Transcript

Greg Dunaway :
Today we have got a fantastic guest. I'm thrilled to have him here with you guys. My good friend David Cohen is joining us. David's a true expert when it comes to scaling businesses with three decades of experiences leading global tech companies. He's the CEO and founder of Connect Scale Consulting. He focuses on cannabis and cea. But many of you are going to know him from his incredible run as the CEO of Fluence. If you are in a grow at any point in the last 15 years, you know, Fluence and David was the one that took them from a 15 million doll company to a $200 million company, making it obviously the top LED brand light for cannabis and CEA.

Greg Dunaway :
And then he orchestrated the sale, which we all heard about, for a massive $272 million. David's insights are incredible. His experience, his travel, the breadth of information that you're about to hear, I'm so excited. David, you've got 30 years experience. A lot of people, as I mentioned, are going to know you from Fluence Bioengineering, that incredible run you had. I'd love to talk a little bit about, you know, when you moved into Fluence, specifically, what, what was the state of Fluence when you got there and what were you, what were some of those things that kind of maybe surprised you about entering the cannabis and, you know, CEA space?

David Cohen :
Yeah, well, you know, when I came to Fluence, it was really just a stroke of luck. I was running a company in Texas and they decided to close the US operations. I had a very good friend, a mentor of mine that was just giving me general advice and he was working for a banking company that was representing Fluence out on the open market because the owners had decided that they wanted to put it up for sale. He's the one who told me to go down there and take a look. It was like an hour, two hour drive down the road. I met Nick Claes, one of the founding owners of Fluence. And you know, after the sale to Osram, it was still rocket ship territory. You know, Nick and his team, Randy and the sales guys and the marketing people had done an absolutely fantastic job of branding this company.

David Cohen :
Nick, personally for me is probably one of the most brilliant product marketers that I have ever met, along with a lot of other things. But he really knew how to position the company and match the science and what the market needed. So when I got there, you know, I don't remember exactly, they were on maybe a million a month pace revenue, maybe a bit more. But Osram's Perspective, and Osram is the one who hired me, was that this thing could be or should be, but like 10 times bigger than that. In my interviewing with them, they were showing me all kinds of market data about the cannabis market. And I remember we're talking about 2017, 18 states. A lot of states still hadn't come online. Canada was just ramping up, you know, yet Colorado was going literally bananas in California.

David Cohen :
So I got handed the keys to a Ferrari. This, like, hands down, you know, it's always going to be a combination of luck and opportunity and ability. For me, it was luck. My friend happened to be working for canaccourt Genuity. They were representing Fluence. He asked me to go meet Nick, and Nick is the one who introduced me to Osram after he sold it. So, you know, when I got there, it was. The expectations were massive and, you know, Osram was willing to back up those expectations with significant support, significant funding.

David Cohen :
I remember being told in the interview by the guy that I eventually worked for, he said, look, this is going to be really hard because we know all the jobs everywhere in the world. Are you ready to get a phone call to say you just lost a project in Russia for $12 million? What are you doing? They were that dialed into the market. I think it was partially Osram's desire, I want to say obsession, but a desire to be more compatible and closer to Philips. Philips was big in the space. Those two guys, big lighting companies in Europe have been going at it for decades. They had tried to develop their own lights and beat Philips and they weren't able to. So they looked out, found Fluence, and in my view, I think in everybody's view, made a great purchase. So like I said, going back to your question, sorry, a bit of a ramble there, but I was handed the keys to a Ferrari and had a.

David Cohen :
All the gasoline that I would need for sure.

Greg Dunaway :
Now, of course, a Ferrari can spin out. A Ferrari can have a lousy driver. So I appreciate the humility there. But you know what? Over those years that you were influenced, what a vantage point you had, I mean, you were running one of the most influential companies in all of cannabis. What, what sticks out in your mind at your tenure at Fluence as those, those moments of either, you know, like what we like to call an aha moment of like, oh, wow, I'm realizing this about the industry or, or, or significant moments in that growth, in the growth that, that led to the eventual sale. What, what sticks out in your mind is those moments that you look back on that were really memorable in terms of the industry shifting or things that you per.

David Cohen :
That's a really good question and that's the statement everybody makes while they have to think about the answer to take for a second.

Greg Dunaway :
I appreciate it.

David Cohen :
There we go. That's a great question. I'm going to go around this in a couple of different ways. What immediately jumped off the page at me was the financial health. I had been involved in a lot of startups, a lot of turnarounds as well. So I had both ends of the spectrum. The team there prior to the sale had done an unbelievable job of matching growth and profitability and free cash flow. I can't really get into a lot of the specifics, but you'd be astonished the amount of money they had in the bank, the margins that they were making right away.

David Cohen :
It was really impressive. You know, the opportunity in the market was staggering. I had been involved in hyper growth before, but that kind of redefined hypergrowth for me. There was a period of time from maybe the end of 18, so I started right in the middle of 2018. This period of time from let's call it January 1, 2019 to maybe the middle of 2020, anywhere we went, we virtually got the order right. And not in a bragging ego way. It was, you know, Nick and his team had positioned the company in a very certain way. The look and the feel of Fluence and what it was all about, I mean obviously that changes over time as you get much bigger.

David Cohen :
But the starting guts, the foundation that I had to work with was not having to validate or justify the brand or the technology for again, a lot of very lucky reasons. Fluence was one of the only companies at the time that was fully scaled up for high production support in the cannabis industry. I mean they were still doing a ton of work. You know, Nick's I think vision, Fluence's vision at the end of the day was a lot more commercial ag based. You know, the long term play was to be involved in food security and a lot of the bigger farms they were doing trials with. But at that moment in time there was not a lot of options to a company that could supply 5,10,000 lights reliably, you know, delivered reliably in an amount of time. And you know, we all remember how things were going back in 18, 19 and 20 with bros, you know, hurry up, I need it right away. And then, oh yeah, the next day you're late, you know, we're waiting for this, the lights in this particular situation, the planning and so what Struck me right away was the amount of growth that was available, combined with the financial health of the business, combined with the amount of money that the owners were willing to throw at this thing to grow.

David Cohen :
I mean, it was massive. And they're active lighting investors. So unlike finding a fund who says, here's a suitcase full of money, you know, grow the business. This was a hundred plus year old company that knew what the end had to look like. And you know, I go into these things a lot. Got a very close mentor to me that uses this phrase a lot. Go into the start with the end in mind. They knew what they wanted, so they knew how the steps needed to come together to get where they knew that they wanted this to be.

David Cohen :
So whenever I needed that, you know, when you had those CEO moments of okay, what do I do? This is a really hard decision. I could lean on a company that maybe never scaled anything this big, but was running a $4 billion global lighting business and knew what factory supply chain, treasury, credit, legal, that that was all there and anybody else that followed behind us that wasn't owned by something that big in any discipline in the space. No, you don't have that. And you're left trying to figure a lot of those things out. So again, I was very fortunate that it was commercial customer acquisition, order delivery, that was about it. So I hope that answered the question. It was really roundabout. I mean, when I got there and then what struck me was I need 5,000 lights in four weeks.

David Cohen :
And they really needed them in four weeks. Where today, where it's saturated and everybody's, it's a different space. You know, there's a lot of validation that has to happen to figure out if what the customer is saying is really what the customer needs. Back then it was, we had more people, didn't buy enough, put it that way, you know, didn't place big enough orders and realized even though we did the layout and we did all the spec and we worked with the engineering firms and we worked with people to try to protect the customer back then it was get as big as you can, as fast as you can. And unfortunately, I think everybody paid the price for that. But in 20, 18, 19 and 20, that was, it was a gold rush, that's for sure.

Greg Dunaway :
Yeah, there was the gold rush. And it's a natural dovetail into kind of getting your question. Next question about where we find ourselves today. You are someone who has a very, again, unique vantage point. You were there for the green rush. You were there to see those operators, probably a lot of operators that didn't make it and some who did, both in cannabis and in, you know, in larger cea. My question for you is this, David, what, you know, kind of define for us, what does the market look like now both in cannabis and CEA from your perspective? Maybe relative, of course, the green rush, which. And then also, you know, of those operators that you worked with that are still around, are there any through lines about who makes it, who doesn't and what you know, and you know, kind of give us an idea of like what you look for in some of those more solid operators in cannabis and cea?

David Cohen :
Yeah, yeah. So I think I'll go back to what I said earlier. You know, those that started with a realistic end in mind, not fantasy. Right. You have to be able to match what is really needed with, with what you can really achieve. I got to put a caveat on this thing. It's all very market specific. Obviously the world of California is different than the world of Oklahoma, then Missouri.

David Cohen :
So without getting into 10 different states and making commentary, the operators that I see that make money, that can weather the ups and downs are acutely aware of their operational costs. They know that what they have to do to make a dollar, they know what price fluctuations that they can withstand. They are also very dialed into their brand and what their unique value proposition is. It's just not growing as much as whatever you're growing. It's really offering something that customers can identify with in the cannabis space. Maybe there may be just very, very high volume producers that are not that concerned about their brand because they've driven their operational costs so low that no matter where that particular market goes. But I know the ones that are surviving are operationally astute. They know exactly what they're doing.

David Cohen :
There's very minimal waste and they have a really good understanding of what their brand is and what they're good at. They're not chasing anything other than I'm good at this, I'm going to do this. I know that the price range, anything below whatever number it is for them that I have to adjust. I have to either cut back or whatever. And I've got some very, very good relationships from customers that I had at fluence that I still have today. The ones that are really good are people that came out of automotive. Automotive is a grind. If you're an automotive supplier, you're fighting for the last penny.

David Cohen :
And no matter what the value of the thing you sell is, it can be $10,000 thing, it could be a $1,000 thing. Those guys operationally know exactly what they're doing. And other people that really understand how to develop a brand in a specific market. So, you know, other states, you know, Greg, there's states that the tolerance right now, price per pound or price per bushel, not as applicable to CEA would say, but more for cannabis, you know, is a bit higher. And even those really good operators I find are the ones realizing even higher prices per pound because of how they were able to do it. None of them scaled too big, none of them got bigger than their britches. They conservatively raised cash, they conservatively put up capacity and they manage it like they're fighting every day for the last dollar. They're not managing it for some kind of pot of gold at the end of the rainbow or some home run.

David Cohen :
Right. And that doesn't.

Greg Dunaway :
I absolutely love what you said.

David Cohen :
Things are bad, but in the way this market went, if you knew that that was going to happen when you started with the end in mind, you probably wouldn't have done it.

Greg Dunaway :
I am uniquely aware over at Colt David about expansion. I think you see a graveyard of littered facilities of people who said, I'm going to go from 20,000 square feet to 120,000 square feet. And they were very ill prepared for the correction that came. And it's sad, but that is something that's on the forefront or should be on the forefront of a lot of operators.

David Cohen :
Yeah, I mean, I'll go back to automotive. I became particularly close to a mid size SSO up in the Midwest, North Midwest, and he owned a company, owns a company that did small stampings for automotive. Again, if anybody knows what doing business in automotive is like, they know your margins, they know your cost structure, they manage your margin in the contract negotiations. It's not market pricing. And he brought that mentality which is first you make one, then you make 10, then you make 100, and when you know that you've made a hundred the same way you made one, then you go to high volume, whatever that is. He followed that prescriptive recipe. It took him longer to get online than most people, but his failure rates and his cost awareness is eons ahead of where anybody else is. The failure rates are almost nothing.

David Cohen :
He simulated every possible failure, which they make you do in automotive, especially when you're in high volume. He's in a metal stamping business that sells 100 million stampings, identical stampings a year, and they have to all be exactly the same. So I think the industry suffered a lot from the influx of money that Funded hyper growth that didn't attach to realistic outcomes. I don't think it's a stretch to say where we are today. If we really thought about it in 2018 and 19, that you couldn't have said, okay, this could happen. And the people that did probably are doing okay today. In cea, it's different. CEA is already super tight margins, it's automotive like you're managing per tomato, per cucumber of margin, their cost control, their investment in Capex.

David Cohen :
It's all so measured and so exact. And that industry continues to grow at a really nice pace. But it's big. You're talking about greenhouses in the hectares, not 100,000 square foot indoor grows, a big grow. I mean that fits in the corner of some of these tomato greenhouses. So, you know, understanding that scale and understanding how exact you have to be in getting to that scale, you can't afford to make a mistake. At $4,000 a pound, you can afford to make lots of mistakes.

Greg Dunaway :
I would love to see $4,000 a pound again.

David Cohen :
David, take the room down, clean it, burn everything, start again. You know, you have so much leeway. That's dangerous. And for the people who don't understand how dangerous that is going in, you could get in a lot of trouble.

Greg Dunaway :
I want to talk a little bit about technology because one of the things that you brought up earlier and affluence was obviously on the forefront of this was opex. Those operators that made it obviously understood their costs. You had a view both at what you're doing now at connect scale and at Fluence with tech impacting operators. And I think probably good and bad. And I don't want to give your answer for you, but I'm wondering what you would say about that line of tech for tech's sake. Something sexy versus tech that actually makes a difference in this space where, as you mentioned, margins are so thin.

David Cohen :
Yeah, again, that's a great question. So my view, and this comes out of 30 years in manufacturing and technology. There's tech, so I like to say there's the Skunkworks team, there's the CTO and then there's the product managers. Product managers know what their customers want and product managers know what their customers are going to need. What Fluence did a really good job of is the DNA that the founders baked into the company was attaching technology with customer needs and using customers to develop that technology that were a little bit out in front of everybody else. So you were just ahead of the curve. You knew that people were going to work into that space. But you were validating these great ideas with a person who is actually using it.

David Cohen :
What I see right now is, you know, the ability for this market to develop technology is incredible. You know that there is just an insane amount of data, AI sensors, you know, predictive, if the growers don't want it, if the growers don't want to use it. You want to be really careful of how much money you're spending and what you're raising money against. And that's probably one of the biggest conversations that I have today with clients is, you know, how far in advance in the future do you think that this is going to take hold? And you have to be able to separate that from the argument of this is so good, look what it can do, right? It's tough. It's the Steve Jobs. I don't listen to people what they want, I tell them what they need. And that's great. When you run what he did, that's the way to do it.

David Cohen :
You're on a tech curve that's consumer driven. Growing is still, I find, an intensely farmer oriented business and I say a farmer, from any cannabis grower to tomato grower to flower grower, you know, when the person's out there looking at plants, that's the person you have to understand, you know, what they need and what they can utilize and being able to connect that with what the investors are willing to fund. So it's almost like the tech companies today in the space have to be that bridge between user and spender where when I was first involved in fluence, it was convince the grower and you're all set because there was no fail safe. Now it's, you know, the grower could want it, but the investors have to be willing to pay for it. Which has always been the case in commercial ag. And the technology adoption and development is a secondary consideration behind, you know, the health of the plants and the ability to pull down crops and sell them. I know there's a lot of people that say this thing is due for a massive automation upgrade. You know, you gotta take the labor out, you gotta make things repetitive.

David Cohen :
And I agree. But the amount of things that I've seen that are super cool that it just don't have a chance of being monetized. You have to be aware of that. So that's what I'm seeing and I think it's all going to get there eventually. But if I was running a company and was on the leading edge of technology, like really out front, I would make sure that I had a basket of growers, pun intended, that I could lean on to tell me, like, if I gave you this and your investors said they would pay for it, would you use it? And how would you use it? So now you're talking about things like billions of data points, sensors and AI and cameras, and it's going to help and it's going to make a difference. At some point we're going to. Somebody's going to go back in the archives and look at this podcast and go, wow, that guy was way off. Because now you, you know, it's robots and drones flying around.

David Cohen :
I don't know about that, picking plants, maybe one day. But, you know, it's. At the end of the day, you know, the guy who's harvesting a 50 acre indoor tomato greenhouse has to believe that it's going to be beneficial. And then somebody has got to see an ROI that pays for it. So I think that people who are a little bit in front of the grower today are probably in a better case than people who are. This is where the industry should go, in my view.

Greg Dunaway :
You made me think about something which is. You and I are. You made me think about something which is international space. And I know that you are, Joe, that you are doing both CEA and cannabis. And what I'm wondering is if you could share with us, David, a lot of questions that I get are about Germany and the EU cannabis market, because a lot of people have this idea and I think to an extent it's accurate. Are we seeing time travel? Is it exactly akin to the US coming online? And I'm very curious how you feel about that. And I'm curious when you look internationally for cea, where are those opportunities?

David Cohen :
Yeah, so Germany is very interesting. You know, it's, it's been bubbling and happening for years now, and it appears that, well, the data would suggest it's happening. Right. The amount of imports, if you just track how much they're bringing into that country, is going up exponentially fast. The government seems to be doing what everybody thought they were going to do. There's still some slowness to it and there's still some things that remain to be seen. But, you know, that's a very different market dynamic than we experienced here. You're not going to get massive growth in Germany.

David Cohen :
It's just, it's not going to be the way it goes. It's a patient driven system right now. While the overall consumption in the country and the demand is very high, I don't think you see that in Germany as a one to one. As like you see in the US demand in Missouri goes up, suppliers in Missouri go up. The legal structure, the regulatory structure is different. So I believe it's going to be a huge play. I think as Germany goes, the rest of Europe is going to just kind of fall in and it's going to be difficult for France to say there's no border control. People could just go over and get it and come back.

David Cohen :
So everybody's going to have to try to adopt the system here. And then you start to get to that point of inflection where there are twice as many people in Western Europe as there are in the United States. Even when you lump in Canada, Canada's only 30, 40, 50 million people. So let's say at the best case it's 400 million person market. Knowing that all of those people aren't going to consume over there, it could be 7,800 million. So no matter how you handicap that down, you have a bigger market. I think that they're going to go import. Like Canada is doing really well right now, Australia is doing well.

David Cohen :
I think Israel is shipping in doing well. I think we're both aware of some big grows in the Czech Republic and Macedonia and Malta. I think it's very interesting that the money is not pouring into Germany to build up this infrastructure. That's the thing that's most interesting for me. You go to Germany and you find that there's a ton of users there, but unless you're a pharmacy or a club owner, what are you going to do?

Greg Dunaway :
Yeah, it's so fascinating to me too because it's like you and I both are working on the equipment side and we are all rooting for Germany to say, hey, build out here, build out here. And one of the things that I think about is as the market matures and people start to expect better cannabis, you know, I think when you and I are over there, you know, some of the cannabis that you can get on a prescription, you know, it's, it's largely almost free. Is it largely almost quality? I would say probably not. But then again, when you're shipping it on a shipping container from Canada or wherever, Portugal, wherever, there's that, there's that expectation. So I often wonder about the social clubs with the real kind of next generation of growers, what might happen there. And I think, you know, who knows, It's a tough argument when you're getting your cannabis for free to say, would you like to pay, you know, 7, 8, 9 Euros a gram. Right. So who knows what'll happen?

David Cohen :
Yeah. And then you get right into the dichotomy of, you know, the old school cannabis network, whatever we want to call it in the United States that understands and appreciates like craft beer, like fine wine. This is good, this is not. You put it perfectly if somebody's handing it to you. And I'm not naive to think that every one of these patients has some ongoing affliction that they need cannabis for. But that's where it's rooted in. And there are people that aren't necessarily going to be swayed by higher thc, higher quality, higher terpene count, cannabinoid profile. I don't know how that's all going to go.

David Cohen :
It'd be very difficult to predict. But I think you see regionally and in certain sectors of parts of the United States, within states that there's an appreciation for quality. But it would appear that it's the kind of Budweiser, Miller craft beer example, and when you break up what those volumes are and what those numbers are, it's a lot different. So I'm interested to see. I think it's very, very interesting when you go talk about an expanding market and everybody gets excited, but then they realize that most of it's coming from a region that's already completely supplied and built out. Those opportunities for the ancillary market to benefit from that are, where else can you build to grow and produce very, very low cost at very, very high quality? Where are those opportunities? And that's the lighting, the sensors, the infrastructure, companies. You've got to look at those places because no matter what happens in Germany, you still have to find the place where it's all going to come from.

Greg Dunaway :
Yeah. And I think one guiding light that I have is I'm never going to out trulieve. Trulieve. I'm never going to out cure leaf. Cure leaf. So if you can find a niche on the cannabis side, that's great. It's almost opposite in the emerging CEA market, I would argue, I would say the governments in a lot of areas are kind of saying, hey, we will have food security, go find ways to kind of the political arm is kind of saying, we will have this and it's kind of leaving it then to the open market market to kind of fulfill that need.

David Cohen :
Yeah, I would say in CEA there's a standard of quality that you have to reach. I don't know that it's a publicized standard, but you know, you're selling to consumers. Obviously, I Mean, you're selling to supermarket chains, you're selling to wholesalers, but you know, the tomato breeds that you're cultivating, the cucumber breeds, the strains, you have to know that there's a market for them and the fluctuations on price are far less. So to answer the second part of your question, I think it's more of a minimum threshold is much, much higher. In comag its food, people are going to know the minute that they bite into a crappy piece of vegetable, they're not going to buy that again. It's that simple. So you have to be at least at some level that's much higher, I think, than the bottom of the cannabis market, if I was to to call it something. And then in terms of growth, I mean, look, you and I both know that the Middle east is massive still.

David Cohen :
In Europe, there is huge, huge greenhouses about necessarily growth, I'm not sure. But the opportunity in the markets is big. It's still a big Dutch culture. It's difficult to get a sense of what's going on in China, factually. I've read a lot of reports, I've seen a lot of analysis. I've been there. I mean, I lived there for a couple of years. The greenhouses in China are counted.

David Cohen :
You drive down the road, it's a guy, put up a piece of plastic. And as in typical China, which is not a bad thing. It's just you do what you got to do to grow vegetables to support your village. But there's initiatives all over the place for security of supply. And I see that market growing at better than 25% CAGR for a while, and it's already huge. So same thing in the Middle East. There's going to be a time where they're going to get to their goal. They're going to grow all their own food.

David Cohen :
They have enough money to do it. It's just how effectively do they deploy that capital and how quickly can they scale?

Greg Dunaway :
Yeah, and I think one of the wonderful things about this podcast and this conversation in particular, David, is honestly, for the people listening, I hope one of their takeaways is that from vantage point, this indoor growing, this greenhouse growing that you and I are a part of, while it is in some cases in cannabis hyperlocal, it is going to continue to scale. And I think a lot of people lose sight of that because to be honest, it is really frigging hard. Like, it is a very difficult business. But I think a lot of what I wanted to get into, just as we get towards the Tail end of our conversation is that kind of upside. And I wanted to ask you about Connect Scale. You know, you are now advising companies and I'm sure some of you can talk about and some you can't, but you're advising companies that are in our space. And I'm curious, what are you, what are you hearing from some of these clients? And again, some you can name, some you can't. What are you hearing from? What are they, what are some of their, what are the things that they're running into? Roadblocks? What are you helping them navigate? You know, in cea, cannabis, even completely outside of it.

Greg Dunaway :
What are, what are some of those? Through lines right now?

David Cohen :
Yeah. What I'm trying to help companies with the most is sit down and identify what you're really good at. I mean, really, really good at or what you want to be really good at. Put all your time and energy into that and focus. It's hard. You need to be able to compete in some really hyper competitive spaces here. So I think the too wide approach is dangerous. But also, again, I'll go back to the beginning, have the end in mind.

David Cohen :
What do you want this thing to look like when you succeed and what is it actually doing? And if you're naming things that aren't happening now, you better have a really good bridge explanation of how you're going to get from not happening to, to your end. Vision capital is extremely difficult to get your hands on these days. The farms in the Middle east, the farm expansion even now in North America is CEA wise. It's loosening up and there are companies that are expanding. You have the stale warts of North American cea, Moochie, Mastronardi, Little Leaf, These are massive places, but in cannabis the capital is restricted. So I mean, you have to have your value proposition really dialed in, whether you're a grower, you're a supplier to the space and know what it is that your customers need and be able to provide that in any case at a premium. Like what do you have to do to be able to command a premium? Because you know that's just going to go down from there. If you're starting at the bottom and it's only going down, it's dangerous.

David Cohen :
And what I would say to you lot of the people in the cannabis space, if there's any opportunity to take a trip up to Leamington, Ontario, there's an opportunity to drive around, you know, the Benelux region, Belgium, Luxembourg, Netherlands, there are so many, you'd be astonished of the Concentration of greenhouses and see what an industry that truly has grown and matured, that matches supply with demand. There's not massive oversupply of tomatoes right at the end of the year. There's not this fire sale on cucumbers. It's pretty close. And what that scale looks like is extremely impressive. So again, I can't give you the timeline of when I think that's going to happen, but it's going to have to happen. There's just going to be a rationalization. I'm seeing it in certain sectors happening already where you just don't need that many suppliers, you don't need that many whatever you want to call it.

David Cohen :
In my case, I have a lot of expertise in lighting. You don't need as many lights as all of these suppliers can make. So it doesn't take a rocket scientist to figure out that it's a race to the bottom to stay alive. And then the question is, is that really what you want to do? It's easy to sit there and convince yourself in any space why you're better or should be better than other people. But if you can't execute that and you can't make money, can't pay the bills.

Greg Dunaway :
Yeah. All of a sudden you're in the boneyard we were talking about. I can't not ask a follow up to that. That was fascinating. And so I guess my question is we have a really unique audience on this podcast. There's growers on here, there's investors on here. So I think that this is a super interesting question for you is when you look at that kind of ruthless efficiency right when you were there, or even when you would tour CEA or cannabis, either one, that kind of ruthless efficiency, what do you attribute that to? What are all the factors that need to get there? Because I can tell you, and I know you agree with me, Come down to Arizona and Colt. We're not there yet.

Greg Dunaway :
We're doing okay. But ruthless efficiency, no. What you described was something that I think is exceedingly rare. That kind of. We know the data, we know exactly what we need to produce and we're ruthless about it. Would you explain a little bit about what you think those factors are that contribute to that kind of success?

David Cohen :
I think it's leadership, personally. I mean, it's top down, right. You need leadership in place that places that as just an expectation. I mean, there's. I'm a big sports guy, so you have famous coaches. Nick Saban, I saw something recently of him speaking to a business. There's A standard that we set that we don't accept anything below that. And you got to get the organization dialed into that, and then you can truly understand how efficient you can be and assess that actual efficiency against what the market will provide in terms of margin.

David Cohen :
In cannabis, it's tough. It's really, really tough. You have the lack of enforcement, you have the illicit market. You have a whole bunch of stuff going on that makes life really, really difficult. But I think, I think the fundamentals of business. Know your costs, know your costs. Like, you gotta know where. Where you are and you gotta know where you could be.

David Cohen :
You have to have metrics that track what you're doing, that will tell you exactly where you are and where you can be. And you have to know the market. You have to know what the market will bear, not what they should pay when you grow this great strain or. Or anything. I'm not trying to be critical, but it is. I am trying to be critical. I guess I should say that realistic story. Can the leadership team sit there and say, this is where I should be at this number.

David Cohen :
If I can make it for a buck, can I sell it for two? Because I know I need that dollar in between to pay for everything else and to subsist. That's one thing. The other thing is, it's a little bit of a tangent to what you said, but. But this is ripe for consolidation. You got too many suppliers. There's just too many. It's happening in cea, or it's probably more down the road. It should be happening in cannabis.

David Cohen :
There's way too many suppliers fighting for very little market share. There's not that many more markets that can explode. We talk about Germany. That's a perfect example. Germany quadruples in demand and consumption. There's nowhere in Germany that as a supplier you're going to make money. Unless you're building clubs or what, building pharmacies. You got to go find all these places.

David Cohen :
And my argument would be that the world is capacitized. As I like to say, there's going to be no shortage here. So I like the consolidation idea. And this is the opportunity, fortunately or unfortunately, where the next level of people, the funds come in and see cents on the dollar, assets, and they rationalize it. It's just kind of a natural course of action across any industry. You have 17 million cars being made a year in the United States at some point, and there's enough suppliers to support that. That goes down to 12 million. Guess what happens? Somebody comes in and picks up the Dead carcasses puts it all together and makes it more efficient.

David Cohen :
It has to be driven to efficiency, Greg. In my view, if it's not driven to ultimate efficiency at every level, it doesn't have a shot of succeeding. It may in the short term, but in the long term, it won't.

Greg Dunaway :
I love it. I think this focus on efficiency and optics is the way, to quote my son's Star wars show, that is the way. If you can dial that in from a grow perspective. And again, I want to give you a lot of credit because you came from an LED space. And I think one of the things that's interesting is you are so keyed in on. You know, Fluence had wonderful tech. Everybody knows it. But I think one of the things that you're bringing to light is that the tech must be in service like the tech must be in service of this kind of ruthless efficiency.

Greg Dunaway :
And I don't want to put words in your mouth, but I think that's really strong takeaway.

David Cohen :
It's exactly it. There were a lot of conversations in 2018, 2019 about what could be developed technically, and that was seven years ago. Most of it still is not applicable, and most of it would have cost millions of dollars. So, you know, that margin saved the opportunity cost, not spent, built things that helped the company focus what it was good at and create value. Now look at, at the end of the day, it was really hard. I mean, Fluence grew far faster than I thought it ever could. The infrastructure globally was not in a condition to keep up with that, and we paid the price. There was.

David Cohen :
There was incidents which were extremely difficult to weather through. That capacity problem is now solved. So, you know, I would add into the ruthless efficiency service the people that do business with you need to walk away every time believing that you will live and die with their success. And I think that's the other thing that happens when the market gets this big and the suppliers are so vast to choose from. Customer service matters. I'm not saying anything that's groundbreaking here. You got to be able to service your customers. And in my book that's always been how much loyalty can you build in a customer when things go wrong? Because things will go wrong.

David Cohen :
Seizing on those opportunities to own mistakes, to rectify things that hurt your customer, and to be there also will help you quite a bit.

Greg Dunaway :
David, I want to give you an opportunity. Who are some of the people that might want to reach out to you about connectscale? Who are some of the people that would really benefit from. From speaking with you and maybe you just want to give us an idea of some of the projects you're working on, some of the projects you anticipate you're going to work on. Who's listening to this going, should I reach out to David? Maybe I should. Maybe I shouldn't maybe help them out.

David Cohen :
Yeah, I appreciate that opportunity, Greg. So we're focused on a few things right now. A lot of M and A involved in this consolidation idea. If you're finding yourself looking around and seeing too many of you doing what you do. If you're a fund, that's saying, okay, I want to deploy some money in the space, but I don't want to directly invest in a single company. So that's one thing. I do quite a bit of fractional work right now. So as a partial CEO and that's more slanted towards investors.

David Cohen :
If you've taken over something or you're owning something and you need a fresh look, I typically will come in for three months, six months. We do a lot of that and executive coaching and mentoring. I mean, and I like to say all the time everything that I tell you is from some death spiral that I experience myself. I'm not going to give you anything theoretical. I very much try to attach. I believe you should do this because I didn't and this is what happened. So those would be the three main areas. I'm fascinated with the space.

David Cohen :
I'm not less interested in cannabis for sure. It was very, very good to me and I did quite well with that growth. That being said, I'm really interested in what's going to happen with global food security. It's a huge topic for me. I do a lot of research and reading and talking to people on that and it happens to be something that's near and dear to my heart. I think it's really important that people have access to food. So what ConnectScale is also doing is a lot of advising and a lot of fractional work in that space as well. I don't want to say jack of all trades, but I've been around.

David Cohen :
I've lived all over the world. A lot of different cultures, built and scaled businesses. Most of it worked, some of it didn't. I think that pain and suffering is valuable to people and if anything it's a conversation. Give us a call and we could talk for half an hour and if anything you'll get a friendly voice at the other end that'll say, I wish I could help, but that's not my expertise. Best case is it fits something that we both agree that can provide value. So I love talking to people. I love talking to leaders, and I love trying to help leaders be the best that they can be.

David Cohen :
I'm starting to get more of a charge. You know, it used to be leading the organization and now I really, really enjoy helping people be successful and being able to step back and be part of their journey and in making them successful.

Greg Dunaway :
Well, I would. On a personal note, I would tell you, David, you have a lot to give. If there's anyone who's heard our conversation, it does not have to end. I am going to let David go because he's a busy guy. But do pick up the phone, give him a ring. This has been an absolute pleasure to have you on, David, getting your perspective on a lot of really important issues. Again, can't thank you enough for your time and again, really, really, really appreciate the insights you shared with us today.

David Cohen :
Appreciate it, Greg. And for all of you guys that listen to this, thank you for hearing us out.