Reza Satchu is Managing Partner and co-founder of Alignvest Management Corporation, a leading private investment firm. He has co-founded and had successful exits with several operating businesses, including SupplierMarket, a leading supply chain software company, and StorageNow, one of Canada’s largest self-storage companies. He is the Founding Chairman of NEXT Canada, an intensive entrepreneurship program for Canada’s most promising young entrepreneurs. Mr. Satchu is currently a Senior Lecturer at Harvard Business School. He holds a Bachelor’s Degree in Economics from McGill University and an MBA from Harvard.
Q: Let’s start with your story. What led you to embrace the path of entrepreneurship?
Reza Satchu: I think all of us deep down have the desire to make a positive impact on the world, and on the people we care about. From when you’re a kid, through adulthood, and even on your deathbed, when you think about what’s important to you, it’s not money – it’s the impact you’ve had.
When I was still a kid, I moved from Mombasa to Toronto. My parents, who are wonderful people, made the decision to essentially cut us off from the Kenyan immigrant community and just dive in, sink or swim, to Canadian culture.
At that time, I had no control over my circumstances. But I focused on making an impact, on learning as much as possible because I wanted to find a path to control my own destiny, and my family’s destiny. I wanted the freedom to have a positive impact, and I saw that the path of a founder was the quickest route. I began making decisions, consequential decisions that I was accountable for. I was testing my judgment, and with mistakes came a lot of learning. But with success came confidence and conviction in the ideas, and in myself. And the amazing thing I learned is that once I had that conviction, I could more easily find the resources to bring them to life.
Q: What was the idea that first gave you that conviction?
Reza Satchu: Whatever specific idea I had, it was flawed I’m sure, extraordinarily flawed. I had limited expertise, as we all do starting out. And I lacked resources as well. But I had a vision of entrepreneurship, which I began to think of as the “relentless pursuit of opportunity without regard to resources currently controlled.”
Ideas aren’t that hard, they’re everywhere. Just think about what bothers you, and those are ideas. The problem comes when people don’t believe in themselves, because they feel sure that other people with much more resources would have had this idea already, and tried it by now, or decided it was ridiculous.
When you think about the huge successes, the Amazons and Teslas, the ideas are straightforward. There were huge corporate infrastructures set up to monetize any idea around books or cars. Someone must have thought of this first, right? But when those founders made the commitment to their idea, without regard to resources currently controlled, because they had no resources – they created something transformational and unexpected. So I learned early on to not feel confined by the lack of resources, at least in terms of a vision. You may have an insight that others have missed, or have just decided not to act on for some reason, inertia or whatever. But you can act on it, even with far less information.
Q: How did your experiences as a founder inspire you to become a professor and mentor?
Reza Satchu: I know how important a mentor can be. The single most important event in my life was my family being allowed to immigrate to Canada. My brother and I were both able to go to Harvard, we both built businesses. We had opportunities we would never have had, and we expanded what we thought was possible in our own lives – our expectations for ourselves.
After being in the U.S. for over a decade, I started noticing and thinking about the prosperity gap between the U.S. and Canada. The gap was increasing, and the standard of living in Canada was decreasing at the same time. And I saw that it was not to do with hard work, or being less educated – it’s more that Canadians don’t produce the right tail outcomes. There’s no Canadian Google or Facebook. There’s Nortel, there’s Blackberry, which failed. But there’s not a big, novel idea. And I knew that there could be, if we expanded the expectations that Canadian entrepreneurs have for themselves. The things they believe are possible to achieve.
I was walking along St. George Street in Toronto one day, thinking about these things, and I walked past the Dean’s office at the University of Toronto. I sort of pushed my way in and said, hey, let me teach a class. I want to teach business and entrepreneurship at a granular level, and address this “expectation gap” with Canadians, and teach them to expect to make transformational changes. He said, have you taught before? No. Ph.D.? No. You’re in Toronto, you live in New York. Why do you want to teach? I said, because I know it’ll be the best class you’ve had. Even without those other things, he saw my commitment, and he gave me a class. And it became one of the most sought-after classes, one of the hardest classes at UT. And it was the seed in the kernel to create NEXT Canada.
Q: Did you have a mentor as you came up?
Reza Satchu: There’s no greater mentor to me than my father. My father had great confidence in himself, even though he did not have a proper education. He was a real estate salesman when we moved here. He sold small houses in Scarborough. I was a Toronto Star paperboy, I would deliver papers and slip in business cards for my dad. Helped him sell a house for around $35,000. We worked really hard. And my mother, when I was 11, she sat me down and she told me I was going to Harvard. She believed in me, both of them did, and you just need one or two. But along with our circumstance came what I’ve come to call the “benefit of obstacles not of my own choosing.” We moved seven times in seven years – that was hard. The schools were hard to adjust to. These were all obstacles, but they gave me something special. I knew early in life that I could overcome them.
Q: Can you describe the principles of what you’ve called the “Founder Mindset”?
Reza Satchu: The new class I’m teaching at Harvard Business is built around this concept. When I try to describe it, the “Founder Mindset” has a few different components. But the most important component is how to develop judgment. A founder has to make decisions, and you’re just hoping there are more good ones than bad ones. The key is, how do you as a founder improve your judgment over time? Judgment is like any other muscle, you have to practice it. You must put yourself in situations where you’re making consequential decisions that you’re accountable for. The reason I say it’s the most important component is because ultimately you’ll need to count on your judgment to commit. Committing with uncertainty is not easy. But you must commit, and that takes belief in both yourself and the idea. You simply can’t compete with someone who is committed. Because that’s where the magic happens. When you’re feeling that sense of drowning, barely surviving as a founder, and you’re able to demonstrate that ambition and tenacity, that fear ultimately, but when you show that kind of commitment, you get people to believe in you. They see it in your eyes, and then when you get your first investor, that’s the magic. You’re that much closer to making the impact that you want.
Q: In your 20 years of teaching, what have you learned about business students?
I’ve always taken a direct approach as a professor. I did that with my first class at UT, and I was curious to see if that kind of approach would work at Harvard too. And for the most part it has, but I’ve encountered the same issue, and it may be getting worse. I find that most students are ultimately risk-averse. They overstate the downside. Especially as graduates of elite business schools, they’re underpricing their capabilities I believe. They don’t want to commit to something, because they’re not aware of what they’re truly capable of. Launching a business from here is attractive, and the risk profile is much less.
Q: What would you say to people who are right on the precipice of committing to an entrepreneurial idea?
Reza Satchu: The thing to know is, you’re never going to have perfect information. Any idiot can make a decision with perfect information. People always want more info before they leap. They can never have enough. You have to accept that there is risk associated with being a founder. You have to calibrate that risk appropriately, and in doing so think about how you can start to navigate it, to get moving, without just collecting more options. Most people never commit, because they think the next option will be better. It’s a tragedy that they don’t see what they’re capable of. What’s the downside? It doesn’t work, and you learn a tremendous amount. The upside is, something meaningful happens. The Founder mindset is all about choosing ‘tried and failed’ over ‘never tried at all’.
