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 what's the difference between a good idea and a good business idea? What are the things that set those two things apart?
DS: For me, I like businesses where I don't have to over-sell it. I like businesses where - this software business [Fitting Room Central]what I think held us back fundamentally was, it's a great idea but it's not a mission-critical product: I don't need it to run my business.
Top people in major businesses are extremely busy and they just don't have time, and unless it's something that can have a major impact on their business that's very evident, then - I meet people who are, like, "It's very interesting, I'd be very interested" but it would stay still for months and years. If you are selling to an entire committee of people, it's a major undertaking, it's a high cost and involves a lot of people, resources and time, then it's too complicated.
I like simple businesses where, like with tea, you like the tea, you want the tea, you buy the tea. You don't have to ask 10 people, and if you don't buy the tea there are a hundred-plus people that are walking through the door that same day that I have another chance with. So, I prefer businesses with a wider customer base, with a simple product that I can understand and that I can quickly make someone else understand and that people want right out of the gate.
That it is not a question of me having to do a very good sales job. I think that was the problem; I was a good salesman so I was able to walk into a board meeting with 10 executives at a table and really get them interested, but then the six months that followed were just a lot of, "Yeah, yeah, we are thinking about it…this proposal..." I sent out a lot of proposals but it just didn't happen.
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." I had a partner and I didn't want to let him down so, in hindsight, I probably let it go on a year longer than I should have but c'est la vie.
Yes, there was a moment and then I needed a job, and there I was with a failed business, decent marks but certainly not on the honour role, and so where is my next move? Where am I going to go? So I went back to the person I knew who encouraged me the whole way which was my cousin, Herschel Segal [the founder of Le Chateau] and I said, "Hey, do you have a job for me?"
My timing was perfect, he is the founder Le Chateau, and he was taking a step back from the business and he was going to make investments in some small to medium-sized businesses, and he said, "Look, why don't you come on board and you'll investigate businesses for me. You have been through this experience now, and you have a sense of what might take off and what might not - certainly what might not," and I said, sure. So I took a day job, I went to work 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: This has been Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail.