I’m not a fan of John Ruffolo.

It takes a special person to harbour ill will towards people they’ve never met. Fortunately for you, I am exactly that type of person. I’m not a fan of John Ruffolo. I believe this stems from his involvement with the Circle Jerk of Canadian Innovators.

This is a group of self-proclaimed Innovation Messiahs who advocate for government intervention in the economy to foster innovation. These economic saviours are about to dethrone Google or JP Morgan, but they need some cash or a policy break from the Canadian government first.

Do I Care about John Ruffolo?

Even more unforgivably, Maverick John Ruffolo pollutes my Twitter feed with incredibly banal observations, of the “war is bad” level of insight. Observations that should be posted on LinkedIn.

John Ruffolo's tweet

Ruffolo has been named an Investment Legend by the lamestream media. When the media decides someone is important enough to cover, it creates a self-perpetuating cycle. The reason for this adoration is that John Ruffolo was an early investor in Shopify and a few other tech success stories while at pension fund OMERS. That is the narrative presented by the media. Let me add some qualifiers to that story.

Orienting OMERS funds towards technology in 2011 was undoubtedly prescient. Michael Nobrega, their CEO from 2007 to 2014, deserves a lot of credit for that. To his credit, Ruffolo has always acknowledged Nobrega’s contribution:

“Our experience demonstrates the importance of leadership. Michael Nobrega led the charge in 2011, convinced that significant technological disruption was on the horizon.”

Michael Nobrega, who knew Ruffolo from their time at Arthur Andersen, appointed him as project manager. Ruffolo did take a risk by leaving his secure job to join a new initiative in a dormant industry at the time (Canadian venture land).

Michael Nobrega

The Shopify investment was made in 2013 and exited two years later, shortly after the IPO. The initial investment was made at a valuation of approximately $900 million. My guess is that OMERS existed long before Shopify reached $10 billion in revenue. In the end, I doubt Shopify was a ten-bagger for OMERS.

So John Ruffolo had a few multi-baggers during the Golden Age of Asset Inflation and Techno Utopianism, and I’m supposed to treat him like a cross between Warren Buffett and Lee Kuan Yew? Puh-lease. My grandmother has probably had more multi-baggers than John Ruffolo.

Despite their flaws, public money managers market themselves on the basis of ROI, not how many winners they have had. Even though Eric Sprott has probably had several dozen multi-baggers in his career, I would not recommend following him as a model. Public investors are mature enough to recognise that they occasionally invest in duds.

From 2014 to 2017, John Ruffolo was also Chairman of OMERS Energy, which was a terrible time to be in that industry, but no one talks about it. I could list a number of his failed transactions, but that doesn’t prove anything. There is no mention of Maverick John’s IRR in any of the numerous articles about him. That would be very useful information. After all, even a blind squirrel will occasionally find a nut.

In an August 2018 cover story, Ruffolo announced plans to triple OMERS Ventures’ assets within a decade and open new offices in Silicon Valley, London, and Singapore. It was also stated that his responsibilities at OMERS would include agriculture, real estate, infrastructure, and clean technology in addition to ventures. Despite his grand plans, he left OMERS within a month. To this day, no one knows why such a seemingly successful investor had to leave under mysterious circumstances.

Ruffolo had a difficult time relaunching his new firm, Maverix Private Equity, after leaving OMERS. Teachers reportedly pledged $250 million to back him up before backing out. Unspoken horse-trading is something that good journalists do.

I recently saw a Bill Gates interview in which he effectively traded opening up about his divorce for the opportunity to promote his new book. Both parties are satisfied. In contrast, the majority of the Canadian media participates in lionising so-called investment experts with little critical scrutiny. “I stubbornly didn’t die,” Ruffolo is said to have said after his cycling accident (which is not uncommon for messiahs). But we don’t know what caused him to abruptly leave OMERS. While Maverix has two pension funds as investors, there is no indication that OMERS will join. Ruffolo and traditional OMERS do not get along, in my opinion.

You know how the media throws around phrases like “mining mogul,” “real estate titan,” and “porn impresario”? Everyone, in my opinion, should be assumed to be a blind squirrel unless proven otherwise by a statistically significant record of outperformance spanning at least a few cycles. “Blind squirrel” may be too derogatory for normojournos to use, so perhaps “unproven investor” will suffice. That is exactly what John Ruffolo is, and it will take time to change that.

With Maverix, he said he was looking for legacy businesses with $100 million in revenue in traditional sectors such as healthcare, transportation and logistics, financial services, and retail. Maverick John, unlike most private equity firms, accepts minority stakes.

Ruffolo stated in a 2021 interview that he had three deal prospects in the works, one in travel, one in supply chain management, and one in transportation and logistics. Boring! However, the first two announced deals appear to be typical growthy tech deals. One worked with influencers, while the other consolidated Shopify merchants – both trendy concepts.

In pivoting from venture to private equity (at least, that was the stated idea), Ruffolo offered the thesis that the Canadian venture market was now well supplied with capital, so the real opportunity was in growth equity. A couple of points.

The two key founders of the Shopify store consolidator are based in New York. I believe New York is reasonably well supplied with capital for a wide range of projects (what with Wall Street being there). Other investors are involved in both transactions.

Maverix isn’t even the first investor in the influencer space. Which, once again, tends to refute the notion that they invest in “capital-starved” opportunities. If I had to guess, Maverix has already vaporised non-immaterial value on a mark-to-market basis simply by investing in zeitgeist companies at the wrong time. Nonetheless, I don’t want to be too picky. It’s still early. We must keep an open mind while keeping our wallet closed!

Another bias that journalists have is that once they decide on a slant for an article, they will dismiss anything that contradicts that viewpoint. I know this because, despite being the best living journalist today, I tend to do it. So, to be fair, there’s a lot to admire about the Ruffolo story so far. For instance, how he rose from humble beginnings to achieve success.

He also appears to have a large number of powerful and loyal street friends. Among them are some of my favourite people: billionaires. As in Peter Gilgan. Do you think I’m scared? Puh-lease. That’s a very basic misunderstanding of human nature. Although John’s detractors may enjoy this post, I am confident that his industry colleagues will enjoy it.

Every professional friendship has an undercurrent of jealousy. As a rational man, I am envious of the Queen or Hugh Hefner, but most people are envious of people they know, i.e. the circle of people they consider their peers.

John Ruffolo also apparently has a policy of always agreeing to a first meeting request. So maybe he’s a decent person. But let me ask you: what’s decent about bothering me with a tweet like this:

On Bay Street, there is an elite private equity firm with a 30-year track record of savvy dealmaking that has never had a single article written about them. Journalists must maintain a sense of perspective. Of course, journalists’ proclivity to write unwarranted hagiographies is self-serving. They create legends so that they can claim: we have access to these investment geniuses and their insights, for which you, the reader, must pay subscription fees.

Journalists are constantly in need of expert quotes. This is due to the rule that journalists cannot quote their own expertise, even if they have spent years covering a beat. For example, Globe reporter Sean Silcoff has spent years kissing John Ruffolo’s ass, but in order to write about how great he is, he needs a quote from Jim Balsillie. Why? Oh, that was excessive roughness. I’m hoping my Peer Jealousy Theory is correct, because otherwise, the entire Globe newsroom will be looking into my tax returns.

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