Michael Hyatt became a self-made millionaire at just 25, when he built two highly successful tech firms valued in the millions. Today, he ranks as one of Canada’s top entrepreneurs, is a celebrated “Dragon” on CBC’s new online sensation Next Gen Den, and is a weekly Business Commentator on CBC News Network. In this interview with Bay Street Bull, we learn more about Hyatt’s roots:
Michael Hyatt is barely into his 40s, maintains the look of someone in his 20s but lives the way we all dream of at any age. Spending his time between homes in Toronto, Paris and West Palm Beach, Hyatt’s success as an entrepreneur in the tech space has carried him into the elite stratosphere of accomplishment in Canada. Having been named as one of the country’s Top 40 Under 40, Hyatt is now a regular commentator on CBC’s Business News and having recently stepped down as the CEO of his latest success story, BlueCat Networks, Hyatt is getting back to doing what he does best, being an entrepreneur, and there is clearly no limits to what he can accomplish. Sitting down for a chat at his residence in the Four Seasons Hotel, Hyatt recently spent some quality time with The Bull and let us know that there really is no secret to his success, just a good mix of hard work, a humble approach and plenty of fun.
David King: You’re a Western University graduate who notoriously went to London to pursue a career as a doctor. How did your experiences in school and life during those years chart a path for you towards entrepreneurship?
Michael Hyatt: I don’t think you can run from who you are. I was a sick child, which I think led me to want to be a doctor, but in my DNA, it was really always about business. Although I liked Western and I’m proud of my science degree, I never really fit in. After giving my thesis talk the panel said, “Mr. Hyatt, you should sell cars.” I got the message and jumped into what I was good at and not what I thought I should be.
I’ve heard you reference in the past that the last business course you took was in grade 9. That being the case, where do you credit your approach to business and management style?
When we started out, the Internet was barely around. There was no real venture capitalcommunity and no great mentorship programs or groups. It was also much more expensive to start a company – there were none of the efficiencies you now have with the Internet, cloud and mobile. In many ways, my brother and I knew we just had to make it. Thinking back, we did a few things well:
1. Grit. Just pure hard work and grit. The harder we worked, the luckier we got.
2. I never thought I was right. I tried to find the right answer, not just my answer.
3. I didn’t have an ego about hiring people better than us. Hiring A-players and letting them excel was always exciting to us.
4. We stuck together. My family stuck together in the early days no matter what – that kind of support was key.
After finishing school, you and your brother chose to start Dyadem, which you eventually sold in 2011. As someone who works closely with his family, I know how challenging that can be. What drove the decision to start a business with your brother and what is your relationship like today as a result?
We didn’t want to be poor! Seriously, when I graduated it was during a recession and there wasn’t much hope for work for a science student. I jumped at starting our own thing and we worked like mad men to get somewhere.
Working with family can be a huge success or a huge failure – the stakes are so high. I feel sad for these iconic Canadian families who have horrible generational infighting. Growing up, my brother and I didn’t see eye-to-eye. Interestingly, our business forced us to build a relationship – a very close one. When you put two people on the same side of a difficult situation, you basically make it or break it together. I think we resigned on each other 10 times in the first two years, but that’s the magic of brothers – you get over it quickly and move on. Blood is always thicker than water and you can say some really bad stuff to a sibling, which can be easily forgotten; something that isn’t true of a even a best friend.
Today, Richard and I get along very well. We also have a third brother, Jonathan, who is an amazing movie producer and has just been accepted into some great film festivals. I think he will end up doing better than both of us!
What was it like coming to the decision to sell your first business and when the transaction was completed, were you able to take stock in the success that had been achieved? Was there any sellers’ remorse after the fact or were you happy to see your business moving on without you at the helm?
Selling a business is an art, not a science. It’s a difficult and remarkable process. I now understand why it’s rare, as it’s tough to pull off, regardless of how easy it may appear. Once you go through a real due diligence process, you feel like you just completed an Ironman – sore and dazed.
But, no remorse. I was always pleased to pass the business on. I gave up the CEO role at Dyadem to focus on BlueCat. Last year I gave up the CEO role at BlueCat to focus on some new ideas. In both cases, I handed the business over to great operators. By the time we sold Dyadem, I knew only my family would ever recall that our first office was a bedroom in my parents’ home.
Today, I watch all the amazing things going on at BlueCat with the new management team and I often think, “Why didn’t I see that?” It’s interesting to me how you can be so involved in a business and miss things that someone from a different perspective can pick up.
When you and your brother started BlueCat, you did so notoriously without any venture capital, instead choosing to seed the company yourselves. Aside from maintaining corporate control, what other motivating factors were behind your decision to go at it on your own?
I remember a meeting we had in the early days of BlueCat with very famous investors in the Valley. They loved our idea and wanted to give us a big cheque, and control the company. They also wanted to add in their own management team and have us move to the Valley to be close to them. Although this was a huge compliment (and market validating) from some very smart rich guys, we felt we would be giving up too early.
When all you have is crazy passion, it’s your right to win or lose on your own terms – if the bus was going to crash, we wanted to be driving. Not taking money early was very difficult, but it was the best thing we ever did. To this day we still control BlueCat.
Growing BlueCat over the past few years, what do you think has been the greatest accomplishment for you as a leader of the business and what has been the greatest accomplishment of your team?
I’m most proud of how we got through the tough times. It’s easy to take high-fives in the good times, but I always felt that what you do in the darkest hours defines you as a leader. The great financial crash of 2008 was one of those times. Some people have short financial memories, but I recall vividly that no one really knew if business was going to grind to a halt. There was little liquidity in the system and raising money became exponentially expensive almost overnight. At that time, a company was trying to buy us (the deal died due to the crisis) and we had some challenging and serious employee issues. We also had to continue balancing responsibilities between both Dyadem and BlueCat, and got involved in litigation. In the middle of the legal fun, we needed to raise capital, and grow the company. Looking back, I’m not sure how we got through this, but I always knew we would. I understood that we were in a tough spot but knew that if we kept our heads down and focused, we would make it.
Fast forward to today, BlueCat is a very solid high-growth, high-margin business. We turned it around and even added a fabulous new management team to take us to an IPO. Looking at the business today, you’d never think we went through anything. BlueCat is in a great spot.
Staying on the edge of innovation is critical to the success of any tech company. What do you and your teams do to stay on top of technology and how do you keep your customers interested in your innovations and offerings?
We shut up and listen. Often people throw up information on clients, but we start by asking a lot of questions. BlueCat has about 1,200 mainly large enterprise customers. We spend a great deal of time looking at the application of our technology in their networks and how we can remove pain. Our solution is part of what we call the “Elastic Network” – the idea that there is so much happening in the new world of virtualization and the Internet of Things that clients need a highly dynamic, flexible way of getting business done.
My view is that the Internet is still very young and it’s still early. We ain’t seen nothin’ yet!
You define yourself as an entrepreneur and not a manager. Tell us what it is about being an entrepreneur, as opposed to being a manager, that makes your day-to-day life that much more fulfilling. How does this distinction drive your decisions in your business as well as your life?
Being a CEO and founding a company is a very lonely job. It’s a long and often thankless path, which is overly glamorized. But it’s winning that has always driven me. Sure, I’m competitive like the next person, but I get a real thrill from inventing something with my brother in a spare room and having Fortune companies actually use it to run a big part of their network.
I also think all founders are a little crazy. Ask some people who work with founders and they will say we’re all over the place, emotional and somewhat unpredictable. In most cases, this is exactly what is needed to start a business, but it may not be what continues a business. The odds of succeeding are really stacked against you and most rational people would never attempt a startup. This is also why large companies have trouble innovating, since you have to buy into the craziness to innovate.
Once a startup is at good size, it’s often a good idea to pass it over. For me, it’s not that I can’t run a larger company, it’s just that I think it’s best for investors and employees if I’m not leading the process. I passed BlueCat over to a very solid operator, Michael Harris (former CEO of MKS on the TSX), who is moving at great cadence, which will take BlueCat to an IPO.
Having been named as one of the Canada’s Top 40 Under 40, you’ve experienced and been recognized for so much success at such a young age. From a personal perspective, what do you do to take stock in this success and enjoy your accomplishments?
I remember making my first million by 25. I was wealthy and miserable. For whatever reason I lived up north in a family area. It was lonely and isolating, which turned out to be a key life lesson. One day I just decided to move to Toronto and promised myself I’d never get caught up in only making money, I would also focus on building quality friendships. Interestingly, I seem to have made much more money and faster than I ever thought. It’s a daunting task to manage money.
When I first got my big cheque, a very smart financial advisor told me, “It’s not the return on capital that you should be most concerned with, it’s the return of your capital that should be the first goal.” Making a ‘safe’ return is a hard thing to do especially in this low/no inflation environment.
And, although the accolades are nice, I just feel fortunate and thankful. A billion people have a hard time finding fresh drinking water every day and we find ourselves mired in odd first world issues that sometimes seem silly. Success is also a very relative thing. Money is only one way to measure it. At the end of the day, I try not to get caught up in too much materialism.
Sure, I have some nice suits, but most of the time you’ll see me walking around in a $10 T-shirt buying groceries. Funny enough, I will buy extra pasta if it’s on sale and still think through every purchase.
Outside of business, what kind of hobbies and pastimes do you indulge yourself in to get away from work and enjoy the lifestyle you’ve created?
I’m kind of nerdy and like to read, cook and watch cool documentaries. Outside of regular work, my family started a foundation called The Hyatt Family Foundation, which invests in Canadian charities. So far we’ve focused on education and women’s charities, such as Dress for Success and we fund one of the largest college scholarship programs for underprivileged Canadians. We are also interested in medical research, where we are looking to partner with Canadian researchers to help advance some key breakthroughs.
Winning is one of the core pillars of The Bull and the lifestyle that we pursue. Define what winning is to you from both a personal and professional perspective. Have you won yet or is the game just getting going?
Life is short and we really don’t know what our timeline is. But today, I’m healthy, my family is healthy and I get to wake up every day and do what I want. I’m winning.