Mike Wekerle’s Advice to John Chen: “Don’t Sell BlackBerry”

In a wide-ranging interview at the recent Cantech Investment Conference with Cambridge House’s Vanessa Collette, Difference Capital’s Mike Wekerle says that there’s “no reason” that Samsung should acquire BlackBerry, responding to rumours swirling around both companies.

Singing the praises of BlackBerry’s new Passport phone, which he then fishes out of his pocket, Wekerle has some blunt advice for Samsung.

“I hope they don’t. There’s no reason they should buy it. They’re a little late. The investors should look at it and say, this is a sign.”

Difference Capital (TSX: DCF) hit highs of $2.73 per share this past April, before half of its board found the door in June, immediately preceding a steep downward plunge in the company’s share price. The publicly traded merchant bank is now trading at $0.95, so to say that Wekerle’s tenure has been smooth would be to sugarcoat the situation.

“We had to make some changes on the management side,” he says. “[Former CFO] Henry Kneis has taken over the CEO role. I’m more the ambassador-chairman.”

Internally, since the shake-up, Difference has focused more on satisfying shareholders by “right-sizing the company”.

“We had too many investments, at 40,” he says. “We’re now at approximately 28, on our way to 20,” referring to the various investments that have dragged the company’s bottom line down, including World Gaming and Lignol Energy.

Thanks in no small part to Wekerle’s personality, since then, Difference has cultivated relationships with IPO-ready companies who retain close ties to the start-up world, including Hootsuite and Vision Critical.

When he appeared at the 2014 Cantech Investment Conference, Wekerle was already famous within Bay Street circles, but his recent tenure on Dragon’s Den has brought him to sudden prominence among middle-class CBC-watching Canadians.

Canada’s tech sector has spent a good long time foraging in the wilderness after the death of Nortel and the near-death experience of RIM becoming BlackBerry, accounting for approximately 2% of the index as recently as 2010, at which time the resource sector rode high.

It was at that point, Wekerle claims, that he started seeing signs indicating positive marketplace flow in the tech sector’s direction.

“What an opportunity for an investor,” he says, before tossing out one of his catchphrases. “When people leave, I buy fear. When people get in, I sell greed.”

On the subject of how Canada consistently manages to punch above its weight compared to our Southern neighbours, Wekerle suggests that what we’ve done well “over the past 25 years is build institutions for education that has now made us the top computer science provider of engineers in the world, I believe. We produce out of the Kitchener-Waterloo-Guelph region more computer engineers than the whole state of California.”

“What an opportunity for an investor. When people leave, I buy fear. When people get in, I sell greed.” -Mike Wekerle

When asked what Canada needs to do to juice our competitive mojo, Wekerle suggests light-rail transit throughout Ontario, lamenting that “somebody sitting in Sudbury who’s perfectly suited to be working in Kitchener, you can’t get there. Make it open. Create that infrastructure for humanity and all Canadians to have the ability to work in either the metropolis or to work in an isolated tech centre.”

Collette asks him, “What do you say to people who think the tech sector is overvalued?” to which Wekerle responds, “I say bon chance,” before adding, “What I do like about people who say that is that I know I’m not anywhere close to the end. It’s when I get in the taxi cab and he starts giving me stock advice that I know I’m in trouble.”

Wekerle’s jokes at his own expense can’t conceal his fundamental insight into the main themes pushing the tech space forward.

He absolutely understands the new climate of the cloud-based, wireless, second-screen, SaaS, Big Data, recurring-revenue business model, wherein companies who know the importance of user engagement stand to reap the whirlwind.

Noting that the iPad didn’t exist eight years ago, Wekerle points to the potential for technology to transform certain sectors.

“I’m really looking forward to digital health,” he says. “Innovation, in the sense that we make it more efficient, less costly for the government, which ultimately is less costly for the average Canadian through taxes.”

Asked if there’s still money waiting to drain out of the resource sector into tech, Wekerle doesn’t stutter. “You ain’t seen nothing yet.”