Putting your hard earned money and time into a new business idea can be terrifying even for seasoned entrepreneurs. For Lukasz Tracze and Sebastian Solano, their second attempt nearly broke them.
Tracz, 37, and Solano, 38, are co-CEOs and co-founders of Jeeter, a Desert Hot Springs, California-based cannabis brand they launched with their siblings in 2018 — together, they’re twins. are part of two sets. In just four years, Tracz and Solano have made Jitter one of the most successful retail brands in the cannabis industry, selling more pre-rolled joints than any other brand on the market.
In 2019, Jeeter earned $19 million in total revenue, according to the company. That number is set to grow rapidly this year: the company plans to generate sales of more than $400 million in 2022. Just wrap your mind around this fact: The company says that in the brand’s home state of California, customers smoke about 3.5 million jitter pre-rolls each month.
In order to get Jeeter off the field, however, Tracze and Solano told CNBC Make It that they had to learn a few things the hard way. A series of false starts in a new industry meant that the first two years of trying to establish Jeeter – even as the company brought in millions – were “some of the toughest, worst years of our lives”. , Solano says.
Tracz says that, at one point, the founders mortgaged their watches and cars to get enough money to cover payroll after burning through millions of dollars in funding before Jeter took off.
Here’s how they did it, and why they say Jeeter could become a billion-dollar brand in the next few years.
‘Ridiculous’ party people
In a way, it’s déj vu again for Tracz, Solano, and their twin siblings — Patrick Tracz and David Solano, who serve as Jitter’s vice president of marketing and chief sales officer, respectively. As college students at Florida State University in 2006, the quartet threw a series of parties that eventually became Life in Color, a multi-million dollar global event and music festival brand.
Trac and Solano met about 16 years ago at a waiting table to make their payments through college. Along with their twins, the four bonded over HBO’s “Entourage.” The show inspired them to look for ways to make money while partying together, so they started throwing house parties.
Far from small shindigs, Solano says these “ridiculous” parties will attract hundreds of college kids, some paying up to $150 to board a chartered bus and back again and again at local nightclubs.
After initially letting the parties make money from past events, the friends used ticket sales and sponsorship cash to go to nightclubs and playgrounds. Life in Color became a legitimate business – touring the country with paint cannons and electronic music acts – before the co-founders sold it in 2012 to Los Angeles-based events group SFX Entertainment for an undisclosed amount.
Tracz and Solano remained as partners in SFX for five years. The ride was bumpy — SFX declared bankruptcy in early 2016 — and Solano says the “very corporate” environment weighed on them all.
At the time, Solano says, the co-founders were receiving unwanted pitches from cannabis startups looking for investors. By then, legal marijuana was already a multi-billion dollar industry, and California represented its most fertile ground.
Solano says he decided to “dive into the numbers” and found an “outrageous” opportunity: the company with the busiest, most lucrative brand may have the best chance of winning on a nascent market. The friends pooled their money to launch their own cannabis brand, investing $6 million between their own savings and some additional funding from friends and family.
This time he was completely out of his comfort zone. “Everything was a challenge,” Tracz says.
From running out of cash to building up discussions
At first, the quartet struggled to decide which area of the cannabis industry they should focus on. Should they go into farming, retail or both? Should they try to sell the whole flower – the real cannabis plant – or the distilled oil?
The booming industry didn’t help: Solano says his plans change “every six months.” After a year of false starts, he says he finally decided to keep it simple: Source hemp flowers from licensed farmers and hired staff to hand-roll them.
After all, there was no talk of getting lost in the weeds of the cannabis industry. It was to build a brand. The company name was a starting point: “winner” is a Southern Florida slang term for a marijuana joint.
The company promises that each of its joints is hand-twisted—a unique touch that requires a lot of hands, which is why Jeeter now has 1,156 employees working each in its Desert Hot Springs, California, factory. Days make 145,000 additions.
It’s a costly approach, and by the time the co-founders settle on their concept, they’re out of funding by about $6 million. They were also slowed by the red tape required to obtain the necessary licenses and approvals to sell cannabis products to consumers.
“There are just so many steps that were out of our ballpark,” Tracz says. “We’re used to throwing parties and we’re not used to, like, getting land and real estate and zoning out for cannabis and all that stuff.”
In 2019, Jeeter took out a $500,000 loan to stay afloat. The company brought in about $19 million in revenue that year, the company says, but Solano acknowledges that much of it came from the wholesale sale of cannabis from cultivators to dispensaries — essentially, acting as middlemen — Instead of winning pairs.
Plus, Tracz and Solano walk “door to door” to connect their couples to marijuana dispensaries and befriend the staff members, or “buttenders,” of each establishment. They created limited-edition offerings of specialty product drops, one-time event pop-ups, and additions in collectible packaging. Eventually, he leveraged his entertainment connections to find celebrity partners for those drops, including athletes Dwayne Wade and Ricky Williams.
As the buzz grew, so did Jeeter’s revenue: $80 million in 2020 and $180 million in 2021, which was also when Jeeter became profitable, the company says. Solano says 99% of this year’s projected sales will come from Jeeter’s branded products, not wholesale. With a straight face, he expects Jitter to top $1 billion in annual sales by 2025.
This is a long question. Only a handful of cannabis companies are known to bring in 10 figures in annual revenue, and Jitter is currently active in only three of the 19 total U.S. states with legal recreational marijuana sales: Arizona, California, and Michigan.
Solano says the plan includes expanding into more states and new markets such as apparel and merchandise. It also means a longtime characteristic of founders: doubling of events. Last year, for example, the company hosted its first “Jitterday,” featuring product drops and appearances by celebrities like Wade, Demi Lovato, and Ludacris.
From concerts to product drops, says Solano, successful events aim to “connect with consumers on a more intimate level of delivering a real experience.” “You’re not just smoking Jitter, you’re smoking Jitter and we’re making this whole world for you.”
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