Ali Asaria is the president and CEO of Well.ca an online retailer which sells virtually anything you might find in a Shoppers Drug Mart, minus the pharmaceuticals.
When Ali Asaria's angels invested last summer, the irrepressible founder of online health store Well.ca was still working out of a church basement, building his business – and attracting the occasional homeless person looking for soup.
"He was packed to the rafters," recalls investor David Ceolin, who supports early-stage companies through his Toronto-based firm, Innovation Grade Capital.
"That's what impressed me about Ali – his resourcefulness and his ability to get out of the gate with very little but, in doing so, being able to show results of live market activity," Mr. Ceolin said. "He was putting money back into the business, not worrying about the aesthetics, as it were."
Fellow investor Jordan Banks, managing partner of Toronto-based Thunder Road Capital at the time, was struck by the young entrepreneur's grasp of the metrics.
"He knew exactly how much he was paying to acquire a customer, the basket size of that person, how many times that person was going to come back in any given quarter, the profitability of that person. Therefore, he essentially knew the margin per user, which is incredibly important and impressive for somebody who, at the time, was fairly early on in the development of the business," said Mr. Banks, who is now also managing director of Facebook Canada and a director of Well.ca.
Mr. Banks and Mr. Ceolin put together a $1.1-million cash infusion that allowed the 29-year-old electrical engineer to move into a sprawling warehouse on the outskirts of Guelph, Ont., last November. He hired some of his former colleagues from Research In Motion Ltd. and began to take Well.ca to the next level.
The business now carries more than 34,000 health and beauty products, has roughly 100,000 "active customers" and a staff of 45.
Mr. Asaria said he did not give up "a significant" stake in his business in exchange for the financing and still retains majority control.
"Generally, the longer a growing business waits to take on investment, the less it will have to give up in equity," he said, noting that he had been operating for more than a year before securing the money in the summer of 2009.
When other would-be entrepreneurs ask Mr. Asaria to instruct them on the art of the pitch, his answer is not what they might expect. He learned a hard lesson, he says: "Traction speaks louder than words."
"When I started, I did meet investors right from the beginning [in early 2008] and I would talk about the idea of building the biggest e-commerce company in Canada, with this really large vision. I think a lot of people thought it was a little funny. Who is this guy with the big vision?"
(This guy with the big vision learned about retail – and how to generate business through excellent customer service – as a boy hanging out at the pharmacy operated by his father, Sultan Asaria, in Guelph. He indulged his love of technology at the University of Waterloo, eventually landing at RIM, where he was best known for designing the Brick Breaker game for BlackBerrys. "My passion for e-commerce came from my own personal bad experiences buying things online. I had used U.S. websites and loved the selection, but hated paying the extra shipping and duty charges," he said.)
Alas, the first moneymen he pitched to were not interested in untested ideas.
"I would meet investors and they would just stare blankly and never call me back. I had the extreme where I was literally insulted in meetings, where they would call me names," Mr. Asaria said in an interview at his company's spacious digs. "It's challenging for an entrepreneur because when you meet an investor, especially in the beginning, there is a power imbalance where they have access to a lot of capital, and you might be very desperate. I think sometimes investors abuse that."
They were "quite open" about why they turned him down, Mr. Asaria said. "In the beginning, most thought that I didn't have enough business experience. Yes, I was doing engineering at RIM, but I was also 27 years old. They said I was too naive, and hadn't run a company before. A common reason I was rejected was because of our intense focus on Canada, which investors saw as a weakness. A number of investors – Canadian and American – aren't interested in companies that focus on Canada because they think it is too small."
So he "bootstrapped it," starting as a one-man operation in his apartment, taking orders over the phone, making shipments, one by one, while writing the software to support the operation.
"When we started, we decided to do a few things differently [than other online retailers] The first was actually answering the phone. … We'd remember people's names and send them personalized gifts for their kids if we heard babies crying in the background. Soon we started writing little notes to them with every order." Mr. Asaria developed his business sense – and the systems to track and analyze all aspects of the operation – on the job.
One year in, Mr. Asaria had demonstrable results to show Mr. Banks and Mr. Ceolin. At that point, Mr. Asaria said, it was more of a conversation than a pitch. "You sit down and say, 'Here are the things I care about, what do you care about? Is there a partnership that we can form?' You want to find the right investors who share your vision," Mr. Asaria said, adding that he was looking for angels who would provide their expertise as well as their money.
Mr. Banks, a former managing director of eBay Canada, has a wealth of experience in e-commerce. Mr. Ceolin was the founder and chief executive officer of Digital Cement, a global firm widely recognized for its innovative capabilities in digital marketing strategy.
Mr. Banks, for his part, was impressed that Mr. Asaria had "smart answers" to every question he threw his way. Mr. Ceolin was intrigued by the interactive relationships that Well.ca had established with customers. Mr. Banks said this devotion to customer service is Well.ca's "secret sauce."
Customers are invited to write product reviews on everything from soap and shampoo to gluten-free brownie mix and organic jelly beans. The company sells everything, and more, that consumers might find in a well-stocked drugstore – short of prescription drugs – and offers free shipping anywhere in Canada.
Mr. Asaria still aspires to build the largest e-commerce operation in Canada without, he hopes, compromising the customer service ethos he learned from his father. Would-be buyers come to him, now, but he has no plans to sell. He is in it for the long haul, he said, and intends to remain firmly in control.
"It's not about retaining majority control for me, it's just about making sure we find investors and partners that believe in our culture and long-term vision," he explained.
"We just incorporated two years ago, and it's just been this phenomenal ride."
Special to The Globe and Mail