I don't care for John Ruffolo

The "tech ecosystem" won't be pleased with this one. Or will they?
OPM 6 min read

It takes a special person to develop animosity towards people they have never met. Fortunately for you, I am just such a person. I don’t care for John Ruffolo. I think the origin of this is that he is one of the founders of the Circle Jerk of Canadian Innovators. This is a group self-anointed Innovation Messiahs who advocate for the government to intervene in the economy to support innovation. These economic saviours are about to disrupt Google or JP Morgan, but first, they need a bit of money or a policy break from the Canadian government.

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

The lamestream media has decided that Ruffolo is an Investment Legend. Once the media decides someone is worth covering, this becomes a self-reinforcing phenomenon. The basis for this adulation is that John Ruffolo, while at pension fund OMERS, was a prescient investor in Shopify and a handful of other tech success stories. That is the narrative that is presented by the press. Let me add some qualifications to that narrative.

Steering OMERS money towards tech in 2011 was no doubt prophetic. The credit for that probably belongs to their CEO from 2007 to 2014, Michael Nobrega. To Ruffolo’s credit, he has always acknowledged Nobrega’s role:

Our experience points to the value of leadership. Michael Nobrega led the way in 2011 as he was convinced there was significant technological disruption on the horizon.

Michael Nobrega, who knew Ruffolo from their days at Arthur Andersen, enlisted him to lead the project. Ruffolo did take a risk leaving his secure job to join a new initiative in a sector that was moribund at the time (Canadian venture land). As for the Shopify investment, it was made in 2013 and exited shortly after the IPO, two years later. The first investment was made at a valuation of around $900m. My guess is OMERS was out well before Shopify hit $10B. Bottom line, I doubt Shopify was even a ten-bagger for OMERS.

So John Ruffolo has had a handful of multi-baggers in the Golden Age of Asset Inflation and Techno Utopianism and I am supposed to pay attention to him as though he’s some combination of Warren Buffett and Lee Kuan Yew? Puh-lease. I bet my grandma has had more multi-baggers than John Ruffolo. Public money managers, for all their faults, market themselves on the basis of ROI, not a few winners they have had. Eric Sprott has probably had several dozen multi-baggers in his career and I would still not advocate emulating him as a model. Public investors have the maturity to acknowledge that occasionally they invest in clunkers. John Ruffolo was also Chairman of OMERS Energy from 2014 to 2017, a terrible time to be in that space, but no one talks about that. I could enumerate a number of his failed deals, but that doesn’t prove anything either. In countless articles about him, you won’t find any mention of Maverick John’s IRR. That would be pretty useful info. After all, say it with me: even a blind squirrel occasionally finds a nut.

There’s an August 2018 cover story of Ruffolo where it is announced he planned to triple the assets of OMERS Ventures within a decade and open new offices in Silicon Valley, London and Singapore. It was also stated that his purview within OMERS would expand beyond ventures and into agriculture, real estate, infrastructure and clean technology. Despite these grand plans, within a month, he had left OMERS. To this day, there’s no explanation why such an ostensibly successful investor had to leave under mysterious circumstances.

After leaving OMERS, Ruffolo had a bumpy road to rebooting under his new firm, Maverix Private Equity. Apparently, Teachers had pledged to back him with $250m and then backed out. One thing good journalists do is to engage in unspoken horse-trading. I saw a recent interview of Bill Gates where, in effect, he exchanged opening up about his divorce against getting to plug his new book. Both parties get what they want. In contrast, most of the Canadian media is complicit in lionizing so-called investment experts with little critical scrutiny. So we are told about Ruffolo’s heroism following his cycling accident - “I stubbornly didn’t die” (which is not uncommon for messiahs). But we don’t know under what circumstances he suddenly left OMERS. And while Maverix has two pension funds as investors, there’s no sign OMERS signing on. My spidey sense says Ruffolo and traditional OMERS are not on great terms.

You know how the media uses clichés like “mining mogul” or “real estate titan” or “porn impresario”? In my view, everyone should be presumed to be a blind squirrel, unless proven otherwise through a statistically meaningful record of outperformance spanning at least a few cycles. “Blind squirrel” might be too pejorative a term for normojournos to use, so maybe we could settle on the term “unproven investor”. That’s what John Ruffolo is and it will take time to reverse that. With Maverix, he said he was pivoting to traditional sectors like healthcare, transportation and logistics, financial services and retail and looking for legacy businesses with around $100m in revenues. And unlike most of private equity, Maverick John takes minority stakes. In a 2021 interview, Ruffolo said he had three deal prospects in the pipeline, one in travel, one in supply chain management and one in transportation and logistics. Boring! However, in actual fact, the first two announced deals look very typical growthy tech. One was involved with influencers while the other is consolidating Shopify merchants - both very in vogue ideas.

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. Couple of things. The Shopify store consolidator: the two key founders are based in New York. I would think New York is reasonably well supplied with capital for all kinds of projects (what with Wall Street being there). In both deals, there are other co-investors. Maverix is not even the lead investor on the influencer thing. Which again tends to negate the notion that they invest in “starved for capital” opportunities. If I had to guess, Maverix has already vaporized non-immaterial value on a mark-to-market basis simply by virtue of unlucky timing in investing in zeitgeist companies. Nevertheless, I don’t want to nitpick too much. It’s early days. We must keep an open mind and a closed wallet!

Another bias journalists have is that once they pick a slant for an article, they will discard anything that invalidates that view. I know this primarily because I tend to do it, despite being the best living journalist today. So let me be fair and say there’s also much to admire from the Ruffolo story to date. For example, how he built his career from humble beginnings. He also seems to have many powerful and loyal friends on the street. Including some in my most cherished class of people, billionaires. Like Peter Gilgan. You think I am scared? Puh-lease. That’s a very basic misunderstanding of human nature. John’s detractors might enjoy this post, but I guarantee his industry friends will love it. Every friendship within professional circles has an undercurrent of jealousy. As a rational man, I am envious of the Queen or Hugh Hefner, but most people are jealous of people they relate to, ie the circle they consider their peers.

John Ruffolo also apparently has a policy of always agreeing to a first meeting request. So perhaps he’s a decent human being. But I ask you this: what’s decent about bothering me with a zero-value-add tweet like this:

There’s an elite private equity firm on Bay Street with a 30+ years history of savvy dealmaking that has never had one article written about them. Journalists really do need to keep some perspective. Journalists' propensity to write unwarranted hagiographies is of course self-serving. They build up legends, so they can say: we have access to these investment geniuses and their insights, for which you the reading plebe must pay subscription fees. Journalists also constantly need experts to quote. This is because journalists have a rule that they can't quote their own expertise even if they have spent years covering a beat. For instance, Globe reporter Sean Silcoff has spent many years kissing John Ruffolo's ass and yet, if he wants to write how great he is, he needs to get a quote from Jim Balsillie. Why? Oh boy, that was unnecessary roughness. I really hope my Peer Jealousy Theory holds because otherwise, the entire Globe newsroom will be looking into my tax returns.

You can read a follow-up to this piece here:

I am Ruffolo-ing feathers again
Featuring former OMERS VC honcho John Ruffolo, now of Maverix Private Equity and drive-by smears of Jim Balsillie and Slippery Som.
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