backed, they don't raise money. That's really a 1% thing. And of course, VC backed companies are looking for outsized returns, right. I mean, a lot of these guys, I mean, they're looking for a billion-dollar company to get there, you know, after seven or eight or nine or 10 years now, I guess, is probably putting closer to 10 now, but you know, it's tough to, you know, pour jet fuel into something and make it turn into 100 million dollars in like, you know, three or four or five years so it can be worth a billion. So yeah, that's great. That's a great story. And so, you've already got, so you've got this. You know what I'll call Midwest work ethic only because I know we're a Dinah's because I went to school in South Dakota, so I know exactly, yeah. Yeah. So we were on the border of Minnesota, we're in Sioux Falls, so go to Minnesota a lot actually. And then moved to Colorado. And then it sounds like you know, got the entrepreneurial flair after doing a lot of review on the sales side of the devices business.
Chase Terwilliger 11:49
Yeah, so we, we had a distributor so our number one company was Johnson and Johnson then also kind of went in and out of smaller companies. new startup medical devices that you know we had access to all these surgeons, orthopedic surgeons and we could kind of in our bag or our reps bags we could bring in these other products and so it was it was really fun it was a good industry to be in at the time however at the end and I believe it's still this way ticket to this day is that it started to get squeezed a little bit with health care systems all combining and so they had buying power like none other and so obviously with buying power they can take down the margins big time. Yeah, really smarter them but squeezed the industry.
Chris Snyder 12:44
Yeah, you know, we're I was talking about this with someone today. When things get centralized, it's a lot easier to control, right? And when, and it's a lot easier to scale. Like if you look at Google or Amazon they've pretty much brought everybody into their marketplace and they can control it. Right. So they think Shopify does a good job, giving them a little bit of competition. I'm talking about Amazon, but who's giving the centralized search business? Any competition? You know, no one's no one's digging on Google. Really. You know another thing I was talking about with someone else today is this notion of some apprenticeship and training. I suspect that you got pretty decent, you know, executive style and business development and contract and just a whole bunch of stuff that you probably got from that devices company that may have helped you just be a better sales development professional or business development person. Can you talk about that experience? Any?
Chase Terwilliger 13:48
Yeah, yeah. I think business development. Absolutely. Getting in there and going through these contract negotiations with heads of major hospitals. And then also having to work with our executives. Let's say it was a Johnson and Johnson contract working with them and kind of being that middleman and trying to figure out how they negotiate how they anchor their position, how they, you know, what they offer first and, and just predicting and all that it was a great learning experience. You know, from a sales side.
Chris Snyder 14:23
Yeah, it's tough to get that experience. And I think there's this notion of some, like nowadays, instant gratification if you read a blog, you know, maybe you know how to do sales, or if you read a blog, you know, how to do creative or content or you know, how to bid by or budget Google and it's just like, because there's so much content out there, right? I mean, so everybody kind of acts like they know what's up, but there really isn't any substitute for you sitting in that chair and doing that work as like as an apprentice. I don't know if there's any other word for it, but you're kind of an apprentice - you're captive, you have a mentor. Usually, there's a booklet of materials and training and people are holding you accountable. And it's tough to find that path. Nowadays it comes a lot sooner.
Chase Terwilliger 15:11
But I think you hit the nail on the head with the accountability. I mean, you're accountable for your decisions and everything you're doing. And now you have executives from both sides, you know, on the hospital side and your own side, you know, your partner, all looking at you and you have to perform.
Chris Snyder 15:28
Yeah, well, that's if you're a sales rep like you're you probably weren't commissioned only but a big piece of your comp is selling. Bottom line, flat out.
Chase Terwilliger 15:45
Yeah. We were commissioned only as a distributor and we had all reps on commission only.
Chris Snyder 15:46
Good. Commission only I stand corrected. I. Yeah, it was when I started my career there was this notion of recoverable and nonrecoverable draw. So if you worked on a record recoverable draw, they gave you some money in the hopes that you were going to sell to pay them back for that money. And if you did not sell your necessary wares, they would recover the money back. It's called a recoverable draw for a reason. Right, right. I don't that would by the way that was with Gateway selling Gateway computers in parts in South Dakota. That was a long time ago. I don't even know if that's legal nowadays. But yeah.
Chase Terwilliger 16:35
You fall back out on somebody's commissions.
Chris Snyder 16:39
Yeah, well, they wouldn't let it go on too long. I think what they would do is and back then, I mean, as a quote-unquote, kid, I think they're only paying you like 1400 dollars a month. I think you got 750 every two weeks. And then if you missed your number for like a month, you are kind of in the hot seat. Then Yeah, they could recover those future earnings from your commission that they fronted you, just so very interesting. So, so you did that. And then so how did was there any space between balanced health botanicals and these other things that you did you take a break or what happened in between there?
Chase Terwilliger 17:21
No. So so we sold the distributorship to were bought out by Johnson and Johnson and started silver ness within a month. It was a project that the current CEO and founder had been working on for about a month. And, and thought that this was really interested in interesting, like I said, try and you know, you could just feel the compression happening in that in that industry. Yeah, with margins and so moved over to the tech side. And then during silver ness right when I got back from 500 Startups. There was This group of individuals that I knew that were in the cannabis, the marijuana side, they had some family and friends who wanted medical marijuana, but they didn't want to get high. And this group was really, really talented on the extraction - like that's what they were known for. So they started using hemp to extract the CBD and really the medicinal part of the plant out and then selling it, you know, or basically giving it to their friends and family at the time. And they said, you know, we have an abundance of this, let's try and sell it online. They put up a Shopify site in, you know, probably took them a day to put up. And one of the individuals had an Instagram following because of his, you know, he was a master and expert at extraction, and said, Hey, we're selling CBD on the Shopify site. Yeah, come check it out. They sold $100,000 in one weekend. Oh, God. At the time, I'm busting my ass back and forth to San Francisco, you know, and we're just doing anything to get that revenue at Silvernest. And these guys come, say hey, you know this, we just hit $100,000. And I'm like, yeah, excuse me. And we know there's an opportunity here. Can you help us kind of find that? So I was consulting for him for about a month because I thought, you know, CBD could be snake oil. Yeah, I really had no idea what it could do for individuals. And so found that there was really no digital strategy in you know, with a handful of companies at the time. So this was late 2016. And so started helping them out on the SEO side on, you know, email workflows, very simple things, but huge opportunities. And I had just come off 500 Startups. Well, the testimonial started coming in and it was changing you know people's lives, their friend's lives, their family's lives, and their kid's lives. Not that we that kids should be taking CBD but people did say that and so anyways, that's when everything turned around for me and I just basically said these you know this is changing people's lives we have a mission behind this company. Yeah is that there's a, there's a y that I haven't had before it wasn't selling, you know, medical bone anchors for five $600 for a piece of metal that much just to make a buck. This is really changing people's lives similar to Silvernest, but even more impactful here. And we had all the tools to do it. We had a team that knew how to extract and then you know, myself, and we added to kind of my team to help market the product. Yeah, it kind of took off from there and I left Silvernest and you know, it's fortunate enough for them. To bring me on as the CEO, he had, I think five people at that time and we have 125 now, you know, years later, that's great. That's great growth.
Chris Snyder 21:09
I want to take a step back I mean, look, I think I think we know and maybe most people would loosely know kind of what it is right? You know, you guys what it is is and correct me if I'm wrong is an alternative to another health or wellness product and it's just, it's called CBD right. And that particular that CBD is extracted from, you know, hemp or marijuana plant is that accurate?
Chase Terwilliger 21:44
Yeah, yeah, you're accurate there. It's, it's extracted from hemp. So the biggest question or \the the most frequent question that we get is, you know, what's the difference between hemp and marijuana? Yeah, marijuana gets High it has a component called THC. And that gives you that psychoactive high effect. hemp does not It has very small amounts of THC so it won't get you high, but it's still rich in all of the components of the cannabis plant, which are a number of you know, there's over 100 of them. They're called cannabinoids, they're different molecules. The most prevalent one is called CBD. And that's the one you know we have other minor cannabinoids that we sell as well but CBD is really the front and center star of the show.
Chris Snyder 22:35
So in order for someone to start CBD company I mean, I think it would be safe to say that there's probably a lot of science here. I mean, I feel like there's some grow houses with plants and beakers. And so can you talk a little bit about the operation for the novice like how does this work. You guys have scientists there? Do you have your own field? How does that part of this business work?
Chase Terwilliger 23:07
Yeah, yeah. I could talk about it probably for a few hours because it's still as a new industry getting polished out - the value chain. But for us is we work with farmers who grow hemp, and we try and work with the same farmers every single year. So we get a very consistent product that we know is safe, and we test that product to make sure there's no pesticides, and that it complies with the law that it doesn't have too much THC in it. Then we take it, we buy buyer hemp, and we take it to an extraction partner, who actually will extract it into three different kinds of CBD for us in different form factors. So there's one where it's just the isolated CBD molecule so they rip out everything from the plant other than that CBD molecule, it turns into a little white powder. And then there's also which is Our best selling products, it's called full spectrum where the extractor does co2 extraction to basically squeeze all of the plant nutrients out of the plant. And so with that, you get a lot of CBD but you also get terpenes which are like essential oils of the plant some other minor cannabinoids and you do get just a hint a THC because there's a hint of THC in the original product but not enough to get you high. And then we have a third component where they actually take that full-spectrum our best selling product and they just take out that little bit of THC. So that's really where we see the future is that full plant squeeze, but not any, you know, people won't, you know, test positive for drug tests and things like that and can be more mass-market produced. And then what we do once we have that oils, we bring it back to our manufacturing facility. here in Denver to turn into our products are tinctures which are little droppers. We have gummies. We have soft gels, we have a bunch of topicals. Throughout this process, we're testing everything. to your question about science is really unique because CBD was actually a schedule one substance next to heroin. I don't even think cocaine's at number one. But like heroin and some others, and LSD, schedule one until 2014. Wow. And then there was a bunch of muddy water between 2000 legislate with the government between 2014 and 2018. And, essentially, what I'm getting at is there couldn't be research done in the CBD space. Yeah. So all the research is coming out now. He's here in the US. Others have been like, pretty standard. Other countries have been doing this for, you know, 100 years researching this product, but here in the US, the clinicals are really starting to come out. So most of our evidence is anecdotal right now. Yeah, we're getting all the science behind us to support all of our claims right now.
Chris Snyder 26:21
Wow. Yeah. I mean, I think back and I feel like I've seen a couple Netflix, documentaries on stuff like this. You know, the military was, was testing it. There was, you know, a bunch of people in the 60s, obviously testing it. And then you know, what happened? The Reagan administration or one of these administrations said, you guys are toast. It's all schedule one, and we're done here. Is that kind of what happened?
Chase Terwilliger 26:48
Exactly. And so you have this prohibition for years and people are still using it, right horse but you can't do any real science. There's only a couple University I think the University of Mississippi and maybe one other that can, you know, actually do clinical research, which is never going to give the American public enough information, the information that they need, and they deserve at what, you know, is this safe? And if it's safe, what can it do for me? What kind of alternatives? How can it make my life better?
Chris Snyder 27:24
Yeah. And so let's get into that a little bit. So give me some of the things that I would use this for hand creams, headaches, seizure, like what's, what's the normal applicative use?
Chase Terwilliger 27:37
Yeah, and I need to be a little careful around the application as we don't have those clinical studies out. Got it. And so, but what we what I use it for is I'll use it for pain and inflammation. Um, and then also there's been a number of studies for anxiety and stress. I also take it for sleep. Especially the full spectrum does a great job of just relaxing me and getting me to sleep at night and be able to sleep through the night. It's funny, the number one complaint that we have for our products by far is that there's vivid dreams. And so if that's gonna be, you know, the one bad thing, I'm okay with that. Yeah. Well, we're sleeping so hard.
Chris Snyder 28:30
If it allows us to identify a problem, right before we go to sleep, and then to work on a problem you're supposed to, you're supposed to kind of sleep on it right? You know, that'll determine is but if it can provide a vivid solution to our entrepreneur problems. I will take it all day long. So the the the guys and the gals that started the company before you got involved, I think you'd mentioned they did like 100,000 in a weekend. They're still there. Right. So your business partner does that?
Chase Terwilliger 28:58
Yeah, yeah. Most of them are.
Chris Snyder 29:00
Yeah, so So how did you meet those folks? Like, how did that even happen? Were they also the same people that you did the other work with? Or?
Chase Terwilliger 29:09
No, it was. It was very random. And you watch you know that one of those events that you wake up one day and you don't realize your life is gonna change completely? Yeah. My, my father in law actually bought them. They were looking for equipment for their extraction. And they didn't have the capital. And so my father in law was friends with one of their dads and said, You know what, I'll, I'll finance the equipment. That's awesome. And so he, all of a sudden, he downloaded the Shopify app. And I don't know if anybody has ever had the Shopify app, but it goes catching every single time that yes. And we're sitting at Thanksgiving dinner, you know, right at the Black Friday Sale. I just get done with 500 Startups. And his pocket keeps on going "Chi Ching Chi Ching Chi Ching Chi Ching." Yeah. What on earth is going on? And he started telling me about it. And that's where, you know, my mind just opened up. And it's like, wow, these guys are really they got a tiger by the tail. Certainly. And, you know, like I said, if this stuff really does work, this can be big. And these guys really know how to make the best product in the world. And I'm coming off this, this digital strategy and sales side. So I think I can add some value.
Chris Snyder 30:36
Yeah. So So fast forward, you've got, you know, some folks that sorted out that they could go find these growers go to these fields go to these extractors, put stuff in a box in a bag or in a bottle. So what happens next, you guys, white label private label, or do you create your own retail brand and your retail brand is balanced? nickels out works. So we
Chase Terwilliger 31:03
actually at the time were just CBDistillery. So CBDistillery is our number one brand and in carries most of the weight right now it's our you know legacy brand even though it's four years old. And so is all about building a brand. We did do a small amount of white label and private label which was really interesting at the time because you can see who was doing what and if you know what was working for him what wasn't and we had some partners on the white label private label side but have taken a shift since then to get out of that and just work on building our brand. We're Balanced Health Botanicals now because we have a family of brands we have CBDDistillery, which is our workhorse. We also have a company called Bota Hemp, more skincare products. cosmetic products, you can find them in Ulta, and then we have CBDistillery which is a high higher console. centration line that you find in independent pharmacies and physician offices.
Chris Snyder 32:07
Interesting - so you're not creating products for other people, you're creating these brands, these retail brands for yourself. Now, you're not allowed to sell CBD on Amazon, right? Unfortunately, unfortunately, because that would be awesome for you.
Chase Terwilliger 32:25
Fortunately or unfortunately we get more profits on our site through Amazon but you're right there's pluses and minuses to that
Chris Snyder 32:36
And now that I think about it, it limits your competition with all these guys that flood the market with crappy products shipped from overseas that are not quality tested, so that's good. So are you allowed to advertise CBD on you know, the, you know, Google Facebook's of the world are you allowed to promote this with traditional advertising way, we're not so we have our hands tied on the end.
Chase Terwilliger 33:04
This gets a little confusing, but on the ingestible side, yeah, just will side is where we run into all the problems with the FDA and regulations. They're forming regulation. They know that it will be legal. They've said that but they haven't put the regulations in place. On the topical side. they're okay with topicals. And so we can advertise on Google and Facebook are topical products.
Chris Snyder 33:28
And that's like the lotions and the creams.
Chase Terwilliger 33:31
Yep, it's stuff like that.
Chris Snyder 33:32
So your biggest channel is your biggest channel online or is it? Like channel sales to ski resorts in Colorado, I can imagine is a big seller for you guys or shigh end hotels, maybe, you know, places like that. What's your biggest channel here?
Chase Terwilliger 33:49
Those are all on the list, certainly. But our biggest one is e-commerce. We're really good at e-commerce. That's one of our core competencies. We do about 65% Our sales in e-commerce and the rest come from mostly independent retailers because they will take ingestibles and so we sell into about 6000 independent retailers throughout the US and in Europe.
Chris Snyder 34:18
Chase Terwilliger 34:20
6000. So we have a distribution center here in Denver, South Denver that does a phenomenal job sending out not only you know, sometimes up to four or 5000 packages a day e-commerce, but also sending packages to all of those independent retailers.
Chris Snyder 34:40
Interesting. So are you basically acting like the Amazon for those guys fulfilled by probably the bread probably by Balanced Health Botanicals or would it be fulfilled by the CBDistillery?
Chase Terwilliger 34:56
Yeah, either one. It's one of the same and You know, we did do the three 3PL for a little while and it was a disaster. It's so hard, especially when you start to experience that hockey stick growth, you just enter a whole different component. So that it was hard to manage inventory really hard to manage inventory and cash flow. And then also, you don't have control over order accuracy. So they say that they're very accurate these three pls, and they are for the most part, but when they're not, you know, our customers would email and say, Why did I get a toothpick gun? Why did I get a scarf, a woman's scarf, and then you kind of, you know, what a great customer experience he kind of out that, you know, we outsource all this stuff. So that only lasted a couple months, and we took it all back in-house.
Chris Snyder 35:46
Oh my God, what a waste of time. I'm just thinking from a business continuity standpoint, how much time you spent to talk about it, how much time you spent to do it, and then how much time you spent to unwind it.
Chase Terwilliger 36:00
I mean, the cost was substantial. You know, it was a big learning experience to do that. And it's obviously, it's expensive, you got to get the pencil out with having your own logistics facility too. So I don't want to discount that. But it's really not that expensive to when you start to look at, you can get a $15, you know, a month software that plugs into whatever platform you're using to manage it.
Chris Snyder 36:30
So yeah, I've heard, you know, good and bad. And I think that at the end of the day, it's all really about kind of who you want to be when you grow up, I guess, as a company. And if you're going to do scale, and the manufacturing and logistics process is part of like your core competency, you should probably do that. Right. So let's talk about a little bit about COVID. So you've got this warehouse, I think at the beginning of the call we talked about you know you guys going from Three or four or five or 10 people to think 130 was what you said. So, a lot of those, or maybe at least half of them have to be warehouse and logistics, kind of day-to-day workers that need to be around each other. Is that how many of those folks are around each other? And how is this impacted your business?
Chase Terwilliger 37:23
Yeah, so we're fortunate that a little, probably about 60% of our workers can work remote so they're not manufacturing or logistics and we identify before it was mandatory. We sent everybody home in early March. And so we didn't get pushed into that and didn't happen overnight, necessarily. On the other side, we do have 40% of our workers that are crucial to making sure that our operation stays operational. And so they did come in. We were also fortunate that we have certifications for cGMP which are good manufacturing practices, most food companies have them; very few in the CBD industry IT companies have them like you said there's a lot of bad actors out there. But with that, that we had mass we had a lot of the PPE already available. So we put in the six-foot rule. We added sanitation, additional sanitation, sanitation to the schedule, and then stocked up people with PPE. And we've been very fortunate and very thankful for our workers to keep on coming in. We also did some staggered breaks. You know, our Director of Operations our VP of operations that should say over there did a phenomenal job of coordinating that and today we've been clean.
Chris Snyder 38:50
That's awesome. How many warehouses do you have? One massive one or do you have multiple warehouses?
Chase Terwilliger 38:56
Since we grew It's kind of both. We were in a business park and we all of a sudden turn into the business park bully just taking unit after unit after unit after unit. So we're actually in six units, but they're all in the same business park right now.
Chris Snyder 39:14
Yeah. So you need an electric scooter. Or I guess, I guess if you were really cool and go back to like, circa late 90s. You could have a Segway, right?
Chase Terwilliger 39:24
You know, I hope our employees don't hear that or we're gonna get requests for Segways here, no.
Chris Snyder 39:31
Then I'll just throw down like Paul Blart Mall Cop or something like that. And I'll be like, you don't want to be like Blart.
Chase Terwilliger 39:38
Yeah, there we go.
Chris Snyder 39:41
Um, so you've got growers in nine different states as well. Is there some kind of climate or, you know, you know, state geography that suits this the best and how does that scale as you guys scale?
Chase Terwilliger 39:58
Yeah. Farming is a really interesting part of our business because first of all, there used to be no farmers who farmed hemp. Yeah, because state programs each, each state has to have their own program and only a few did. And then states opened it up quickly. Now there's, there's hemp coming out of our ears. There's too much it's oversupply. But specifically to the climate question. hemp is a really unique crop and where it can, it can grow almost anywhere. So we have started this next year, we'll dial it from nine states down to two. We really did that initially, to make sure that if one of the batches had pesticides or something tested poorly, we can we could terminate that contract. And we could use we'd have backups in those other states, right, just for redundancy because, you know, when you move into a new industry, I can't tell you how many times we've been burned in certain things. So redundancy was our middle name. Yeah. And so we really had those nine states for redundancy that and here in Colorado, we get hail storms that can wipe things out. But if I had to say where the best hemp was grown, it's probably in Oregon is really where we're seeing the highest percentage of CBD.
Chris Snyder 41:23
Got it? Got it. And then you also scaled to distribution in 15 countries. Can you tell us about how you took an international strategy? I mean, I'm assuming it all started in the US. I'm assuming the farms were in the US. And now, like, boom, you're International, what kinds of countries and what kinds of products are any regulations that you have that we have to be aware of or?
Chase Terwilliger 41:51
So I'll talk a little bit about UK and the EU because that's, that's our biggest next to the US and we started Just by, you know, people word of mouth would call us up and say we wanted it at our, our shop so fine, we'll, we'll send it over there. That happened for about a year or two. And then we saw the potential and that those shops were starting to sell more and more. And so we invested pretty heavily into our international expansion put our first x Pat over in the UK. You can see at the time that they were about a year and a half behind us as a society. D stigmatizing the plant Yeah, educated on what CBD was. And so we felt like there was an opportunity there. And so we started to develop operations over there. So we have a small office, we have a manufacturing partner, we still grow all of our hemp here and turn it into oil here in the US, and then we ship it over to the UK, where it gets turned into other products. The most challenging part of that, not only does it tie up a lot of working capital, just because you're tacking out a bunch of time and transit, but also, the legality. We were fortunate that the FSA, which is the equivalent of the FDA here, made strides, you know, almost overnight, to allow CBD to flourish on the ingestible side of things. So we were fortunate there, but just setting up a legal entity, setting up banking. Something we didn't think was going to be a problem and ended up tripping us up for, you know, six-plus months, just banking relationship there and credit card processing. So that was a little out of left field and something we didn't see coming.
Chris Snyder 43:45
Yeah. Do you have one person there? Do you have a full operation there now?
Chase Terwilliger 44:65
We have one person there. And then we have a team here that operates You know, they're up early in the morning.
Chris Snyder 43:59
Yeah. We've got someone over in London. So she works until about two o'clock everyday LA time. But I know I think she starts around 4am or whatever that is. It's okay for the East Coast folks. But for us West Coast folks, it's makes it a little bit more challenging. So where do you see the business headed? I mean, you guys are a decent sized business now. By the looks of it, probably bigger and better than most others out there. Where do you go from here?
Chase Terwilliger 44:33
Yeah, I think really, we need to continue to be positioned as that number one player so we're from our knowledge number two, we did about 60 million in revenue last year. So we're number two revenue-wise, but the most profitable company out there. So really continuing to have that mindset of profitability, which treated us very well. You know, through this code pandemic so far. And, you know, the main reason why I say that that's kind of the future is that we're not going to go and try and get as much market share as possible, we're going to try and build a solid business that our customers love and respect. Specifically, on the mass retail side, you know, someone that they can trust, you know, we've invested heavily into the science behind the product. So we're the only one who has our it's called grass, it's generally recognized as safe, self from grass for all three of our ingredients. And we've invested in a number of clinical trials that are going on right now, as well as that cGMP that I was talking about making sure we have a safe consistent product each and every time. And so all of this is just for not only the end consumer and brand loyalty, but also for our retail and e-commerce consumers and customers to make sure that they can trust us. So we're going to make this shift from just you know, hey, you know Does your mom wants CBD does her cousin want CBD? Yeah, saying, alright, you want CBD, we are your provider. And this is why you're going to get a safe and efficacious product every single time. Let's grow a partnership in a relationship here.
Chris Snyder 46:25
Yeah, no, that's great. That's great. Are you guys you capitalize on all this with cash flow or you have you work with banks. You work with venture, you work with private equity. How do you are you guys capitalized?
Chase Terwilliger 46:37
So we've bootstrapped.
Chris Snyder 46:39
Chase Terwilliger 46:40
Yeah, we have. We have a little bit of debt. But it's really challenging in this space to raise any debt. Yeah. They still - the banks haven't come around to addressing you as hemp and not marijuana, they'll bank you. But when it comes to their committee to actually provide debt, that's really off the table. So we've been fortunate enough You know, I bragged a little bit about our profitability we were kind of forced into it as well.
Chris Snyder 47:10
Yeah, no, it's tough I didn't you know, I remember those days were probably similarly aged but I remember when people would ask us to help them with their gambling products, right and I'm like, Well, I can't place ads anywhere it's gonna be really hard for me to help you with that right? Yeah, scrappy ways to do it. But you know, I think this business right now between you know, medical marijuana or recreational marijuana or anything with you know, CBD oils in it. We have some Amazon clients and of course that's not allowed, which is why I asked the question but you know, I think it's, it's challenging your go-to-market strategy really is just channel right. You just got to reach out to all these guys like you have I just said, Hey, we'll pack it up. We'll ship it for you guys and you have another. What do you do? Do you give them a rev share? Is that how it works for you guys to say, Hey, listen, my product basically and you're we have this marketplace of 6000 companies - list my product and we'll give you guys a cut. Is that how it works?
Chase Terwilliger 48:17
Yeah, yeah, there's some of that. I mean, a lot of it's our e-commerce is directly off our site and we work with and we have tons of different channels. So that's one of the things because there's a really good analogy to gambling, being that you have all these restrictions everywhere because the companies haven't caught up to your industry yet. Because you're a tiny fish in a big pond. And so, yeah, I lost my train of thought I'm sorry, but..
Chris Snyder 48:51
That's okay. It's the challenge. I mean, I guess it's the Marketing Challenge with a regulated or, forget regulated, a product that's not recognized as something that the government believes to be. You know, I don't know what the right word is it, you know, efficacious if that's a word like they don't want us advertising products like this if they don't understand the science, a little bit of the science and the banks don't want it. They don't understand the math behind it. Right. So your challenge is really growing when you can't, when you don't have access to those channels. Like how do you do that?
Chase Terwilliger 49:30
Yeah. So we have all of these different marketing channels, knowing that one could go away. Yeah. And so one of the things that, you know, through Silvernest, so I have a friend that I went to high school with, that's the CEO of Thrive Market, which is an LA company.
Chris Snyder 49:50
Oh, yeah, I've spoken to those guys before.
Chase Terwilliger 49:52
Yeah, they're great and they're blowing it up product. Yeah, they're, they're obviously absolutely crushing it right now during this pandemic. Just great products all around. But anyways, you know, it's just asking me how did you guys grow this and you really talked about, you know, providing or building out this blog kind of affiliate but not a black hat affiliate white hat affiliate program, and how they were able to grow that and, you know, send these bloggers products and, you know, maybe they're gonna say it's horrible, maybe they're gonna say it's good. And we really put a big emphasis on that since the beginning. And people loved our products great because they could do the education for us. And then at the same time, we would run big campaigns try and get more email addresses and then we put them into workflow. You know, we started with MailChimp and moved on to EMR says, SEO and blog and content has been huge. I mean, people, like probably a lot of people listening, maybe, you know, they've heard about CBD, but they're gonna say what's the side effect of CBD so we were able to figure out That people were searching for that build the content around that. Yeah. With their funnel. So we have a very diverse marketing, you know, different marketing channels.
Chris Snyder 51:10
Yeah. And you probably have a lot of return clients, you probably have a pretty hefty CRM there you would have to so you can make your marketing dollars go further. So a lot of email probably and you know, potentially retargeting at the probably the display networks might allow you to do some of that stuff. I'm assuming.
Chase Terwilliger 51:30
Yep. programmatic is. Is does decent for us.
Chris Snyder 51:34
Yeah, that's great. That's great. Well, Chase, you know, you've got a great story here. If you were to leave our listeners with, you know, one or two things about, you know, your advice to them. You know, you've done a lot of different things. Don't give up, perseverance. There's probably a lot of different things you could say. But what like what would you give to our, you know, our viewers, our listeners as advice as it relates to being an entrepreneur and scaling a company from basically zero to 60 million bucks in a couple years, two and a half years I think you said.
Chase Terwilliger 52:09
Yeah, that's a good question. I think number one and one of my strong suits is just working hard and I know that's not a surprise to anybody but working hard with a balance. So I wake up at 430 I'm also you know, people think "Wow, you're an early riser." I also go to bed at eight but those two hours in the morning before really anybody else signs on are my most productive two hours of the day. Hands down and so I think that that that would be the biggest is balancing your life and your work life but work really hard work harder than everybody else. And just Yeah, the perseverance thing. I mean, there's been ups and downs. I mentioned earlier with the Johnson and Johnson, you know, got purchased or bought out? And I thought I'd bet 1000 you know, and then you go into a Silvernest where you're grinding every single day. And it's a great lesson learned. And but you get out of that rut. And it's been a really special experience.
Chris Snyder 53:17
Yeah, that's great. You've got a great story. If you're going to be an entrepreneur, it's definitely you have to understand this journey. And it's not about the destination, because you may not ever get there. You know, some of us will, but I fear to say that, some won't. And it's hard kind of lifestyle if you're not fully into it, right. So you do have to have balance, too, because this is the tortoise and the hare, right? We're not racing for a year in the hopes to capture something that will last 20 - we're going to be really plodding through this thing for many years to come. Well, I appreciate Your time everyone. Chase. I'm going to try this right. I'm going to try this. Chase Terwilliger.
Chase Terwilliger 54:07
You got it.
Chris Snyder 54:08
Did I get that? Right?
Chase Terwilliger 54:09
Chris Snyder 54:09
Awesome. Chase Terwilliger is the CEO of Denver based balanced health botanicals. They are one of the largest CBD and hemp-derived product manufacturers in the US. You can find them at balanced health botanicals.com. I know you can find chase on LinkedIn and I challenge you to spell his name. He'll probably be the only one there with that name, except for his father, of course. And his wife and his kids. But yeah, check out chase on LinkedIn. We'll have the rest of his companies in our show notes. Thanks very much, Chase. Thanks, Chris.
Chase Terwilliger 54:47
Appreciate it. Take care.
Thanks for listening to Snyder Showdown. We'll see you again next time and be sure to click subscribe to get future episodes.