Karl Moore: This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail. Today I am delighted to speak to David Segal, who is a 2004 BCom graduate from McGill and the CEO of David's Tea.
Good Morning, David.
David Segal: Good morning!
KM: So you're sitting in your basement, you are in your pajamas, your girlfriend is giving you a hard time - was there a moment when you went, "That's it, it's over! I'm walking out of here!"
DS: Yeah, and that's hard to do because I don't want to give up, I mean nobody wants to be a quitter, so it's a fine balance between taking a hard look in the mirror and saying, "This isn't working" and that's when I saw tea. I saw tea right away, I loved the business of tea and I loved the economics of it.
KM: Well, what do you mean "you saw tea"?
DS: Well, there is a tea shop on Emery just off St. Denis, it's a great tea shop, it's called Maison de Thé Camellia Sinensis. It's a very traditional tea shop and I think there are three partners and they travel, each to a different region, and bring back the highest quality Japanese Senchas and black teas. You have to hit a gong and be very quiet, so it's very traditional.
So I went in there, it's across the street from this movie theatre and the International Film Fest has movies there, and my wife had some tickets that she had got through her work and we were early. So we went across the street, we were having a cup of tea, and it brought back memories for me – I had a good friend's mother start up a tea shop up in Ottawa 10 years ago, a very nice traditional British tea shop, and it just suddenly hit me that here is a product.
I had been around clothing my whole life and in clothing you have size, colour: it's a much more complicated business as you have thousands of what we call skews in retail, there are markdowns and heavy seasonality, it's highly competitive and there is big square footage. Anyways, all the economics of it, and here is tea: nobody is doing it on the main streets; nobody's doing it in a fun, fresh, North American way. There is no size, there is limited colour (you do have a bit of colour and size in the accessories) but small square footage, and it jumped out at me right away.
KM: Did the idea come fully born in a sense?
DS: Yeah, but no, I knew it had to be a very customer service-focused business and I think that was a mistake a lot of my predecessors in the business were making. We are certainly not the first tea shop on the scene – there have been plenty before us. I think what made it different, though, is we broke down the intimidation factor. Tea had a bit of a stereotype for being a bit stodgy, a bit off the beaten track, either highly British or Asian and you felt like, "Loose leaf tea, well if I don't know it, I can't go in there."
I think what we did very successfully that really launched us was that we broke that intimidation factor down with some old-fashioned customer service. We created a warm and friendly environment that you could come into. I always tell my staff that the first question you should ask is, "Do you drink your tea loose or in teabags" and when they answer "in teabags," which a lot of people do, then it gives you a chance to be excited about it and say, "Oh, well I've got to show you how easy loose leaf tea is" and right away you are off to the races. You are almost literally taking the customer by the hand and taking them through the journey of loose leaf tea and they walk out of there and they felt like they have travelled around the world without even leaving Montreal Eaton Centre. So that is one of the nice things about tea and I think that when you add service to the equation it can be a lot of fun.
KM: This has been Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail.