Economic Sovereignty, Competitiveness, and National Building: A Conversation with John Ruffolo

What does it mean for Canada to truly control its economic destiny? Where have we fallen behind, and what would it take to rebuild national competitiveness in a world order that is changing in real time?

In this episode of Forthlane Features, Vanessa Hui and Rob Vanderhooft sit down with John Ruffolo, Founder and Managing Partner of Maverix Private Equity and a leading Canadian voice shaping the national conversation around innovation, capital formation, and economic policy. Together, they unpack the urgent issue of economic sovereignty.

Drawing on decades spent helping build Canada’s venture ecosystem, John explains why governments must move from neutrality to intentionality, why entrepreneurs need to lead, and why Canadian capital must be mobilized toward domestic growth.

John makes the case that Canada must rebuild its innovation engine—quickly. He outlines the critical sectors where Canada must lead and calls on entrepreneurs and capital allocators to build boldly.

This is a powerful conversation about vision, action, and national ambition.

WHAT TO LISTEN FOR

:47 What does "economic sovereignty" really mean in a Canadian context?

4:40 What are the low-hanging fruits Canada can act on today?

12:12 What are the key sectors where Canada must lead?

14:23 What can entrepreneurs and business builders actually do to create change?

25:09 What lessons can be learned from Shopify’s global success story?

GUEST: John Ruffolo, Founder and Managing Partner of Maverix Private Equity 

Maverix Website | LinkedIn | X | Substack

CONNECT WITH ROB VANDERHOOFT, PRESIDENT & CO-CHIEF INVESTMENT OFFICER, FORTHLANE PARTNERS

Website | LinkedIn

CONNECT WITH VANESSA HUI, SENIOR CLIENT ADVISOR, FORTHLANE PARTNERS

Website | LinkedIn 

This podcast is for informational purposes only and does not constitute investment advice. Views expressed are those of the speakers and should not be relied upon for investment decisions.

Transcript

Vanessa Hui (00:07):

Welcome to another episode of Fourth Lane Features, a podcast where we dive into the world of global wealth and asset management. I'm Vanessa Hui, senior client advisor at Fourth Lane Partners. Today I'm joined by my partner, Fourth Lane's president and co-chief investment officer, Rob Vanderhooft, for a timely and important conversation with John Ruffalo. John is the founder and managing partner of Maverick's Private Equity, founder of Omers Ventures, and one of the most influential voices in Canada on innovation, capital formation, and economic policy. John, thank you so much for joining us.

John Ruffolo (00:45):

Thank you, Vanessa. It's a pleasure to be here.

Vanessa Hui (00:47):

So John, we could easily spend an entire episode on your career and your influence on building Canada's venture and growth capital ecosystem. But I want to jump straight into what feels like the defining issue of this moment. We find ourselves in a time where geopolitics, trade, capital flows, and technology are being reshaped in real time, what Prime Minister Carney described as at Davos as a rupture in the world order. And I know you've spent a lot of time writing and speaking about economic sovereignty. So for our listeners, can I ask you to just define economic sovereignty in a Canadian context to start?

John Ruffolo (01:31):

Sure. Economic sovereignty is really about control and controlling over your own destiny. It's about not having a branch plant type of mentality. And the best and most vivid example I can give is really comparing how we tried to generate economic growth in the post World War II economy. We didn't care where the capital really came from. For example, if it was a car plant, we welcomed capital to come in from anywhere in the world and we relied upon physical supply chains and it created this economic multiplier that created wealth. And it worked quite well for that next 40 to 50 years. And when it all changed, it really was in the early '90s. And I would say 1994, to me, was the defining moment where the world moved from an industrial based economy to a digital based economy. And Canada used its same techniques that don't work.

(02:52):

And in a digital economy, when you get foreign direct investment and all you're doing is really operating as a branch plant, it reverts from additive to your economy to potentially extractive. And now is the time for us to pull out the chains and it's really like pull it out in the scene in the matrix when you start to realize, oh my God, we really are continuing this where it's really benefiting another country. And then when that country turns hostile to you, you start to see how exposed you are.

Vanessa Hui (03:36):

I mean, Rob, listening to John's definition, is there anything you would add from your perspective in Western Canada?

Rob Vanderhooft (03:44):

Well, maybe more from a Canadian perspective, and I guess it does apply to Western Canada as well. We've talked about economic sovereignty for Canada, and really we need to pivot away from what has been our existing trade relationship with the US. We've effectively had almost economic union without political union, and that's kind of backfired on us. So how do we, and are we moving in the right direction for that economic sovereignty?

Vanessa Hui (04:19):

It's obviously a big topic and something I know you've been really, really focused on, John. But if I was to say if there's two or three low hanging fruits that Canada could act on today to move meaningfully closer to economic sovereignty in the way that you've defined it, what might they be?

John Ruffolo (04:40):

Well, one of the things that we are doing, and I agree in principle is as Rob had said, we really placed all of our eggs in the US basket. I understood why we did that in hindsight, but it really ended up being a bit of a lazy move. And yes, I agree with trade diversification, which is what gets you into the problem in the first place. But at its core, the problem is we really stopped building in Canada. Rob just mentioned natural resources. In fact, natural resource industry is actually the most productive assets that we have in Canada, and yet we really stopped short of going much past the extraction and then relied upon the United States for a lot of the refining and then for the ultimate finished goods. And wealth is ultimately created with net terms of trade. So the idea that you could extract for a dollar and buy back at $10 still sets you in the hole.

(05:54):

So in that example, we made conscious decisions not to refine or build pipelines or create mineral processing and refining capability, and then the ultimate finished goods and holding all of the intellectual property from the resultant products. So to me, it's actually one big message. Get our own backyard fix and make things that you can actually trade with. Yes, we got some natural resources, but that's not going to get you the prosperity that we're all expecting. So to me, it's all about build, build, build. And yes, it's going to take a lot of dollars and money, but ultimately that is the only way we're going to be able to ultimately control our future.

Vanessa Hui (06:49):

Rob, anything you'd add to that?

Rob Vanderhooft (06:52):

I mean, maybe a question for John really, how do we do that? You look at how competitive we are or we aren't. You look at productivity and innovation in Canada, and that's a challenge. So how are we able to move up the value added food chain and be competitive in those areas and to make those finished products? That's a big challenge when we have productivity levels that have stagnated for 10 years, and we've favored full employment solutions over capital solutions. So what's the answer to that?

John Ruffolo (07:37):

Right. So in the industrial economy, what we focused in on is we focused in on job creation and we said job creation will lead to wealth creation. And again, in that example, it sort of worked. In the digital economy, it's the other way around. Wealth creation and controlling the resultant intellectual property for whatever you do, whether it's digital goods or physical goods, will lead to the job creation. So let me give you an example. One of the biggest blunders that Canada has made was the battery plants and the tens of billions of dollars that we handed to foreign-based companies who we believed had some sort of magical IP, yet there is so much great battery technology in Canada. What we did is we handed money to a foreign-based company with the promise of a paltry thousand jobs at the time. And we didn't even require them to leverage any of the Canadian supply chain of minerals.

(08:54):

And yet we have all of the ingredients just in the province of Ontario, whether it was nickel, cadium, graphite, lithium, you name it. We had no conditions whatsoever.

(09:07):

The opportunity ended up becoming a farce and we gave away tens of billions of dollars. Well, let's look at where can we actually compete? And one of the misnomers too is you got to start somewhere. So if we have some great technological advances in some areas, yes, they might be small and might not be globally relevant, not yet, but you use the power of procurement, standard setting, requirements for supply chain, and this is how we start to build our winners. And the thing that we got to do is not use the same old Canadian mindset of spreading the peanut butter so thin and trying to make everyone happy. We're going to have to make choices in select areas that we think we might be globally competitive. But if we don't start now, I guarantee you the result will be we'll never have those global winners because we're not helping build that ecosystem right from the ground up.

Rob Vanderhooft (10:16):

Governments have been, I guess, loath to, in a sense, pick winners by doing that, but you're suggesting that targeted incentives, targeted programs are a necessity to move in that direction.

John Ruffolo (10:35):

Abby, our Canadian governments have been loathed to do that. And again, you don't want to pick necessarily individual winners, but you want to play sectoral bets. So as an example, Canada was one of the first movers in AI, and then we had this belief system that, oh yeah, just let the free market determine the winner. Well, there's no such thing as a free market, particularly in these industries that are intellectual property-based. By its very nature, a government contracting authority is determining how much profit you get to keep by virtue of licensing or standard setting or what have you. So you're led to believe that you should not be, as a government, trying to influence winning industries, yet who does that all day long? China and the United States. So they don't want you to do that. And we end up being Boy Scouts about it and trying to remain pristine.

(11:45):

But as my partner, Jim Balsley say, the difference of using the Boy Scout analogy is at least Boy Scouts are prepared.

Vanessa Hui (11:54):

So John, can I ask you if you were to say, do you have any view on the key sectors where Canada must lead to remain independent in the next 50 years? So if you were to pick a sector to invest in and focus on, what would they be?

John Ruffolo (12:12):

Yeah, so I picked seven of them

(12:16):

And there's seven thieves and shockingly, it's aligned to our mavericks investing thesis. I know you're just like, "Wow, I went ." It's sovereignty and control over data, communications, energy resiliency, food security, healthcare security, mobility and transportation and defense, both cyber and physical. We've added a eighth only very recently, and it was in reaction to both the US Genius Act and the national security statement by the United States, and it's the sovereignty over money and the distribution of money. And that has alarmed us literally only a few months ago, which ended up leading us to the Stablecoin Act, but money is going to be the mechanisms in which geopolitics will draw battle lines. And Canada has to be very, very careful where we end up with the distribution of digital money and digital assets as well. So that's my bonus eighth one.

Vanessa Hui (13:34):

So I recently saw on LinkedIn that you reposted one of Build Canada's memos, the Go Memo, where it was signed by more than 30 of Canada's leading builders and operators, a few actually fourth lane clients. And they were arguing that Canada is in a productivity crisis and we are still governing with habits and decision making frameworks from commerce times. The memo calls for actions, not from governments, but from corporations, institutions, and individuals. A lot of our listeners are builders, entrepreneurs and investors. Any advice to them on what they can actually do to impact how decisions are made and actually influence the shift that the BUILD Canada memo's calling for?

John Ruffolo (14:23):

Yeah, Vanessa, this is a very good point. I mean, for your listeners and clients that are entrepreneurs, the entrepreneurs in Canada are the ones who will drive the wealth creation. This is where the focal point is, and this is who needs to leave, lead. God forbid-

Vanessa Hui (14:44):

We don't want them to leave.

John Ruffolo (14:45):

I know. We don't want that. That was a unfortunate slip of the tongue that's getting me very paranoid these days.

(14:51):

And so we cannot ask government or public policymakers to be leading. They need to be identifying where the market is going. And what they really need to be doing is eliminating the friction that's getting in the way. And that friction really ends up in three discrete buckets for the average entrepreneur, access to capital, access to talent, and access to customers and markets. And again, in the old industrial economy, there was more of a leisure fair approach to this, but in the digital economy, because of the nature of intangibles, government has to play an arm by arm role, but it is the entrepreneur that must lead. And the one thing that I do tell entrepreneurs is that the government is not hostile to the objectives of the entrepreneurs, but they need to know. And we need to help government understanding where the markets are going and any friction points that we need removed or eliminated, they need to support that.

(16:12):

And if they don't, then it's up to the public to determine which government can remove those friction points, but it's game on. And our time, we've already probably sat for three decades as the world has changed. And as Mark Carney said, if you're using the same old game rules, it's already over. The game is ruptured. And I think people really need to understand that and not just bury under a rock and hoping it goes away, but being bold and making those changes now, or we're going to be in a deeper hole years from now.

Rob Vanderhooft (16:58):

John, to follow up on that and the access to capital piece, previous government looking to raise capital gains taxes in Canada, a big mistake, as we know, capital's a driver of innovation and productivity. So have we moved much more now, you think towards the center, what do we need to do to improve the access to capital and also to drive foreign direct investment in Canada?

John Ruffolo (17:37):

Yeah. So Rob, this is, for me personally, the biggest area of concern and the one that I hear entrepreneurs complaining the most, Canada does not naturally form capital, maybe with the exception of the province of Alberta, but really we don't, unlike the United States. So the capital that we have here, we need to incentivize it to reinvest in our own borders. Now, whether that means changing the taxation policy to make it even more lucrative, capital gains, rollovers, angel tax credits, things like this expanded capital gains exemption to incentivize you to reinvest. So I think a focus in on the earlier stage investors, in particular, on taxation policy is a must. I was at the front line on the change on the capital gains taxation and I almost lost my mind and I told government, "We already are having a crisis and you're taxing away what we need most." And they really didn't get it.

(18:55):

This government does understand that, but we need to do more. There's also an approach looking at the capital pools that we have. The large capital pools, pension funds, et cetera, there's a reason why they're so large. We used public policy, particularly around taxation to give them an advantage. But for God's sakes, we need that capital too. We're not asking you to make uneconomic decisions. Maybe Canada does need a sovereign wealth fund. The one thing I could tell you, Rob, that's very, very different now. Every country in the world, including the United States, is looking at this issue of sovereignty, everyone. And you know what they're doing? They're making sure that their capital doesn't leak across the border because they need it for their own domestic opportunities. So Canada hoping that oodles of foreign direct investment in the form of capital's going to cross the border, I think is not going to happen either.

(20:01):

So again, this needs to be us thinking about how we need to do it on our own terms. And if we create great opportunities, then capital outside of Canada might find its way in. But right now, it's a real challenge for us.

Vanessa Hui (20:21):

John, curious, you mentioned that you think Alberta's doing a good job at capital formation. Why is that? Can you explain that a bit?

John Ruffolo (20:27):

Yeah, because what Alberta having the lowest taxes and they have the resource revenues is forming capital in excess of the needs of its own citizens, residents in that province. Now, I am sure that if you had somebody from the province of Alberta and mentioning if they didn't have to pay 13 or 17 billion or whatever dollars in transfer payments, you would see that in excess surplus on there. And I am highly sensitive. And I think Canada, I'm from Eastern Canada and I think I am sensitive to that. And can you imagine what would happen to Canada if it wasn't for that excess surplus that's coming from the province, but we can't rely upon that and it's a finite resource, so you can't do that. So we've just been blessed. This is the beautiful thing of Canada. There is no reason other than gross mismanagement for us to be the richest country in the world.

(21:36):

There's no reason. We made a choice and now we're seeing the results of our choices.

Rob Vanderhooft (21:43):

I mean, you bring up Alberta and again, you look at our exports of oil to the US at a discount. We re-import oil in the east at a premium. I know. So we don't have an ability to transport oil across Canada to really take advantage of that differential. And we have very limited ability to export beyond the US. And so with producing no more oil, we could with the right takeaway capacity be in a much better position.

John Ruffolo (22:23):

And then we ended up doing boneheaded moves on natural gas where our allied partners of Germany and then Japan had begged Canada to supply them with natural gas, and we told them both to stuff it. This government has realized that was not the smartest thing to be doing. And by the way, I'm a sustainability guy, and I could tell you the most rapid decrease on GHG emissions. Now, some would argue the methane causes some grief to this, but just generally speaking, the replacement of the coal that's being burned in the world today just by natural gas will have the single greatest reduction in GHG emissions. And by the way, Canada picks up a few nickels and dimes on that. That doesn't like a bad idea. But again, we need to think through this and not just from the extraction. How can we use that advantage?

(23:31):

We heard people saying, "Well, maybe we can power AI compute and in particularly sovereign AI compute." It's like, oh, okay, now we're starting to talk. So now let's keep on layering on. What else can we do? Oh, you know what? Maybe in that sovereign AI compute, well, yeah, those chip sets, the fastest ones are really built upon photonics. Canada is only one of three countries in the world that has great photonics capabilities. The other two being Taiwan and Netherlands. We're not exploiting that. So you keep on breaking down the essential elements and choke points of a supply chain, and then you determine which ones are you going to push the pedal on. That's the sort of strategic nation building I really want us to do. And it all started off from a discussion of oil and natural gas, and we got all the way down into chipsets.That's how I would love for us to think about.

Vanessa Hui (24:33):

John, you often speak about the risk of Canada becoming just a branch plant economy. At Omers Ventures, you were an early investor in Shopify, obviously one of Canada's great global success stories and proof that Canada can build and scale great category leaders. Can you speak about any lessons from that experience that are particularly relevant in today's environment?

John Ruffolo (25:01):

Yeah. So when I formed and built Omers Ventures, the entire thesis was predicated on investing in Canadian-based companies that export globally and operate globally. And Shopify is obviously the poster child, but what actually happened at the time, there were three companies of relatively equal size. It was Shopify, a company called BigCommerce and the other one called Volusion, which I have no idea what happened to it. They were all around, I don't know, 15 million of revenue, and they were all doing the same thing. They wanted to be the anti-Amazon. And Amazon built a walled garden that was not an open system that you basically pay one price and they, in essence, extract all of the economic rents. So you barely make a profit and destroy the retail sector in the interim. But if all of Canadian companies were going to leverage Amazon, it basically left no profitability essentially in Canada and you get this hollowing effect.

(26:24):

So when Shopify came around, what we really said is you can be the anti-Amazon, you could be the open system that as opposed to extract economic rents, you really create a constellation of companies around you so that you really are creating a best of breed solution and enabling those retailers to take control of their own destiny. That was the bet. And frankly, we had said to them, "Well, then let's raise a monstrous amount of money, not because they needed it, but because we wanted to declare Shopify as the winner." And that's what happened. And the interesting thing is it took many years, including right now, people have in the United States, they were surprised to learn that Shopify is a Canadian company, but there's no reason why we can't multiply this. And in those seven, with the bonus eight areas, we are looking for those opportunities.

(27:38):

We invested in Kepler that just launched the first data center in the sky. Now, ironically, it was SpaceX who delivered our payload a few weeks ago, but what is that? It's the anti-Starlink. Starlink is a closed proprietary system that extracts all of the economic rents. Here we go again. Kepler is an open architecture, latest technology using optical networking, i.e. Photonics. You get the message here pulling where does Canada can really play? And then I plug my nose and place a monster bet and that's how you win. But you've got to place your bets wisely because the failure rate in this sovereignty world is extremely high. So choose wisely and the outcomes are disproportionately high if you pick the right winner.

Vanessa Hui (28:44):

Rob, any questions that you're burning to ask on before I ask the last one?

Rob Vanderhooft (28:50):

Yeah. I mean, maybe back to something that I think, John, you've said, or it was Barry Appleton, looking at diversifying trade in Canada, which is great, the direction that we need to go, but do you think we can do it quietly without attracting the attention of the US to the degree that we have so far in trumpeting what we've accomplished?

John Ruffolo (29:24):

Yeah. I mean, trying not to play armchair quarterback because I know it's tough, but Rob, you've done this many, many times. When you're working on a deal, the first thing you try to do is assess who's got the power and the leverage. And if you don't have any leverage, you try to create leverage through different techniques and trying to find your BATNA. As much as we like to think, Canada's leverage is Bo or none. And people don't want to hear that. And we have a bully in the White House right now. It's not the United States, it's the attitude, and we shouldn't take it personally. And what you don't do is when you have someone who's using their heft over you and really doesn't care of what the consequences are, poking them in the eye might not be the best strategy. When I used to play hockey, if somebody got their elbows up in my face, well, you know what?

(30:47):

If that person can't deliver behind that, I will take their teeth out. And it's the same thing. You got to back it up. And then when you poke somebody in the eye, but then you really don't have the power of leverage behind you, it's very, very hollow. It doesn't mean you run away either, but what you have to be careful of is running into the arms of perhaps another bully that's doing something differently. And this is why I say trade diversification is not easy to flip overnight. And yes, we should do it, but geographic proximity plays a massive role. And the biggest market that I think that Canada should focus in on the short to medium term is Canada because we have been delinquent on our own Canadian-based companies. And that was really part of the whole build Canada. Focus in our backyard, make things that the world wants to buy and start on that pathway of diversification.

(32:02):

But in the interim time, we are going to approach the greatest trade relationship agreement that you may not like what's being said about you, but make no mistake. We have 75% of our goods going there today. And the analogy that I use, when customers or suppliers sell to Walmart and Walmart squeezes them and can be a really crappy buyer, okay, then Walmart goes on to the next person and you're not able to maintain the fixed costs of your operation. So you kind of just said, "All right, I'm going to swallow my pride for a while and I'm going to try to find a whole bunch of new customers in the interim." Canada is no different.

Vanessa Hui (32:52):

John, is there anything else, any parting wisdom that you want to leave our listeners, many of whom, as I mentioned, are in very fortunate positions to actually have a voice and create change? Anything that you haven't mentioned that you'd like to say?

John Ruffolo (33:10):

All I would just say is be vocal. Criticizing or adding ideas is not unpatriotic. Shutting up and not saying anything, I think is we all love the country and we all want to see it win because we all believe it can be, but now is not the time to lay low and hope that it might go away because it just won't.

Vanessa Hui (33:41):

And the final question that I ask all of our guests on Fourth Lane Features, is there one lesson that you've learned over your career that continues to guide how you think about your role in Canada now or just really influences the way that you carry yourself?

John Ruffolo (33:59):

Rob, you want to take that one first?

Rob Vanderhooft (34:01):

But I'd probably go back to what you said that you can't just hope things get better. You need to participate, you need to actively have a voice. There's an expectation that others will handle it and there are right people leading governments and businesses that will do the right thing, but they do need to hear the voices. So you need to have that voice and to be able to participate. We've gone through very difficult periods with productivity. People need to understand what needs to happen, where the government needs to be involved in creating the necessary preconditions for improvement. I don't think they'll come to it on their own, so we need to provide those voices.

Vanessa Hui (35:10):

John, actually, question for you.

Rob Vanderhooft (35:13):

Go ahead.

Vanessa Hui (35:14):

Obviously BUILD Canada and Canadian Council of Innovators are great examples of people using their voice. What has been government engagement like? Has there been traction from policymakers? Is the response going as how you would hope or what else can be done?

John Ruffolo (35:33):

Yeah, I would say with this new government, the engagement has been very positive and the reaction has been very positive. And there's been a lot of positive statements going in the right direction, but ultimately it's about action and results and words could end up being hollow at the end of the day. So ultimately we're going to judge based on the results and entrepreneurs and leaders who are allocating capital, you have to put your money where your mouth is. And that's one of the big lessons that I've learned too, is that words are hollow, but actions really speak louder. And there is a lot of folks, whether they're capital allocators that are speaking a good game, and then when you actually look to see how they're allocating, they've gone risk off. And just, "Well, let me just wait till things calm down, et cetera." Well, that's not what we need.

(36:48):

Put your money where your mouth is. Do your work. Don't take dumb risk. But times like this in times of fear and greed is where opportunities really are. And we have moved from a decade and a half of greed to we're commencing probably a decade of fear. And I think the real adults in the room show up and my ask is for those to be bold and show up.

Rob Vanderhooft (37:25):

Maybe Vanessa, I'm going to take another crack at answering that question.

Vanessa Hui (37:29):

Sure.

Rob Vanderhooft (37:31):

One of the things that I've learned over the years and continue to harp on is, don't just bring me problems, but bring me a proposed solution. And to John's point about engaging and having a voice, it's not just about pointing out problems. You're much better shape if you bring solutions.

Vanessa Hui (37:51):

Absolutely. Well, John, thank you for lending your voice to us at Fourth Lane today for our listeners, but more importantly, thank you for being such a bold, positive, courageous, and resilient voice and person in Canada. We are all grateful for you and Canada is definitely better off with having you as such a thoughtful voice for us. Thank you. Thanks,

Rob Vanderhooft (38:20):

John. Thank you

John Ruffolo (38:21):

Very much, Vanessa and Rob. It was a pleasure.