David's Tea

In the mid-2000s, David Segal noticed a massive gap in the tea market. "If you go back to that time, you either bought it in a grocery store, where it was a commodity, right? You picked what you wanted based on the picture on the box and the price point." Or you found yourself in an intimidating specialty shop where you felt you had to whisper. "Tea had this stodgy vibe to it," Segal explains. He saw an opportunity to make tea cool and accessible to younger consumers on the main streets of North America.

Segal turned to his distant cousin—then in his 70s—who had previously built Lushatow, a successful clothing brand that brought Carnaby Street fashion to Montreal in the 1960s and sold to celebrities like John Lennon. When Segal pitched the tea idea, his cousin offered to back him. "He said, you do it and I'll back you. And I was like, great. We got to work." They built a brand focused on making tea fun and approachable, educating consumers about the nuances of the product while keeping the experience inviting.

Segal's early outreach was scrappy but persistent. "I was writing handwritten letters to every CEO and every clothing company you can think of," he recalls, mentioning that he even got responses from Les Wexner of Limited Brands and Victoria's Secret executives. He was building David's Tea with a retail-first strategy, opening brick-and-mortar locations in major markets. The locations became destination stores where customers could discover new flavors and learn about tea in a fun, non-intimidating environment.

At its peak, David's Tea became a massive success. "At its height, we had a billion-dollar market cap on the Nasdaq, 200 million sales." The company opened 100+ locations and became a beloved brand. However, cracks began to show when internal management conflicts emerged. Segal's cousin wanted to bring in family members, while Segal wanted to run a meritocracy. A deal with private equity group Highland Capital (founded by Tom Stenberg, who also founded Staples) complicated matters further. "When your management team and your board are fighting with each other, you're not focused on creating value for your customers," Segal reflects.

The company went public on the Nasdaq, and Segal sold his stake in 2016 at an average price of $14 per share. The stock later traded at $4. While the IPO was successful for the private equity exit, Segal's decision to leave proved prescient—the company lost focus without unified leadership. Today, Segal has moved on to restaurant ventures (Mad Radish, Luisa's Burritos and Bowls, Revival Pizza) and is working on a new direct-to-consumer tea brand with a focus on unflavorable, high-quality blends. "I still think there's a massive opportunity in tea," he says. "Tea is not just when you're sick or for hippies... it's a better drug than coffee."