David Segal: Building David's Tea

KEYPOINTS

• 01

  Entrepreneurship is a personal journey disguised as a business pursuit.

  David Segal, founder of DAVIDsTEA, says most of the job is managing your own psychology. On his interview show Big Shot, he talks with entrepreneurs over 70 who tell their 50–60-year careers as montages, where two minutes covers five to ten years. Living through those stretches feels much longer. His rule now is no action bias on a bad day, week or month. He makes major evaluations only when he's in a good place mentally, and only over long periods — roughly once a year.

• 02

  Measure progress annually; bring urgency only to small, reversible things.

  For each decision he asks two questions: can I recover easily if I'm wrong, and what's the risk of waiting for more information? Big moves, like changing product direction or overhauling marketing, usually call for waiting. Pushing a supplier to ship faster when you're out of stock calls for pounding the table. The yearly test is simple: did the business grow this year versus last? Sometimes the honest answer is no. Early in his career that answer meant waving the white flag.

• 03

  Business happens at the transactional level.

  Ask people why an airline is the worst and they won't name its CEO. They'll describe the agent at the counter. At 16, Segal sold running shoes at Athletes World on commission, earning about $12 an hour when minimum wage was around $5. No customer left without him talking to them, and he outsold everyone. A mentor's 'will versus skill' frame stuck with him: you can teach skill more easily than will.

• 04

  A militia becomes an army, and needs process without 'that's our policy.'

  With five stores, you say 'turn left' and everyone turns. At scale, the same order turns into broken telephone. What you stand for should never change; how you do things should never stop changing. Processes should carry information to and from the front line. They shouldn't turn staff into robots: hearing 'I'm sorry, that's our policy' is often the beginning of the end. His version of staying in the weeds is 'trust but verify,' without ivory-tower decrees.

• 05

  'Interesting' is a great word in a classroom and a terrible word in business.

  After McGill, Segal built Fitting Room Central. It measured fitting-room conversion so buyers could tell whether an item failed on look or on fit — essentially today's traffic-and-conversion analytics, back in 2005. He landed meetings through handwritten letters to Les Wexner and got a pilot at Macy's on 34th and 7th. But it was a nice-to-have with a complex sale across marketing, IT and finance. After three years, with no income and living in a basement apartment, he quit. He calls DAVIDsTEA 'an eight-year overnight success.'

• 06

  DAVIDsTEA took a commodity and un-commoditised it.

  Working for his father's cousin, the founder of Le Château, and reading a Buffett book, Segal walked into a Montreal tea house and saw a business with no sizes or colours. Tea doesn't spoil like a sandwich, margins are good, it fits small spaces and nobody was making it fun. It was youth plus experience: without his cousin he'd have 10–15 stores; without Segal, the cousin would have zero. Four stores in, the summer he married, it nearly didn't survive. By 2016 it had 200 stores, about $200 million in sales and about $30 million in EBITDA. Customers smelled, tasted and talked tea in the store.

• 07

  Selling triggered the deepest depression of his life.

  At 35 he had financial independence and no plan for the day after. He'd been on the road six days a week, amid fighting among the original partners and the private equity group. He felt guilty: what right did he have to be depressed? Looking back, he'd get a nice office, because he went from 100+ people rushing up to him to nowhere to go. He'd also talk to people who had sold companies, and he wouldn't set an ego-driven timeline to avoid being a one-hit wonder.

• 08

  There's no shortcut for the work — in depression or business.

  His advice is habits you do when you don't want to: the run, the 20-minute breathing session, the eating. They matter most on six hours of sleep, not ten. He recalls a camp survivor's point that those who lasted had hope but not expectations about when it would end. Be compassionate with yourself: start meditating at three to five minutes, and when your mind wanders, simply come back.