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Jun 7, 2019 · 18m · top-founders

1413 With $4m in ARR, This Cannabis POS System Is Market Leader Growing 3x YoY

Kyle Sherman · 8m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Top Entrepreneurs Podcast, host Nathan Latka interviews Kyle Sherman, founder and CEO of Flowhub, exploring how the cannabis compliance and point-of-sale SaaS platform scaled to over $3.6M in ARR across 500 dispensaries while navigating regulatory hurdles and building out its sales organization.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 47.3% of the talking time here. How this is scored →

Nathan as informed peer 3.1 Guest teaching 1.4 Guest disagreement 1.0 Nathan pushing back 2.0
05100:0010:000:00–2:13 · Nathan as informed peer 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue promoting his book and delivering a pre-interview summary of Flowhub's high-level business metrics.2:14–5:14 · Nathan as informed peer 3/10 Guest Introduction and Cannabis Culture in Business Nathan asks about cannabis workplace stereotypes before transitioning into Flowhub's SaaS pricing and hardware partnership with HP.5:14–7:34 · Nathan as informed peer 4/10 Founding Journey, VC Backing, and Three-Year Growth Nathan inquires about venture backing in the cannabis space and calculates monthly revenue run-rate based on customer counts.7:35–10:40 · Nathan as informed peer 5/10 Customer Segmentation, Retention Rates, and Churn Factors Nathan presses Kyle to distinguish between logo retention (98%) and net revenue retention (100%), while Kyle explains dispensary churn drivers.10:40–13:07 · Nathan as informed peer 3/10 Customer Acquisition and Sales Team Expansion Kyle explains Flowhub's early state-compliance moat and admits the sales organization is just starting to figure out CAC forecasting.13:09–17:17 · Nathan as informed peer 7/10 Unit Economics, LTV, CAC Ratios, and Capital Allocation Nathan presses Kyle on investor conversations regarding CAC and calculates the implied CAC when Kyle claims not to know it offhand.17:17–18:01 · Nathan as informed peer 0/10 Episode Recap and Flowhub Growth Summary Nathan recaps Flowhub's revenue, growth, team size, and retention metrics in a closing monologue.0:00–2:13 · Guest teaching 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue promoting his book and delivering a pre-interview summary of Flowhub's high-level business metrics.2:14–5:14 · Guest teaching 2/10 Guest Introduction and Cannabis Culture in Business Nathan asks about cannabis workplace stereotypes before transitioning into Flowhub's SaaS pricing and hardware partnership with HP.5:14–7:34 · Guest teaching 2/10 Founding Journey, VC Backing, and Three-Year Growth Nathan inquires about venture backing in the cannabis space and calculates monthly revenue run-rate based on customer counts.7:35–10:40 · Guest teaching 3/10 Customer Segmentation, Retention Rates, and Churn Factors Nathan presses Kyle to distinguish between logo retention (98%) and net revenue retention (100%), while Kyle explains dispensary churn drivers.10:40–13:07 · Guest teaching 2/10 Customer Acquisition and Sales Team Expansion Kyle explains Flowhub's early state-compliance moat and admits the sales organization is just starting to figure out CAC forecasting.13:09–17:17 · Guest teaching 1/10 Unit Economics, LTV, CAC Ratios, and Capital Allocation Nathan presses Kyle on investor conversations regarding CAC and calculates the implied CAC when Kyle claims not to know it offhand.17:17–18:01 · Guest teaching 0/10 Episode Recap and Flowhub Growth Summary Nathan recaps Flowhub's revenue, growth, team size, and retention metrics in a closing monologue.0:00–2:13 · Guest disagreement 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue promoting his book and delivering a pre-interview summary of Flowhub's high-level business metrics.2:14–5:14 · Guest disagreement 1/10 Guest Introduction and Cannabis Culture in Business Nathan asks about cannabis workplace stereotypes before transitioning into Flowhub's SaaS pricing and hardware partnership with HP.5:14–7:34 · Guest disagreement 1/10 Founding Journey, VC Backing, and Three-Year Growth Nathan inquires about venture backing in the cannabis space and calculates monthly revenue run-rate based on customer counts.7:35–10:40 · Guest disagreement 1/10 Customer Segmentation, Retention Rates, and Churn Factors Nathan presses Kyle to distinguish between logo retention (98%) and net revenue retention (100%), while Kyle explains dispensary churn drivers.10:40–13:07 · Guest disagreement 1/10 Customer Acquisition and Sales Team Expansion Kyle explains Flowhub's early state-compliance moat and admits the sales organization is just starting to figure out CAC forecasting.13:09–17:17 · Guest disagreement 3/10 Unit Economics, LTV, CAC Ratios, and Capital Allocation Nathan presses Kyle on investor conversations regarding CAC and calculates the implied CAC when Kyle claims not to know it offhand.17:17–18:01 · Guest disagreement 0/10 Episode Recap and Flowhub Growth Summary Nathan recaps Flowhub's revenue, growth, team size, and retention metrics in a closing monologue.0:00–2:13 · Nathan pushing back 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue promoting his book and delivering a pre-interview summary of Flowhub's high-level business metrics.2:14–5:14 · Nathan pushing back 1/10 Guest Introduction and Cannabis Culture in Business Nathan asks about cannabis workplace stereotypes before transitioning into Flowhub's SaaS pricing and hardware partnership with HP.5:14–7:34 · Nathan pushing back 2/10 Founding Journey, VC Backing, and Three-Year Growth Nathan inquires about venture backing in the cannabis space and calculates monthly revenue run-rate based on customer counts.7:35–10:40 · Nathan pushing back 3/10 Customer Segmentation, Retention Rates, and Churn Factors Nathan presses Kyle to distinguish between logo retention (98%) and net revenue retention (100%), while Kyle explains dispensary churn drivers.10:40–13:07 · Nathan pushing back 2/10 Customer Acquisition and Sales Team Expansion Kyle explains Flowhub's early state-compliance moat and admits the sales organization is just starting to figure out CAC forecasting.13:09–17:17 · Nathan pushing back 6/10 Unit Economics, LTV, CAC Ratios, and Capital Allocation Nathan presses Kyle on investor conversations regarding CAC and calculates the implied CAC when Kyle claims not to know it offhand.17:17–18:01 · Nathan pushing back 0/10 Episode Recap and Flowhub Growth Summary Nathan recaps Flowhub's revenue, growth, team size, and retention metrics in a closing monologue.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 91.9% · guest 8.1%0:00 · Nathan 91.9% · guest 8.1%3:00 · Nathan 22.7% · guest 77.3%3:00 · Nathan 22.7% · guest 77.3%6:00 · Nathan 29.9% · guest 70.1%6:00 · Nathan 29.9% · guest 70.1%9:00 · Nathan 28.9% · guest 71.1%9:00 · Nathan 28.9% · guest 71.1%12:00 · Nathan 74.2% · guest 25.8%12:00 · Nathan 74.2% · guest 25.8%15:00 · Nathan 35.3% · guest 64.7%15:00 · Nathan 35.3% · guest 64.7%18:00 · Nathan 0% · guest 100%18:00 · Nathan 0% · guest 100%
Sharpest disagreement ▶ 14:10 Kyle gets defensive about missing CAC numbers

Kyle pushes back against Nathan's line of questioning by stating he cannot recall exact CAC numbers off the top of his head due to managing other priorities.

 Hardest push from Nathan ▶ 13:34 Nathan demands customer acquisition spend details

Nathan refuses Kyle's vague answers regarding unit economics and presses him on how he explains CAC and capital deployment to investors.

 Biggest teaching moment ▶ 8:17 Kyle breaks down boutique vs chain dispensaries

Kyle educates Nathan on the structural landscape of the cannabis retail market, explaining boutique dispensary dynamics compared to multi-location chains.

 Nathan holds their own ▶ 13:58 Nathan does instant mental math on LTV to CAC ratio

Nathan demonstrates SaaS expertise by catching Kyle's contradiction and computing the implied CAC directly from the $44k LTV and 3:1 ratio.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Book Promotion: How to Be a Capitalist Without Any Capital 0000 Host monologue promoting his book and delivering a pre-interview summary of Flowhub's high-level business metrics.
Guest Introduction and Cannabis Culture in Business 3211 Nathan asks about cannabis workplace stereotypes before transitioning into Flowhub's SaaS pricing and hardware partnership with HP.
Founding Journey, VC Backing, and Three-Year Growth 4212 Nathan inquires about venture backing in the cannabis space and calculates monthly revenue run-rate based on customer counts.
Customer Segmentation, Retention Rates, and Churn Factors 5313 Nathan presses Kyle to distinguish between logo retention (98%) and net revenue retention (100%), while Kyle explains dispensary churn drivers.
Customer Acquisition and Sales Team Expansion 3212 Kyle explains Flowhub's early state-compliance moat and admits the sales organization is just starting to figure out CAC forecasting.
Unit Economics, LTV, CAC Ratios, and Capital Allocation 7136 Nathan presses Kyle on investor conversations regarding CAC and calculates the implied CAC when Kyle claims not to know it offhand.
Episode Recap and Flowhub Growth Summary 0000 Nathan recaps Flowhub's revenue, growth, team size, and retention metrics in a closing monologue.

Statements from this episode (18)

Disclosure
Flowhub Teams Sometimes Consume Cannabis for 5 PM Brainstorms
“And you know, as a team, sometimes we do you know, we'll, we'll responsibly consume as a group and we'll you know, certain departments will sit down and talk and brainstorm things at five o'clock. It's kind of our version of the bar cart, but you know, no, dur…”
Kyle Sherman Jun 7, 2019 ▶ 2:58
Assertion Not checkable as stated
Sherman: Flowhub average ACV is around $8,000, reaching up to $45,000
“Our ACV year is around 8000 dollars today. Some go as high as 45,000 dollars.”
Kyle Sherman Jun 7, 2019 ▶ 3:54
Assertion Partly supported
Sherman: Flowhub partnered with HP for all-in-one dispensary hardware systems
“We partnered with HP earlier this year to provide an all in one solution. So these systems ship from HP over to our customers with our platform installed on it.”
Kyle Sherman Jun 7, 2019 ▶ 4:24
Disclosure
Flowhub has raised approximately $8 million in venture funding
“About eight million dollars.”
Kyle Sherman Jun 7, 2019 ▶ 5:26
Disclosure
Flowhub's seed round was led by Poseidon Asset Management
“Early on, our seed round was led by a group called Poseidon out of San Francisco.”
Kyle Sherman Jun 7, 2019 ▶ 5:37
Assertion Not checkable as stated
Flowhub reaches just under 500 customer dispensaries
“We're over probably about just under 500 at this point.”
Kyle Sherman Jun 7, 2019 ▶ 6:56
Assertion Not checkable as stated
Flowhub operates exclusively in the US across 10 states
“All US based. So we're in 10 states today.”
Kyle Sherman Jun 7, 2019 ▶ 7:03
Assertion Not checkable as stated
Flowhub Generates Approximately $300,000 in Monthly Recurring Revenue
“Yeah, we're right around 300 K.”
Kyle Sherman Jun 7, 2019 ▶ 7:12
Assertion Not checkable as stated
Flowhub had a $1.6M ARR run rate in August 2017
“August 2017, we were at about one point Six million dollar run rate, I want to say.”
Kyle Sherman Jun 7, 2019 ▶ 7:18
Assertion Not checkable as stated
Flowhub Generated a $180,000 Revenue Run Rate in 2016
“In the year before that we were doing a 180 K.”
Kyle Sherman Jun 7, 2019 ▶ 7:31
Assertion Not checkable as stated
Sherman: Flowhub maintains 98% annual customer logo retention
“We're retaining about 98% of our customers year and year.”
Kyle Sherman Jun 7, 2019 ▶ 9:21
Assertion Not checkable as stated
Sherman: Flowhub's net revenue retention is around 100%
“We're right. Yes. We're right around a hundred percent.”
Kyle Sherman Jun 7, 2019 ▶ 9:51
Assertion Not checkable as stated
Sherman: Most Flowhub customer churn is due to store shutdowns
“A lot, the majority is truly because they shut down though.”
Kyle Sherman Jun 7, 2019 ▶ 10:29
Disclosure
Flowhub Only Started Building a Dedicated Sales Organization in 2019
“We just started building our sales organization this year, if you can believe it.”
Kyle Sherman Jun 7, 2019 ▶ 11:13
Assertion Not checkable as stated
Flowhub has roughly 40 employees across Denver, SF, and LA
“We're about 40. Nathan Latka: 40 people all based there in Denver? Nathan Latka: No. Kyle Sherman: So we have an office in San Francisco and Los Angeles. and then our headquarters is in Denver.”
Kyle Sherman Jun 7, 2019 ▶ 11:27
Assertion Not checkable as stated
Flowhub has about six employees across marketing and sales
“We've got to see about six at this point between marketing and our sales org.”
Kyle Sherman Jun 7, 2019 ▶ 11:41
Assertion Not checkable as stated
Sherman: Flowhub customer LTV is roughly $44,000 over five years
“So LTV is five years, about 44,000 dollars.”
Kyle Sherman Jun 7, 2019 ▶ 13:31
Assertion Not checkable as stated
Sherman: Flowhub operates at roughly a 3:1 LTV to CAC ratio
“Like we're about a three to one.”
Kyle Sherman Jun 7, 2019 ▶ 13:54
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