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Ousted Silicon Valley CEO preaches reinvention, advice for Canada

Douglas Bergeron

Rachel Idzerda/The Globe and Mail

Douglas Bergeron has had a rough ride in the past few years, and he's just fine with that.

As an investor in and chief executive officer of VeriFone Systems Inc., the Windsor, Ont. native turned Silicon Valley resident made a fortune he pegs at about half a billion dollars.

Then things got a little bumpy.

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He was roasted in the technology press in the summer of 2012 for his criticisms of highly touted (and valued) payment systems competitor Square, Inc. He called Square, the brainchild of Twitter Inc. founder Jack Dorsey, a modern Pets.com, a pointed reference to one of the biggest failures of the dot-com bubble. "Oh boy, was that stupid," Business Insider opined at the time.

The following year, he was ousted from VeriFone, which he built into a point-of-sale payments behemoth (think of those little pads where you sign electronically for credit cards, and all the technology that processes the payment securely). Upset at his fate? Sure, a bit. But not any more. Mr. Bergeron is building a new company and his legacy by giving millions to his alma mater and several causes, including multiple sclerosis, a disease his father had. And he is preaching the gospel of reinvention.

"Not to say bad times are great," Mr. Bergeron said on a recent visit to Toronto. "But if you use your negative experiences to take inventory of who you are, what needs to improve, how you can reposition yourself, that's a really good thing. That's a gift. That's a gift from wherever."

Over coffee after a presentation on thought leadership (he was catching a plane to Pittsburgh after his talk, making lunch a no-go), Mr. Bergeron is keen to talk about his views on Canada from afar.

This tech entrepreneur's take is that Canada still does a great job in technology. Stop beating ourselves up over the failure of Nortel Networks Inc. and the struggles of BlackBerry Ltd., he advises. Stop worrying about rivalling Silicon Valley. Stop pouring taxpayer money into ill-advised venture-capital programs that compete with the pros in the industry. Start focusing on reinventing the tech economy here. Start being more proud of Canadians who make good in technology elsewhere. There's no rule that says you have to do it here.

Mr. Bergeron is an example. The 53-year-old entrepreneur is not very well known in Canada, a product of having moved away almost three decades ago. These days he lives in Atherton, a Silicon Valley community that was just named America's most expensive zip code.

He jokes that as he has lost his Canadian accent, he has maybe gained some American forthrightness.

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Mr. Bergeron is blunt, his speech peppered with spicy language. He is wearing a sober suit, but also pointy boots that appear to be crocodile skin. Picture Dennis the Menace, had the cartoon kid grown up to become a successful entrepreneur, but never quite shed his glee at causing a stir.

He's not coming back to Canada, either, given the weather in California and the fact that his kids are there, but he remains tied to this country. He has never become a U.S. citizen. His mother still lives here, as do siblings.

Much of his giving comes to Canada, including $10-million he and his wife Sandra have donated to York University, where he earned his computer science degree. That money is going mostly to create a new building that will be home to the engineering school, a gift that was just announced a few weeks ago.

"Unless I come back to Canada I feel like a man without a country," he says. He still has only one passport, his Canadian one. "I'm going to have a Canadian flag in my funeral. Not an American flag."

If there's a theme to Mr. Bergeron's life, he says it's serendipity.

Take his choice of university, and his major. Neither was exactly planned. He wanted to be a journalist. Only when one of the fathers at his Catholic high school balked, pointing out that he was a math whiz and there were these new things called computers that might be big, did he consider computer science.

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For a middle-class kid who needed money to pay his room and board, York was a practical choice, not an aspirational one. York was simply the closest university to Northern Telecom's offices in suburban Toronto, where Mr. Bergeron had won a job even as a student. At 19, he was writing and maintaining computer programs that helped the sales force.

He shared a townhouse in a dodgy north Toronto neighbourhood, and commuted to class at York and to work in Brampton.

After that, he took full-time work at Northern Telecom in Ottawa. For a kid from Windsor, it was cold. So when he won a scholarship for graduate studies, he chose University of Southern California, because it was warm.

He liked California, and stayed. Eventually, he found himself on an executive track, working in financial technology at SunGard Data Systems Inc.

A few years later came what he calls his "lightning strike."

He and some partners were raising a private equity fund, and in the wake of the tech bubble's spectacular pop, they got the opportunity to buy a payments business from Hewlett Packard. HP had paid more than $1-billion (U.S.) for a business that was suddenly a money loser. HP sold the company a few years later to Mr. Bergeron's group for $50-million. Of that, all but $5-million was borrowed money.

Mr. Bergeron and his partners reaped billions as they grew the company – VeriFone – and took it public. By 2011, the company was worth more than $4-billion. However, not long after, Mr. Bergeron's time was up. After a long run of growth, VeriFone was struggling and missing earnings estimates. At the same time, Mr. Bergeron had been in that public sparring match with Square (he also accused the rival of having poor security). In March of 2013, his 12-year run as VeriFone's CEO ended.

He wrote in his goodbye e-mail to employees that the company's "terrible results" of late were "my responsibility and I accept the consequences."

Today he says he may have overstayed his time at VeriFone.

"I probably wasn't personally capable of pressing the eject chair myself," he says.

That said, Mr. Bergeron is clearly not thrilled with the decision the company's board made. He argues the board was no longer the same one that had been around in the good times.

"Now we have a bunch of 65-year-old guys that just joined over the past few years, so in their lens it was like, 'Hey, we had a bad year. This guy's been around 12 years; maybe it's time for a change,'" he says. "Yeah, I was sad, but it's an opportunity to reinvent myself."

First, he prioritized family. "I've got lots of money so I was able to spend a lot of time with kids travelling around," he said of the time after his ouster. "We spent time in the jungles of Costa Rica, hanging out with monkeys and riding jet skis. We also went to a dude ranch in Montana to ride horses and shoot guns."

But only a few months later he was back at work, teaming up with his old private equity partners to launch a new venture. He is putting up $50-million, and his partners $450-million, and they are looking to get back to building a company.

They are seeking businesses that focus on software that helps companies manage risks through third party vendors. It's in a sweet spot of growing spending, where Mr. Bergeron likes to invest.

"I'm doing something now which is thoughtful, interesting," he says of the new venture. "It's not in 120 countries. It's not with 6,000 crybaby employees and a board of directors I'm having to spoon-feed the news to. I've probably added 10 years to my life."

The idea is to put a few companies together and then sell the combined group, or maybe take it public.

Which brings us to Canadian technology.

Mr. Bergeron laughs when he says he just lost an auction for a Newfoundland company called (in a funny twist) Verafin, which specializes in anti-money laundering software.

So yes, maybe BlackBerry is struggling and Nortel is gone. But Canada's contribution is still strong. There are good companies here, doing excellent things.

"We should not feel defeatist, but take pride that some of our Canadian accomplishments might be by a Canadian elsewhere," he said. "I think this Nortel and RIM experience has given us an unfair sense of defeatism."

Similarly, he's not fond of Canada's propensity to worry about recreating a Silicon Valley here, often with government money.

"These conversations take place in Boston, in Austin, in Denver. All these places where people have declared they are going to be the next Silicon Valley. There's a reason Silicon Valley has an unchallengeable lead by far. It's this network of the people, the money, the weather, the universities."

He points to the fact that Mark Zuckerberg founded Facebook in Boston and moved it to Palo Alto because he needed access.

"I say just get over it."

He is similarly critical of Canada's attempts to use taxpayer money to fund venture capital.

"Just because we don't have a later stage venture market it doesn't mean the government should step in and do it – that's a dumb idea," he says. "It makes politicians feel good but they are going to blow all their money. It's really hard to beat Marc Andreessen and Vinod Khosla and some of the best VCs. You think you are going to outflank those guys? You are not."

And as for his public confrontation with Square, a darling of the venture capital world, he is not backing down.

"That will end badly I'm pretty sure," he still maintains. "They are still floundering for a business model that makes money."

He says he learned at VeriFone that Square's plan to serve micro-merchants is too tough: too much fraud, too little in the way of transactions, too much turnover in the businesses. And Square's planned electronic wallet has been cancelled.

Yet so far, things haven't turned out the way Mr. Bergeron predicted. When he gave his Pets.com take on Square, the company was valued at about $3.25-billion. It has now reportedly raised money recently at a valuation of $6-billion.

Still, Mr. Bergeron is unrepentant. And unlikely to stop speaking his mind.

"I learned a lesson to keep my own opinions to myself, maybe, but whatever."

***

Age: 53

Education: Undergraduate degree in computer science from York University. Master of Science from University of Southern California.

Kids: Five. Two adult children from his first marriage, and an 11-year-old and a pair of 10-year-old twins with his current wife, Sandra.

Hobbies: Owning professional sports organizations. He is a part owner of a NASCAR team, and he was part of a (failed) attempt to buy the Nashville Predators.

He's been cited as a billionaire in the press. True? "No, not a billionaire but my life has a billion blessings."

Philanthropy: The Bergerons' $2-million gift to the Multiple Sclerosis Society of Canada is the largest in the organization's history. (Doug's dad had the disease.) They have also endowed a professorship in Neuroscience at Georgetown University with a $1.25-million (U.S.) gift. The family has given $10-million to York University, the largest single amount from any alumnus. That money will help support a program to back entrepreneurial programs in science, technology, engineering and mathematics, and build a new home for the university's Lassonde School of Engineering that will be called "the Bergeron Centre for Engineering Excellence."

He has been invited to five straight World Economic Forum gatherings in Davos, Switzerland. He is also a lifetime member of the Council on Foreign Relations.

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