Deep Patel has achieved more as a 22-year-old than many people do in their entire lives. He’s never raised a dollar from investors, but he’s already started multiple businesses. At 17, he wrote a book named one of the best for entrepreneurs.
Patel’s latest company, Penguin, is a direct-to-consumer CBD brand. Since launching in October 2019, Penguin has become one of the fastest-growing CBD brands. Penguin’s CBD oil has been named one of the five best.
Just two years after launching, Penguin caught the attention of Verma Farms, one of the leading CBD manufacturers in the United States. Excited by Penguin’s popular brand and rapid growth, Verma Farms’ team approached Patel and offered to acquire Penguin. Within days, Patel agreed to sell Penguin to Verma Farms in an all-cash deal.
How did Patel get here? Are there any secrets he can share, or any advice for aspiring entrepreneurs who want to build a brand? He offers four key points.
Patel was dedicated to starting a business at a young age. He lived on his computer, and by age 12, he had made his first $2,000 flipping rare coins on eBay.
Tapping into a business obsession when you’re young can help you learn how to build and sell products.
But perhaps the most important benefit is that people are more willing to help you when you’re young.
“When I was starting, I emailed every successful person I could think of. Once I told them I was in high school, they couldn’t wait to help,” says Patel.
Be Your Own Customer
According to Patel, many aspiring entrepreneurs neglect to ask themselves the most basic questions: First, what does my company do? And second, who is my customer?
With seemingly unlimited business ideas out there, how do you choose what kind of company to start?
“You should start a business that you’re passionate about. Focus on something that you don’t mind pulling all-nighters for,” explains Patel. “The easiest way to do that is to start a company that solves a problem you have.”
This advice applies to both the product and customer you choose. If you build a company that solves one of your own problems, it will be easy to stick with it through the tough times. After all, you’re doing this for more than the money; you’re doing this because you need it.
That’s why Patel chose to start a CBD brand. He was obsessed with CBD as a product, but felt that few CBD brands were taking advantage of the direct-to-consumer business model that people his age are accustomed to.
When starting Penguin, Patel built a structure that appeals to the people he knows best: Generation Z. The entire shopping experience is done online. Penguin’s website has an Amazon-like subscription dashboard where users can edit their orders without emailing customer service. Products arrive in distinctive baby-blue boxes.
You might be tempted to market your product to everyone you know; this can be a fatal mistake for a new business. Instead, focus on building a product for yourself, and find other customers like you.
Commit to Transparency
If you’re bringing a novel product to market, getting your first customers can be an uphill battle. Patel says that your key asset is transparency.
In 2019, Patel says, most people didn’t know what CBD was or, if they had heard the term, they might think it was something sketchy or illegal. “That’s why we committed to being radically transparent with our agricultural process and safety testing from day one.”
But this level of transparency is no simple feat.
The U.S. Food & Drug Administration is still in the process of assessing the rapidly developing market of cannabis and cannabis-derived products such as CBD. This gives brands a responsibility to take extra precautions and ensure safe production. As a result, says Patel, Penguin dedicates significant resources to product safety testing and educating customers.
Rather than conduct its own product testing, however, Penguin goes a step further; it uses third-party laboratories that are GMP-certified and FDA-inspected. The young CBD brand publishes these independent reports directly on its website to give customers an unbiased analysis of product safety.
“We conduct business as if we’ll never get a second chance. That means putting in the extra work to always be open with customers,” adds Patel.
While many brands like to keep their internal processes secret, radical transparency can pay off in the long run, as it builds trust with the consumer.
Have a Mission Beyond Money
“If you want to get through the hard times, it helps to have a greater mission,” says Patel.
“We want to bring CBD to the world without damaging the earth in the process. That’s why our products are organic, pesticide-free and GMO-free.”
Having a mission doesn’t come for free, though. For Penguin, ensuring that products were eco-friendly and sustainably-made meant increasing their production costs.
“We made a decision early on that we were going to do this right. It’s reflected in our prices, and there was no way around it.”
Patel took a gamble, deciding to charge higher prices than the rest of the market in order to keep his products eco-friendly. As it turned out, Penguin’s customers were willing to pay a bit more to know that their products aren’t damaging the earth.
This kind of ethical commitment is a crucial way to stand out in a competitive industry. And it’s important to adjust your prices accordingly if you want to stay in business. At the end of the day, says Patel, if you provide enough value for your customers, they’ll be happy to join your journey.