Marnie [00:00:02] Hi, I'm Marnie Niemi Hood. 

Russell [00:00:05] And I'm Russell Evans. We're the host of Contributors, a podcast where we explore how Canadian employers are leading change, innovating industries and investing in our country's well-being and prosperity. 

Marnie [00:00:18] These organizations are prospering today by prioritizing more than just the bottom line and so are we. As leaders at the CAAT Pension Plan, we're contributors to one of Canada's fastest growing defined benefit pension plans. 

Russell [00:00:32] We believe in contributing today for a long term benefit. And we want to showcase other employers who are securing a better future for Canadians. Follow along. 

Marnie [00:00:50] Although Canada's private capital funding ecosystem has made strides in recent years, there are still significant gaps that need to be addressed. 

Russell [00:01:00] That's why firms like Maverix have made it their mandate to focus on building an innovative future in Canada, fueled by technology enabled growth and disruption. 

Marnie [00:01:10] Today on contributors, we're sitting down with the founder and managing partner of Maverix, John Ruffolo. 

Russell [00:01:17] On this episode, we'll discuss how Maverix is innovating to meet the needs of key stakeholders today and how those strategic decisions will reap further benefits tomorrow. 

Marnie [00:01:26]  We'll also get John's take on the current gaps in Canada's private capital funding ecosystem and how we can address them to create a stronger economy going forward. 

Russell [00:01:38] John, welcome to the show. 

Marnie [00:01:44] All right, John. So happy to have you here. 

John [00:01:48] Thank you very much. 

Russell [00:01:49] We have given some notes about you, John, and some of the notes are that your son is named after your favorite wine from California, favorite vineyard. And your daughter is named Rome. It's like your favorite city. 

John [00:02:01] Yes. 

Russell [00:02:03] I should admit to you that you're a man after my own heart. We just got a cat and our cat's name is West. After my favorite composer. You may know his name as Kanye West. 

John [00:02:14] Oh, that's fine. 

Russell [00:02:19] So my choices may be less slightly more controversial than yours, but along the same. 

John [00:02:23] Yeah yeah. Might a little more. Well, I thought you were going to say there are other cats named Kim or something like that. Yeah. 

Marnie [00:02:32] I'm really looking forward to chatting with you today. Thank you so much for joining us. 

John [00:02:45] Yes, thank you. 

Marnie [00:02:46] John, let's let's just jump right in. You've had a really spectacular career from CPA right through to private equity fund founder. What have been some of the big career highlights for you so far? 

John [00:03:02] Well, I've discovered that after eight years, I do a complete career pivot, so I'm not sure if that's a positive or a negative. But in many respects, I've had one career in that and I would say the career choice, although I started, as you indicated, a CPA with Arthur Andersen back in 1988, it was 1992 in the depths of a horrible recession where I was bored out of my mind and I had asked the partners of the firm, could I start a business inside a large sort of bureaucratic organization? And they asked, well, what business would it be? And I just said at the time, we call it the high technology business, and I chose it for a very specific reason, not only for my particular interest, but rather I was twenty five at the time and there was no way that I was going to build relationships with C level folks being a twenty five year old. But the tech founders were closer to my age, so I was doing it for very pragmatic reasons. The funny response that I got was a little bit of a chuckle, saying, really? Go ahead and go knock yourself out. And it was three very, very trying years until 1995 hit and that was really the birth of the consumer internet. But the interesting part is that from 1992 till today, 30 years is really the same objective. I just wore different hats all the way through. 

Russell [00:04:48] So, John, I think obviously you're here because you're the founder of Maverix Private Equity. For our listeners, what is a private equity firm in the simplest possible terms? What do you do? 

John [00:05:00] I identify great entrepreneurs that are looking for a partner to grow their business so that they could create more wealth for not only themselves, but for their employees, shareholders and hopefully the country at large. And what I do is I buy a piece of their company at a predetermined price and the piece of the company that I buy the money either goes into the company or I might buy it directly from the particular entrepreneur. And my job and my team's job is to help that company grow even faster than they would have had they not taken the money. And then at some point in the future, I get paid back either through dividends, selling it to a bigger company and taking the profit or ideally them going public, and then I eventually sell the shares that I own through the public offering or hold on to them as long as I like. 

Marnie [00:06:14] What's the difference between venture capital and private equity? 

John [00:06:20] It's all private equity, and there are three subsegments of private equity, there is buyout private equity where you take a control position, which is what most people will use colloquially as just private equity, but it is specifically buyout. Then there is growth, private equity, which is the firm that I built. And then there is venture capital and it's really focused. The differences are focused on the different stages of the lifecycle of a business. Although I must admit today, given the massive amounts of capital available, all three are starting to get a little bit murky and blended. But traditionally, those are three separate sub asset classes. 

Russell [00:07:14] We had the opportunity to meet with Yung Wu from MaRS Discovery District and from what I'm hearing, you're the man that everybody at MaRS wants to meet with. So they're putting together their business plans, they're figuring out what they need to do and what they really want at the end of that sort of rainbow is the opportunity to meet with you. Is that fair? 

John [00:07:39] Well, I think Yung is overstating it because he's still mad at me because I'm responsible for him leading MaRS and he keeps on blaming me for that. But in some sense, yes, it's true from the perspective of when a company is looking to grow and hopefully ideally to be successful, you know, the next Shopify, they really need three things. Access to capital, access to talent and access to customers and markets. That's simple. And I represent one of those three lever points, which is the access to capital. And prior to me, building OMERS Ventures back in 2011, the landscape in Canada to access risk capital was extremely small. Some would say non-existent. And based on my career before that, I had the pleasure of advising a lot of the greatest venture capital firms in the world, largely based in Silicon Valley. And when you start to see their approach to placing their bets and and taking not dumb risks, but taking the smart risk. I just learned a lot of what was working and what was not working, so I really applied those principles to Canada. And so what would happen is instead of going to foreign sources of capital, they would have come to me when I was at OMERS Ventures. And the only difference now at Maverix is the companies are at a much more mature stage. However, it really represents at a very large stage, the only source of Canadian domestic capital. If you're trying to build a company, save from a hundred million dollars in revenue to the billion dollar plus, that's where I play. When Yung and I were working very closely 10 years ago, the problem was getting companies from zero to ten million dollars. So looking back over 10 years is quite remarkable the number of companies that are getting now to the hundred million dollar plus range. 

Marnie [00:10:10] You mentioned a moment ago that Maverix is the sole growth private equity firm in Canada, and it seems to have a real niche market in terms of the kinds of disruptive technologies and innovations that it's really geared towards. Can you give us a sense of the deal pipeline? How are things looking in Canada? What's the current ecosystem for funding of these kinds of technologies? 

John [00:10:42] Yes, so you're really striking at the heart of the investment thesis, so I'll just try to summarize what I started to observe, and it started around 2015. So for the first number of years when I had built OMERS Ventures, we were investing exclusively in technology companies. And when I say technology and very amusing, a classical definition of software companies, hardware companies, and semiconductors that that specific segment. And it was quite amazing in the technological innovation that was moving at an unbelievable clip, but a classic technology company. The purpose is for it to build tools that all of the other industries in Canada would be able to utilize in order to increase their productivity. And so what I started to notice around 2015, but it became very clear to me around 2016 that the application of technology by those other industries really crosses the chasm. And it started off with the Canadian banks and it started expanding into real estate, health care, et cetera. And what I started to realize is that while I absolutely love and continue to love investing in the technology sector, per se, which represents give or take 10 percent of Canada's GDP, I would rather focus on the other 90 percent that I was excluding. And now it's becoming more indistinguishable what a technology company really is. And we started assigning names to them fintech, proptech, health tech, whatever tech. It's nonsense because every company will need to be a technology company in some respect. And if you're not, you will go bankrupt as simple as that. So our job at Maverix is really looking at that other 90 percent of the GDP in particular. And as the application of technologies, you know, and I'll give you a few examples of technologies, artificial intelligence as an example, the use of the blockchain. You know, the list, you know, ideally at some point in time, quantum computing, all of these technologies are going to be used. And the issue from an investor point perspective is you better understand how those technologies work and you better understand the industry in which you're seeking to disrupt. And it's the combination of those that's really the secret sauce. 

Marnie [00:13:32] John noted that there are three things the company needs to see success. 

Russell [00:13:37] That's right. The first is access to capital. The second is access to talent. And the third is access to customers and markets. 

Marnie [00:13:45] After building OMERS Ventures from the ground up from 2011 to 2018. John has an extensive knowledge base of the Canadian landscape of risk capital. 

Russell [00:13:57] The growth he's seen in the area over the past decade has been, in John's words, remarkable. And the number of companies reaching the $100 million range has grown exponentially. 

Marnie [00:14:08] John founded Maverix Private Equity in 2019 in an effort to keep Canadian opportunities on home soil. And today it's the sole growth private equity firm in the country. 

Russell [00:14:21] He says the secret sauce to his success as an investor is understanding the technology landscape and how new developments will fit into the industry you're seeking to disrupt. 

Marnie [00:14:32] He goes on to describe why corporate ethics are such an important piece of the puzzle for him and Maverix, and how the firm is contributing to a stronger, more prosperous country overall. 

Russell [00:14:46] So, John, you and I are connected on LinkedIn, and we've shared kind of a quick conversation or two over that platform in one of the things I've noticed, you're sort of a LinkedIn super user, which I got to give you credit for. And one of the things I've noticed is there's a common thread in a lot of what you post and comment on, which is corporate ethics. That's something that is really, really important to you. And it comes through in a lot of what you have to to to say and a lot of the opinions you share. Talk to us a little bit about the importance of corporate ethics in terms of growing a business. 

John [00:15:26] Yeah, that's a great question. You know, and that's, you know, that's something that while, you know, we're not an ESG fund per se. And frankly, a lot of folks that are touting themselves as ESG, I find is absolute nonsense. But really being authentic and holding to your values, and this is one thing that I really share with CAAT and one of the things that attracted me, particularly to the individual added business where we share ethical values, not going to make an investment just purely to make money and screw somebody. And ultimately, it hurts your brand. And this is the thing that I'm trying to teach folks. In fact, you're going to see we haven't put it up yet, but our ESG investing principles, we're not an ESG fund, but just to be very, very clear, if you are an entrepreneur and you're doing things in your business that perhaps, you know, scale a little bit too close to the line or cross the line, but you're doing really well. We will not be your investor. Period end of story and there's plenty of other folks that might want to do that. But at the end of the day, not only does it hurt your brand ultimately. When I go home and share with my wife or my kids or my parents, what I am investing in, and if it's counter to the ethics that I grew up in, like what is the point of doing that and where I think people miss out is they think that ESG or ethical principles are separate from making money when in fact the two are completely linked. 

Russell [00:17:23] That's great segue, John, to what I wanted to ask you about next, which was, as you know, our show is called Contributors, and it's really about Canadian organizations that are contributing to making Canada better, stronger, more prosperous. What do you see as the role of Maverix in that? 

John [00:17:43] The role of Maverix is to really support the growth of Canadian based indigenous companies from an innovation perspective. And by virtue of doing this, I believe that we will create wealth for the next generation. It will be employment for our kids and our grandkids, and Canada needs to make this transition from a post-World War II industrialized economy, to a knowledge based economy. And it's very complicated and everything that we do almost always uses the old rules. Give you an example. When Canada says all you know where our GDP is not growing at the rate that we need to. So let's go and attract foreign direct investment so they can build plants. And then you have an economic supply chain and multiplier effect. Well, guess what doesn't work that way, not in the knowledge based economy. There is no economic multiplier calculated through the supply chain like it used to be before. In fact, it's a negative issue to our economy because the value is in intangibles and largely through the brainpower of individuals. Using our great talent in this country to create intangible value for foreign based companies is complete and utter nonsense. And yet our public policy is predicated on those very principles. And it was so frustrating that back in 2016, Jim Balsillie, the Founder of BlackBerry and I created what's called the Council of Canadian Innovators. And we are proudly Canadian. We are Canadian first and all of the policies that we're recommending to the various levels of governments are wired for our Canadian companies to win and we will give you the money and our average investment is about a hundred million dollars. And now go for it. And by the way we will help you with standard setting, with government policy, et cetera, so that there is nothing blocking you. And the last thing I would just say on this point is when somebody says that Canadians don't have the same risk appetite or they don't have the fire in the belly, you know, I just want to smack them up the side of the head that Canadians have had it all. And frankly, look at all the amazing success stories of Canadians in other countries or in Silicon Valley. It's not. It's not a cultural thing or inherent thing, it's just that we need to remember that we can compete against anyone in the world and we will win. And once we start collectively doing that, just watch us go. 

Marnie [00:20:58] That's absolutely true. John, Canadians, we definitely have a reputation for being too polite. And I have no doubt that you've been known to throw an elbow here and there when you know when you're advocating on behalf of your stakeholders. And so I'm wondering if you can give us some examples of some of the innovative approaches you've taken around those three levers you were talking about earlier. 

John [00:21:26] So let's just use talent, right? So the world is in a war for talent and the quality of our talent in the innovation space that matches anyone in the world. There is zero question. I think the world has caught up to that. Do we have enough of it? Probably not. And so and in fact, a lot of the foreign based companies, particularly American based, really come over here to attract AI talent, quantum talent, blockchain talent. But there's plenty of it. So where do we continue to get this talent as we continually run short? Well, let's look at our immigration policies. This is one area that Canada is one of the best in the world in, and our CCI organization was heavily involved in the development of immigration policy, particularly for what was called the temporary foreign worker visas. And it was us who helped decrease the process from nine months to two several weeks. And what's been very interesting is Canada, despite what we say is hot around the world in terms of an attraction for immigrants. We are a great place where they feel comfortable and they landed in Canada, particularly Toronto, Montreal and in Vancouver. And so in what they realized is, Oh well, I could still live in Canada and I could do my little jaunts over in Silicon Valley or New York quite easily. So I don't need to live there. In all of a sudden, we get this incredible addition of brain power that we never had. Well, let's take this a step further. What should our universities be or we should weaponize our universities as the import hubs of the world, and some of them have already started this. So as an example, you get your great, innovative universities, Waterloo University of Toronto, et cetera, and you set up their branch operations in India, Southeast Asia, wherever the mass of individuals are coming. And I would literally be camping within the schools or the technology schools that they're at with a big welcome sign with a fast tracking to immigration to this country. There's so many amazing things that we could do that are in your face. 

Russell [00:24:19] Absolutely, one of the things that I really appreciate about you, John, is you often comment on politics online. But I have no idea how you're voting. No idea. You're very careful about that. 

John [00:24:33] That's very, very insightful of you, wow, you really do follow me. And the reality is, and this is what I really want me to be in politics is brutal. It doesn't matter who does it. It is not an easy life in our job here really should be to support them. However, we will craft the policy that we believe creates the greatest value for this country, and we share it with all of the political parties and those that embrace it. We will actively support it. It has nothing to do with personalities. And at the same time, when you do something that's pretty stupid, that actually puts a nail in it, we'll also call that out, Russell I think that's what you're referring to when I will call that out, but not in a personal way, but change your policy. And by the way, we will help you and we'll help you understand that. I am optimistic, I am here to stay. And, you know, I will fight for my kids. You have it easier than I did when I was spending time in my career. 

Russell [00:25:56] So, John, do you have any final words of advice for our listeners? This is primarily a B2B podcast, so you'll be talking to business leaders across Canada and if you had one bit of advice for them, what would that be? 

John [00:26:09] It would be to be bold. It's funny when I set out to launch the biggest growth private equity firm in Canadian history and again having the great support of a pension fund like CAAT because it wouldn't have been able to do this without such a great partner. The number of times that I was told, Whoa, dude, too big, too ambitious. And you know what? You're not going to be part of the journey, so just get out of the way and I will find those individuals who believe in that journey. And Russell Marnie. Really, you know, given that I am now one of the old folks in the industry now. My job before I always felt like I was the center iceman who, you know, needed to get the puck skate down in and shoot it past the goalie. I am now the person behind the badge and I just realized I am way better off and way better off for this country to be the coach and getting the young folks to believe that they could all skate up the ice and shoot the puck past the goalie. And don't let anyone tell you you can't do something. A year ago I had a very catastrophic accident. And I was run over by a tractor trailer and told, first of all, I was going to die. It didn't tell me they told my wife I was going to die, and then they told me that I will never, ever walk again. And I'm not going to repeat what my first reaction was because it was an expletive. But if I listen to that, I would for sure never walk again. And I now likely will walk again. It's very difficult through a lot of rehab, but using that same principle, it's really about the mindset. And so if we can just spin it around and when folks are doing something and perhaps, you know, they're making lots of mistakes there, cheer them on, maybe help them privately, but cheer them on and really convince them that you can do this. And if we do this broadly enough across Canada, no one is ever going to stop us. And that would be my message to whether you're the entrepreneur, whether you're the employees, whether you are in a not for profit, it's all the same. 

Russell [00:28:58] Inspirational. That's fantastic. 

Marnie [00:28:59] Thank you for sharing that with us, John. 

Russell [00:29:06] Honesty, ethics and integrity are clearly some of John's key values as a leader. 

Marnie [00:29:12] He mentioned that people tend to think of environmental, social and governance factors as a goal that's entirely separate from the act of making money and business. But on the contrary, the two are fundamentally linked. 

Russell [00:29:25] What goes around comes around. And this is especially true in the business world. John is someone who clearly has his overarching values top of mind at all times, and he wouldn't want to make a move that compromises that. 

Marnie [00:29:40] The future of Canada lies in our unique ability to innovate and the incredible talent we have at our fingertips. 

Russell [00:29:48] Ultimately, as John said, prosperity without sustainability is meaningless. We all need to do our part to make the world a better place for our children and grandchildren. And after speaking with John, we're already feeling more optimistic. 

Marnie [00:30:04] The story John shared with us about his accident really underscores everything he stands for in life and in business. 

Russell [00:30:12] Be bold. Stay focused, and don't take no for an answer. 

Marnie [00:30:30] Thanks for joining us today on Contributors. We hope to see you again next time. 

Russell [00:30:34] Don't forget to subscribe rate and review Contributors on Apple Podcasts and then tune in for our next episode on November the 17th.