Canada's Next Unicorn?

The Globe is reporting that Wealthsimple is in talks with several US venture capital funds over raising a $100 milllion plus round that would value the company at over $1 billion.

The Backstory: The popular milennial financial company has grown significantly in the past five years:

  • In 2015, Wealthsimple partnered with Canadian financial services provider Power Corp. Since then, Power Corp and its wholly owned entities have invested nearly $315 million in the company.
  • Power Corp sees Wealthsimple as a bet on the future of financial technology (Fintech) and an opportunity to tap into a younger demographic that typically aren't clients of Power Corp's other assets.
Stocks Only Go Up: While Wealthsimple's main business, their robo advisory service, has grown to over $8.4 billion in assets under management, Silicon Valley is really excited about their Wealthsimple Trade product.

Wealthsimple Trade is the Canadian Robinhood, allowing you and I to trade without fees on an easy to use app. Similar to Robinhood, Wealthsimple's brokerage saw huge user growth over the pandemic and it's on pace to nearly triple in size this year.

Silicon Valley VCs who missed the Robinhood deal see a chance to get in on another fast growing online brokerage.

Why would they raise? Since Power Corp is worth nearly $17 billion and owns nearly 70% of the company, you wouldn't think Wealthsimple would need the cash...

But as we've talked about a lot over the past month, it's IPO szn. Wealthsimple is looking to go public and raising outside capital would give them external validation ahead of a public offering.
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Market Highlights

  • Oil: Trump to issue permit fro $22 billion railway between Alaska and Alberta to transport oil and other resources.
  • Europe: EU companies warned of 700,000 job loses in the event of a No Deal Brexit.
  • Deficit: The Government of Canada's deficit hit $148.6 billion through July.

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No More (Gas) Cars In L.A.

California is cracking down on gas powered cars. The state committed to banning the sale of gas-powered vehicles by 2035, an aggressive move designed to forcibly transform the auto industry. 
 
What happened: California Governor Gavin Newsom said that the sale of vehicles powered by gasoline and diesel will be illegal in California effective 2035. 
 
Why it matters: California is a huge market and automakers will not be able to survive if they cut themselves off from consumers in the state. This will accelerate the transition to electric vehicles.
 
Zoom out: Conventional cars are under pressure from multiple fronts, including better and cheaper electric alternatives and tougher regulations on emissions in multiple jurisdictions, including Europe and China.
 
What it means: The days of the internal combustion engine are numbered. 
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Q&A with Mindy Loverin

What and where did you study?
 
I did my undergrad at the University of Saskatchewan at the College of Commerce with a major in marketing.  Later in life I did my graduate degree at New York University earning a Masters of Science in Public Relations and Corporate Communications.

What did you do while in school that helped you land your first startup role? 
 
There are probably a few unintentional things I did during grad school that led me into startups, but I’d say the most impactful thing I did was to leverage the network I created during the program -- both with companies we did projects for and individuals. One of the companies I did intern-type of projects for was Shutterstock which led me into the world of marketing technology, the industry that FlashStock became part of.

What else did it take to end up at Flashstock? What can others learn from you who want to join an early startup?
 
First, I’d say entrepreneurialism is part of my DNA having grown up on a farm in Saskatchewan.  But I don’t think I realized that until I was actually part of the startup -- it’s more of something I’ve reflected on as I direct my career path.  When finishing up grad school, I felt like I was naturally drawn to the exciting world of startups which is probably largely to do with the entrepreneurial spirit and knowing startups are where you have space to build.  I held various corporate roles prior to grad school, and having the real life experience allowed me to see that startups might be a better fit.  
 
While in NYC I stumbled across someone who had also moved there from Saskatchewan.  Low and behold, he and his cofounder came up with the idea of FlashSock and after a brief discussion he learned that I’d worked with Shutterstock and thought I’d be interested.
 
The most helpful insights I’ve gained when it comes to joining an early stage startup: 
 
  1. Don’t just join a startup because your friends think it’s cool -- they are not for everyone.  Look inward to ensure you can tolerate the level of risk needed to forego a high paying salary and fancy title for a keg and ping pong table.
  2. Do something you care about as you will be far more likely to succeed.
  3. Leverage your network.  If you don’t have one, there’s no better time than NOW to start building one.

You’ve described yourself as a generalist, how does that type of role change as a startup grows? How do you keep yourself flexible in a growing company? 
 
I’m very much a generalist which I think is incredibly valuable as an early stage employee.  When you are launching the first version of your product, you’re usually just trying to get an MVP up and running in order to gauge results and customer insights.  Things can drastically change from MVP to future iterations and in order to adapt, people have to be flexible.  With that said, I think it’s important in small teams to define and agree on roles to avoid duplication of work -- resources are meant to be lean.
 
My role at FlashStock changed so much that I actually can’t count the various “titles.”  But the common denominator was being the person to get into an area of the business, understand what needed to be done and either build a process, inform product, or hire people in order to scale it.  Once it was working well, I’d move onto the next thing that needed attention.  So I went from building the first version of our global photographer community, informing product features needed to support it and hired people to manage it; next was client management, and then leading our strategic account growth.
 
I kept myself flexible with lots of yoga.  Just kidding!  I kept myself flexible by repeating the phrase “what is best for the business” at every stage of building/growing.  From there, it was pretty clear to work with the team to understand where each person should focus.

Flashstock was acquired by Shutterstock. What was that experience like, from a career perspective, what should someone think about while going through that process and working under new ownership? 
 
Overall, I’d say the acquisition came with a ton of valuable learnings.  It was my first startup experience let alone a successful exit, so experiencing the transition first hand was like a degree in and of itself.  The positives: I was able to work with teams to evangelize our product and create processes within the larger organization, speaking at events and owning different programs with resources we didn’t have as a startup. There are a lot of smart people at Shutterstock and it was great to work with them.  The negatives: things move slower -- that is just a fact when you move from a startup to a larger company, especially one that is publicly traded… and for good reason.  But it was tough to get used to, and frustrating when it felt like I no longer had as much influence or autonomy to make decisions quickly.

You’ve since left, what are you working on now, how do you position your startup experience towards what’s next? 

Yes!  I’m one of the crazy people who willingly left a salary on the table mid-pandemic.  But I have my sites set on building in the femtech space, so I’m currently laying the groundwork by building out my network to be more relevant to the space and gauging from the people who are already there where the “white space” is.  It may look like building something or joining something early stage.  But basically I’m rewinding my brain to 6 years ago and using the same strategies I had when building communities from scratch as part of FlashStock.  Needless to say, it doesn’t happen overnight but it’s part of the journey.

You’re an advisor, board member or mentor for a few different organizations, how can someone position themselves for these types of roles. How do you be a good contributor in these settings and what do you get out of them? 

The most important thing here is to only do them if you are actually interested in the initiative, organization, or startup.  If you don’t, it will just become another thing you feel like you have to do or attend, and that is not helpful to anyone involved.  To me, being a good contributor is to first understand what the other party’s expectations of you are as it can vary a lot and then contribute based on those expectations.

The main reason I usually get involved is because I’m either personally interested, want to learn and grow in that area, or have a genuine urge to give back to that community.  So when any of those goals are achieved, I get something out of it. 

In order to position yourself for these types of roles, leverage your network.  Most of my involvement has come naturally through conversations with leaders in the tech community.

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Peak Picks

The next Bond: The Ringer has published the definitive argument for making Tom Hardy the next Bond, and it's pretty persuasive. If it's not going to be Idris Elba, we're down with Tom.

What's on: It's looking more and more like lockdowns are coming, so here's 15 binge-able shows to help get you through the second wave. 

The Bat Cave: A secret "man cave" was discovered below Grand Central Station. 3 transit workers had turned the storage room into a hang space complete with a TV, futon, and workout gear. Seems like a good repurposing if you ask us.
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Leftovers

The Federal Government tabled legislation to extend the Canada Emergency Wage Subsidy into next summer and introduce a new benefit to bridge the end of the CERB.
 
BlackBerry beat revenue forecasts on the strength of brand licensing deals, but fell short of growth targets for its software business.
 
Hootsuite scrapped a contract with U.S. Immigrations and Customs Enforcement (ICE) after receiving blowback on social media and from staff.
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Bear Season

Despite gains yesterday, this has been the first bad week for stocks in a while. 
 
By the numbers: 
 
  • The S&P 500 has fallen 9.6% from its peak earlier this month. 
  • The Nasdaq is down 11.8% from its heights. 
  • The TSX is down almost 6% from its late August peak.
Unfortunately, much of what's driving the downward trend is outside of our control as its rooted in what's happening the United States right now: 
 
  • Political instability: The death of Ruth Bader Ginsburg has increased the volatility of an already unstable political situation and made an election meltdown scenario even more likely.
  • No more stimulus: With Congress deadlocked, it appears that another round of stimulus before the November election isn't going to happen. Existing stimulus is running out, which means America is heading into months without critical emergency relief. 
  • Second wave: It appears that much of the United States is already enduring a second wave of COVID that could inflict even more damage on the economy.
What's next for Canada: Any disruptions in the U.S. will have an impact on Canada too. But in some ways we are better positioned to weather economic turmoil with a more controlled COVID outbreak, greater political stability, and ongoing emergency relief and stimulus.
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Coalition of the Willing

A coalition of tech companies are forming a coalition to fight Apple and "protect the app economy." 
 
What's the issue: Tech companies that depend on downloads from the App Store for their business model hate that Apple takes a 30% cut on any in-app transactions while also forbidding companies from sending customers outside their app to complete transactions.
 
Who's in the coalition: Major tech names like Spotify, Epic Games, and Match Group (which owns Tinder and Hinge).
 
What do they say: The coalition argues that Apple's 30% transaction fee amounts to an unfair tax and that Apple is abusing its dominant position in the market to undermine competition and stifle innovation.
 
What does Apple say: Apple argues its fee is standard across online marketplaces and that it merely provides a platform for apps that companies can choose to opt-out of if they don't like the terms.
 
What's next: With 13 initial members in the coalition including major companies like Spotify, Apple's opponents have assembled some real leverage. It would be difficult for the company to boot apps like Tinder, Hinge, and Spotify off its platform without inflicing serious damage on itself.
 
And don't forget... Governments are increasingly looking at using anti-trust laws to regulate big tech companies. The coalition's arguments are carefully constructed to align with the emerging anti-trust case against companies like Apple.
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Dancing with Myself

Belarusian President  Alexander Lukashenko channeled Billy Idol when he inaugurated himself, in a surprise ceremony, to a 6th term in office on Wednesday. It's safe to assume the low key swearing in wasn't because Lukashenko just wanted some alone time. 

Backstory: Belarus has been dealing with mass protests ever since the country's August 9th election, where Lukashenko claimed victory with 80% of the vote. Opposition parties and western observers are calling the results fraudulent. On the ground the people of Belarus believe the election was fairly won by Svetlana Tikhanovskaya.

Under Pressure
The opposition is calling for a pile on, which would include:
  • Other countries refraining from formally recognizing Lukashenko as the leader of Belarus after November 5th, the expiration of his last five year term.
  • Imposing and enforcing economic sanctions and travel bans against Lukashenko and his allies.

Canada's Involvement: Our government, along with others, has called for an expert mission to investigate the electoral fraud and violence towards protesters. Canada had sanctioned Belarus from 2006 until 2016, when the Liberal government attempted re-engage Lukashenko.

Big Picture: The European Union attempted to pass sanctions against Lukashenko and allies, but the measures were vetoed by Cyprus, an EU member country who, like Lukashenko, is aligned with Russia. Belarusian opposition are public stating that Canada and the United States must step up on sanctions to provide a counter balance.

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Shady Shopify

Two Shopify employees have been turfed after it was revealed they stole an unknown amount of  customer information from 200 merchants. This is a blemish on the squeaky clean Canadian company, they've reassured customers that no credit card or banking information was stolen, and that the breach is not a technical vulnerability but the result of employees going "rogue."

Fallout:
  • The investigation has been referred to the FBI and other international law enforcement agencies for a criminal investigation.
  • Shopify shares (TSE:SHOP) closed down 3.4% yesterday, but as you'll notice from all the red above, it was a bad day on the market.

Longterm: Shopify remains a home grown global powerhouse, and this breach is practically already a distant memory. We're still big Shopify fans.

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