An eCommerce Products & Services Powerhouse That’s Putting Canada on the Map
It can seem almost impossible to open a newspaper or visit a Canadian business news site these days without being bombarded with the pessimistic mantra that Canadian businesses (and entrepreneurs) are risk-averse, conservative and doomed to play second-fiddle to our southern neighbour in the innovation orchestra of the online world.
Here at Dx3, however, we don’t buy into that kind of thinking. That’s why our “Made in Canada” series regularly highlights Canadian startups that took a chance, dreamt big and are now stepping boldly into the global marketplace.
About Demac Media
When we set out to feature companies in the Dx3 Digest “Made in Canada” series, we look for businesses that break the mould of the typical and that redefine the way we think about Canada’s digital legacy. With that in mind, Demac Media was an obvious choice.
As an award-winning eCommerce solutions provider, Demac is the kind of company that flies in the face of the misguided mantra that Canada is the slow, awkward and underdeveloped little brother in the global family of online retail. From web design to marketing integration and optimization and everything in between, for the past few years Demac has been helping Canadian business build seriously effective retail portals from the ground up.
To get a better feel for how Demac grew into the eCommerce powerhouse it is today, we sat down with founders Matthew Bertulli and Dimitri Colomvakos.
As surprising as it may seem, back in the late 2000’s eCommerce and retail weren’t necessarily seen as the most glamorous or exciting industries to get involved with. For Mathew Bertulli, however, it was an obvious choice. “I grew up with retail,” he told me, “and my family has been involved with it for over 40 years. Because of that eCommerce was obvious choice when I knew I wanted to start a business even though it’s never really been the ‘sexy’ thing.”
These days eCommerce is the the concept almost everyone in the online space has to talk about at one point or another, but back in 2007 context and timing played a big role in this earlier misconception. As Dimitri went on to add. “Remember this was all happening just a short while after dotcom bust so there was a general sense that no one was really interested in eCommerce at the time outside of the big players.” There was opportunity in the air.
In their previous jobs, Dimitri and Matt had already begun to notice the writing on the wall: eCommerce was a largely underdeveloped industry in Canada even as more and more retailers were realizing its emerging importance.”Before starting Demac Media I worked at a cloud software company called Netsuite” Matt recalled. “While I was there I got to talk to a lot of companies in retail and eCommerce, and I think in Canada what frustrated me was that the big retailers didn’t seem to have any issues with getting into and working in the realm of eCommerce… but the small guys were a totally different story. I would hear about their problems all day long and almost immediately I knew I wanted to be in that space.” He knew, even at this early stage, that there was potential to build something interesting but that he couldn’t do it alone. The answer? He called a friend: Dimitri. At the time Dimitri was working as a developer over at Eloquoa (a marketing automation software company).
From these beginnings, things picked up quickly for the emerging business. From the first moment, Matt and Dimitri went in with the goal to become a major powerhouse. “We were and still are all about being at the front of eCommerce in Canada,” said Matt. “To this day we want to build really cool shit really quickly, so we try to focus on moving as fast as possible.” It was a gamble of balancing a thorough understanding of the opportunities in the eCommerce in Canada at the time, developing effective software as a service and good timing and fortune. They also scored big by picking Magento as their development platform back when it wasn’t yet known as one of the pre-eminent brand names in the space.
“When people ask how we scaled our company so fast, we still say ‘dumb f***ing luck,'” Matt joked. “We got into business just when Magento was still getting going and out of 600 platforms we just happened to pick the right one. They were a 40 person company when we started with them… then they shot to over 400 in an instant.”
As always when starting a business from scratch, however, Demac has defined its success and its growth primarily on its ability to overcome the obstacles and adversity in its path. “One of the biggest challenges in eCommerce,” Matt explained, “is always going to be staff. You really can’t hire engineers with eCommerce backgrounds right now simply because they mostly don’t exist. That’s why we started our monthly eCommerce meetups because we knew we needed to help build the community. Sometimes people ask why we do it, but that’s it right there.”
The strategy seems to be working remarkably well. Demac recently teamed up with MaRS to co-host the monthly meet-ups and without a making a reservation well in advance you’re unlikely to get a spot.
On top of the challenge of finding experienced eCommerce talent in Canada, however, Dimitri and Matt also shed light on how misplaced stereotypes and hesitancy about online retail in Canada have occasionally presented roadblocks to overcome. According to Dimitri, “4-5% of total retail sales in Canada come from eCommerce but in the US it’s more like 9-10%. This is partly because the technology up here lags behind in some areas but also because the same willingness isn’t there.” As a case in point, he went on to describe how one of their American clients “Unique Squared” asked them to build a “make an offer” function for their site. “They asked for that while meanwhile up in Canada you could almost never get a Canadian retailer to try it. But the data on how those things perform is incredible so it should be easy to convince people to try it.”
According to Matt, “it really comes down to education.” He went on to describe how, in Canada especially, most retailers are “family owned so change can seem risky and dangerous… but when you see the numbers it becomes pretty clear.”
Fortunately, Demac and its clients are ushering in a new kind of retail success story. With their client Snuggle Bugz, as just one example, they still see conversion rates going up whole percentiles quarter after quarter. “Even still, there’s no secret sauce for perfection or success,” Dimitri explained. “It does come down to experience though. The average retailer may have experience with a small handful of eCommerce sites, but in a year we’ll work with several dozen. What we bring is perspective.”
On Being an Entrepreneur in Canada:
When our conversation turned to the culture of innovation, entrepreneurship and collaboration in Canada it wasn’t hard to sense Matt and Dimitri’s enthusiasm. “The community in Toronto is particularly awesome,” according to Matt. “You’ve got guys like The Working Group and Bnotions to name just two great companies that started around the same time as we did. There were 17 of us in total that started Lean Coffee Toronto and having that support system in the early days was huge. There’s so much shit that nobody teaches you in school, but we’d share our mistakes and learn together.”
In addition to having a solid support network, according to Dimitri there’s also an “awesome talent pool here” even if the eCommerce education infrastructure isn’t fully developed yet. “The engineering talent is fantastic and that makes a big difference..”
Advice for Entrepreurs in Canada:
Entrepreneurship is so often associated with raising capital and wowing investors early on with a great idea, but Matt and Dimitri champion a leaner approach to building a business that is rooted, first and foremost, in following your own interest. According to Matt, “people talk about it all the time, but really the key is to just do something you really want to do. In the bootstrap world in particular, the saying is ‘scratch your own itch’.” Without that incentive at your back, Dimitri added, the trials and tribulations of building something from scratch will seem all the more challenging. “You’ve got to have fun doing it and you’ve got to love the people you work with because it’s not glamorous at first.” With that in mind, he advocates hiring for personality and culture first and foremost.
So often when you talk about startups, the conversation almost immediately swings to an either/or situation between funding and running lean. In this case, Matt and Dimitri were quick to point out that sometimes entrepreneurs can get caught in the thinking that they have to create the next Facebook or Amazon or else they’ll be a failure. That they have to get piles of funding right out of the gate to succeed. “The one key piece of advice would I give” said Matt, “is that I would say don’t be afraid to not swing for the fences. There are so many great companies that get acquired in the 10-20 million range but you never hear about them, but it’s way better to be an owner of one of those companies than to have a dozen stakeholders on one a few times bigger.”
” In Canada,” Dimitri added, “a successful small to medium business is just fine. Be good at what you do first.”
The Road Ahead:
Less than half a decade old, Demac Media is already moving fast and furiously with the solid foundation of a company twice their age. In fact, it seems they’re in the sweet spot of having become successful without losing their agility. “We still release new tech every week,” said Matt. “Everything we do is extremely incremental and that’s the key to why we’re so agile.”
With that in mind, I asked him to shed some light on where the Demac story is headed next. “2013 for us is all about mobile and data” he explained. “Data is huge and we’re getting so much of it every day. But analysing the data so you can do something with it is the hard part. From an R&D focus, that’s definitely fixed on our radar.”
Stay tuned to the Dx3 Digest for our ongoing “Made in Canada” series: