January 29, 2020—W. Brett Wilson is an entrepreneur, philanthropist, FirstEnergy co-founder, former Dragon’s Den star, and owner of the Nashville Predators. He offers his unique insights on:
- investment opportunities, career tips for entrepreneurs, how he supports entrepreneurship and start-ups;
- his view on how to define success;
- his keys to success in business as well as in life
Subscribe: iTunes | Spotify | Google Play
Transcript
Welcome investors to the Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies. Your hosts Julian Klymochko and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by accelerate financial technologies. Accelerate because performance matters. Find out more at www.Accelerateshares.Com.
Julian Klymochko: Welcome investors to episode 50 of The Absolute Return Podcast. I can’t believe we’re up to episode 50 already. Thought we would commemorate the occasion with a very special guest on today’s episode. That is W. Brett Wilson, who is a real seasoned entrepreneur and investor, a co-founder of FirstEnergy, one of the most successful boutique investment banks in the country. Owner of the Nashville Predators, along with being an author and philanthropist, he had some really unique insights on investment opportunities, his career tips for entrepreneurs, how he supports entrepreneurship and start-ups.
Lastly, we discuss his view of how to measure success and his keys to success and not only business, but life as well. So with no further ado, here’s our guest on today’s podcast. W. Brett Wilson.
Julian Klymochko: And we are live. Brett welcome to the podcast. We really appreciate you making the time out of your busy schedule. To start things off, I just want to get in to your experience and being supportive of start-ups and entrepreneurs. Obviously famous for being on Dragons’ Den. Before that, you are as supportive of entrepreneurship and after that. Really just a prolific backer of start-ups and entrepreneurs. Once you tell us about your approach to investing and new businesses and start-ups.
Brett Wilson: Let’s even go back a little further. I never really thought of myself as being an entrepreneur because I viewed the entrepreneurship world as one of risk. It took a long time for me to appreciate it, and my new very clear outcome in terms of my approach to this, is entrepreneurs are not risk takers. They simply view risk differently. It is not about rolling the dice and getting a thrill like you would if you were in Vegas. But it’s betting on yourself, betting on something that, you know, you might be wrong, but you’re not taking a risk for the thrill of the risk. You are not chasing for the thrill of the chase. You are actually building because you believe in yourself. And the world of entrepreneurship came to me left, right and centre, really, after I finished my engineering degree, came to Calgary, to do business degree early on in the business degree. One of my first classes was entrepreneurship 501, 101 201, whatever. And it was an introduction to case studies where I was watching people in sort of non-entrepreneurial backgrounds be fostered into the world of entrepreneurship, and I realized, you know what, this is me. And that was really the essence of FirstEnergy when we got it going. The business that I started before that, which we imaginatively called Wilson Mackie, my partner Mackie and I got going and we brokered all our gas properties, just like a real estate agent would. But as we evolved into FirstEnergy, the opportunity to back the entrepreneurial community in Canada and in particular the oil and gas industry was front and centre and we really fell in love with the world of entrepreneurship.
Julian Klymochko: Great and you mentioned FirstEnergy, which you were a co-founder of, and really grew it to one of the largest and most premier boutique investment banks in the country. What was its key to success?
Brett Wilson: You know we came together as a partnership. There was Jim Davidson and Murry Edwards and Rick Grafton. And each of us brought unique skills to the table, but we also brought unique relationships to the table. And Murry knew a couple people that joined, and I had some team in terms of Mackie and Wilson Mackie group and Jim and Ricky really bought people to the table. So it was really at that time about an opportunity to cherry pick the best of the best as we built a team from scratch. It wasn’t 12 people that came together, it was four who then curated and chose very carefully a great collection of the right trader, the right research, the right support team as we built FirstEnergy. We also stumbled into the market at the right time. The market had been in kind of the doldrums. The market itself that we were trading into was not easy to work with, but there was no competition, who was as focused as we were. FirstEnergy was intending to be, and we joked about this many times. But cradle to grave and many investment banks focused on start up to certain market cap, maybe 100 million, 200 million. Then the big bank own dealers said until you are, you know, a quarter of a billion dollars in market cap, we are not interested in you. What we discovered was that the cradle to grave relationship was important and while we would not be the only investment banker working with a given company, we would be one of several. The idea of cradle to grave helping someone start with their first financings, and we discovered that we could do that even as private companies. A lot of people thought that all financings were meant to be done in the public markets, not so. Private market and we sometimes do two, three, or four financings in the private market, then take them public, list them, trade them, and then eventually when the offer came in, sell them. So cradle to grave.
Julian Klymochko: Right and so you guys got together and you spotted an opportunity in the market that really was not being capitalized on by your competitors.
Brett Wilson: That is correct. The competition, you know, Peters & Co was in the market, but they were regional. They happened to be mostly oil and gas, but their focus was anything in Alberta. And so they weren’t nearly as is, if you will, consumed with just oil and gas as we were. They evolved there and then into the market came GMP who said, you know what, we are going to have an oil and gas office in Calgary, and of course, they had great people and they did a great job doing that, and there was a few others. Lancaster others that created platforms in oil and gas. The most enduring platform of all ultimately was the FirstEnergy platform.
Julian Klymochko: Right.
Michael Kesslering: And how is that Calgary investment-banking market changed from that time when you founded FirstEnergy, looking at today now?
Brett Wilson: Well, for sure, the challenges have been many. Obviously, FirstEnergy has gone through a couple of different shareholder groups in terms of both GMP and now Stifel. We have also seen other people in the marketplace evolving in terms of their focus and their interest, the fact that there is very little capital being raised. You know, I think we were 20 billion to less than 1 billion in a three or four year window in the capital markets. Both M&A and new issue equity are the essence of how a firm gets along. Trading day to day is helpful. It is part of the business for sure, but the merger and acquisition work in the new issue work is critical. So it has been challenging for the players. Again, the key players as investment bankers go, have stayed the course and there is still a handful that are available when you need them.
Julian Klymochko: Right. And so continuing on with that thread is that many of your colleagues remain energy focused, but you’re well-known outside of the oil and gas sector, whether it be real estate, cannabis, professional sports. So you become well diversified while many of your peers sort of stayed energy focused, which has certainly hurt over the past five years or so. How does your approach to investing differ from your peers?
Brett Wilson: Well, the investment approach may have been a bit different, but most of my peer group are looking at opportunities. Most of us have learned not to stray too far from the nest in terms of where you first got skilled. At FirstEnergy, we got good at oil and gas, but we also got good at the people that ran oil and gas. And that was for me, the essence of most of the future businesses. I certainly was active in cannabis for the last couple of years, but my son, who worked for me and I went about building relationships so that we could build opportunities. And that’s really the essence of that business.
The Nashville Predators I bought into those folks the night that I landed in Nashville. It was a unique opportunity, there was a dinner party, got talking hockey is inevitably would happen, and at a table or the house that had about 100 people sitting down for dinner. I happened to be randomly seated beside a kid whose family was part of the new ownership group, and they had lost someone from the ownership group that morning. So random chitchat, not much more different than you do at a coffee shop. Turned into, would you be interested in buying a piece of the Preds? I looked at the league. I understood the economics, understood the paperwork. And so basically the next day at noon, I shook hands on buying, I can’t recall ten or twelve percent of the club at that time. I stepped up my interest over time and kept participating. I am not on the ice guy, but I’m pretty good at the non on the ice things from marketing to financial transactions and how we capitalize our business. So I was able to add value and that really goes back to it’s probably a mistake for most people to invest in businesses where they can’t add value, whether it’s a phone call to a board member or an update from a supplier or competitor or consumer or even being able to help in staffing. There should be some value added proposition to really make it interesting. I have done random investing for sure, but my success record, for example, in start-ups in technology, I don’t know if I’m 0 for 10 or 0 for 20, or maybe one. But there’s not much that’s worked out well and done the novelty of investing in friends and their ideas, that sort of stuff, but really have to focus on people who know what they’re doing. And that’s where cannabis has worked out farmland, real estate’s worked out, sports has worked out. Certainly, energy has been volatile, but in the long term, it has worked out
Julian Klymochko: Right and owning the Nashville Predators or at least a stake in them, what was your underlying investment thesis? Did you view that as undervalued, inflation hedge, fulfilment of a childhood dream?
Brett Wilson: You know, sports franchises are mostly ego plays, and I mean that in a kind way. You want to be involved with the sport. Not many people lead with economics when they are making those decisions. It has to look fair but you don’t do it, but I can’t think of anyone who would say, yeah, I’d love to overpay for a baseball team or overpay for a hockey team. With the time, it looked fair. Now with the evolution of marketing and Bettman has done a phenomenal job and blah, blah, blah. And the Rogers deal that was done in terms of media and marketing, the value of every hockey team in North America appreciated dramatically. So have I done well by at economic? Yes. Did I expect to do ok? Yeah. Ok was all I needed and was hoping for a team that would be exciting on the ice. Yeah, and we delivered in spades on that
Julian Klymochko: Right. It has been a great experience, just far.
Brett Wilson: All of it has been a good experience. You know, we have had our differences as owners. We have had to turn over a coach recently, but, you know, the management of the team does a pretty good job of taking care of business, call it.
Michael Kesslering: And how surprised have you been? Just the absolute uptick in hockey interest in the south. Nashville is really the cornerstone of that. How is that being as an owner, witnessing that fan demand increase?
Brett Wilson: I took a great deal of good natured abuse from friends. What, in the heck were you thinking or kinder words than that. Buying into a team that probably is not going to make it. And I said, if you ever get to Nashville and you watch the fan base, a fan base might be small, but it’s more passionate than I’ve seen in other big cities that call themselves hockey cities. You know, it is pretty easy to have the national fans even today stand for the last two minutes of a game, whether we’re up to or down one. It does not matter. They are there to throw enthusiasm. And I’ve been to games in virtually every Canadian hockey rink, and you don’t get that same buzz. So all due respect to my Canadian hockey fan friends or hockey friend fans, there is more to the game.
Nashville was a great example, and you know who came to visit Nashville to see how they could roll out their team? A group called the Vegas Golden Knights, and they may have taken this flag from us in terms of fan engagement, but it’s a matter of understanding in the world of sport that its entertainment. Happens to be hockey, but its entertainment first. And so what happens from the moment you buy your ticket, not to the moment you get to the arena to buy your ticket. There is an engagement opportunity, there is e-mails, there is websites and there is the outside the arena activity, the inside the arena activity, food and beverage. How it is all packaged? The music, the entertainment between periods, the after play, the little flags that you wave, the people who show up. There is so much to it. It is so much more than, who your coach? And who your front line is?
Julian Klymochko: Yeah, that totally makes sense. A side from professional sports, which obviously seems to have worked out very successfully, thus far. What longer-term trends are you focusing your investments on and why are you seeing opportunities on a go forward basis?
Brett Wilson: Well, I have been pretty active in two areas. One is real estate and selectively choosing where I want to be in real estate and part of it’s with family and friends and not all of the real estate I own is up for development right now. But there’s a few projects I have bought into Kelowna and 2006/7. It took five years for anyone to return my calls and now the phone ringing constantly with people interested doing a development out in Windermere BC of some size. Probably the most significant project on my plate right now is working with a guy named Bruce Chernoff, and together we control a business called Maxim Power. At Maxim, we are building what’s, I believe, the only significant power plant under construction in Alberta. Being built up in Grande Cache Alberta, so it is a gas fired power plant. Have ever built one before? No. Did we figure out how to do it? Looks like it, but we won’t know till we flip the switch.
Julian Klymochko: Right, right. That is good to know. So you wrote a book called Redefining Success, which I recently read. I really enjoyed it. What I found was interesting was used to define success by material wealth and financial success. But it really changed your definition over the course of your career and your life. How did that sort of develop? How did you used to view that versus how you now view and define success?
Brett Wilson: You know the title of the book was originally contemplated to be redefining success in a wealth-obsessed world. So taking a little bit a shot at the business life that I’d led and a wealth obsessed world is not an uncommon world. You know, people focused on, you know, you start with real food and shelter and then clothing and then you start to get into where is your holiday’s? And how big is your office? And what kind of car are you driving? and how long was your holiday? And you start creeping into this world where material wealth creates opportunities and they become somewhat shallow and superficial over time. If you are, only focus is indeed called the wealth objective and looking at the important things in one’s life. You know, I redefined my idea of success and tied it to happiness, and in order for me to be happier, I had to have my health, had to have my family, had to have my friends. Those were much higher priorities than where my office was or, you know, some of those called superficial moments. When I named the book Redefining Success, the subtitle is Still Making Mistakes. And at some point one of the people at HarperCollins said, well, can we just call the book Still making mistakes? And I smiled and said, my life’s not that screwed up. It is just redefining successful. We will work with it.
Julian Klymochko: Perhaps that is the sequel.
Brett Wilson: Yeah, exactly.
Julian Klymochko: So being respectful of your time, just a couple more questions. Touching back on entrepreneurship. Do you have any tips for entrepreneurs who have not made it yet? Just new to business. Just starting out, college students? Etc.
Brett Wilson: Sure. In terms of advice, I think I always argue that the study of three things makes a difference. Study of marketing, the study of entrepreneurship and the study of philanthropy, and let me go back to marketing. A one-page resume can be powerful. A 10-page resume can be boring. So understanding that probably for most people, most important marketing document they will ever prepare his first their resume and then potentially down the road a business plan with a pitch. But understanding that marketing is your point of differentiation. It’s how you set yourself apart from the crowd and whether you’re studying marketing when you’re 10 years old and selling lemonade to people down the street, driving down the street, or you’re an adult, 35, 40 years old looking for a career change. Marketing yourself is literally job one. And there’s many ways of studying marketing, whether it’s books or seeds or podcasts or online tools, doesn’t much matter. But the study of marketing and it’s often overlooked. When I did my MBA, the cool cats were studying finance and accounting, and anyone who studied marketing was probably destined to sell toothpaste or cereal for the rest of their lives. Yet my focus on marketing while I was doing my MBA was a big part of what allowed FirstEnergy to differentiate itself, me to differentiate myself. The constant focus on marketing was a result of studying marketing, understanding it. The study of marketing, the studied of entrepreneurship.
And the study of entrepreneurship for me isn’t studying accounting and finance. It is studying the examples of those who have gone before. Legendary entrepreneurs of big consequence, whether it’s a Clay Riddell or a Jimmy Patterson or someone who’s still growing businesses left, right and centre like Murray Edwards or younger guys who are still making things happen like a Jay Hawker or a Brett Wilson. But there’s so many examples of people who’ve done real life stories, taken real life stories and turned them into real life businesses. And that’s the study of entrepreneurship. When I was doing my MBA, I had the privilege of studying a few case studies that inspired me, massively inspired me in terms of what did they do? Why did they do it? How did they do it? Where are they now? Then, of course, the last part is philanthropy. I jokingly point out the FirstEnergy we made a lot of money giving money away, and that was because we built brand, we build relationships, we built connections, and we were often one phone call away from an important person relative to relationship with. Selling a business or doing a financing or whatever. The brand that we had built as an investment bank because we had a social conscience was unique, and there is just one example of the thread that ties marketing, entrepreneurship and ultimately philanthropy together. We made a lot of money making the city a better place to be.
Julian Klymochko: It is really interesting and touching on marketing and branding. You have really built yourself up a personal brand as an investor, as a businessman. What was really the key to success and elevating your brand and establishing it within the market? Obviously, Dragons’ Den must have been huge to get that national coverage.
Brett Wilson: National coverage was interesting, but I had extraordinary profile in Calgary as a result of FirstEnergy and the charity work we were doing. So I wasn’t craving or seeking more, but it was coincidental. I had retired the week I turned 50 and three months later I happened to be doing charity work and I was in Mexico of all places. And I got an email from CBC saying we’d like you to be the next dragon. So I had literally retired. I don’t think if I had been in the saddle riding hard in terms of German and doing what I was doing, that I would have found the time to take on the Dragons’ Den, first of all, the shooting and second, and probably more importantly, actually getting the deals done and helping run the businesses. Built a lot of brand as a result of Dragons’ Den. Twitter was formed as we were getting Dragons’ Den going. I still remember CBC coming to a saying, would you sign up for this software. And a couple of us are like….No. And they leaned on us and then it became a competition to see who could be first to getting a thousand followers and blah, blah, blah.
And so all of a sudden, Kevin and Brett, Arlene and Jim and everyone’s playing with this thing called Twitter. I have evolved off all social media platforms. You can’t really find me on Facebook and you won’t find me on Instagram, but Twitter is the platform. I refer to it as the platform for sports and politics.
Julian Klymochko: Right.
Brett Wilson: And I am a little bit interested in both of those.
Julian Klymochko: Good to know, because as I leave things off. I just wanted to allow you to let our listeners where they can hear more about you. Obviously, you are big on Twitter. A great follow by the way.
Brett Wilson: I have had a lot of fun on Twitter and I have actually an incredible following. We are coming up on a couple hundred thousand followers, but there is some interesting hockey players and musicians. There is interesting local politicians. There is national politicians. There is business leaders. There is a wide range of people who interact there. Some days I will spend half an hour on it. Other days, like today gets three minutes. I am a little preoccupied with other stuff. I enjoy being able to rant and rage. Rage in a friendly way on topics of interest to me, and sometimes I take headlines, news headlines and simply recreate them using facts. I think the world has suffered by virtue of the fact that we don’t apply critical thinking to a lot of things we hear. You know, just pick one article, there was one yesterday, but some young guy, girl I can’t recall talking about how the electrification of all of our furnaces was critical to the future of the planet. Not once in that article did they acknowledge that the economics of converting all these furnaces was a disaster and that there is not enough power in the grid does not exist. I am a power guy. There is not enough power in the grid to fuel to displace the BTU from the heat provided by propane and natural gas. There is not enough power in any of the grids, so we have a massive recreation of your wires and all your connecting systems. So there’s a massive hypocrisy embedded in this article, but it’s got a nice little headline saying the future requires electrification of our furnaces. So I might have taken a poke at that. Might have. I might be getting ready to. One or the other, I can’t recall.
Julian Klymochko: Yeah. There is a lot of critics who lack rationality and really don’t take all the underlying evidence and information required to really make those vast pronouncements. Like you said, just for electricity. We just don’t have the grade or any of the infrastructure, let alone billions of dollars to recreate all of that.
Brett Wilson: On that, I challenge a listener to do the math on what it takes if everybody plugged in their electric car at suppertime, then others say, well, yeah, but that does not count. People could always get up at 1:00 in the morning and plug their car in. I am thinking, really! You are going to set the alarm to get up to plug your car in at 1:00 in the morning. No everyone is going to plug in at night. So your peak load could go up, and I think the math was a factor of four or five if you’re plugging cars in left, right and centre because you’ve got upcharge this massive. Well, we don’t have enough power in the grid to let everyone charge their cars. Yet those who are proponents of electric cars say everyone is going to be driving one in 2030 or 2040. The other sidecar and I will just finish with this. Right now, there is a fuel tax to pay for our roads. Electric cars don’t pay fuel tax. So our roads going to be free going forward? Is that the model? How are we? Who is going to pay for them?
Julian Klymochko: Right.
Brett Wilson: It is just things that have not been thought through in this mindless pursuit of decarbonisation.
Julian Klymochko: Right. Well, there you have it, folks. Brett Wilson, as always, bringing rationality and intellectual conversation into the mix. So with that said, thank you so much for your time and a real pleasure to have you on the podcast.
Michael Kesslering: Yes, thank you.
Brett Wilson: An invite in a year might be a wise thing. Let’s do it again.
Julian Klymochko: All right. Perfect, sounds great. Cheers.
Thanks for tuning in to the Absolute Return Podcast. This episode was brought to you by Accelerate Financial Technologies. Accelerate, because performance matters. Find out more at www.AccelerateShares.com. The views expressed in this podcast to the personal views of the participants and do not reflect the views of Accelerate. No aspect of this podcast constitutes investment legal or tax advice. Opinions expressed in this podcast should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment strategies. The information and opinions in this podcast are based on current market conditions and may fluctuate and change in the future. No representation or warranty expressed or implied is made on behalf of Accelerate as to the accuracy or completeness of the information contained in this podcast. Accelerate does not accept any liability for any direct indirect or consequential loss or damage suffered by any person as a result relying on all or any part of this podcast and any liability is expressly disclaimed.
