Founder of Namaste Technologies Sean Dollinger always made it his business to find success in niche markets. First, it was with a mobile phone reception company, then a coal-fired pizza business.
Now it’s with a billion-dollar soon-to-be-NASDAQ-listed online vaporiser and cannabis retailer.
For many Australians, the concept of legalised or even semi-legalised cannabis is entirely foreign, meaning the vast majority of Dollinger’s business will be too. Vaporisers (or vapes, as they’re usually known) aren’t exactly used widely either, with various legal barriers existing in some states which prevent the free uses of vapes in public spaces.
For those out of the loop, here’s the run-down: Canadian entrepreneur Dollinger founded Namaste Technologies in 2014, starting out as an online retailer focused on selling vaporisers and associated vape accoutrements.
Vaporisers are widely used in Australia as an alternative to smoking cigarettes, with the device vaporising liquid nicotine to give smokers their hit. Vapes can also be used without nicotine oil, sometimes just with pleasant tasting vape juice or, more commonly, cannabis oil in countries where recreational or medicinal cannabis use is legalised.
“Four years ago I was travelling in Israel, and a retailer there was speaking to me about rolling papers and the success he was having selling those. Fast forward about four weeks later and I was with my father in Laguna Beach, and he showed me a vaporiser,” Dollinger tells StartupSmart.
“At that point, 14 years of e-commerce experience clicked, and I started a side business selling vaporisers online. We very quickly went from a couple hundred to a few thousand kinds of vaporisers.”
Dollinger says in the business’ early days, he fielded an offer to be acquired for a few hundred thousand dollars. It was a deal he was planning to accept before a friend told him it was crazy, and suggested the business go public instead.
So he did. Dollinger floated Namaste Technologies in March of 2016 and closed the initial public offering with a market capitalisation of $CAD6 million ($6.3 million). Yesterday, Namaste finished trading with a market cap of $CAD1.03 billion — an extraordinary rise in just two-and-a-half years.
The Uber, or Amazon, for cannabis
At the time of speaking to StartupSmart, Dollinger had just recently finished celebrating Namaste’s official induction into the billion-dollar valuation club, hosting an event with none other than hip-hop god and cannabis advocate Snoop Dogg.
Not only was the party amazing, but so too was the journey to reaching that coveted valuation, which Dollinger says hasn’t been made easy due to constant attacks from short-sellers.
While much of Namaste’s core business has remained in the international sales of vaporiser and cannabis accessories, the business has made a concerted push in recent times into the retailing of marijuana itself, aided by the acquisition of Cannmart, an online marketplace for medical cannabis, in 2017.
The company has also developed a new platform known as NamasteMD, which allows Canadian customers to be prescribed medicinal cannabis via a telemedicine portal, and delivered that prescription on the same day, provided they are close enough to the warehouse.
These developments have set a goal for Dollinger and his company to become the Amazon of medical marijuana, providing not just vaporisers and cannabis accessories to shoppers, but the actual product itself.
“We’ve always tried to stay in front of the curve as the industry emerges and more competition starts to crop up. We want to be the provider for all cannabis users in countries where it’s legal,” he says.
“If you told me two years ago we had the opportunity to be the largest online cannabis company in the world I would have told you you’re crazy.
“We want to be the one-stop shop for everything cannabis.”
Australia on the way to legalisation
Surprisingly, this one-stop-shop will also make a home Down Under, as Namaste already has a presence in Australia through two online vaporiser stores: NamasteVapes.com.au and Australian Vaporisers.
Dollinger says Namaste is well-poised to take advantage of growth in the medicinal cannabis market in Australia, but there’s a way to go yet in terms of both legislation and public perception.
“If you go into the room and start talking about cannabis people will look at you sideways, even in somewhere like Australia which is full of educated people,” he says.
“But those people will still call it the ‘devil’s weed’, which it’s not. It’s a product that’s proven to be helpful, healthy, and medicinal.”
Despite these perceptions, Dollinger says Namaste still has over half a million Australian customers for its products. He thinks the country is sitting where Canada was a few years ago in terms of softening of attitudes towards legalisation and medicinal cannabis use.
“We’re positioning ourselves for a future in Australia, and I think the industry is all about timing. If you look at Namaste and when we went public, we could not have timed it any better,” he says.
For other companies in Australia hoping to get in on the cannabis industry, Dollinger has a number of key pieces of advice, the first of which is never underestimate the amount of capital you’ll need to get started.
“You’ll need to have very deep pockets. Don’t underestimate how much capital is needed, and you’ll need to have a plan to grow sustainably as buyers fall in love with the product,” he says.
“Also make sure you’re making at least 50% gross margin on your product, otherwise you’re going to find it extremely hard.”
But more generally, for startups looking for new niche markets to go into, Dollinger warns against going into the cannabis growing space, even in Australia. Instead, he urges startups to think outside the box.
“There’s plenty of people growing, so try and think of the added value you can bring to people and where you can have a specialty. I don’t encourage getting into the growing side — it’s called weed for a reason because it grows like one,” he laughs.
“I think there’s a big opportunity in home-grow kits, developing a turnkey solution for growing at home along with finding ways to get people cannabis pre-rolled once it’s legalised.”
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.