Every founder goes through challenges when building a company, but few have faced simultaneous challenges from incumbents, governments, and investors at the same level as Wind Mobile’s team. Brice Scheschuk, the co-founder and CFO of Wind Mobile before the company’s sale to Shaw Communications, shared the turbulent story of Wind’s founding, near-death moments, and eventual $1.6 billion exit at TechTO’s Economics of Exits events in Toronto.
The core theme of the talk was grit as Scheschuk shared experience after experience of the pressures that entrepreneurs go through when building something new.
Audit, consulting, and meeting Tony Lacavera
Scheschuk began his career in audit and consulting. Entrepreneurship wasn’t even presented as a choice during his four year business degree.
“I cannot remember the word ‘entrepreneur’ being articulated in my four years [at university], which is fundamentally insane,” said Scheschuk.
But in 1998, after four years in the professional services industry, Scheschuk and a couple buddies quit their jobs to start a business on this new thing called the internet. According to Scheschuk, the company was an “internet 1.0 company” that the co-founders took public during the dot com boom. It subsequently “crashed and burned” during the dot com bust.
Then in 2003, Scheschuk met Tony Lacavera, a young entrepreneur with a telecom company, called Globalive Communications, that he founded in 1998. For the next five years, Lacavera and Scheshuk, along with other co-founders, built what would end up becoming the foundation for Wind Mobile. Globalive Communications made about $4,000 in revenue in 1998 when Lacavera started it. By 2007, the company had integrated Yak, a discount long-distance phone carrier, and grew to over $120 million in revenue. The company also won numerous best places to work awards, something Scheschuk is particularly proud of.
Then came the auction.
In 2007, Canada had the highest wireless costs of the developed world and the lowest wireless penetration. This was also the year the iPhone debuted, changing how people interacted with their phones forever.
The Canadian government set aside wireless spectrum – the technology that powers mobile communications – for new businesses and away from incumbents Bell, Telus, and Rogers. The Globalive team wanted to be part of that auction.
Through a lengthy process of searching globally for investors – few Canadian investors had the appetite to take on Bell, Rogers, and Telus, according to Scheschuk – the Globalive team received the funding they needed from Eqyptian billionaire businessman Naguib Sawiris. They spent nearly $450 million at the spectrum auction. And that was just the beginning.
As with any business, once they had the right to operate they needed to set up staff and distribution networks.
Scheschuk said that Wind had a potential deal to distribute in malls and stores through Blacks Photography. Suddenly, Telus announced their acquisition of Blacks Photography. Undaunted, Scheschuk said Wind considered other retailers, such as Radio Shack/The Source. Then Bell announced their acquisition of The Source. Finally, Scheschuk and the Wind team inked a deal with Blockbuster, and they could continue planning.
Then, just as the team was gearing up for launch, the governing body for intercarrier connections (the CRTC) denied Wind Mobile their licenses, stating that the company violated rules about foreign ownership and control. At the time, there was a rule in place that a non-Canadian could not control a Canadian carrier. Despite foreign investors only owning a minority of Wind’s equity, the CRTC felt that Wind had “not met the requirements of the ownership and control regime,” according to its official denial statement. After a long-fought battle lobbying the government on the grounds that they followed all applicable legislation and did not violate any rules, Cabinet overturned the CRTC’s decision.
Finally, Wind was able to operate in Canada and it launched in December 2009 – four months after their target date due to government blocks.
Pivot, grow, pivot
After launch, things were steadily growing for Wind. It introduced the Wind Tab to subsidize phone costs, following a similar tactic played by the Big 3 Telecom companies in Canada. Despite their Eyptian investor selling to a Russian telecom conglomerate, growth continued. When the Canadian government took issue with Russians owning telecom waves in Canada, the company refinanced, a process which Scheschuk said was intense, to say the least.
From 2010 to 2013, the company shifted focus from dealing with fires like distribution networks and governments to building a solid company. Then, in 2014, another spectrum auction came up – this time with massive discounts. Scheschuk said Wind was able to buy $1 billion in spectrum for a fraction the cost due to the closures of other would-be competitors like Mobilicity and Shaw exiting the wireless game.
By 2015, Scheschuk said the company had nearly one million customers and revenues of over $400 million. In March 2016, Shaw completed its $1.6 billion acquisition of Wind Mobile.
Winds of change
Scheschuk is not fearful of telling Wind’s story – even when it means pointing out some of the nastier parts of Canadian business that go against our friendly, inclusive mantra – because he feels that successful entrepreneurs have a duty to share their experiences.
From going to a business program that never said the word ‘entrepreneur’ to building two businesses with over $100 million in revenue – Globalive and Wind – Scheschuk now invests in, and advises, companies as a Managing Partner at Globalive Capital.
Despite his busy schedule and battle-hardened experience, though, he still takes time to help new founders. Why? He believes Canada is due to be “dusted” by other economies that focus on innovation. In order to solve that, people who build information-based businesses must help others create the next generation of information-based businesses. In his view, relying on resource extraction will run Canada right into the ground. But that’s not the fault of workers. For Scheschuk, it’s about the entrepreneurs who don’t give back.
“A core problem we’ve had is not enough of [giving] back from people who have had some success,” said Scheschuk. “As you’re going through your careers, find time to give in the ecosystem… and to the next generation.”