Work

Keegan Peterson spent seven years in HR and payroll for big-box retail companies. In 2015, a friend who owned a cannabis dispensary approached him with a problem: he'd been dropped by seven different payroll and HR vendors. The friend offered to bring Keegan customers if he could figure out how to serve the cannabis industry legally. This became the genesis of Work.

The opportunity was massive. Traditional payroll giants like Gusto, ADP, and Intuit couldn't touch cannabis businesses because they're backed by major national banks that won't handle cannabis cash due to federal illegality. Cannabis businesses were forced into the dark ages: paying employees in cash, calculating taxes with Excel, and literally putting money in duffel bags to drive to the IRS. Keegan saw a multi-billion dollar industry (150,000 plant-touching employees + nearly 300,000 in ancillary services across 44 legal cannabis states) with zero compliant payroll infrastructure.

Keegan self-financed the company for almost a year before raising institutional capital. The business model was straightforward but powerful: charge cannabis businesses a monthly subscription based on number of employees, number of states they operate in, and number of locations. Pricing ranged from $10–$30 per employee per month, with an average ARPU around $20.

The company positioned itself as the only national-reaching payroll and HR technology for cannabis. Unlike Intuit (which Keegan called "advanced Excel"), Work took on the liability and responsibility of ensuring taxes were calculated and paid correctly across all 17 legal cannabis states where they operated.

The first customers came through the friend's referral network and direct sales outreach. Keegan built a sales team of five full-time reps, plus a CRO, all compensated with salary + commission. By early 2017 (two years after launch), Work had acquired over 200 companies serving "well over a thousand actual employees" across those 17 states—likely between 1,000–10,000 employee seats total.

Churn was remarkably low: only two customers in two years, both due to business closure. This reflected the stickiness of compliance-critical software and the lack of alternative solutions.

What worked was solving a real, painful problem in an underserved market. Cannabis business owners were desperate for a compliant solution and had no alternatives. Low churn (less than 1% monthly) proved strong product-market fit.

What Keegan was still figuring out: unit economics and customer acquisition cost (CAC). With 18 people on the team and 5 dedicated sales reps, the company was still optimizing its go-to-market. Revenue was growing (more than $40,000/month by interview date) but Keegan acknowledged they needed to "really apply the pressure" on understanding CAC and scaling efficiently.

Work had raised $3M from traditional VCs—remarkable given cannabis's fraught relationship with institutional capital. Keegan attributed this to Work's familiar SaaS business model, which made conservative investors comfortable enough to dip into the cannabis space. The company operated three offices (Denver, Indianapolis, Portland) with plans to expand into California.

With 44 legal cannabis states on the horizon and only Work providing national payroll compliance, the market opportunity was only beginning. Keegan, then 30 years old, had built a mission-driven, purpose-driven compliance business that was serving one of the fastest-growing industries in America—all because a friend needed payroll help.