David Segal: Building David's Tea
What this covers
David Segal, founder of DAVIDsTEA and Firebelly Tea, reveals the secrets behind building a $200 million tea empire. In this candid conversation with Shane, Segal shares:
* The crucial balance between working in and on your business * Hard-won insights from his entrepreneurial journey, including failures and successes * Unexpected challenges of success, like post-payday depression * Wisdom gleaned from Warren Buffett on business and life * Strategies for effective time management
Segal's story is a masterclass in modern entrepreneurship, from identifying market opportunities to scaling a single store into a retail powerhouse. He now applies these lessons to his new venture, Firebelly Tea, crafting premium loose-leaf teas for today's consumers.
Get 15% off orders at Firebelly with the code SHANE15: https://www.firebellytea.com/
(My favorites are After Dinner Mint and Matcha.)
00:00 - Intro 01:29 - On business and entrepreneurship 03:08 - How to manage your own psychology 07:49 - Yearly planning, daily action 13:49 - Avoid "ivory tower syndrome" 16:38 - On Segal's childhood and early career 25:54 - The founding of DAVIDsTEA and Firebelly 41:50 - The evolution of tea and DTC products 49:16 - Reflecting on failures 56:18 - On battling depression 01:03:33 - Lessons on money 01:08:38 - Business Lessons Learned from Warren Buffett 01:13:16 - Why "shifting sets" is essential for doing a lot 01:21:35 - What's missing in Segal's life 01:26:02 - On success
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What you stand for as a company should never change, but how you do things should continuously evolve; this requires balancing process discipline with frontline empowerment to avoid robotic customer interactions.
“I think you know what you stand for as a company should should never change but how you do things as a company should never stop changing and I do think as a company scales it's really important to understand how to put in place the right processes and procedures not to stifle creativity or to stifle the people you want to empower the people on the front lines and make sure that they can still make independent decisions”
David's Tea was successful because it took tea (a commodity) and uncomodified it by creating a sensory experience—customers smelled, tasted, and discussed tea in the stores, creating a unique experience grounded in personal tea stories from their families.
“what we did that was very different is we took a commodity and we uncom modied it we brought an experience to it I mean when you think about tea you know it's this incredible drink that's it's the second biggest drink in the world next to water...it's this Timeless ritual that everyone has a tea story from when they were younger uh somewhere in their family someone drank tea right...with David St we created this sensory experience in the store where you come in and you're smelling tea and you're tasting tea and you're talking about tea and it became a very unique experience”
Caring about work is something no one can teach you, but you can cultivate someone's spark and sense of urgency over time through exposure and culture, even though it ultimately requires the person to tap into what makes them get up in the morning.
“you caring about your work is something that no one can teach you what to do but I think sometimes you develop the the bug for it right if you many of the most successful people I know didn't H could have stopped working long ago”
Making major business evaluations should occur only when in a good place mentally and over longer time periods (approximately once per year), not during emotional lows or when experiencing swings in mood.
“only make major evaluations when I'm in a good place mentally and only on a a more a longer uh period of time maybe once a year to to sort of take stock of where I am versus where I would like to be”
Money doesn't buy meaning; having financial independence and nice things is fleeting and won't provide fulfillment; deeper meaning comes from personal development, relationships, and knowing who you are and what you want.
“money doesn't buy meaning number one you have to money can help facilitate a lot of things but you you have to know who you are and what you want that's really really important and that has nothing to do with money um buying nice things is is going to be fleeting”
Entrepreneurship is in many ways a personal journey disguised as a business pursuit; the core challenge is managing your own psychology rather than just operational execution.
“entrepreneurship is in many ways a personal Journey disguised as a business Pursuit and what I mean by that is so much of it is managing your own psychology”
Running a small company (militia) is easier than running a large one (army) because communication is direct and immediate; scaling requires developing processes and procedures to maintain alignment without stifling frontline decision-making.
“one of the things I learned building David's te was the difference between running a militia versus running an army you know when you have a small company and you're running it's like a militia right like you know you got five stores...and it's supery EAS because you know you say turn left and the everyone hears you the militias there's five of you right or 10 of you or whatever and everybody turns left but when the company grows you become like an army and when you say turn left you get broken telephone”
A useful framework for meaning is: something to do, someone to love, and something to look forward to; money can facilitate especially the third element, but the first two require personal choice and relational connection.
“I once heard this from a friend you know the secret to life is uh something to do someone to love and something to look forward to and and I think I think money can help facilitate certainly uh uh parts of that especially the something to look forward to but but you have to tap into deeper meaning on on what it is what gives you uh uh what gets you excited on an ongoing basis”
The hour before bed (9-11pm typically) is the most unproductive and destructive time of day for mental state; people waste time scrolling, build depressive states about the future, and prime their brain poorly for sleep.
“I think there are few things a good night sleep won't fix or make better things there are few things it won't fix 100% I'm I have been a victim like like many people of that last hour before bed far too many times I find that having two teenagers now it totally just destroys me”
If you're playing for external validation or external success, you'll never have full fulfillment from your achievements; focusing on internal validation is more sustainable, though Moffat acknowledges he hasn't entirely overcome his own external validation seeking.
“if you're playing for validation from others or you're playing for uh uh external success um you you're never going to have have the full fulfillment that you get from your achievements in life and I don't know that I've entirely uh um overcome that external validation I don't think I have but but um I certainly work towards it and really focus a lot more on internal validation”
Narrative and perspective are elements you can control, unlike many other aspects of life; the story you tell yourself about your circumstances significantly affects your experience and outcomes.
“you don't get to choose a lot of things in life are completely out of your control but but how you think about things and the narrative that you go through life with is in your control”
When tired and in a negative mindset late at night, you should practice perspective-taking and observe your thoughts rather than participating in them; recognizing fatigue as the source of worry allows psychological distancing.
“I try and distance myself and be able to be the Observer rather than the participant in that and be like okay well like you're just tired like you're just tired you know with like with kids when you're like okay you're tired yeah different with adults right like you're just tired like you know tomorrow's another day go to bed”
Peter May's quote that 'you can't make chicken salad out of chicken s***' means sometimes you have to acknowledge when you have a weak product and do the hard work to transform it into something valuable, which takes time.
“a story told by one of our guests on big shot his name is Peter may an activist investor he was Nelson peltz's partner and he tells a story about going around and trying to Market his first company uh and and getting a valuation was Far Below what they wanted and they're yelling at the investment bankers you know we just did this whole Road show what do you mean it's not wor se you know we and the guy goes kid you can't make chicken salad out of chicken and and I think sometimes that's actually what you have to do you have to make chicken salad or chicken and and that takes time”
In commercial tea flavoring, approximately 90% of what goes into flavorings are preservatives and additives that go unlisted on the label; natural flavor simply means it was derived from a plant or animal source but is primarily manufactured in a laboratory.
“if you go label hunting at the grocery store everything has either natural flavor artificial flavor it's not that it'll kill you but a natural flavor just means it was derived from a plant or animal Source but it ends up in a laboratory where about 90% of what goes into these flavors are preservatives and additives go unlisted on the label”
Being compassionate with yourself when you miss a day or slip up on habits is important; don't beat yourself up, just come back to the practice.
“we have a habit of beating ourselves up right like the idea of being compassionate with yourself is really important you know you you miss a day so what like in medit in meditation it's it's you know come back to the breath come back to the breath”
Turning off your phone at night (around 9-9:30pm) is critical; Moffat locks his phone using a device and skips social media scrolling before bed, replacing it with reading or clear mind focus to improve sleep quality and prime the brain for the next day.
“I I try really hard and I I to the point where I bought it device to lock my phone where I can't even open it because I know myself I will check it uh um for that last hour or so before I go to bed and it's just it's the difference between reading 10 you know 10 15 pages uh a night and being able to sleep with a clear mind in a much more relaxed State get better quality sleep”
Pain and hardship are relative; everyone has them, and comparing your suffering to others' is unhelpful—what matters is how you work to overcome whatever challenges you face.
“everybody could say well your Pain's not as big as my pain or your hardships aren't as big as my my hardships but it's all relative I mean pain is pain and hardship is hardship and yes some are worse than others but by and large we all have things that we need to overcome”
Getting up early is important; successful people almost always wake up early; morning workouts are part of Moffat's routine to start the day with intensity.
“I think getting up early is really important uh I mean these things seem seem obvious but they may not be you know I don't really know many extremely successful people who don't get up early I just don't um I like to work out in the mornings”
There is no shortcut for the work—there's no magic pill or magic elixir; it's about habits and doing things even when you don't want to do them.
“there is no shortcut for the work period there's no magic pill there's no magic Elixir it's about habits you have to do things even when you don't want to do them”
As a leader, you need to have your finger on the pulse and understand what's happening at the lowest level of your company where customers interact, but you must avoid micromanaging to the point that you prevent people from succeeding and learning from their own failures.
“you as a leader you want to be have your finger on the pulse and and understand what's going on at the the lowest level of your company where customers are interacting with your team or your products but you also don't want it to micromanage to the point where the people who are who you've empowered to to do the job aren't able to do it and be celebrated for their own successes uh or learn from their own failures”
The lows in entrepreneurship are so low and the highs are so high; learning to tolerate the lows is critical, and they feel much longer when you're living through them than they appear in retrospect.
“there are so many swings to the game when you're building businesses there's the lows are so low the highs are so high as well and it's learning how to be able to tolerate those lows”
The 'rocking chair test'—imagining yourself old and looking back—is a useful frame for decision-making and evaluating whether choices align with long-term satisfaction.
“I like that because you're choosing where to focus right you choose your focus you really do...I have a saying that you um sort of reminded me of when you were talking which is the lack of patience changes the outcome”
Tea is a product that has been studied for decades (not years) by top institutions in the world, has proven health benefits, and is drunk in regions where people live the longest, making it fundamentally different from fad products.
“it's Drank In regions of the world where people live the longest uh it's been studied for decades uh not years but decades by some of the top institutions in the world”
You can be your own worst enemy by getting into a rut and a tail spin, living in your own negative narrative and going round and round in it while days, weeks, and years pass.
“you can be Your Own Worst Enemy sometimes you you can you can and I've seen this so many times in my career where people will will get into a rut and a tail spin and live in their own narrative uh and just go round and round in it uh and and the days go by and the weeks go by and the years go by”
The business happens at the transactional level where money is exchanged for goods; this is where customer perception is formed, and it's often overlooked by larger companies.
“the business happens at the transactional level any business that's where it happens where the money is exchanged for the goods and I think often the bigger the company gets we kind of forget that but really that's what it is I mean it's it's it's a series of small transactions that add up”
Buffett has been repeatedly underestimated during his career (declared a dinosaur during tech booms, before 2008, etc.) yet continues to make brilliant investments; this demonstrates the power of long-term conviction independent of short-term trend validation.
“I've seen him go through waves where the world thought he was a dinosaur right like when he bought kraft and and when the tech was really booming everybody's like or Bitcoin was was super hot right everyone's like oh this guy's a dinosaur he's out he doesn't know anything Well turns out he's not then he turns around he buys the Japanese trading houses at at 10 cents on the dollar”
Caffeine in tea (with L-theanine modulation) creates sustained, calm energy with focus, unlike coffee which produces a spike and crash; this makes afternoon tea superior to afternoon coffee for alertness without sleep disruption.
“you get that big spike and crash you don't really get that in the same way with tea you get more of a sustained energy uh eleanine modulates the impact of the caffeine on your uh in your bloodstream on your body um and it really creates a a a nice calm energy and a nice focus”
There is no one way or one story to success; examples like Sam Walton not starting until his 40s and Warren Buffett making most of his money after 55 show that you can find narratives validating any timeline, and the truth is you have more life ahead than you think.
“there is no one way there is no one story you know I I'm now in my my early 40s and I I we we love telling ourselves the stories of people that validate our narratives right like so I'm like oh Sam Walton didn't start till he was in his 40s or like you know Warren made most of his money after 55 I mean all of these things are are just ways of telling ourselves that we have more life ahead of us and the truth is we do”
Building a habit is like building a muscle; you should start with small, manageable practices (3-5 minute meditations) and build up rather than trying to do too much immediately.
“you're building a muscle you're building that that Focus muscle and um but when we have these sort of blackout moments in meditation where our mind wanders and we don't even know where it goes and then all of a sudden we come back and we're like oh yeah I wasn't focused on my breathing or whatever visual exercise I had um you you know we have a tendency to beat ourselves up you're like oh I can't believe I could you know you do it mentally”
Adopting the Sabbath concept (Friday night to Saturday night as a rest period where you don't work, or work with a different mindset) has been personally helpful for Moffat; he's adapted it to his own secular context while preserving the principle of structured rest.
“I like I like you know you know I'm not religious at all but I think there's some there's enormous wisdom in the concept of the Sabbath uh I think it's just an incredible concept right like what is that so the Sabbath is is Jewish uh is is you know it's called Shabbat it's a it's in Judaism it's this idea of from Friday night Sundown to Saturday night Sundown um you you you don't work”
The distinction between working 'in the business' (operational tasks) versus 'on the business' (strategic, reflective work) is important; weekends should be reserved for the latter, not the former.
“there's working in the business and working on the business I like to take my weekends if I'm going to work to work on the business and not in the business I really make I really make sure I take time for my kids and my wife uh on the weekends”
You have to leave it all on the table and give everything you have to your endeavors; regret lasts a lifetime and keeps you in place, whereas knowing you gave full effort provides peace regardless of outcome.
“regret lasts a lifetime and it lingers and it it does keeps you in place”
Taking care of yourself through routines, rituals, mindfulness, meditation, exercise, and celebration is essential to managing psychology; Moffat has been meditating consistently for over five years and credits it with calming his nervous system.
“I think taking care of yourself matters uh one of the reasons I love tea so much is I think it plays into that lifestyle”
Warren Buffett's two most impressive qualities are: (1) his ability to make very few decisions but with extreme conviction and then live peacefully despite market noise, and (2) his ability to express complex ideas in simple terms.
“I think I think two of the most impressive things about Warren Buffett uh uh the first one is is I I wish I had this this uh superpower I think you know here's a guy who can make very few decisions uh but make them with so much conviction and then live in Omaha Nebraska and like go sit in a fishing boat while the world goes on around him I mean you know talk about being able to overcome the action bias”
You should spend time reflecting on what you truly want out of life and who you are before making big decisions after major transitions like selling a company.
“certainly my lowest moments yeah what was your what did your kitchen smell like on like Friday nights growing up what did my kitchen smell like well my parents were big on family dinners I mean I had a very regular upper middle class middle class upbringing”
You're not all David Goggins or ultra-marathoners; most of us need to be realistic about our capacity and expectations, and that's okay.
“very few of us are David Goggins right like like you can't just you know we're not all Ultra marathoners and we can't you know we don't have to always get it right you're allowed to slip up”
Finding and serving a niche with 'a thousand true fans' is easier in the modern media landscape than it was when David's Tea started; Firebelly benefits from the ability to target specific audiences at scale through modern media that wasn't available in 2007.
“I think what has changed about business is there's more of an opportunity to take a niche and really get a thousand true fans with it I think it's easier with modern day media to talk to Niche audiences and so we want to be really good at servicing a customer base who really cares about having an incredible te- ritual really high quality product and and really just focus on what we do best”
Moffat started his 'Big Shot' podcast with Harley Finlin (president of Shopify) to interview older Jewish entrepreneurs (70+) without social media presence who had incredible careers and enormous impact; the podcast aims to combat hate speech and anti-Semitism while highlighting Jewish entrepreneurs.
“Big Shot which I think is having an impact on on hate speech and anti-Semitism and helping to humanize some of the most successful Jewish entrepreneurs and and and Show the incredible impact these people have had on their broader communities”
The biggest missed opportunity in Moffat's entrepreneurial career was not preparing for or thinking about life after David's Tea; he was so singularly focused on building it that he had no plan for the day after exit.
“I didn't I didn't think about the day after David tea I was so busy trying to build it and we actually don't talk about this a lot uh in entrepreneurship which is okay well you know the struggle is so difficult to get to a place where you're successful but what happens once you're successful and what if you do sell your company and now what right”
Moffat was persistent from childhood, wanting a skating rink in the backyard and attempting to build one with sour cream containers of water until his parents and brother joined him—demonstrating a pattern of determination before age-appropriate ambition.
“I was a bit my wife says this about my son and I I think I was the same way I was a man of with no plan uh you know I remember I remember I really wanted a skating rink in our backyard we had like this tiny little backyard and my parents are like no...and so I was really stubborn I'd go and I'd start taking little you know like the the sour cream container uh uh I'd wash it out and put water in it and start dumping it on the lawn and dumping it on the lawn”
After selling David's Tea in 2016, Moffat went through one of the biggest depressions of his life; he had financial independence but lost his sense of purpose, felt guilty about being depressed given his success, and experienced health issues whose causality with the depression was unclear.
“I actually went through one of the biggest depressions in my life after I sold my my steak and David's Tea you know I don't I don't talk about this often but I was I was in a really bad spot and it was a weird thing like I felt guilty about it cuz like wow what right do I have to be depressed I just I just you know I I lived I just had the dream that everybody plays for which is an exit in a major company”
Moffat had a major failure with Mad Radish, a healthy fast-food concept, during the pandemic when it was significantly underperforming; he nearly sold it but doubled down on product development (especially chicken from scratch rather than pre-cooked), resulting in recovery and current market leadership in Canadian healthy fast food.
“mad radish which is a healthy fast food concept I have in in Canada you know we were we had figured it out for for the lunch market and we were accelerating in 5 day week office stores and then the pandemic came and we almost went out of business and we were failing in a in a big way uh and I had invested way more money than than I thought I would have to and and it had taken far longer than I thought it would um but it wasn't working and and I almost stopped and we almost said you know what let's sell it for 10 cents on the dollar and move on but we didn't and we stuck with it”
His father's statement that 'David, you're like an 8-cylinder engine operating on two cylinders' profoundly influenced Moffat's understanding of potential and self-actualization; he wants to ensure he uses all 8 cylinders and doesn't leave potential on the table.
“when I was a little boy my father used to say to me he'd say David you're like an 8-cylinder engine operating my two cylinders and and uh I never knew what he meant I sort of I only knew my little middle upper middle class middle class upbringing uh in in a small little suburb of a small town you know I grew up in Ottawa it's a tiny little city and um I didn't really know what he meant by that I didn't know the world I didn't I didn't know was out there I didn't know all the possibilities but but the more I go through life the more I realize that that for me is is very important I don't want to ever look back and feel like I didn't use all eight cylinders”
Fitting Room Central was a system designed to help clothing buyers understand whether products weren't selling due to poor fit or poor aesthetic appeal by capturing conversion rates at the fitting room level—a concept ahead of its time (2005) that later became standard in e-commerce.
“I developed a system uh for the fitting rooms and the idea being when you try on when you buy clothing you actually do it in two steps first you evaluate the look of something on your on your body uh sorry the look of something on the rack then evaluate the fit of that item on your body right so the what we thought is hey if we can capture the conversion rate at the fitting room we'll be able to tell you if something's being tried on a lot but it's not converting into the fitting room you might want to check the fit”
Tea should be stored and displayed as a piece of art on your counter (like a luxury coffee machine), not hidden in the back of your cupboard where it gathers dust; packaging and teapot design are part of the product experience.
“we wanted to make sure that it was well designed so that it could you know we we originally put it in these boxes that they're like books on a bookshelf and we did that you know and and as you can see from this teapot these beautiful teapots and we wanted to make it so that they're almost pieces of art on your counter uh kind of like how you'd have a beautiful C machine you know it doesn't tea doesn't have to be the thing that you just throw in the back of your cupboard and gathers dust”
Moffat was not a serious student until he met his wife Emily in his third year of university; he began to focus on academics to spend time with her in the library, became an honor student by fourth year, and credits her with bringing out better habits.
“I didn't take school all that seriously until later on...it wasn't until I met my wife where I really got it together...she she studied hard...you know I I I certainly married up but but um you know she brought out the best in me I on by my fourth year I I became an honor student and and I started to work a lot harder”
Moffat's father was a psychologist who worked from 5:45am to 6pm (never taking lunch breaks) and worked Saturday mornings while raising three children; Moffat credits him with his own work ethic.
“my dad was a psychologist and and uh started working at at the hospitals and then had his own private practice he worked very very hard uh I I certainly learned my work ethic from my dad he was up at at 5:45 every day first patient was at 7 last patient was at 6 uh never took a lunch break uh you know he'd even clock a few Saturday mornings I mean he had three kids”
Moffat discovered the tea business concept after visiting an Asian-inspired tea house in Montreal with his wife Emily while waiting for movie tickets at an independent cinema; he recognized untapped market opportunity in bringing premium tea to North America in an experiential format.
“I remember being in a tea shop in Montreal uh off of uh St Den which is this really cool Street and uh Emily who's my wife and I were going to a movie at The Intern International Movie Theater she had gotten some tickets from somebody at her work and we were early and across the street was this really cool uh sort of Asian inspired tea house and we went in and I started to think to myself I'm like wow you know there's no size no color like there is in fashion it doesn't go bad like a turkey sandwich it's leaves in a cup so the margins are good you can operate out of small spaces and no one's doing this in a fun way on the main streets of the country”
David's Tea took time to gain traction—the initial store on Queen Street didn't perform well, and by Moffat's first summer after opening (about 8 months in, around the time he got married), with four stores, the business wasn't generating enough revenue to sustain itself, but eventually momentum built.
“it didn't work at first I mean it sort of worked um but it really took a bit of time I remember the summer I got married which is about a year we had four stores it was about eight months after we started a year after we started and it wasn't going that great I mean we weren't doing well enough that summer for the business to to uh survive uh and I was really worried about it but then you know we just kept getting better and better at it”
After the failure of Fitting Room Central, Moffat's resume was weak (failed venture, no income, only a university degree), and he felt pressure to find employment; his girlfriend (now wife) Emily pushed him to get a real job, which motivated him to approach his father's cousin about joining his private equity effort.
“my wife was my girlfriend at the time was like okay enough like you know you don't make any income you need a job um so I I at this point my resume is not very good right I've just had a failed entrepreneurial venture I I you know I have a degree from Migel but I haven't really done anything”
Moffat is good at 'shifting sets'—moving rapidly from one context to another (podcast, inventory analysis, real estate, research) without significant cognitive transition time; this enables him to manage multiple businesses and activities simultaneously.
“one of the things that I I'd like to think I'm reasonably decent at is I'm good at shifting sets um a lot of people struggle with this they don't shift sets easily um I I do I can go from uh this podcast into a conversation about um inventory analysis in Firebelly to a conversation about new store Bild outs in Mad radish”
Firebelly Tea uses real Madagascar vanilla, high-quality ginger, and high-quality turmeric instead of commercial flavorings, which makes a measurable difference in the quality and flavor profile of the tea.
“instead of using vanilla flavoring at Firebelly we use real Madagascar vanilla uh we use really high quality Ginger really high quality tum Ric and and makes a difference uh in in the quality of the tea”
David's Tea grew to approximately 200 stores with about 200 million in sales and 30 million in EBITDA when Moffat sold his stake in 2016.
“when I uh sold my stake in David te in 2016 we had 200 stores about 200 million in sales about 30 million in iida uh it was a pretty nice business”
Moffat's mother was a teacher for deaf children and later became an artist; his family had a regular upper-middle to middle-class upbringing with consistent family dinners because his father didn't travel for business.
“my mom had a a few different jobs was a teacher she taught deaf kids for a while then she became an artist my dad was a psychologist...we always had Friday nights weren't dramatically different than than Wednesday nights we we because my dad didn't really travel for business we always had family dinners”