He might no longer be in charge of the country’s largest cannabis firm, but Bruce Linton made one thing abundantly clear during a humorous and insightful keynote address to a business crowd in Kanata on Tuesday afternoon: he’ll never apologize for doing exactly what he felt was required to build Canopy Growth into a Canadian pot powerhouse.
“This is the closest thing to actual real work I’ve had since about July 2,” the guest of honour said during the CEO Talk event, drawing roars of laughter from the crowd in the Brookstreet Hotel’s ballroom.
Linton was referring to his last day as chief executive of Canopy Growth before he was abruptly fired after six and a half years as the firm’s leader, a decision that stunned many in the tight-knit Ottawa business community.
As Canopy’s co-founder, Linton oversaw the company’s spectacular rise from a tiny startup based out of a former chocolate factory in Smiths Falls to the darling of a multibillion-dollar industry. He became one of the country’s most recognized corporate bosses after cannabis was legalized for recreational use in Canada nearly a year ago and earned OBJ’s CEO of the Year Award last fall.
But he was abruptly turfed after Canopy reported a wider-than-expected fourth-quarter net loss in June attributable to shareholders of $335.6 million or 98 cents per share, despite a jump in net revenue to $94.1 million that beat market estimates. Constellation Brands, Canopy's biggest shareholder, said then it was “not pleased” with the firm’s year-end results as it recorded a US$106-million loss in its own financial first quarter in connection with its stake in the Canadian cannabis company.
Linton defended Canopy’s performance at the time, saying he was positioning the company for sustained long-term growth by investing in more production capacity and preparing for the launch of edibles and other next-generation pot products that are soon set to become legal.
During his speech at the Brookstreet on Tuesday, Linton again suggested he wasn’t willing to sacrifice his long-term vision for short-term financial gains.
“The whole idea of learning how to like corporate keywords like ‘fetch’ and ‘roll over’ – that stuff that you’re supposed to do as a really good CEO – I just didn’t understand it,” he said. “July 2, I had a company which was worth around $20 billion and was about six years old, had about $5 billion in the bank and was trading at about 82 per cent of the 52-week high, and I got fired.”
Bold actions sometimes required, Linton says
The Carleton University graduate, who is the co-founder of online rental marketplace Ruckify and the co-chair of rapidly growing Kanata tech firm Martello, said he is proud of his legacy at Canopy, noting the firm teetered on the brink of bankruptcy several times during his tenure but always managed to find a way to survive.
He told the crowd that when he closed the deal for the former Hershey plant on Dec. 27, 2013, he had no idea if the company then known as Tweed would even have enough cash in the bank to make it to the new year. But he persevered, telling the audience that significant payoffs sometimes require bold bets.
“I think all of us have these dark times, where you put yourself in a situation where it would’ve been really easy to explain, we just couldn’t get funding, so I just didn’t buy the building. And Smiths Falls would still be just as bad as it was,” he said. “I think it’s better sometimes to make these big choices and then kind of get in a situation where you for sure have to fix the second problem because you’re now all in.”
Linton also said too many fledgling startups make the mistake of ceding significant control to big-monied backers in exchange for large amounts of growth capital.
Ruckify recently closed a $7.5-million funding round but didn’t take a dime from venture capitalists, he told the crowd. The firm will likely go public on a U.S. exchange at some point next year, but will do it on its own timetable, Linton added.
“The worst thing you can have is a bragging right to say I got a big, huge venture capitalist putting money into me. I would have sooner gone to the mob than that,” he said, adding to more laughter: “And given the business I was in, probably the mob would have been interested.”
Linton said it’s easy for founders to get seduced by the get-rich-quick mentality that massive rounds of VC funding and billion-dollar IPOs often encourage. He suggested that long-term success comes from giving employees a bigger stake in a company’s future through measures such as generous stock options, adding recent high-profile IPOs such as Uber’s were “flops” because they overinflated the companies’ value.
“If you’re the founder or entrepreneur, coming to work with you should feel like coming to that person’s house for Thanksgiving dinner,” he said, using the upcoming holiday as an analogy.
“I see a lot of people who have this idea that the way they should run their business is they grab as much as they can, and then whatever’s left, they give to the other people. But if you did that at your house for Thanksgiving, you would look like a pretty weird host. A lot of people would probably leave that house with not a great opinion of the person. You invite people in and you give them as much as you can, and what’s left you keep.”
Linton said he owned only about four per cent of Canopy’s stock, preferring instead to spread the wealth.
“This idea that dilution is your enemy is wrong. I think I learned that it’s actually better not to have total control and have total acceleration.”