E55: Entrepreneur to Investor with Michael Hyatt

Foreign. This podcast is brought to you by Gensler Wealth. The information discussed today is meant to be general in nature and not tailored to your specific investing circumstances. This means that you should talk to your regular Gensler wealth advisor or your own advisor before acting on any information we discuss today. Nothing in this podcast is intended to be a solicitation and past performance does not guarantee future returns. This is the first in our series of podcasts with an AI theme running through it. I should note that this is still the real Brian Gensler speaking for now. Today on the Unlimited podcast, we speak with Michael Hyatt, one of Canada's top tech entrepreneurs and investors. We talk about choosing your right path, sibling co founders, what Canada needs to do now, the exponential improvements of AI and more. Let's go. Welcome everyone to the Unlimited podcast. Today I have a really special guest. I say that all the time, but this one is really special. What I'm trying to do over the next number of months, and we'll see how long it goes, is a little bit of a theme, a little bit of a theme around technology, around AI. Of course, investing will always come into it, but what I've really felt in the last number of weeks and months is this huge AI boom and AI theme. And obviously tech permeates through everything. So today we have someone who I think fit the bill to give us a lot of background on his journey through the tech world. That is Michael Hyatt, who's one of Canada's top tech entrepreneurs and investors. He co founded Blue Cat Networks, scaled it into a global cyber security firm and sold it to private equity. And prior to that he had already built and sold another tech company, Diadem, to a public company which is now part of S and P Global. Today he runs the Hyatt family office, is a senior advisor to Northleaf Capital, a guest investor on Dragon's Den and the pitch, and a founding fellow at the Creative Destruction Lab CDL. He's been named one of Canada's Top 40 under 40 and is a go to voice on building, scaling and investing in high growth businesses. So, Michael, thank you so much for being here. Appreciate you taking the time to speak with us.

You know, glad to be here.

So I've given a little bit of a background. I hope that's a good summary. I saw guests tell me sometimes it's strange to hear their bio repeated back to them and so you can fix anything, but we always like to start, just give us a little bit of background, you know, how you got from where you started. To where you are now and you know, give a little bit of color for our listeners to get a sense of who you are and then we can dive in with a whole host of questions, if that's okay.

Well, I'm no longer under 40, so that top 40 under 40 is a nice title for a long time ago. That was a really great program. When it was around, it was always amazing to be in the room with so many other great people. That's an experience. One of the VPs actually standing beside me in my picture, the top 40 under 40 turned out to become the CEO of BMO. So people really rise up in that group. But look, my, my, my journey is I'm a 20 year overnight success. I, I started in the 90s, so look, that makes it 25, 30 years, you know. And I started a software company with my brother when I got out of school. The market was really, really bad and the Internet was just coming about and no one really understood what it was. I think the interesting thing about my career is that I've lived through very, very, I guess prominent or well known crisis I lived through that was a CEO in the 2001 dot com bubble, the 2008 financial crisis. I was in the sterling senior executive in the, in the COVID You know, now through the kind of what I call the inflation and a bit of a shock and all going on now we can talk about that. But you know, my career has followed a lot of, a lot of waves in the market and technology and a lot of shocks and a lot of changes, a lot of upsides, a lot of downsides and, and, but there's nothing smooth about my journey. It's just been, you know, it's gone extremely well over a long period of time. But you know, you go through a lot of sequential small battles. I think everybody underestimates what they can achieve in a long period of time and then probably overestimates what they're going to achieve in a short period of time.

Right, right. Okay. Well that gives a good sort of theme or background to it. And actually one thing I didn't mention, and this takes maybe listeners a little bit behind the scenes, I call it going into the kitchen, I guess of our podcast I often will prepare a pretty detailed agenda for our guests. We're not here to trick people or surprise people or gotcha people. We want our guests to have a good experience and you know, share some of their key highlights. And Michael made it very clear right from the beginning though, do not send me any details I don't want any. Any questions. I want it to be on the fly. So I guess it probably gives you a little bit of a sense of Michael and his, you know, the way he operates. So I love the few things you said there and I want to touch on them, but maybe give a little bit about. I always do a lot of research. My research on you a little bit was your path might not have been going into this business tech type of world. It might have been a completely different degree or approach back in school. And someone might have suggested to you you should be doing something else, which is a little strange when you're a student. So can you. Can you give a little bit of color there?

Oh, I went to Western. Why did I go to Western? Western was the only school that accepted me. This is true. I get into sciences because, of course, I wanted to be a doctor. I was a very sick child and I spent the first 10 years of my life in sick kids. And I think that that shaped me greatly as a human being for so many reasons. And when you're a very sick child and things are quite bad, parts of you mature extremely quickly. At 10 years old, parts of you are 18 and parts of you are 10, and parts of you, you're 5. It's a very strange thing for a sick child. But of course, you get attracted to that line of work because you're around doctors and nurses for, you know, an obscene amount of hours. So I go to Western to be a doctor. I was never a great student. I worked extremely hard. And I did biochemistry and chemistry. You know, my marks were in the, like, low 80s, which is very respectable, but not even in the. Wasn't even close to applying to med school. I mean, I'd be sitting in class with people that would score 95, 98, and there'd be always one guy, this guy Jonathan, who's so bright. And he would get like 102 because he got the bonus question. And I was just like, not equipped for this. And I gave my thesis speech at the end of it, and I literally. It was like. It was like the. The scene at a flash dance with these old guys with the glasses on the end of their nose, the male pale and stale look. And I give a speech on X ray crystallography. How exciting is that? And they said, Mr. Hyatt, you need to go sell cars. You should leave Western now. And they told me to leave. And that's actually literally what they said to me. Literally. And I left Western on a Friday. My last exam was A stats exam. And I got into the software company with my brother on Monday. I really had no vacation. And that was it. We started right out of the get go and the rest is history. But I think I was always naturally good at business and sales. I just ran from it. And I think that's an interesting thing about people is that if I take somebody and I put them in a company or where do you naturally drift to? Do you drift naturally to marketing or sales or tech? Like if you watch a human being, they always drift to what they're good at. So if they're in marketing and they're very analytical, they always go to the analytical marketing. Right? Or so there's a drift to a human. And I remember I had this neighbor who was really great and I told him, I'm going to be a doctor. He says, no, no, my boy, you're going to be in sales, you're going to run a business. I'm like, what are you talking about? He's like, no, no, my boy. I always remember this guy. And it's true, I was just running from was and I went into business and it worked out. But you know, certainly I was not a fit for, for medicine. I would have loved to have been a doctor, I think. But I, you know, I, I certainly, I realized like people then would go on to do their masters or PhD in med school. I realized that that world didn't want me. They, they wanted a very different type of character. And I got all the respect in the world of people who come doctors. It's just, I realized that, you know, you know, life is short and I got to go do something. So.

Right.

I got into business.

Amazing. Good story. And so. Yeah, so what, so what was that first business that you started two days later or whatever it was. Is that the one that that grew and got sold your first business that you sold? Because I think you've done a whole host of things here.

Yeah, that was diadem. We started with my family. My brother was the coder, my dad was the product manager, engineer. And my mom told us if we're going to have a business, we need to get out of the house. So she told us to rent an office and we rented the back of Knobber Photography Studio and this guy named Fred Knobber, I always remember his name is a sweet guy. And we rented the front of the back of his photography studio and, and that's how we started and we, we just had our little business there and we had to sell one license of the software a Month to pay for the rent.

And what was it? What was the business? And how did you identify the need for whatever this was?

Well, my dad was a chemical engineer and my brother had dropped out of university. And my dad said to my brother, look, if you're going to stay at home and do nothing, you better. Because my brother was actually a genius coder. He just could code and he hated school. So he dropped out of UFT and he coded the world's first Windows based risk assessment tool for chemical risk. And that sounds a little arcane and strange, but at the end of the day, no one had ever done it. No one had ever taken Windows and applied Windows is very new by then. Like using Windows over DOS was really a big thing. And he made the first Windows based product that could help you do chemical risk risk assessment on a refinery, on a plant which was regulated by osha, the epa. And we just started selling it and started selling it in this American dollars. And we would sell and we'd go to the post office and mail you the diskettes and you put them in your, you know, your, your disk drive and you'd boot up the software. And this was before the Internet.

So I remember that.

Yeah, that, that, that's when it started. It was very strange, you know, what we call an intolerable burden. But that was how we did things back then. It wasn't strange at all to mail somebody a disc because how else would you do it? It just was the way.

We live.

These lives where, you know, we do things where later in life they become such a crazy idea like going to a store and buying a CD and coming home and putting it into your disk. It's an intolerable burden. You'd never want to do it. But that was normal then. That was normal. That's how you did it. You know, that was the deal. There was nothing else. And that's how we started. And you know, there was really no VC community, no way to get money or anything like that. So we stayed profitable. Early on we built, we just built up and eventually sold that business at the same time we started Blue Cat. That was another crazy experience.

Yeah. And I think the theme also of like not really taking VC financing I think is something that carried on whether it was through your first company, BlueCAD as well.

We definitely took some, we definitely took a lot, lot less than other people though. We took, we took some, but we always remain in majority control of the company. Which was the strange thing, the unusual thing. It's not really how people Build companies today. But that's how we wanted to do it.

Right. And, and what was happening sort of as before, before you were selling Diadem, I think you were actually already on the road to start Blue Cat a little bit. And I. And again, another theme I think I've learned about you is at some point you say, okay, I've got to bring in some other folks to take over for me here or run it. I think you call them people smarter than you, but I doubt they're smarter than you. They just have the different skill that as you had identified earlier, you know, you gravitate to different things. How do you think through that?

I never wanted to start Diadem. Diadem was there because my dad and my brother started the software and that's what it did. And then my brother, we had to get a DNS server going and people like, what's DNS? And we invented our own server. And I'm like, God, we could sell these things, Richard. And we did. So that was really exciting to me because I was there in the very early genesis of Bluecat and I was in 01 and after the dot com crisis. And I still understood though, even though the Internet was affecting effectively announce as dead and silly and it burst and all those silly tech companies are going away. I realized that I would never want to get rid of my email, but I would get rid of my phone. And I realized that email is not going away. And that sounds so weird to say today, but you'd have to have guesstimated that. This is before WI fi, before instant messaging. This is before the iPhone. This is before mobile really took off. Would you guess that people wanted to communicate electronically? And the answer was you have to. You'd want to just keep calling people.

Right?

And so we thought that that would work and we started to build bluecat in the same kind of premise. And in all these companies, the best things I ever did was hire great people. And the worst things I ever did was hire the wrong people. I do think there's a number of people smarter than me in their verticals. Like, I would hire an incredible lawyer, finance person, somebody who really understood a deep vertical. That was very helpful for me. But I also learned how to hire really good people and step back. And one of the hardest lessons as an entrepreneur is to, you know, hire a players and step back and let them be A players. Because if you don't let an A player be an A player, they just won't stick around, they won't be motivated you have to let people have scope and authority and let them fail and allow them to do things wrong and right and all the rest of it. And I think it's very, very easy to, you know, always kind of run a, a company on one of these kind of like, you know, pinnacle things where you're like a pyramid, a little bit of one of these dictatorships where the guy on top runs the company is not actually that effective because if you don't download responsibility, you can't actually grow. And that's just another plain mistake. Right? I mean, I think Jim Collins speaks about this readily in the book Good to Great about how Level 5 leaders have very specific attributes. They're not all outward going and like that. There's a lot of key characteristics. I think that might be one of them.

Yeah, amazing. And so is that part of the trick to scaling because I mean, Blue Cat, you grew dramatically. Is it the right people or how do you. Well, people for sure, but how do you get those, the revenues cranking up like crazy quickly and whatnot? Because you've, I mean you've done this a number of times.

I think that people underestimate the importance of product market fit. You hear about it all the time, but you don't really, you hear product market fit and you just kind of say, yeah, yeah, it's a green checkbox. I'll have product market fit. But true product market fit isn't anything like you've ever seen. Product market fit means that you can basically have, you know, real demand for your product because someone has to buy it, not because they like you or like your company or your logo, your product. If they don't put that in, it's going to cost them some serious damage in their company. We were taking something very essential like DNS and making sure that these networks would stay up and how we would control the IP addresses internally in a network. And we kept on scaling. It's not the sexiest market, but my God, if something goes wrong with the DNS server, no. 1, Coke doesn't make Coke. UPS doesn't fly planes. There's no banking at JP Morgan. Like it is the most important thing on in a network. And we learned to really, really nail that use case and rinse and repeat that use case very specifically for clients. And we were maniacal about client experience and making that better and reducing the rates of errors. Because most people take entire, you know, this is a little bit of a jaunt on this, but you know, you can take a lot of people make literally a Very small error in the DNS and in the early days would take down the entire network and couldn't figure out why it was down. And so we really spent time on product market fit and I think we did a very good job of doing that. I think if you're listening to this podcast, two things are really important. One, if you could get product market fit in a large and growing market, you will be doing very well. Even if you're slightly incompetent or incompetent. I'd rather have a relatively incompetent team in a big market with product market fit and in general, you want to be pulled by the market right now, if you have an excellent team and with product market fit and a big and growing market, that's great. And I think people underestimate how important it is to look. When you go to a company and you want to sell them something in that month, you're not competing against other products that are like yours. You're competing against everything they need to buy that month or that quarter. So you have to like get up to the very, very top all the time. And so, and especially if you're selling to the enterprise, the big clients, you have to have your game on because they're not like, oh my God, you have an AI tool. Come on in, it's so exciting. They don't do that. They're like, you have such a cool new agency, blah blah, blah, blockchain on that, blah, blah, you know, it's get in here now. They won't do that. They have all these blockers for a reason, right? Because they slow stuff down. So there's a way to sell to the enterprise. There's a way to do big deals. It is a very rigorous process and you've got to be very good at scaling to the enterprise if you really want to build a big business.

Just as a quick aside, maybe can you just explain what that product was from Blue Cat? What is DNS for those that don't know and maybe also give a sense of why this is so critical.

Oh, so basically when you type in CNN.com in your browser, that actually wasn't it actually transverse to a number to a name. And. And the entire Internet is a gigantic reverse phone book. So the Internet works on directing traffic by IP address around the entire network. Also internally in your network, if you get an IP address, you are led onto the network. That's something a little different called dhcp. But the point is, is that all these IP addresses point you in different directions. And Allow you to get somewhere on the Internet when you open up a browser, when you use TikTok, when you use YouTube, use anything. It's all using DNS to connect to something, to pass you around. That's how the, the Internet knows as a large reverse phone book, Ford phone book, where to place you, where to send you. Like how does your computer know that it's sending you to CNN servers? Right. Well, it gets directed through these, through these systems of DNS. What happens is that in super large companies or big companies there is so much going on in address management. We figured out that we needed to go into those companies and manage millions and sometimes billions of transactions, which a human eye couldn't do. And we just came really good at it. And it wasn't sexy, but it's incredibly high margin and profitable.

Okay. And I described it because I've heard others describe bluecat as a cyber security company. I guess when you're controlling or managing all these IP addresses, DNS, etc. Is that the right label for it?

No, no, there's DNS security, which is one thing, it's really network infrastructure. So I, I actually the cyber security thing, my brother and I bought another company two years ago, 18 months ago, called Data Stealth. So I, I am into the cybersecurity business today. I'm, I'm going for a three peat right now and that's a whole nother conversation.

Right, well, want to hear about that too. How challenging and not necessarily for what you're doing at this very second, although maybe it is. How challenging is it to build a tech oriented or cyber oriented company in a world where there are so many bad actors trying to just hack everything? Does that add another layer of complexity to what's otherwise a very difficult thing which is building a new company?

Well, the cybersecurity market is one of the most interesting enterprise markets in the world because I always say bad guys need jobs. So what ends up happening is that there is, there is a never ending well of bad guys trying to get your stuff, whether it's an individual or a nation state that they're trying to get your information.

Yeah.

I mean there's for instance there's breaches of very large funds and you can go and read this, that have all their documents and maybe they're only like a 500 person fund, but they're very significant VC and all their documents and all their internal memos are all leaked. And like you can just imagine for companies getting this stuff out to the public, it is a nightmare scenario. But it happens a lot. And it's a cat and mouse game. You get more secure than they break that there's no real ultimate 100% guarantee. What you do is that you just make your house on the street a lot more secure than everybody else's. And then what happens is that most likely you just want someone to go to the next house, not yours. And it's a bit of a theory there, but. But the cyber security market isn't going away anytime soon. In fact, it just keep growing and I. We could talk about it, but with the whole AI and where it's going, is this going to cause another layer of insanity of automated agentic hacking or something like that?

Yeah, yeah, okay, we're gonna get to that before we maybe switch gears a little. You said right from the beginning your first business was with your father and your brother. Blue Cat with your brother. I'm not sure if your father was involved. I think what you're doing now is with your brother. What's the key to success with family? I think I read you said somewhere in the past, in the early days, you resigned on each other about 10 times, you and your brother, but somehow you got back together. How does that work?

Do you have a sibling?

I do, yeah.

A brother or sister.

A guy with sister.

I want everybody listening to this that has a sibling to imagine this. Let's say right now you get into a fight with your sibling and you call them some really bad names. I mean, you say some bad stuff to them. Okay?

Yeah.

Really think about that for a second. Like now it's like, you know, nine in the morning and. And I bet you by 3pm you're fine. And literally fine, you know, you might be pissed, but there is something resilient about siblings that you let it go and you can't describe why. There's something, I think that's something innate in our genetics that we don't understand. Now if you do that with your best friend, I think you do repair it. It takes longer and scars remain. And I believe it never fully regains.

Right.

But it does self heal with siblings. So if you can build a company with family, it's incredible when it goes bad though, it goes bad. Okay? When you have a family office and you have like, which I do, and the family office breaks down, which mine has not, it works very well. But the reason why family office breaks down is not over money. It's over who gets the cottage that weekend.

Right?

It's over silly emotional things that don't make any monetary Sense. So the flip side is also true. But if you can build a business with a sibling, it is incredibly resilient and strong. And Richard and I worked together over 30 years. It's been great. We definitely had our very hard times, but, you know, we work it out. But I understand what his strengths are. He understands what mine are and weaknesses. I have found it an incredible yin and yang, you know.

Okay, good. I think they say the challenge, frankly, is moving it, in some cases to the next generation or the next generation. I think right now your experience has been just you and him building this stuff together.

So well, it's a very, very important thing. I have three kids and my brother has four. And the. The question is, if we've been very good at building and we can't pass it on to our kids, let's say we're a nine out of 10 and our kids are a six. Their kids are going to be a three out of 10. So you've got to be incredibly careful that there's a great saying in business, which is shirt sleeves to shirt sleeves in three generations.

Right.

And why that is well known is that most families lose all their money in three generations because the third generation has no institutional knowledge of what to do. That is the hardest thing to break by far. And it's one of the reasons we set up a family office is to create a institution that gets them working in the office and gets them working on deals and understanding money and all that kind of stuff. The kids are really young. But the most disappointing for me, and I won't be around to see it, is if my children's children were duds, because that would mean I did a bad job, you know?

Right.

So.

Well, and another thing you've said in the past is if you're a great entrepreneur, you're likely a pretty bad investor. But now, hey, you've got your family office, and I think at least a part of that, a big part of that is probably investing. So how do you think about managing your wealth in the family office? How do you think about investing? How do you organize yourself to make what you hope will be the best decisions? And maybe what. What type of things are you investing in now? What opportunities are you saying what made.

Me a pretty good entrepreneur will make me a bad investor? Meaning that I'm probably overly driven. I'm spontaneous, I'm patient, I'm direct. I have a propensity to get something done. All those characteristics make investing a terrible job for me because investing is. Is actually really good. Investing is not sexy and it's really boring and it's slow. And investing has a lot more to do with saying no and sticking to a plan and being consistent and knowing what you're good at and knowing what you're the rightful owner at. I've surrounded myself with a really good Chief Investment officer, Elmer Kim. And I think a bunch of people know him on Bay Street. He's very experienced. And I have Brett Gladstone as our CFO and David Lautner is our lawyer. So the three of them created insulation around me. And if you came into our family office meetings, which we have twice a week, there's no kowtowing, they basically will be fully open to say no. I think that's a really terrible idea. Or it is like it looks like a gladiatorial ring because they're there to basically be overly candid about any deal they see. And Richard and I have never hired sycophants. We've always been about, you know, getting to what's the right answer. And we enjoy being challenged. And listen, we, we. I'll give a high level of our investment allocation. A third of our money is kind of at any one time. Our true allocation is kind of like a third in stocks, a third in private equity with more private equity and small venture capital. And then a third is really buying companies. And I'm doing massive investments. We're trying to buy companies. That's what we're doing. We want to just kind of run a platform that has a barbell of returns and the highest return we're going to get is if we run the company. And the most standard return we're going to get is in the S and P. So you kind of barbell between two numbers, right?

Nice. I like it. That being said, you are also, and I assume it's still the case in advisor to Northleaf, which is a big private alternative infrastructure asset type of business. So you are becoming a professional. Well, you are a professional investor, I guess, or an advisor to other investors. What's your thoughts and views on those asset classes these days?

I work with Northleaf because they were on the board of Blue Cat and I just really liked them as people. They asked me to work with them and I said I'd really like to. And I think I said I also like the team and I also like how they invest and they're very conservative and they're well run and put together. I'm typically doing the later stage, more profitable, larger companies with them and their Northleaf growth funds, which have been quite exceptional. I'm not a big proponent of venture capital as a standalone asset class. I think very few people do it right. I've seen all the decks and I think there's a handful of Canadian VCs that are really exceptional, that are real winners. I think that private equity for me is a little bit better. I like to have. This is just me personally, I'd like to have a larger stake in control. I like when. When a company buys the majority of a company and if things don't go well in a year, they can change management, they can change things, they can move things. I don't like being, you know, fractionated minority shareholders with no real say. At the end of the day, if things go south and everybody's pay to play and all this stuff, venture capital should be returning a lot higher number. I would say that it is extremely difficult to beat the S and P if you're a venture capital firm. Very few firms have done it. I know the ones in Canada that have, and there's some real winners. But you have to have a Shopify in your portfolio. You have to have a Verafin in your portfolio. You have to have a Blue Cat on one of them. You gotta have a this. You have to have all these winners, right? And every portfolio needs a substantial winner to make your fund. And that's a risky thing. I mean, how often are you going to see Shopify? I mean, we've seen it, what, twice? You kind of had Nortel. Yeah, BlackBerry, Nortel and Shopify. You've had three massive. You know what I mean? You've had very few times in history. I mean, back in the day, in the 90s, we had JDs, Unifies and Corel and. But it's been very, very few and far between. And it's also. The second thing I would say is that when you saw these companies in the early days, which I was in Georgian Partners very early, it wasn't entirely obvious that Shopify would be as big as they are now, which, you know, they're an incredible business and you knew it was special, but you didn't know, like, be over 100 billion. It's one of these things. You can't just pick winners. That's what I'm trying to say. You just can't, like, you can't just invest in something and say, okay, I can ride this to that kind of number. Because I think everybody would be so rich on, for example, Bitcoin. But when bitcoin went from 100 to a thousand dollars, everybody says, okay, I'm out. You know this is amazing return, right? I mean they couldn't fathom 100,000 and frankly neither could I. I mean I thought that was the number of bitcoins at now seems so normal, but now it seems so ridiculous. If you perspective back to 2012, I think it's extraordinarily hard to pick those winners. So I think in private equity you're not trying to pick an outsized winner that has 100x or a thousandx like Shopify. You're to trying. You're trying to pick things that are 3 and 4x every five years, which is a very good return when you look at the barbell.

Wasn't on my list of questions, but you brought it up. What's your views, insights, thoughts on bitcoin digital assets. But maybe bitcoin in particular. I think that's sort of the dominant asset basically.

For a long time I didn't like bitcoin and even though I owned it, I've owned it for a long time. I found it. I was always very, very disappointed in the industry with all these things like F FTX and all this what I call skullduggerous behavior and all this kind of insider stuff in the wild west, I didn't. I don't like things that are not regulated. I don't like things that are not. There's a reason why the SEC is involved and they and they exist. There's a reason why you can't do. You can't front run. You can't do these things. There's a reason why there's laws around trading stocks and those are good laws actually. They stop a lot of very, very bad people doing bad things. With bitcoin on the bad side, I don't like there's so many whales that actually can move an asset. I mean, imagine if there was 3,000 people in the world that could move the US dollar. I mean that's probably not a good thing, right? Or gold, right? So I think that you want to. For a long time I didn't like it. Now what I'm seeing is the world has started to say when institutional buyers came in this past three years and Fidelity made their etf, which is how I buy it. And the reason I buy it from that ETF is simply security. If I physically have the bitcoin, I mean people are getting robbed for their ledger wallets and all that. So just buy it on there. So I do. And do I? You should have in your portfolio. Yeah, I do. Do I think it's going to Go right now from 100 to 200 and eventually a million probably. And why is it it'll eventually do that? Because it's a put against the stupidity of the way we do debt in the US if you believe that we're going to continue to run these massive unsustainable deficits in the US at some point we're going to have to have a countermeasure to that. And it can only really be gold right now. Or bitcoin. That's what the market's saying. So is there enough gold? No. Is gold gone up? Yes. But you know, to me, if bitcoin didn't exist, gold would be at 10,000 right now because it had to go somewhere. And you know, it was really interesting when the 30, when the 30 year hit an 18 year high last month and the US was downgraded again, I think by Moody's. Usually the US dollar rallied. It went down for the first time, which is, you know, people, it wasn't a rush to safety. But what happened? Bitcoin went up. Now I'm not saying that's going to happen all the time. I still don't like it. But do I think it's a necessary evil to own some of it? I think so. I think the safest way to buy it is probably on one of the ETFs and sit and hold it. Would I put more than 5% of your liquid net worth into it? No. I'm also not a gold bug. Because if gold goes to 10,000, let me tell you something. We have a bigger problem than your gold assets.

Right.

You better get some guns, some Spam and some water and get no bunker. So we have way bigger problems if gold goes to 10,000 next year. I hear that stuff all the time about silver and gold, but I'm more Buffetonian about that, which is you dig a hole, you put it in the ground, there's not really any productive use out of it.

Correct.

So I don't like bitcoin, but I own it. And I do think it's a decent trade.

Well, and I would say like gold has been the safety asset, but if you know something happened in the world and you needed to exchange barter, use gold as a currency. My question is, how are you doing that? Like it's in these bars somewhere in a safe. You can't divide them easily, the normal human. But anyways, it's yeah, it.

You're not getting anywhere.

Right. If you need the gold, you're in big trouble.

I guess as you said I guess you could buy bullion and put it in your bank account, but if you really actually needed it to trade for food, you're probably going to be dead before you get to the bank. So let's just talk about, you know, it doesn't really make sense. At the end of the day, the US Is running a trillion dollar debt every hundred, increase the deficit every hundred days. It's a spending problem. Eventually something's going to have to happen there. I know everybody says that every year, but everybody says it doesn't matter, but I'm not sure that's sustainable. So it'd be very interesting. Either they cut spending dramatically or increase interest rates dramatically. But right now, Trump is course trying to cut interest rates a couple of percent. And I think if he gets his Fed share pick in six months, which he will, of course, I think we're going to see a lot more dovish activity.

So, talking a little bit about the States, let's talk about Canada for a second. I think you've had the opportunity to move your businesses yourself or others into the US or outside of Canada, but you've always chosen to stay here. I guess the question is why? And I don't mean that in a negative way. I mean, you know, just interestingly, what do you think about. So A, that's the question. B, what do you think about what's going on in Canada now in terms of business investment, innovation, taxes? Maybe A and B, part of that question.

So for the first part of my career, for actually up to, you know, for the first 20 years in my career, I was so proud always to go around the country, around sort of the world and say, you know, I'm from Canada, we have a wonderful place, we have a stable banking system, we have a stable this, we have a stable that. You know, our company, our country is this, it's that. And I would always kind of say this is a great place to do business and et cetera, and, you know, don't have to lock my doors in Toronto. You know, you can walk around anywhere pretty much in Toronto at 3am probably pretty true, I would say. And I just don't want to kind of, I feel PTSD talking about it, but I feel the last liberal administration in Canada and certainly for the final five years of their existence did a really terrible turn on Canada and the business community. The incredible inflation, the incredible incompetence in the budget and the idea that we'll raise taxes and 66% inclusion rate and capital gains when we desperately needed more entrepreneurs here and to build companies. It was basically the first time where the government basically said, put up their hand and says, we don't, we don't give a crap about you business elite, quote, and you should probably get out without understanding that, you know, all these, quote, entrepreneurs and quote, these business elite started with no money, built up companies and hired tens of thousands, hundreds of thousands, millions of people paying them very good salaries, by the way, in taxes. We pay way better than the automotive industry. We pay way better than any other industry. What do they do with that money? They pay taxes. Where do they go to restaurants? Where do they go to movie theaters? What do they do? They buy cars, they buy real estate, they vacation. And what do we do? We do everything we could for the past, I would say five, six years to dissuade people from starting businesses here through tax policy, through silly virtual signaling and a lot of silly things that I think made people really upset. It got so bad that before the last election I went to a dinner and it was 20 of US CEOs and I was really angry and I said to everybody at the table, we all got a chance to speak and I think there's a couple of government people there. I said, put up your hand if you've thought about leaving Canada for the first time in your career in the past year. And 100% of hands went up. Never in my career has anybody ever put up their hand to say, I want to leave Canada because it's a wonderful country. On a bad day, we're good. On a bad day, Canada's good. And then I'm not trying to use this slogan great again or anything like that, but I'm trying to say that, you know, it takes a lot for Canada not to be good or great. And, and I think that they, they achieve that by, by not understanding that our country is huge geographically, but a minor currency and a small population. We're under the GDP of California and we trade to the biggest economy in the world and we're on knife's edge, you know. And now, like, are we going to see a difference? Is Carney going to start really pushing interal trade? Get pipelines down, this awful spend of government? I mean, how do we have more CRA agents than IRS agents in the us? Like, how do we have to bloated? Why do we have $23 billion in consultancy here at the federal government level? My hope is that Carney is actually what he says he is and he's going to bring that spend down. He's going to do These things, I think we need to give the guy a chance. My so desperate hope for our country is that we get our kind of our legs back and we start saying, hey, hey, we're open for business, we're open for trade. We're going to get trading with Europe and India and China. We're going to start really pushing hard and diversify from the US but we're going to manage the US and let's talk about taxes for a second. I just want to take up this tax thing. I went and met with a lot of the senior people at the government, the underlings from the minister who actually do the hard work. And I said to him, listen, I'm not here to tell you to lower taxes. I'm asking you to put taxes at a competitive rate so you can put them wherever you want. But money is fluid. It's just going to go, people, if you put US at 66, inclusion and the US gives the first 10 million tax free, when you sell your business and they give a lower tax rate, we're just going to go there. You can set it wherever you want. But there's a, there's an asymptote. There's a, there's a rate where you go above. People just go, I'm out, I'm out. And then what it does, it hurts our economy dramatically. And, and lastly, what I would say. So I think tax policy was, was a joke under the last administration. And it was all this idealism and this silly idea that everybody that you know, or probably almost everybody listening to this podcast didn't pay their fair share and all this silly talk. And it's like, you know, this idea that I think Trudeau ran this commercial saying it's really bad, it's really unethical that people who take a capital gain pay less taxes. Like, you know, because he knows what he's saying is right. He knows that when I invest, I risk the whole capital. It's not the same thing as income.

Right, right, right.

But they're pretending they don't know that they're pretending when I write a check can know. So whatever happened with that? So what happened is that when you increase that inclusion rate and make started saying, if you're going to punish everybody, people are going to stop writing those first checks. And what happens if we don't find the next Shopify won't give him 250 or something like that. Why, why would I write a check into a company if there's no tax advantage, if there's nothing? Why would we do this and, and why we do this in our country where you put us in this position. So I, I really struggled and I, I. And I really was upset. And even then I didn't leave Canada because I was hoping that, you know, either you're gonna have Pierre in or Carney in, and I was hoping that it would get dramatically better. So, you know, I'm kind of in this waiting limbo to hope that the Carney is a centralist, is reasonable, understands this stuff. He was a central banker. I'm really, my fingers are crossed that he sees. And I'm. What I'm hearing in Ottawa from my friends is that this guy is running tough meetings and he's doing the right things. But I'm going to wait and see. I'm really hoping the G7 works out. I listen. I want our Prime Minister to be successful. I want the guy to be successful. I want the guy to get interventional trade. I want him to open a pipeline, I want him to bring taxes down. I want him to spur on economy and innovation. He has a new AI Minister. I want these things to happen for our country. I don't really care if it was conservative or liberal. I just want our country to flourish. I think there's this waiting period now for maybe a year or two. People are hoping that things so dramatically change that you're not going to feel like you want to leave. Because I don't think anybody wants to leave Canada. It's a wonderful country, but we did everything we could to tell entrepreneurs to get out.

Right.

This is just purely my view. And I can't tell you how many entrepreneurs get told, hey, come down to my state, come down to Texas and we'll fund you and we'll do this for you, we'll do that for you. And like, politicians are calling our entrepreneurs and bringing them down here. No, politicians are calling Americans and bringing them up here. You know?

Right. You know, so well said. Well said. I couldn't agree with you more, frankly, on, on all fronts. You mentioned the AI Minister. I guess let's talk a little bit about what you're doing with Creative Destruction Lab, which again is, this is themes around entrepreneurs and investing and all this stuff that you just finished talking about. But I think you actually have a focus on AI there and some of the mentorship and other work that you do do. Can you give a little bit of color what's going on over there and what you're doing there?

Well, the Creative Destruction Lab's an incredible place. It was started by IJ Agrawal and I was one of the first people to invest and start. I was with the original seven guys and I'm very proud of that. It's one of the best investments I ever made. Investments as in it was a donation but so it's not a monetary thing for me. But Ajay and the team there single handedly spurred on more innovation in Canada than I've than any single one individual. Like it's incredible what the CDL has done on and how many companies have come out of it and how many things have gotten going out of it and how Stanford and Oxford and all. Yeah, all these places in the world have actually taken on I think as far as way as Australia has taken on the CDL premise everywhere. And so it's a lab where we're essentially cooking up these companies and giving them advice where everybody is in a gladiatorial ring if you will and helping these companies build, you know. But look, I will tell you something. The way I'll take this is something that's interesting. We were the first that I've ever seen to really, really get into AI. I mean I'm talking 2014, 15. We were like Jeff Hinton was there, all these AI guys were there and they're very strange people but very brilliant. And the stuff they were telling us back then were like sounded science fiction, but they were right. And you know, you could see this stuff starting to come. The mistake I made, and I think all of us consistently make as humans is that we understand things are coming but we don't understand the rate of change and we don't understand how would feel like to move exponentially for your listeners. Where this is going is so interesting because I'm kind of in the camp that AI is underrated in the sense that if any of you have just watched VO3 by Google the new text to video and sound and very specifically if you watch the standard which is happens. I don't know why it's a weird Internet meme thing but Will Smith eating spaghetti, you watch it in 2023 and it looks not human and str kind of you can see it's Will Smith, but It's really odd. 2024, it's really good in 2025, it's almost indistinguishable. So the interesting thing is not how good the video is, it's how far it's moved in one year. And when you start to watch V3 you realize it is 10 times better than 2024. So what shocked me about that AI is that it's 10 times better in one year. And if I now move 10 times, 10 times, 10 times out, which we don't. We can't fathom, it's indistinguishable from reality. And you see where these things are going, right? You're kind of going towards, you know, obviously that's way ahead. But of the holodeck on Star Trek, you're moving to a place where it gets really incredible.

And actually, I think Google's testing that right now, to be honest, where we're sitting in a room. Sorry, I'm in a room. You're in a room. And there's a hologram of the other person. And it feels live and real. I think they are actually testing this already. So.

So, yeah, and that sounds. And it is science fiction and we did dream it up in Star Trek, but I think, you know, it's amazing how many things in Star Trek come true but the, the. Because we dream them, but as humans. But I, I will say is if you move AI out 1 million fold, which is not as far away as you think, if you go exponentially, if you go linearly, it'll take 400 years, but I mean, exponentially, it's, you know, 10. But I do think by 2030, AI will be shockingly different than it is now to a place where we wouldn't understand it. I also think there's going to be all these very interesting things going on where AI will absolutely be able to tell a human and humans will believe their AI is a sentient being. I think the movie her with Joaquin Phoenix is quite real. I believe humans will misunderstand their AI for being sentient. And it won't be, but they will believe it. It's going to be so good. And what we're going to get into is going to be so interesting. It's a completely different. I'm also not one of these guys that are like, oh my God, AI is coming. It's going to end the world and all this. I'm more Star Trek than I am Terminator, but I think it's incredibly helpful. I think there are going to be bad things about everything. I think the very difference. And Yuval Harari, the history professor out of Israel, makes a very, very good point that we're very good storytellers. But the point he makes, and I would say he's right, is for the first time, we decided to land on the moon. We decided to cure measles, we decided eradicate smallpox, we decided to do things we decided to build the bomb, we decided to use the bomb. But we don't know what it's like to have a sentient being or a non sentient being like this. AI decide now. Right. And by 2030, there's a lot of decision making ability is going to occur inside those computers. And we've, we don't know what it's like. I don't think we have to wait for alien spaceships to land on Earth. I think we're going to invent it, you know, and I think that's where this is going to go. By 2030, 2035, we're going to be, be. It's going to be perplexing how advanced those things are. There's going to be breakthroughs. I mean, right now you see a lot of people say, oh well, AI is very limited. It can't do this, can't do that. But I just bring you back to Will smith's spaghetti in 2023 and it can't do this, can't do that. Right. We always can't do it until then it does it. And then I'll give some people some interesting numbers when in 2015 at this creative destruction lab, we were all pretty sure that AGI general intelligence would occur between 2016 and 2017. 70. And then the most optimistic number was 2050. And now it's 2030.

Right.

You know, and Elon Musk has two years. Like I, I don't think that's as interesting as when AGI comes out, but there's like a thousand subway stops before it which are just as interesting.

Yeah.

But it is going to be profound. It's going to reshape how we do things. It's going to reshape the economy. It's going to make our lives much better. But it's going to be fascinating to see how it plays out. Especially the whole idea of agenic, you know, the, and, and, and all I can tell you is that things today you do like you used to go buy that CD ROM and put in a thing that is an intolerable burden that you will not do today. I promise you there is some bunch of 10 things that we're doing today that are absolute no nos by 2030 that you would not dream of doing because it's an intolerable burden.

Yeah.

I mean it's not like anybody's gonna go buy a clock radio.

Right? Right.

For their bedside. Right. What are you talking about? What spaceship are you from? You know, there's going to be so many intolerable burdens that we just won't accept. I mean, we know that, like, my kids are very young. Will they ever get a driver's license? No, I don't think so. I think I'll buy them a license to sell car that picks them up and takes them everywhere. I mean, that's. But that's an obvious one. Right? But I mean. I mean, it's not like anybody here is going to ever open a map, a physical map, and figure out how to get to camping. Because we in the 90s, that's what we did.

Yeah, right.

And that's how we got places on a physical, you know. You know, but that's an intolerable burden, and we're not good at understanding that most things we do today will become intolerable burdens.

And so what do businesses do at this moment? Because, you know, the tech crew is all on board and seeing this future that you've laid out, my sense from talking to other professionals and businesses is, yeah, people know AI is there. Obviously, it's a theme team. It's one of the first things I said when I started this podcast, but I'm not yet sure. Everyone's sort of jumping on to this, and I think if you're not jumping on, you're already behind almost.

I think the number one thing that any company could do today listening to this is get out there and try new things. Really try to accept and try to use it as a tool. In the 80s, I would have said to you, you gotta try spreadsheets. You gotta try. I don't need a spreadsheet.

Why?

I got my guy who can count really quickly. You know, it's funny because we bring in bank machines, automated bank machines, and for sure the print was in newspapers that we're going to fire all tellers. Like bank tellers. There's more bank tellers today than there were in the 70s. And the reason, the thing is, is that jobs change, jobs evolve, we use tools. Right. I also think that there's a whole bunch of things that happen in your business that you can probably elevate and make better decisions faster or bring it in. And you have to also be careful because there's a lot of ways that AI still hallucinates and will give wrong information. Still. It's still early, but I abhor people to try new things. I don't think you have to write the software. I think you can use the software, maybe write on top of an LLM and do a bunch of things. I'd also push people to Start hiring people that are in their 20s that really understand this stuff natively because that's all they know. It's amazing. We have students that are all in their 20s and 20 and 21 years old over at Data Stealth, our CyberSecurity company. And pound for pound, they're the best employees that have pound for pound. They're not the most experienced or whatever, but they come in and they're like, oh, have you done this? Have you tried this? They just see things differently now than we do. Which I think's, you know, very interesting. So I think students are more interesting than people think.

Okay, good. Well, say to my listeners, stick around after the credits and you'll hear a little bit about what we're doing with AI over here. We're getting close to time here. I don't want to take up too much of your valuable time. Maybe a fun question. Maybe you've been a Dragon on Dragon's Day. Do you want to talk a little bit about either that experience or maybe the best business idea you saw there and tell us what really happens behind the scenes?

I did a couple of years of the next gen, Dan. They wanted to do like an online version for a couple of years. It was fun. I liked the people there a lot. There were a couple of really winner businesses. I think Endy was one of them. And I didn't invest because I didn't want to invest in a bed company. But they did great. There was a whole bunch of really smart people. You know, look, the truth is in venture investing, most business will fail. Then it's 80 or 90% fail rate and that's kind of a normal rate. It's very hard to actually pick a winner something. If you go to Shark Tank and you look up the number one returning deal, it was a cat DNA testing business or something like that, a pet DNA testing business. I think if you showed me a thousand shows, I would never have like animal DNA testing.

Yeah.

And then it was a scrubby brush or something like that. So, you know, you think you're good at picking these things, but you're not. Sometimes it's a lot of luck involved and like you pick the right person at the right time, the right market, and then Walmart signs them or something. So you don't always know. And of course the hard part about any of these deals is that the show is one thing. And then after the show you find out they don't own the intellectual property or their uncle owns it or they've rent. I think there's all these weird stuff and that's. Or they've taken on too much debt from somewhere. You hear the real stuff when you dig down, you know, the details are really important. I would say that show is just fun and is it real? Yeah, but I mean, is it, you know, is it a source for me of deals? No, but the producers work hard, I can tell you that much. They're good people.

Right. So, okay, so last question. I always used to ask our guests the same last question every time. I'm going to change it a little bit. Our theme over here is unlimited your wealth. Unlimited. We're an independent firm. We can go look at anything. We can help families in any way. You have your own family office. We actually act as a multi family office for many families and we'll help them in unlimited ways. I want to use the, I want to use that word, unlimited. Now back to the topic of AI for a minute. I want to start asking folks, what is your favorite tool or use of AI right now that you're seeing and maybe the future you envision the unlimited future that AI brings, even though you've already given a tiny bit of coverage in there.

So I, I'm very, very practical and in the moment, I'm not trying to do anything futuristic. I'll tell you what I do with AI that really, really helps me. I get a lot of decks and there's a lot of nuances to a deck. I, I get two types of decks. I get a deck from a fund. Do you want to invest in my fund? I get a deck from a company. Hey, here's my deck. I want you to invest in my company. So what I do now, because it's 43 pages and there's a lot of nuances and there's a lot of stars and little small writing, I, I do not have the cycles to read it.

Yeah.

So I pump it through a couple of lenses that I have and I ask it to look, do research on the founders, do research on the market, score this, score that, score this, score that. And then basically what I do is I get the AI in a reasoning model to give me a complete score chart and coloring of all the facts of exactly what the IT thinks of this market. Then I start asking questions and drilling in and drilling in. And then I can score it really quickly and figure out right away if I should take that phone call. Because If I get 100 decks, I only want to speak to seven. So it's. And because I do not have time to read every slide. Right. But Now I'm actually theoretically reading every slide even more intently. And then I asked like simple things like there's four founders here, do some research. It'll come back and say founder number three. This guy was charged with fraud. So then you know, there's different then you know you're out. So but I mean you wouldn't have known that. You might have known that in two months of work, right? So that's very rare by the way. But this, the second thing I do is if I'm invested in a fund and I get their fund quarterly statements, I run it through and have it scored and I put it right back at them and I show them what quartile in the market they're in. Oh, you're a third quartile fund now. And they're all like umbrage, like how am I just say well what's wrong? Tell me factually what's wrong on this sheet.

Right.

And I, and, and, and it can't. I literally put it right back at them, their numbers and, and how him compare to everybody else in the market.

Right.

And it scores them, you know, instantaneously and they spend a lot of time on the reasoning model to be unbiased. Nothing towards me, nothing against, but I find in the moment analyzing decks and information coming at me because I can't properly read it and I won't the most useful form of AI for me right now and gathering what the world thinks of this market and competitors and doing matrices and all that. So it's incredibly useful. Useful.

Awesome. Amazing. Well, if you got a hundred people sending you decks and you got to get down to a few, you probably have a hundred people asking you to chat with them and do a podcast. And we're very, very lucky that you whittled it down and, and you spoke with us. So Michael, I really, really appreciate your time. Thanks for your insight. Thanks for your candor, especially about Canada. I hope Prime Minister Carney's listening and wish you all the best and continued success in, in what you're doing.

Thanks for having me. I appreciate being here.

I appreciate gay.

The Unlimited podcast is hosted and produced by Brian Ginsler and is edited and mixed by myself, David McMillan. This podcast is not to be taken as investment advice. If you like what you heard, don't forget to rate the podcast and follow us on social medianslerwealth. Thanks for listening and see you next time. Foreign.

Well, thanks for listening. I hope everyone enjoyed that. That was what I would call the first in our series that will have an AI or tech theme, but really AI running through it. I've really realized over the last number of weeks and months that AI is really the dominant theme for really the world, business, investing, etc. So one thing that we're doing over here is making it a real focus on our day to day operations and trying to make our lives better. I made a little bit of a joke at the beginning of the disclaimer that it's the real Brian Gensler speaking for now. And in fact what we've done or what I've done is I have actually created the Brian Gensler AI clone, which is an AI speaking and texting Brian Gensler with all my articles, podcasts, quarterly letters, website detail and knowledge built into its learning model. And so if you want to have some fun, still in beta, still being worked on, we'll be a little bit more front and center on the website soon. But if you open up our website genslerwealth.com and you look in the bottom right corner, there'll be a typical little chatbot icon. It will appear and seem to be the same as most others that you see, but it's not. It's actually my AI clone. If you are bored, if you want to talk to me, if you want to ask about anything investment and other related, keep in mind that's the base of its knowledge. You can click that little chat bot. I encourage you to click the phone icon, the phone handle icon and actually talk, talk to me, talk to it. And it's just a fun way for us to really get to know and understand this AI world and hopefully be a little ahead of the curve. So enjoy and more fun podcasts with this theme coming over the next number of months. Bye bye.