For Reza Satchu's family, East Africa of the mid-1970s was a bad place to be. Ugandan dictator Idi Amin was exiling people of South Asian descent, and the same sentiment was taking hold in neighbouring countries as well. Particularly disliked were Ismailis, members of a Muslim sect known for their enterprising nature and relative wealth. So, after the late prime minister Pierre Trudeau opened Canada's doors to 20,000 Ismaili immigrants, in 1976 a seven-year-old Satchu, his five-year-old brother and their parents moved to Toronto's Guildwood neighbourhood, taking up residence in a two-bedroom apartment.
Fast-forward to 2000, and SupplierMarket.com, the supply-chain software provider launched by the Satchu brothers just a year earlier, was being acquired for US$925 million. Seven years later, they sold consumer storage facility chain StorageNow—in which Dragons' Den's Kevin O'Leary was a minority partner—for $110 million.
Satchu's other star turn started in 2004, when he offered to create and teach an undergrad entrepreneurship course at the University of Toronto. It became the most popular course on campus, with hundreds of students competing through a rigorous application process for one of 35 spots.
That class is no longer offered; but in its place is The Next 36, an intensive, eight-month program in which three dozen of Canada's brightest university students learn about the art of entrepreneurship—and experience the pain of failure—from Satchu, an army of mentors and guest lecturers from big-name U.S. schools while launching real businesses with real money. Co-founded by Satchu, it's a remarkable program, not only in its structure and successes to date but also in its ability to attract the backing of some of Canada's biggest names in business, including Jimmy Pattison, Paul Desmarais and Galen Weston.
What's driving this most likely of unlikely success stories to focus Satchu's attention on Canada's youth? As PROFIT's Ian Portsmouth learned in a recent chat with Satchu at the Toronto office of his latest venture, Alignvest Capital Management, a big part of the answer is the entrepreneur's frustration with key elements of Canada's entrepreneurial ecosystem.
What do you remember about your childhood years in Canada?
It was an uncomfortable set of years.
I came to this country from the outside; when I got here, I immediately skipped a grade, so I always felt younger than everyone else; and I wasn't really part of [the Ismaili] community. If someone asked me to define my childhood, I would say it was all about looking in from the outside, and not having quite enough guts to get in there and make stuff happen—but having quiet confidence that one day, I'd be able to do something.
I watched my parents work very hard. Over time, we saw our standard of living improve. I say this to my students all the time: all you need is one person to believe in you. I had that with my parents. If my parents hadn't believed in me, I would not have as much confidence as I have today. I think that you need someone in the face of all this chaos to tell you that you can do it.
What's the best lesson you ever learned about running a business?
At university, I started a business called Qualitex Clothing. It was doing fantastically well, until I learned one of the harsh truths of business. I was convinced that [former baseball and football star] Bo Jackson was the greatest thing, so I ordered 5,000 Bo Jackson T-shirts that read "Bo knows McGill" [a play on a successful Nike advertising campaign] because I could get a better deal by ordering in bulk. I didn't think I was taking a great risk—because I loved the shirts, everyone else was going to love the shirts, too. Only 10 other people did. This bankrupted the business effectively, because I had 4,990 Bo Jackson T-shirts that never sold. The experience taught me a key lesson: it's all about when you spend the cash and when you take it in.
What is "entrepreneurship?"
I believe it's a way of thinking. So, my definition of entrepreneurship is this: "The relentless pursuit of opportunity without regard to resources currently controlled." It basically means you're willing to make stuff happen—you won't let what you want to build tomorrow be constrained by what you have today.
But that's not just about starting a business. It can apply to anything you do. It's about looking at where everyone else is going, and trying to do something different. And that has been a big part of my life; it's part of the reason why I started teaching.
How is The Next 36 different from other incubator programs?
It offers more value, more capital and more mentorship. We fly in the top entrepreneurship professors from across North America. I think what we're providing to these young entrepreneurs is unique.
What results have you seen?
The first metric is the students' feedback.
If you talk to them, they will tell you it's the most transformational experience they've ever had.
As far as the success of the businesses they've created goes, they launched 10 businesses last year; five are still ongoing, and three have received external funding. Here's the final measure of success: so much of The Next 36 is dependent on time and money of Canada's business leaders—and in that dimension, we're off the charts. The people who've embraced the program with their time and money have been phenomenal. The results have been so good that we've raised money for a fund led by BlackBerry Venture Partners, John Albright [a prominent venture capitalist], [broadcasting mogul] Gary Slaight and my firm. We've committed $2.5 million because we believe that there's such good traction here.
Given your wealth and entrepreneurial acumen, you could be doing anything right now. Why The Next 36?
Because we're trying to solve the "right tail" problem in Canada, which is that there are not enough truly extraordinary entrepreneurial successes in Canada. If you look at the prosperity gap between the U.S. and Canada, it's increasing. The reason isn't the median worker in Canada, who is just as productive as his American counterpart. The difference is the far right tail. We don't have our share of Googles or Facebooks. What we're trying to do is inspire that kind of thinking in the students that come through our program and to serve as a catalyst for entrepreneurship in the ecosystem.
Why do you think Canada hasn't had its fair share of entrepreneurial successes?
Even though Canadians are much more into entrepreneurship now than they've been before, the cultural piece that we still need to change is the stigma attached to failure. The mindset is Canada is that failure is punishable by death or incarceration. It's brutal. You can't be an entrepreneur without failing; if you don't fail, you're not pushing hard enough. You learn a tremendous amount by failing. If you look at some of the greatest entrepreneurs, they all went through massive failures before they built the thing that really defined them. Part of the value of The Next 36 is that each of the students will be pushed into incredibly difficult positions in which they will fail for the first time in their lives.
I also think that from a national policy perspective, there's the belief that Canada should be reasonably good at as many things as possible. We're going to be left behind with that kind of strategy. My goal is to create a centre of excellence around entrepreneurship, like Silicon Valley or New York for entrepreneurship and for venture capital. We should be able to do it.
Do you think established Canadian entrepreneurs are aiming high enough?
I won't categorically say no, but I don't think enough of them do. Part of the problem is that so many of them think east-west—across Canada—instead of north-south. We need Canadian businesses that are influential, productive and tap into the U.S. marketplace.
What I worry about is the number of businesses that reach $50 million in sales and then immediately sell out to a U.S. guy. It's a shame. People feel they have to sell because they don't have the option to raise money in Canada on reasonable terms. We have to change that mindset.
You built and sold two operating companies. Why not go for a third?
That's a good question. I've made more money than I ever thought I would make, and the unfortunate thing about making money is that it's hard not to want more. Not because I want to buy a jet, but because it's a way in which you can have impact. And I really want to have a big impact on my family and my community.
I also enjoy the game, and I'm reasonably good at it. So, in 2010, I launched Alignvest, which is a pool of about $400 million that we're going to invest in entrepreneurs that we trust and respect, and lend them our business-building expertise. We've done two large investments so far. But I view Alignvest as an operating business, because it's investing in other operating businesses, mostly new businesses, In many ways, it's the perfect culmination of my career because it takes advantage of the fact that I've seen a few different industries, it provides me with the capital to take advantage of some interesting opportunities and to back people whom I've gotten to know in my business career.
How do you stay motivated?
I want to be a very positive role model to my three children, who aren't being brought up in the way I was brought up. They're living in a big mansion. They have a home in Palm Beach. They just have so much. And part of me really worries about that.
So, I put them in situations in which they're out of their comfort zone. For example, they've been learning Mandarin since the age of two, because I think it's going to be a very important language over the next 20 to 30 years, and it also gives them a window into the Chinese community. They often enter poetry competitions at a Chinese cultural centre. Whereas in [upper-class Toronto neighbourhood] Rosedale, everyone would get a participation certificate, at these competitions, one person gets a trophy and the other 30 go home dejected. I want my kids to feel that.
I also stay motivated because I want to have an impact—a big impact. I want to feel like I really improved the lives of as many people as possible. I'm 42, so I hope I have a lot of time left to do so.
What's something entrepreneurship has given you that you might not have enjoyed otherwise?
As a kid, I never learned how to skate. My dad didn't know anything about hockey, and it's an expensive sport to buy the equipment for. At the age of 33, I learned about a Wayne Gretzky fantasy camp, where 30 idiots pay a lot of money to spend a week with Gretzky and 30 Hall of Famers. I thought, "I'm going to do this." So, I learned how to skate. As someone who was obsessed with hockey growing up but who never could play it, it's pretty great to have been able to do that.