E57: Founder Launch with Reza Satchu

Foreign.

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 HBS professor we've had on the podcast and they are known to be masters at guiding conversations, so this one may be out of my hands. Today on the Unlimited Podcast we speak with Reza Satchu, founder and Managing Partner of Align Best Management and also a Senior Lecturer at Harvard Business School. Well hear his journey from Mombasa, Kenya to Canada to founding and selling five successful businesses and how he teaches entrepreneurs at Harvard Business School. Let's go.

Foreign.

Welcome everybody to the Unlimited Podcast. We continue our little bit of a theme of AI over the course of the summer. When I think about this guest, it actually is a little bit of a theme of AI and entrepreneurship. Our last guest was Michael Hyatt and so we're sort of bringing a couple themes together. Really excited as always, I'm really excited for my guest. And today's guest is Raza Sachu, serial entrepreneur, investor and educator. He's the founder and managing partner of alignvest Management Corporation, a private investment firm behind several high profile exits, including most recently alignvest student housing. Reza is also a Senior Lecturer at Harvard Business School, my alma mater and his alma mater, where he teaches courses like the Entrepreneurial Manager and the Founder Mindset beyond the Classroom. He's the founding chairman of Next Canada, a nonprofit that has helped launch over 500 ventures. His journey from immigrating to Canada as a child to building billion dollar businesses offers a masterclass in entrepreneurial ambition and impact and look forward to hearing about it. So, born in Mabasa, Kenya and raised in Toronto, reza holds a BA in Economics from McGill University, an MBA from Harvard Business School. He's been recognized with several honors, including Canada's Top 40 under 40 award, the McGill University Management Achievement Award, and the King Charles III Coronation Medal. So Reza, thank you for joining. As I always say to my guests, sorry for enduring the long bio. It's a theme. My guests have a very wonderful and detailed backgrounds and accomplishments, so I have to share it a little bit. So thank you very much.

Well, my, my pleasure. And I know at least my mother will enjoy hearing that I should do.

My bio again at some point for my mother too, because I think she does listen. So look, thank you so much for joining. I know just from coordinating this, you're, you're busy, you're in Toronto, you're in Boston, at hbs, you're all over. So thank you very much. We always sort of start similarly, my, my listeners probably know I've given the little bit of the bio. Can you give the history of where you're coming from and, or where you came from, I should say, and what it was like coming to Canada and launching, launching yourself to here.

So I often say that despite how challenging it was and maybe perhaps because of it, the single most important event in my family, my family of origins trajectory, was the opportunity to come to Canada. And so we came here on Canada Day, July 1, 1976. I was seven, my brother was five. It was the first time that I'd been out of Kenya. And we came here and it was challenging. It was challenging in that we didn't know very many people. My parents made a interesting decision, which was to effectively cut us off from our immigrant community. Sort of a sink or swim mentality. And I also skipped a grade, which was sort of an odd thing to have happen, which perhaps an indictment. It's shocking that the Mombasa education system would be more advanced than the Toronto education. Right, Right. So be it. When we moved seven times in seven years. So we started in an apartment on the second floor, small apartment at Kingston Eglinton in Scarborough. And my mom was a secretary. My dad took a couple of years to try to figure out what it is that he wanted to do. And ultimately he became a real estate agent. And I remember distributing cards in Scarborough saying, rustom Satchu has sold this house for $35,000. And over time, he became an excellent real estate salesperson and really built a great business. And so we were able to see as kids, every year, things getting a little better. We went from a small apartment to a small townhouse to a small. And if I were to define my childhood, I'd say two things. I'd say one, definitely looking in from the outside in terms of being an immigrant to a new country, living in an area that was disconnected from the rest of the city, all these sorts of things. But then I think the second thing was, and I've learned this over time, was obstacles not of your own choosing, especially early on, can be a tremendous gift. And they're quite painful at the time. But you get tremendous learning. And perhaps the most important learning you get is what you're capable of, not because you chose those things, because you're forced to Actually confront them and figure out, can you actually make something happen? But there's no question that if I reflect, and perhaps part of the reason why I created Next Canada, some of these other things, is I feel a sense of obligation to this country because you sort of had a family where neither of the parents had gone to college, to one where both my brother and I end up at Harvard and have both built very substantial businesses and have a level of control that we dreamed about.

Yeah, amazing. Well, and I wanted to ask about your brother as well. You've given me a little bit of background on him in some of our previous discussions. He's extremely successful as well. I mean, you've sort of alluded to it already, but what do you think? And this is sort of the end of the story right at the beginning. But what was it, maybe even a little bit deeper, that allowed both of you to become hugely successful?

Yeah, so I think there's a couple of things. So one is what I said, which is it turns out that actually some of these obstacles, immigrating to a new country, not having any relationships, trying to figure out how you can do stuff on your own at an early age. You know, all of these things turn out to, at the time, be uncomfortable, but it's precisely because of the discomfort that you learn a lot. And then suddenly when you're starting a business and you think to yourself, well, you know what? I moved to a new country and I used to, you know, took me an hour and a half to get to school or whatever it was, suddenly things don't seem so hard. I think the second thing is, although we weren't part of a broader community, in my parents, the four of us were kind of unbreakable. It sort of felt like the four of us against the world, like, it was like a. Like, my biggest responsibility was my youngest brother. Like, there was no question that was my biggest responsibility. But as a foursome, we felt very tight. I think two things happened. One is my mother, you know, at the age of 10, we're living, you know, at Kingston and Eglinton. 3400 Eglinton Avenue east, which is this crazy apartment building, says to me, razor, you're going to go to Harvard. Okay? So, like, all it takes is one person to believe. Impossible, right? Like, all it takes is one person. Okay? And so, however crazy that scene, she planted the seed. And then in my father, what I saw was, through hard work and initiative, your life can get better. And it was very tangible. Like, every year, we would move to a slightly Better place. And so I think, you know, that sort of led to a feeling with both my brother and I that things were more possible than they might appear.

Amazing. I love it. And so what was the path to hbs? And then maybe we'll dive into some of the businesses that you built.

Yeah. So actually just told the story because, you know, I was honored to get the McGill, gave an award last week where. Where I spoke about McGill. And so I went to McGill. And it was interesting because for me, I didn't again, I. I chose McGill, I think, because it had sort of an international reputation. Most of my friends were going to Queens, and I sort of said, look, I just want to start something a little new. And it was actually the right thing for me because it enabled me to sort of redefine who I am and what I want to do. And, you know, I met my wife there in first year. We've been together now for 35 years. And she's been a very important partner on this ride. You know, my brother went there as well two years later. And so Miguel sort of open the world, but not enough. Meaning. I'll never forget being in third year and opening up this thing called the Wall Street Journal and reading about all these kids from Harvard, Stanford and Yale going to this thing called Wall Street. I hadn't even heard of Wall Street. I didn't even know what Wall street was. But I was like, well, why are all these kids from Harvard and Yale, Stanford going to Goldman and Morgan and Merrill lynch, and no one even talks about the claims that we y. You know, I think that's where the seed was planted. And I was like, well, why are. Like, are they that much smarter? Like, why is it that all the kids at McGill end up on Bay street, but no one else wants to be on Bay street except for Canadians. So why wouldn't I want to be on the place where everyone in the world is trying to get to.

Right?

And so I think I must have my marrying my girlfriend at the time my wife now. And I must have sent like 150 letters to investment banks. And we got rejected everywhere. And the, you know, the story I tell is I then had a strategy which was I would call Canadians who are working on Wall street, of which there were a few after 5pm with the hopes of their assistance had gone. And I get. I could find them. And a woman named Sharon Simmons, who was running Numero Lynch Recruiting, picked up the phone at 515. And so I explained who I was. And she gone to Miguel too. And I said, you know, I really want to do this. Blah, blah, blah. And she said, well, where are you? And the last thing I wanted to tell her was I was in Montreal. So I said, well, I'm in New York. Great. Let's meet tomorrow at 9am well, sure. So I basically drive through the night to get there at 9am and I met with Sharon, and she asked me all sorts of questions about investment banking. And of course, I knew none of the answers. And she said, why would I ever hire you? You seem like a nice kid, but, like. And I said, here's what I have to tell you, Ms. Simmons. First of all, I have to apologize because I lied to you. I wasn't in New York. I just drove all night to be here. And unlike those kids from Harvard, Stanford, and Yale who rubbed their eyes, ran out of bed, got out of bed, and signed up on a sheet of. When would you like to interview with Merrill Lynch? I have been trying for six months, have sent 150 letters, have been rejected everywhere, and I want this much more than they do. And it's because of that conversation that I got the job. Okay.

Amazing. Wow.

And then my brother got hired at Morgan Stanley, and it all began.

Unbelievable. Amazing. And then. And then, I assume you were there for a few years, went to hbs, and.

Yes, correct. So I was there for three years, and then I went to hbs. And here's the thing for me about HBS is, you know, I very much had sort of imposter syndrome when I was there, which was like, these kids must be so much smarter. I don't know if you felt this way. You probably had more confidence at the time, but, wow, these kids must be so smart. And I often say that the thing that HBS gave me was they're just not that smart. Saying it is. Maybe I'm as smart as they are. But the shocking thing for me was sort of just you suddenly realize that you know what, you have what it takes. And I think, yes, I built a great network. I learned some things. But I think the transformational event for me at HBS was the realization that I could compete with the world's best.

Yeah, well, we had Jerry Scheff on the podcast a few episodes back, and he went to HBS as well, and he actually said something similar. He realized he could keep up with the whole crew there at hbs, so I have no doubt you did as well. Okay, so let's talk a little bit about some of the business. We're talking entrepreneurship, founding, etcetera and then that segues all the way into what you're doing at HBS now, which is teaching folks how to be founders and entrepreneurs. So maybe talk a little bit about some of the businesses you founded after HBS and up till now, and what did you do and why?

Okay, so. So let's just deal with the existential question of why did I want to be a founder? And why, perhaps especially in the. In the age of AI, do I think that everyone should be a founder? Okay, meaning. Meaning I would go, as you're jumping.

Like, 42 minutes ahead in my agenda here, though, but that you're the HBS professor and you know how to run a class. So you.

You go, okay, all right, so I'll plant the seed, but we'll come back to that. But I want to tell you that that at the core, I think a lot of who you want to be has to deal with kind of your childhood experiences. Okay. So I didn't feel as a child that I had much control over my environment. Okay. And so what drove me early in my life was this desperate desire for control, control over my time, all these things. And so then you think, okay, well, what do you need to have control? Well, very quickly you sort of say, these are the sort of first order things are money and power. Well, if I had money and power, then I would have a lot of control. But what you learn is you get older is that the thing that I think every human being has a desperate desire for is to have a positive impact on the people they care about. Now, that can be as small as yourself or your family, and it can be as broad as the world. And so then the question is, okay, I want to have an impact, a positive impact on the people I care about. And maybe I would define that as broadly as Canada at the time, but the way I get there is by optimizing for learning. If I can learn the most, the other things will correlate. Money, power, credibility, confidence, all those things. And so for me, founding at a very early age represented the peak of learning. You know, of course, when we talk about AI, I will tell you the only skill that a human being has is judgment to compete. And this is why things like founding have to be a part of any. Any person's career. So. So for me, I was solving for that. And so I desperately wanted to. To found. Okay? And so I think what's important for me is I'm a founder more than an investor. Meaning, yes, I've made some money and now invest, but if you asked me what do I define myself as a business person, it is both as a founder of businesses and a teacher of founding. Like if you look at the last 25 years, I've been a professor for 25 years, and I've been a serial founder for 25 years. And so if we go, you know, if we go through the businesses, you know, the first business is a company called Supplier Market. This is an interesting one in that, you know, I went to McGill, my brother went to McGill. I went to Wall street, my brother went to Wall Street, I went to Harvard Business School, my brother went to Harvard Business school. So after HBS, I graduated in 96, before the Internet boom. And so I went and joined a startup private equity firm. My brother was HBS, graduated 99, right in the middle of the Internet boom. And so one of the companies that, that I oversaw at the private equity firm was a mattress company. They'd been buying springs and coils from the same suppliers forever. My brother was hbs. You know, I said, why don't you do a field study or why don't we do a field project on this company? And Supplier Market was born, which became basically a supply chain software company that match buyers and sellers of manufactured goods. Okay, look, I would say on Supplier Market, we got, you know, we built that company to 200 people. We got. We were fortunate in that we sold it at the right time, meaning we'd filed an S1, and we sold it in March of 2000. Now, we didn't own anywhere near as much as I would have liked to have owned of it, but it was an interesting and jarring experience where, where we capitalized on market timing. Now, I don't want to underestimate capitalizing on market timing, but it can be fleeting. Okay? And so I'd say the, the interesting thing about the learnings from Supplier Market were one is pigs get slaughtered. Like, I can't tell you the number of people on our board who did not want to sell. And it was hard decision to sell. Two is all it takes is one, meaning what you really care about is not the value to you. What you care about is the value to the buyer. And the key is optimizing for what is it worth to that buyer. And I think we were very clever in who we raised money from in Supplier Market and that it was all our former client, former work colleagues. So it was Fenway, KPR and firms that could deliver portfolio companies as customers. Okay. But in some ways what it did was we were in a bit of A desert afterwards. Because of course, then the crisis hits and, you know, you kind of feel. On the one hand, everyone's asking you for advice because you've made a little money, but you're 31 years old and you don't really know that much. Right. But it feels like you know a lot and. And you're. There's also this undercurrent that. Oh, was it just luck? Like, you know. Yes. Was it just. It was so fast. Was it just. So I sort of spent two years thinking about what I wanted to do next. We started. We had a baby and started our family, and I was living in New York and I came back to visit my parents. And two things happened in 2003. One is we started our. I started another business called Storage Now. And two is I started teaching at University of Toronto. In some ways, Storage now represented the opposite of supplier market. Like, I wanted to start a new business, but we didn't want it to be sort of at the whims of a market and wanted something more stable that we. We could invest our own money and build. And it was incredibly important. Stores Now. Because not only did we build stores now, but then I. My brother was with me in that deal, but not on the two next ones. Our addiction center business and our student housing business, all three of which, I mean, look, Stores now, we made five times our money. And the Detection center business we made, we sold for $200 million, made 15 times our money. And the student housing business, we made well over a hundred times our money and. And sold it for a billion seven in terms of the capital that we put in. So. So the point is, is. But it never would have happened without that first moment with Storage. And I can talk about each of them if you want, but let me just quickly go to the U of T thing because it's sort of interesting and it's the thing I try to teach my students, which is, look, I was thinking the same thing everyone was thinking in 2003, which is, I'd come back to Canada. I'm like, why are all these smart kids that I went to McGill with having so much less impact than the kids that I went to Harvard with or worked on Wall street with, or worked in Silicon Valley? Meaning they're no less smart. They seem to be working just hard, but they're far fewer right tail outcomes. And I'm not just talking about money. I'm talking about just the impact they're having. And it struck me that a lot of this had to do with the education system and the exposure that students had to leaders and expectations that we had of these students. And so, you know, the story is true, which is I was walking along St. George street going to visit my parents. I look up and Rotman's there. And so I go and knock on Roger Martin's door, who's the dean of Rotman. And he's not there. And so I then look across the table across the street and this is. You mentioned Jerry Sheff. So this was before Ira Crosin had endowed the Department of Economics. But I look across and there Department of Economics. And I knock on the door there and there's an assistant. I say, look. And I look up and I see the dean's name is Michael Berkowitz. I said, I'd like to meet with Dean Michael Berkowitz. And she said, well, do you have anyone? I said, no. So I create a bit of a fuss and Michael thankfully sticks his head out. And I say, Michael, take 10 minutes to talk with me. You just know who I am. And it's interesting because this moment sort of changed my life, right? And so I sit down with him and I say, look, here's who I am and I want to teach a class. I want to teach a class on entrepreneurship for the very best students at University of Toronto. And he said, raise. I've seen people like you, you should just guest lecture, do one. I said, no, no, no, this needs to be on the faculty. It needs to be fully accredited. He said, well, where do you live? I said, new York. I said, I will fly up and teach this class, okay? He said, why do you want to do this? I said, because it's a seed that may get bigger and I just think that I can change these students lives. He said, well, have you ever taught before? I said, no. He said, do you have your PhD? I said, no. He said, why the hell would I ever let you teach? I said, because it's going to be the best class that University of Toronto has ever had. It will be the number one rated class. Every student at University of Toronto is going to want to take this class. And I promise you, you will be pleased you did it. And so that's exactly what happened. It was sort of a transformational class and it was the seed that built Mex Canada. The point I'm making is really around trusting your judgment. Like when you have these ideas. Pause. Like, the downside was neither Roger Martin or Michael Berkowitz were there, okay? And I wasted 10 minutes of my time, right? The Upside is I built something that has led to great joy in my life.

Amazing. I want to come back to that in a second. Just closing off on sort of building these businesses. It's unbelievably rare for someone to be successful building a business.

Yeah.

You've just run through five, if I'm not mistaken.

Yeah.

You know, and that's not a fluke. It's obviously a series of approaches or a way to navigate through the process of founding and growing a business. So, for lack of a better question, what's the trick? How did you do it?

And let me just tell you about one other business, because there's other. Because the three real estate operating businesses have some consistencies, which I'll talk about. But let me just talk about one other business which I think is really the. The right tail outcome of your point, which is I really had no right to build this business. Okay. So meaning over time you could say, you know what, Raisie, you've really developed an expertise on the real estate operating through business model, and you capitalized on a set of characteristics that each of these industries had, these sub industries in terms of fragmentation, cap rate, compression, international student, all these sorts of things. Okay, and we can talk about that. Well, talking about one business and then helicopter up to some. Some broader principles that I think will answer the question you're asking. So at Harvard, I sat beside a Turkish student named Levent Karaman. Levent, the first time he left Turkey was to come to the US to study. Okay. He came from a poor family, but he won every prize in Turkey, from an academic perspective, was a top student, ends up at hbs. And despite his thick Turkish accent, he was clearly the smartest guy in the class. Okay, so. And he sat right next door to me. Sat in saying, you know, in section, you put in the same seating, so he sat right next to me. So we left hbs. And I said, you know, one day we're going to do something together. Okay. I don't know what it's going to be, but one day we're going to do something together. Now, we took very different paths. He just, he was sort of a, you know, sort of a mathematical genius. So he became a bond trader and built what's called agency war, in fact, securities desks at first at Solomon and then at Barclays. Okay. And I, of course, had my path on building businesses. So 2009 hits, the financial crisis, blows up. I'm down at our place in Florida and I'm reading the paper and I'm seeing all this blood on the streets having to do with mortgages. Okay, now one of the things I know is that when there's blood on the street, there's also opportunity.

Yep, yep.

But I can barely spell fixed income or mortgages. And I follow up my friend Levent and say, you know how I said one day we might do something together? Now's the moment. And he's like, you know, making lots of money. Barclays, his desk is doing very well because it's agency bonds, not subprime. And I said, just come down for the weekend. Anyway, he comes down for the weekend and we end up spending a week together. And we built at the time was called KS Karaman K Statue. It ends up being KGS Dan Goldman. We go and there's another great story which is I said, who we need, we need a second partner in Levent. This is music to any founder's ears. And I can't tell you how many times this has happened to me where someone says, well, the perfect guy or gal is X, but we have no shot of getting that person. Just give me the name. Just give me the friggin name. Okay? All I want is the name. And so we brought Dan Goldman and built kgs. Anyone? It's a long story, but this business we sold for just under half a billion dollars a few years later to bank of Montreal. Now that's an idea. That's an example where I know very little about fixed income and mortgages. Okay. And so the question is, well, okay, let's use that as a test case. Why was that able to. Okay, so I'd say the first thing is getting to a place where I'm even willing to trust my judgment to make that call. Like, like others didn't read the newspaper, have the same idea, which is, okay, like everyone's shutting their mortgage desk. Maybe talent is much cheaper now. You don't have to give like five year guarantees. There's less competition, there's still people. And again, people are scared of mortgages. This is government backed mortgage. So it's not, you know, it's completely different sphere.

Yeah.

So the first thing is just trusting your judgment and recognizing that I think mathematical. There's a 99% chance that Levent would have told me to go compound solved. Okay, but that's 10 minutes of my life. There's a 1% chance that we'd build a business that we sell for hundreds of millions of dollars. Okay, that's a good trade. That's just a good trade. Okay, so. So I think that's the first thing is trusting. Your second thing is I think the. And I'll talk about the one business that's that failed. I think that the single sort of data would show this. The thing that blows up businesses most is co founder strength is like co founders having different visions. You got to remember, being a founder means you are inevitably going through multiple crises. And the question isn't how you behave when you're like, got a piece of paper with all sorts of great things that you're going to build. Questions. How are you going to behave when everything goes wrong? Everything. Okay.

Right.

And what will you do then? And so what I'd say to you is, at kgs, we had the hardest time raising money. We put in the first $10 million and we couldn't raise money. We knew we had a great idea because people were so scared of mortgages in 2009 and 2010, but stayed committed. Okay? We stayed committed. What I've learned is the reason the gains are so outsized, not just in terms of money, but in terms of learning, is precisely because it is so hard. It's precisely because most people can't see it, okay? You can see something they can't see and thank God, because if they saw it, the opportunity wouldn't be there.

Right?

And so I think just staying committed, like, I can't tell you how much money I have made at times when everyone thought it was lost. And it's precisely because you stay committed that I. That I call it magic happens, right? Like, it's precisely because people see the fear and the ambition in your eyes that they're willing to show up. Right? Because you're still there. So anyway, so. So I think, I think I'd say two things. One is trust your judgment. Like on these initial ideas. Don't have such a high bar. Just trust it. People make mistakes all the time to stay committed for longer than you think. Like stay in the game, in the arena for longer than you think. I hate this whole concept of fail fast. If I look at my Harvard next students, like, their biggest threat is that they will fail too fast. Okay? Like, like it's just too hard to be failing too fast. And then the third thing is I have a very strong belief that investors are lennings. Now, you may not like this, Brian, but basically that investors want to be led, okay? Meaning you, what you want in your job is to find a great founder who you trust, who you think is super competent, who's going to compound the capital for yourself and your investors. What you don't want is someone who's going to listen to you based on the fact that you're spending 5% of your time, if that, thinking about their business. Like, imagine a world where you are backing someone with your money and they were coming to you for advice, and yet they're spending all their time thinking about this. So I'd also say that my framework as a founder is very different than most founders in that I view it as an opportunity, I'm giving an opportunity for investors to invest in my business. But I'm not going down this founder journey without being my business. I mean, I'll give you sort of Joseph Campbell, who is a great author, many books are based on his, you know, his principle of the hero's journey. So I think of founding as a hero's journey, okay? I think of the world being divided into two parts, the ordinary world and the extraordinary world, okay? So I believe everyone is born in the ordinary world. And as you're in the ordinary world, you get inspired by something. You see something. You're like, wow, the world could be better. Like, there's something I see. But everyone tells you, you don't have the information, you don't have the resources, you don't have the power. There are others who are so much better suited than you are to have figured this out. Who the hell are you? Now, the reality is, if Elon Musk felt that way and thought to himself, well, there are hundreds of thousands of people at GM and at Ford whose only job is to think about how to sell more cars. Or Jeff Bezos thought, okay, there are thousands of people at Barnes and Noble whose only job is to sell more books. Every business you know wouldn't exist if people actually thought logically about it. So there's a refusal of this call. And most people never go past that. Some meet someone, like, they just meet someone who believes in them, like a mentor, whatever it is. And it's through that belief that they're willing to go from the extraordinary, from the ordinary world to the extraordinary world. And in that extraordinary world, there's tons of crisis. Like, it's just like crisis, crisis after crisis. But it's precisely because of those crises that you learn what you're capable of and how to manage through it. And you get the benefit of what I call exponential learning, such that you can return back into the ordinary world with the thing that we all want, which is the resources, the learning, the capital, et cetera, to actually do the thing we all want, which is to have a positive impact on the ordinary world. I think that for me has been a philosophical underpinning of founding for a long time, that, that it's hard for a reason, it's full of crises for a reason. And if I want the elixir of having a positive impact on my family and hopefully the world over time, this is what it takes. So I think just broadly speaking, staying committed, exercising your judgment, understanding why you're doing it, optimizing for learning. Right. Are the things that are the foundational pieces to being found.

Okay, well, you're. I can see the professor in you is shining. So let's roll into the teaching side again now and let's talk. Actually, you told a little bit about your origin story with U of T. Let's maybe move into hbs because you're seems to me from the outside, you're really shaking things up over there in terms of how entrepreneurship and founding is taught. So you have this new course called Founder Launch where you won't even let students in unless they pledge not to recruit for a full time job, which is probably what, you know, most of the students are doing there. Of course, maybe explain what are you doing there, what's the course and what's been your path at hbs? Probably also the top course at the school would be my guess.

All right, so let me just take it one step back. Which is one of the hardest decisions I had to make was in 2010, I'd been teaching this course at University of Toronto for seven years that was far and away the most popular class in the Faculty of Arts and Sciences. And I'd become very close to David Naylor, who was the president. And I received a letter from the Lieutenant Governor offering me to join the board of the Governing Council at University of Toronto. The same time I was thinking, boy, you know what, what I really want to do is something for Canada. And you know, I can't do this being part of University of Toronto. And so I turned down that offer and went to David and said, look, not only am I turning down your time to offer, but I imagine to stop teaching at University of Toronto and I'm going to create this new thing called Next Canada. And U of T will be a partner, but we will, I want to broaden into all of all Canadians. In fact, all Canadians around the world can come to this partner. And more than that, I need your support and I will always be forever grateful. I call David a co founder because he was critically important to launching Next Canada Now. So in order to understand what I'm doing At hbs, you need to understand what I'm trying to do at NEXT Canada. So Next Canada is now into its 15th year. We have been 100% funded by private individuals. Okay. You know, Tim price just gave $10 million to next a few months ago. But it's the organization that has now transformed the lives of thousands of Canadians, is employing over 10,000 Canadians in high jobs and really trying to solve the. We'll talk more about this. The right tail issues around Canada. Okay? Many of our. Many of our faculty at NEXT Canada are also faculty at hbs. And so they fly into Toronto for a week at a time and they'd see kind of how NEXT Canada works. I've been the chair of it for 15 years and teach there. And so they started asking me to come to hbs. And so I suppose I went to HBS five years. But I think that there are sort of three reasons why. One was ego. Was I just wanted to see if I could teach on a global scale. Right. This is sort of the insecurity where you're like, okay, I know I'm a great teacher in Canada, but, you know, who cares? Does anyone else care? And so I wanted to see if, if my teaching style would work there. Secondly, I very much wanted. Thought I'd be very good for NEXT if I broadened and took what I learned at next. And remarkably, half of my. So my two classes are, if not the most, certainly two of the three most popular classes at hbs. Half of the cases are Next Canada cases. So these cases are being taught all over the world, and they're my former students who are building Canadian businesses. Okay? And then the third thing was I wanted to have a platform to have a global impact. Okay? So importantly, one thing you need to know is I've never invested in an ex Canada or U of T student, and I've never taken a dollar of pay in those situations because I didn't want some article saying that I was doing this for other. Any other reasons. Okay? So for me, it's. It's all about impact. Okay? So Harvard. So Harvard's been a very interesting experience in that the world's best really do show up there, not just students. But I've had it. I've had everyone from Reese Witherspoon to Tim Ferriss to Sheryl Sandberg to Mark Cuban, all sorts of people in my class there for the Jeff Bezos, Andy Jess. I mean, all sorts of people. And so, wow, that's. That's fun and interesting. But I would also say that Some of the, obviously Trump is a, you know, is off. I would never say I agree with most of the things he says, but I would say that some of the things he said about elite education in the US is absolutely true. And, and so I experienced some of that and I've really pushed against it. Meaning there has been. DEI did build you far. Okay? There was. There is no real viewpoint diversity. Okay. Sort of bureaucracy is insane. Okay. So all of these things, I see them. And so what I did was I said, okay, you know what? I'm just going to create my own classes, which is not easy to do, but I think I had enough credibility with the students saying that, you know, that. That I transformed their lives or experiences that, that the faculty had to give me a shot. And I've now built. I don't want to call it a fiefdom, but I've built a track that is pretty powerful at HBS and hopefully more broadly at Harvard. There are things I've introduced that I think were controversial things like you mentioned, you can imagine from HBS's perspective, what they care a lot about is placement. So think about the fact that you can't enter my class without signing a piece of paper which says you are not going to recruit. So this is a pretty controversial thing to do. But every student did it. And if you ask them the single most important reason why they founded their businesses, it's because they were committed. So I had raised called the curse of optionality. So we are taught as kids and as investors that options have value. And it's true. Every option, you know, you're an investor, has value. So what I saw at HBS was what I call the curse of optionality, which is these incredibly talented students who came from like, the middle of nowhere. No one would embed on them as young kids, you know, they're the product of a single mother in inner city Birmingham, Alabama, or they're from this poor family or they, whatever it is, the trajectory to get there was insane. But they get to HBS and they take jobs at Bain and BCG and these places. And I'm like, I met my fortune. I would not have bet a dollar that this kid, when they were born, would get to Harvard. But I bet my fortune that this kid, once they got to Harvard, would have a job at Bain or BCG or Goldman or whatever these places are.

Yeah.

And it's because of the curse of optionality, because they're just trying to preserve options. And the problem with optionality is what you massively underprice is commitment. Okay. What you massively under price is what are you capable of if you actually commit to a thing as opposed to living your life where you're just preserving a bunch of options. Okay. And so with my course at its core is I force my students to commit. Okay. Like they are taking risk. Okay? Yeah, you're right. You're going to lose that off from Blackstone and from kkr. In fact, you're going to turn down the sponsorship from Katie Kenyard to do this class or you're not going to take it. Okay? And it's. It's. My experiment has been, is that's that commitment has been the single most important driver to success. Okay. Now, obviously there's lots of things. Hopefully they learn all this sort of stuff. But. But yes, I would say the things I am doing differently is my. My class is incredibly competitive every week. The students have to deliver on the milestones they've achieved and they have to do it in a public forum. There is radical sort of candid feedback, rankings, all this sort of stuff, so people know exactly where they are. I certainly. And I to my students say, raisin, you always have favorites. I'm like, welcome to the real world. Like, guess what? I exercise my judgment and your job is to be one of my favorites. Right?

Right.

And then I also turn it around on the alums, man. You know, this having gone, HBS is typically guest speakers, Kyle. And they're feted and they speak for 20 minutes and they're put on a pedestal. That is the opposite of mine. So you cannot, you as an alum cannot come to my class unless you are the founder or the decision maker, unless you spend two days on campus meeting with my founders and then provide detailed feedback like ranking them, pros, cons, would you invest? Would you not, et cetera, which I then expose to everyone in the classroom while you're there. Okay? So it's a very different approach. And it really starts with culture, which is super high expectations and ultimately trust. Right. And the great thing about never taking a dollar is there's no motivations other than hopefully to. And look, for me now, I've been teaching for 25 years, and so I still to this day love when I get emails from students 25 years ago who are like, Reza, I still remember this or I still remember that. And that that gives me a.

So that's amazing. Very different for sure. Very, very different. I'm getting worried about our timing here, so I keep flying and let's maybe move on to the AI topic. Because I know. I think you're writing a book that hits on that topic. And obviously you cannot be teaching entrepreneurship Founder Mindset, Founder Launch today without probably talking about AI in every single class or every single interaction. So please share with us sort of what your vantage point is on AI and how you're talking about it, teaching it what the world's going to evolve to. Very interested to hear.

Okay, so I'm writing this book with a close friend of mine, David Deming, who is a brilliant Harvard economist. He's just been. I think he's the right man for the moment. He's just been made dean of the entire Harvard undergrad college. And David is an academic that's been thinking about something I've been thinking about a lot over the past 25 years, which is how do you teach judgment? Okay, so if I had to say, what is the thing in the age of AI that you most want? Right? It is not memorization, it is not rote learning, because there's going to be no, no path for that. The only skill that human beings are going to have that can enable them to compete and differentiate in the age of AI is judgment. Okay? It's judgment. So let's take hbs, which at its core is a school that tries to teach judgment. Okay. In the past, the way in which they have tried to teach judgment, you know, this prime, if you're listeners, is. It's called the case method, where they put. They put you in the position of Jeff Bezos, should I launch books or CDs? In the position of Elon Musk, should I shut down SpaceX and invest in Tesla, or should I keep both? Right. Whatever it may be, okay? So it's very much a. A system where you pretend you're the protagonist, use imperfect information and make decisions. Okay? Now, in the age of AI, students take that case and just run it through and have all sorts of answers. So it doesn't teach judgment anymore. So what needs to happen, and this is what our book is going to be focused on, is how do we change the education system to teach judgment? And so what fundamentally needs to happen is we need our students to actually feel risk, okay, and make decisions. So they need to go from pretending they're the protagonist to actually being the protagonist. And that's what Founder Launch is. Founder Launch is actually then being the protagonist. Okay?

Right.

So the mission statement, I want to change. I just met with the Dean last week. I said we need to change the mission statement. The mission can be the same for Harvard, which is Educate leaders and make a difference. But Harvard Business School, we need to transform the school from a school where students come here to seek jobs. Right. To seek a job at McKinsey or Blackstone to a school where they come here to create jobs starting with their own. And given the commoditization of coding. Right. Like that, that has been like probably the most interesting development. Meaning so many people would say, well, I can't found something because I don't know how to code. Well, that's not necessary anymore. It's just not necessary anymore. And so barriers to founding are so much lower and the learning opportunities are so much greater. And. And so as I think about AI at a threshold issue, I think the biggest thing it's going to do is change the way in which we teach our children or our students. And the way it must change it is in a way of almost like learning by doing where there's risk. So basically we've got to go from an environment where students seek comfort and seek certainty. It's sort of the opposite. They need to seek uncertainty because it's only in those periods of uncertainty that you need to trust your judgment. Okay. And that's what we have to do, is get our students to trust their judgment. Okay. And I actually believe judgment isn't some ordained right that you get at birth. I think it's something you can develop over time. And it's why you see so many founders who've never managed beforehand suddenly can successfully manage 100 or 200 people. It's because of the exponential learning they get and the trust they get their judgment. And so. Yes, and there's no question that every business coming out of HBS or 95% are have some sort of AI AI piece. I mean, it's changing everything. Yeah.

Is there going to be a market for Harvard MBA as a from the students perspective or potential students or can everyone now just, you know, why do you need to spend two years there when you could launch a business in two weeks or according to X or something in five minutes?

Yeah. So I think this is a great question. Stay tuned. What I would say is, let's take your question to an extreme, which is Harvard in the past has claimed or and the data would show that they've been able to attract the very best students. Okay.

Yeah.

Your question underlies a very important point, which is why would the very best students want to do an MBA like okay, raise. I buy into the fact that the very best students want to found. So why would they come to Harvard given everything so Basically, what must happen is Harvard needs to transform to a place that substantially increases the probability of success for those that want to found. And so the curriculum, the way in which people are taught, what they're doing, their ability to get capital, all this sort of stuff needs to change such that they can compete on that dimension. And that's something that you can imagine I'm at the forefront of, I bet.

Okay, so we're talking for a little bit about Harvard, a bunch here about what Harvard needs to do. Let's step back into now, Right. Let's go back to the start of the story. You showed up in Canada and Canada's created a huge. I think. Well, you created it, but in the area of Canada, you created huge opportunity. What should Canada be doing now from your vantage point and what you see as, again, successful entrepreneur and. And someone who wants to make a difference and, you know, help our country grow, I assume.

Yes. Okay. So first of all, I care deeply about this country. Like, I. I'll go back to the beginning, which is there's no chance that my family would have accomplished the things we had had we not been given the opportunity to come here. And so I care deeply about it and I have invest a lot of time and money into it. I will tell you that When I started NeXT, my partner, Jay Agarwal, is the academic director of NeXT. We kind of put up a screenshot. We said, you know, what we're trying to do is change the prosperity gap between the US and Canada. And at the time, it was $10,000 GDP per capita. And our thesis was that the issue wasn't that Canadians were less educated or Canadians worked less hard. Our thesis was that there were far fewer right tail outcomes, meaning that, you know, at the time there was rem, but that was it. Whereas in the US you got all these right tail outcomes, which lifted everyone's boat. And so next was really to focus on these right tail outcomes. Okay. Today, the GDP per gap, capita gap is over $30,000. It's just brutal, Brian. Like, it's just so. Every time I look at that number, it is just so depressing. And the only number that's more depressing is when I look at our GDP per capita growth, not surprisingly, because, you know, across the oecd. Okay. And I do blame Trudeau and his government for a lot of this. We're like second last out of 25 countries. Yeah, it's just like, terrible. It is just. I mean, it's just so painful to even think about. And then you throw in what's happened with the US and tariffs? I mean, we really are in a crisis at this point. I mean, look, I, I, I'm sure Carney is a very talented guy, but you're asking people to make decisions in areas that they have very little competency. Yeah, our political system, okay. And that's partly because they don't get paid enough. It's the slander, all these sorts of stuff. And so in some ways I'm sympathetic because you're asking them to make these decisions that they're wholly incapable of making. I mean, look, AI is a prime example of, of us dropping the ball with, under Jeffrey Enton and others. We were one of the world leaders in AI. And what should have happened in that moment is instead of spreading our bets across a hundred things and getting all sorts of political votes, we should have gone deep into AI, okay? And it would have been hugely transformative for this country. And so the, the issue I think Canada faces is one where we can continue to slide into some irrelevance by being mediocre at everything, or we can make some bets using informed judgment with the private sector along with it, where we pick places where we can be excellent. The issue is, of course, from a political perspective, that's a very hard thing to do, but it's desperately needed. What I'd say in terms of next, what we're doing is I've partnered with Harley Finkelstein, who's the president of Shopify, and Michelle Zatlin, who's the founder and president of Cloudflare. And we are now working with sort of the generation of founders in Canada who have broken through the billion dollar valuation and who are pre ipo. And can we get these founders to do something different from most, which is not sell out too early. Right. And to actually try to build a public, sustainable, global company based in Canada. And we have a shot there. I think there are a few you can see, but there's like 60 or 70 Canadian companies. So the ecosystem has got better. Right. We still just have Shopify, which is a shining example, but we need many more. And look, part of that is cultural, right? Meaning part of that is still this aversion to failure. I'll give you one research thing that your listeners may find very interesting. So one of my colleagues at Harvard named Paul Gompers. Paul, I have been saying for 20 years that even as a founder, even if you fail, there's tremendous learning and you're going to get back on your feet and do fine. Okay? Now, of course in San Francisco or in Boston or New York, people know that. But in Toronto, that's a very hard thing for people to process like they feel. So Paul Gompers did a seminal research report where he looked at 5 million data points across LinkedIn and he looked at only two types of people. People who founded and failed and people who didn't found. Forget about people who found it and succeeded. And then he compared them with, put them in segments where they had similar educational and professional backgrounds. And what he found was the people who found it and failed came back to the jobs that the other stream went into with 2.8 years of seniority. You know why? Because even though their judgment was flawed, they were testing their judgment. And the market actually values judgment first and foremost. And so I think, you know, part of this is just a cultural reset. So I would say to you that if I, if you ask me what does this candidate to do, it needs to focus on its winners, like double down on its winners, like not worry about sort of the politically expedient thing. So there's some level of concentration and risk where you're actually trusting your judgment. And it must work closely with private sector to do that because unfortunately, most of the people in these positions, and I'm not blaming them, they just don't have the expertise. Right. They got elected for reasons that have nothing to do with the cabinet that they're running today. And so there needs to be a joint effort and there needs to be some judgment, I think, in terms of the U.S. i mean, in some ways we've got to figure out how to, how to view ourselves as part of, like, partner. But the US Is our most important trader. They are far more important to us than we are to them.

Clearly, Donald Trump has made that clear.

So we need to think about how we, how we resolve this issue. But look, I mean, I do think, and I also think I'll say a couple other things. I ran Kim or Tan to talent, okay? I think our immigration policy for the last 10 years has been way too broad. Okay? So I think we have an opportunity here, especially with the US With Trump's policies, to actually figure out how to get the best and brightest here. We should go pick off the best faculty members from the Ivy League institutions that are under attack, get them to come here. Right? One of the best students. Like, we hate to be really tactical about how to do this, you know, So I think, I think we have to pick our spots like that. And there's an opportunity there. And my hope is that this new government will be. I certainly think they will be much more effective than the last one.

Well, I hope so. I hope so. Okay, so last question, because I know you have to run, because we're on the AI theme for the summer itch here, and you have a really interesting vantage point because you see so much and the founders and whatnot. What's the greatest AI tool that maybe you're using right now to impact your life? Or if you don't have a great answer for that, I'm sure you do. What's maybe the greatest thing you've seen from your founders or otherwise that we should be looking forward to in the future and like, put our seatbelts on and get ready here?

My suspicion is most of your audience isn't as technical, so I'm going to give you something that has changed my life.

Okay, great.

I think every senior executive entrepreneur should have a chief of AI or even if you don't want to do that, have an executive assistant who is incredibly familiar with AI. Meaning. Meaning every question you give to your chief of staff or your executive assistant should be, how are you going to do this using AI? Okay. And so that osmosis will be incredibly valuable. It will be.

That's what we're doing every day here at my firm. So I'm glad you said that. Hopefully my team is listening to this after the fact. They don't know if they listen to these. I hope they do.

Like you met Jessica, like her job right now, I've got her going into classes, but every I send her, the framework I want from her is how can we use AI to make this task better? And so these all parts of my life, personal, professional, charitable. And so I'm constantly getting feedback from her as to how to use AI. So just using it, I think. And because we're all busy, I having someone there who uses it and then conveys it to me and makes me understand it. So I would say that is probably the most important thing I can say I've done on the, on the AI front is just having someone whose job it is to incorporate in everything we. We do. You learn a tremendous, A tremendous amount about it. You know the interesting about AI. So I'll give you. I'll give you one example. So this is not a new idea. But if you think about when you walk into a car, you have a dashboard of what's happening. Okay, why doesn't that exist for a house? Okay, why is it that when you walk into a house, you don't have something which tells you like it's same thing, a dashboard. So I've got this wonderful female founder who actually was a military veteran, the first female to fly a Blackhawk. And, and anyway, I read the article. Yeah, she's phenomenal.

Yeah.

So she has created a company called Hopley and she's just raised $5 million. Actually, Bill Ackman came to my class and gave her $500,000 on the spot. And so.

Wow.

Yeah, so actually at my house actually, because I held it. I held a dinner with Bill in the middle of all this Harvard stuff. Anyway, that's. You're there. But, but anyway, so I mean that's. I mean we don't have time to go through it, but what AI has done has enabled her to have a shot of cracking something that so many others have tried and for all sorts of reasons. But that's an example of an, an idea that many people have had and it's only now available. And my hope is, and expectation is that she's going to build a multi billion dollar business.

Amazing. If it's okay with you, we'll put links to that article and the other article that you shared with me about your class. I know you're busy and we got to run here, so I just want to thank you so much for your time and insight. I think we could probably keep going here for another few hours, but we'll save that for those lucky enough to be in your class. And I'll see you, I think next week or so at the HBS event on AI. So look forward to that. But thank you very much.

Yeah, my pleasure, Brian and I, I'm thrilled that you're on your own founder journey.

Thank the Lord. I'm a founder here, otherwise, you know, you wouldn't even talk to me.

Probably. I'm sure it's going to be hugely successful. But what I'm also sure of is given your skills of interrogation, there. There are lots of things. Lots of.

Well, this is what we do with the investor managers we. When we do due diligence. I'm glad you feel it. Okay, sir, thank you very, very much and look forward to talking to you soon.

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 media at denslerwealth. Thanks for listening and see you next time.