Pouring your hard-earned money and time into a new business idea can be terrifying, even for experienced entrepreneurs. For Lukasz Tracz and Sebastian Solano, their second attempt at it 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 in 2018 with their siblings — together, they're part of two sets of twins. In just four years, Tracz and Solano have built Jeeter into one of the cannabis industry's most successful retail brands, selling more pre-rolled joints than any other brand in the market.
In 2019, Jeeter made $19 million in total revenue, according to the company. That number is poised to jump exponentially this year: The company projects sales of more than $400 million in 2022. Just wrap your mind around this fact: In the brand's home state of California, customers smoke about 3.5 million Jeeter pre-rolls each month, the company says.
To get Jeeter off the ground, though, Tracz and Solano tell CNBC Make It they had to learn some 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 life," Solano says.
Tracz adds that, at one point, the founders pawned their watches and cars to get enough money to cover payroll after burning through millions of dollars in funding before Jeeter took off.
Here's how they did it, and why they say Jeeter could become a billion-dollar brand in the next few years.
In a way, it's deja vu all over again for Tracz, Solano and their twin siblings — Patryck Tracz and David Solano, who serve as Jeeter'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 multimillion-dollar global events and music festival brand.
Tracz and Solano met while waiting tables to pay their way through college roughly 16 years ago. Together with their twins, the four bonded over watching 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 would attract hundreds of college kids, some paying up to $150 to board a chartered bus and be shepherded to local nightclubs and back again.
After initially funding the parties with money they'd made from previous events, the friends used ticket sales and sponsorship cash to move into nightclubs and sports arenas. Life in Color became a legitimate business — touring the country with paint cannons and electronic music acts — before the co-founders sold it to Los Angeles-based events group SFX entertainment in 2012 for an undisclosed amount.
Tracz and Solano stayed onboard as partners at SFX for five years. The ride was bumpy — SFX declared bankruptcy in early 2016 — and Solano says the "very corporate" environment weighed on all of them.
At the time, Solano says, the co-founders were receiving unsolicited pitches from cannabis startups looking for investors. By then, legal marijuana was already a multibillion-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 buzziest, most attractive brand might have the best chance of winning over a nascent market. The friends pooled their money to launch their own cannabis brand, cobbling together $6 million between their own savings and some additional funding from friends and family.
They were distinctly outside of their comfort zone this time. "Everything was a challenge," Tracz says.
First, the quartet struggled to settle on what area of the cannabis industry they should focus on. Should they get into cultivation, retail or both? Should they try to sell whole flower — the actual cannabis plant — or distilled oil?
A rapidly growing industry didn't help: Solano says their plans changed "every six months." After a year of false starts, he says they finally decided to keep it simple: Source cannabis flower from licensed cultivators and hire employees to hand-roll joints.
The point, after all, wasn't to get lost in the weeds of the cannabis industry. It was to build a brand. The company's name was a starting point: "Jeeter" is a Southern Florida slang term for a marijuana joint.
The company promises that each of its joints is hand-rolled — a unique touch that requires a lot of hands, which is why Jeeter now has 1,156 employees turning out 145,000 joints per day in its Desert Hot Springs, California, factory.
That's an expensive approach, and by the time the co-founders settled on their concept, they'd nearly run out of their $6 million in funding. They were also slowed by the red tape needed to acquire the required licenses and approvals to sell cannabis products to consumers.
"There's 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 getting zoned for cannabis and all of that stuff."
In 2019, Jeeter took out a $500,000 loan to stay afloat. The company brought in roughly $19 million in revenue that year, the company says, but Solano admits much of that came from selling cannabis wholesale from cultivators to dispensaries — essentially, acting as middlemen — rather than from Jeeter's joints.
All along, Tracz and Solano walked "door to door" to pitch their joints to marijuana dispensaries and befriend each establishment's staff members, or "budtenders." They created exclusive product drops, one-time event pop-ups and limited-edition offerings of joints in collectible packaging. Eventually, they leveraged their 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 is 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 Jeeter to top $1 billion in annual sales by 2025.
That's a tall ask. Only a handful of cannabis companies are known to bring in 10 figures in annual revenue, and Jeeter is currently only active in three of the 19 total U.S. states with legal recreational marijuana sales: Arizona, California and Michigan.
Solano says the plan involves expanding into more states and new markets like apparel and merchandise. It also means doubling down on the founders' longtime specialty: events. Last year, for example, the company hosted its first "Jeeterday," featuring product drops and appearances by celebrities like Wade, Demi Lovato and Ludacris.
From concerts to product drops, successful events aim "to connect with consumers on that more intimate level of giving them a real experience," Solano says. "You're not just smoking Jeeter, but you're smoking Jeeter and we're creating this whole world for you."