How David Segal Went From Zero To 500 Employees In Three Years

In 2008 David Segal was just a twentysomething aspiring entrepreneur who loved to drink tea. Segal would visit tea and coffee shops and wonder why tea always had to be snobby and boring, which led him to believe he could do better, and resulted in a business idea. “I felt there was a void in which we could deliver a fun, fashionable and accessible tea experience on the main streets and in high traffic malls,” Segal says. This void led him to start DavidsTea, now a national retail chain and e-commerce company with over 40 stores.

He might be a successful entrepreneur now, but the path to get here wasn’t always smooth. “I’ve always wanted to be an entrepreneur since I was very little and have had a few unsuccessful attempts before DAVIDsTEA which I learned from,” he says. His failed ventures included a software business, which he says taught him the difference between a good idea and good business.

Segal started the company in Montreal, and opened his first retail location in Toronto’s Queen Street West neighbourhood in 2008. Though he had no retail experience, he could draw on family experience to help him out. Segal’s cousin is Herschel Segal, founder of clothing chain Le Château. In the early days the challenge was just turning idea into reality. “Taking the plunge and really deciding to go for it,” he says. He also says the prospect of success isn’t always on an entrepreneur’s radar. “Entrepreneurs have a habit of not preparing for success.”

The company has over 40 locations across Canada, and offers a selection of 125 teas, both in store and online. Segal says both the in-store and online aspects of the business are important to the bottom line and the customer experience. “In either case, top quality product and the customer experience are the two most important things. We are constantly trying to improve.” He also employs 500 people, a far cry from the early days with one retail location. He says his employees are the company milestone he’s most proud of to date.

Another David, David Bellisario, started competitor Teaopia in 2003, another large-scale tea chain in Canada. But Segal says their approaches set them apart. He recently said in an interview that he likens his approach to the Apple or the Lululemon of the tea business, with minimalist design. And they’re both targeting different areas – Teaopia tends to open locations in shopping centres, while Segal prefers the stand-alone store.

Segal plans to open another 30 locations by the end of 2011 to bring the total to 75 retail stores. He says that while they’re starting to expand their efforts in online marketing, it hasn’t been a focus for the team yet. “We find word of mouth most effective. Naturally we explore all the social media options as well.” And for any other twentysomething entrepreneurs who are where he was three years ago, an entrepreneur with a failed business and an idea, Segal says it’s all about keeping an open mind. “Don’t marry your ideas – you’ll have many of them,” he says. “Keep an open mind and make sure you associate with good people.” As for what’s next, Segal is focusing on improving their methods and opening stores. Oh, and drinking a few cups of tea along the way.