UNBeknownst podcast episode 17
Tom Liston (BBA’96) is one of the most sought-after minds in Canada’s tech investment sector. He currently serves on several Board of Directors for public and private technology companies and has a strong track record of shareholder value creation in that capacity. As chief investment officer of a leading technology-focused venture capital firm, he made investments in SaaS, FinTech, and healthcare IT fields – two of which were among the top exits in Canadian technology in the past decade. Tom is consistently ranked among the top technology analysts in industry surveys and has received more StarMine stock picking awards than any other technology analyst.
Tom also volunteers his time as a mentor at the Future of Sport Lab in Toronto, has raised over $100,000 for the MLSE Foundation to support kids sport, and was a lead investor and advocate for refurbishing Canada’s oldest basketball court in St. Stephen, NB. A BBA grad from UNB, he continually supports his alma mater in many ways, including mentoring students and volunteering as chair of the UNB Student Investment Fund, which manages the largest student-run fund in Canada.
Tom sat down to talk with UNBeknownst hosts (and brothers) Arash Ahmadi (BScEE’15), Arsham Ahmadi (BScEE’12) and Armin Ahmadi (BBA’18), otherwise know as Team AAA, about investment success, cryptocurrency and technology investment in Canada.
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Highlights from the podcast
Team AAA: What is your secret to investment success?
Tom: It’s one thing to say a stock is a great value and you should own a lot. It's a second thing to convince a portfolio manager with billions of dollars, who's looking at oil and gas and all these other sectors, to convince them that they need to put a couple percent of their portfolio into something.So there are two answers to your question: One has a lot to do with just spending that extra time going to industry conferences, talking to every competitor, talking to as many customers as you can and that's the way to really understand the differentiators and technology. It's learning how sticky and how much you're providing an ROI for customers. The second piece is harder. First of all, clients hear from 17 other analysts that have masters degrees and went to good schools and what have you. So you have to work them and add a few more bits of information that maybe no one else has, so then they gain some trust. And then of course, you just build a track record that you have their best interest in mind, not just trying to get a trade that day. I gained their trust because I had their best interest in mind over the long term, not necessarily the short term.
Team AAA: You've worked with a lot of startups and you mentioned that it's better to keep homegrown companies inside the country to make them multibillion dollar businesses. What kind of impact do you think Canadian tech startups make?
Tom: A lot of Canadian money is coming into Canadian sectors and that's generally a very good thing. And if you look at it, even since I've left venture capital, the amount of companies valued at a billion dollars privately in Canada has been up twenty-fold in the last five years – it's just been absolutely outstanding. And that's a very good thing – these companies in Canada are getting $100 million +++ investment into them that really allows a nice runway to grow and grow. Effectively, because if you're raising $20 million and EU peers are raising $180 million it’s not exactly a fair fight and you have to be really nimble to fight against that. If you're more on par with what your competitors are raising, you can now run as fast as them and have a great chance of being the market leader. So I think that's the most healthy thing.
Team AAA: We've seen a lot of ups and downs in the financial markets in the last couple of years and there were a lot of predictions that we’re potentially up against another recession. What was different about the volatility in the stock market during the pandemic versus previous volatilities in the late 90s and 2000?
Tom: Good point. Especially during the pandemic interest rates were all all-time lows and and it's very, very cheap to borrow money and people worried about concerns about inflation, among other things. So how do you outpace that? Will you borrow money cheap and buy high growth stocks? If you look at the discounted cash flow models, if you look at some of the macro models, you know when interest rates are very, very low, you want to lever up and buy the high-growth technology. So during the pandemic, you just had so many incremental new buyers of a lot of these stocks because where else are you going to put your money? And there's a bit of a housing bubble right now – I think we can call it a bubble in Canada. Bonds aren't yielding anything. So you're going to put your money in a savings account. But the volatility has never been crazier and that's the tough part. I don't love this extra volatility because I’d rather stocks climb in a more orderly way, a little more measured approach. But volatility I think seems to be here to stay, and the uncertainty on the geopolitical front is certainly a huge factor this go around as well.
Team AAA: The oldest basketball court in the world is located in St. Stephen, New Brunswick. And you're helping with its restoration. Why is that significant to you?
Tom: There are some things that are just meant to be, and I was meant to somehow be a part of this. I’m a big basketball fan, as you know, I worked with the Maple Leaf Sports and Entertainment Foundation and we did a lot of Raptors functions and raised a lot of money for charity that refurbished courts in tougher neighborhoods in Toronto. Just a wonderful, wonderful charity. Been to a lot of Raptors games and of course coach basketball, and grew up with basketball as an important part of my life and. You know Ian Hanomansing from CBC – I hope everybody knows he's from New Brunswick. He did an interview with James Mullinger and at one point, the interview just paused and he said, “you know, New Brunswick is an important part of who I am.” And I'm going to steal that use it. New Brunswick is so important to me. And you just have this terrific group of people and I'm fortunate to spend a lot of our summers and holidays in Saint Andrews, which is 15 minutes away. Again, it just was meant to be: 10 years ago, there was a fire in this old building in Saint Stephen that currently houses the thrift shop. Smoke went through this building the sprinkler system went off and the carpet was ruined and the drop ceilings were ruined. So they pulled it all up and found these beautiful tin ceilings. If you go to worldsoldestbasketballcourt.com you'll see it all. This court was preserved in a beautiful way. And it's not just about the basketball court. We want to make a very interactive center and a hub and not only have people interact with basketball and its history, but also have basketball tournaments and everything else there. We're extremely excited – we raised over $1,000,000 from private donors and it's just such a magical thing for New Brunswick.
Team AAA: You have actively engaged in investments and business opportunities, but you've also given back to the community. Why is that important to you?
Tom: We should take care of each other and we should reinvest if we've fortunate like I have. When you have some good fortune why not give some of that back and pay it forward and make it easier for the next student, or make an investment in a small business in New Brunswick that's trying to make it. New Brunswickers, I think, are dramatically under appreciated. I don't think people realize how awesome it is to live by the river and drive twelve minutes to work and have people bring you pie over when you're feeling sick. There's some really wonderful about the beauty and the lifestyle that we should cherish and value and I think we also need to have more confidence that we can be #1. So you know I'm pretty passionate about telling everybody how wonderful this province is and if you're a digital company, start hiring a bunch of people in New Brunswick who still work hard and appreciate it and they'll be loyal and you’ll get some great people. And I think there's a dramatic opportunity to lift up this province, given its wonderful qualities.
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