In this exciting interview with Elad Barak, CEO and co-founder of Djot, a Toronto-based startup that is revolutionizing the cannabis industry with its precise dosing technology. Elad will discuss Djot’s proprietary Dispenser and Pod technology and how it allows users to enhance any beverage with the tap of a finger, creating a personalized and convenient cannabis experience without smoking or inhalation. Elad brings a wealth of experience in business development, fundraising, and general management, having raised more than $30 million from institutional and retail investors.
Automated Transcript of Djot on the Startup Talk Podcast
Direct from the sixth world renowned Canada’s largest city, with Canada’s biggest thinkers, visionaries and hustlers. This is startup talk featuring the founders, funders, innovators and community leaders who’ve led Canada’s startup ecosystem right here in Toronto. You’ll hear the challenges, the failures, the successes, Toronto StartUp podcast gives you the full story direct from the entrepreneurs and influencers who’ve made a difference. Now, the host of startup talk, the founder of Toronto starts this startup coach.
The Startup Coach 00:37
Welcome back to startup talk. I’m your host, startup coach, founder of Toronto Star. It’s one of the largest startup communities in Canada. With me today is Elad Barak, CEO and co founder of Djot, welcome Elad.
Elad Barak 00:48
Hey, thanks. Thanks for having me.
The Startup Coach 00:50
Can you tell us about your background and how it led to you co founding DDOT?
Elad Barak 00:55
I’m actually doing this podcast back from from where I grew up, which is in Israel, came for a quick visit. But I as I mentioned, grew up in Israel did the military service was an officer in the military. After that I got an opportunity to work abroad for Israeli embassy. So I worked for a year and a half in Mexico and another year in Ukraine. Back to Israel. I got my undergrad and Master’s in system engineering and worked for five years in the Israeli aerospace industry mainly with spacecrafts, a bit jet planes. At that stage, they felt things were too big for me. And that company is the biggest company we have in Israel. And I moved to a very small startup that builds robots for the US military here in Israel. And that really kind of started up my passion with startups. I then went to Toronto to get my MBA at U of T. And after that kind of led my career through smaller scale companies, and one of the cleantech then in the cannabis industry. And then that stage I decided to start my own company, John, which is what we’re talking about today. So that’s kind of my path and 60 seconds. So jot, jot, yes, the silence. What inspired the creation of jobs, I was working in the cannabis industry, for a company that was trying to do beverages. And after a year, that kind of didn’t work anymore. I wasn’t too hireable, probably. And we separated our paths. And I wanted to do also a cannabis beverage company, I thought things were done wrong. So a friend joined me and we started this company. And we want to do a cannabis beverage. And we tried to think what beverage should we do what dose and as we were working on it, our NBA hat kind of came to place. And we felt we’re not solving the right challenge for consumers. Consumers want the cannabis beverage, but they’re not asking us to choose the beverage or the dose. So we thought maybe a solution is to give them small vials where they can make their own beverages. And we thought, okay, that’s smarter, but it was still missing something. And that something was the dosing, as we’re all different. And there’s a lot of regulations that don’t allow you to sell more than 10 milligrams at a time. So he said, Okay, let’s find a device that can help us dispense liquid, according to the regulation and, and sell that, and we start doing a search and we just couldn’t find anything. And then we thought, You know what, why don’t we develop our own product. And we kind of felt that actually also fits better our skill sets of what we can bring to the table. And we started working on that. And in less than a month, we pivoted the company completely to what we’re doing today and neglected anything else not touching anything that’s cannabis beverages anymore from that perspective, but working on our dispenser to create them.
The Startup Coach 03:18
How does the Djot dispenser work and what makes it unique in the cannabis industry.
Elad Barak 03:22
So this is our dispenser. As you can see, it’s very small. I have my phone next to it. So it’s it’s smaller than an iPhone. And the dispenser is what consumers call the trick of cannabis. So it’s a one time purchase. And it has inside a pod. And the pod is something you buy with your cannabis brand that you like, if they partner with us, you slide it in on the bottom, there’s a slider that we want. So once they move it, it opens the dispenser, the screen turns on, and they can literally choose my dose here. So now it’s in two and I can bring it up can bring it up to three or down to one and we’re in Kansas, so I can actually go up to 10. And then when I’m ready, I’ll just I take a beverage, put it above press the button, and I get an accurate dose right to my beverage. And it’s good to go. I’m done. I close the slider, it turns off. And that’s all I need to do. So now I can dispense any beverage I want. And I think what’s important here and we’ll probably touch this more than once in this conversation is there’s a very deep understanding for us. It’s not that we’re a hardware company, not a cannabis company. And that means that we can dispense a lot of things, not only cannabis, and we have a way bigger vision for our company, which includes dispensing medicine, OTC psychedelics, vitamins, there’s a lot more opportunity for us. Cannabis is just to go to market that we thought is a low hanging fruit.
The Startup Coach 04:41
Since you’re talking about the hardware, can you walk us through the process of developing and refining the dispenser and pod technology?
Elad Barak 04:48
That was a long task. I think what we did well, and that kind of goes to my background is system engineering. So this is almost four years ago and we sat down. And he made a really good list of requirements. And they took my team and one of my team members are in my co founder. He’s a CPG expert, you know, he ran sprinkles globally for Procter and Gamble. He’s not an engineer in any way, shape or form, but asked him, tell me, what’s your marketing requirements. And we took that very big list and grinded it down to what we call, you know, engineering requirements that we can actually follow afterwards. And started developing processes according to that. And I think in that way, we, you know, with letter process, fairly organized to what we have today, and a lot of times when people ask us, How did we get something that fits all the regulation today, it’s because back when we started, we really kind of put our focus in System Engineering. And there’s a few things that I’d like to mention that I think are important sometimes, you know, you can forget about is one of the things we wanted this to be as affordable. And our starter kit, which is a dispenser and pod, which are going on the market and 4999, that’s possible, because we designed something that’s low cost, so we can actually sell it to the mass market. So from the beginning, one of the requirements was don’t make something too expensive. So every time we have to choose technology, we have to check Well, the cost of the technology, be something we can handle, then there’s the accuracy, right. So we had to check all kinds of technologies for the accuracy of the dispensing one of the things was a battery that lasts for a long time. So we had to make sure that these technology actually use a lot of power not so how can we make sure that we have a battery lasts for a few days. So I think really was a good list of requirements. And going through the process, we were able to do that. Another thing that we did that I’m not sure if it’s right or wrong. That’s what we did. And there’s some things that I feel maybe we should have done it upside down, is we first of all really focused on getting our technology ready by stages. First, we were dispensing, then we dispenses quantities, then we actually calibrated it, and only when he had a really good product that we manufactured proper that we fumbled and we knew what we’re doing. And we went and we did the design process designed from a consumer facing perspective, and manufacture this. And the funny thing is, we’re getting so much compliments and so much hype of the new design, that sometimes we’re thinking maybe we should have done the design first. And then the technology, even though it’s upside down, it’s complicated. I don’t know how it will fit exactly. But we really focused first of all, the technology, the first version, what we call the Founders Edition, looks like small refrigerator, it’s just a rectangular that I designed. And again, I’m a system engineer, not a designer, that’s kind of another thing that maybe was good, maybe it was bad, but it was part of our process. So how do you ensure the accuracy and consistency of dosing with the dispenser process itself is not of the checking is obviously not sophisticated, or, you know, complicated, we have a really high fat, you know, very fancy scale, and we do a lot of measuring. But once we started checking technologies, we were looking for technologies that will allow us accuracy, and there’s all kinds of approaches, we’re using a component that called the piezo. Electric component. They’re known for their accuracy in many industries have different kinds of different things that you do with them noise and in pumps and off things. And what we did is we just created really accurate electric pulses to operate them and actually move data from one level like one movement level. And since all the rest is constant, like we’re getting very accurate dispensing. So that’s kind of the process we did, we had a few other technologies we were checking in the beginning. And some of them were accurate as well. But they took too much power or just too much space, what we were able to do is contain a ton in something that’s small, I think the accuracy question really aligns to what technology allows a lot of other things around, because there’s other ways to reach accuracy.
The Startup Coach 08:34
What have been some of the biggest challenges you face bringing Djot to market? And how have you overcome them?
Elad Barak 08:39
I think there’s the obvious challenge that most companies will will have, which is fundraising and as a hardware company, there’s no way to do it without the money when you want to build things. Even if you want to do your prototypes, the prototypes usually cost way more than the manufacturing. Our first 10. PCBs cost us like $2,000, then we manufactured 1000s of PCBs, and each one costs I don’t know, 20 bucks, maybe. Right? So like cost reduces. So fundraising is always a challenge for any startup, and definitely for a hardware startup. But I think another challenge that maybe is a bit more unique to companies learning something that is more on the innovative side and change from the consumer perspective, is how do you go and convince companies when we show this to consumers, they jump all over it. But companies that need to make a decision and justify their moves to their boards in an industry that is kind of beaten up in the cannabis industry is buttoned up is sometimes challenging. Something’s didn’t want to see the data, and I can’t show them data because we’re doing something, you know, we’re the first ones doing it. I can show a lot of supporting data, but not direct data. So sometimes can you know, convincing the bigger guys can be a challenge. But what we found is that there’s more medium sized companies, they’re more agile and they kind of are more flexible, and their decision making is fast and it’s they’re more connected to the market in a way and they know. What can be achieved with this and they think that was our, our solution to to go around that and have not only one partner but a few companies that are actually waiting to join. So I think that’s one of the solutions we did that helped us a lot.
The Startup Coach 10:14
What has been the response from customers and the industry in general about jots dispenser,
Elad Barak 10:19
We just delivered our product to the OCS and this is a text, you know, pocket. So I’ll just give a quick bonus. This is the Ontario cannabis store. And they’re essentially the provincial board that buys product for Ontario. If you want to sell cannabis, I’m sure you have to sell through them. And then they will sell to the retail dispensaries. So we just delivered to them a week ago, our first order which is exciting, you know, for us, it’s a huge milestone. And as any startup wants to be a revenue generating company, we’re a revenue generating company right now. And then those yes sells it to the dispensary. So as of today, they are starting to sell it and stores are ordering it and about a week stores will start selling it. Last week, we did a launch event in one of the stores And they’re called Miss Jones, downtown Toronto. And we have a bunch of people there budtenders did some education with them. And people love it. Because the solutions you have today in the cannabis industry are not really allowing consumers to get what they’re looking for. And the beverages are not answering all their of their requirements. So the people that came to that event loved it. And that was the video had in the beginning in the background with me was from our event. And people just they they loved the experience of choosing their own beverage, putting their own dose into it. In a way when you have a pod that has 300 milligrams, and an average beverage is 10 milligrams, you have 30 beverages in your pocket. You know, it makes you the, you know, the most cool person in the party. And they were very happy to take that with them home.
The Startup Coach 11:46
How does Djot see itself fitting into the larger cannabis market? And who do you see as your competitors?
Elad Barak 11:54
There’s two parts of this question that I’m happy to answer both of them. This is where I kind of have my opportunity as a founder of a company to bring my prediction. So the first thing is the cannabis beverage market as not kind of achieved what everybody was expecting. Cannabis beverages is a topic that people are speaking about for four years. And okay, we achieved that technology. There’s a lot of companies that can make cannabis water soluble. But still cannabis beverages are just about 2% in Canada 1% in the States, and everybody’s prediction is there going to be 10%. And I’ve been claiming for a long time that the reason is that we’re not selling cannabis beverages the right way. If I would tell you I have a great startup. It’s a coffee sold and I can you were told me Well, a lot people don’t buy coffee and the best beans are grinded beans, and they make it themselves. And under the same kind of logic, every beverage has its own serving. And cannabis beverages are not meant to be sold in a bottle. Because it’s mainly water. It’s costly, it’s very difficult to travel with it or to sell it. So we believe that this is the way to sell it. And once we do that, we’ll get to that 10%. And once we get to that 10% I do believe that the cannabis spirit will be divided into two 80% are going to be pods and 20% are going to be ready to drink the bottles. When you go to an event maybe or I don’t know you want something like when you’re going for housewarming? I don’t know. But in general 80% of the market will be will be this I kind of forgot the second part. I think it was the bigger vision maybe or who do you consider are your competitors are the competitors. So that’s another interesting point. Because the obvious competitor is beverages though I don’t think we’re competing. I think we’re going to grow the market and again grows from 2% to 10% by adding that 8% That’s my prediction. But I tell this a lot to people after we kind of take over the beverage market Gummies is next and and the reason is that cannabis gummies are just the dosing mechanism. If you eat gummies, which most chances you’re not because you’re an adult, but if you do, you go to a store, you take a bag, and you pile a lot of gummies then you go and you snack them, and no cannabis company has sold you a pack of gummies with 0.1 milligram per gummy. So you can just stack them they give you one gummy, with two milligrams or five of them. They’re essentially giving you a dosing mechanism which a lot of research research shows, that’s the most important thing consumers want. So if all they’re doing is a dosing mechanism, and it’s a very dumb dosing mechanism, we do it better. So I think they’re, you know, next in line wants to kind of prove our product. And again, we have a bigger vision outside of cannabis, but this is within our first market.
The Startup Coach 14:29
I have interviewed a few cannabis startups. I have helped a few in our industry. I’m working with a CBD cream startup right now. I’ve worked festivals that are you know, on reservations, everything anything goes I’ve talked to I’ve worked with I do websites for cannabis stores. So I kind of know the industry somewhat. And I agree with you when you say dosing is the thing that people want. They want that feeling they get from a certain type of strain for a certain type of dosage or a certain type, I’ve gone to these festivals and I see people where they’re giving up like 50 milligram coffee, and people are getting free refills all day long. That is a completely different style of person than the average person walking in the OCS and having a product that will work for all of them is very key. Now, that boils down to this curveball I’m going to throw you is do you see beverage dosing rules changing in Ontario and Canada? Because there is a volume problem? Yeah, like you can only buy five, you can’t buy a six pack at the store because of is the way it’s sold. And things have to change a little bit to reach this 10%. How do you see that happen?
Elad Barak 15:49
Yeah, those are they did do a small change lately to the Regulation A few months back, where you’re now allowed to purchase up to 48 beverages? I think so will you go with 48 beverages, or we’ll just go with one pod, right, our product will still be more flexible and better for consumers, and will still be more cost effective for consumers, which is something Canada’s consumers are very aware of, I have to say. So first of all, we’re not an Ontario company, we’re based in Ontario. But we want to be in all of Canada, we want to be in the States because we don’t touch the cannabis plant, we can actually go any border, we’re gonna go to Europe and Australia. And while we are playing within the regulations, and we developed it to the Canadian regulations that we believe will help us work in many other regulations, because Canadian regulations are, are fairly tight. We don’t believe that this is a regulation play. where I’m going with this. I believe that even if tomorrow and tourists says you can sell a bottle with 100 milligrams, I think people will still prefer having a jot dispenser and buying a bottle with 100 milligrams, that so that’s kind of where we are right. I don’t think this is playing under regulations.
The Startup Coach 16:48
The key is people want to drink, they want to drink.
Elad Barak 16:50
Yeah, they want to drink they want to drink and you brought the coffee example and I love that sample because I actually love dispensing my coffee, I smoke weed I vape weed and and I never tell people that I’m claiming that I’m a convert the world to drinking. I think the people that don’t want to smoke or vape this is the solution for them. People like me that want to maybe add some more things to their routine reduce smoking. That’s the solution. I’m still vaping cannabis. But every morning, I love adding it to my coffee. And I know there’s some companies that are doing cannabis coffee, but with respect, they’re not selling me the same coffee that I want to drink in the morning in a coffee place. And they can’t give me that experience. Right. And that’s where the dispenser comes into place where I can go to a regular coffee place, add it to my coffee, sit there and enjoy nice coffee with my cannabis. And I got it with the company that I you know, for cannabis that I like, which is our partners, great water soluble cannabis. I’m kind of like, I’m getting everything the best.
The Startup Coach 17:43
I agree with you. I think my dream was being able to go to Starbucks getting whatever drink you want, and have it dosed with whatever. So you can sit down enjoy your drink without bugging anybody. There’s no smoke, there’s no vape and whatever in the air. Yeah, I mean, and have the beverage you want. To buy a 48 pack of lime soda, great is everybody you’re gonna share one lime soda, or.
Elad Barak 18:06
And I have to add on this. A lot of times people ask me what I love the most about our product. My answer surprises them when they say from my perspective, as somebody with an engineering background, what I love about this the most is the challenge to serve everybody. Because creating a product that serves one small segment, maybe it’s interesting, but it’s okay. But when you’re trying to create something that consumers that want one milligram will enjoy and consumers that want 10 milligrams will enjoy and even somebody that wants to press the 10 milligrams a few times and get 50 milligrams will enjoy that challenge. Putting it all together. That’s kind of like the iPhone challenge, right? And we even tried to design it that way. I want my mother to be able to use this. And they want hipsters people in the street to enjoy this and people with suits, because you can be discreet with this. You know, that challenge of creating something for everyone is what you know, personally kind of gets me into this all the time and single kind of want to continue to develop and we want to continue adding stuff. So it’s kind of around this thing. And this dosing is part of it.
The Startup Coach 19:01
You kind of touched on it, but can you discuss jots a recent partnership with Emprise Canada,
Elad Barak 19:07
I think it’s a really cool story because employees are you know, they’re a midsize manufacturer. And when we started, we as I mentioned the beginning, we wanted big partners, we were looking for different products, because we wanted to fill our pots to test them. We stumbled into Emprise they have water soluble cannabis. And we found it to be the best one actually isn’t the first time I liked it so much. I went on LinkedIn to find our CEO. And I sent him a LinkedIn message saying hey, I just bought your product. And it’s phenomenal. And we became LinkedIn friends, but nothing happened with that. And we’re sticking with a bigger company about doing their first the first launch and things are going just a bit slower than we wanted, right startups work on a different pace. And bigger companies work a bit slower because they have more decision making and you know more gates. So we’re thinking okay, we should probably talk with another company and we reached back to enterprise which we kind of knew but didn’t discuss business before. And we showed them what we’re We’re doing an I think they love what we’re doing. We really love their products because we thought why not start with the company we believe has the best product. And we’re where this comes into places you were asking about our event last week, people were dispensing beverages to kind of see how it works. And really surprising to us, like, you know what the guys, I feel this after 10 minutes, and even budtenders that usually have a higher kind of dose level. First, like, while guys, I’m feeling this because their product is really good. This is a company that focuses only on digestible products, a few creams, but mainly they just have a product that knows they’re water soluble and doesn’t deal with anything else. They don’t grow the cannabis, they don’t make it into oil. They just know how to make CPG products. And I really think their product is phenomenal. So we’re lucky to have this partnership with them. And they think together with our dispenser, it’s really giving a great experience for the consumer, both on the technology side, but also on what they’re consuming.
The Startup Coach 20:54
The format is great. One of your team was dispensing at one of our events, and I got to experience it. It looks great how it works. It’s just nice to see it and experience how it works. And that is so compact and small. You can show it but it’s not like feeling it in your hand.
Elad Barak 21:13
Right, I agree.
The Startup Coach 21:14
Okay, it feels great. It looks great. And I think you’re really hitting a problem around personal dosage. What is Djot’s vision for the future of personalized cannabis experiences and the role of technology in that vision?
Elad Barak 21:31
You know, when you’re saying that it really hits him that personalizing and I think there’s something a lot of times, you know, I’ve been to the cannabis industry almost five years now, you always hear companies talking about personalizing cannabis for consumers and people go berserk about it. Yes, I can’t wait for the cannabis to be made specifically for a lot. I’m like, Okay, that’s great. But you know, there’s no dosing mechanism yet. Like you’re talking about growing or selecting cannabis specifically for me and my DNA. But you don’t even know how to dose it. I mean, aren’t we try to like jump a basic step here. Now there’s not, it’s not that there’s no dosing mechanisms in the world, but pets and labs costs hundreds of dollars, you know, the professional ones, the ones that are just tubes, you need to know how to use them, you have to touch the liquid because the surface then there’s all of mess around, in my opinion, and this is about cannabis, but also about medication in general is, and I’m no doctor is that there’s off personalization, we can add just by starting with the dosing. And I think in cannabis, it’s a great example. It’s very, as I mentioned, it’s a low hanging fruit for a lot of reasons for us to start in. But I’d love to give examples from other places where I think it’s really important, I can show why it’s important. I have a four year old. You heard him before the podcast. And usually when he needs Tylenol, it’s usually in the middle of the night. He’s crying. I’m nervous. My wife is nervous. You look at the package. How old is he? How much does he weigh? How can you figure out why not put into the Spencer your kids age, his weight, put a pot of Tylenol for kids and measure it for him because every kid’s needs something different. Recorded because we have a Bluetooth habit for later in psychedelics completely different example. Today, if you want to do micro dosing, you’re taking 100 milligrams of psilocybin and if you need to increase it, you’re gonna go to 200 milligrams, you can’t do 110 We can do that. Then cannabis, we’re actually saying one milligram, two milligrams, three milligram, just because nobody cares about 1.1. But we can actually do 1.1 1.2. So there’s always personalization. And you know, I tell this to people who want to run conferences and look around the crowd. And tell me if you think that everybody here needs the same dose, if it makes sense to you different gender, different backgrounds, different size, tall, short, fat, then. So there’s a lot of potential here. And now we kind of need to unlock it industry by industry and take it through it. We have a roadmap, we’re starting in cannabis where we don’t need to be too accurate as we need maybe for the medical, but we have time to develop it while we’re generating revenue.
The Startup Coach 23:51
Can you talk about the importance of research and development in the cannabis industry?
Elad Barak 23:57
I think there’s a there’s a lot of importance. And there’s different things. And we see a lot of research on the cannabis plant itself. As I mentioned, I’m exactly in Israel, where there’s a lot of research around the cannabis plant itself. And I think all of that is great. I think when it comes to technology, we have a bit less of it. So there’s a lot of software applications, and there’s a lot of competition between them. But I’m not sure that will, you know, I wouldn’t put that in r&d. And lately, you’re seeing in the vape world, a lot of kind of competition with r&d, which I find exciting. Again, as a hardware company, I follow that. So there’s ice fire, which is actually a company registered to the NASDAQ that just raise money and the raise 20 million US dollars, and I think 4.8 of it or 5 million, something like that, and their PR is for r&d. And I’m excited about that. They’re already doing a lot of improvements. We know there were a lot of challenges with vapes, and what kind of like medical issues sometimes and pieces of metal. So I think there’s always work to improve. But I also think and I say this a lot of times when people challenge me and all kinds of things. You know what I can’t prove to you if what we’re doing is right or wrong of course. Simply 100% That is that challenged me if you want, but at least I can say one thing, we’re doing something really innovative. And unfortunately, outside of vaping, and maybe water soluble, you don’t see a lot more r&d. And I’m sure there’s more opportunities there. I don’t have an idea right now, but it can’t be that limited to vapes or soda, which again, there’s dozens of companies that can do already. And Djot which I don’t know anybody else is doing, but there has to be more.
The Startup Coach 25:26
How was your MBA from the University of Toronto’s Rotman School of Management contribute to your success as an entrepreneur?
Elad Barak 25:33
I think in a lot of ways, I had a great experience in the MBA, I came as a cynical Israeli and left as a good Canadian. But I think for me, there’s a lot of soft skills that I gained in the NBA, that really helped me, you know, I have a lot of that Israeli in me, that gives you a lot of kind of like push power, people that work with me feel it right away, I’m very pushy, I have a lot of energy that I put into, like the activities that we’re doing and expect people to work hard on it. But I think a lot of the soft skills that you need as an entrepreneur, I learned through doing my MBA, and obviously, you know, polishing a lot of the business acumen that you need. I don’t have marketing in my background, and I’m happy to have a co founder that is, you know, he’s the marketing guru from my perspective, but I need to be able to speak in his level. And I think I got a lot of, you know, at least strategic thinking from from the MBA that helps me with that. When we do fundraising, I definitely know my financials very well. And I can, you know, I can talk finance with investors. So you do need those, like strong skills. But for me, the soft ones were, were really what helped me.
The Startup Coach 26:41
What advice would you give to someone who is interested in starting a cannabis related business?
Elad Barak 26:48
I think one of the challenges of cannabis is that the industry has been through a lot, and a lot of investors have been burned, there were a lot of companies that raised high amounts of money and then collapsed. We’ve seen that multiple times in the market where companies lose 90 even more percent of their value. And that leads to a lot of fear. So not only does not often investors, there’s a lot of fear with investors. They’re also you know, from my perspective, when it takes the hardware as a background, there were a lot of companies that wanted to do vapes. And they came into dentistry after there was one leader, and tried to create a vape that couldn’t compete with the leader. And again, the company has disappeared. So a lot of times, companies tell me Well, what about all these companies? Why would you be different? And you know, so I think one of the biggest challenges for companies in the cannabis industry that are doing something innovative or just small startup is kind of grinding through historical disappointment for an investor that has nothing to do with us sometimes, but we kind of you know, need to pay a bit of the the price for so. So that I would say is the challenge. It also goes to the companies, as I mentioned, sometimes they’re a bit more risk averse at this stage. Because they don’t want to go too crazy and then not know how to explain themselves, it’s waves, it will probably go back at some stage to more growth and more risk taking. But that’s kind of where it is right now. I think another thing is an advice is one of the things that we say is and once we understood that we’re not really a cannabis company, we’re a hardware company, is to really define and explain, look, we’re working in the cannabis industry, you know, we can get revenue really quick. We finished our manufacturing on March. And we’re in May, in our practice on the market selling right like, you can’t find that anywhere else. If I would do vitamins, which kind of fits from a, you know, regulatory prospect perspective, I can do that. I’m looking at a year and a half before I put this in the market with a company like WalMart or you know, one of those big chains, there’s often advantages in the cannabis industry. And maybe you can kind of if you’re a tech company, maybe kind understand that you’re more of a tech than the cannabis. Right. And you think that can give some advantages.
The Startup Coach 28:44
Without telling tales out of school, is there any advice you would give to cannabis companies? There’s OCS there’s BC, every province has different laws, every state has different laws. Is there a place when it comes to alcohol? Sometimes it’s better to start out west where individual buyers own a lot of stores and you can get in started versus going directly to the LCBO? Is there a easier market to break into other than Ontario? OCS? Which is you know,
Elad Barak 29:18
yeah, absolutely. The short answer is yes. Yeah. But um, but I’m happy to kind of like, open that up. So the short answer is yes. I think that if you look to Saskatchewan, you’ll find a much easier market to approach. But when you’re choosing your market to launch and as a company, you want to have a bunch of ingredients into this. And one of the things that was important for us was to prove this in the market that is more tough in the way right, because we need to show something we need to prove something. As a hardware company. We still need to do more fundraising and we want to prove it where we can. We also wanted to start in the market that has a bit more kind of it will make more noise, right? If you’re succeeding in Saskatchewan, I’m not sure if We receive the same kind of noise and news and cover up as we’re if we’re doing an internal thing against any other province. So I think there’s kind of like different, you know, different aspects. Another aspect that kind of plays for our assistant and Ontario is the fact that everything goes to OCS. And as a small company that produces a lot of our logistics, so I’ll just clarify what that means. We do not need to ship product to each and every store, we actually ship our product to enterprise. And we even did a starter kit with them. So in order to make sure that everybody has dispensers, we’re selling the dispenser with the pot in the beginning, but we’re doing it through an price, we’re actually losing the bid or leaving, you know, we’re leaving money on the table, because we’re adding it with partners. But now the OCS is distributing for us our product across a huge province with more than 1500 stores. So I have the possibility for really being everywhere. And I don’t need to work on the logistics too much which in other provinces, maybe we would have to do more work on the logistics. So there’s also advantages. And it was kind of like looking at all these different, you know, small options are big and deciding. We also thought about different markets outside of Canada. But we really thought that starting in your backyard is the best where we can you know, I’m going to be a brand ambassador next week in different stores. And I’m excited about that. So not only I get to sell my product, but actually get to talk with consumers and see what they think. And you know, if it would have been in the other side of Canada or the world, it’s just a much bigger effort. So this is, you know, it’s great to have it in the backyard one of the dispensaries in my neighborhood is going to sell it. So you know, it’s exciting to go buy it there.
The Startup Coach 31:34
When breaking into the cannabis industry or any industry, you need to get user feedback, you need to test your product, you need to talk to users. The problem, obviously in the cannabis industry is there’s a lot of rules and regulations around that. You mentioned, you know the OCS but there’s a lot of non OCS stores. In fact, one of the biggest ones in Toronto is non OCS cafe where pretty much everything in their store isn’t available in the OCS and they that they pride themselves in that and they just pay the fine whenever somebody decides to would you recommend or maybe not recommend? Because who knows? I don’t know, the legalities around this. Is that a way for a founder to go to try and you know, prove that there’s demand for their product before trying to escalate to level of OCS?
Elad Barak 32:23
I think it’s an option. It’s definitely an option. We had our opinion where we wanted to play, it’s kind of from a different approach. I used to use cannabis before it was legalized. And and I always tell people, the biggest thing about legalizing cannabis is not having a store next to my home, it’s the possibility to know that I’m a good citizen, and the government doesn’t think I’m a criminal. And that’s important people that use cannabis, a lot of them are normative people. And it’s a bad feeling to you know, to consume cannabis and look around your shoulder will some police officer come in and bug me. So for me that that’s a big change. And that’s something I want to support. And I wouldn’t want the company that I’m part of, to go and sell in an illegal market or an illegal store because I really want to support the legal market, both as a consumer but also as a company. So for us, that was more of kind of a I don’t know if they call it an ethical decision. But that was the reason we didn’t do something like that. But I don’t think it’s something that’s not possible from a functional perspective or you know, but it’s up to you and your values and where you want to put them right?
The Startup Coach 33:20
Absolutely. And I think there’s one thing to say, Okay, I’m going to make 1000 product and put it out there and see what I can sell and get feedback from and then take that information and just to prove that I can sell something, that’s something different than I’m going to make a living off selling it. So it’s just trying to figure out is this you have to prove that there’s a market, people are willing to buy it, people are willing to pay a certain price. So you can take that and escalate it forward. So those are just looking at different ways that potential companies might be able to do that. Again, you’re a hardware company in this, you’re just starting in the cannabis industry. But let’s face it, cannabis is a hot topic. What are some of the biggest misconceptions about the cannabis industry that you’ve encountered?
Elad Barak 34:03
The biggest misconceptions, I think, you know, first of all, people think it’s easy. And the proof is, you know, you walk in Toronto, and you see how many stores are one next to each other. And you think that they didn’t understand that if they’re putting one next to each other, it’s not going to be easy. In my neighborhood, there are four stores, I think there’s maybe 50 meters difference between each one of them. And I don’t know, maybe the fourth one started the process before they knew that the other three are there, because it’s a long process. But there’s a lot more companies than we need at this stage. And a lot of people I think are still going thinking they can join the industry and make easy money. And that’s not the case. There’s a lot of competition. It’s a sophisticated market that I don’t think was completely or still completely kind of figured out. Some companies are starting to do it much better. And then we’re starting to see companies that are profitable, which we didn’t have before. So I think one of the biggest misconceptions is that it’s easy and it’s definitely not and I think a good you know, foundation for these companies that are successful is really having both people that To know the business they’re doing meaning if you, you know, my partner actually knows CPG. And not just, you know, want to be experts so that but also having at least one or two people in the company in the sea level that actually understand the plant and understand what they’re trying to sell to consumers. Because if you don’t use your mistakes, like the first companies in Canada, that didn’t grow good cannabis, as much as all the slow ones are growing today. And they could have, they could have hired the same people that used to grow in the illegal market and take them to their facilities with a lot of money. So I think there’s a lot of learning that you need to kind of have all the professionalism with the love to cannabis, but also that it’s not easy.
The Startup Coach 35:34
I agree. I think there’s a lot of people who just think, Oh, I’m just going to open up store, get a license, and we’ll come and the village. Yeah, unfortunately, like everything else, I might saying is if they build it, they won’t come, you know, if you. I used to go to a bar to watch sports and stuff. And it’s always empty. And I talk to them about what are you doing to bring people in, you know, you’re supposed to be a sports party, do fantasy sports, and they just look at you, Duly. Like, there’s 10 things you could be doing every day that to fill this place up. Same thing with cannabis stores, they open up and think they’ll come but they’re not actually building their community. I think now more than ever, you need to build your community, you should be running events, you should be doing all sorts of stuff to get people physically there. Trivia, samples, speed dating, movie nights, all 1001 things that you had you could be doing just to start building your community and get them out. I always think that speed dating for cannabis people for cannabis enthusiast would go over big because then one year at a speed dating for cannabis enthusiasts, that whole thing that you smoke cannabis stigma is no longer applies. You never have to at some point say oh, by the way, I’m gonna go above puff and cringe and whether if they’re okay, or I mean, there’s a lot of things that people can do. They just don’t they just do this thing. And then you know, don’t do anything else. And that is a really missed opportunity. People really need to start thinking about if you’re building a store, how do you get people in? If you have a product? How do you get demand for that product?
Elad Barak 37:07
The Startup Coach 37:09
Do you have any tips for founders?
Elad Barak 37:12
You know, I think the most important thing is one, it’s usually hard, right? Like one day success happens over a few years, there is no one day success one night success right? Or overnight, and that you really need to believe in what you’re doing and be into it. If not, you won’t have the passion or the power to pull through. You know, we’ve been doing this for about four years now. And there’s a lot of challenges in the way it’s a roller coaster, there’s a lot of highs and lows. And every time like we finished the launch event, and we came back to the office and we took the whiteboard, we’re like, Okay, what do we need to do now? And we have way more tests than we had before. Like, Weren’t we supposed to be happy? We just finished a huge milestone, right? But when you are the founder work never stops. And every time you finish, you know, you get to one kind of peak. You notice. Okay, there’s there’s a bigger one I need to continue to right now. I don’t know. So just let me know what you’re getting into. But there’s definitely nothing more interesting than having your own company or being a founder on the professional level, in my opinion.
The Startup Coach 38:09
And you have to celebrate the wins, you have a launch party had a great big victory. But yeah, you can’t stop, you have to keep momentum going. What is next for you? And Djot?
Elad Barak 38:19
I think right now we need to start growing. So we already got approved for another province. And we have more partners that are waiting to join. And we have to kind of manage that growth. And with hardware. Sometimes it’s really hard to grow without fundraising because you need scale to actually be profitable with hardware, a lot of times right or electronics need scale to be in the right cost for us. So right now it’s really about managing correctly our growth and not taking kind of commitments we can do or fundraising and supporting them. But then where are we seeing is we really want to take this grow this as fast as possible the cannabis kind of side of our business till maybe a potential of an exit of selling the cannabis arm, but keeping the core technology with us so we can focus on other industries. As I mentioned, we see a lot more industries to do. And I always tell this to people. If I do one deal with Pfizer, I’m probably going to make far more money than everything I can do in the cannabis industry. Pfizer, by itself this $50 billion revenue is one company. So there’s there’s a few medical companies that if we get one or two medicine with them, that’s the future. So we really want to see how we can take this to other industries. Our vision is to help personalize people’s support people’s health and wellness by personalizing their dose. And the goal is to have this in any medicine cabinet, right so people can have it for their Tylenol, maybe for opioids. You know I had a surgery because of my medical condition. And they got 50 pills of opioids and told us it over a week not over two days. And that’s not a way to support a patient with pain that you want to make sure doesn’t get addicted, why not give them a dispenser that locks itself so you can dispense more than once in four hours. So we see morning so many opportunities for ourselves outside of cannabis and anything when you want to start pursuing them. We just kind of have to choose She have some grofers in cannabis that will, in a way finance this so we can move on. And that’s where we see our vision is and you know, once we leave the cannabis industry and go to all these other industries, we’re definitely not a cannabis company. But in my opinion, we’re a unicorn company at that stage.
The Startup Coach 40:16
Where can people go to find out more about you and Djot?
Elad Barak 40:20
Very simple djot.com One of the advantages of making your own brand in your own name is that even four letters.com is still there for you. So DJot.com, is our website have all the information that shows our first partner and then I’m fairly active on LinkedIn, if anybody wants to reach out and talk, I think even the email is on the screen right now. A lot of chat.com in Toronto, I’m always happy to network with other entrepreneurs that want me to talk. There’s always a lot of learning to do. We’re in downtown Toronto and yeah, if you want to reach out to the company or follow we also have Instagram page djot official where you can see some pictures and stuff and we we uploaded a few videos on YouTube that you can find if you type jobs that kind of show how the product works and you know your your basic frequently asked questions.
The Startup Coach 41:08
Most of those links will be in the podcast show notes. I’m not sure but all the YouTube videos that’s why I always say most I can afford it afterwards. Yeah, perfect. But all those links will be in the podcast show notes for those people that want to find out more. I really appreciate you taking the time out of your busy day to be part of the startup talk podcast.
Elad Barak 41:25
Thank you so much for it. I really appreciate it was really fun.
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