The year before Lift & Co. went public, its staff tried to overthrow the company’s CEO, Matei Olaru. A group of employees—more than a third of Lift’s workforce at the time—signed a letter detailing their concerns with Olaru’s ability to run the cannabis company. Since he took the helm a year earlier, Lift had been troubled by a revolving door of employees, and an increasingly vocal group of discontented staff who remained at the company. Worried Olaru was jeopardizing the company’s shot at success, employees devised a plan to correct course.
The letter demanding his resignation cited concerns about his ability to lead, “including, but not limited to your repeated demonstrations of: dishonesty, failure to follow process, failure to heed expert advice or data, lack of transparency, financial incompetence, favouritism, deceit, manipulation, harassment, bullying, inexperience and gender discrimination,” reads the document that circulated the Lift office, collecting signatures, in October 2017.
“If you do not step down into a role more suitable to your abilities, and resign as CEO of Lift by Tuesday, October 31 at 5pm, we will be forced to take our numerous and detailed concerns to the board.”
The staff circulating the letter wanted to get all employees’ support. While trying to convince others to back the CEO’s ouster, Olaru got wind of the plan.
Fresh out of law school with little experience managing people or businesses, the young CEO had parachuted to the top of Lift & Co. The events and media company has since become a linchpin in Canada’s fast-growing cannabis sector, an authority on regulation and the brand behind North America’s biggest events in the trade.
Less than a year into his leadership, though, Olaru was losing his staff’s confidence. As a last-ditch effort to make amends, he appealed for forgiveness.
At an emergency all-hands meeting, called for October 30, Olaru said he regretted neglecting employees’ concerns and acknowledged he needed to do better, according to several people who attended the meeting. He promised to give lower-paid staff salary increases and offered everyone stock options in the company. He would put a greater emphasis on culture, he said, and pledged to improve employee morale.
“If you weren’t paying attention, you might actually think he was apologetic,” says one former employee who attended the meeting.
“It was this real crocodile-tears speech,” says another former staffer.
Despite their doubts around Olaru’s sincerity, the staff dropped the planned coup. Some of them did get their promised pay bumps, but the company’s culture continued to spiral.
The Logic spoke with 13 current and former employees about their experience at Lift. Most of them asked not to be named, as they signed confidentiality agreements while working at the company. Others worried speaking could hurt their reputation or job prospects in the industry, and one former employee said she didn’t want her name linked to Lift in online search results. The interviews paint a picture of a toxic work environment characterized by erratic business strategies, pay inequity and financial missteps. According to most of the employees, at the root of the company’s woes is a leader guided by a destructive combination of inexperience and micromanagement.
The Logic requested an interview with Olaru and the company’s founder, Tyler Sookochoff, over several weeks. Neither agreed to be interviewed and the company declined multiple requests to answer written questions. “We do not have a response at this time,” said Sara McMillen, director of communications at Lift.
Since the company went public in a reverse takeover in September 2018, its stock has suffered from low trading volumes and its market cap has dropped more than 60 per cent since it peaked the day after going public. And, less than six months after cannabis legalization promised a new era of prosperity for Lift, two members of its four-person executive team had left.
Still, its public profile is soaring. Since legalization, the company has secured government contracts in partnership with Mothers Against Drunk Driving (MADD) to train cannabis retail workers across the country. And, its roster of Lift-branded cannabis events, which attract tens of thousands of people each year, continues to grow. The company is teeing up its next Lift Expo in Toronto this June with Canadian Cannabis Week, a series of pop-up events across Canada, including one hosted by The Economist focused on investment opportunities in cannabis.
Interviews with more than a dozen people who have worked at the cannabis events and media company paint a picture of a toxic work environment characterized by erratic business strategies, pay inequity and financial missteps. Two members of the company’s four-person executive team have left Lift since it went public in September 2018. Its founder, meanwhile, has left the company’s board. According to sources, at the root of Lift’s woes is a leader guided by a destructive combination of inexperience and micromanagement.
Olaru’s accolades, meanwhile, are piling up. He was named in the Bay Street Bull’s Top 30 Under 30 in April, among Olympian Tessa Virtue and marketing powerhouse Dani Roche, co-founder of creative agency Kastor & Pollux. And, Olaru is nominated for Ernst & Young’s regional Entrepreneur of the Year Award, which seeks to recognize “the unstoppables.” Finalists will be announced July 4.
Some sources who’ve worked at the company in recent months say Lift’s culture and business have improved since staff tried to remove Olaru as CEO. However, many say the company would be better off under a new leader. As investors begin to shed underperforming stocks—with cannabis indexes down more than 19 per cent since legalization—Lift is facing increasing internal pressure to change course.
Lift & Co. began in 2014 as a cannabis strain review platform. The federal government had enacted new laws that year that placed cannabis production for patients in the hands of select licensed producers (LPs); Lift was a resource to help users decide which producers and strains to choose.
The company gained steam in 2015, following Prime Minister Justin Trudeau’s successful election campaign, which was won in part on the promise to legalize recreational cannabis. The forthcoming laws presented huge opportunities for companies like Lift that had secured a foothold in the space during the industry’s infancy.
Right away there was enormous demand for information from LPs, investors, lawyers and all manner of entrepreneurs looking to spin lucrative businesses out of legalization. Lift, which had expanded to include industry news, was a go-to portal.
A rewards program launched in 2015 helped spur the company’s growth. Medical cannabis users could review products and LPs on the platform and, in exchange, receive discounts off their prescriptions. Legalization put an end to the program—offering discounted cannabis was outlawed—but Lift still incentivizes reviews with rewards like gift cards for Amazon, Cineplex and Indigo. By the time it went public on Sept. 17, 2018, Lift’s platform had accumulated more than 75,000 strain reviews, according to a press release.
“It was one of the best companies in the industry because what they offered was different,” says one employee who joined the company’s content team in 2016. “Lift was ahead of newspapers a lot of the time and it was drawing on issues that really needed a light shining on them.”
One of Sookochoff’s early visions for Lift was to run trade conferences—a more lucrative way to share information than selling ads against posts on the company’s website. Lift began hosting speaker series in 2015 in Vancouver and Toronto. It was at one of these events where Sookochoff met Olaru.
Olaru had just graduated from Western University’s law school. He had little professional experience, but he was smart and confident. Plus, Sookochoff needed funding. Up until then, he had been financing Lift himself, with help from friends and family, according to a source familiar with the company’s beginnings—when Olaru offered to help him raise money, Sookochoff brought him on board.
Olaru took the lead on planning the company’s first two Lift Expos in 2016. The Toronto and Vancouver events, held four months apart, attracted 10,000 and 7,500 attendees, respectively, according to Lift’s website, making them the biggest cannabis conferences in Canada’s history and signalling a promising business in cannabis events.
Still, when Olaru was promoted to CEO less than a year later, some at Lift were surprised. “It seemed a bit out of left field,” says one former employee who had been at the company longer than Olaru. “There were a few of us who had been there a while and we were pretty intimate with the company and the brand.”
For the first couple years, Lift operated on a tight budget, and the company hovered below 10 employees. Olaru launched a hiring spree shortly after becoming chief executive, bringing in 17 new employees in his first six months at the helm, according to data on LinkedIn. Within a year, Olaru had hired about 30 employees. The company now has a team of over 60. But turnover has been high: LinkedIn shows that 43 employees have left since it launched five years ago.
For a while, Lift couldn’t pay some employees competitive salaries, according to several former employees, so Olaru offered some of them equity and promised generous pay increases for meeting certain targets. Two former employees who spoke to The Logic say they took jobs at Lift over other offers that paid more. “Matei insisted on what I would say was a far lower compensation package than I think was fair, but promised that if certain milestones were met, there’d be the opportunity to make much more money,” says one of them. “I believed him.”
Olaru did not respond to questions about whether he promised employees equity, bonuses or pay raises upon meeting targets and, if so, whether those promises were kept.
Many former Lift staff interviewed for this article say they joined the company for what they considered an exciting opportunity to work in a new, promising industry. “I wanted to do something that would satisfy the immediate need for income, get me into the cannabis space, do some interesting work and potentially open up some doors for the future,” one worker says. “Everyone was really excited about cannabis to see what the next year or two [was] going to bring for legalization,” says another. “I figured I’d join.”
Several people interviewed for the article say it didn’t take them long to realize that Lift’s culture was problematic and its business strategy lacked direction.
Former employees who had experience at previous startups say it was common elsewhere to work long hours and to wear multiple hats. But most of them say Lift was different; more stressful and disorderly. It was common to see people crying at work, exhausted by the workload and seeming aimlessness of the business. “The cannabis industry universally is a very fast-paced, stressful environment. There are some places that are better than others; certainly Lift is high-stress,” says one employee who has left the company since speaking with The Logic. “It was a bumpy ride.”
“One week we’d be a media company; the next we would be an events company; the next week, we were a reviews company and a data company,” says one source who worked at the company for a year prior to it going public. “We were kind of expected to just adjust. Which, to be fair, is somewhat just how the cannabis industry goes,” she said, “but Lift was pretty unclear about what it was doing.”
Internal communications reviewed by The Logic detail instances where an employee claims she was bullied and harassed over Slack, the messaging system the company uses, both in one-on-one messages and in group exchanges.
That employee said she was forced into mediation with the colleague. “Matei basically told me he was indispensable and it was me or him,” she says of the alleged harasser. “And that although his behaviour was unacceptable, the company couldn’t do without him.”
Ex-employees who spoke to the The Logic reported doing work they weren’t qualified, or hired, to do. A project manager, for instance, says she was put in charge of accounting. “That was a pretty big issue, just because I had no accounting experience,” says the former employee.
A number of women at the company say they were paid less than male colleagues who were junior to them. “A lot of the people that started [the company] started to feel that they weren’t valued—and they weren’t, if we’re talking monetary value,” says the ex-employee. “When somebody absolutely new to the industry whose … work that they handed in was a quarter of the value that we’d be used to, and yet, being paid double, triple what people who started the company were being paid, that starts to leave a sour taste in people’s mouths.”
The Logic was not able to independently verify if there was pay inequity at the company, based on gender. Olaru declined to respond to claims that there were unjustified pay disparities between men and women at Lift.
While the company has hired several women at the vice-president level and higher since Olaru became CEO, none of them have lasted longer than eight months. “I don’t know if that’s a Matei thing or a cultural thing,” says one source who worked at the company in the last year. “It is very bro-y,” they said. “Dudes talk to dudes in a different way than they speak to women in the office … There’s an aura of chest-bumping everywhere.”
Most recently, the company lost Lise Dellazizzo, vice-president of data strategy, hired in December 2018 to help Lift diversify its revenue by commercializing its data.
In an internal employee survey from late 2017 obtained by The Logic, most employees reported being proud of their work and their efforts at Lift. However, many lacked confidence in the company’s leadership. Sixty-five per cent of employees responded negatively to the statement “Senior leadership is open and honest,” and 60 per cent said the company’s leaders were not approachable. Only 45 per cent of employees agreed with the statement “I believe in the vision and direction of the company.”
In the run-up to going public in September 2018, Lift had trouble securing financing. GMP Securities, the investment dealer tasked with taking the company public, formed a bank syndicate to increase its chances of finding interested investors, to no avail, according to a source close to the company’s fundraising efforts. And, LodeRock, the investor relations firm hired to advise Lift as a public company, terminated its contract with Lift the week before it listed on the TSX Venture Exchange, according to the source. In a press release issued at the time, Lift said the termination was mutual. LodeRock and GMP did not reply to The Logic’s multiple requests for an interview over the course of several months.
Lift ended up cutting its number of common shares by more than half four days before going public, according to its financial reports, a move that increases stock price. The following day, its chief marketing officer, Kerri-Lynn McAllister, submitted her resignation letter and never returned to the office, leaving stock options and equity on the table. The company did not issue a public statement to investors about the executive’s departure until September 19, two days after going public.
The day after listing on the TSXV, Lift’s market cap peaked at $66.5 million. It has since fallen to roughly $26 million, as of publication time. The company’s most recent financial disclosure, meanwhile, published shortly after it listed, shows that Lift’s revenues jumped from $212,581 in the last quarter of 2017 to $835,050 during the same quarter in the next year. However, the company was also burning more than a quarter of a million dollars a month, netting losses of more than $4 million for the nine months ended December 2018. And, while Lift bills itself as a technology and media company, its revenues in those verticals make up less than 10 per cent of its business—as such, it only reports revenues from its events business, which the company has yet to turn a profit on.
“There is a collective feeling that we are operating inefficiently, without clear processes, and in a reactive, hectic environment,” reads an internal report from Lift dated Jan. 9, 2018. “While we recognize that there are competing priorities, limited bandwidth, and shifting strategic elements, we must transition to a more proactive state.”
Lift’s marquee cannabis conference is a snapshot of the industry. At the Vancouver Convention Centre in January, hundreds of vendors gathered to display cannabis-related everything, from industrial production equipment—drying machines the size of whole apartments, laboratory-style extraction equipment, crop harvesters, fertilizers and security systems—to bongs, ready-made rolling kits and on-site silk screen printing.
Tens of thousands of attendees milled around the booths collecting swag bags and business cards. The crowd was a mix of corporate stakeholders—those hoping to make big money off legal weed—and the cannabis activists who spurred regulatory change and, in some cases, have been in the business well before legalization.
Up until now, there’s been plenty of room for young companies to cash in on cannabis. According to a recent report from Viridian Capital Advisors, which monitors the cannabis space, US$13.8 billion was raised in the global industry through mergers and acquisitions and other investment deals in 2018. That’s up from US$3.5 billion from the year before. M&As more than doubled year-over-year, from 153 to over 300 deals.
Some analysts in the space now caution that the flurry of activity won’t continue—at least not for everyone.
In February, Namaste Technologies, a cannabis tech company, ousted its CEO Sean Dollinger after an internal investigation found he had enriched himself through the sale of Namaste assets to entities in which he had a personal interest. In January, both the CEO and the co-founder of Aphria, an Ontario-based LP valued at $3 billion, resigned following allegations by short-sellers that the company paid inflated prices for firms it bought in Argentina, Colombia and Jamaica, all of which were linked to a network of company insiders. An independent review of the matter found the company paid a high, but still fair, price for the assets. It also found some company directors had conflicting interests they didn’t fully disclose to the board.
An October 2018 report by the Canadian Securities Administrators, the umbrella organization for regulators of capital markets in every province and territory, found widespread problems with cannabis companies’ financial disclosures. And, a 2018 report from accounting firm PwC predicted more bankruptcies in the cannabis industry. “Only by establishing a seamless, efficient and agile operating model will companies free up the cash and resources necessary to stay ahead of rivals,” the report reads. “The players who are flush with cash, have a clear strategic plan and the supporting business infrastructure to deliver, will be those able to capitalize on opportunities in a consolidating marketplace. Otherwise, companies will likely be consolidated or enter bankruptcy.”
“People thought that you could start making money right away, out of the gate, after legalization. And I can tell you, because of my experience in the industry, they’re not,” said Jennifer Lee, a partner at Deloitte focused on consumer advisory and analytics in cannabis, during a panel discussion at the Lift Expo in January. “I believe a lot of companies were just trying to get to legalization and then they realized, ‘This is actually a business and we have to have an actionable strategy.’”
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Some early employees who spoke to The Logic noted that Lift could well be doing better than when they were there, which in some cases was more than a year ago. The company has doubled its workforce in the last year, and has moved into a new office in Toronto’s Entertainment District, a brightly-appointed space sprawled over three floors in the former Church of Scientology offices.
The company landed a deal in partnership with MADD to exclusively train cannabis retail workers of government stores in Ontario, Nova Scotia and P.E.I. And, in September, Lift will launch its first international cannabis business conference in Berlin.
One employee at Lift, meanwhile, noted that the company has benefitted from hiring more experienced staff in certain areas, like marketing and data analytics. It next reports earnings in July.
But there are signs that Lift—now well past its infancy—hasn’t yet found its footing. In March, Craig Hudson, the former CFO widely respected among employees as an experienced and level-headed professional, left the company. Neither he nor Olaru respond to questions about whether Hudson was fired or if he resigned. Scott Campbell—the company’s former communications director who previously spent 10 years leading communications at Bell Media for HBO Canada and Showtime—left in April, similarly on terms Lift would not confirm. And, the same day Lift announced Hudson’s departure, Sookochoff, the company’s founder, sold off less than one per cent of his stake in Lift: 117,000 shares, worth a total of $65,520. When The Logic requested an interview with Sookochoff—who left his chairman position on Lift’s board in August 2018—Sara McMillen, the new communications director, said he was on personal leave from the company due to an illness in his family.
“Definitely there are times where there is no structure; definitely there are times where it’s chaos,” says one employee. “But it is a startup in the cannabis space, which is what you sign up for, I think.”