If you’re a Small Business, you will LOVE this episode! On today’s show, CEO of Lightspeed POS ($LSPD) Dax DaSilva joins us to share his entrepreneurial journey and the genesis of Lightspeed POS. We get the chance to talk about the development of eCommerce over the past 20 years, and how massive technological innovations have paved the way for small and medium sized businesses to compete on a level playing field with massive corporate enterprises online.
Welcome to the The Voice of Retail , I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with Retail Council of Canada and this episode is sponsored by RIWI..
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If you’re a Small Business, you will LOVE this episode! On today’s show, CEO of Lightspeed POS ($LSPD) Dax DaSilva joins us to share his entrepreneurial journey and the genesis of Lightspeed POS. We get the chance to talk about the development of eCommerce over the past 20 years, and how massive technological innovations have paved the way for small and medium sized businesses to compete on a level playing field with massive corporate enterprises online.
“That, you know, even though they might consider themselves diehard brick and mortar, that, that online presence and the ability for their customers to interact with them on these other channels, that the personal connections were still existed and that shopping online doesn't mean that you weren't shopping local, and that those weren't opposite things. So that that I think is just reinforced, you know, our belief that omni channel is important for everybody.”
We get some insider information from Dax just off the virtual NRF Big Show stage in New York on how purchase behaviour has shifted over the years, and gain insight to some of the lessons his clients have learned about eCommerce during the pandemic. From inventory management to supply chain procurement tips, this episode has it all.
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I’m your host Michael LeBlanc, President of M.E. LeBlanc & Company, and if you’re looking for more content, or want to chat follow me on LinkedIn, or visit my website meleblanc.co!
Until next time, stay safe and have a great week!
Michael LeBlanc
DAX, welcome to The Voice of Retail podcast. How you doing this afternoon?
Dax DaSilva
I'm doing great. Thanks for having me.
Michael LeBlanc
Well, I’m actually really kind of shocked because you and I've been kicking around the retail industry for a long time in Canada, yet we've never met and we've never spoken. So, thanks to NRF for putting the two of us, if not in the same room, at least on the same, or on the same podcast together. So, it's great to have the chance. Yeah, it's great to have a chance to talk to you. Well, listen, let's jump right in your you know, you're a well-known great entrepreneur, and innovator in the retail sector. But for those listeners who may not be as familiar, you know, with either your personal journey or your professional journey up to Lightspeed and give us a sense of your background, and how you got to where you are today. And then we're gonna talk about all kinds of great things about what you're working on and your perspectives around the industries that you that you enable and plan.
Dax DaSilva
Yeah, absolutely. Yeah, so you know, Lightspeed started in 2005. But my own story, my own personal story with technology, you know, probably starts, you know, much earlier, when my dad used to bring home a Mac. He was a graphic designer, one of the original Macs. And I just fell in love with, the Mac, and how it combined, you know, technology and, design and just humanized technology. And became, you know, I got my own Mac at the age of 12, and started to program on the Mac, by age 13. I was working for an Apple developer.
Michael LeBlanc
No easy feat, right? I mean, Mac weren't really designed to be programmed, right?
Dax DaSilva
Yeah, exactly. So, but they were, you know, I was, I would build these. I really approached it from the lens of a designer and built the same versions of the early versions of Lightspeed with the same sort of the same sort of approach, which was, you know, build a user interface, build a user experience, that really put the user in control. You know, power the user, and then you know, I figured out the coding of how to make it all come to life. But you know, really wasn't an engineer, I was much more of a designer in terms of the experience. And that's what I focused on in my teens, and in my 20s, building software for, you know, a wide variety of businesses that wanted Mac based solutions. But a lot of them ended up being retailers, and complex retailers at that. So that it could have been, you know, I was in the Mac ecosystem. So, it was a lot of it was Mac stores, stores that sold Macs before Apple had stores. So, worked for a number of them. And those were, you know, retailers with complexity and inventory, and in different ways of selling. And so, you know, after many, many years of doing custom systems, you know, around 2005, there was just this, this resurgence of Apple. A lot of people wanted to use Apple products, in their stores. IMAX and iPads and so on. And there just wasn't really the software available with the power to run a complex retail business. And that's what that's what the first versions of Lightspeed really solved for was, you know, how do we, how do we put the control back in the hands of the user? And you know, the inspiration for the first version versions of Lightspeed was iTunes. Know back when back when iTunes was understandable today for..?
Michael LeBlanc
I was gonna say.
Dax DaSilva
Yeah. Today its Macs, but
Michael LeBlanc
It’s a long way from where it started.
Dax DaSilva
But back then it was, you know, was, you know, if you think about looking at your retail store, the way that iTunes at the time, you know, let you look at your music library, you know, with the early versions of Lightspeed, you could look at your inventory and your products and your customers and your purchasing system and all of that much in the way that iTunes let you look at playlists. So, it was it became a very approachable way to look at a retail business that had a lot of complexity to it had and had, you know, big database of products and a lot of activity.
Michael LeBlanc
Right.
Dax DaSilva
And so, you know, I think that it was designed first it was, you know, the experience came first and re-empowering, the retail business owner came first and then, you know, making it all come to life that I did what did what you know, was the lead developer originally. But you know, within a few years, I hired a real team of people that really knew how to program so
Michael LeBlanc
Right on, well, as you said, you didn't consider yourself an engineer, even though you're writing complex code. You're more of a strategist and a designer and all those other great things. So, describe for us the scope and scale that, you know, take us to the present day about Lightspeed. Give us the scope and scale and your coverage, you’re a global company. Based in Montreal, right? You're headquartered in Montreal, give us give us a sense.
Dax DaSilva
Very, very global company. You know, we've got you know, more than more than 100,000 merchants around the world in 100 countries. You know, big footprint in North America, of course, but also you know, uh, you know, almost half our business in Europe and Asia Pacific. So, it's, been a, it's been quite a journey. And of course, all of our solutions, you know, are now in the cloud. And that's really powering ability to make to solutions that are Omni-channel. And we've been, you know, we've been we've been preaching the value of Omni-channel for retailers. Also, you know, we also have a big hospitality business, you know, the way that what we've seen over the last 15 years of Lightspeed’s history is just the transformation of how consumers shop and how they dine. How they, how they find the businesses that they want to spend money with. And so, we've, you know, our mission has really been to make sure that those local small and medium sized businesses have the technology, that the technology is democratized. So that they have a competitive advantage on technology to.
Michael LeBlanc
it's a great laying of, leveling of the playing field, really what's happened, right. I mean, you know, I launched Hudson's Bay's ecommerce in Canada in 2000. You know, it was a million dollars to take a credit card online, right back in those days, and I often, you know, preach that, that gospel, so to speak, that as a small business, you've got power, you know, power and capabilities well beyond my imagination 20 years ago that companies like yours would be able to, to deliver.
You know, it's interesting, because I can see, you know, when I think of Lightspeed, I think of you more as a restaurant hospitality. I know, that's not the case. But that's how I thought more of your genesis. Tell me how you've evolved over these years and what forces have pointed you in the direction you said. You're more, it feels like, you're more focused on mid to small size enterprises versus large enterprise, but I don't want to put words in your mouth, so to speak. So, give me a sense of that.
Dax DaSilva
So, what's interesting is that the customer, you know, hasn't changed in terms of the size of the customer. You know, our average, and we did actually start with retail. So, for the, for the first, I would say, for the first nine years of the business, we were retail only. And,
Michael LeBlanc
But, did you get a, I'm just trying to figure out where my sense of the hospitality business came in. Is that where you got most purchase earlier? Or is it just, is that just my misconception that,
Dax DaSilva
No, I would say a lot of the activity that you've seen lately, and we've done some acquisitions, some of them might be hospitality oriented, you know, as we're building a leadership position there. But our business in North America is largely retail. You know, very strong and hospitality in Europe, and in Australia, New Zealand.
But yeah, you know, there's nearly $40 billion of transactions coming through Lightspeed systems every year. So, what that, what that boils, what that breaks down to is that we're working with a customer, that's doing about 600,000 a year in transaction volume, so they're not small. These are, these are small, small-medium sized businesses that are at scale. They've got complexity. So, they've got, you know, on the retail side, they've got 10s, or hundreds of 1000s of skus in their inventory. And, and that just requires a different level of system than a very simple cash register system on an iPad. And that's always been our wheelhouse.
You know, yes, retail has just evolved and continued to change. And now at the same business owner that we serve in 2005, now has a whole other set of expectations on them, in 20-2021, you know. So, you know, they're, they've got to be great, they've got to be great in store, they've got to have a great experience in store, you know, an in-store experience that draws people in, and is memorable, and they've got to have loyalty programs, and then they've also got to be great online. They've got to have great, you know, ecommerce capability, they've got to have great, you know, they've got to have chops on social media. There's just, and they've got to be great at ordering, you know, you've got to have the right product at the right place for the right customer at the right moment. It's a lot of logistics in order to be a successful, small business retailer today.
Michael LeBlanc
It's interesting, right? Because as you and I've seen that evolution of the biggest hurdle to being successful online selling was more technological. And it I think it's fair to say that's less of a hurdle than it used to be, but all the other things are still complicated, right? It's not easy to be a retailer and it takes a lot of a lot of experience companies like yours, come in and kind of level the playing field and make it at least, you know, kind of plow that road for them. You still gotta be a great merchant right? You and I, when I talk to merchants, I'm sure and I want to, you know, ask you what you're hearing, you know, they're saying, “Listen, you know, I need to somehow square that circle where I need to approach the efficiency of the big players and but also deliver the experience of local which is what makes me” right? Is that what's your hearing, like? Let's talk about that for a bit. So, as you know, as we've gone through the first year of the COVID era, we've seen this massive acceleration in ecommerce adoption and you know, beyond me and you would have been thinking these numbers five years from today or pick a number. But we're here, and we're probably not going back to where we were before. So, what have you been hearing from your customer base? Because you're at the, you know, you're at that focal point where you're hearing from them?
Dax DaSilva
Yeah,
Michael LeBlanc
What they need and what they're seeing and what changing. So, give me some feedback on that.
Dax DaSilva
Yes, what's interesting is that I think that a lot of a lot of let's just talk about the retailers here, a lot of those customers bought Lightspeed or selected Lightspeed because they knew that they could get to ecommerce and that they could, they could do these digital experiences. But many of them, you know, might have focused a lot on making their brick and mortar locations as successful as possible. You know, when COVID hit, many of them asked, could they light, could we help them light up their digital channel, you know, really, literally overnight. So, you know, one of the things that we're really proud of is that, you know, the pandemic started in March, by towards the end of April, you know, three quarters of our customers were able to continue to transact with customer, with their customers. So, they were not using the full suite, even though they knew it was there. And they selected the platform, because of the capability. We know, in talking with customers, a lot of customers, yes, there's some hurdles in terms of like, you know, how do I get my, how do we get my images and photography and product descriptions is a lot of work there. But then a lot of them also had fears around, you know, would going online feel less local, you know, would it be soulless. You know, there's so much of my business that's about, you know, us having that direct interface with people.
Michael LeBlanc
And they don't want to, they don't want to they, they're smart enough, not smart enough. They're smart not to go head-to-head with the likes of the big Amazon, because they're not going to win. So, it is funny, right? Because in some ways, the great acceleration push them out of their, you know, strategic advantage point, which continues today without hopefully that short term where they where they've got to be efficient. But again, that's squaring of the circle right?
Dax DaSilva
Yeah. And I and I think that one of one of the pieces of feedback that I've heard from a lot of people that did, that did go through with using this time, this moment to go online, is that it's it turned out, it turned out to be not as impersonal, as they thought that it ended up being a real additive to what they, what they felt their role was in the community. That, you know, even though they might consider themselves diehard brick and mortar, that, that online presence and the ability for their customers to interact with them on these other channels, that the personal connections were still existed and that shopping online doesn't mean that you weren't shopping local. And that those weren't opposite things. So, that that I think is just reinforced, you know, our belief that Omni-channel is important for everybody. And I think that, you know, what the pandemic’s illustrated is that we've seen the acceleration of Omni-channel because it's been a crucial lifeline for businesses. But it's also proven to businesses that this is something that we want to continue to invest in, and it future proofs us. And there can be there can still be those really important interpersonal connections that we that we love about our community businesses.
Michael LeBlanc
What is it's just a transformation. I, it's been my observation that those who had adopted and built communities and social media had an advantage over those who hadn't. And, you know, it does feel like that old proverb, the best time to plant a tree was 20 years ago, the second best time is now. So, you know, it feels like it's never too late. But those, you know, is it your observation, you know, again, you've got hundreds of 1000s of clients that those who are a little more advanced thinking more about their social community had a bit of a leg up because they could least communicate their proposition that they were still there. Is that what you saw in the market?
Dax DaSilva
Well, there you know, for sure, for sure, there's been businesses that have been investing there and use that those elements of the platform and in were maybe a bit, a bit ahead in terms of adaptation. But I’ve, we've seen businesses really thrive and flourish, even if they had to get up and running. Because they already had their, they already had a lot invested in their Lightspeed platform. They already had a lot of the pieces in place. And in going digital was something that maybe was a, was an area of fear, or an area of non-understanding that, that they realized can just be an extension of what I'm already doing. And that it really does actually create new revenue streams that I'd like to see, continue into the future of the business. And hopefully, what we're gonna see is bigger businesses. When this is all over, as you know, I see brick and mortar transaction volumes go back up. That the businesses are also still doing a healthy business on ecom. And that's maybe a channel they didn't have before.
Michael LeBlanc
Well, you know, I was speaking interviewing a friend colleague of mine very smart guy works in private equity now. And he was saying, I was asking his advice to retailers. And he said, before you go out and buy anything new, have your existing technology provider re-pitch you as if you didn't own it, because you'll wind up finding out that there's seven or eight things you're not using that you already have. Yeah. And you don't need to go find new you already have it. But you know, you know how to get you get caught up in the core. And so I thought it was very savvy advice that, you know, just look at what you've got and get re-pitched again, almost, you know, because there's assets there.
All right so, you know we're talking in the context, a little bit, as I said at the beginning, it's the big NRF show, virtually anyway. It's weird not to be in New York City at this time. As I'm sure you, you feel that as well. And you had a big announcement there, you did an interview. So, tell me about this supplier network you're building. Tell me about it, and what gap are you filling, and just lay that out for me.
Dax DaSilva
Yeah, and you know, this, the announcement of the supplier network really connects back to what we were just talking about, which is, you know, for a brick and mortar business that has complex, has a complex inventory, you know, how do they, you know, how do they get over that hurdle of not having all the descriptions and images ready for going online? So, you know, that's one of the benefits of the supplier network. So, what it is, is it opens a world of suppliers. And let's talk about, you know, we started in a couple of really strong verticals for us. So, bike, outdoor, sport, pet, and jewelry, you know, there's lots of parts and
Michael LeBlanc
Vape, I think I saw vape, too, did I see vape too?
Dax DaSilva
Yeah, that'll be integrated in the future with that, that's a to come for sure. But, but now we've opened, we've opened this world of suppliers inside people's system. So, they can browse, and they can, they don't have to import, it's already inside their system. And they can, they can, look at, you know, they can discover new inventory. But they can also pull in all the inventory with all the images and, and descriptions that go directly into their, into their online, or they can order directly in the system from those suppliers.
Michael LeBlanc
So, does that cut a p.o. for them? Like it
Dax DaSilva
Yeah
Michael LeBlanc
Like is this so, let's say I'm in your network, and, you know, I have a small bike store and I see some great lines of bikes that are actually in stock, because we know how popular bikes are in the pandemic. I don't have an existing relationship, does it cut a p.o.? How do they, and on the other side, I guess my, my question is, how do they know that you're, you know, you've got the money in the bank to cut the p.o. like explained to me some of the back end.
Dax DaSilva
Right, so we, so we have all of these suppliers now being featured in this, in this network, in this market. And, you know, they, if they do discover a supplier that they're not already working with, they do have to create a relationship with that supplier. But once they do, they can use that feed that's in their system to now order and the p.o.’s are built directly in into the system, the suppliers receive them, you know, the receiving and tracking is all automated, the tracking and receiving is all automated in the system. And, and the connection of the, you know, refreshing every time that there's new, new items is automatic. And then the movement of those items onto an online store is also very easy. So, it really is modernization of the supply chain for small and medium sized independent businesses. You know, with suppliers, with their core suppliers. And it just, it's something that we've talked about and worked on for, you know, almost five years.
Michael LeBlanc
It's not the first one I've seen in the market. I mean, it's been tried by, by some but nobody, no one's quite cracked that code yet. So, I'm gonna say it seems to shake. You've been working on for five years, so, what's the biggest hurdle you overcame? To get this to where you thought it was a viable product to launch to your network?
Dax DaSilva
Yeah, so I think that, you know, scale matters. You know, there's, there's 100,000 merchants on the platform. 100,000 plus merchants on the platform that, that could, that over time when we when we extend it to all verticals and everybody. You know, that's interesting for suppliers. What's also interesting for suppliers, and you know, we're not monetizing this in terms of a subscription. This is comes with Lightspeed, you know, ordering fees, there's no subscription fees, because, you know, ultimately, we want the suppliers to benefit. We want the merchants to benefit and we want to be just the default system for those verticals. You know, that's how Lightspeed adds value. So how do, how do the suppliers benefit? You know, suppliers when they supply let's say that, you know, they supply those bikes to that to that retailer, they really don't know how well those bikes did. They don't know whether those bikes, you know, sold as soon as they arrived to the store or whether they
Michael LeBlanc
They know they know selling but they don't know sell through, right?
Dax DaSilva
They don't know sell through. So real time selling thru is really going to help that that supplier, think about their manufacturing, and do planning so that they can be more profitable. And that ultimately the retailers get the product that's actually going, to actually is the popular, the popular with customers. I think we're going to, we're going to optimize for this supply chain the way that Amazon does for itself, using data, you know, the way that, you know, maybe large enterprise retail with big teams to do this does for itself based on its crunching through its data. So, we're using the data that's available to really benefit those merchants and benefit those suppliers. And we think that we're in a really unique position to, to do that. And we have the scale that makes it interesting for everybody to be connected.
Michael LeBlanc
Yeah, scale is an important point, right? Scale is huge, a huge point.
All right. Last couple of questions. And yeah, as you say, we got tons of customers both in, you know, in the restaurant, food service, and service and retail, what's surprised you looking at the data and talking to customers over the past 10 months? And it's super hard question is, what if anything surprised you? And the second part is, as an industry, we kind of look and we should reflect on the industry in these times of crisis and say, you know what? post COVID, we should probably leave some things behind.
Dax DaSilva
Well, I think the thing, the thing that surprised me, and maybe we shouldn't be surprised with, we've seen retailer, retailers really adapt over the last 15 years to the changing tastes of consumers and the changing behaviors of consumers. This is obviously a really compressed amounts of time where there was pretty radical change in how consumers, you know, were restricted and how they had to be
Michael LeBlanc
Unprecedented, right? Unprecedented.
Dax DaSilva
Unprecedented. So, the adapt, but the adaptability, the adaptability of the of businesses of these businesses, you know, we know that our businesses are at a bit more scale that they have, they have that, And that they were because of that, I think they use every tool in the toolbox. The other thing that that available from us, you know, I think that the, the strength of the platform allowed us to really create new workflows that were Omni-channel, you know, we had the, we had the workflows that we already had there. But, you know, as the pandemic, you know, wore on, we realized that some businesses needs to do Omni-channel a little bit of a different way, they they're not the same, it's not the same mold for everybody. And there's just a real creativity, you know, with small, small and medium sized business to take the tools they're given and create innovative differentiated business models. So that was a surprise of like, what people, you know, how they took the tools and ran with them. And we would create new models, new opportunities, and businesses did creative things with them. You know, one thing we rolled out during this period was subscriptions. You know, giving retail businesses the ability to create subscriptions. So, that could be a membership where they sent a gift box, you know,
Michael LeBlanc
A replenish business.
Dax DaSilva
And, yeah, and, you know, some of the things that businesses did with that ability to rebuild customers, their most loyal customers, you know, shows the, the ability for these for these businesses to just be imaginative and chose why they, why they reached the scale that they have. So that, those are, those have been pleasant surprises of how we as a vendor can unlock creativity, and, and how up to the moment, you know, these businesses were and you can see that, you know, in the numbers that we've shown for the last couple of quarters, this is, you know, being able to find ways to thrive, you know, in a tough situation.
Michael LeBlanc
So what, what if anything, should the industry from your perspective, you've been in it for a long time, and you've seen it from a bunch of different angles leave behind what should we, what should we move away from if anything?
Dax DaSilva
Yeah, I think we should move away from, from businesses thinking of themselves as strictly brick and mortar or strictly online, you know, we've started to think about our customers as just as Omni-channel customers. You know, we you know, whether you've made the sale online or you did it in store, you know, that's your that's still your customer, you know, and you're building that relationship. And so the world is no longer that black and white. It's, and we’ve had this acceleration so that we, it's easier to see the future, that kind of future. It is easy to see the interlinkages. To see loyalty work across all these different channels. And so that I think is, I think that conception that you're either or, is definitely something that that will leave in the past.
Michael LeBlanc
Well, it's what my fellow pod, I share podcasts Remarkable Retail, with Steve Dennis, he calls it the “blr” right? It just, welcomed the blur. Like the lines have blurred right? They've just blown up. And it's exactly what you're saying.
All right, one quick last question. It's a funny one because you, you're launching this, you've done some acquisitions, what's next? Like as if that's not enough. But what do you see on your, on your horizon as you've got equity businesses, you've got all kinds of things what's, what would you call it?
Dax DaSilva
Yeah, I mean, you know, we're at around, you know, just over 100,000 merchants. But you know, there's 48 million small and medium businesses around the world, of which we think 7 million are the complex. The ones with complexity they can use, they can be used Lightspeed.
Michael LeBlanc
So addressable market right is 7 million?
Dax DaSilva
So we're, you know, we're super proud of where we are after 15 years, but, but we have a long ways long, a long ways to go. And I think that, you know, as new businesses open, we think we're, we're the right system. And then there's lots of businesses that want to move off legacy and into something that's one platform. So we have a lot of work to do there on the business side.
But I think ultimately, it's, you know, what's next for us is staying close to the community, these communities and these businesses, and making sure that we stay one step ahead of what their needs are going to be. You know, we were lucky to have all the, to see ahead with Omni-channel and with suppliers to know what were the next things that are going to make things easier because it is getting more and more complex to be a successful retailer. You know, the, it's you're wearing, instead of you know, wearing the one hat now you're wearing about five. How do we simplify that? How do we stay a step ahead so that they can really focus on what they're passionate about, which is great product curation and great selection, and having those great relationships. And that's why people get into this, is because they enjoy, they have that they have a dream, right? They have a dream and a vision for what they want to create and what they want to contribute to their community. And just we want we want to have the tools not be the stressful part of that equation. We just want to be a multiplier.
Michael LeBlanc
Well, DAX has been such a treat to meet with you and chat about the industry that we both, we both clearly love and have experience in and all those great things. So, listen, thanks for being on The Voice of Retail podcast. I wish you much continued, much continued success and it's safe and a great week for you and your people as well.
Dax DaSilva
Thanks for having me, Michael. Really appreciate it.