David Segal, the founder of DAVIDsTEA, shares his fascinating journey in entrepreneurship. He talks about collaborating with his cousin to revolutionize the tea market and the challenges of going public, including navigating management issues. David is now revitalizing tea, aiming to make it cool and appealing to a younger audience. He emphasizes the potential for tea as a coffee alternative and discusses strategies for direct-to-consumer sales. He also explores decommoditizing everyday products and the creativity required in today’s retail landscape.
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insights INSIGHT
Tea Market Opportunity
In 2007, the tea market lacked a fun, mainstream presence, with options limited to commodity grocery store brands or niche tea shops.
DAVIDsTEA aimed to make tea younger and more accessible.
question_answer ANECDOTE
Founding DAVIDsTEA
David Segal co-founded DAVIDsTEA with his cousin, Herschel Segal, who was 50 years his senior.
Herschel had a successful fashion background, while David had entrepreneurial experience.
question_answer ANECDOTE
First Million and Exit
David Segal made his first million through a private equity deal with Highland Capital, involving Tom Stemberg, Staples founder.
Management and board disagreements, including family involvement, led to his eventual exit.
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Sam Parr (@TheSamParr), Shaan Puri (@ShaanVP) and David Segal (@_davidsegal) discuss: David’s background - At 26, David teams up with his 70-something-year-old cousin, Herschel Segal, to start DAVIDsTEA. - Herschel had made his fortune in Canada’s fashion industry. Previously Davis was helping his Herschel make small investments. Together they saw an opportunity to grow a tea brand, where David led and Herschel invested - He made his first million when a Boston PE firm (Highland Capital) made an investment in DAVIDsTEA. - When the company went public it was doing $30m in EBITDA. He didn't want to sell shares at the time, but needed to in order to make the IPO big enough. He eventually left the business and sold his shares because of management issues. He sold at an average of $14 a share. - Today he runs a few businesses. One of which is a restaurant where he is trying to mix the best of ghost kitchens with a sitdown restaurant - David is currently trying to get back in the tea game. He sees an opportunity to make tea good, and cool again. Tea penetration is tiny in NA, so there is a lot of room to grow. - With his new brand he wants to do DTC business by keeping tea simple, but widening its appeal. - Previous to DAVIDsTEA, he ran a software business. It was essentially an abandoned cart business but for real life. Brainstorm - Idea: good video for online meetings is like what a nice Italian suit was in the 80s. It shows professionalism and class. Sam mentions he is willing to pay thousands to have someone create a turnkey video conference setup for him. He thinks this could be a great business opportunity. - Made Renovation (https://www.maderenovation.com/ founded by Roger Dickey) offers turnkey bathrooms. The idea is clients can select from a limited amount of pre-selected styles. Shaan suggests applying this same idea to video conferencing setups. - Idea: Uber for contractors. David suggests it’s hard finding reliable contractors, and there may be space for a company that can help organize the market better. - Modsy: For $500 per room, Modsy provides an on-demand interior designer. They will create a layout and make suggestions for furniture to use. - The guys discuss several “experts on-demand” companies. Companies like Intro.co, GLGinsights.com, Clarity.fm & Officehours.com all do similar things in different ways: connect users with experts on a variety of topics. - Idea: Decommoditizing everyday stuff. By taking an everyday item and adding a unique element to it, you can charge more and differentiate an otherwise commodity. David brings up Duraflame. Duraflame is a fast lighting fire log. The company does 9 figures in revenue but hasn’t been innovated upon in years. Homesick Candles successfully innovated on candles by adding regional scents and creating a differentiated product. Eric Ryan built his career doing this with Method, Olly, and Welly. - Idea: Firelogs with scents. Decommoditizing a boring product like fire logs with a viral and catchy twist. - Idea: “...For dummies 2.0”. The “...For Dummies” were a popular series of books educating anyone on any topic. Both David and Shaan are bullish on doing the same for complex modern topics like blockchain or NFT. But doing so through viral videos. - Idea: Using stores as showrooms. David nearly started a company just like this. It’s a massive opportunity for whoever can figure out how to make use of retail space in a way that makes sense in the ecom age. A company doing this is b8ta. - Smart Center: David mentions Smart Center and other REITS have been big winners during the pandemic, by converting abandoned retail space into apartments, senior living etc. - WGSN (https://www.wgsn.com/en/): A subscription service that helps businesses understand the biggest trends in just about every sector.
My First Million 