My First Million - #156 - David Segal Talks Building a 9-Figure Tea Business, Decommoditizing Boring Products & The Future of Retail

Episode Date: February 26, 2021

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.  See

Uh-huh. All right. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On a road, let's travel, never looking back. Oh, yeah. Feel like cool.

All right. So we got a special guest. Got referred in through Harley from Shopify, David Seagall. Seagall or Seagall? How do you say? Seagal. But Seagal sounds a lot cooler, so.

Yeah, I was going to say, related to one and only. Actually, the guy who started the company with you Is that a relative of yours? He also has the same last name. Yeah, he's a distant cousin of mine. He's 50 years of my senior. That's the great starting pitch.

It's like me and my 90-year-old cousin, I're going to start a tea company. Yeah, totally. So give people like, I don't know, explain what is David's T's for somebody who's never heard of it before has never been inside one. Sure. So when you think about tea,

so we started it in 2007. And if you go back to that time, you either bought it in a grocery store where it was a commodity, right? picked what you wanted based on the picture on the box and the price point. And you had the usual suspects, Earl Grey, Camamile, Mint. And then you had 10 brands of Earl Grey and 10 brands of mint, et cetera. Or you somehow found a tea shop that was either very Asian or very British and quiet. You felt like you had to whisper. And even just to walk in the store, you felt like you had to

know something about tea. We had the idea because nobody was really doing tea in a fun way on the main streets of the country. And tea had this stodgy vibe to it. And really, there was an opportunity to make it a lot younger. And when you think about tea, it's actually a specific plant. It's the Camelius Sienesis plant, but how you process it makes it different. But in North America, we call any herb, spice, fruit that you put in hot or cold water that's not coffee. We call it tea. Right. Yeah. So I had the idea. I turned to my now 90-year-old cousin and said we should. Oh, so you're not joking. No. I thought the 90-year-old thing was a, with a, your Like hyperbole.

Yeah, no, I mean, he's 90 now. He wasn't 90 then, right? It was in his 70s then. I was a young entrepreneur. I had been a hustler, you know, most of my life. I had different businesses that didn't work, something that did to some degree. And then came across this idea. I was actually working for him at the time to help him make investments in small companies,

had this idea for T, turn to him. We looked at a few to invest in, realized the market was pretty wide open. He said, you do it. And I'll back you. And I was like, great. We got to work. You built a brand, grew it. Anyway, at its height, it was a billion-dollar market cap on the NASDAQ, 200 million sales.

I sold my steak in 2016. I moved on and I've been doing other things. I started a restaurant brand and invited two other restaurant brands and turned it into a virtual kitchen. And I'm looking to get back into tea, to be honest with you. I think there's still a huge opportunity in tea. But yeah. So your cousin who you started, he had done something cool before this, right? Like something like that?

No, clothing business. So he had a company called Le Chateau, which was in one time, very big. big in Canada and even had a go at the U.S. market as well. He started at 1959. He was selling in the 60s to like John Lennon and like, it was some pretty interesting characters. And what he did was he brought the Carnaby Street look in the 60s to Montreal. And it was really successful. And he stepped back from it in the mid-2000s and was looking to make these investments. And yeah, I mean, it was a great combination of, you know, at the time I was 26 years old and full of piss and vinegar. And I still am. I've never heard that phrase. What is that phrase?

me, just like... I guess piston vinegar is like an explosive combination. I don't know. It's a good question. I never actually thought about what it meant. It's just one of these things you hear and you're like, all right. Did this make you incredibly wealthy? Yeah, I did well.

I scored, yeah. Great. So what I was going to ask you, and I think you've just answered it, do you regret taking the company public? Because taking the company public seems pretty... Besides, all right, so you generated, you created a lot of wealth for yourself. That's awesome.

Besides that, which is like a huge besides. But besides that, do you regret it? I don't regret it, but I wouldn't do it again. I think I was in a very difficult situation at the time. We had done a deal. So my first million actually came when we did a deal with a private equity group. And the business got complicated. We did a deal with a group out of Boston, Highland Capital, this guy named Tom Stenberg,

who was the founder of Staples, actually. And my original partner, my cousin and Tom, it was a difficult combination. My original partner wanted to bring in various family members. I wanted to run a meritocracy professional outfit, and there was a bit too much. It just wasn't a good situation. And when your management team and your board are fighting with each other, you're not focused on creating value for your customers. And I just want to get out of there. There are too many bullets flying.

You could see there wasn't a lot of focus on the actual business. So for me, it was great. I was the third largest partner, third largest shareholder, but I didn't really have the power. The sort of piece was made in that they would go public for the private. equity group to be able to exit. And the CEO at the time would get fired and the family member that my cousin, his daughter that he wanted back in the business would come back in. And then I was able to leave at that time as well and say, you know what, this is a bad combination and I'm out of here. And so you, because I was wonder this, when you take a company public, you know, there's a lockup

period, just like a technical lockup period. I don't know how it works on, actually you're a NASDAQ. So there's like, what is it, six months or something like that? You can't sell? Six months, although on this IPO, we were, I mean, we were making like third. million dollars of EBITDA. We didn't really need the money. And so on the IPO, to make the IPO big enough, we were selling shares. I myself in Highland Capital sold shares. My original partner didn't want to sell any. And I was like, yeah, I'll sell. I mean, it was a great price. I ended up selling it at average price of 14 bucks a share. And, you know, the stock today trades at dead four. How do you decide how much you're going to sell? What's your psychology around

that? Like, you're like, all right, am I going to sell 100%, 60%, and then there's the optics of it. So like, how do you think about that part? I think in this situation, I love tea and I think there's a huge opportunity in tea and I want to get back into tea. When management is fighting with each other, you want to get out. I mean, at the end of the day, you want to get out. Like the future of the business does not look bright in those types of situations. So under normal circumstances, I wouldn't have sold at all. I mean, I think there's an opportunity to just continue to grow.

And you look at tea, I mean, it's one of the best hacks, productivity hacks that nobody knows about North America. It doesn't give you the jitters like coffee does. It doesn't give you the big spike in the cracks. It's a better high, man. It just is. And, you know, in Canada, I mean, it's less than 2% of Starbucks's sales. We don't drink it. And we have these, we're missing out, frankly. There's so many amazing flavors to it.

So I still think there's a massive opportunity. It's just it wasn't going to happen with David's tea. They took their eye off the ball and I didn't want to be part of a team that wasn't aligned. So what do you, I guess, what are you scheming on now? Well, I got this restaurant concept. We have three stores in Ottawa. which is where I live in three in Toronto. We're going to open more.

We added two brands to it during the pandemic. So we had this concept called Mad Radish. It's bowls and salads with big international flavors. We added a burrito brand, which is a healthier take on a burrito. And then we added a Neapolitan pizza company. So Louisa's burritos and bowls and revival pizza. And we're operating them out of one space with one app.

So we're trying to kind of combine the best elements of Ghost Kitchen with the best elements of a restaurant. So we're still building out restaurants with some seating, but we're dedicating more space to kitchen space and we're taking perhaps slightly less prominent real estate and being able to service one customer with different types of cuisine. So if you have three people,

one of you can get an amazing burrito, another one can get a salad, another one can get a pizza all in one order. So I'm still doing that, and I have an incredible operator there and an amazing marketing lead and just a great team all around. And then I'm also actually working with Harley

on a tea business. I think there's a massive opportunity to make tea cool. You know, David's team, made tea fun, but people don't understand how incredible this plant is and how many amazing ingredients there are. So we're going to do it without any flavorings. So all tea companies use lab flavoring. So they call it either natural or artificial flavoring. And they just basically develop a liquid flavoring that they splash on and it coats the tea or the ingredients. But you don't really need to do that. If you get really high quality, high oil content, ginger or cinnamon from

the best places in the world, you can make these amazing blends. Not to mention all these varieties, idols of tea that people just don't understand. I mean, what's the model this time? So last time it was brick and mortar stores, right? You opened up 100, 200 something locations and like Tivana, you would go in and you'd be able to buy teas there. And I don't know how well that worked. Tvana got acquired by Starbucks. How much did they get bought for? $600 million. 600 million. And I think they shut down their stores and now it's just sold out of Starbucks or something like that. Is that right? Yeah, Starbucks didn't do great on that acquisition. Starbucks does a history of so-so acquisitions. And why is that? Because that seems like what you're saying is, dude, tea is massively underrated

compared to America's heavy, heavy coffee. Tea gives you, you know, all of the spunk with none of the funk. This is the best. It's huge internationally. And then with Starbucks distribution, you would think, look, if tea was going to pick up in a bigger way, like Tijuana getting plugged into the Starbucks engine sounds like a good idea. Why is that a so, why was it so-so as an outcome?

I don't think the T was that good. And I think that matters. I think that there's a market for people, look, it's like wine. There's three types of customers here, if I was to summarize it. There's the customer that just wants to get drunk, wants the high, right, and doesn't care. They're picking it because it's cheap and because they like the picture on the bottle. Then there's the customer on the other end of the spectrum that is the connoisseur. They want to become a tea hobbyist.

They want to be able to tell you about the tariff. And then there's everybody else, which frankly wants a really good wine or tea in this case. They want quality. They can tell when they take. taste it, they're like, wow, that's good. But they don't need a PhD and tea. And I think that there's an opportunity to simplify this. There's an opportunity to curate it better. You don't need a hundred different blends. Like, we're going to have 20. And these are the 20, like, you know, look, I know my stuff. I've been doing this for a while. These are the 20 you want to drink.

We've tasted thousands for you. You don't need to think about that. And I just think there's a way to talk about it in a language that people can understand. You know, tea is not just when you're sick or for hippies or, you know, because you romanticize travel or, or, you know, because you're an old granny who eats cucumber sandwiches. I mean, it's a better drug than coffee. I mean, you know, you think about one of the big themes in the world today is like centralized versus decentralized. Like coffee is centralized.

It's centralized our culture in many ways. Like, no matter what you do with coffee, it still tastes like coffee. Whereas tea, you can get all these different flavors. There's no dominant brand in tea today. It's in many ways the decentralized product. And I just think there's an opportunity in direct-to-consumer. You know, would I do some pop-up shops, maybe? Would I do some really cool restaurant applications, like an espresso type store model, maybe down the road?

But we're going to start as a direct-to-consumer business and see if we can, you know, go after a coffee drinker's and say, listen, you're missing out. Try this out. Like coffee is like the PC and tea is like the Mac, and you should try this. So at your, it looks like the biggest year in revenue you guys did was close to 300 million. Is that right? Yeah. Yeah, we were getting up there. 285, 284.

And prior to this, you had a software company, right? Yeah, didn't work. Didn't work. I think it's a cool little funky concept. From what I read, you basically went to department stores and you said, I have software that will give you some data or analytics around what people are taking into the fitting room versus buying, right? They're getting to the try it out step, but they're not buying or they are buying.

It's like abandoned cart software in real life. Yeah, abandoned fitting room. Totally. Yeah. It kind of seems to be a good idea, to be honest with you. What happened? There's a big difference between a good idea and a good business. You know, I kept hearing the word interesting.

It's like, it's very academic. It's like, you know, yeah, sure. When you buy clothing, you do it in two steps. You evaluate the look on the rack. Then you evaluate the fit on your body. And then when the buyers go and analyze whether the item, you know, they test up and then order larger quantities. And when they go and analyze that, all they know is whether it's sold or not.

They have very little insight as to why. And so the idea was to give them more insight into the why. But it was ahead of its time in the sense that it was complicated. Like these are companies, you know, this is 2005, right? they barely had functioning point of sales system. So you go in and you're trying to give them information. They've got to do something with it. I kept getting them saying to me, like, interesting, interesting.

And I thought I was on to something. But, you know, the sales cycle keeps going. And all of a sudden, Sue from marketing wants to talk to Bob from IT, who wants to talk to Michael from purchasing. And like, we got nowhere. We got it into Macy's, though. Like, you know, in those days, I was writing handwritten letters to every CEO and every clothing company you can think of, like, you know,

getting Les Wexner, the founder of, of limited brands and Victoria's Secret to respond and stuff like that. But I get a lot of meetings, and we even got it piloted at Macy's on 34th and 7th. But I realized quickly that long complex sales cycle, a nice to have product, not a need to have product. And I moved on. But my question is this. So you're friends with Harley, you probably have invested in and have great insight into a lot of different style of businesses like software. And I just sold my company to a software company, and I'm getting exposed to it for the first time.

your company, its revenue, it's definitely a little bit bumpier versus a really good software company. It's like, it might be gross, slow, but it's kind of stable. But you're getting back into a, I don't know, what's the word? Consumer.

Right, right. You're doing e-commerce instead of software. It's kind of what's trying to say, why are you doing e-commerce when software exists? I'm a merchant, man. Like, I love the product. I like to put together great collections. I like to sell product.

And I'm not criticizing you, by the way. not shitting on you, you're way more successful than I am and you're badass. I'm just saying like a lot of my friends in this industry, they complain constantly about supply chain issues and about this and about that. And software has its own issues as well. But if you could do anything you want, I just want insight into why you chose this or why you're doing it again. I mean, the main reason why I'm doing, to your point, like, like, I don't need to do it. I mean, I could go play shuffleboard in Florida. But I love business and I love entrepreneurship. I love creating something from nothing. And I have a passion for tea. Like, I look, I'm drinking.

an amazing green tea right now right before this podcast. So I love the product first and foremost. It's also a great business. I mean, the margins are good. You're selling a product that does, that is a drug effectively. The biggest drug dealer in the world is actually Howard Shilts. It's a great business. There's no size, no color like there is on shoes or clothing. So the amount of items you're managing is much lower. You know, you can operate out of small spaces if you do decide to go into retail, although we are going to do this direct to consumer. I think there's space in the market, I think that this is a product that is not well understood by the North American customer and they're really missing out on something incredible here. I'm excited to bring it to

people. I think it's just a lot of fun. Like software businesses are great, but it's not what I love. I love it as a customer, but I don't want to go and create them. And I want to sell tea, man. I like tea. You love tea like Sam loves trucks. There you go. I talk about the trucking business all the time, but I want to ask you another question as well. So unless we post this video, you can't see, but your audio and visual setup is like really, really good. Is it a DSLR? Yeah. Yeah.

Yeah. Exactly. Yeah. Like an A6 or what's it called like an A7? It's an M something or other. It looks great. I tweeted out the other day. I go, someone, I'm studying myself,

my stuff up like this. I couldn't do it. Did you do it on your own? No, God, no. So I tweeted out, somebody come and let me pay you money and do. I can't find anyone. Like there's no great turnkey solution just to come and do this. for me. It's pretty amazing. There's a business right there, right? If you sold amazing suits

in the 80s or 90s, you've got all these business people buying your product. Nobody's buying suits right now, but I tell you, there's a lot of business people that want to buy a killer video and audio setups. They need ads. The ads will look great because it'll be someone in a room like yours with the camera quality of yours and all that. It'll be like, you know, it's the men's warehouse guy saying you're going to like the way you look. Yeah, bingo. Right? That's what I want. It should be the same tagline, but for a Zoom call, basically. Totally. Totally. And you can get, like, you know, the startup package, the pro.

Like, I mean, you'll have the $5,000 package, $3,000 package, $10,000. I think that's an incredible business. Have you seen... The person who set up your camera and Mike also set up, like, the aesthetics of the background? No, the background's me. That's his house, dude. Yeah, it's my house. Like, like, when I've been thinking about this, all right, I'm like, all right, we need the...

Because right now my walls are white, and that's, White is not good when you're doing this. You actually want, but I'm having to hire two different people, like a set designer's style person and then like a technologist. And I've been thinking about this a lot. I'm like, man, I would pay like two grand to have this done for me. That should be part of the package, right? So have you guys seen, we talked about this a long time ago.

Actually, when we first started the podcast, I go, hey, I saw this ad for this company. And I don't know, I've never heard anyone talk about it, but I think it's a dope idea. And it turned out there was like a super, legit entrepreneur Roger Dickey behind it. He started Gigster and some other things. And so it's called made renovation. And what they do is they all they do is bathroom renovations direct to consumer through Facebook ads basically. So what they do is the ad is just a before and after of a bathroom

or just the after, just a sick looking bathroom. And they know that like in the home renovation space, which is this probably a huge multi-billion trillion may make up your number space, Christians and bathrooms are like, I don't know, 75% of it. And so they just started with bathrooms and they basically have three turnkey bathroom styles. It's like you can have this kind of cool Victorian, this cool modern, and this like kind of simple classic. And they have three bathrooms. So all their parts and supplies, it's already like, there's no like planning step.

You just say, I want that one, that one or that one. And then they have all these installers who just know how to install this one fucking bathroom type. And they're like, cool, we're dispatching the guy he's going to go give you this bathroom. And it's a genius idea. I'm sure. I don't know what the price is, but it's, you know, in the thousands of dollars per customer Maybe 10,000, 15,000.

Because the worst part is the contractor, right? You don't want to find the contractor, deal with the contractor, like it's a whole shit show. And then the contractors today don't do any marketing, right? So you're going up against a player who's got both hands tied behind their back because they're literally not even out there selling. So I love taking, you know, world-class internet marketing, pairing it with a high-ticket, you know, high-value thing that everybody, you know,

sort of considers at some point in their homeownership and then going after. So I love this. And I think you could do that. idea for what we're talking about in the home office space. I think you could do made renovation for home office now because that's become top of mind for, you know, I don't know how many tens of millions of people. And I think you could do the same playbook for that. Totally. And it's even more, there's even more value add because you're dealing with with audio, video set up and it's not just brick and mortar, right? Exactly. Yeah. It's more of a technical

thing and less of like plumbing issue. You know what I'm doing is I sold this from a friend. and my friend Noah and Neville did it. They found a YouTuber in Austin, and they just said, hey, can I pay you like 50 bucks an hour and you spend eight hours and just make this really cool and just beforehand buy everything you need,

ship it to my house, and then just set it up and make the lighting and everything neat. It's pretty sick, and I've been trying to find people who can do that for me, and I don't know if someone's taking me for a ride, I don't know who to trust.

It's kind of an interesting idea. You know what I also think, just like the YouTuber thing? So let's say you didn't want to start a business in the crazy way, but you want to be a YouTuber. And you see guys like Mr. Beast build their channel on these like kind of stunts and like giveaways and surprises

and you know, just random acts of kindness and money throwing at people. So you could do the Pimp My Ride Playbook as a YouTube channel. You could be exhibit, you could go knock on someone's door and basically be like, dude, it's your room. Your room, we're tricking out. And you trick out their room to like, like I should be, you know, my chair should be an aquarium.

And there's fish floating underneath my butt while I sit here. Like that's what the aquarium. crazy level. And then I think people would watch these videos and you could build a huge, you know, tens of millions of subscriber channel and have all of the like kind of renovations paid for by, you know, maybe peripheral companies or whoever, like some sponsors just like Mr. Beast did where paid him 50 grand per video so that he would go give $50,000 away. And he's like, cool, you're paying for my growth. That's brilliant. Even on the contractor side, it's interesting, I mean, let's see you talk about contractors. Like there is no way,

there's no Uber reviews for contractors. Right. Like, how do you find contractors nowadays? You either know, it's all referral-based, right? It's all word-a-mouthed. You look around, there's been a lot of businesses that have been word-about businesses that have platforms have been created around to be able to facilitate finding a good one. Have you guys heard of Modzi? No, what's-no? Okay, it's M-O-D-S-Y, M-D-S-Y, and what it does is, let me pull it up so I can explain exactly. But I've spent two or three thousand dollars with them because I've done it for all my houses and apartments. So basically, the interesting part is the technology. And so you take pictures of your house. Every time I've done it, my home was empty. Yeah.

But I've done it a couple times with furniture in there already. But you take pictures of it and like a video and they patch it together to make like a 3D image of what your room looks like. and then you go through a quiz and tell them what furniture interests you and like what styles interest you. And then they have people who are mostly like design students. So like college people who are good enough but you know don't make a lot of money. And they have like a massive group of them on staff. And they send you like eight or 10 different designs of what your room could look like like. And then you say, I like this, I like this, I like this. I don't like this. I don't like this.

And then they fix it. And then they give your final one. And then they have a buy now button where you can just buy all the products that they've listed. And it's a virtual designer. It's sick. Yeah, it's pretty cool. It's like $500 a room. I've probably got... I've got eight rooms maybe done over the course of the last four or five years.

If I'm crate and barrel, I'm buying these guys now where they're small. Right. It's really fascinating. I've really enjoyed seeing this business kind of take off. It's super interesting, but they don't do like audiovisual stuff. I mean, but in many ways, this is a feature, not a business, right? Like I'm surprised they haven't already been scooped up. Yeah, it's, you pay $500 a room.

And then I think they make a lot of money off the affiliate fees, which is a pretty stupid business model because I don't buy any of the stuff they tell me to buy. I just go out and buy stuff that looks exactly like it. You know what I mean? Like, because a lot of stuff they pimped out is like brands I haven't heard of. And if they list a leather couch, I'm like, I've never heard of this brand. I'm going to go to restoration hardware and buy one just so that looks exactly like it. There's an idea that's along these same lines.

So I'll talk about it real quick. If you go to intro. The guy behind this is, you know, We're not super close friends, but he's a good guy. I've met him before. He had sold one company to Intuit, so he sold like a kind of a bookkeeping software to into it, made good money, moved to L.A., blah, blah, blah. And now he's starting this thing called Intro. And what intro is, is like, you know, like these business like Clarity FM or whatever

where it's like, Clarity started in the tech space and they were like, hey, you can pay $45 and you could talk to a head of growth at Airbnb to talk about growth. And it's like, dude, this is like this nerds feeding nerds. I don't know. It was just not like the coolest way to go about this idea of connecting people who want expertise with experts. And so at the premium end, you guys know about like GLG? Have you guys heard of GLG? Yeah.

No. You're going to get, you're going to like this. It's crazy. It's an insane business. Basically, GLG is an expert network that hedge funds and big financial players use. Yeah. So let's say I want to decide if I'm going to buy Tesla, right? What I'll do is I'll go to GLG and I'll say, I want to talk to every like world class battery

expert or AI expert to talk about is Tesla is what they're talking about for batteries and self-driving cars? Is this like a reality? How close are they? Are they better than what Waymo's doing and whatever? So you pay like thousands of dollars. I'm a I'm a geo expert Sean. So like I put on my profile. I know a lot about email marketing and I'll have like I've had Morgan Stanley call me and this I they can't tell you what they're doing. I have a feeling they were taught there it was about SendGrid's IPO. Yeah. And they wanted to say like do you use SanGrid and uh, I was like, it's okay. It's kind of complicated.

I prefer mailchimp. And I charge, I put, like, what I thought was a wild number, like $2,000 an hour. And I started getting bids. So I went on clarity. The issue I had with it, it's not curated. Like, how do you really know who's of hack and who's for real? Right. So that's what, so GLD does that a little bit better where they're like premium.

So, you know, like because they're charging thousands of dollars, they can afford to vet people and, like, use the reviews to, like, curate the marketplace a little bit. Although, to be fair, I don't know how much they really. do it, but in theory, because the ticket price so high, they can afford those additional services. And so hedge fund guys need it because they're trying to make big decisions. And then on the low end, nobody's really been able to do it. The guy who started mint.com, he tried to create something called Fountain, which was like, you need a repair or you want to redo your lawn or your bathroom, like call an expert contractor. It didn't really work. So there's been tried a bunch,

but I think this approach, the intro is doing is somewhat interesting because they chose a better market, I think. And they went for like, they got the stylist of like just, Beber and Kim Kardashian stylist and the person who did the Kardashians like home decor renovation or interior decoration or whatever you call it and so you can pay you know 50 bucks and you could do a video like a FaceTime call with Justin Bieber stylist and you can ask them about style stuff now I don't know so-and-so as trainer for your workout routine or exactly I can get the rocks to right yeah exactly the bragging rights if I talked to the rocks trainer for 30 minutes so now I too will look like that's right so I don't think this is going to work necessarily

I think it's a really hard business, but people keep trying this. And eventually somebody is going to crack it. Somebody's going to figure out how to get the dynamics right, pick the right vertical. Like one interesting thing about this business is the astrology vertical started taking off because people were just like, there's all these like celebrity kind of like astrologists on Instagram. And so they're like, they would just promote like, hey, you can book me and I'll do a reading for you.

And people are like, oh, yeah, I want you to do a radio, you know, astrology reading for me. And they're just making tons of money, thousands and thousands of dollars a month. because that vertical works. But you would think it would be the more mainstream large verticals, like working out, clothing, eating, diet, right? It ends up being astrology. I actually, no, I buy that. David, do they have Miss Cleo in Canada?

No. Okay, so there's this woman, I don't know if it went to the 2000, but it was in the 90s, and she was Jamaican. I don't even know if she actually was that, but she was this character that would play on infomercials, and she had a Jamaican sounding accent. And she's like, hey, darling, how are you? And she's like, let me read your poem.

Like, or 1-800. It was like terror cards or psychic reading. They had a phone bank in a warehouse full of these types of people. Who knows what their credentials were? I mean, nothing, right? It's psychic reading. Yeah. But they did.

In only a short amount of time, this company did a billion dollars in sales. Wow. So I think that the psychic thing. Yeah, man, people want predictability. But I mean, do you really want to be doing that? selling snake oil, right? No, but it's interesting. Yeah, I think in some ways it gives people this weird peace of mind. It's like religion, right? Like, if you feel like, you know, something about your fate is being told to you and you get either comfort that, you know, everything's going to be

all right or, you know, that it is what it is and it's, and I don't have to, like, stress about it anymore. I don't know. There's something that's deeply, like, there's something that just is deep in this that works for people. I obviously, I agree with you, you know, the person who's on the other end, who's just got a call center of, you know, Jamaicans who are fake Ms. Cleo's like, you know, there's a question of do you want to be that person? But there's no doubt that there's demand for this kind of thing, which is, which is wild. You could just reboot Ms. Clio today on Facebook, and Facebook is your new infomercial and probably do extremely well. What businesses are interesting to you right now, David, besides the things that you're

directly involved in. So, I mean, I think it's never been easier to uncommoditized niche products. So I give you, I'll give you an example. I was, it was, it was, Turks and Caicos with Harley, actually, and we were lighting fires on the beach, like we would get someone to set this up, like a bonfire, right? And they have this special wood in Turks that, for whatever reason, burns, lights up faster and burns longer than anything I've ever seen. And I'm Canadian. We light a lot of fires.

It's freaking cold up here. So we started having this idea, and we start talking about the experience around starting fires, right? And when you start a fire, I don't know if you guys start a lot of fires, but you... I do. Yeah, okay. So you tear up newspaper, you put it in the fireplace, or you buy these little pucks that you buy on the back out. It's like the back shelf of Walmart or the back shelf of Home Depot,

and you've got to light them and you're in like usually there's fire ash already there from the last fire you lit. The whole thing kind of sucks. You're down there. You're blowing on the fire. Ash is going everywhere. It's messy. It's not that great.

So our idea was to create a fire starter, not one of those logs that are full of wax and feel very chemical, like the dural logs or whatever, but more something that it helps you get a bed of coals. And it also ideally would have some scent that it gives off. So kind of merging the idea of candle with fire starter. And then, of course, you could go further, right? It leads to this idea, well, what about the, like I'm looking here in this room,

I'm actually a fireplace on my left here. What about like the shovel that you get and the little broom thing and the fire poker, right? Like, there's a lot of products on the back shelves of Walmart or Home Depot that have been bought half-hazardly by some mid-level buyer at the company at a trade show that are complete commodities that you could uncomoditized, create, put a little bit more thought into, create a better experience around and have these niche million dollar businesses. And I think, I think there's a lot of opportunity there. That's the first place I would start is I would literally go down to one of these big box stores and walk the aisles and be like, what product? Do these guys

clearly not care about but feel they have to have? There's where I would go direct to consumer and create something a little bit better. So Dura Flame, I'm looking it up now, crazy fascinating. I believe it was sold to Klorox, but it sells something like five or six hundred million dollars a year in these logs. There's been no innovation there since I was a kid. It's the exact same log. It was five years old. They were lighting dural logs. That's super fascinating. I do buy a lot of that stuff, but I only buy it in store. I don't ever own it, ordered online. But I think I would. I think I'd do it off of it. I mean, everything fucking online, right? Yeah, exactly. I mean, once upon a time, you bought everything in store. It's just a little bit more of an, like, I need it right now. But I would do it as well.

It's also giftable, right? It's a nice thing like you want to get a great example of your thesis there about differentiating a commodity product. The guy who spoke at HustleCon, Eric Ryan, is that his name, Sam? Yeah. He's basically built his career office. So his first thing was method soap. So he's like, oh, okay. He's like,

you could just, he goes, I walk down the aisle in a grocery store. He goes, anywhere I see a sea of sameness, like an ocean of the same thing. And he showed a picture of the soap aisle, and it's like 55 green bottles of liquid that are all shaped the same and all look exactly the same. And I'll look

exactly the same. He's like, cool, I'm going to make a new bottle shape. It's going to be a different color. I'm going to market this in a kind of risque way. You know, if you turn the back of these bottles, they all have these chemicals you can't pronounce. So I'm going to make it where it's chemical free cleaners. And method became like a big hit. And now he's doing the same thing with Well, which is band-aids. Go down an aisle in a first floor. Well, he already did it with vitamins for all Bali, and then he did band-aids. So wellie is probably the best example of the thing you're talking about. Band-aids are the most like commodity. Who cares? Literally the thing is meant. to blend into your skin color,

although nobody is the color of a Band-Aid, but like that's the idea is for it to be like totally a nothing product. And then he tried to put some personality into it and sell it in a kind of unique way. And boom, you have another winner. There's still so many of these niche areas that are outstanding where you can put more thought into it.

I mean, your competition is some buyer at a big box store who's going to the trade show and saying, okay, we need something in this category. We'll take that. and they're buying off the shell. Walmart's not designing fire starters or fire pokers or, right? Like it's not a big enough category for them. But you have enough of these.

I mean, like you just said, Durlaug does what, $500 million in sales. Man, I'm looking this up now and they don't have that many employees. What an interesting company. And you know, you guys want a piece of it? We'll do it together. Let's do it. No, what I would do, you know what I would do is I would actually copy, there's this guy named Ricky Van, what's his name, Ricky Van Neen.

He started college humor and Vimeon. and he sold that to IAC and then he worked at Facebook and he was married to Allison William so he's like this pretty cool dude and he started this thing called I forget what it was called Home Sick Candles

and they have a different candle flavor for every state so if you're from Washington maybe it would be like evergreen flavored and it's really interesting and I would do that but for fire logs and have like state flavored

or some yeah I would do something like that or different kinds of wood depending on what area you're living in. Yeah. Yeah. No, that's cool, man.

We should just open source this idea. So if a hustler from the pod, listeners, wants to go run with this idea, you could DM me or Sam, you're hustling credentials. Have you done anything before? Are you going to make this shit happen?

And then run with this idea and just carve out, you know, 10% for your boys. And then we're good. We will give you. Yeah, exactly.

We'll give you the initial capital and get going if you're legit. It's kind of interesting. That's a pretty cool idea. I'm going to explore that. You know, what I was thinking about

when I was doing a little bit of research, I did very little research, but just enough on David's T's to get, like, familiar with it. And I was just looking and it was like, I don't know, you know, there's always these metrics that I don't really fully believe, but directionally they're correct, which is like the T market is a $50 billion market, expected to grow into an $80 billion market. It doesn't matter what the number is. That's a big number of how much T is sold every year because when they say a number for these, that's the annual sales volume.

You know, the market for AI is X and it's just like a, you know, like a valuation-based thing. Right. These are real dollars being sold. real dollars that are trading hands. And we, on the last episode, we talked about NFTs, which are like these kind of like crypto trading things, right? I've been looking at like, how big is the trading card market? And, you know, for a lot of these things, it's like, oh, that's a $2 billion, $3 billion market. You have to know blockchain. You have to get into this market. It's super hard. And then you have tea. That's $50 billion and you have candles.

That's like probably $80 billion or something like that. Like these spaces that are, you know, just commodities that are already adopted and un-innovated. And I think that there's so much easier to win there than it is to try to go to the new cutting edge frontier. Yeah, I mean, you can win really big on the cutting edge frontier. So another one, two other ideas I really think are bigger ideas now. One is you're talking about NFTs and, of course, crypto and all that stuff. I think people don't realize, those people that are talking about and thinking about these big innovations that are happening now and these major disruption to our financial system,

to our legal system, a legal profession, there's going to be a lot of people that need education around that. They're going to have a really hard time grasping these things, these concepts, right? And I think there's a big opportunity to, I don't remember those books. Remember the four dummies books? Yeah, dummies, exactly. You know, I think there's a dummies 2.0 version that someone should really go after to try and explain some of these concepts that are hard to grasp. They're not easy.

So I'm actually doing this one. I just brought on a guy, a YouTube animator guy, and I'm doing the first one is Bitcoin for normal people. I'm going to try to create the thing that, like, a normal person who's heard about it, you might have even bought some or considered buying some. You've looked into it once or twice and come up very unsatisfactory solution

where everybody's so technical and so complicated. My dad called me. My dad called me the other day. And like my dad is 75. Like when we FaceTime, he picks up the phone and puts it to his ear and I have to remind him dad at his face time. Like, you know.

Right. And so, I mean, this is the least tech savvy person. He called me the other day. He's like, what's Bitcoin? You know, so you're going to have this huge audience of people that I, as this goes into the mainstream, they're going to want to understand it.

And they're going to, and they can't, you have to talk to them in a different language than you would, the people to listen to your podcast. I'm trying to make the video that you would forward to your dad in this case. I think this is the best explanation of what you need to know and not anything more. And broken around in simple English. And for me, I'm like, there's not really a business here. I wouldn't want to do it as a business.

I just really want to do it. And I'm like, okay, if I take some of the earnings I made on Bitcoin, if I just took like half a percent. And I said, all right, just going to like it's a charitable donation of like content creation for people to learn about this stuff in simple terms it's a good trade it's been good to me i can be good back to and that can be my contribution it's going to end up being a big business that's my call it's usually the ones you're doing because you don't expect them to be a business then up being a business you said the two other

we just said one what's the the other i think there's this big opportunity around discovery so commerce has been decentralized in a way very quickly we were kids if you want to buy a pair of running shoes. You went to the mall and all the running shoes you could possibly buy were in the mall. And now there's so many different amazing shoe brands that how do you find them, right? Like when I Google's shoes, I still see Nordstrom's come up and I don't really read past the first page. I don't see Albers. I don't see swims. You know, there's all these incredible brands out there. How do you discover them? I think, you know, at one time pre-pandemic, I wrote a deck for a pop-up shop mall. The idea that mall is the future would be all these online brands that you, that you, that

you would operate. Basically, brick and mortar becomes about discovery, not distribution. It's where you go to learn about cool brands and products. And then you replenish an order online. Could you create a mall experience around that? Sean's been like geeking out over something similar about like live commerce. So I have two on that. One is exactly what you said. Have you ever heard of beta, David? No. It's almost exactly what you're describing. I'm going to send you a link right here. It's B and then the letter, sorry, the number eight, ta.com. I love beta. They did. exactly what you're talking about, which is this

insight. And I think this insight is spot on. And one insight like this can change, you know, that's $100 million, $500 million insight, which is that malls are now going to be for discovery, not distribution. Boom. That's the insight. You can build a career off that. You can build a huge business off that. And that's what they're doing, which was

I think COVID kind of fucked everybody who's trying to do brick and mortar, but like they were creating these pop-ups. And I as a D to C brand can just rent it for seven days. And I basically send product and I send some edge education materials or I send one of my own people there, I think. And they operate it.

And they're sampling it. They're operating it. And I got this footprint. I don't need to go, because all these DTC brands open up freaking like showrooms. And it's like, dude, that's such a pain in the ass for like, it's such an expensive, time consuming thing for really just trying to do marketing to get your product in front of people. And so this beta, if it works, it's like what AWS did, where they were said, AWS and hey, you don't need to install servers and buy hardware.

Just rent some off us. And what beta is doing is saying, you don't need to build a service. stores just rent 10 square feet off us. And I think that would be a great idea. Yeah. It's a huge problem right now. The cost of advertising gets higher and higher. And how do you find these places?

You don't. Like, you know, you ask your friends, but, you know, what if your friends are with that call? By the way, this beta idea, if anybody thinks is a good idea, you can just keep doing this in every, because you need one in many different geo locations, right? So a college student could create beta on campuses. And be like, cool. For any brand that wants to get in front of college students, I have created the network of pop-ups

on every major campus and DTC brands pay me $50,000 for an activation, $150,000 for a one-month activation, and we put product on every campus for them to get seen. Are they running it as a platform where like existing property owners can run the program and then get reviewed? Or are they running it as they are the operators? I don't know. That's a good question. When they started, they were definitely the operator, but I haven't, and they've been out for a few years now. Because what you're talking about is interesting, rather than rolling out 10,000 of these things where you're running this big staff and you're essentially being a landlord that operates stores.

Can you outsource the model, almost like a franchise to these operators? And then these operators get reviewed, right? Because all you want to hold is the most valuable part, which is the relationship with the brands. One click deploy every month or for three months, whenever they do a new product or whatever. You just want to own that relationship and offer them a bunch of reach. And ideally you're not paying for or managing the reach, which is what you're talking about. What did you say? You said I wrote out a deck for it?

Yeah. When I left David's tea, it was the first idea I had. And I made a pitch deck. I toyed with the idea a little bit. Because at the time, I mean, you were starting to see the writing on the wall from malls, especially department stores who had all this square footage. I mean, they're dying. Yeah, they're all into nursing homes, man.

Right. Yeah, well, that's what's happening effectively. Although some of these real estate companies are going to make a fortune in the next 10 years. You know, there's this one in Canada called Smallerner. art centers, these guys, they have all the Walmart anchored stores. And of course, in the pandemic hit, stock got killed because all the crappy, shitty, shitty clothing brands from the 1990s are getting wiped out. But all these guys are doing, they have the best real estate in the suburbs. So they're taking this pad where they had, you know, some crappy JCPenney type brand and they're building

a multi-unit residential apartment building or a senior's home. And they're getting enormous value out of the land and even bigger returns. And not only that, they're building it at a time with rock bottom interest rates right before, you know, where we're likely to see a lot of inflation. I think these, there's a lot of opportunity to repurpose. Sounds like a stock to buy. What stock is that? That's smart centers. But, you know, there's tons of these reits in the states, too. Like, you've got to find the ones that still are going to have a decent anchor. Like Walmart stores aren't going anywhere.

Even if e-commerce becomes everything to them, they still need that last mile. They need the real estate to operate their e-commerce. And that, and I don't know if you've been in a Walmart parking lot recently, but they're still full. people are still going to the stores. It's those clothing brands that were hot 10, 20 years ago that are gone. Right. How big, when you were making this deck, how big did you project that it would be? And what did it need to become in order to interest you?

Dude, the deck is fiction. You're all forced you're going to say. I mean, yeah, exactly. I know, but like a deck, I imagine a deck oftentimes is not necessarily what you're making to present to people, but a way to get yourself excited and organize your thoughts. So I saw it centered around clothing. and I saw one of the issues with e-commerce as returns where you don't know your fit.

So I even looked at like, could I get a fit machine? Like they actually have these machines that like you can scan and give you your body fit and you can keep it on file. So I was like, could I keep a database of everybody's body shape and be able to recommend brands based off that as well? I didn't really think about how big could this be. To me, it could be enormous. I think this is a monster.

I mean, this is a multi-billion dollar idea, I believe. That's pretty exciting. That's cool. Well, I mean, think about it. You've shifted everybody. You didn't do it. No, I didn't do what helped me up. It's a big, complicated idea.

It's a major commitment. Plus, maybe some scar tissue from the first fitting room business. That's right. Exactly. Exactly. Exactly. So I want to ask you a question. You know, with Devinces, you guys did all these different flavors, like you

would have like luscious watermelon or like caramel or whatever. And it's like, cool. You're coming up a new product to get people excited. Great. I had heard and tell me if this is bullshit, I'll just half relay what I remember. I had heard there's some agency, brand, annual report that comes out.

And Sam, you might have been the one to tell me or Steph Smith from the hustle, maybe he was long who mentioned this. So tell me if you remember the name. But they come out with a report every year and it's like this giant report and it's just like colors, smells. Yeah, WGSM.

Yeah. We've talked about them a lot. It's like they do about 90 million in sales and about like 40 million in profit. So is that, did you guys, use something like that? Oh, totally. Yeah.

Absolutely. Actually, funny you mentioned them. I was just griping about them earlier today. I've been trying to get signed up again for my food business and for new T-brand. And like they're not answering the emails. These guys don't want sales, I guess. So it's WGSN. They're owned by a company called Essensiol, I believe, which is a publicly traded company in

England that own cans, like the festival. And they own a bunch of trade shows. So I don't know if they're like doing that well. but the WGSM was like their anchor asset because it just, I don't think it, it doesn't really grow, but it just does the same every single year. So how do they do this and are they right? And is it like surprising the stuff they were right? Like they predicted like millennial pink.

You know millennial pink that word millennial pink? I think they were talking about millennial pink a couple of years before that. Yeah. I mean, sometimes they're, you know, like they're right. They're wrong, right? I mean, sometimes they're a way out there on some of the trends. It's just a guess. It's just a guess.

Exactly. And sometimes you don't want to be the first. Some ideas, we definitely got inspiration from there. We got inspiration from adjacent industries, from the culinary world, from the fashion world. Absolutely. They'll tell Starbucks, like, this shade red is kind of interesting, so maybe make your name tags that during Christmas.

Right. Or meringue as a hot ingredient out of Sri Lanka. You might want to do a blend with it. Is it based on data? Do they just have tastemakers? How are they doing this? Both. I think they do have in-house tastemakers,

people their entire job is to go around and look at, what's new, what's hot, what's cool. You know, they're trying to find the next coconut water, right? And it's expensive. It might cost 25 or 35K a year. Yeah, it depends how big you are. They scale it up depending on the size of your company. It's a pretty interesting business, and it's publicly traded so you can go in and look at it.

Really fascinating. Because, David, I own this company, we just sold it, but this thing called Trends, and I modeled it after a little bit after that company. Of course, we only charge $300 a year, and Norton make a lot of money. We should have charged $30,000 a year. but it's quite fascinating. You could have just charged $3,000. You could have bought their report for $30,

distilled it down and offered it free. That's right. Charge three. I like your mother better, Sam. I'm going to sign up after this for $300. That sounds like a way better value proposition. Well, that's all we, except ours isn't like niche specific. We look at like all types of interesting.

It's basically like this podcast, but way more thought out. And like we have a team of researchers who like comb through all the data. And then we have a community where it's a pretty sick community where people discuss it. And it was heavily inspired by WGSN and that it's a big business WGSN absolutely I mean most people in the product business use

WGSN all the fashion guys use it most of the food guys awesome well we hit the hour David we said that we're going to do 20 minutes so I appreciate you staying with us it's sort of our like first date thing we're like oh I got to meet a friend in 30 in case the guest sucks we can we have the excuse to wrap it up but you were awesome oh dude this is a ton of fun I really appreciate you guys having me I really enjoyed it what's your um contact or you you your social presence. How should people get more? Instagram at David Siegel T, the letter T.

And on Twitter, it is... You don't even know your Twitter, him. Never, never... You know, this is the biggest thing that I should have done. underscore David Siegel, at underscore David Siegel. And I'll start posting a lot more content as more followers coming. Did you, uh, all right, I'm on it now. Yeah, yeah, my friend.

You change your profile picture, too. I think you're better looking than this profile picture. I think like right now, the way you look right now, you look like a cool guy. I think you could show that off better. Like a screenshot. I got to lose the collar, eh? It's a little too serious. No, like you and Harley kind of have similar vibes where you like you give off this serious.

Still fun and playful. Yeah, like you're going to kick ass, but you're like fun to be around. Listen, I mean, it's amazing to kick ass and to try and just get better, better and try and become world class. But, you know, you got to have fun. You only live once. Yeah. So anyway, just some. feedback.

I think it's good feedback. I'll take a shot. Actually, I'll take this shot from this podcast. That was a classic, like, left-handed Sam Parr compliment, which I'm telling you

you look better looking than your picture. All right, cool. All right, sounds good. All right, thanks, man. Thanks, man. Take care, guys. Bye.