PicoBlog

Why is it that the very same people who want us all to “rise above it” are also the first to hurl unsupported epithets the moment they are on the losing end of a public policy argument?

Prior to Budget 2024, despite my decades in-and-around the early-stage business, I’d not heard of Jon Shell. I’ve come to learn that he was once part of some Vet Clinic roll-ups in Australia and Canada, and even tried his hand at U.S. Angel investing before joining Social Capital Partners. SCP seems to be a venturey-type fund designed To-Do-Good.

According to the Toronto-based firm’s website, SCP’s last deal was in early 2021. In that instance, Canadian-founded SCP helped an American guitar manufacturer transition ownership to its Californian employee base. A victory for economic justice, apparently: Employee ownership within the Capitalist system! I’d have thought this concept was more widespread in North America than the SCP press release would imply, but I admire the marketing zeal.

SCP was founded by a fellow named Bill Young, CM more than 20 years ago (via G&M):

Bill Young figures he got rich by getting lucky. Now he's giving money away to help people whose luck has run out.

Mr. Young runs a $10-million charitable foundation in Toronto, mostly funded by stock market winnings from an investment in his cousin's U.S. software company.

"I was one of those lucky people who had more than I needed," says Mr. Young, a chartered accountant and Harvard MBA graduate, who turned his back on the life of a high-flying manager two years ago to concentrate on his social goals.

The initial SCP strategy was an early version of “venture philanthropy,” and the concept has since been adopted by all sorts of important missions (see prior post “Wellington Financial becomes National Advocate of EB Research Partnership” May 31-17). Find some wealthy donor(s) and try to help solve the world’s problems. A friend of mine does this in Boston on behalf of a single Family Office GP that’s big into the oceans. These are good things to be doing.

In a free market, donors have every right to choose the vehicle through which they want to improve their communities. There are plenty of mechanisms available: traditional charitable donations, a PAC, a Family Foundation, Federated campaigns, or a venture fund that’s more interested in “social returns” than traditional financial IRRs. Prior to our firm’s acquisition, Wellington Financial LP had it’s own charitable foundation. Again, these are good things to be doing.

The moment that a firm such as SCP gets involved in a purely political cause, I think they open themselves up to criticism in the event they themselves benefit from a privileged tax structure. If a wealthy donor or her/his Board Chair wants to solve a social problem, nothing is stopping them from handing those funds directly to their local civic, provincial or federal government: the embedded staff expertise and delivery platform of a gov’t entity far surpasses whatever an individual team might be able to marshal. Obviously, that wouldn’t be as much fun for the team handing over the dough. There are few ongoing accolades and plaudits, nor would the donor have the ability to fire staff or adjust strategy if things weren’t going to plan.

It might also be less effective than directing the effort themselves, which is likely why they set up their own shop in the first place. But trusting one of more levels of government to undertake this work for the Donor in question is certainly an option.

As such, the irony is TOO MUCH TO TAKE when the same people who choose to direct their social change efforts via their own captive team / capital, advocate for the rest of us to pay even higher taxes directly to our mutual government to support social causes that may well be adjacent to these same folks’ own directed venture philanthropy. That may not be a traditional conflict of interest, but these crafty activists are only too happy to dedicate more of your hard earned money to ever-larger government programs that are of particular of interest to them, while shielding their own tactical capital within a tax-advantaged asset allocation vehicle.

The same vehicle that led to an Order of Canada award for their worthy Founder, Mr. Young. No one’s getting invited to Government House just because they paid $10 million in taxes, but I digress.

My attention is on Jon Shell, the former MD and now Chair of the very “social capital” firm that was seeded by stock market gains earned via what looks to have been a passive Dot-Com bubble era “Friends and Family” investment round into a U.S.-based tech firm. (It’s unclear what the capital gains inclusion rate would have been at the time of that big hit, but the top marginal tax rate in Ontario was far lower than it is today.)

Mr. Shell wrote a corporate blog piece on the tax-advantaged(?) SCP website defending the Liberal Party’s recent Budget, which is consistent (Ed note: coincidence?) with his apparent Liberal Party donation record. Just because Mr. Shell might be a fan of Team Trudeau doesn’t mean that his economic analysis is flawed, mind you. Mr. Shell’s blog post linked to the Duncan Rowland Globe op-ed (see prior post “Who are these ‘Rich Canadians’ yearning for higher taxes?” May 5-24) as evidence that there was at least one entrepreneurial voice in favour of the Liberal Party’s capital gains tax increase.

Rowland’s assessment is at odds with the findings of the Council of Canadian Innovators, which has a list of >2,000 “tech employees, innovators, small business owners, doctors, dentists, entrepreneurs, and concerned citizens,” all of whom have their own sensible reasons for opposing the increase to Capital Gains Taxes. This grassroots effort is in keeping with Conservative Leader Pierre Poilievre’s recent suggestion in the National Post about how Canadians should go about defeating such things in real time.

Others are thinking about this topic from different vantagepoints: Entrepreneur Candice Faktor has posed some interesting and relevant questions on LinkedIn, while Wattpad co-Founder Allen Lau offered this perspective (from May 5th G&M):

The Liberal government is increasing taxes on investment. Anyone experienced in entrepreneurship and investment knows this will stifle growth. We are at tremendous risk of losing our brightest entrepreneurs – along with the high-skilled jobs they create – to other countries.

This is evidenced by a new survey conducted after the capital-gains tax changes: Just 5.3 per cent of Canadian founders believe Canada is the best place to grow a company.

As the world shifts to intangible assets, the consequences go beyond brain drain and job loss. We will lose out on the greatest prize of the innovation economy: ownership of industry-disrupting companies and technologies. This would have a devastating and long-term impact on our economy and reputation on the world stage.

I may have irked Mr. Shell when I linked to his first blog post in my May 1st Toronto Star column, as an example of an “economic justice activist” (his own words) who was all-in on Freeland’s tax grab. Perhaps he didn’t appreciate the attention, even as I drew eyeballs to his argument.

As is sometimes the way in Progressive politics, Mr. Shell took to LinkedIn to accuse me of misogyny. As he tells it, I’m a sexist to suggest that “By putting wedge politics ahead of what’s best for Canada’s future, Freeland risks more than she knows.” Below is an excerpt from that recent post:

I want to talk about the below-the-surface sexism so prominent in Canada when it comes to Chrystia Freeland.

The latest example is this article, where the author ends with "by putting wedge politics ahead of what's best for Canada's future, Freeland risks more than she knows."

There were a lot of different options for the end of that sentence, like "risks our economic standing in the world" or "risks a massive brain drain from which we may never recover" or some other specific thing. But he chose "more than she knows."

Two years ago, before the 2022 budget, a bunch of bank CEOs wrote articles and gave interviews warning of continued government spending. In those, Freeland was continually referred to as not up to the job, and her past as a journalist was a constant topic. Diminishing her was very natural for these folks.

I don’t recall any bank CEOs saying such things (although I was up to my eyeballs at the time serving the stakeholders of one of the aforementioned banks and might have missed such insolence). If Mr. Shell wants to lump me in with such an august crowd, that’s up to him. As the son of a former journalist myself, though, I have zero motivation to demean the profession; an example of there being more to me than he knows, perhaps.

More ludicrous is the accusation of sexism. If you read my entire Star column, you’d have found that along with Minister Freeland, I blamed both “Team Trudeau” and Finance CoS “Andrew Bevan” for being part of the process that saw this bad policy ultimately see the light of day. Mr. Trudeau and Mr. Bevan are both men, so it’s not as though gender comes into play here. Shell and I do agree on the sad reality that Canadian “finance…is highly indexed to men.”

From Mr. Shell’s post:

Canada's business, finance, political and journalistic elite is highly indexed to men. I am one of them. I definitely make mistakes when it comes to this issue.

I think it's up to us to be extra vigilant, to choose our words carefully, and not to fall into the easy trap of minimizing accomplished women. I am the father of three girls, and honestly that shouldn't matter a lick, but I hate the idea of them reading "more than she knows."

I also have a daughter, and I’m confident that I’ve not diminished her self-esteem through this choice of words: “risks more than she knows.” If Minister Freeland only knew of the negative impact of her decision on Canada’s economic future, relative to the near term forecast of some additional tax revenue, surely she wouldn’t have made the choice that she did. As such, she’s risking more than she knows.

That’s not sexist; it’s the only conclusion one can draw, based on my decades of experience in the entrepreneurial ecosystem.

I don’t need anyone to remind me that Minister Freeland (Canada’s first female Finance Minister) has accomplished more in the political sphere than most Canadians will in a lifetime; certainly more than I. Like the late Hon. Pat Carney (first female Canadian Trade Minister), the Hon. Mary Collins (first female to hold the rank of “Minister” within NATO) and countless female politicians before and since, she was a “first.” I was fortunate enough to work for both of these Privy Councillors as a young man. These three first’s are a reminder that it wasn’t that long ago when women were granted the right to actually vote. “The Person’s Case” was one of many historical moments that Minister Collins made sure we commemorated each year, and — even now — it’s hard to believe that it took until WWII for women to become fully-fledged citizens in some parts of Canada.

It’s unfortunate that Mr. Shell assumed that anyone not on the Progressive end of the political spectrum would be both unaware and indifferent to the challenges women have faced in our society for millennium.

As he can’t win this policy argument based on the facts, Mr. Shell defaulted to name-calling: SEXIST! The Molotov cocktail of a modern day social justice warrior. I give him credit, as his “Clout Chasing” tactic worked for some of his LinkedIn followers, who may not have spent the money to actually read the paywalled Star column that had drawn his convenient fury.

A disconcerting hallmark of some on the Left, if all too familiar (see prior post: “Were you compared to a Nazi today?” Apr 8-13), but further evidence of Mr. Shell’s absent research. If he’d only checked, he would have discovered that I’ve been writing about the lack of female representation in Finance for almost 20 years (see representative prior post: “Canada's Top 40 "Men" Under 40” May 9-07).

Below is just one of several blog pieces where I was critical of the process that the sponsoring headhunting firm had followed to generate the list of Canada's Top 40 Under 40:

After 12 years, and a nationally-representative 27 person advisory committee (5 women out of 27 members), the best that Caldwell Partners could do was find 5 women to sprinkle into this year’s Top 40 Under 40 list. This is not acceptable.

Of those five women, two hail from academia, and one from a crown corp., which means Caldwell could find but two women from business to join our nation’s male corporate leadership (27 of which made this list).

*****

Back in 1988, my then bosses, Senator Pat Carney, and the Hon. Mary Collins, gave me a chance to see what advancement barriers looked like. And they worked hard so that the current generation of young female executives and community leaders wouldn’t know what they’d both experienced when they were building their careers in British Columbia and the Northwest Territories in the 1970s.

In 1988, “glass ceilings” were still a topic of conversation. And then one day a generation of people seemed to decide that there was no longer an issue to analyze, or even discuss. That the battle for gender equity had been won.

Caldwell’s Top 40 list this year betrays that notion.

As a savvy observer of the public realm, Mr. Shell likely appreciates such criticism made me no friends at this particular headhunting firm. He’d be correct to conclude that such is the cost of doing what’s right, even if that puts you on their Blacklist for all-time. That was long before his performative post.

Mr. Shell wasn’t done, however, as he channeled the Prime Minister’s Budget 2024 talking points with the claim that I was just another of the “Elites” who have been allegedly diminishing Minister Freeland’s standing in the world:

The author and I certainly disagree on the content of his article, but his arguments are well made. There was no reason to add the dismissive approach to Freeland so prevalent among the Canadian elite.

As a former McKinsey staffer and long-time member of the Young President’s Association himself, Mr. Shell would certainly have been exposed to true “Elites” over the course of his pre-SCP career. Here again, though, Mr. Shell misses the target with this particular arrow. He shouldn’t be so lazy as to conflate financial success with being an “Elite.”

Given Mr. Shell’s absent research to date, I’ll do this part for him:

Most successful Entrepreneurs are not to-the-Manor born. They hone their work ethic as young people: washing cars, delivering newspapers, babysitting, cutting lawns, teaching swimming, pumping gas and waiting on tables. Academic backgrounds and achievements vary widely. Some drop out, while a few might get a scholarship to Stanford.

These folks invariably have an idea that gives them the confidence to borrow money to start a business, risking financial ruin. They turn to their friends and family for capital, as there’s never enough to get started otherwise. Traction is never certain, and many Start-ups fail, levelling untold stress and life-altering financial and personal setbacks on their families. When things start to work, these Entrepreneurs hire other risk-takers, and if they’re successful collectively, these teams grow the pie for all of us via a larger tax base, new innovations, happy suppliers, mentoring, volunteering, corporate and personal charitable donations….

Their sweat, intestinal fortitude and conquest of risk within a Capitalist System leads to a stronger society.

It may well be that Mr. Shell assumes “Privileged Elite!” as he walks through an area hospital and sees the name of any number of Entrepreneurs high up on the Donor Wall. Just because one has achieved financial independence and can afford to help build a new wing at Sunnybrook Hospital, UHN or SickKids doesn’t make them an “Elite;” they’re just a success story to be proud of.

To emulate, if possible.

Americans seem to understand this intuitively, and I wish more Canadians held that view. Activists such as Mr. Shell may well be what holds our country back from fully realizing our nation’s potential.

I don’t blame him for not appreciating all that goes into being a true Entrepreneur; it seems to be beyond what he knows. As for the “sexist” epithet, I’ll borrow a line from the late Jack Layton: “#fail.”

MRM

(note: this post, like all blogs, is an Opinion Piece)

(photo: Chef (A), New York, 1951, by Irving Penn)

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