Few Canadian tech companies have inspired more excitement in the last year than Lightspeed POS, the Montreal-based SaaS company that has been expanding rapidly into international markets, with no fewer than four acquisitions since going public in March of 2019. The company, which recently announced it will open new offices in Toronto, provides comprehensive business software to small retailers and restaurants. In 2019, Lightspeed's customers saw 10.3% growth in year-over-year gross transaction volume, beating the industry average of 1.5%, according to a recently published Year in Review report.

We spoke with founder and CEO Dax Dasilva — named 2019's Innovator of the Year by Report on Business magazine — about why diversity is central to his company's growth, when to take on external financing, and how he plans to accelerate Lightspeed's global rise.*

RE$EARCH MONEY: What was the original business opportunity that you identified?

Dax Dasilva: The business started in 2005. I'd been a Mac developer since I was 13, and I'd done many different custom systems and solutions for different retail businesses. Apple was having its big comeback, and I realized that more and more people wanted to use technology where they were. The Mac computer was a great tool for people to feel empowered with their data and their business. But there wasn't really any business software available to them on the Mac. At the time, people had these black plastic legacy systems that you punch in your transaction into a POS system, but it doesn't really give you insights or much help running your business.

When we started out, it was about giving the merchant back control of their business. As we have progressed over the last 15 years, we've responded to radical changes in consumer behaviour and allowed merchants to keep pace. That meant adding mobile checkout and bringing the solution into the cloud so that we could seamlessly enable omnichannel e-commerce buying, loyalty programs, and multi-location analytics. We're the platform that lets independent SMBs be competitive with big-box franchises and actually exceed the performance of some of the big retail outfits that have failed to adapt to the technology.

R$: You probably introduced a lot of merchants to the possibility of being responsive to data about their customers.

DD: One hundred percent. At Lightspeed, we work primarily with customers with a physical presence. That's still where most of the transactions typically tend to happen in our world today. But these businesses are not used to thinking in the data-driven manner that an e-commerce business is. We are helping brick-and-mortar businesses look at all their sales channels and start to make their decisions based on data. That's new and we have to make it easy. A small business owner didn't get into business to become a data scientist. They got into it because they're passionate about bikes, or they're passionate about Spanish food. We have to make the technology side of it work for them so they can thrive.

R$: Looking back at your growth trajectory in the last 15 years, which of your early growth strategies put you on a path to success, and what were the ones that you ultimately needed to change?

DD: In the first seven years, we bootstrapped the company. I think this is a very important stage for any company. A lot of entrepreneurs I speak to are drafting a pitch deck for investors before they've even started their business. Bootstrapping allowed us to do everything that we're doing now. We were able to bake in an identity and a DNA.

Bootstrapping brings integrity. It allows you to understand what's working and what's not working, because you're building a business based on your revenue, and you're bringing people on based on how successful your business is. I think people forget — especially in tech — that business is about bringing in revenue and bringing value to customers. It's not only some exciting idea. People have to stay grounded on what you're building.

R$: So why was it a good decision to take on external financing at year seven? What changed to make that the best move?

DD: We realized that competitors were starting to come into our space that were heavily funded by Silicon Valley. Also, we were selling software on a license basis, and we needed to move to the cloud and sell on a subscription basis, which meant that there would be a period of time where we weren't getting all the money upfront as we did when we were selling licenses. Also, we built our company with our employees, with our customers and with our reseller network around the world, but we had no connections to the investment community or to the tech ecosystem. Taking investors really helped us connect to the outside world.

Our first investors were Accel from Silicon Valley. They put in $30 million. We didn't spend a dollar of that for the first year. We just professionalized the company. We worked with them every Friday to figure out how we make Lightspeed a global leader. And that meant bringing in new executives, new systems and new processes. We came to the conclusion that we were going to have to commit to the cloud and go SaaS-based much sooner than we thought. That's when we started to spend the money and make investments. But we were not going to pour gas on the fire when we weren't ready to accelerate.

R$: So Accel was in a mentorship role?

DD: Absolutely. When iNovia joined — they are, in my opinion, the best VC in Canada — they added the same kind of value and different networks. That's some of the advice that we give entrepreneurs: Don't just go for the investor that's going to give you the biggest valuation but that may not know anything about your industry or your segment. That's going to be a real challenge for your business later.

R$: What were some of the challenges you overcame to become the company that you are?

DD: As we started to realize we had to go into the cloud, we started to make small acquisitions, as of 2013. Most private companies don't do that, not at the size we were then. We weren't a huge company, and we were bringing in a team of 20 new people that live on a different coast. We were trying to get our engineers and their engineers to build something that had never been done before.

At the same time, we were transitioning our business model. We had customers on our old system and we were trying to bring them onto the new system. There were innumerable challenges: trying to be competitive in a new market, trying to get our resellers to understand all these changes. There's no shortage of things that feel like they're going sideways on a day to day basis.

When people ask me what were the great failures, I always tell them there are ten things that go wrong in a day and two things that go right. You have to make sure that the things that go wrong become learning opportunities that help the company be better and better. And that we celebrate the wins and you make sure we capitalize on the wins and use them as fuel to go forward.

R$: Have the acquisitions primarily been a strategy for entering new markets? 

DD: Typically, the acquisitions have done a couple of things at the same time. In general, we say that acquisitions either bring new capabilities, bring us into a new vertical, or bring us into a new region. And on top of that, they can bring us great leadership and great teams. For example, our acquisition in Amsterdam helped us get into e-commerce omni channel, but also helped us have a large presence in the Netherlands. We bought that company with 80 people in 2015. It's now 160 people, so we've built a big presence there.

R$: What aspects of Lightspeed's culture have contributed to your growth?

DD: There are a lot of cultural elements that we have digested down to a couple of key beliefs, such as diversity. All the original members of the company were from the LGBTQ communities. As we've grown the company, we've always had the belief that everybody's viewpoint is valuable, and everybody should have a fair shot. That's key to our ethos. As we do acquisitions and get people that come from very different backgrounds and cultures, we retain that ethos, that difference can be a teacher.

And integrating doesn't make everybody the same. That's the reality. Lightspeed Berlin is not going to be the same as Lightspeed London or Lightspeed Sydney or Lightspeed Montreal. And that's the great thing. We've got to be aligned on process and values, but there's going to be things that that we teach one another.

R$: What types of government support have been critical to your growth and success?

DD: We've had lots of different programs that we've been able to benefit from over the years. In Quebec, there's the immigrant investor program from Investissement Québec. There's the BDC and all of its programs. There have been local municipal programs, as well as things like SR&ED and the e-business credit. Lately, the fast track visas and some of these newer programs have all been very helpful for us as we reach these different growth stages.

R$: Are there any policies or programs you'd like to change?

DD: In Canada, we need to make sure that we are cognizant that, as a budding tech ecosystem, we are competing for talent with the United States and other countries. And so when the government wants to add stock options treatment or tax treatments that put us at a competitive disadvantage to an employee working south of the border or overseas, that harms the Canadian tech ecosystem more than any government revenue that would be achieved from that.

We have to make sure that we have certain advantages for our local Canadian tech companies. We incentivize a lot of foreign companies to set up offices here in our Canadian cities. The Quebec government does an exceptional job making sure that local companies get properly supported and that we don't fall all over ourselves convincing multinational tech companies to set up shop here.

R$: How are you handling the talent challenge now?

DD: Every tech company is going to be competing for the same talent. As we grow, that's always going to be more and more of an issue. We have more than a thousand people around the world, and most of them are in Montreal. I think we're a destination employer here in the city. We get a lot of strong talent, but we're also doing some things that, as an at-scale tech company, we are not going to be able to find certain skillsets locally. We do need to occasionally bring in people from other places, especially senior executive talent. So I think it's a multifaceted challenge. We're fortunate that we have strong universities and schools in this country. I think one of the things that has probably changed over the last five years is that more people are coming from other places to study here and more people are staying.

R$: How important are universities and colleges to your growth?

DD: There are some universities and colleges we have regular activities with, like the John Molson School of Business. We do get great talent coming out of universities and colleges, but there's much more we are going to have to do as we go from 1,000 people to 5,000 people over the coming years.

R$: When you talk about growing to 5,000 people, do you see that happening here in Canada, or is that around the world? Can you elaborate more on your kind of growth aspirations today?

DD: It's going to happen everywhere. We're not going to stop growing at headquarters and we're not going to stop building out our international teams. Two-thirds of the company is here in Canada and I think that you'll see that proportionally grow. Stay tuned. We're just getting started on this path as a public company, which allows us to do even more accelerated planning than we've ever seen before.

R$: What kind of investment do you put into R&D?

DD: We've got some long-term focused R&D projects. Our product technology group is focused on our main platforms, but we also have projects around all sorts of leading-edge technologies, like Internet of Things, augmented reality, et cetera.

R$: Do you do all your R&D in-house, or do you also work with universities and other labs?

DD: For now, it's in-house. That may change in the future as we start to work more closely with universities. I know that on the AI side, there are a lot of collaborations that are possible. It's something we're interested in.

R$: What advice do you have to, for those founders that want to continue to scale an innovative Canadian company and remain in Canada?

DD: Before you get to 50 people, it's easy to feel like your company is like a family. Once you get past that, it starts to go to another level. Ultimately, I think that company culture comes from the top. As the leader, you need to bring in the right partnerships and the right kind of business, find the right investors at the appropriate times, and know that there are going to be many inflection points, year upon year.

One thing to keep in mind is that, as the leader of a business, you have to reinvent your role every year. You have to take a step back and think about what you're going to let go of, and how you're going to share ownership, because that's the only way that the business is going to scale. Your people have to feel as much ownership of the company as you do. That's the culture that has come from the top. When you start to issue things like stock options, people behave like owners. That's one of the great things at Lightspeed: everybody here is an owner of the company.

R$

*This interview has been edited and condensed.