Why did you leave Frank & Oak?
Raff Paquin: Being an entrepreneur allows you to learn a lot—about customers, the market, and yourself. The challenges related to management and exponential growth at Frank & Oak were extremely demanding, which allowed me to get involved in various projects requiring diverse skills. These experiences allowed me to figure out what I liked and what attracted me less.
During my time at Frank & Oak, I realized that I loved using technology to create breakthrough moments, rather than making incremental improvements. I realized the leader in technology that I was, or at least the one I wanted to be, was not a leader who preferred incremental improvements, but loved to take risk. During the stage of growth that Frank & Oak was at [when I left], the company and its business model worked well and the foundations were well in place. Most of my responsibilities were to optimize and improve, rather than to build something new. That interested me less, and explains my desire to seek new out challenges.
How to succeed when starting a business?
RP: It is critical to listen and understand the consumer when starting a business. Today, many entrepreneurs who want to start a business try to find an idea. They figure that they have a good team and the funds to start their business, but they lack the right idea.
But it is a profound mistake to start businesses from an idea. I believe that companies should be created in response to a problem, rather than from an idea. Only by understanding and analyzing a problem can we find the idea that solves it. When creating a business from an idea, it can be difficult to find a market and consumers willing to pay for the service or product. However, people are willing to pay for a product or service that responds to a problem and simplifies their life, a solution that meets their need, whether they realized it before or not.
Does that explain the rapid success of Frank & Oak?
RP: Frank & Oak was established in 2012 and has grown extremely quickly. One of the main reasons for this is the success of its business model, which is based on a solid understanding of consumers’ needs. As said earlier, basing your initial reflection on a problem can ensure a certain level of success, or at least greatly reduces the risk of the project failing. I think this, in part, explains the success of Frank & Oak.
Hicham [Ratnani] and Ethan [Song], the two co-founders had a deep understanding of the problem: men want to be well dressed and are increasingly interested in fashion and cosmetics, but the purchasing experience was not well suited to them. They exploited this trend by trying to meet the needs of male customers who wanted to be well dressed while simultaneously addressing the lack of understanding, “education,” or advice in choosing clothes.
So we created a model to educate our consumers first, with our content strategy, explaining how to wear a tie, a bow tie, or cufflinks, for example. At the same time, he was provided an experience where he could explore the products without assuming any risk. The customer simply subscribes to our newsletter in order to then choose three products sent for free every month, for him to discover and get to know our brand and our products. The creation of a specific shopping experience for men is based, in my opinion, the rapid success of Frank & Oak.
Did e-commerce lead to this success?
RP: Quebec, and more generally, Canada are lagging about two years behind in electronic commerce. Any business person looking to launch a business or a new project should always ask: how can I “attack” the US market? This has been possible for us, with e-commerce. So, Frank & Oak’s success mainly comes from the United States, as approximately 80% of our sales are made in there, even from the first day of operation.
As a startup, it is difficult to change consumer behavior. You can educate them, but it remains difficult to change their behavior, which in turn makes it difficult to convince people to buy online. Startups alone cannot do this, but broader trends can convince consumers to buy online.
What role does Interaction Ventures play in the Quebec financing landscape?
RP: There are many angel investors who invest personally, and 4 or 5 major investment funds in Quebec, but very few are similar to Interaction Ventures, our venture capital fund. Interaction Ventures was started with five people coming together who wanted to have basically the same role as a financial angel in a project. Interaction Ventures offers very early stage funding, generally without a massive investment, but provides a lot of support to entrepreneurs by giving access to our network of contacts and consulting. This differentiates us from other Quebec venture capital funds, like Real Ventures, for example. That fund is also complementary to ours, because it provides much larger investments and chooses more mature projects than ours.
What do you think of the startup ecosystem in Montreal?
RP: There is an interesting dynamic right now and we’re approaching a tipping point, due to the solid structure that has recently been set up. Even if we criticize stakeholders in the Quebec market for their aversion to risk, or their mentality that understates selling and marketing. Many Quebec entrepreneurs are producing great products and promising technologies, and offer extremely interesting ideas to address the problems encountered by consumers.
But unfortunately they do not always have the appropriate method to develop and implement an “aggressive” marketing strategy, even though this is so important. The current dynamic in the startup ecosystem gives us the chance to challenge ourselves and to develop ourselves to look beyond the relatively small francophone market, and to start tackling international–and especially US–markets. Every entrepreneur in Montreal should definitely consider the US market in order to grown and ensure the success of the project.
©: Kilovolt/Le web en pleine effervescence à Québec