Think about a scenario where a business concept is conceived
in one of the most dangerous and hostile geographical location of the world i.e
between Somalia and Yemen. A place teeming with high water pirates. That is
exactly where the concept of ‘Tradiv’ was born.
Aaron Sullivan the founding member of Tradiv, was a marine
captain aboard USS New Orleans which
was fighting US War on Drugs. Their mission was to stop Somali pirates who were
running high sea drug operations and seize opium and munitions. But Aaron new
this was futile as another gang would fill the vacuum pretty fast.
After the stint in North Africa, Aaron went back to his base
in California and found out about the burgeoning trade of legal cannabis in
Colorado. He completed an online MBA program quit his job and co-founded the
weed tech startup Tradiv with Geoff Doran his dorm mate. They raised a capital
$3.4 million within a year and embarked on their dream to become the next
Amazon for legal cannabis.
The dream run
Tradiv copied the exact business fucntion of Amazon and
replicated it for their business model. Tradiv created an environment where
marijuana growers and sellers could register themselves and start striking
deals all legally on Tradiv. They took a cut of 4 to 10% on each sale that went
through their platform.
Tradiv sold $40000 worth of marijuana in the first month of
its inception and by the end of the year in December it facilitated $4.5
million worth of products with 70 registered companies on site. Rapid
innovation and a clear ground without competition in sight made Tradiv a
marketplace for 230 companies.
Everything was going great guns for them and they featured
in the most promising startup 30 under 30 young founders list. That is when God
spoke to Aaron.
When God spoke to
Aaron Sullivan was hiking on the farthest corner of the
world in Alaska. While gazing at the crystal clear stars dotting the pristine
Alaskan sky a strange question popped in his head, who is leading the human
With this thought weighing heavily on his mind he felt
telepathically connected to God. Aaron who was agonistic immediately knew he
was communicating with god. Aaron perceived god wanted a much higher meaning
for his life and that clashed with the very idea of his successful startup
Less than 18 months later after his return from the life
changing Alaskan sojourn Aaron would quit as the CEO of Tradiv. A new CEO would
place his bets on conquering new territory of California moving from the niche
market of Colorado which would set in motion the spectacular fall of Tradiv.
the lines and what e-commerce can learn from Tradiv downfall?
Tradiv was well entrenched in Colorado niche and got a good
hold over the market. They were well operating within their limitations by
providing dispensaries, sellers, buyers and suppliers steady flow of legal marijuana
and cannabis. The real trouble in fact started when after the departure of
Aaron, the company started setting its sights on California without proper
blueprint in place.
They decided to shift their Amazonesque mode of operations.
Technically Tradiv never physically handled marijuana which made operations
easier. But California was a one of America’s oldest pot market, and Tradiv
tried to transform into a full-fledged distributor. Some of the major
operational mistakes they did were.
Doubling their staff due to which industry
knowledge and quality resource took a hit
Opening physical warehouses and own trucks which
greatly reduced their profit margins
Logistic failure due to the great distances they
had to cover and improper placement of Inventory
is where things started hitting rock bottom for them. Their profits started
falling, they couldn’t handle the Californian market because of more
established players in one of America’s oldest pot market. Improper inventory
management and spiraling costs started hemorrhaging the profits of the company
and finally it was too late until they realized California was their Waterloo.
the time they wanted to undo the things and shift back to Colorado it was too
late. Resentment took over their clientele in Colorado who were left in the
lurch with Tradiv focusing on new markets. Finally Tradiv which was caught
between a cliff and a rock had to file for Chapter 11.
are various reasons which led to the downfall of Tradiv ranging from lawsuits
and bad management decision making. But from all the debris we cannot ignore
the stark reason of bad inventory and logistics management that also played its
hand in Tradiv going bust.
I cannot comment on the God speaking to the CEO part. Being a mere mortal I
place my bet on the importance of having an inventory management strategy before
considering a territorial expansion.