Podcast Episode: Be Smokey Bear: How Würk’s CEO stops fires before they start

Welcome to Seed to CEO the podcast about making your way in the cannabis business.

I’m Omar Sacirbey, a veteran reporter with MJBiz. This week on Seed to CEO we’re joined by Scott Kenyon, CEO of Würk, the cannabis industry’s best known payroll and human resources company.

After decades and software and technology, both at startups and huge corporations like Dow, Kenyon broke into cannabis by joining the board of work, where he had an inside view of the company’s strengths and weaknesses. But he was unexpectedly thrust into the CEO role almost 18 months ago, and has had to weather many storms. And while payroll and human resources aren’t exactly sexy topics, they do provide Kenyan with an unfettered view of cannabis businesses.

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Welcome back to Seed to CEO. I’m with Scott Kenyon, CEO of Würk. Thanks for being on the show, Scott.

Hey, thank you. Glad to be here today excited to share our story.

Terrific. Well, very much looking forward to it. Now, before we get into what you’ve done as CEO of Würk, could you bring our audience up to date on what work does, how big the company is where it operates? That kind of thing. So our audience gets a sense of what you guys do.

We are the largest payroll and HCM provider for cannabis. HCM stands for Human Capital Management. So just think of that as all the software that HR professionals need to run their organization. We have been in business coming up on seven years, and 100% of our clientele are cannabis companies located all across the country, we actually process payroll in 46 of the 50 states and in over 574 jurisdictions. And that was as of the end of February. So I need to get some updated numbers. But that just gives you a feeling for our scope across the country.
We moved over three and a half billion dollars in payroll and payroll taxes last year. We plan on doing way more than that this year.

Wow. Wow, impressive. All right. Well, now let’s kick into really you know, the gist of our conversation here. For starters, tell us a little bit about how your pre-cannabis professional life helped you prepare for the cannabis industry? What skills did it give you that are helping you today?

Well, I think my pre -cannabis life should be the poster child for what it takes to survive because I had a little bit of everything. I was an entrepreneur out of school, and thought, oh, that had to be easy. There’s an easier way than being an entrepreneur. So I went to go work in the corporate world in a Fortune 50 company and spent over a dozen years doing that, and then thought, this is way too boring. And it was easier. So be careful what you wish for. And so then I went back in the startups arena or startup space. When I was in corporate world I was with Dell Incorporated. So we’re mainly focused in on hardware. And then when I jumped from Dell, I focused you know, the last 10 plus years have been in software, everything from when the mobile phone just came out to you know where we are today with everything in the cloud and everything that’s going on in software.

What skills I built up helped me in cannabis. One is being flexible. You know, when you when you go and in software, especially, you know, the big term is agile development that allows you to be flexible in your planning and execution. Instead of you know, the old way was like pouring concrete once you pour it and it sets. It’s there unless you just go destroy it. This allows you to evolve as you go through is so being flexible was key.

Also working with different types of customers; I was actually interested to see how customers were going to be different in the cannabis space. And at the end of the day, Omar, the the customers are people, right? They want to be successful. And they want to know how you can help them in their organization be successful. So, you know, dealing with a diverse set of customers over my career really helped me coming into cannabis.

And then last but not least, is I was an expat worked in Latin America for about 10 years. And I really honed in the skill of listening, just learning cultural differences. And so when I came into cannabis, that was a purposeful piece. I mean, that’s just part of my leadership style overall, is to be a great listener. But, you know, coming into a space where my wife and I were angel investors and a few different companies. I was on the board, but you know, getting into the day to day operations. I was clueless, right, and but listening to our customers, listening to our teams, and listening to experts, has been, you know, just huge for me. One mistake, I’d say I did was I listened too much to the politicians, that they’ve changed their direction, as many times as the wind changes direction. So that’s one thing I wish I could go back, I wouldn’t listen to them so much, and really lean more on the industry experts.

Let me ask you, if I could follow up on that a bit, because it comes up a lot in conversations that we have with people when it comes with transferring experience from outside of cannabis industry into the cannabis industry. And that’s working at really large companies like Dell versus working at startups. If I recall correctly, one of the startups that you began was Casey sports, sports apparel company. And a lot of people who are in your shoes will say that working at a small company at a startup that kind of environment tends to be more beneficial than coming from a huge corporation just because you have to be scrappy, of, you know, fewer resources, that kind of thing. What’s your take on on that, you know, the benefits of working a, you know, a small startup versus something much larger?

I was building and running one of the, you know, regions for for Dell. And it was it was a startup within Dell. So I was able to be nimble. And I was known as the startup guy within Dell. So much, many of my assignments and positions had to deal with going and starting up new businesses, for them around the world. So I think there are opportunities like that within big corporations. And I also think it really depends on a functional area as well. But 100% I do agree, you need to be nimble, you need to be flexible, you need to screw up quickly, and keep forcing through. And more than anything, I would say the ability to hear no, multiple times and still be able to make traction, right, whether that’s through fundraising, whether that’s through product development, you know, whatever it may be, you have to have that thick skin to be able to go out and, and deliver. But you know, we are a startup in a startup industry, especially for us working in the HR world. A lot of these HR leaders haven’t been in a startup type environment. So they’re experiencing things they’ve never experienced that big corporations or, you know, government facility wherever they were working in HR, this is an environment that’s just totally new for them.

Well, you know, speaking of that, it’s also one of the questions that I wanted to ask you is that because the cannabis industry is so new and unique, you know, how did your pre cannabis life not prepare you for cannabis? I mean, just you know, how is cannabis so unique? Just that whatever you do beforehand, you just can’t be prepared.

But let’s use the example of a small business owner. So let’s say Omar’s Hair Salon. Omar can cut some crazy hair and is known for just doing amazing things. Then we have Scott’s dispensary. You know, Scott can run a great retail operation. But there’s so many more regulations on Scott than on Omar. They’re both the same size. They have same amount employees. But what Omar worries about compared to what Scott worries about is totally different. So these business owners are always under the microscope at any time their license can be revoked, they screw something up and they get in trouble with a regulator. It’s a different type of pressure that is that they are under in every aspect of their job. And that’s surprising that doesn’t matter if it’s if it’s a dispensary as the example I gave or a grow are a fully vertically integrated company. And whether it’s a CFO or a HR leader or a salesperson, it is just incrementally harder and I was not prepared to see that at every step of the business and so you know, my my mission, personal mission is to make it easier for our customers every chance we get because their job is just so hard. In our job, quite honestly, we’re not exempt from that.

You plug any size company in cannabis compared to a non-cannabis company with the same size as employees, it’s going to take more to process payroll, and, you know, deliver great customer experience on the HCM side for that cannabis customer than a non-cannabis customer. And that’s one of the reasons why you don’t see a lot of the big players come in. And if they do come into the cannabis space, they jump out real quick because they realize how difficult it is to serve as this industry.

Now, you know, you were just talking about how you know the challenges that newcomers face in the industry, yet they still keep on coming in.  What made you want to come into the cannabis industry in the first place, what made you want to step on to the board of Würk a couple years ago?

When I started mentoring our founder, Keegan Peterson, and we just really hit it off. And he had had a lot of advice and mentors from the cannabis space early on. And so I was just really trying to help him through his his learning and planning of growing a small company. It wasn’t so much about the company as much as it was about him. And as you know, meeting many founders, founders have such a great story and passion for their their companies. It’s hard not to fall for people like that.

Besides the mentoring aspect of it, what goes into being a good useful board member, as opposed to somebody that just sits on the board and tries to look good?

I am an investor seat board member, meaning I’ve invested in different companies where I’ve earned a seat at the board. For Würk, it was an independent board member. So there’s different responsibilities there. I think when you’re leading around as an investor and get a seat at the table, you need to represent that round of investment to your fullest ability. As an independent board member, you need to be looking at it holistically, not just you know, whatever round you lead for investments for that company. So I really enjoy being an independent board member. But more importantly, I really enjoy going going and finding great independent board members. For example, I have Jim Franklin, who is a CFO by trade. And his help, to me, has been tremendous. And to my team from from little things, as far as you know, how are you presenting financial metrics to investors or the board to big decisions on financing and M&A deals. So I really enjoy the independent piece. And I think it’s essential to every board. And my advice to founders is, once you form a board, I would always try to add as many independents as you can, because that’s only going to help you as the company grows and matures.

And when you’re in that board position, what are the types of things that you’re looking for that you’re seeing, and that eventually came to inform your management proach, your CEO approach at work when you became CEO?

The thing naturally, people focus in on areas that they know best? How can they learn from the scars on my back? Right from all the mistakes that I’ve made over the years? So I’m always looking at it from that aspect. And then just holistically, how can I help the team and 100% I focus in on my strengths? I think the only thing is a board member, you’re only you’re as good as the information you’re given. Right. So as a board member, I’m always trying to dig deeper even into what information is given. But when I stepped in to be the CEO of work, obviously, I started getting aspects of the business that I had never seen before. It was just a perfect fit. Because a lot of the challenges at this stage of the company that they had was right in my wheelhouse. There are operational challenges that that I have faced and dealt with in the multiple times in my career, there was customer challenges, which I’ve always been able to deal with customers. And then it was how do we how do we design the company in the future. So it truly was a you know, hindsight, looking at it, a really good fit for the company and a really good fit for me. What based off my skill set?

I think it’s been about 1618 months, give or take since you become CEO, you know how big was Würk at that time? What were some of the strengths and weaknesses that you saw in the company? What aims did the company have at that point, and you could maybe elaborate on those a little bit for our audience.

I think the big thing for a couple items that stick out stuck out for me at that time as a growing company in a growing industry. A lot of the times you can just outgrow your problems. And when I came and the company was really at that point, and probably was for the last six to 12 months, whether we knew it or not. We were not outgrowing our problems. And by all currently that means, what’s the problem today in six months won’t be a problem, because you have new problems. I think the other thing was identified earlier, as I mentioned earlier, is there weren’t systematic, huge changes we had to do, it was more blocking and tackling, and really just having a good plan and going out and executing to it. So those were the big things. For me, it was just take away that mindset, like, Hey, we’re just gonna outgrow this, and really focusing on those basics. And, you know, this was a company that I felt was ready to scale. And if you look at software companies, Omar, when software companies start to scale, rarely do they do they falter. It really takes you know, it just really it’s kind of like a hockey stick. And we experienced that we’ve had great little growth last year, we we hit our goals of driving customer experience, and profitability. So it was a it was a tremendous year for us. And again, our customers are seeing it, our employees are seeing it, and our investors are seeing it and the way the company is just scaling through every interaction and every process that we that we go through.

Now, you mentioned some of those operational challenges and customer challenges that you found. I mean, what were some of those, if you could just be a little bit more specific and let our audience know, you know what those were and how you guys got over them?

One of the biggest thing big things I stepped in early on was I wanted reporting and metrics around everything. And with that data allowed me and the executive team to make better better decisions. For me it was the core basis when I came in was we have to treat our customers in a way we’ve never treated them before. And I felt like and our and our metrics that we did have were not good metrics. And now we’re you know, world class 18 months later, we’re best in class in cannabis and darn near world class in payroll, and HCM, if you include outside of cannabis, it really was hey, can I can I drive great customer experience that in turn will drive growth and profitability as we go through there. And you know, it was a big bet for us. We proactively went out and talk to our customers, we shared my vision of what we wanted to do. And, you know, everybody listened and nodded their head, but I know, you know, in their head, they’re like, yeah, we’ll see if this happens, right. But as you start proving that out, people then start to become ambassadors for you, you can turn your customers to be ambassadors, you know, you’ve really done that. And again, that’s through customer experience, you know, I can look back and say I probably could have driven more revenue. Last year, don’t tell my board that, but it probably would have cost some margin and some customer experience in the long run. That’s not there, I turn this into a short term focus company, just focusing on getting that next deal closed, growing that customer to how are we making this a long term viable company, and I’m happy to say we’re well on our path there. And, and again, our customers have trusted us and enabled us to get to where I thought we could take the company, and now they’re reaping the rewards as much as we are.

It sounds like we were just, you know, covering some of the short term priorities. You know, like the immediate things that you had to do when you came on as CEO at work, you know, getting the improved data and metrics that you want it in there and sort of, you know, building that company of the future. Can you tell our audience a little bit more about that future building process? What were those again, in those first, you know, weeks and months, when you were in that CEO role? You know, how did you envision that build out process? What were the things that you were identifying, that need to be fixed? And how did you come about the solutions?

It was focusing on: Do I have the right team members? The second is, how do we change the mindset of the organization and our customers into a long term play and we had become the world’s best firefighters. And I wanted to stop that. I said, I don’t want to be the world’s best firefighter. I want to prevent fires. How do we prevent our customers from getting into mistakes, or making mistakes and just making their life easier? How do we foresee their their challenges before they even know it? For example, in an M&A  process, or a new state that they’re launching? Everybody is doing something new in this industry. So the more we can help them the more valuable we are as a partner. The team did a good job of adapting that not not right out of the gates, but I’d say definitely the second half of the year.

So fast forward to this year. We really wanted to focus in on we are focusing in on this cannabis community and becoming stewards of the community. But there’s more than just proactivity that is involved in becoming a and being a very good steward for our customers. So for example, that’s building that trust relationship with all of our customers, it is continuing to anticipate their problems. But as when they bring problems, it may not be something that you can solve, but what can we do? Or who do we know that can really go help them do this? How can we help them frame? You know, we have customers that have high turnover? How can we give them best practices, both in and outside of cannabis on this this turnover, what’s causing the turnover, specifically within their their groups, and again, using data there, but if we’re if we’re every decision we make Omar is the foundation of that decision is based off being a good steward of this cannabis community, we’re going to deliver great results.

Now when you guys were, you know, going through these revaluations, and lining up the long term priorities, that kind of thing, did those ever change? Did you guys ever have to make pivots in that process, maybe attempt some projects that you thought were going to be beneficial, but maybe didn’t give you the juice? You thought you were gonna get for the squeeze and thought, oh, maybe we should focus on this instead? Did you guys have to make some pivots? And if yes, can you tell our audience about
them?

For sure, not as many as I thought we would have. But you know, one that really sticks out in my mind. And this is why I’m not a good gambling person. And it was providing a concierge type service to our biggest customers. So 80% of the MSOs in the cannabis space are on the work platform. And we needed to be able to provide them a different level of service than we had been. And so I came up with this concierges idea and listed out everything these people can do for these customers. And the customers were were kind of lukewarm to it when I rolled it out. And, and one of them shared, like, Hey, Scott, these are all great, but these aren’t our real problems. Here are the five things I can really use your help with. And so we pivoted and changed our focus to that. And now people are like, hey, Susie is so great, you know, I will never leave work, because Susie is just unbelievable. And no matter what we run into Susy consultant, or John, or whomever it is, you know, that was a big mistake that I thought we knew everything that our customers needed. We knew what they were telling us. And we were probably already delivering it. But we didn’t know what we didn’t know. And I should have asked them at the beginning. But thank goodness, I had a few of them come out and say thanks. Nice try. But here’s what we really need help on.

Can you give an example or two of something that your customers brought up to you and said, Hey, we want this? And then you guys said, yeah, we’ll we’ll we’ll get this to you?

You know, as with any software you use, there’s just some simple education. And, you know, again, going back to the term blocking and tackling, we were we were addressing those but more importantly, as they needed more of a consultant or someone outside of their world, where they could come in and say, here’s what we’re thinking, what’s right about this, what’s going to be hard, what’s going to be easy. Tell us what we don’t know. It could be, hey, we’re looking at integrating into a new ATS applicant tracking system. Here’s the ones we’re thinking about. What should we be thinking about? This one’s the most expensive, but is it the best? Right? So it is kind of helping them evolve and steal some of the day to day tactical items. But I bet if you asked my top 10 customers, they would all say that their premier service team member is a part of their team. And they utilize them for everything, but most importantly, their strategic decisions.

Now, early on, in our conversation, you mentioned how work is a startup working with other startups. And that really piqued my interest because I was wondering, you know, What has working with cannabis businesses taught you about cannabis businesses? I mean, if somebody from outside of the industry was was to ask you, what’s it like working with these people? What’s it like working with a dispensary owner? What would you tell them?

The people are very resilient in this industry. And I can’t say if they weren’t before they came into it, but to survive in this industry. They are very, very resilient, resilient and moat and that’s all different facets are not just founders or first employees, early employees, that is people that that in every aspect, finance, sales, marketing, HR. The other thing I would say is they’re very focused, because I think out of necessity, and again, how hard it is to run this business. There’s not time for mistakes and in other startup type worlds. You know, the one thing you don’t have and cannot get his time. You never have enough of it and you can never go reproduce more of it, you can go get more money, you can go, you know, earn more money, you can raise more money, but you can’t go earn or raise more time. And that’s the same way in cannabis. What worked in Colorado seven years ago, is not necessarily going to work in New Mexico, which is the state right below it that just went legal this year. There’s so many things that have changed in that period of time that you’ve got to be focused in on what does the market need? What can you learn from those early states that came on board? And what can you learn from the most recent ones, California is an example California was not the first to come in and do adult use legalization. But when they did, they didn’t really take the best practices from Washington, Colorado, Oregon, etc. They they kind of went off on their own and some things they did way better and other things they did, you know, they’re still struggling with. So again, back to the question, resilient and just Uber focused on on driving every aspect of this business.

Can you name you know, two or three things about doing payroll and human resources in the cannabis industry that are just completely different than doing it in the quote unquote, mainstream world, just things that you will not encounter in the mainstream world that you encounter in the cannabis industry?

Number one is just the banking aspect, you know, the, the MSOs, haven’t figured out everybody else, it’s a constant challenge. And especially for small business owners, it literally one day, you could be working with your bank, whatever area of the country you’re located, and the next day, you get a call saying you’re going to get kicked out of their system in 30 days, right? So the lack of banking in this industry, still is just alarming. And that’s something we really, really need to go out there and focus on. And the other, I would say, is the, we have a lot of unbanked employees in our industry. And that’s because the bank will say, Well, yeah, we’re not going to take a direct deposit from a cannabis company, then they’re having to get paid in cash, right, or going somewhere and cashing the company check where they can get cash, that there’s nothing good that comes from that. So I think that’s a difference. For us.

That does raise the question, you know, as this industry evolves, who are Würk’s competitors at this point? And how do you see your niche of the industry evolving? Do you see it getting more competitive? And what do you need to do in the future, you know, to stay on top?

As a leader, I want to be going up against the best competition to make us better. And going back to my theme for this year, if we’re going to be good stewards, we need to be forcing ourselves and the community get better every interaction we have. But for us, you know, I really want to evolve our practice, so that every cannabis company has the access to the same set of tools for their employees, as non cannabis, for example, 401k is a new thing, recent in the last, you know, 18 months to cannabis. So not only do we provide 401k solutions for our customers, but now we’re providing multiple employment plans that allow the these companies and their employees to have, you know, pick and choose which for one provider that they want to use. Again, there’s no reason. And I hired a new CEO, named Deborah last year last fall. And she came from, you know, 20 plus years in the payroll industry. And his was actually the outgoing president of the independent payroll providers of America. And when I was interviewing her, I was like, I need you to bring everything to cannabis that’s not here now. And she’s like, Well, everybody’s kind of scared. They don’t know it. I go, great. You’ll come in here, you’ll understand that, wow, these are real people. This is a real business. And they have real problems we can go solve. And everybody will look to you like is this? Okay, Deborah. And sure enough, they had their first convention, I think it was in February. And she was like the prom queen there. Everybody wanted to talk to her. Everybody wants to know how our experience was, and how can they get in to help the cannabis business? I really want to bring that, that that’ll be a big milestone for us. And it’s simple things, right? There’s just, there’s simple things, there’s big things that they can bring, we launched a poster compliance program that allows our customers to everything is just automated for them, you know, around state regulations, etc. And that’s, that’s not a big thing. It’s probably cost them $60 a year. But it’s more of the time suck that it took. It probably cost, you know, 60 hours of their team to go execute on that. So when you’re spending time on, on things like that, that could be solved for you. That’s how we bring that value. How do we anticipate our customers needs before they know it? And so that’s my goal by The end of this year to be in that spot as well. And that’ll help determine that success. So I hope to reach most both of those goals of bringing everything we can in the cannabis that’s not in here now. And then you know, getting ahead, telling customers, here’s your problem you’re going to have, it’s going to be a great 23 Next year, because those are our goals to get there this year.

Scott, thank you so much for coming on. It’s been most excellent. But before we let you go, we do have one more question. But first, a message from MJBiz.

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Welcome back to Seed to CEO, I have one more question for our guest, Scott Kenyon of Würk. Scott, can you name a big mistake that you’ve learned as CEO at work in the last year or so? And how did you overcome it?

The one thing that I would go back and change is I identified personnel changes that I needed to make, let’s say 60 to 90 days in that I waited another 60 to 90 days to go do that just cost me time going back to earlier in the interview. And I said I don’t have the the benefit of having all the time in the world, I have a limited amount of time. So I lost time. And so in turn, I didn’t grow the business as fast as I would, would have. And our customers weren’t as happy as I could have, if I would have made those changes. So trust your instincts, do your due diligence. But once you go there don’t don’t continue to make excuses or allow that to continue. Because that person, I’m a firm believer, everybody wants to be successful, no one goes to work and says I want to suck today. And if they’re not being successful in their role, and they aren’t leaving, you’re you’re doing them a disservice by trying to, you know, keep them on an extra month or that another month, they’re gonna finally get it in the people I’m thinking about have have gone from work and now doing well in their careers. And one of them I actually talked to back in January, they’re like the best thing that happened was when you let me go from work, because now I’m doing something that I’m really good at. And I was just, you know, overwhelmed with everything that we had going on at work. So, again, the short answer is just trust yourself and make those changes as soon as you identify him.

Scott, excellent. Thank you so much for those insights. We appreciate you coming on to the show today. And thank you so much.
That’s some really frank advice. If you’re trying to build a successful business, don’t hesitate to let go of employees who don’t fit. You don’t do them or yourself any favors by keeping them on. Next week, we’re going to have a special episode focused on MJBizCon 2022, the best and biggest cannabis show in the world. Lots of industry pros want to share their know how with fellow pros, but speaking spots are limited. So what does it take to submit a winning application to speak at MJBizCon? Our conference content team will share some secrets of what it takes to make it.