Early-Stage Startups, Turnarounds, Insurtech Ventures: A VC Perspective

Speaker A: Foreign.

Speaker B: Joe. So we're rolling, uh, just two, uh, Canucks on Thursday, uh, afternoon. It actually happens to be Halloween when we're reporting this. It's funny, just occurred to me like, even though I've got four kids, my wife says, are you going to be home tonight? Uh, because you're on duty. Uh, because I've been traveling a lot too, so, so I'm, I'm here in Oakville, Ontario. I, I could hit the lake shore with a stone throw. That's where our office is actually. Just walk by the lake. Where, where are you uh, sitting today, Joe?

Speaker A: I am at, uh, I'm in the financial district. Adelaide. Adelaide and York. Adelaide, New York.

Speaker B: Nice. You, you, you spent a lot of your career down there, haven't you?

Speaker A: Pretty much all of it except when I went off to uh, Turnaround Children's Aid foundation and next Canada. Everything else has been in this four or five block radius. So it just feels like an appendage. I love the people, I love the energy, I love the vibe. And even though I'm not operating a company, I still like being in the mix because you have these beautiful mini collisions every time you step out of the office and it's pretty special. And even though my kids are a little older now, my youngest is 18, I'm still racing home for Halloween. It just makes me so happy. It brings my heart so much joy to have all these young people coming by the door and having this wonderful experience. So I'm a little more excited than perhaps a guy like me should be. And I'm, I'm dressed as a pretend Bay street finance guy, as if I actually had any talent.

Speaker B: Well, the pocket square is matching the shirt, so.

Speaker A: Right. Well that's part of the costume. It's part of the costume.

Speaker B: Yeah. Well done, well done. I'm pretty sure you didn't get that from Amazon though.

Speaker A: No, Costco. I got it at Costco. Good old Kirkland.

Speaker B: Little plug for Kirkland there. Yeah.

Speaker A: That's awesome. That's awesome.

Speaker B: So Joe, I, I, you know, I, I'd be remiss if I didn't talk about a bit of your accomplishments for our, our audience here. You're, you're very well known guy and I, I don't want to blow up your head here because I know you're humble, but Joe is a bit of a Canadian icon and uh, you know, I've done a lot of research on you and I've known of your name in the kind of venture circles, in the fintech circles and lots, uh, of Household names associated with you, like Fidelity, like Asante, like uh, Synergy. I know you were um, an early investor in wealthsimple, if I'm getting that right. And uh, you've done a lot of things and you've had a lot of uh, a lot of accolades through your career. Uh, I know from what I've read you've done a lot of turnarounds and maybe, maybe we'll talk about that because I, I think the Canadian economy is in need of a turnaround. Uh, so maybe you've got something to share on that theme. Uh, but you know, there, it's rare. I don't think I've ever interviewed someone who's, and if, correct me if I'm getting this wrong, that's been awarded the, the Queen's Diamond Jubilee and named most uh, influence. Influential person of the decade. So you know what, Joe? I'm, I got my founder hat on here. Like I wear two hats. So I'm, I'm John inserttech Canada who runs this podcast and community trying to do my part in the space as someone who's put 22 years into the insurance industry myself, but I'm also a startup founder by day. Um, and so you know, I've gone through, you know, the pains of self funding, of launching uh, my own company and I'm not here to promote that at all. But I understand the founders that I typically interview and our audience is a, is a mix of startup founders, investors, insurance carriers and other stakeholders in the insurtech ecosystem as well as accelerators and incubators and you name it, and we have an international audience. So I think, you know, guests like you, I, we've done a lot of founder interviews and I know you've been involved in founding a lot of ventures as well as investing, but I think you have a lot to share and to contribute and I, I know I've already taken a lot away and I've learned a lot just from the conversation we had leading up to this and uh, I know our audience will take, take a lot away uh, from this as well. So I, I want to just give you an opportunity to talk about like, give us a bit about your background, Joe. And like what, what are you focused on today before we jump into the topics at hand?

Speaker A: Sure. Thanks John. And listen, I, I am honored and delighted to be here. I've been so frickin blessed in my career to have a number of really awesome entrepreneurial experiences or leadership roles to rebuild Fidelity after they had fired 90% of their staff. They had four people left and $60 million. And we were able to build that into a multi billion dollar success story, um, and hundreds and hundreds of employees. And I built GT Global, um, which is now called Invesco Trimark. And we built that. I think at the time we were so lucky we had created such a great platform, an amazing team. We went from Nothing to almost 3 billion in under three years. Like I think we're the fastest company to get to a billion dollars in assets back in 1994, 95 when we launched, um, and then I built, as you mentioned, Synergy Asset Management and that was equally exciting. And, and we made a lot of money for our investors in our funds. And then CI Financial came along and, and bought it because they really wanted to um, own that structure, that platform, that pool of assets. But they also wanted me to come in and my team to um, parachute into Assante Wealth Management. The same day that they announced they were buying Synergy, they announced they were buying Asante. And they didn't know how to run it or who to run it. And Bill Holland, their CEO at the time, was a good friend as well as my toughest freaking competitor. I mean that guy was so difficult in every one of those startups I was building. He was the toughest guy to beat every single time. And then for him to come along and offer a really, I thought, a very aggressive valuation for our company and we had RBC as a partner. They were a minority partner in our company. I wasn't sure they were going to say yes, you know, for us to sell to a competitor of rbc. Um, but they said, we love Bill Holland, we love CI, Go do that deal and make us proud. Turning around Asante, because Asante was in rough shape. They'd had seven CEOs in five years. They had really big problems with the regulators and with uh, lawsuits and stuff. And so I spent a good chunk of my life turning that around. And I was so happy and so proud when we were done because we created so much more wealth and prosperity for our investors. And going through the financial crisis, um, 2008, 2009, I think we really, our advisors across Canada rose to the occasion, did a great job. And then when it was all done, I really just wanted to be a dad for a while because when I do things, I pour myself into it. I immerse myself. I'm a 24, 7 guy. I eat, sleep, sleep, live, breathe. I've got a light up pen beside my bed. I Write notes at 2 in the morning. I'm Nutty. And so it was, it was really great. It took me a year and a half, almost two years to convince Bill that I should go off and take time with my family. But I did. And the short version of the story was when I was taking time away and really embracing the, uh, family thing, you know, people would come to me and say, listen, can you take a look at my company? Can you see my son's friend startup? And this is why there was no startups in Canada. In fact, you know, that's when I started at Next Canada. They come to me when I was at Asante saying, can you take a look at our pitch deck? And this was an accelerator incubator that did great, that had hoped ambitions of doing great work for Canada. And so I loved it so much, I became their first board member, their first, um, investor or donor, because it's really a not for profit. Uh, and so I embraced the whole startup community at a time when it really was nascent, it didn't exist. And when Next came along, then CDL was born out of that, and then Vector and then Velocity, and now there's hundreds. So it was kind of early days and I was just feeling my way around, to be honest. And so when Michael Katchen came and said, would you take a look at my business? And I saw the disruptive potential of wealthsimple, I was immediately drawn to Michael because he's got character, he's got integrity, he's got deep value, he's got a beautiful family life. Um, I met his parents. I mean, I loved his family as much as I loved him, and I loved the business model. And then I met his team, and I loved the money he was putting around him. So for me, it had all those elements. So that's how I got involved there. And Coho, I got involved with Daniel Eberhard. Rich human being, deep values, great character. And so I started to do a few of those, and then I got called back in to do another turnaround. Just I happened to be on the board of Children's eight Foundation, and the guy was, uh, making a bit of a mess of it. And so the board said, please, would you just go and spend two days a week fixing it? I said, two days? You think it's two days a week?

Speaker B: Sounds like.

Speaker A: I went in, I looked at the business, even though I was on the board, I should have known, but it was six days a week. So I said, okay, I'll do it, put up my hand, you get two years of my life, I'll do It for free. I love these kids. This is for children who've been abused, neglected, abandoned, orphaned, and they're brought into the child welfare system. And we fund a lot of their education and programming and, um, a lot of programs that really make me. So, again, it was one of the most special periods of my life. And so I've had the honor to do things like that. Then I spun two companies together that were broken and sold them to Purpose Investments called Aston, uh, Hill, and, uh, Front Street. And then I did Next Canada. And so really, all I do now, ironically, um, just before this call, um, I was with the CEO of Uset Insurance. So, uh, Xavier was in here. Um, I advised him, I work with him. He's a brilliant, energetic, charming, driven young man. He's built a great business. I think they're doing great things. They've got a great board, great capital. And so that's what I do. I help five or six different tech founders, CEOs, um, as they need me. And, and when they stop needing me, I just go home. So I do cap intel, um, tip, tap, pay, uh, aic, AI, and, and I just, I, I step in when they need me and then I back off when they don't. Kind of like a coach. I'm not a coach.

Speaker B: Well, I, as a founder, as a fellow founder, early stage founder. Like, we need coaches, uh, because, uh, sometimes we can be our own worst enemy. Um, and by the way, sidebar, you set great Canadian insuretech. Xavier, uh, and I have changed, exchanged a few messages here and there. You got to help me get him on this podcast.

Speaker A: Okay, sure. You know what? I think he would be delighted to do it. He's a terrific guy. And, and as I say, whenever he needs me, I'm always available.

Speaker B: So, Joe, uh, and, and, and you know this, right? The best athletes in the world still have coaches, right?

Speaker A: One, uh, hundred percent.

Speaker B: It doesn't matter how good you are at your game, whether it's the game of business or the game of sports or whatever your discipline is, everyone needs a good coach, right? Because you can start to buy your own BS a little bit. And, you know, sometimes you need that sounding board. I want to ask you a question. You've done lots of turnarounds and you've been deeply involved in startups. What do you think is harder? A turnaround or a startup?

Speaker A: I will not do another turnaround. Um, what I love about startups is I love the energy, I love the ideation, I love the vision building, I love, um, the strategic work. I love the leadership. I love building the team. I'm okay at raising capital. Um, so I like all of that. And when I was starting up those companies back in the day, there was no startup capital in Canada. There was no venture community. So it was weird. But I was able to raise the money and I had a really good run. I hire A's. I mean, I'm not particularly good at anything, so I hire very well. And I've hired people that are, uh, just so talented, so gifted, and believe so strongly in the vision. So it never felt like work. Um, so I love that. And we were able to grow and get momentum and, and that is one of the most elusive things for any company ever to get, is momentum. And I've been blessed to have it three times with three different companies. So, um, when I do turnarounds, I do it because they need somebody so badly that I'm their last alternative, if you will. Uh, right. You know, I wasn't meant to be the CEO of Jones Aid. I wasn't meant to be the CEO of Next Canada, but we had gone through a bunch of CEOs or something bad happened and they needed somebody to put up their hand and step in to fix it. And I usually just do it for two years for either nothing for a fraction, just to get it back on track. And then I go back on the board and how I know I'm successful is if I point the best person for the job after and they take it to the next level, then I know I've succeeded. And in each case, there's that person I put in is still there. And so that's how I measure the success is there, that continuity. But the reason I don't like, uh, turnarounds is they're so emotional, they're so painful. And I'm a very energetic person. I have a lot of love for people. And when you go into a company that's really dog meat and you've got to gut the thing and get rid of a lot of the, the waste and the, and, and the, uh, the mistakes. You got to deal with all the lawsuits and all kinds of ugly stuff. I do it, but I don't love it. I do it because it's absolutely necessary to prune the tree so it'll grow stronger and better for the future. So. But for me, it's hard because you don't like to do those things. You just know that they're necessary in order to save that enterprise.

Speaker B: I was going to say, like the, the legacy baggage you inherit or as you call dog meat. Right? Like uh, you get the dog's breakfast when you walk into a company because you get the existing culture, the existing leadership, the, the legacy culture that is probably bad if you're being brought in for a turnaround, a startup.

Speaker A: My favorite thing is you go and meet these guys and they're like, yeah, I don't think it's that bad. I think everything's great and I'm great and everything's going really well. And I'm like, really? I wouldn't be here. You're kidding yourself. And I think maybe that's what got you into this problem, this situation is you've deluded yourself into thinking that everything's great, but it's not. And so, you know, if you're the fifth CEO in, in four years, which I was in one instance, or the eighth CEO in five years, you know, there's a problem, there's something not good at the foundation.

Speaker B: So I can't help myself. But I'm going to throw out an analogy here. How about a company that's had the same CEO for almost 10 years and he's incompetent and they're a G7 country and it's not a company.

Speaker A: Sorry. Um, I, I'm.

Speaker B: I'm gonna go, I'm gonna go there.

Speaker A: Yeah.

Speaker B: I thought a turnaround project that involved you taking public office. Would you ever consider that? And, and this is, I, this was coming but like

Speaker A: I would do it for a dollar a year. Like you couldn't pay me because I'd feel not right. I would feel like I'm doing it as a civic duty and I would do it as a minister. I would do it, um, I'd run, obviously it's a democracy, but I would do it as a finance minister, as a non threatening. Because I never want to be prime minister. That's not my thing. I don't want to be in politics. But when I see things that really aren't working, that deserve better people, that deserve m. More people that want hope and, and belief in a better future and a better life for our kids and our grandchildren, like that's not trope to me. That is mission critical. And I'm actually very sad at what's happened in our country in the last 10 years. I've never seen so much divisiveness. I've never seen so many people so dejected. And I'm worried that a lot of the investment capital, with this last increase in capital gain, stocks, the investment capital has dried up. The money that was Coming across the border has slowed down. The people see us as unstable, they see us as unpredictable. We're not getting invited to the table in some of the G7, G20, NATO type meetings or our opinion isn't worth that much. It bothers me because we were a beacon. We had great relationships with our U.S. partners. As an example, right now we're almost insignificant to them. And that's not right. I mean, we are the largest landmass on their border and we're good people. We have or had really good productivity and we had really great companies that I thought could dovetail beautifully with a lot of American enterprise. And that's gone away in the last five years. The first, you know, uh, of the nine years, I would say the first three, four were pretty good. There were some good things happening, but the wheels really have fallen off and there's been a lot of damage done. And m. I think um, I want so much more for our country and we deserve so much more. And there's been a lot of politics and there's been a lot of thinking that this is about redistributing wealth and tax the rich as opposed to, let's grow our economy, let's create more opportunity, let's create more industry, let's create innovation, let's create more millionaires, let's take more Canadians, new Canadians or first generation Canadians and give them more opportunities for success, for wealth. And we've gone the entire opposite direction. So to be honest, John, it's really frustrating to watch. And as a person who's put millions of dollars into startups and into charities, I've never been more sad or uh, concerned about the direction of our country.

Speaker B: It's uh, you know, despair is not a good place to grow from. Right. And, and it's, it's become a punitive mindset for succeeding in Canada versus a growth mindset. And you know what? Like, I'm not a fan of the current leader, never have been. But I'll, uh, use an analogy. If you have a we, A, uh, leader like that at least surround yourself by A's like you said. Now the, the person at the top should also be an A. But I think we have a systemic problem. The entire cabinet. I don't see any A's there and we don't have competent people making those decisions. And so maybe let's unpack this a little bit more so people can understand because, and uh, and I, I do want to, I don't want this to be all negative, but like, we got to talk about the truth. We got to understand the root cause if we're going to fix it. And I'm not personally not a believer in, in relying on the government to solve all of our problems. I think the private sector needs to step up, individual citizens need to step up. I think it was Preston Manning wrote a book called Do Something. Mhm. And it's like that, that mindset, that's what drives me. That's what gets me out of bed. I'm like, okay, I can't change the world, but I could do my part. But we have to understand the problem we're solving first.

Speaker A: Yeah. And I would say that Canada has had incredible leaders throughout the decades and Frank McKenna was a phenomenal leader. Um, Ralph Klein was a phenomenal leader. These people have done great things in public service and they were selfless about it and they were really mindful. I actually just met uh, with the Premier of Manitoba. Um, I really found him to be quite a, ah, thoughtful, enlightened, uh, premier. And he thinks long and hard about every decision and about, okay, if we're going to change health care in our province, how are we going to do it? But then also how are we going to pay for it? I think the problem that we've gotten into as a nation is instead of thinking about, okay, we want to change this, we want to change this, we're not thinking about and what's the financial impact, where are we going to find the capital, where are we going to find the savings or how are we going to make this happen so we don't bankrupt our province or our country or, or what have you. Because when politicians kick the liability and the responsibility down to the next generation or two, somebody still has to deal with it. It's just not them because they're gone. And my fear is we go into this morass, this sideways, um, period and we have to go through multiple governments to fix the problems that we've created. And, and some of these problems are now deeply embedded like the size of the federal payroll or does.

Speaker B: Yeah.

Speaker A: Uh, productivity or increase in taxation. You know, you just look at these things and, and listen, I believe in bank tax. I, I have no problem being taxed as long as it's at a fair valuation and people have an opportunity to work hard and do well. And if you're going to take risk, reward that risk. But we don't do that, especially relative to the, the, the, the tax rates in the United States. So I would say if they're your nearest competitor and partner and we're Losing again. We weren't for a little while, but now we're losing thousands and thousands of really smart young people and businesses to Austin, Texas, Nashville, Tennessee, and some still going to Palo Alto. Because even there there's an opportunity to make a lot more and be taxed a lot less. And, and you know, bright young people that are mobile and they can do simple math, they're like, you know, why wouldn't I try that? And it happens to be on the ocean, you know, whatever. Joe.

Speaker B: My own experience, you know, I'm the founder of InsurTech Canada. Born and raised in this country, my entire insurance career, 20 plus years in this country. I started an insurtech five and a half years ago. We couldn't get any Canadian money other than the bdc. I got to give credit to the bdc. They helped us early on. We got some shred credits. So there were some, some subsidies there, uh, to offset, which is extremely hard to navigate by the way.

Speaker A: So what's available?

Speaker B: You got to hire an expert, which by the way, startups don't have that money to hire SMEs. But ra our, uh, first angel check, second angel check, all of our VC money south of the border. And it's uh, it's like, why, why is that now? I'm one example, but I know dozens and dozens and dozens of startup founders because of our community. And it's been. And it's almost like, like you talk about benchmarking off the U.S. i think we should. They're the largest economy in the world, whether we like it or not. But it almost feels like Canadian, early stage, Canadian investors. I don't know if it's fear, I don't know if it's bad policy, taxation, uh, you know, the whole capital gains piece. But they almost need to see the first check or level of vetting come from the U.S. but the problem is that leads to brain drain and some companies never come back. Um, especially John.

Speaker A: I would tell you that in 2014, 15, 16, that all started to change as we started to support our startup community and ventures started to come north of the border or stay in borders, um, capital started to float and we reduced our capital gains tax to a 50% inclusion rate, which meant it was whatever you pay minus 50%. So it was like 25% or 23%. And, and it was, it was in a range of, um, within 5% of the points of the United States. So we were competitive and it was attractive for people to invest because if you think about it, there's an 80 to 90% chance of failure investing in a startup. Right. 80 to 90% chance of failure. When you get a winner, you should be celebrating that, not taxing the crap out of it. So this is, this is my issue. I think that angel investors, venture investors, or these hardscribble entrepreneurs, whether they're young people graduating out of university or people leaving Sun Life and RBC and all these beautiful big companies who say, I've got an idea. I've got a vision for how I can make something really special or make something that's working, but I can make it way better. Like my, my, um, my investment in James Rockwood Cap Intel. He's taking an investment model to investment advisors and money, uh, managers that is far and away better than all the incumbents in the market. So did he take a giant risk? Sure. He was a mergers and acquisitions guy at kpmg. He was about to start a family. So here's a guy that walks away from huge compensation, who's, who's starting into a very risky situation, getting married and starting a family, and yet he, uh, goes and does a startup. So I applaud that. And I think we as a country should. But because of some of the changes, because of the way things have unfolded in the last five to seven years, a lot of that capital is no longer coming. It's no longer worth it to take the risk. With 5% interest rates and now like a 35% tax rate, 66% inclusion rate, you're like, I don't know, I'd rather not take the risk. And so especially with, uh, uh, a high failure rate like that. So that's what is going on. That's the discussion. So a lot of Canadian companies that we're raising in Canada, they were getting the first check in Canada. Now that money's moving away or it's dried up. And the American money, as you so rightly pointed out, that was keeping. If they were coming across and writing a check to a, uh, founder and to a startup, now they're kind of going, you know, that's a big check. And, you know, we don't really want to fly up to Toronto, Montreal, Vancouver, Halifax, wherever you are. So maybe you should just move down here to Austin. And to your point, once they're gone, they're not coming back.

Speaker B: Especially if you get on top of your first investor south of the border, you get customers down there and, you know, let's face it, Canada is an exporting nation. And that, that's not, it's not a bad thing. Um, I, and I don't know if you agree with me on that, like are we an idea exporter as well or uh, because I think to build can, can a fintech that you've seen build a successful or insuretech scalable startup that turns into an IPO company and stay in Canada.

Speaker A: It's happening now. So it started again back to my original comment or thesis 2010 it began in earnest and then creative destruction lab in 2012, 2013. So a lot of the money started to come locally. The ideas people are graduating out of engineering school at Waterloo or U of T or Queens or, or, or um, McMaster and these people were like, you know what, I got an idea, I'm going to build a company and there's money available now there's angel communities, now there's an incubator I can go to. Oh now there's this accelerator that I can participate and there's a bdc. The government doesn't need to step in. The government doesn't need to put money in. They don't need to put all kinds of um, programs in place. They just need to get the hell out of the way and let entrepreneurs be entrepreneurs. Get rid of the bureaucracy and regulatory burden. Don't put any money, who cares? But also don't tax the crap out of people so that they're no longer um, incentivized to take risk. Right. When you like Charlie Munger, you show me the incentive, I will show you the outcome. He was one of the greatest investors in the history of the markets. He and Warren are all about finding the right incentives. And uh, those incentives have dried up and so capital has dried up, so opportunity has dried up so there are less startups and the ones that are existing, they're having a harder time finding capital. So we've shot ourselves in the foot from uh, once thriving, we went from a brain drain to in 1990s 2000s to a brain gain in the 2000s to now. We're a drain again. And that bothers me because it didn't need to happen. This is all self inflicted and it's either stupidity or arrogance or politics. But whatever it is, I recently gave a speech in Ottawa and I was trying to be super positive so I said here's how to Build Innovation Nation 2034. Here's a vision for the innovation and startups for 10 years in the future. Instead of constantly clubbing things to death, let's support them and just stay out of the way. Let's do it with purpose like Own the podium or like when we did on the podium we became really good at the Winter Olympics when we did basketball Canada. Look how many people, five of the top ten um, people in the draft two uh, seasons ago. Five of them were Canadian. Right. Look at this. Canada 2012 they started in earnest supporting that program. Now we're killing it on the world stage. So build and own the podium for technology, for venture, for startups. And that's what we were doing naturally and then we shot ourselves in the foot instead of supporting.

Speaker B: Yeah, I look at um, I think I said earlier I'm not a huge fan of, of government overreach and, and, and over involvement. I do think they need to get out of the way. But one, one use case that I've seen where it's worked well is Israel. Israel has 26 unicorns that are like well known GDP wise. I think, I don't know they rank like number 13 in the world or something like that. Canada's has, is a G7 country is number 8 or 9 I think based on, on the, on the recent rankings. But we have less unicorns coming out of Canada. Uh, but honestly Israel has an over disproportionate government uh, uh, support towards early stage companies and I, I don't know if that culturally if that's in our DNA to do that. So I, I would rather have our government just get out of the way because like having gone through the hoops of like applying for IRAP or shred, there's a, there's a carrot there and you think you're going to get some money back which uh, capital constraints are everything to early stage companies. And then you realize all the time and effort and then you have to spend money to get that money back. And if you're still in ideation phase then there is no incentive. Now there is a retroactive. You can go back two years but you have to spend a certain amount. You still have to apply and there's no guarantee you're getting that money back. And a lot of these companies are pre revenue for the first you know, three years potentially.

Speaker A: Right.

Speaker B: So you're just spending money and then, and then we have the tax issue. Um, do you think the federal, corporate federal tax. Do you think that would be a start to lower corporate federal tax rate or put some sort of.

Speaker A: I'm not so worried about the federal, the corporate tax. I'm more worried about the capital gains tax and I would have another incentive for investors and for startup uh, entrepreneurs and that would be if you're dumb enough like I am to invest in a whole bunch of startups with an 80 or 90% chance of failure and I happen to get a winner and then I'm dumb enough to put it into the next startup or two startups. Let me roll it tax free. Why would you tax it now if I'm going to put it into another company that's going to create hundreds or thousands of more jobs in another industry, like just support the people who are supporting industry and supporting the country. When I think about Israel, that is a beautiful model of entrepreneurial success, of innovation, of ideation. They have more patents out of Israel than any other. This is a tiny country, 7 million people I know they have more patents than any other country other than the U.S. like, and uh, and U.S. is 350, 400 million versus Israel. And yet look at their dominance. Look at the success rates in biotech, in pure tech, I mean Waze, Waze Technology, multibillion dollar company that Google ended up buying, you know, that was just a tiny little startup in Tel Aviv. And um, there's a whole list of them. So am I impressed? Yes. Is it a model that we want to use as an example? Absolutely. I think Canada be very well served. And quite frankly when I think about Canada, in our university system and stem, we are graduating a lot of really talented, um, smart, driven people. We should make it easy for them to say. We should make it easy for them to take their ideas and make them become manifest or real because the easier it is for them to learn through an incubator or an accelerator to grow raising capital from angel networks, from venture capital or wherever, friends and family. And we have a culture that supports all of that and just lets these companies do their thing. They will change the world. They'll change this piece of the world, then they'll change North America and then many of them will change the globe. And we've seen it over and over and over. So we just need to get out of the way and allow this beautiful, virtuous cycle to continue the way that it was in 2014, 16, 18. I just bumped into um, Minister Banks, Navdeep Baines, who was um, the head of industry under Trudeau. And I said, when you had that vision, when you were the leader, um, it was a magical time for Canada. And I said, you should be very, very, very proud. You did great work and you really supported an industry at a time when it was ready to go and to grow. And it did. And now it's not. So I'm um, trying to think of all the positive things that went on in the last 10 or 15 years and not dwell too much on what's been in, because I think this can change. But I still haven't seen from any party a vision for the future of innovation and technology. And that is worrisome to me because that is the future. One of the companies I put a lot of money into because I love the founders, was called Layer six, right? Jordan Jacobs, Tommy Putin, two giants in artificial intelligence. Tomi had done like six startups or eight startups and exits. He's a terrific guy. He sold that business, they sold that business to TD bank for $100 billion. Tomi goes on with Jordan to build the Vector Institute, which supports all of artificial intelligence PhDs and whatnot. And now he's building Signal 1. So of course I'm an investor in Signal 1. Jordan goes on, um, with the help of um, Jeffrey Hinton, Ed Clark, not only to build Vector, but also to build Radical Ventures, which is the most important artificial intelligence venture fund in the world. If I'm him, I'm frustrated as hell because here am I, a pioneer in artificial intelligence, already having a number of successes and exits and whatnot. And yet we're stumbling and getting in his way, we're getting in Tony's way, we're getting in the way of all these terrific AI companies. We had a whole stream at NEXT Canada called Next AI and I'm telling you, we, we, we just need to stay out of the way and let these companies do their best work. So that's my problem.

Speaker B: So I have a few follow ups on that because like you said a couple things about, I was going to ask you if you think the opposition understand or has a plan for this. Um, but, um, I don't think they, they do. I haven't, I haven't seen one that's compelling. And I think, you know, as a, as a community, we're trying to build a vibrant insuretech ecosystem that's based in Canada. And by the way, like, I'm a big dreamer. I don't want it to just impact Canada. Yeah, I want it to impact the world. I want there to be a shock wave that goes out there. Um, so as a community, as a private sector, as innovators, investors, founders, should we be more involved in influencing government policy regardless of who is in government, should we be lobbying? Um, because there's so many constraints and I don't know, is this going to be, is this problem going to be fixed in, in, in an election? Cycle or do you think it's going to take a generation? I know I, there's a lot in that statement there, but like, yeah, so

Speaker A: let me, let me think thoughtfully about this. Can this be fixed in one, um, leadership term? The answer right now is yes. If they kick the problem down the road and they miss the opportunity to change now, then it'll take multiple prime ministers to fix it. So I think it's infinitely manageable. Fixable with the right vision, with the right strategy to make that vision become reality, um, and reinvigorate that um, industry group and all the financing groups around it. So is it doable? Yes. Have I heard a strategy articulated by any of the two primary parties? I have not and that worries me a little bit. So, um, I think as maybe we get closer to uh, an election or a change in leadership, maybe that starts to come out or maybe it comes out after, but it sure needs to be thought about today. The second thing that you asked was should we be doing more as a startup community and whatnot? I don't know if I want any of my startup founders focusing any of their time or attention on anything other than doing right by their employees, their investors, their families. It's hard enough to build a successful company. Um, you can't start lobbying the government while you're taking on an insurance company. You're taking on Sunlight Manual Life, um, Canada Life. You're, you're taking on some of the most powerful companies and oldest companies in Canada. You've got a lot of work cut out, so you can't be lobbying. There are bit, not little. There are industry groups out there that are passionate about this who are lobbying. I've talked to them recently. In fact, I had lunch with one of them 10 days ago and she said they met with, I won't say which minister, but it's a very important minister. And they said that, that minister. I'm not even going to say gender because you'll figure it out. Their eyes were kind of glazed over that they took the meeting just to say they took the meeting. Not completely disinterested. And I gotta tell you, my heart sank when I heard that because the person there was actually two or three people in the room. I mean these are some of the most important influencers and um, venture investors and industry groups that were in front and they were completely disregarded. It was joke, disappointing.

Speaker B: This is, this is two guys having a beer right now. I'm saying this to you like incompetent people don't get to run companies. In the private sector. Why do they get to run governments? Right. Because that to me is just more than lack of vision. There's a much bigger problem there.

Speaker A: Um, someone chasing democracy is the best system we have. I don't know any better system. So I don't think we're going to solve that problem. But we can solve some of the startup problems, we can solve problems, some of the other problems. But you know, I do I wish for more? Do I wish for better? I absolutely do. As, as the father of three bright young boys either who graduated from STEM or still in My, my youngest is in his second year engineering at uh, the Smith Engineering School at Queens. I mean I, I, I have a lot of hope for his future and his brother's futures. Um, and I wanted to be a player.

Speaker B: Is this the rugby player?

Speaker A: Uh, this guy was a, AAA ball player and he's also a pretty decent lacrosse player. So he's um, actually playing for Queens Lacrosse right now.

Speaker B: Nice. How did, how did you, was it your older one that played rugby? He's also.

Speaker A: Right, he was what, sorry?

Speaker B: He's also an engineer or he graduated.

Speaker A: Yeah, yeah. And he's a, he's a terrific kid. I mean he's, he's working at Hatch Engineering, working on some pretty cool projects down in the States from Canada. Um, but yeah, he was a, I missed watching him play rugby. He played for uh, your neighborhood. He played for the Oakville Crusaders. He was the rugby man. He played uh, for Toronto Elite Reds. He played for team Ontario. Team, uh, Canada. He had some stuff with. And then he was a walk on for the Waterloo Warriors. He's a, he's a wonderful young man and until he hurt his shoulder playing for water rugby, do that playing against Queens. So that's, that's the irony because he had two brothers at Queens.

Speaker B: It's funny, I, I played rugby too and just in high school I wasn't very good. I was a flanker. Um, but uh, it, it's like it's not obvious for Canadians to get into rugby. Was that like a family thing or you just, you just.

Speaker A: No, I, I think he, he liked the sport and one of his friends who I think had an Australian father, one of his buddies introduced him to it and he just really took to it and so, and he said, he actually researched it because he engineer, he said if I'm going to do this, I want to play for the best team with the best coaches. And he's 12 years old or 13 years old and he says the very, the best of the best is Oakville. So I'm going to go and see if they'll let me play for the crew. And so here am, I driving out to Oakville three nights a week to get him to practice. And you know what the traffic is like going from downtown Toronto to Oakville. It was a nightmare. But man, oh, man, I mean, that's what you do as a parent, right?

Speaker B: Did he get the cauliflower years?

Speaker A: No, uh, no, because he was an eight man. He wasn't a prop. That's, that's the strong guys, the guys, you know, that are getting the cauliflower ears. Very unattractive. I played a year of rugby. Uh, I wasn't very good. I was more of a football player. But, uh, but to watch him play, it just made my, it made me very happy.

Speaker B: So, you know, like, uh, I just think about, like talking about your kids here for a second. You know, I told you before we went on, like, I've got four and, and I worry about the future, right? And I'm a very optimistic person, but I'm also, also a realist. And I think something you said earlier, because, like, we have, your kids are young adults, I've got teenagers, like, they're going to be, this is going to be their problem pretty soon. And you said something about it needs to, something needs to start happening now. This can't be kicked down the road further. And I, I, I couldn't agree with that more. I think there has to be a sense of urgency. And the reason I say that is the exodus that's already happening. And the best, some of the best minds leaving is already happening. And for me, I, I've always known that it was there. And I've talked about the brain drain on this podcast for almost four years now. But what really was the tipping point for me was the capital gains tax change that recently happened. That's when a lot of people that I know closely quietly said to me, that's it. Like, this is just, this is just ridiculous. Right? And so I, I just don't understand how our current government doesn't see that or if there's a bigger agenda at play. I don't know. But something needs to happen now. And I guess the reason why I mentioned, do founders need to get involved? I'm not suggesting they go to, you know, Ottawa and do the actual lobbying themselves, but they need a voice because founders are, founders are, get shit done people, right? Like, we're, uh, pull up your sleeves. You know, it. We see a problem, let's go Fix it. And we're not afraid to get our hands dirty doing it. Right. And I, I think especially in Canada where things are so federalized, we live in such a, a monopolistic, oligopolistic country and AA I think has a bigger impact on us than if you're going to compare ourselves to the states. Washington can make some stupid decisions and the states are fairly autonomous. Uh, I'm not saying the province don't, Provinces don't have a level of autonomy in Canada, but I don't think, I think the ripple effect is stronger here, uh, when, when asinine decisions are made on Parliament Hill. Um, so I think it's important that we're at least aware of what's happening and how our vote does count. It does matter. Right. And it, and it contributes towards our future. But let's shift gears here for a second. Next Canada. I'm really interested in, in hearing more about Next Canada's contribution in the early stage space and how much does Next Canada lean into the insurtech fintech world in your view?

Speaker A: So they are a brilliant group of founders themselves. Um, the guys who originated were Tim Hodgson who had been um, very bright guy. He'd been the head of Goldman Sachs in Canada, really wanted to commit to the sector, raised a statue who um, had done some startup work and built a line vest and he's now a profit Harvard Jay Agarwal who founded Creative Destruction Lab and is a, and has written two books on artificial intelligence, um, and as a prophet U of T. And Claudia Hepburn, um, who is the Ed or head of NEXT for the first five years that all very passionately believed in it. The reason that it worked John, is you had a whole bunch of very uh, philanthropic people around the table on the board. And most of us cut a big check at the beginning, um, to support getting this thing off the ground. And, and there were a number of other entrepreneurial families that said yes, we'll step up. So Claudia went to Galen Weston, Paul Demre senior and, and um, Jimmy Patterson. And each of them gave us a million bucks on top of the board's clip. And so you had really important prominent families who believed in the future of Canada and board members that believed in the future of Canada. And we had great people on our board, right? We had Nadir Mohammed, um, Psalm Safe, um, we had Sam Dubach, uh, Patman, like great people, great Canadians and people who really gave a damn about the startup community and saw this as the future of Canada. And so it was great then. It's great Now. So in the. In the aftermath, after all those years, Um, I think so every year we bring in somewhere between 70 and 100. Like the years, the two years that I committed to being CEO before I went back on the board, I think we did at least 80 or 90 companies a year. Each year, I'm pretty sure one year we did 100. And so we have three verticals. Next 36, next AI and next founders. And so we're educating them. We're bringing in pros from Harvard and U of T and Queens and Georgetown and all these great academics and scholars. Um, and then we're bringing in mentors. Um, I brought in a whole bunch of my CEO friends to come in and mentor the startups. So we had a whole mentorship program run by, um, Alex McGregor. She's a wunderkind. Um, and then we had Ernst and Young. Ey did all the financial structuring around our startups. Oslers did the legal structuring. Um, and then we would give them exposure to capital. So it was really incumbent upon the startup founders to make their way. So they learned, they grew together. Um, they were in class together, they went out and discussed startup land together. It was a culture. And so I would say they're probably. I can't remember the numbers because I came off the board a year and a half ago. I'd been on since 2010. I mean, at some point you become stale. And so I think there's almost a thousand companies that were started out of NEXT Canada, and we also have NEXT AI in Montreal. Uh, so there's a lot of hope, a lot of opportunity, and some great businesses that have been born out of there. And the thing that's kind of cool is these people have gone and built companies, sold them, and started other companies. So it's not a one and done. There's a second company, there's a third company. And so, um, I just saw Stephen Lake, and he built Atomic Labs and then he sold that to Google. Now he's building Jetson, you know, which is pumps, um, Hydro, um, hydraulic pumps, I think, for houses, for heating and air conditioning and whatnot. So, um, I need to get a better understanding of his company. But knowing Steven, you know, he's your classic kid who had nothing. Grew up in Scarborough, went to Waterloo. Mechatronics, engineer. I was a happy investor in his company. And. And, you know, and his wife is also. Was also a graduate of NEXT Canada. And she's building, uh, or she's built an incredible startup in the building space. Uh, so Again, it's just, it's just phenomenal to watch these wonderful young people that really believe in their idea and they bring it to life. And as an organization, one of the things that I tried to do when I stepped uh in was I built an alumni program because we didn't do anything to bring people together. And I said when you think about like a thousand startups and in 10 years, 2000, these are going to be some of the most talented entrepreneurs and risk takers in Canada. We need to bring them together and build a community. And so we have. There is an alumni community now and a magazine called Grit, which celebrates the historical startups and entrepreneurs and tells their story and tells the story of the new startups. It's pretty cool.

Speaker B: And usually the successful startup founders usually don't just stop at one. I think it's a bit of an addiction but unity is the key there. That's my takeaway from that because it can be lonely as you know, whether you're running a uh, turnaround like you've done or startup, it can be lonely when you're the founder or when you're at the top.

Speaker A: And John, it's not just lonely. It is so brutal, it is so challenging, it is so damaging. And this is what bothers me when we're cavalier about how much work and, and, and stress and, and pain goes into this. Yeah, there's 30, 35%, 30 to 35%, um, mental health issues with um, CEOs of startups. Right. This is a giant challenging problem. So there's loneliness but there's also all the mental issues that come with um,

Speaker B: boundary fatigue is real and uh, sometimes you just need that community to plug into. It was one of the things that motivated us to start InsurTech Canada. Uh, a bit of a selfish plug but like our, our three C's are our identity so community, customers and capital. But it starts with community because the other two are, are basically a result of creating community. Right?

Speaker A: Um, right. Yeah.

Speaker B: Covid was a time that we, we desperately needed something to plug into. It was virtual when it started, but here we are. I'm glad you talked about next Canada and the success stories because you know, know thousands of startups there's currently, you know, at least 250 in Canada active insuretech startups. There's more but there's you know, those are the ones that are known that are showcased 600 or more FinTechs. The future. I believe the future is bright for Canada. I believe that the best and greatest leaders as long as they stay here can influence the future of Canada. Um, but you know, policy and politics do have an impact on that. I'm glad we unpacked that a bit. If you were to, if you were to boil it down, Joe, to like the top three things that we need to fix to make things right, or maybe it's one or two things. What, what would those three things be?

Speaker A: Um, I do think that, as I said, I, like, I have no problem paying tax if I feel that that money is being well used for the right programs, the right opportunities. And it's respected, it's other people's money, it's our money. But do it with respect, not with malice and not with arrogance. Um, so I would say if they were to have the courage, instead of all this crappy symbolic crap, if they had the courage to bring taxes in Canada down to a level that started with a 4, I don't care if it's 45 or 49.9, like uh, Walmart rollback in the savings event, it has to start with a four. Secondly, you can never have the capital gains tax be more than 5 percentage points off the US as soon as it's bigger than that, you're no longer competitive and the money doesn't, the money stops. And third, let people invest and reinvest and continue to invest in the future of Canada and future of startups because it creates tens of thousands, if not hundreds of thousands of jobs and, and let that happen. Have the government stay out of the way. Forget funding programs, forget funding venture capital, forget all that stuff. They've done it, it was okay. But government isn't designed to take risk like this. Government is designed to make these decisions. They're not equipped, they don't have the understanding that's necessary. Just stay out of the way, don't fund it, don't do anything. Just don't get, don't be a barrier to success and just let it happen. I think you'll have huge increases in productivity, huge groundbreaking changes like people used to say. And I used to worry and I thought we were getting there. Like in 2015, 2017, I thought we are going to build our Google, our Apple, our Tesla, and then we blow ourselves up and like, oh, so we got a couple good ones. We got, well simple, we got Shopify, we got some of the other guys Lightspeed, like some good companies. But then it didn't keep going. So. And I don't want to just be a branch plant for Amazon and Salesforce and, and all these American companies. Like hey, they got smart people in Canada and we pay them in Canadian dollars. So go hire 300 of them. I'd rather 300 of those smart people from our good universities going and building their own companies or working for Canadian backed, Canadian funded, Canadian started generated businesses like this. I'm happy to have Amazon here, but not at the expense of our own startup community. So you know, uh, do I think that we can be more competitive locally? 100%. You said it yourself, this is the land of oligopolies. So there's lots of potential for disruption. Insurance at Canada is disrupting the incumbents. That's a beautiful thing. As much as the guys who run those companies are friends of mine, they, they could use a little disruption. It keeps them you know, on the, on their game. It forces them to bring their A game and, and be more competitive, uh, and sharpen their skills. So I, I listen, I think, I think there's lots of hope, there's lots of opportunity. If we just get out of the way and support this whole sector and you'll have a whole lot more success in Canada. And you know, over time instead of purposely shutting down the energy and mining and forestry sectors, they were going to naturally come to that crest in their story and we would move away from fossil fuels and some of the different mining and whatnot and we would have more innovation around that. So we'd reduce the carbon footprint. So instead of shooting those industries offset with new tech, R and D and all the startups, right then you have um, um, parallel growth. So you have those companies riding up into the sunset 20, 30, 2040, 2050. And then they move away and then you have all the new industries, AI, solar, wind, fusion, fission and then all the, you know, the, the um, Fintech, Insurtech and all the other companies that are coming up run parallel. Let the older companies have their life cycle and the new companies have a new run. And I just think Canada would be a very powerful beacon of um, success. And we want winners, we deserve winners and I believe we do have that in our DNA. I don't believe that we have supported that.

Speaker B: So Joe, on the winners front, um, but we'll start wrapping up here. What are the, what are the top attributes? And I, I like threes. What are the top attributes that you see in the successful startup early stage companies that you've gotten behind, that you've backed?

Speaker A: It's, it's always the same things for me. I have a mental checklist. I'm looking at the leader and I'm looking at their character. I'm looking. I'm looking at their value system. I'm looking at their integrity. I'm looking at their drive, their ambition, their resilience. So that's one small bucket of, um, identifiable cues that tell me that this is somebody I can get behind. Then I'm looking at the second thing is the team. Do. Does this leader hire people that are equally talented and good or great in their roles? Do A's higher A's, as we talked about earlier, or do B's higher C's? So if I see an A and they, their CTO is an A and their COO CFO is an A, then I'm like, okay, we got that covered. And then I look at the cap table and I say who's around them? So, um, who's on the cap table? And, uh, is it. Is it institutional money, or is it real money from individuals? And is it smart money? Right. There's a lot of dumb money in venture and startup land, and then there's smart money. And I look at that and I go, okay, oh, my gosh, look who's on the Gap. I love that guy. Oh, gee whiz. I get to be on the same cap table as I was about to name names, and I know I get in trouble, but I see some of these books on the Gap table, and I'm telling you, I actually invest more. If I love the founder, if I love the team, I love the idea. Because even, uh, even a great founder with an idea that goes sideways or doesn't go, they can pivot and start another company or pivot and change and become great. I've seen, um, that time and time again.

Speaker B: They attracted to their cap table is an indicator. Uh, yeah, yeah.

Speaker A: So those are the things that I like at John.

Speaker B: Do crowded cap tables scare you at all? Because, like, uh, I was gonna go there. We. I know, I know we probably don't have time for this, but, uh, the check sizes are smaller in Canada,

Speaker A: and

Speaker B: so it leads to that outcome. Crowded cap tables, you get bigger checks in the U.S. um, and it's as a founder, like, you're managing your team, but now you're managing your investors. And, you know, it's a bit of a balancing act. Does that scare you at all when you see too many people on the cap table? Is it more about the quality of people on the cap table for you?

Speaker A: It's more about the quality. I don't mind small checks. Listen, I think any founder should spend their time building their company, not have to Spend a ton of time raising money. It's hard building a company. So get the money. Let's get going. But in Canada, to your very, very valid point, the check sizes can be smaller. So that's a lot more meetings, and you got to go to a lot more investors to get those checks. I don't know if it's five meetings you get a check or 10, but it's a lot of meetings. And so. And if you're not fully prepared, if you're not polished, like I work with my, uh, founders on their, um, 30 minute pitch deck, of course, but from that, the subset. And it takes way longer to build a three minute, uh, that you would do on, on, um, on the stage at Elevate or Collision or something. And then your 30 second elevator pitch, that one takes the longest because it has to be the most powerful, the punchiest and the most succinct. That's the hardest one. So I work on those things with founders. I just worked on one with a company I'm not advising. But I love the founder so much, I said, let's do it. Let's work on this. And he just presented, and I think it went very, very well. So it makes me very happy to see that. And, um. But, yeah, storytelling is hard. Raising money is hard. So I would love for these companies to spend way less time having to raise money and more time focusing on the mission. But one comes with the other. It does.

Speaker B: It's all part of company building. Right? You nailed it. Uh, last question. This should be an easy one. Habs or Leafs?

Speaker A: Oh, come on, Come on. Listen, I love Brendan Shanahan. He's a friend. He's a great leader. That guy has character, his integrity. When you look at him as a leader, as a hockey player, as a guy who would do anything, anything to get the job done. I mean, in terms of, you know, going into the corner, going up against guys that are 3 or 4 inches taller than him. I mean, he grew up in a family. I think he had four boys, so he used to get the crap kicked out of him by his brothers. And, you know, he lived in a community where there was a bit of a anti Catholic thing going on, if I remember correctly. So I love the guy's integrity. I love this character. I love his drive. He just needs. And he's got it, I think now with Craig and, um, with, uh, Brad, um, they're all more like him, um, versus the previous administration. And so I think you're starting to see a little bit more of Brendan on the bench, on the ice. And so you could see that kind of grit. That's what wins championships. That's what Florida had last year. Right? They were able to show that grit, that drive, that scrappiness, from the minute the puck was dropped to the end of the game to the ice.

Speaker B: Yeah, it was.

Speaker A: Tampa was like that for years, too, under John Cooper. So, again, I love great leadership. I'm a student of leadership, um, and you want to see that, um, translate onto the field or onto the ice surface. So, uh, for all those people listening that are House fans, I apologize. You guys have built a great, great, great, uh, team, uh, over the years. Um, you know, much stronger in the last 50 years than the Leafs. But, um, I got to say, I'm

Speaker B: Alicia, and great rivals. I love the way you. I love the way you position that. And, Joe, come on. Two Canadian guys can't talk for an hour without mentioning hockey.

Speaker A: I got to tell you, who I love is the Oilers. I mean, they're not my team, but, you know, one of the smartest things they ever did was putting Paul Coffey behind the bench. And, you know, he. He is that guy. He is that Shanahan type guy. And so they took a team that was a really beautiful skating team, but wouldn't go into the corners, didn't have that same grip, and now he's got them doing all those things because he's, uh, won five Stanley Cups by doing that. He now is modeling that with the players. So there you go. That's another extra. That was a bonus round for the people in Alberta.

Speaker B: Little shout out for friends out in Alberta. Yeah, I'm a big McDavid fan. So, uh, yeah, he's. He's good people as far as I'm concerned. And he shows up to playoff games even when he has a sore tummy, unlike. Unlike someone else who I'm not gonna.

Speaker A: Yeah, let's not naming names.

Speaker B: Yeah, we'll protect the innocent. So thank you, Joe, for today. Uh, really appreciate the conversation. I hope it's the first of many. You contributed a lot today, and I know our audience is going to take a lot away from this conversation.

Speaker A: So listen, as I said at the outset, thank you for having me. I'm honored. I do hope your audience takes some of these nuggets away. I hope there's some little bit of value for them, and I would be delighted to come on if you'll have me at some point in the future.

Speaker B: Awesome. Thank you, Joe. Enjoy, uh, enjoy Halloween and All Saints Day for those celebrating. Take care.

Speaker A: Thanks, pal. See you. Bye.