Reza Satchu: What I learned after selling my first startup for nearly $1 billion
Co-founder of Alignvest Management and Next Canada. Entrepreneurship professor. Dot-com millionaire
If I look back, there was no more important event for my parents, my brother and I than Pierre Trudeau saying he'd take 25,000 Ismailis from East Africa.
There was a lot of discomfort moving to Scarborough, of course: I was a scrawny Indian kid with a funny accent from Mombasa, Kenya. It was winter, I'd skipped a grade, and my parents really want to immerse us in the Canadian community, so we were far less involved in our particular immigrant community.
My mother was a secretary, and my father became a real estate agent. I remember delivering cards in Scarborough saying, "Rustom Satchu sold this house for $35,000."
While I was at McGill, I read an article that talked about all these kids from Harvard and Stanford going to a thing called Wall Street. I'd never heard of Wall Street, and I wanted to know, why are all these kids going there when that's not even on my radar?
After I graduated, I must have sent out 200 resumés and got rejected everywhere. But all it takes is one lucky break. I'll never forget the woman at Merrill Lynch who took my call. She asked if I could come in that afternoon. Of course, I was in Montreal, so I drove through the night and met her in New York the next morning.
I'd always wanted to be an entrepreneur, so after a few years at Merrill Lynch, I applied to Harvard. On my first day, I felt like everyone else was so much more impressive. And what you learn is, that's just not the case.
I had opportunities to go to more established private equity firms, but I really wanted to see something being built from ground up. So I joined Fenway Partners in Boston. I was one of four people, and in five years, we raised $1.4 billion (U.S.).
My younger brother and I are extremely close. We were a team, the two of us. So we both went to McGill and then to Wall Street and then to Harvard.
While Asif was at Harvard, he did a field project at Fenway. We started thinking, was there a way we could create a more efficient marketplace of global buyers and sellers of manufactured goods? That became Suppliermarket.com.
We ended up raising money from Sequoia, Onex and KKR. But we'd never really run anything. I like to say that all these financiers saw two Indian kids across the table and just assumed we knew something about technology.
Suppliermarket.com was scheduled to go public at a ridiculous price—this was 2000—and my brother and I, who had all our money in this, thought we had hit the top of the market. It was only after we threatened to quit that our board agreed to sell it to Ariba for $925 million (U.S.).
The major disadvantage I had coming out of McGill was that I had more modest expectations. Whereas kids at Harvard, Yale, Stanford—through their interactions with CEOs, they get to see what's possible. The reason I created Economics for Entrepreneurs at the University of Toronto, and then Next 36, was to provide that bridge.
The class is purposely stressful, because guess what? Being an entrepreneur is stressful.
There's an increasing prosperity gap between Canada and the U.S. Not because we don't work as hard, but because we don't have any Facebooks, any Googles, any Ubers here.
If someone asked me if I wanted to teach entrepreneurship in high school or to 30-year-olds, I'd go for high school. Google, Microsoft, Facebook, Uber—they were all started by people in their 20s.
In Silicon Valley, failure is almost a badge. In Canada, getting young adults thinking about failing and taking risk early in their careers is a good thing.
At Alignvest, partnership is critical. At the end of the day, we're not going to actually run the businesss. Ultimately, we're backing management teams that are extraordinarily talented, in industries where we see opportunties for growth.
If you go into room and ask people who wants to be an entrepreneur, 98% will put up their hand—because it's glamorous, you can have freedom and impact. And yet, ask the same people how many of them have actually become entreprenuers, and 98% of them will say they haven't. It's not that they don't have ideas—it's this fear that other, much larger competitors have surely thought of this.
Never underestimate the stupidity of large companies. If they did everything right, there'd never be new companies.
Part of being an entrepreneur is suspending disbelief and just going with your gut. So take the imperfect information you have and make a judgment. If it's wrong, who cares? Just keep going.
Dawn Calleja is a senior editor at Report on Business magazine. Tweet her @dawncalleja