We talked to Constantin Marakhov of Hempfy about the cannabis project and COVID-19.
First of all, how are you and your family doing in these COVID-19 times?
Constantin Marakhov: Well, knock on wood on our side all is OK, but I have to admit that with this second wave of COVID, I know more and more people from my circles who either got the virus or already had it.
Tell us about you, your career, how you founded Hempfy.
Constantin Marakhov: My background is in finance and general management, and had several jobs in my life related to this. However, entrepreneurship was always my real passion, and I had a different level of involvement in several companies. In 2006 I came to Switzerland, joining an amazing team of the World Economic Forum where I have spent a couple of years full of different discoveries and experiences. My entrepreneurial experience in Switzerland started with a nutraceutical business, with one of the projects focused on cannabis and its well-being and wellness application. In several years the cannabis project grew so big that it kind of cannibalized the mother business.
How does Hempfy innovate?
Constantin Marakhov: My position is that successful startups are similar to riding a bicycle, which means you always need to push the pedals, otherwise you stop or fall – where pedals are the innovation in its broad sense. Companies always need to reinvent themselves – product base, positioning, marketing strategy and channels, and so on. When we speak about product innovation, of course, there are a lot of strategies where innovations are part of the very well-structured conveyor process, they become almost mechanical. In my opinion, this method is more appropriate to bigger FMCG companies, while startups have the privilege to be spontaneous and creative, which is one of the most exciting parts. In our case, all innovation is coming from speaking to different partners and stakeholders, learning of novelties, and trying to adapt them to our resources. A good recent example was the invention of our Recharge Water. One of our production partners has access to a lithium-rich source. It was quite a revelation to know that lithium is one of the most important microelements, which apparently is responsible for serotonin production in the human body.
However, there are some hurdles in marketing lithium mineral waters on a regulatory level – and here we come with our ingredient. We have achieved two things: first, to boost the water with adaptogenic cannabis derived elements, and second, we have been able to move the product category to functional waters. It looks like an easy process, but it took us almost two years in R&D to achieve the right taste and consistency. But in the end, we are extremely happy to receive one of a kind of supercharged natural product – calorie-free, clean label, vegan, organic, etc. You can see the result here https://hempfy.com/products/recharge-water.
How the coronavirus pandemic affects your business, and how are you coping?
Constantin Marakhov: COVID is definitely has a major impact on small businesses. They are the most hurt in the current situation due to a lack of financial and administrative resources compared to bigger players. I think that overall up to 30% of SME will not survive. In our case, we needed to substantially change the strategy, in particular, go digital and follow the money. Having said that, both directions have their challenges. In the digital realm, we, unfortunately, are hostages to monopolistic players, so-called FANG. These are not the most friendly guys towards small businesses, where the good example is the recent EUR 30B unfair competition case started by EC against Amazon – I truly believe there is a good reason behind that. Following the money, in our case, we need to go to North America, where the cannabis industry is much more vivid. That brings some geographic challenges, but we have a good track record of resolving these.
Did you have to make difficult choices, and what are the lessons learned?
Constantin Marakhov: We all are making difficult choices, almost every day. These choices are related to human relationships or are around them. In my opinion, all business decisions are, in essence, human-centric. The major lesson learned is to trust your first instincts. Usually, the first impression is the right one, and sometimes logic and reasonable thought just fail.
How do you deal with stress and anxiety?
Constantin Marakhov: I drink Recharge Water – remember, it has lithium, which helps you smile?
Who are your competitors? And how do you plan to stay in the game?
Constantin Marakhov: We are quite an unusual company here. I truly believe that cannabis for mass consumers is still white space where on one side, big players are hesitant to enter, and on the other small companies are too small to make an individual impact. In this context, our position is not to compete but rather to cooperate with other players and stakeholders to develop this “white” space. We will compete later.
Your final thoughts?
Constantin Marakhov: We leave in a challenging but still quite an amazing time when almost everything is possible with the right dedication, patience, and optimism. Being human and cooperative is the key to success.