Nuanced. - 3. Camden Hutchison - How To Start a Business

Episode Date: September 14, 2021

Mr. Hutchison is an assistant professor at Peter A. Allard School of Law. He teaches Business Organizations, a course that discusses the formation of a business organization, like sole-proprietorships, partnerships and incorporations. He has a strong understanding of corporate law, legal research and the important differences between business organizations.Camden Hutchison LinkedIn: https://www.linkedin.com/in/camden-hutchison-9918101a/Starting a business? Here are great local resources:Stó:lō Community Futures offers support services for Indigenous owned/controlled businesses within S'ólh Téméxw, the Stó:lō Traditional Territory from Fort Langley to Yale, on both sides of the Fraser River.  Our offers include business counseling, access to loan capital programs, business training workshops, and growth guidance. Visit their website to get started: https://www.stolocf.ca/Community Futures South Fraser serves small business owners and entrepreneurs in Chilliwack and Abbotsford.  They provide basic business advisory services including free one-on-one coaching conversations for small to medium-sized business owners. If you’re wanting to grow your business in a specific way, we have a specialist that can help. Visit their website to get started: https://southfraser.com/Community Futures North Fraser serves small business owners and entrepreneurs in Harrison Hot Springs, Agassiz and Mission. They provide basic business advisory services including free one-on-one coaching conversations for small to medium-sized business owners. If you’re wanting to grow your business in a specific way, we have a specialist that can help. Visit their website to get started: https://northfraser.org/Support the show (https://www.patreon.com/user?u=35374462&fan_landing=true)Send us a textSupport the shownuancedmedia.ca

Camden Hutchison, it is an absolute pleasure to sit down with you. I had you as a professor, but this is sort of the first time we get to sit down and have a long-form conversation. I think that the way you delivered the information really stood out to me and really appealed to me because it's something that I had always thought about businesses and how they function, but your ability to deliver that information made it very motivating for me to want to learn more about it, which is sort of how this podcast came about, because I learned so much in that class that I realized so many people don't have access to this information. And so that's why you're here today is because I think that I'm hoping to get out more information on how to

start a business. So could you give us a brief introduction just for people who don't know who you are? Yeah, sure. My name is Camden Hutchison. I am a professor at the University of British Columbia Law School, which is how we met. I teach primarily in the business law area. So I teach business organizations, which you took with me. I teach corporate transactions. My PhD is actually in history. So my research, we need to focus on my research, but my research kind of combines legal history and business law. And so I, you know, teach kind of legal history seminars from time to time. But my research and my teaching focuses primarily on the business law area. Well, that really just gets us started because we've heard from a few guests prior who have the real world experience. And I think you're able to give us kind of what is the business and how is that, how has that come about over time? So I'm wondering if we could perhaps start there. When was, when did we kind of start thinking of things as separate entities. And how did we get started with this idea of a business being able to function

separately from the individual? Well, the idea of a corporation, right, so the idea of a legal entity that is distinct from the individuals involved in the business. I mean, it's a very, very old concept. We don't need to go into the entire history of it. I think that would make this into a very long podcast episode. But it's something that, you know, comes out of English law, you know, all the way back to the 16th century, there were, there were chartered chair corporations that did business in the English Empire, and that evolved over the centuries in England and in, you know, countries like Canada and the United States that use the English legal system. And, you know, and civil law countries have their, they have their own

equivalent to business corporations as well. But it's something that it's, you know, its roots are historical, but I think the kind of modern-day policy justification for it is, is that corporations and other similar entities, the main thing that they do from a legal standpoint is they provide what's known as limited liability to the individuals who comprise the business, meaning that the business itself is sort of cabined into a separate legal entity, and that legal entity accrues its own debts and liabilities and obligations, which are not the debts and liabilities and obligations of the individuals themselves. The individuals who form the business and invest in the business are sheltered from, say, you know, debts that you might owe to a

creditor or debts you might owe to a tort creditor if you get sued for something, you know, those kind of obligations. And so that protects the individuals who invest in the business from bankruptcy or from, you know, falling into some kind of catastrophic financial loss because their business fails, right? So it gives you, you know, it gives you sort of a cushion of protection if you're starting a business, that, you know, whatever you, whatever capital you invest in the business, right, say you invest $10,000 into a corporation, if the business the corporation fails and the corporation goes bankrupt, you'll lose that $10,000, right? You won't get that back.

That's a sunk cost that you won't be able to get back. But the creditors of the corporation are not going to be able to come after you personally and come after your personal assets, right? And so you have that protection. And I think that the implicit or explicit policy justification for that is that governments want people to take risks and invest in new businesses, invest in new ideas, invest in new technologies. And so we give them that extra level of protection in order to encourage them to start new businesses because, you know, kind of new businesses, new business ideas, new technologies, those are really the primary source of growth in our economy, both historically and also today. That is so valuable. And I think that it's important that we try and make the implicit explicit because that is something growing up in downtown Chilliwack on a very limited income with not great social supports that we're able to tell me these things.

It's very encouraging to know that there are incentive structures built into our government system that allow people to take risks and try and offer something to their community that is of value. And I think that the market does a good job, hopefully, of figuring out which is providing value and which one's not, which is. when you see corporations shut down or declare bankruptcy. Right. I think that's a great point. So in a country like Canada, I mean, we essentially rely on, you know, basically a free market. I mean, it's a highly regulated market system, but it's essentially a free market system where individuals are allowed to make their own choices about whether to start a business,

what business to start, you know, how to invest in a business. You know, most people choose not to start business. Most people just get jobs and kind of, you know, work for other businesses. but the government doesn't really play a primary role in making those decisions or in allocating that capital. And you're exactly right. It's the market that decides what's a good business idea and what's not, right? So if you start a business and, you know, there's a huge market and you're offering a product

or service that people want at an attractive price, you'll do well, right? The market will reward that. If you have a business idea that's maybe not so great, there's not really a market for what you're trying to sell, your price is too high, you're not providing, you know, quality goods or services or whatever, you're going to be punished in the marketplace and you're going to fail, which is not the end of the world, right? Because you have that protection, you know, either in the form of a corporation or a limited partnership or what have you. Absolutely. And so let's just get started a little bit with your educational background. Sure. How did you get started within this

field? Can you walk us through your bachelor's degree, moving into your master's and then attending law school? What was that all like? And did you always have this eye for business or this interest in business? When did that all come about? So my life journey to where I am now as a law professor who teaches business law has been pretty circuitous, I would say. So going back to my university days, so I'm from the United States. I went to university in the United States, and I was a history major, as I alluded to earlier. My background is in history. So I was a history major as an undergraduate, and I did well in school. I was a total nerd. I really loved history. But I was not one of these

people who had a really great sense of what they wanted to do with their life. And I certainly had no particular interest in or desire in going to law school. I didn't know any lawyers or no lawyers in my family. That wasn't really something that was on my radar. I actually kind of assumed that I would pursue a PhD in history after university just because, you know, I did well in the history program, and that's what some of my professors recommended to me. You know, but when I kind of looked into the job market for history professors, if you get a PhD and you want to teach history, it was just, you know, super dire. It was just a really, really bad market at that time.

It's even worse now, by the way. It hasn't gotten better, but it was a really bad market at the time. This was, you know, about 15 years ago. And, you know, I didn't want to invest in getting a PhD and then end up unemployed. Right. And I didn't know what to do. I knew I didn't want to get a real job. I was pretty young at the time. And so I kind of did some research into different career paths. And I saw that, you know, in the United States at least, if you got a good job as a lawyer, I mean, boom, you're making a six-figure salary, like right out the gate. And the likelihood that you're going to end up unemployed, quite low. Right. So that just seemed a lot more attractive to me, even though I didn't really have any interest in any experience in the law. So I just ended up taking the LSAT kind of at the last. last minute. I did okay on that. Went to law school. Again, without any real knowledge of or interest in the law. So, I had, going into law school, right, this is a situation, you know, you were in not too long ago. And I don't, I don't actually know, you know, kind of what your

thoughts about what you wanted to pursue when you went into law school were. But for me, I was just clear this. Like, I had no idea, right? So in my history background, like, a lot of the history I studied was kind of history of economic development, history of international trade, really, like economic history was kind of what I focused on sort of global economic history. So I definitely had an interest in economics and an interest in economic history, even though I didn't really have business experience. And just kind of, you know, I like contracts in my first year. And it was just sort of kind of random. But in my second year, I really, you know, kind of focused on the business courses. And I really liked them. And by my third year,

very sure, like, yeah, I like, you know, corporations, securities, you know, secure transactions, all those kind of courses I really enjoyed. And then I got a job at a big U.S. law firm after law school. And I was very sure I wanted to pursue transactional work. And that's what I did. And I enjoyed it. So that's kind of my practice experience. I actually practiced in the U.S. for about five years. And then, you know, I sort of made a career change. After doing that for a while, I, you know, we can get into that if you'd like to. But to make a long story short, I mean, it was a extremely demanding lifestyle, right, working at a big firm in the U.S. The hours were really bad. The stress was really bad. And I enjoyed it and I was definitely

into it at first. But, you know, as the years went on, it just wasn't really sustainable for me in terms of, you know, kind of personal happiness and satisfaction. And so I, you know, I kind of burn out, to be frank, and I thought, you know, kind of what, you know, what do I want to do with my life? What's my plan B? And then without getting into, you know, sort of too much of the personal details, I actually ended up going back to grad school and getting a PhD in history, right? Which is kind of my original, my original plan after university. Although it wasn't so crazy of a decision. Like all my friends and colleagues thought it was really crazy decision at the time. But it was a calculated risk I took. What I wanted to do is I wanted to get a job as a law professor. And in the United States, in Canada as well, in the United States, it's a big advantage to have both a JD and a PhD and then go on the job market. In Canada, it's a requirement. Like, you just, you have to have a PhD, right? So I didn't want to get a job as a history professor because I knew there were no jobs, especially in my field, which is, you know, sort of history of economic development, history of capitalism, for lack of a better word. And so I wanted to kind of use a PhD in history to get a job as a law professor, which is what I ended up doing. I got my job at UBC. And again, that was also very random.

I had no intention of moving to Canada or getting a job in Canada. It just turned out that when I was on the job market, that was the most attractive opportunity for me for a lot of different reasons. And so, you know, having the PhD allowed me to apply to schools in Canada. And so now I teach business all here. Okay. Well, beautiful British Columbia. What was that transition?

Like, how do you, do you like British Columbia better than the United States? Or like, what has that transition been like? I mean, I really like Vancouver, for sure. You know, it's not perfect. No place is perfect. But yeah, I mean, I really like Vancouver. I really like living in Canada. I certainly have no complaints.

The legal system, as you know, and probably a lot of your listeners know, it's very similar between the two countries. So even though my background, my legal education and my legal training was from the United States, it was very easy to apply that in Canada because it's very similar. I'm not actually qualified to practice law in British Columbia, which is a bit funny since I teach law. But, you know, it was a pretty smooth transition, I would say. Okay. Let's get a little bit into the history of capitalism, because I think that that is what I'm hoping to get out of this podcast is more. of how our system is set up and what are the underlying structures that allow for entrepreneurs to exist, that allow corporations to exist, how did this all come about? And can you give us

some of the Cole's notes from your perspective on the interesting aspect of capitalism as it's developed over time? Well, yeah, I mean, that's a, it's a bit of a loaded subject. And like I said, the kind of the history of the legal structures on which kind of corporate capitalism is are quite old. They really come out of the end. English system. And, you know, in Canada and the United States, right, we inherited our legal system from England, and we, you know, sort of inherited the notion of corporations from England. It's something that developed in Canada, the United States, you know, kind of, you know,

after their legal systems had devolved from England. In the United States, there was quite a bit of development in corporate law in the 19th century, and then into the 20th century as well, also in Canada. And by, I would say, by the, probably the late 1800s, certainly in the United States, most businesses of any significant size would have been organized as corporations, right? So prior to that, you know, when you had, you had smaller businesses, you know, kind of tradespeople doing business on their own account, They would often have no formal business entity. They would just be doing business either by themselves

or if they were doing their business and cooperation with other people in the form of a general partnership, right? Which is a general partnership doesn't really give you the limited liability that corporation does. But there was around the turn of the century, so late 1800s, early 1900s, in both Canada and the United States, there's a really, really explosive growth in kind of large managerial businesses.

and I think that that was really what kind of solidified the corporate form is the sort of go-to for people engaged in significant business. Now, I should say that even today, the most common form of business in both the U.S. and Canada, so the most common kind of organizational form is the sole proprietorship. So most businesses by number in North America are not corporations. They're sole proprietorships, but we're talking about, you know, pretty small businesses, right? So most businesses are small businesses. generally, once a business scales to a certain, you know, fairly limited size, it makes sense to, you know, incorporate or, you know, use a limited liability company, which is an entity that's available in the United States. And then that gives you that limited liability protection. So, you know, businesses where you have, you know, significant revenue, you have employees on payroll. Like, once you get to that stage, you want to incorporate generally. But, you know, there's many, many, many, Small businesses are just sole proprietorships.

They don't have any corporate form. It's basically just the business person just kind of out there, you know, doing business on their own account. And that can make sense for a very small business because then you don't have to worry about the cost and the, you know, the legal technicalities of incorporating your business. But once you get, once you get to a level of business where, you know, you're incurring, you know, any significant amount of debt or like there's any risk someone might sue you or whatever, you probably want to incorporate. It's probably worth the expense to incorporate. Right. Okay, let's break it down then. Can we go through what is a sole proprietorship?

What does that kind of look like in examples? Then move on to partnerships and then corporations and kind of break down the different tax structures that exist. Yeah, yeah, sure, right. So I probably should have explained that a little better. But when I say sole proprietorship, right, so sole proprietorship is not really a legal term. Soul proprietorship is it just means someone doing business as a sole proprietor. So they are the proprietor of their business.

and again, they're just out there doing business, right? So an example, you could imagine, imagine somebody, you know, say starts a podcast, right, and they want to get advertisers or they want to get sponsors or whatever, and they're doing their podcast, you know, they have guests, say they're doing it in their home, whatever, and you just kind of use this as an example. And, you know, they're starting to get revenue, whatever.

Like, any revenue that they get from advertisers from sponsors, that just goes in their bank account, right? Like, they don't have any legal structure. They don't have any legal entity, because it's a very small scale, informal business. And maybe it grows, maybe their podcast is successful, and it grows to the point that they're making a significant amount of money. And at that point, they might want to think about whether it makes sense to incorporate.

But just kind of a small business where, I don't know, you're selling, maybe you're selling something on Etsy or on Amazon or something. You've got some kind of side hustle going on, right? That would be a sole proprietorship. A lot of small businesses, unfortunately, are organized as sole proprietorships. and really shouldn't be, like, they're large enough that they probably should incorporate. But the proprietor, right, doesn't, they're not legally savvy, and they just don't have that knowledge or that legal sophistication to know that they can protect themselves under a corporation, right? So once you reach a certain level where there's any kind of material risk that you might get, you know, you're taking out a loan from the bank, you really don't want to take that on your own name.

Like, it's better to take that out in some kind of corporate names, so you're protected. But, you know, there's a lot of people who don't, they don't know that for whatever reason, right? Like, they're maybe good at managing their business, but they don't have a legal background, and they've never, for whatever reason, I've never thought to retain legal counsel. And, you know, and legal counsel is expensive, right? And so they're doing business as a sole proprietorship, which is very risky. I would not, I would not advise that. The corporate form is, you know, it's an expense.

We can kind of talk about the details of what the expenses are. It's an expense. So it probably does not make sense. sense if you have a very, very small business, or if you have a business where you just don't think there's any risk, you're going to incur any significant liability. Like, you're not taking out debt. It's not the kind of thing where you think people are going to sue you over anything. You're not too worried about that. Then maybe it doesn't make sense to incorporate. But once, you know, once you start taking out loans, once you, you know,

you're buying, say you're buying supplies on credit, right? So now you owe money to, you own money to your suppliers. You know, you've got, I don't know, it's kind of tax issues. Like, you, you know, you might end up owing money to the government for, you know, back taxes or whatever. At that point, it's probably better to incorporate. Right. And how do partnerships play into this? Because one thing that I really took out of the course is that you can end up in a partnership and have no idea that you've done so.

Yeah, so partnerships are, there's actually a few different types of partnerships under Canadian law. So I guess we can talk about the different types to two main types that would be relevant to business people, I think, would be what's known as a general partnership and then what's known as a limited partnership. So a general partnership, you can think, it's a partnership, right? It's like a partnership between business partners. You know, it's a colloquial term as well as a legal term. But a partnership you can think of, a general partnership, it's sort of like a sole proprietorship

that involves multiple people, right? So you're working with multiple people, but you have the same risk and the same unlike, the same unlimited liability as you would have with a sole proprietorship, right? So you're legally exposed in that sense. There's a lot more law around partnerships, I would say, right? So there's something called a Partnership Act in British Columbia that kind of sets out all the rules about how partnerships work and all the kind of responsibilities that partnerships owe to each other

and kind of owe to people that they're doing business with. So there's a more robust body of law around partnerships and there is sole proprietorships. Like, sole proprietorship, there's not really much law about sole proprietorships. It's just like,

you know, it's just like general tort and contract law, right? Like, there's not like law specific to sole proprietorships, really, but partnership law there is.

So there's a partnership act. Um, it's very common for people in a partnership to enter into a agreement that's called a partnership agreement. That's basically a contract among the partners that can kind of customize

the rights and obligations to each other. But the tricky thing about a general partnership, right? So I'm talking about general partnerships now. The tricky thing about a general partnership is it's, in some ways, it's actually kind of worse than a sole proprietorship from a legal exposure standpoint in the sense that

as a general partner, you are liable for any debts or obligations incurred by your partners in the conduct of the business, right? So say you're in some kind of retail business, you have like a, I don't know, like a mom and pop store or whatever, and it's organized, you and your friend do, so it's a friend in a friend store rather than a mom and a pop store. But, you know, it's a general partnership. And then, you know, your partner in the conduct of the business goes out and takes out some huge bank loan or does something, you know, irresponsible or, say, injures somebody in the course of the business, you're on the hook for that, right? It's joint and several liability for

general partnership. So you're 100% on the hook for something that you didn't even do, right? It's something that your partner did. And as you mentioned, you don't have to take any affirmative, like, legal or formal step to form a partnership. Partnership status is just something that the law recognizes when people are doing business together. So you can actually end up in a partnership without intending to, right? So if you go out and you're doing business with someone and you're acting in the way that partners act towards each other, the law will deem that to be a partnership, even if that was not your intent. Right. So you need to be kind of careful about that. You need to be aware of that. And if you're doing a business that involves

business partners, you probably want to talk to a lawyer, right? Whether you want to incorporate or not, it's probably a good idea to talk to a lawyer. So that's a general partnership. General partnerships are pretty risky. A limited partnership is a special kind of partnership. So there's a number of differences between a limited partnership and a general partnership. The main thing is that a limited partnership has two different types of partners. It has what's called a general partner or partners, and then it has limited partners. The general partner, or partners, there can be multiple general partners. The general partner is responsible for managing the business, like they're the ones who actually manage the business, and then they have unlimited liability,

meaning that they're legally exposed. The limited partners are special limited partners who are passive investors who invest in the business, and they get limited liability, right? So they're protected. The only money they could lose is the money that they invest in the partnership. So they put $100 in the partnership, the partnership folds.

They lose their $100, but they're protected from anything else that the partnership would owe. The trade-off is that they're not allowed to take part in the management of the partnership. They have to be sort of silent, passive partners if you know what I mean. And so limited partnerships are very, very common

in lots of different investment vehicles. So like real estate investment is often conducted through limited partnerships, right? So you have like a general partner who's making the investment decisions about like what projects are we getting invested in, blah, blah, blah, blah, blah. And then you have limited partners

who are putting in money to get that return, but they have to be hands off. Like they can't make the investment decisions, right? You know, private equity, often done through limited partnerships, venture capital, often done through limited partnership. So limited partnerships are very common in the investment world, hedge funds, often limited partnerships. But they're not really ideal for a business if the investors want to be actively involved in the business. Because if the investors get actively involved in the business,

then they lose that limited partnership status. Another difference about limited partnerships is that limited partnerships, unlike general partnerships, are creatures of statute. So there's something that, like, general partnerships, even though there's a partnership act, general partnerships are essentially a product of the common law, like they've been around for hundreds of years. It's something that evolved out of English common law. Limited partnerships are provided for by the Partnership Act, and to form a little on a partnership, you have to file a specific registration statement with the BC government. And if you don't do it, you're not a limited partnership. So it's not something you can just kind of accidentally fall into.

the way you can to the partnership. But, you know, that said, if you're doing business and you're making investments and you'll be deemed to be a general partnership. So if you want that limited partnership arrangement, you need to be aware of that. You need to get out in front and make sure you file the paperwork, which is pretty inexpensive. Right. So one aspect that's kind of arisen a few times is this idea of liability and legal liability. And I think that that is where there's this huge disconnect from the entrepreneur who has

this idea of starting this business. They want to help out the community. They want to sell apples or something and they want to bring that to the community. Their mindset regarding liability for these apples or whatever they're selling is so that's not in their mind. So can we talk about what liability looks like, how that impacts entrepreneurs and small business owners and why it matters? Yeah, sure. So when I say liability, I just mean a legal obligation to pay someone else money. That's what I mean by. liability. So we can probably start out by just talking about our personal lives. We all incur liabilities in our personal lives, right? You have a credit card, that's a legal liability. You

take out a loan to buy a car, that's a legal liability. You take out a mortgage to buy a house, that's a legal liability. Student loan debt, that's a legal liability. So we all make these kind of decisions in our daily lives about, you know, should we borrow money, are we going to, you borrow money to go to school, you're investing in your own human capital because you expect there's going to be some kind of positive return on that, right? So you can almost analogize that to a business decision in a way. You know, same thing with, you know, buying, you know, like an asset, like a house or a car or something, right? Those are financial decisions that people make. So we can start there and just, we're all familiar with liability, right? We generally,

in our daily lives, we don't have much risk of getting sued over stuff, right? That's pretty rare. And most of us are not engaged in that kind of activity that would get us sued too much. So we We don't have to worry about tort liability in general, although, who knows, if you do something reckless and you injure somebody, then you have to deal with the tort liability. But for entrepreneurs who are starting a business, there's a lot of different liabilities that they might take on in their business, right? And some of those, you know, might be broader than what they're used to kind of in their daily lives.

So if you start a business and you take out a bank loan to finance the business, like, you know, a $50,000 bank loan to start a business, okay, right, you got to pay the $50,000 back, right? That's a liability you owe. That's pretty simple. But, you know, once you're depending on what your business is, once you're out there in the world doing business, you have to worry about incurring contractual liability and tort liability that you may not be familiar with from your daily life, right? So if you order, for example, a bunch of, I don't know, you have some kind of business

where you're manufacturing something and you order a bunch of parts, right? And then, I don't know, you have some kind of cash flow problem and you can't pay for that order. Well, yeah, too bad. I mean, you still owe that money, right? Same thing, if you take an order from a customer, say you're building some kind of product for a customer, the customer takes the order. Say the customer pays you all the part of the money up front. Something happens and you can't deliver the product. Well, you still owe, you know, a customer can sue you for breach of contract, right?

So that's something you have to think about. also if you're selling if you're selling some kind of some kind of good or even some kind of service I mean it might injure someone it might do damage to somebody someone might be harmed in some way

right like depending on the scale of your business so in the example I gave of like a podcast it's very unlikely you're going to injure someone in the course of like producing a podcast right but if it's some kind of product right I don't know like maybe there's something about it it's dangerous, whatever, and maybe you're just unlucky, you know, and you can't really

control who's going to try to sue you or not, right? So the more customers you have, the more suppliers you have, the more kind of different sort of interactions you're having with the world in your business. And if your business grows, right, you're going to start having a lot of interactions with different people, right? If you have a business and you have significant revenue, you might have thousands of customers, right? So that just kind of increases the risk that there might be some kind of liability. And the corporate form is one of the ways that business people can protect themselves against that.

Right. And so let's get into corporations now. And I think you did a really good job of this in the course of kind of talking about all the different aspects because the term shareholders, these all start to, it's where people start to tune out. And for my partner and I, we were listening to your lectures and going like, this is really interesting.

Like you have, like, my partner who has no interest in going to law school, completely engaged in breaking these systems down and explaining them. So can you talk to us about what corporations look like, how the shareholder structures can look, and some of the benefits that exist within creating a corporation? Yeah. So we've kind of used the word corporation a bunch, and maybe I should have explained it up front.

But what a corporation is essentially, is a corporation is a legal entity that's formed under law that owns a business, essentially, right? Or, you know, has possession of a business. And then that corporation is in turn owned by shareholders. So a corporation, you can think of as sort of like a vehicle that owns a business or the possesses a business. And then the corporation itself kind of issues shares, which are just sort of ownership interest, to one or more shareholders. So for a small business, like an entrepreneur, you can just, you can have a corporation, then you own all the shares. Like you own 100% of the shares, so you just kind of own the corporation.

If you have multiple shareholders and multiple investors, you know, things get more complicated, then you have multiple share. holders. But a share is just, a share is just a legal concept that represents a percentage ownership interest in a corporation, right? So if you own like 10% of the shares of a simple corporation, you own 10% of the corporation, essentially, right? I'm simplifying a little bit. But in terms of like the attributes of a corporation, so the most important attribute of a corporation is that a corporation is legally separate and distinct from its shareholders. That's the most important attribute of a corporation, is that the corporation is, it's what's called a legal person.

So it has its own kind of legally recognized personhood, right? So it's not a person in the sense that it's not like a real human person, and it does not have the same rights as a real human person. But it does have some of the rights of a legal person. And so, for example, it can sue, it can be sued, it can take out debts, it can enter into contracts in its own name. So it can do some of the things that a human person would do in the course of operating a business. And the law refers to that as a legal person. So the corporation is this legal entity that you can think of as sort of a kind of a wall of separation between the individual and the business themselves, right?

The corporation owns the business and then the individual owns the corporation. corporations provide what is known as limited liability, meaning that any debts or obligations incurred in the operation of the business are the debts and liabilities of the corporation, but not the shareholders who own the corporation, right? So the buck stops at the corporation, and the shareholders who own the corporation, they are with very, very, very limited exceptions, not going to be held liable for either the business debt, or the tort obligations of the corporation itself, which is the business, essentially. So that's a really, really important protection that the corporate form provides. And that's kind of the main reason

that people incorporate their businesses, and it's the main advantage of incorporating your business. You also, with the share structure, and we probably don't need to get too deep into the weeds about the legal details of how corporations are structured, but shares themselves, it's like a pretty convenient, representation of ownership interest, right?

So you have shares and say you want to transfer your business to, I don't know, you're getting old and you want to transfer your business to your children or a friend or is going to buy out your business, some outside investor is going to buy out your business, right? Those shares, it's very easy to keep track of who owns the business, right? Because you've got these shares that you can transfer for one person to another, right? It's much simpler than it is with like a partnership, for example. So that's another convenience of the corporation. One potential downside of the corporation is that because the corporation is a separate legal entity, it's a separate person, it pays its own taxes.

So corporations have to pay what is called the corporate income tax, which for small businesses in Canada, it's generally, it's actually not high. It's generally between 9% and 15% for small businesses in Canada, but that's a tax that the corporation has to pay. that's sort of on top of the tax that the shareholders have to pay when the corporation pays out its profits to the shareholder. So say the corporation earns a bunch of profits, it has to pay the corporate income tax on that. Okay, so the profits are kind of at the corporation, right? The shareholders, they want to get that money somehow, right?

And they can generally get it through two ways. They can get it as dividends that the corporation pays out to the shareholders, or they can get it by selling their shares at a profit, and realizing the appreciation on the value of their shares. Those are the two main ways that they can kind of get money out of the corporation. Another way they can get money out of the corporation is by paying themselves a salary. But if they pay themselves a salary, then it's not going to be recognized as the profits of the corporation. So that's kind of a – we could talk about that.

That's kind of a side issue. But to keep it simple, kind of the two main ways that you get money out of a corporation is through dividends or through selling your stock. If the corporation pays you dividends, you have to pay income tax on that dividends. You have to pay ordinary income tax as an individual on that dividends. So the profits were taxed once at the corporate level. They're then taxed again at the individual level, right? So, you know, you're paying tax twice, essentially. Same thing if you sell shares in the corporation under profit, you have to recognize capital gains and pay capital gains tax on that.

So it's taxed when the corporation earns the profit. It's then taxed again when the shareholders sell their share. or get paid a dividend. So that's what's referred to as double taxation, and that's bad, right, because you want to pay less taxes, not more, right? So you don't want to be paying taxes twice. Fortunately, in Canada, Canada has what's known as an integrated corporate tax system, meaning that, and the tax details of this are pretty complicated, so I'm not going to

explain all the details of it. But essentially, in Canada, the Canadian tax system allows shareholders who are receiving dividends, they basically get a credit, they get a tax credit that's approximately equal to the corporate tax that the corporation already paid. So they don't actually have to pay the tax twice, which is good. That's very advantageous for shareholders in Canada. Same thing, if you sell your shares and you're in capital gains, the capital gains rate is generally 50% of what you would pay on ordinary income. So you get that kind of 50% off on the taxes you have to pay, which, again, is advantageous.

So the double taxation issue, even though it exists, from an economic standpoint, it's not a big problem in Canada. The reason I'm sort of harping on this is in the United States. The United States does not have an integrated tax system. So this double taxation issue is much more significant, right, and really affects how much money you're getting out of the business. And so there's a lot of, like, you know, sort of legal planning and legal strategy that people use in the United States to try to get around this double taxation problem, that fortunately

in Canada, you don't need to worry about as much. So there's not really a big tax disadvantage to using a corporation in most circumstances other than the complexity, right? So the complexity of it often, you know, you're going to have to have an accountant, you're going to have a lawyer, right? If you have a corporation that's making any significant amount of it is, and then then things start to get complicated, then things start to get more expensive. But, you know, that means you're making money, right? So it's, you know, if you're making money, you've got to pay taxes on it. You know, you have to kind of pay somebody to help you prepare your taxes. So it's sort of a good problem to have, I suppose. This is in contrast to a sole proprietorship or a partnership.

So a sole proprietorship, because there's no separate legal entity, you're just paying ordinary income taxes on the profits of the business. So if the business earns a profit, that's just attributed to you as income. So whatever your marginal income rate is, right, you just just, you have to pay that. Same thing, interestingly, with a partnership, both a limited and a general partnership, even though limited partnerships are certainly considered separate legal entities, and general partners are, I mean, that's a bit more controversial, but I think we can think of them as sort of separate legal entities.

They do not pay any tax on their own profits. They're what's known as pass-through entities, meaning that they are not recognized by the taxes. They're like invisible to tax law. So any profits that a partnership earns, the partnership doesn't pay tax on. Those profits are just automatically attributed to the individual partners pro rata based on their ownership interest in the partnership. So if there's a partner who has like a 10% ownership interest in the partnership and the partnership earns $100,000 in profits in a year, like $10,000 in income are going to be attributed to them for that tax year. even if the partnership doesn't pay them any cash, right? So you need to be careful because if you have a partnership and it's making a lot of money,

like a lot of paper profits, but it's not distributing out cash to the partners. The partners might get hit with like a giant tax bill and they're like, well, I can't pay this. I don't have any cash, right? So that's something you need to think about in advance. And that can be an issue with partnerships. Okay, so one other aspect that we've talked just briefly about is the idea of taxes. And I think, I don't know if you've heard this, but there's a lot of debate

on we should just tax corporations more. It's so simple. Why don't we just tax them more? And I've seen that on agendas in the news and discussions about it. From your perspective, what are the pieces missing from the conversation when we're talking about taxing these corporations more or less? What should people know? Right.

Okay. Well, that's an interesting question. So obviously the question of how much we should tax corporations or how much we should tax businesses, at the end of the day, that's a political question. Right. So that's a question that, you know, kind of voters in a democratic society are going to have to decide. So I'm not going to sit here and say, like, oh, I think corporations should be taxed more or less. But, you know, I think one thing when you talk about kind of what's missing for the conversation is I think in the popular imagination, particularly when we're talking about like large corporations, right?

When we're talking about, you know, because this is going on in the election right now, right? So, like, for example, like, you know, part of the NDP platform is like, we have to, you know, tax these big tech corporations more, right? And I think that sounds appealing to a lot of people. But I think what's sort of missing from that is a lot of people don't understand that any tax in the corporation pays. If you're increasing the taxes on a corporation, that means that the human individuals who make up the corporation, either as shareholders or as employees or even the customers who buy goods and services in the corporation.

Like the corporation is not, it's not a person. It's not a real thing. Right. So like the corporation is not a person that can pay taxes. So if you, if you increase the rate of taxation on the corporation, there are real human beings who are going to be impacted by that, like either shareholders, employees or customers. People who want higher taxes and say maybe want like a more of a restrictive kind of economic system or they want more, you know, tax justice or whatever. What they want to do is I think is that what they want to do is they want to tax the shareholders, right? Which is, is fair, right? So, you know, shareholders, right, if you look at kind of who own shares and companies, big, you know, big companies, small companies, people who own shares, on average are wealthier than people who don't own shares, right? So maybe it's fair to tax shareholders more. The problem is, if you levy a big tax on a corporation, that money is not necessarily coming out of the shareholders' pockets. Part of it might be coming out of the

shareholders' pockets, but part of it might be coming out of the pockets of workers, right, who work for the corporation. So say you have a corporation and has X amount of profits and it pays Y amount of taxes and then you double the tax rates and now it's paying two Y in taxes. I think that the idea is that that money is going to, that reduction in after tax profits is going to be paid by the shareholders. But maybe, you know, the shareholders have enough kind of economic power in the context of the economy at that moment and in that context, that that money just comes out of the paychecks of the employees, right? So the shareholders are like, we're not going to take, you know,

we're not going to take a reduction in our return. You know, employees, you're going to have to make less money, right? I think at this particular moment in time they're at right now where it seems to be this like a kind of a scarcity of workers, I don't think that that would happen. But certainly in situations where the job market is not, is not kind of as robust as it right now. That could definitely happen, right?

Same thing, like, you know, raise the taxes on a big tech company, you know, like they might just raise their prices to customers to make that up, right? And so then it's the customers who are paying the tax, right? Or in the case of the employees, it's the employees who are paying the tax. And so I don't want to get into the economics of it because I'm not an economist. And there's a lot of disagreement among kind of academic economists as to where is this tax incidence. but I think it's naive to think that 100% of the tax incidence is on shareholders

and my personal view is given kind of the international mobility of capital I think most of it is probably not paid by shareholders it probably is primarily paid or I shouldn't say primarily but most of it is probably paid by employees and customers

so we want to be careful about taxing entities that are not people like if we want to tax people it's probably better to tax the people themselves. That said, you know, tax law is very complicated and it's very difficult to, you know, tax exactly who you're trying to tax. Yeah, I get very worried when we start just having these slang terms of like tax the corporations without any real analysis of what a

corporation is, how it functions, and where the taxation would take place. And so I just appreciate you being able to break that down for people. Right. And I think that you're, and again, I'm not an economist, I don't want to really, I don't want to weigh in hard on the policy debate, because that is a policy debate, but I agree with your intuition that when people are just like, oh, we just need to tax corporations more, they're not thinking about the second order effects that that might have, right? So that might have secondary effects on employees. That might have secondary effects on consumers that we actually don't like.

So we need to be more, you know, kind of thoughtful about what we're doing. Well, and I also think that when people say these terms, they think of Jeff Bezos, Elon Musk, these really, really wealthy people when they think of corporations, they don't necessarily think of their community and the small businesses and small business corporations that exist right in their community and how that would impact them. Yeah, right. So, like, not all, you know, when you hear the word corporation, people are like, oh, my God, these, like, evil giant corporations, well, like, most corporations are pretty small, right?

Most corporations are local businesses, as you said. that said in Canada and in, you know, in lots of countries, I mean, particularly in Canada, the tax code does provide a lot of advantages to small corporations. So, I mean, like... Could you tell us about some of those? Yeah, I mean, I'm not a tax lawyer, so I'll, I don't want to get too over my head. But, I mean, when I said, you know, that the tax rate on corporations in Canada is between, you know, 9 and 15%.

So there is, there's kind of a special tax category for, for privately held small corporations in Canada that pay a lower tax rate. And I can't remember what the, like, what the definite, it's like you can't earn more than $800,000 in revenue. You know, I don't want to, I don't want to say something wrong on Mike. So I would have to double check kind of what the threshold is. But the idea is that, you know, corporations that are of a smaller size, they pay a lower tax rate. And they get lots of other very, very, you know, there's tons and tons and tons of, like, special tax credits that are given.

Like, actually, if you really dig into this, I mean, it's, I mean, it's, frankly, a lot of it is, like, pretty questionable. But there's, like, a lot of small businesses that get specifically subsidized through the Canadian tax system. So it's like, oh, you do, like, you know, like, you know, mining companies get special tax subsidies. tech companies get special tax subsidies. There's lots of specific industries that get lower tax rates, they get tax subsidies. And in general, it's the smaller businesses that get the more favorable treatment. Right.

So the other part I wanted to ask about is the idea of shareholders because I was watching and the show explained on Netflix. I don't know if you've heard of it. But the idea is they break things down in about 20, minutes and one of them is on the idea of money and billionaires. And they talked about how there's been this real focus. Originally, I guess, in like the 1950s, there was this more holistic approach to a business. It would try and support the workers. It would try and support the community. It was very broad-based and trying to do everything it can to, I think in the 1960s, there was this guy who

came forward and basically said the whole goal is to support the shareholders. And the only focus should be the shareholders. And so I'm wondering if you can elaborate on what that means for our society and how that does impact shareholders and our communities. Yeah, I mean, that's a huge question. So I haven't seen the show, but the general narrative that you just described, I mean, is at least somewhat accurate. I mean, I think it's true that, say, if you look at the United States, like in the 1950s

and 1960s, corporations were often managed. with kind of a philosophy that the business should be managed for the benefit of not only the shareholders, but also the employees, like also community interest, right? We got to provide, you know, good jobs in this community, right? We have to have, you know, like, kind of low prices for customers. So there was, like, kind of a more holistic attitude about how corporations were managed. And I think that was a function of the discretion that corporate managers had at that time. So corporate managers had kind of more discretion to do whatever they wanted in managing the corporation. And so they would often kind of appeal to these ideas that the corporation should not just benefit its shareholders. It should benefit, you know, kind of society more broadly. And that was a pretty, pretty popular idea. And I think there's historical truth to the idea that that was a more widespread concept at this time. I think you also have to take that with a grain of salt. I think a lot of managers of big businesses said that, you know, sort of making management decisions that kind of

protected their own interest were in the benefit of all these other interests, right? So there's a little bit of cynicism about it, I think, right? Like people would say, like, oh, you know, I should be the CEO forever because that'll protect, you know, employees. And it's, you know, so like, you know, we need to have a legal system that would prevent me from ever being, you know, like dethroned to CEO or, you know, I'm simplifying a bit. And it's kind of like, oh, okay, maybe, but also like there's clearly some self-interest involved, right? So I think it's important to be clear-eyed about that.

And I don't know that the individual, I'm not sure who they're referring to, what specific individual came forward is maybe they're talking about Milton Friedmer or something. Yes, it was. Oh, okay, Melton Friedman was like, he was a very famous economist. And he, I think, is probably the most famous proponent of this idea of shareholder wealth maximization. He was a very famous economist, and he was a prominent public figure. He wrote popular articles all the time. He was on TV. But it was actually like, this was like a very broad, it wasn't just him, right?

It was like a very kind of broad message that was coming out of the economics profession and out of business schools. And that argument has essentially, I would say, that argument pretty much won the day in the 1980s and the 1990s. Corporate governance changed a lot. there were legal reforms. I think there were cultural reforms in the business world where more and more CEOs of big businesses who used to think of themselves

as sort of the overlords of these business empires that provided benefits to all of these different interest groups. That kind of fell by the wayside. And I think CEOs of big companies today, and this is maybe starting to change a little bit in the very, in kind of the last few years, But I would say certainly in the 1980s, 1990, you know, over the last, you know, 10, 20 years have really thought of their primary responsibility as maximizing shareholder return.

How does that impact us? How does that impact us? Well, I mean, the stock market's gone way up. So if you own shares, it's good for you in that sense. You know, that is a huge policy question. there are a lot of people have argued that this this sort of shift in philosophy from kind of a more community-oriented understanding the corporation to a more shareholder-focused understanding the corporation. A lot of people have argued that's been a negative for society, right? That corporations, they just focus on shareholders and shareholder greed.

They're just chasing returns. They don't care about workers. They don't care about customers. They don't care about the environment. they don't care about being responsible. And they're not investing for the long term, right? They're not investing enough. They're not making enough capital investments to invest in, like, new production technologies,

for example, that it's kind of a short-sighted attitude. That's, you know, that's kind of one side of the argument. A lot of other people have made the exact opposite argument and said that, like, kind of focusing on shareholder returns has actually really kind of clarified the purpose of corporations and really increase their efficiency. And they're better run than they used to be because the managers are much more focused on the bottom line, which at the end of the day is kind of like

the most important metric of whether or not a business is successful. So they're like become hyper-focused on really maximizing profits, which go to shareholders. And that's actually resulted in better companies, better technologies, you know, more growth. Right. So those are kind of the two sides of the argument, and there's political dimensions to the argument as well. I mean, I'm personally, I am more sympathetic to the idea that this has been a positive development that kind of focusing on shareholders has actually improved the efficiency of corporations, that, you know, it's improved their effectiveness at delivering the kind of economic growth that benefits everyone. But it's a, I don't want to weigh in it. It's a very loaded question, right? And there's a lot of political debates about it. And I would say that there's strong arguments on either side is probably the best way to put it. Fair enough.

And I think I'd like to tie this in with the, it feels like that idea of being community-oriented has kind of had a rebirth. And I'm a little bit worried about it. This idea of Tom's giving away shoes sounds like a good thing. Most corporations are all about green initiatives now, about certain social causes that everybody can get behind. And so it's not really questioned. but I get concerned that they're using it more just as maybe it's the cynic in me just to sell their products rather than actually looking for the genuine good. And so I'm wondering if you could touch on that.

Are you seeing a growth in this from your perspective? Yeah, yeah, definitely. So in the corporate world, in the business law world, in the world of corporate governance, absolutely. There's been a major shift rhetorically, at least, towards corporate social responsibility for lack of a better term. So this idea that corporations should be more socially responsible. They should be more responsive to the needs of the communities in which they exist.

That's absolutely a thing that's happened. We see it everywhere, right? Corporations very actively market themselves in terms of, you know, kind of, you know, what they're doing to help the environment, you know, what they're doing to help the country that they're based in, help the economy, help workers, help disadvantaged members of the community. You know, the environment in particular, I think, really kind of stands out as something the corporations are focused. Issues of social justice, right? You know, like, you know, Nike, you know, hiring like Colin Kaepernick as a, as like a spokesperson, right?

Like kind of, you know, really positioning, like kind of taking sides in sort of social justice debates. Despite the fact that they were caught using labor, like child labor, right? Yeah, yeah. And so it's, so it's complex. It's complex. But there's definitely been a kind of shift in the rhetoric of how corporations position themselves, how they place themselves. One of my colleagues at UBC, Joel Back, and he wrote the book and made the film The Corporation, and then they just came out with the sequel to that. And it really kind of focuses on this issue of corporations positioning themselves as this kind of benevolent factor in society.

And I think your cynicism about it is well-placed. I think that corporations do that. It's a calculated decision that they make because they think it will earn them more money. They want customers to feel good about them. They want government regulators to take a soft, you know, they say like if BP or Exxon is out there, you know, talking up like how they're protecting the environment or whatever, then like maybe, you know, we're not going to crack down on fossil fuels as much, right? So it's, you know, if Nike is saying, you know, we really support, you know, social justice causes, then maybe they're going to sell more shoes, right? And I think that that, I think the Nike example is particularly interesting, I think, because Nike has, has, you know, through its advertising campaigns and, like, spokespeople at tired, it's really positioned itself as kind of like, you know, we're woke. We're on the kind of the social justice side of things, which I think is calculated to increase their profits, frankly. I think it's something that they do. I'm, you know, and the management, you know, they may sincerely believe that as well. But if they thought it was going to lose money, they wouldn't do it, you know. But it's interesting because it's a calculated risk, right? So this was more of an issue in the the United States where I think just like racial politics have been really fraud around Black Lives

Matter and stuff like that. But that alienated a lot of customers, right? So it's not like, it's not like a no-brainer. Like if we come out in supporting Black Lives Matter, like everyone's going to love that. No, a lot of people hate that. Right. So it's like not only you winning some customers, you're maybe alienating other customers, right? And so Nike is a super successful, super profitable, sophisticated company. And I think that's a really interesting case where they probably made a call. They're like, are we going to, is this going to help us more than it's going to hurt us? And they took kind of a bold stance, you know, and I think it was the right stance to take. But I mean, I think that they took up for business reasons. So I think we should be

cynical. I mean, I don't think corporations do things out of the bottom of their heart. I mean, that, again, corporations are not people. Like, they're made up of people. So it may be that it's certainly sometimes, it's certainly true that corporations do, you know, do, you know, like the quote unquote right thing because that's what the the people who run the business actually believe right there's that definitely happens i think most the time it's it's more of a business decision you're making which is not which that that's not like a bad thing though right like if if corporations are out trying to advance social justice or they're trying to help the environment because they think that that's going to improve their bottom line so what like i don't care

why they're doing you know what i mean like if they're doing something that's that's beneficial then that's good i think the the thing we need to be worried about is that is that some of this is just phony that like they're just set like you can put out an ad and say like oh we do so much to protect the environment like and then everyone's like oh wow they do like

and then you look at the details and it's like no you're just saying that right so I think that's what we want to be cynical about um you know personally that's not something I care about to I mean I don't want to sound like a jerk but like when I'm when I'm out making market decisions about like oh what am I going to buy like I don't

really, I'm like, is this a product I like at an attractive price? That's kind of where I'm thinking, I'm not really worried about, like, you know, I don't know, the politics behind a commercial I saw or something. Like, it's just, you know, so that's not something I, I worry about too much, but, you know, some people do. And so that's the, that's the reason that corporations kind of, you know, make these decisions, I think. I guess that worries me because it feels like, and this might be another pessimistic statement, it feels like my generation is eating this kind of hookline and sinker. I have a lot of friends who identify that they deeply care about the environment,

and then they're making a lot of their decisions around, oh, well, this bottle of Clorox says that they care about the environment, so I can buy this and be confident that I do care about the environment, and it feels like it's after the fact that they're not sitting down and going, what issues are genuine to me, what am I worried about in my community, how can I be a better steward for my community? They're at the grocery store, and someone tells, them if you buy my product, you care about the environment. And then they're taking that

purchase and saying, well, I care about the environment. I bought this product. And it happening after the fact, I guess, worries me in that it feels like we're in this really difficult polarizing political time. And people are making decisions not based on the critical thinking of an issue, but because they bought a product that gave them some sort of token saying, look at how caring I am. Yeah. I mean, I think that that's, I mean, that's a, That's a fair point. That's one of the reasons, like, I don't, so like the, you know, the examples you're giving, assuming somebody goes and they make purchasing decisions based on, you know, an ad they saw saying,

like, oh, our product's sustainable or whatever. It's like, I, you know, I don't give those kind of ads too much stock because, like, we don't know. And, like, we're very, you know, as consumers, we're very limited in, you know, our ability to receive and process information. Like, nobody really has the time to, like, dig in, like, no, it's like, you got a life to live. You can't super, you know, investigate, like, oh, is this product environmentally sustainable or not, which is why I just, you know, I just discount those kind of statements from businesses. I'm just like, all right, whatever. Like, if you read in the news from some independent third source, they're like, oh, this business is like super not sustainable or like this business is actually really good. You know, then that's, that's fine. But, like, in terms of the marketing that's coming from the companies themselves, I think what you're describing is effective marketing, right? So it's like companies are sophisticated in, you know,

manipulating people to buy their their products. And I don't mean manipulate, I don't mean manipulating in a bad way necessarily. I just mean like a literal way, right? That's kind of the purpose of marketing. I guess my fear is now that like it used to be you read a newspaper and maybe you were manipulated by the newspaper, but now you can be manipulated at all times. If you're on your phone, then you're on your laptop. You're always getting ads. There's ads everywhere you go. And so it's becoming perhaps more so. Do you have any thoughts on that? I would just, yeah. I mean, my thoughts is just like ignore. ads. I don't know. Like if you need to

do your own research, I wouldn't don't pay attention to ads. But I mean, I think we're kind of getting into a broader subject, but I think you when you kind of identify the problems facing your generation and, you know, my generation as well, you know, facing everybody. It's like we are, you know,

we kind of live in you know, this very, very complex capitalist system and there's a lot of issues facing us like the environment, you know, for one, you know, like climate change, And like, we all, we all want to do something, right? We all want to do something to help.

And I think it's, it's very easy to sort of do, like, very low-cost things and then feel good about yourself, but have, like, no, no impact on, you know, like, if you buy this versus that, like, this is not, I mean, even if you buy, like, a Prius versus a, like, it's just not, that's just not, that's just not going to have a huge impact on, on, on, like, climate change. Well, I mean, yeah, but I was going to say if you buy a Prius, you know, you should buy a Prius rather than a pickup truck if you care about, if you care about climate. But, you know, like, sort of like if you, like say you buy a Prius, right, or you buy, I don't know, like the Chlorox that's sustainable or whatever, but then you, you know, you fly in a plane to Hawaii or whatever. Well, you just completely negate, you know, so it's just like we sort of want to do things that are easy that make us feel good, but don't really address the problem in any real way. And it's tough. I mean, we don't need to get into the climate change issue, but that's like a super, super, super hard issue. I think it's harder than a lot of people think.

I mean, it's just like a really, really, really hard issue. It's one of the biggest issues facing us as a species. I don't disagree. So I'm also interested to kind of wrap up this conversation on corporations. We've talked a little bit about the incentive structures that exist. I'm interested to know what those incentive structures are and why we need entrepreneurs? Why do we need businesses at all?

How did that kind of come about? And why should people consider starting a business if they're able to and interested? Yeah, so I think entrepreneurship broadly conceived, right? So like when we hear the word, like entrepreneurs become kind of a trendy word in our society. So when we hear the word entrepreneur, you know, we think about, oh, somebody like starting a tech business or whatever.

I mean, entrepreneurship is just kind of like anyone starting any kind of business or really any kind of organization that's offering something new, right? So entrepreneurship, and lots of the biggest companies in our society today were founded by entrepreneurs, right? Entrepreneurship is really, really, really important to economic growth because what entrepreneurs do is they introduce a new, and generally, if they're successful, a superior and more efficient way of doing something, right? And it doesn't have to be something that's like obviously world change.

It can be a small thing. Like, oh, I just figured out a somewhat better way to do, I don't know, this like fairly banal thing, right? It doesn't have to be a complete game changer because there's a lot of entrepreneurs out there, right? But like our kind of economic model of growth is basically based on people, you know, people like you and me, individuals who have an idea of a better way of doing something, right? And, you know, in our free market economic system, if you have an idea for a better way of doing something, you can often make a profit off that. that. You can introduce in the market. If you have a superior way of doing something, you have a superior good to sell, a superior service to offer, or you can maybe offer an equivalent good or service at a lower price because you have a better, you know, have some kind of better

process for providing it. People are going to pay you for that, right? So you'll be rewarded in the marketplace. So, you know, kind of one of the, you know, kind of good things about capitalism or about the market system is that it rewards people for introducing these new innovations. And these innovations over time, whether they're big or they're small, are really, really kind of responsible for almost all of the economic growth that we've experienced in global society over the last, you know, the last two or three hundred years, right? So like, kind of the life that we lead today in terms of our material prosperity is just, it's just a world of difference from, you know, the experience that people had a few hundred years ago.

Like, in terms of just, like, our health, our nutrition, our lifespans, our access to leisure, our access to education. You know, you can even talk about, you know, kind of political things, like women's rights and stuff like that. Like, it's just completely our lives today are just unrecognizable from the perspective of people, you know, even like 200 years ago, right? And that's really due to kind of a market system that rewards people for bringing in these these technological innovations really right like technology is a broad term it doesn't just

mean oh like you know some really sophisticated you know computer application or so like like technology can be like technology just means a better way of doing something right a more efficient way of doing something so um you know and you know frankly like the harnessing of fossil fuels like figuring how to do that i mean it's just been like a you know huge huge huge positive uh for for human welfare, right? It has this unfortunate side effect that's now catching up with us and that, you know, carbon emissions are, you know, creating climate change. So we're going to have to, like, kind of get off fossil fuels at some point in the future. But, you know, like, you know, computers, the internet, like all these things. Like, it's just, we have such a rich access to,

you know, to entertainment, to information, to medicines, to, to, to nutrition. And, like, all of that is just sort of this, it's due to this kind of cascading effect of all these entrepreneurs. So like anytime somebody starts a business, well, I mean, most small businesses fail. So like most businesses fail, right? But the small business that are successful, they actually do contribute to our welfare as a society in a small way. And sometimes there's a big way.

That is really encouraging. And I hope people listening are encouraged to start that because, as I said, I think that it's so great to hear that when you think of how scared most entrepreneurs are when they're starting out, that it's an important aspect of how we got here to our society. And I'd like to move into a little bit about your history background, because it's very upsetting to me to hear that there is no careers there, because I'm sure most listeners know, those who don't know history are doomed to repeat it. And so the idea that history is not a currency in our economic system right now is very concerning. So can you elaborate more on this development of

capitalism, how it differs from other structures, like perhaps communism, and what your thoughts are on this capitalist system. It sounds like you're a proponent of it based on the fact that we have this immense wealth and we are much healthier and better off today. But could you give us your thoughts? Yeah, I mean, I guess I am a defender of capitalism. I didn't come out on this podcast to deliver, you know, like an apologia for capitalism or anything, but I mean, since you've invited me to do so, I mean, I do think if you kind of look

at the history objectively, you know, the kind of the development of industrial capitalism, which really, you know, kind of started in England in the 1700s and is now, you know, kind of spread across the world. I mean, if you just kind of look at just very, very objective metrics of human welfare is like clearly been one of the most positive developments in the history of these human species, right? I think that that's, in my personal opinion, I don't think that can be debated, although many, many people debate it. You know, what are alternative systems of governance. I mean, I think, you know, Marxist-style socialism is one major alternative.

So that's, you know, basically you have an industrial economy, but rather than having the market make economic decisions, you have a centralized authority making economic decisions. And I think, you know, the historical record of Marxist style socialist, so like communism, essentially, I think is, again, it can't be depated. cannot be debated that it's, it's, you know, just been a catastrophic failure in the countries in which has been attempted, so namely the Soviet Union in China. It doesn't seem to be able to generate sustainable economic growth. I think that the communist countries like Russia and China

were able to industrialize, they were able to kind of copy the industrial innovations that already occurred in capitalist countries, and so they experienced economic growth based on that. But it doesn't seem like communism offers the incentives that you, need to sort of develop dynamic economic growth, right? And so the Soviet Union collapsed economically, and China has shifted away from that style of communism is really kind of embraced markets, even though it's under an authoritarian framework. And then I think, you know, if you just sort of think about kind of issues of basic issues of freedom, I mean, I think like one of the, one of the kind of attractions of a free market system is it's based on people doing kind of whatever

they want and having to convince other people to cooperate with them, right? So if you want to make money by selling some kind of product, you can't force people to buy your product, right? You have to get them to cooperate with you. You have to offer them something that they're willing to offer, you know, you some equivalent amount of money in exchange, right? So if your product is no good, you're not going to be able to convince anyone to buy it. Same thing, like you can't convince someone to work for your business if you're not willing to pay them a wage that they're willing to upset, but you have to reach some kind of cooperative bargain. And, you know, kind of in communist-style economies where the government is making all the

centralized decisions, there's no room for anyone to make those kind of individual economic decisions. And in fact, the government kind of has to prevent them for making those decisions for the system to work. And the, in my mind, inevitable kind of result of that is, you know, kind of massive violent coercion, right? You know, the experience of the Soviet Union and of China and then, you know, to other countries to a lesser extent, like, you know, Cuba and places like that, is it's like the, you know, the government has to keep people in line at the barrel of a gun, right? And if anyone

dissents, they're, you know, thrown in prison or they're killed or something. So I think that we've, I think that most of us have learned that that's probably not a good road to go down. I mean, what are other alternatives to capitalism? I don't know. I mean, a lot of people talk about Socialism is kind of a mix between sort of markets and then, you know, government redistribution and social programs. So if we use socialism to mean just kind of like a mixed economy, then basically all countries in the world are socialist, like including, you know, the United States, including Canada.

And I think that that's, you know, that's fine. I think that, like, it's pretty clear that we should probably organize our economies around markets. I would argue that as a historian. I mean, that seems pretty clear to me. But to what extent are we going to provide social programs? To what extent are we going to tax people? To what extent are we going to take money from the wealthy and give it to the poor? Those are all political decisions that I think any society is free to debate and they can make their own choices on. Right. So, you know, you look at the United States. The United States is kind of the stereotype of like a really kind of capitalist free market economy. And Canada is pretty close to that, frankly.

And that's the decision that, you know, kind of Americans have made through their political system. You can look at, you know, Scandinavian countries, which are sort of more of a quote-unquote socialist system in the sense that they have more robust social programs. I would argue that those are fundamentally market-oriented countries that just kind of have more robust social programs. And that's, you know, that's great. If that's what the people living in that society want, that's fine. But I think it does seem like there's not really a viable alternative. to organizing our economy around markets, at least not, I mean, maybe in some kind of science fiction future, where we're living in a post-scarcity economy and, you know, there's no opportunity

cost to providing anyone with anything, then that might be a different situation. But in the real world that we exist in now, where there's immense scarcity, right? It seems like letting markets make those decisions is probably better than having a centralized government authority to it. Right. I'm hoping we can also talk a little bit about Canadian. corporations that you're aware of because I think we had some really interesting discussions of like Canadian Tire and these larger corporations that exist in Canada and how they impact our communities and our society more broadly across Canada. Yeah.

I mean, so Canada is, you know, similar to the United States, Canada is basically a market-oriented economy. I think, I'll just say this is an American. I think in the United States, a lot of Americans have this weird stereotype that Canada is somehow like a socialist country or something. And I think a lot of Canadians have a weird stereotype that, like, the U.S. is, like, super crazy capitalists. The reality is, like, the political economic structures of the two countries are very similar. Like, they're really close.

Like, you can kind of have, like, Canada and the U.S., maybe, like, over here kind of on the right, and then, like, maybe Europe is kind of to the left of that. But, like, Canada is, like, way closer to the U.S. than it is to Europe, if that makes any sense. Yeah, so corporations play a big role in the Canadian economy. The government does as well. I think, you know, one of the interesting features of the Canadian economy, which I think I might have mentioned in our business organizations course, is that the Canadian economy, when you look at the really big corporations, like a Canadian tire, for example, or a Rogers or, you know, these kind of big companies, is that a lot of big companies in Canada are family controlled, meaning they're kind of controlled by the descendants, the kind of the family members. of the entrepreneur who originally formed the company, which is not true in the United States. There's not a lot of big publicly traded corporations in the United States that are family controlled. You do have some big tech companies that are controlled, you know, kind of by the

entrepreneur, right? So, like, if you look at like a Facebook or something, like Mark Zuckerberg retains a lot of, you know, through the share structure of the corporation, he retains a lot of control over Facebook. So you see that in the tech industry in the United States, but The U.S. model is really that big public corporations, their shareholding is very, very widely distributed, meaning that there's like just, you know, hundreds of thousands, if not millions of shareholders, and like none of them really have like a sufficient kind of control block to call the shots, right? It's like, you know, very, very, very widely held. And that that is changed. Like, so corporate ownership is actually becoming more concentrated in the United States, but just to put it sort of stereotypically, that's kind of the American model. Whereas in Canada, you have a lot of publicly traded companies that are dominated by a family shareholder group, either because they own most of the shares or because they own a minority of the shares, but they have like a weird, you know, unequal voting structure so that they're able to maintain voting control, even though they only own like 5% or 10% of the shares.

And I don't, I'd have to kind of revisit some of my research notes to give a good explanation as to why that is. but that is kind of an interesting feature of if you look at like oh what are the biggest companies in Canada a surprisingly large percentage of them are owned you know by it's like oh it's the grandchildren of like the guy who formed the company and then the public investors in those companies are sort of like along for the ride like they don't they don't really have control yeah that is really interesting and I think it kind of just reflects that community orientation but I also think that for so many families average people they're like a family owns this? Like, that was mind-boggling

to me to even consider, like, what does that mean that, like, my family doesn't own a part of Canadian Tire? Like, it's just such a different perspective to consider owning a business or owning property. These differences for people can be so monumental. And I think it's just interesting

to learn about those things. Right. So, these are, like, billionaire families, right? So these are not families like your family or like my family. But, but, you know, but, like, what I think the what's interesting is that all all of these big businesses, right? So if, like, if you look at the kind of the family dynasty type, type companies in Canada,

you know, like a Rogers Telecom or, you know, like these kind of companies that are owned by a family group, they were generally started by entrepreneurs, right? They started out as very small businesses. And if you look at the United States, you look at like, oh, who are, like, the biggest kind of business people in the United States? and it's like, oh, Jeff Bezos or Elon Musk or Bill Gates or people like this, right? Those people, I mean, they're billion. They're like the richest people in the world today, but they all started out as entrepreneurs creating small businesses.

That's so important that people think about that. All the years of not having that financial success, of not being rich. Like I saw a photo of Jeff Bezos with like Amazon.com with like a white sheet from like his bedroom or something put up on the wall. And it's like, that's where. he started. He was not a billionaire when he was working on the idea. It took him years to get there. Same with

Elon Musk and getting Tesla. People laughed at them when they were starting these ideas. And I think it's important that we remind ourselves that entrepreneurs just start out with an idea. Right. And a lot of, you know, like if you look at the United States, a lot of these entrepreneurs, like it's they, you know, a lot of them did have certain advantages, right, given their social economic

background or what have you. It's not like, you know, it's rarely like a total rags to riches type story. But it's important to keep in mind that they were not always billionaires, right? and they were starting out, you know, with very risky projects and kind of, you know, putting it all in the line for a business idea. And really, if you look around the world, and this is not a podcast on like, you know, how to get rich or whatever, but like if you look around the world, like almost all of the richest people in the world started their own

businesses, right? Like that is how, like, if you want to get super, super, super rich, that's how you do it. It's like start your own business. And you probably won't get super rich. But, you know, it's like, but, you know, it's a lottery, right? Like, it's like, you know, It's a one of a thousand people get rich starting a business, but that's how you do it, right? You're not going to get rich being a lawyer, right? You're not going to get rich, you know, being a dentist or whatever. It's by starting a business. And that's, you know, if you look at people like, you know, like Bezos or Elon Musk, and you kind of look at their, you know, and these people, they certainly have their detractors, but I guess I'll defend them on this podcast.

If you kind of look at what they've done with their lives, like these are really, really exceptional people, like exceptionally driven. exceptionally you know positive thinking forward thinking like committed you know to an idea and really you know

sort of willing to um willing to commit themselves to long term projects in a way that like you know a lot of people wouldn't like you know like I think Elon Musk who again is like you know I think a controversial character

for a lot of reasons but you look at in like kind of the businesses he's formed and how he's operated I mean I think you have to give him credit, right? He really has, you're right about Tesla. People were like, you know, no, electric cars that'll never work. And I don't think, you know, I don't think anyone coming out of the traditional automotive industry could have ever created Tesla, right? Like, he came in as an outsider of the industry, somebody who has weird, creative ideas, and is like committed to executing on them.

And I just don't think the traditional automotive industry would have ever created something like Tesla. He really was a disruptor, right, to use a cliché term. And now all of the major automotive companies, they're all copying, they're all trying to achieve what Tesla achieved. Like, everybody is, you know, kind of using the technological breakthroughs that Tesla demonstrated were possible. They're all kind of trying to copy Tesla's, you know, all of the big European manufacturers, the big U.S. manufacturers, they're all now following Tesla, right? And, you know, there's like, you know, stories about Elon Musk, like, you know, sleeping in the factory. for days, you know, just like, you know, completely, like, sacrificing his personal life.

And I don't know, I'm not saying that that's healthier that anyone should do that. But it's like, it's not just luck. Like, these people didn't just, it's not like an accident that these people have been successful. Like, they're really, you know, really motivated people. Well, and I think that to that point, I think it's important that entrepreneurs not get discouraged because if you had have sat down with any of those big corporations like GM or anything like that, they would have said there's no way that there's ever going to be another car manufacturer be able to come up and compete with us.

And I think that that's what Elon Musk was told multiple times is there's no way this industry is locked in, the Ford's, the big companies, they're here, and you can't compete. Right. Like, you can't have a startup manufacturing cars. Like, everyone's like, that just doesn't make any sense, right? And I think that there's, you know, there's kind of a bigger lesson here, right? That, you know, we can't, you know, whatever you think of entrepreneurs or whatever you think of these kind of very successful, you know, billionaire type people.

I mean, I think that there is kind of an inspirational lesson that you can draw from their stories that is applicable beyond the business world, right? So, like, most people are never going to try to start a business, and, you know, most people who start businesses don't succeed. But I think, you know, everyone, no matter who you are, no matter what your background is, no matter what your goals are in life, right? Like, everyone, I think, could use positive encouragement, right? Because I think no matter who you are, there's always, always, always, always people telling you, you can't do this. It's too hard. You know, the odds are stacked against you. You know, don't even bother. That's dumb. You know, just like, or people are like, you know, it's the system's not fair. You'll never succeed. Or like, you're not the kind of person who would achieve this, right? And I think that that is just that, that kind of thinking and that kind of discourse is just very pervasive in our society, I think. And it's just incredibly disembate.

empowering, I think. I think that people, no matter what you want to do, I think that people have more, more freedom and more potential and more ability to achieve their goals than they realize. I think that's true of almost everyone. And at the end of the day, for whatever reason, people just don't take that risk, right? They don't do what they really want to do because, I don't know, like they think it would be hard or because someone told them, oh, you'll never succeed in doing this, right? And they don't take that risk. And I think it's really important in our lives that we really kind of identify like what do we want to achieve and we just do it. Like if you're like really, really committed and you don't take no for an answer and you just, you know, work hard.

I mean, I don't want to sound like too corny about this. But I think that there's there's much more latitude in our lives to do the unexpected than we think, right? That's something I think everybody struggles with is people like tell you like, oh, no, you can't do this. you can't do that. And I think one of the characteristics that's common to really, really successful people is that they don't think that way, is that they persevere, right? And kind of an interesting thing about entrepreneurs, and this is not about Elon Musk specifically or anyone else, but a lot of entrepreneurs who are really, really successful entrepreneurs,

the way that the business in which they made their money, that wasn't their first business, right? It was like their second, third, fourth, fifth. they failed the first time. They failed the second time. They failed the third time. And they just didn't take no for an answer. And they kept trying and they persevered. And they were eventually successful.

Whereas I think a lot of people, if you fail once, you're like, I'm done. I learn my lesson. I'm out. You know, like, and you just sort of accept defeat, right? And I think that that's, whether you're talking about business or you're talking about anything else, like you just got to keep trying. Right. And I think it's really important to life to just try, try your best.

Obviously, you know, be realistic. Like, you know, set realistic goals for yourself. um right like you know i'm not going to play in the NBA or whatever you know no matter how hard i want to do that right but like you know set realistic goals for yourself and um you know i think just sort of perseverance and discipline and commitment can take you a long way that is brilliant and really what this podcast is about because to me what i was seeing having so many guests on who are small business owners it's like they don't get to talk about the accounting they don't get to talk about taxes they don't get to talk about people aren't interested in having those

conversations. So there's no way to get beyond and really trying to figure out the best way to start a business, the best strategies. Do you incorporate? Do you stay as a sole proprietor? Which one's better? Do you work with an accountant? Do you work with a bookkeeper? Which one's better? These conversations, it just doesn't feel like they hit the mainstream. It doesn't feel like they reach people. And then we make worse decisions as a consequence. And then it feels like our communities would be worse off if we don't know how to start these businesses. And if we don't know who to talk to to get kind of the ball rolling, which is why it's important to me to try and share free information from brilliant people like yourself who are able to offer digestible,

real information where people can start to really think about the idea of being an entrepreneur, because so many people go to school, they get their undergrad, they get their masters, and they never really think about what if I started a business? What would that look like? What business would I want to start? How would I try and translate that to the community? And so just getting this idea started for people is important to me, and I really like what you just said about just doing it because it's something that it's what's brought us here today. It's what's brought our society to where it is. And it feels like we need to be more grateful to the entrepreneurs who are willing to sacrifice their income, their comfort, there are so many

aspects of like you hear about small business owners working until midnight and just continuing to try and grind to get their business started. And it's like we need to have, we talk about like you should shop at small businesses, but it's not the reasons why. aren't, that they sacrifice so much for our communities. Yeah, and I think that, you know, I think that, I guess the way I, yeah, I mean, I think that, you know, kind of along the lines of what you're saying, like, anybody could start a business. Like, lots of people have business ideas. Like, lots of people have ideas. And, you know, I've had, you know, like, almost everybody has had, like, some kind of business idea. And then you don't pursue it for whatever reason. And I think, unfortunately, a lot of people don't pursue a business idea. either, you know, they might be actively discouraged, and that's probably the worst case scenario. Like, someone's like, no, you'll never, you'll fail. Don't do that.

But a lot of people just don't have access to the information that they need to figure out how to start a business of a smart way, which is kind of what you're talking about, right? So it's like, you know, in my research, I've studied, like, Silicon Valley and kind of the, like the entrepreneurial community in Vancouver. And I think there's certain people who, you know, come from certain backgrounds, you know, who go to certain schools and get certain majors. and they're like immersed in that information, in that culture, right? And so for people like that, and those are the kind of people who are sort of more likely to become entrepreneurs,

they've got like kind of the game plan, you know, provided to them, right? They've got mentors, right? They have, you know, peers who are, you know, kind of encouraging them. They have people that they can talk to and give them advice. So, like, they have all these questions and they can get answers to those questions. Somebody who's not part of that world is not part of like Silicon Valley, like they don't know anything about that. So it's a very scary prospect to try to start a business. And I don't know if I necessarily have great advice about how you get access to that information.

I mean, a lot of it you can get through research, you can get it through trying to meet people. Like, networking is very important in entrepreneurship. But I guess what I would say is it's something that I think anyone can consider and it's just a calculated risk. So I'm definitely not saying like, oh, if you have some idea, go out and start a business, right? It's like if you have an idea, maybe like let that idea kind of simmer and percolate and then maybe start to think hard about whether it's a viable idea. Like there's a lot of business ideas that don't work out, right? So if you have a business idea, you want to learn kind of the legalities of starting a business

and, you know, kind of the accounting and the tax pieces. You want to understand that. But you also want to validate your business idea in some way. And there's, you know, a lot of different ways you can do that. You can do it by talking to peers and friends. You can do it by talking to, you know, trying to get mentors who have business experience, talking to them, do some kind of market research. You can maybe start your business out on a very, very small scale. It's kind of a side thing in your life and then see if there's a market for what we're selling and then that's kind of a trial and then you scale it into like a real business.

You know, so I wouldn't advise, don't just be like, oh, I have an idea and I believe in it. Therefore, I'm going to be successful, right? That's a naive approach. So it's despite everything I said about, you know, sort of you can do anything. It's like, well, yeah, but I mean, but, you know, there's constraints on that, right? You need, like, starting a business is always, it's always risky. And when I say risk, I mean that in more of a positive way than a negative way. I mean, it's risking that it's not a sure thing.

Like, it might fail. So sometimes when we say something is risky, we say that in a negative way. All businesses are risky in the sense that they might fail. But, like, you're never going to earn a return. You're never going to earn a reward unless you take risks, right? most people work a job, you know, for a salary or for a wage. And the risks there are relatively small. Like, there's a risk you could lose your job.

Like, that's kind of the biggest risk. But as long as you know, you do your job well and the economy's good, like, you probably won't lose your job. And, you know, but then there's kind of a, there's a cap on how much money you're making. With a business, it's like unlimited upside if your business is successful. But then there's a risk it could completely collapse. So I guess that's maybe another, when I say calculated risk, also. So, like, I think anyone who starts a business, whether they're investing $100 in the

business or $100,000 in the business, they have to be comfortable with the idea that the business could fail and that, like, they're going to be okay, right? If this idea completely collapses, am I going to be okay? Am I going to have plan B? And if the answer is no, then, like, don't start a business. Like, don't invest your whole life in something that fails, right? But like I said, like a lot of entrepreneurs fail and then try again and then are successful later on or with a different

idea. That is so valuable for people. Can I just ask, do you think as a whole, all things being equal, that we are better off with more entrepreneurs, or is it something that should be delegated to a smaller population that's more

risk-averse? Do you think that where we're at now is good, or do you think that we should see a rise in that? Have we seen dips and valleys in people willing to take those risks? And could we see that go higher and see more social benefit? That is, you know, that's a, that's a big question.

and I mean, I guess I would say in terms of like, if you look at sort of the history of our economy and kind of the, I mean, we're, it's, so right now we're in, and I, you know, probably should have emphasized this earlier, but like obviously right now, we're living in very unusual times, historically and economically, like, we're living through a global pandemic, which is, I think, temporarily disrupted almost everything, right? So right now, it's like, it's hard for me to say anything about what's going on right now because I'm just like, I'm just trying to make it through the next six months. But like, um, In terms of the long term, like, let's assume, which I do assume that, like, things will get back to normal at some point, right? So we'll get past COVID. Things will get back to normal. You know, given kind of the trajectory of the economy, I think, I would say economy-wise, we, and I could be 100% wrong about this, but I would say we probably have about the right amount of entrepreneurship, particularly in North America. I think, like, the United States is probably the most entrepreneurial country in the world in terms of successful entrepreneurs. And so maybe Canada, and I've done research on this. I mean, there's things that Canada could do politically that would encourage more entrepreneurship in Canada. But Canada does well compared to other countries, right?

It's just maybe not compared to the United States. So I'm not necessarily sure we need, like, a huge amount, like, we need like much, much, much more entrepreneurship in our society. And there's also a question of, like, kind of quality entrepreneurship versus, like, high-quality entrepreneurship versus low-quality entrepreneurship. Like, some entrepreneurs are good and are successful. Like, some entrepreneurs are not good and are not successful. So, like, not all entrepreneurship is created equally, right? And there's a lot of people who just, like, like, like, entrepreneurship has also become, like,

very trendy and faddish. So people are just like, oh, like, I listen to this podcast and, like, now I'm, I'm an entrepreneur because, like, you know, I've got, like, my own, like, I've got this, like, Instagram account And it's just like, you know what I mean? Like, like very, you know, very kind of dubious claims to entrepreneurship, right? Like I feel like, I've noticed like a lot of young people will say like, I'm an entrepreneur and just like is like another way of saying they're unemployed. It's like, okay, like what's your business? Like what, you know, what's your track record?

That said. So I don't know if we necessarily need a lot more entrepreneurship, although maybe we do. I think one of the things I think we need we need sort of more. or I don't know if we need it, but I would like to see maybe more kind of equal access to entrepreneurship. So I think that, like I said, it's like the people who become like tech entrepreneurs, it's really kind of a specific, it's, you know, historically it's been like a lot of, you know, relatively privileged white men, also a lot of immigrants, a lot of immigrant men, you know, kind of

of go into entrepreneurship. They're like, you know, sort of, you know, tech bro or finance bro type people. And I think at a cultural level, I think we could do a lot better. It's sort of, you know, kind of inviting a broader segment of society into entrepreneurship and being like, yo, this is something that like, you know, anybody can do. It's something that anybody can pursue in school. It's something you don't necessarily have to go to school. A lot of entrepreneurs didn't graduate from university. I'm not recommending that.

But, you know, it's just like that's not a requirement necessarily. So maybe kind of broadening the culture a bit to make it more inclusive. And that's, you know, kind of a, kind of a corny word. But I mean that in, like, the very real sense of, like, how do we include more people in this? And, like, just let this, like, let people know that this is something that they can pursue in their lives. I don't, you know, I don't have, like, really formulated ideas on how to accomplish that. But I think that that's something we could do a much better job at. I think of that because that is part of the reason that I'm doing this is because I think of my indigenous community, Chihuahawatha First Nation.

We have, like, 600 members. We have 22 First Nation communities in the Fraser Valley. And like, I don't know, I can name maybe four businesses owned and run by indigenous people. And so I don't think of that as just like, well, we don't like indigenous people and we don't want their businesses. I think of they don't have the information, the knowledge, the access to the lawyers, the accountants. They don't have that as like a community where those people are in their community every single day. And you just go, oh, hey, Joe's a lawyer. Let me ask Joe about how to start this business or who I should call.

And so to me, that would discourage indigenous entrepreneurs to a certain extent because they don't have that community, as you said. And so to me, as a broader Fraser Valley community, we all miss out on the potential that our community could be so much more rich in the culture and in the community if everybody was able to have the opportunity to pursue entrepreneurship and have the resources necessary to do something like that. And so I think that that is one area. I hope to continue to support and develop. Yeah. And so when I talk about kind of equal access, I mean, that's partly just kind of a function

of the inequality in our society more broadly, right? Like there's just a lot of inequality in our society and you see that reflected and kind of, you know, access to entree. But I agree with what you said. Like,

I don't think it's a, I don't think the problem is like there's some, like, male of it force out there that's like, no, like you can't be an entrepreneur. You know, it's more just like, if you don't have that network,

if you don't have that experience, you don't have like, there's not anyone in your family who's done that or whatever. you're sort of starting from zero. And so it's a big disadvantage, frankly. But yeah, in terms of like, you know, First Nations, I think, in Canada, I mean, there's enormous opportunities for economic development, you know, by, you know, indigenous communities.

I mean, you see that going on to a certain extent. I mean, there's definitely been entrepreneurship among indigenous people in Canada. If you look at kind of, like, if you look in the extractive industries in the United States, I can give you lots of examples. of like kind of entrepreneurship and sort of like casinos and resorts and things like that but like you know people have taken big risks and made a huge amount of money for themselves and for their communities um but you know it should be broad in that like you know like you know somebody who's like a young person from an indigenous background i mean they should uh i mean they should be open to like

any kind of business idea right like you know tech retail maybe whatever right like i think this is something that we want to somehow kind of get more people in our society involved in in a positive, constructive way. Absolutely. Do you have any final words to give on the benefits of starting a business or entrepreneurship and maybe any resources that people could consider books that you enjoy podcasts or anything? Okay. Yeah, so I guess I would say I can speak to that maybe kind of specifically and then more generally.

So I would say specifically in terms of like books or podcast or whatever, I think in terms of books, there's a book. It's called The $100 Startup by Chris Gilbeau. And I think that that's, that's not really a book about starting businesses, but it's, it's sort of, it's a book about kind of starting business ideas on the side. Like, it's kind of like about like having a side hustle. And the $100 start, the idea is like you can start a business with $100, right? And that's like has like lots of like practical tips on how to start really, really small scale businesses. And so I think that that's maybe a good place to start because I think a lot of people like, oh, I just have this like really, you know, it's kind of.

of us, like, it's not, oh, I've, you know, I've, I have an idea like, oh, this is how we're going to do quantum computing or cold fusion or something. It's more like, oh, no, no, it's just kind of like, here's a thing that someone might want to pay money for, right? It kind of speaks to that. I think that's a good book. It's called a $100 startup. That same guy, he also has a podcast that's pretty decent. It's called, I think it's called like side hustle school or something, I think is the name of the podcast. And it's the same thing to, like, bring somebody on and they just talk about this kind of weird side idea that they had that was successful.

So that's pretty good. There's a book that's called ReWork that's by Jason Freed and David Hanson, I think, who are their two business principles at Basecamp, which is like a small but very successful technology firm. And that's kind of like,

that's kind of a fun book to read. It's well regarded, I think, in the business world. But it's sort of like, has like kind of hundreds of very, very, very short chapters, like each is like a page long. that are basically kind of like aphorisms about you know so it's like all these little kind of like catchphrases and then like the meaning behind them and it's it's basically like how to run a small business in an unconventional way i think that's pretty good um in terms of some of like the the bigger kind of economic and political and philosophical issues i was talking about earlier uh i think zero to one by peter thiel is is pretty good um he's like a really a really um very very wealthy and very prominent uh an investor in Silicon Valley. Yes, he works with Eric Weinstein, who I'm a huge fan. Okay, yeah, yeah.

So, yeah, so, and he's, you know, and he's somebody who's, his political positions, I think, are a bit controversial. But the book itself is not really political, but it is kind of like, it's sort of like kind of a philosophical and historical overview of, like, the role of technological change in economic growth.

I think that's interesting if you're kind of looking at the big picture stuff. In terms of podcast, I mean, I would obviously start with the very excellent Bigger Than Me podcast. But, you know, if you're listening to this, you've probably figured that part out already. In terms of other podcasts, I'm not a huge podcast guy. So, like, I think that there's a tremendous amount of podcast

on entrepreneurship. I think, like, some of the popular ones are how I built this is one. There's another one called Entrepreneurs on Fire. There's the Side Hustle School, one that I mentioned. which is pretty, even though they're like kind of, kind of corny, like, I don't know, they're just very, and like, when you listen to, like, you, like, listen to podcast. I think actually one of the interesting, one of the most interesting things about podcast about entrepreneurship is that the podcast themselves are clearly entrepreneurial projects. So it's like they're all, they're sponsored, their market, and you go like, oh, so it's almost like the most, like what they say and the guests they bring on, I've not found any podcasts that are that great, but it's kind of like, oh, like this person is an This podcast is like a way that they're trying to make money and like they're hustling like and so you can kind of like observe it as like an artifact of entrepreneurship, which I think is interesting. And then I would encourage people of like you know nothing about business, maybe just start reading business news like CNBC financial post. Business of Vancouver, BIV.com is kind of covers local business stories. If you're into investing, I think like the Motley Fool podcast are pretty good on that. So those are maybe some specific sources. but unfortunately I don't yeah I don't have any like really really great great sources on business information but in terms of you know kind of where people

get started I and this is kind of getting away from business but I I would encourage anyone you know listening to this podcast whether you're interested in business or not to just sort of like be entrepreneurial in your life like I think the kind of this is going to sound corny maybe but I think the kind of the the entrepreneurial attitude, the entrepreneurial outlook is something that almost anyone can apply. And I really think it is something that I've applied to my own life, where I face these junctures in my life, like going back to grad school, for example, going into academia, that was a really major and risky decision I made. Like I was, you know, sort of giving up like a very high

salary career to go and be a grad student, right? And like kind of start from, start from scratch. And I actually, at that time, I faced a lot of discouragement, right? Like people I confided and I was like, I'm thinking about doing this. They're like, you are nuts. Do not do that. Like, that is not a good idea. And I believed in myself and I did it anyways. And I can give a lot of other examples of times in my life where things, you know, things weren't easy or I was facing a difficult decision. And I could kind of take the easier path or I could take the more difficult path.

And I really think that, you know, if you want to live kind of a, you know, a purposeful, you know, life and kind of be satisfied the things that you're doing, it's important to, like, really figure out what your goals are and what your values are and then just sort of pursue those, right? And don't take no for an answer. It just kind of, you know, really take ownership of the decisions you make in your life. Because like I said before, I think that we have way more freedom to do what we to do in life, then we often realize, right? And I see this as somebody who teaches law students. I think a lot of law students are like, I went to law school, I got to get a job at a big firm, I got to do this. They have a very, very narrow vision of kind of what they should do in life. And I think that's unfortunate. It's like, you go to law school, you can do anything. You can start a business. You can, you know, you can work for a nonprofit. You can travel the world. Like, you can do whatever, right? I mean, I mean, not literally anything, but like you have way, way, way more choices in your life than just like, oh, am I going to work at this generic law firm

versus that generic law firm, right? And not to disparage that life choice, but it's like, no, just like, you know, I think sometimes, and I don't say, I'm not saying this to put anyone down or anything like that, but I do think that sometimes people complain about not having options or not having choices. And what they really mean is like, it would be hard to do what I want. Like, that's what they really mean. What they're really saying is, like, I don't really like the easiest path, but I'm just going to do that. And it's like, no, just like, you know, take some risk, you know, and maybe it won't work out, maybe it will. So I would just encourage people, be entrepreneurship, you know, shoot for the moon in your own life. Like, don't settle.

That would be my advice. Could you share some of those stories? Because I think that that is so valuable for people to hear, I think likely what I'm expecting is many people are going to be very intimidated by reading your bio, by realizing that you're a law professor at one of the most prestigious universities in British Columbia, and to hear you choose to leave the law firm and move in this other direction and have, be discouraged and continue anyway, I think sets a really strong example. I mean, I would say in my, there's probably a lot of examples I could give. In my own life, I would say that's probably the biggest example, but like, you know, I, you know, in terms of my, my personal background. I mean, I, you know, come from like a pretty, you know, pretty average

kind of middle class background. But I, you know, I was not, like, again, there were not lawyers of my family. I was not one of these people who's like, oh, you know, like, I didn't really know anything about the law. So I was, when I was a young person, I think I was a little bit, like, lost, kind of when I was law school. I didn't really know what I wanted to do. And I was not super ambitious. Like, I was a poor student in high school, for example. I didn't really hit my stride until I went to university. But, you know, it's a tricky thing because, like, I mean, some of the stuff I'm going to describe is not necessarily positive traits, I don't think. But, like, when I was in law school, like, I was like, that's kind of when I caught the fever, right?

So I was sort of like, kind of an underachiever when I was in high school. Like, I didn't get good, like, like, almost didn't get into college. Like, it was like, it was not good, right? I got in trouble. It was, you know, not a great situation. And then I went to university and I did very well in university. But I wasn't from that sort of like, you know, kind of. like prep school mentality of like, you know, you have to be really successful. It was just kind of

like, oh, I just like class, right? And it wasn't until I got to law school that I was in that environment, that kind of like really ambitious environment around people that had a lot of ambition. Like, I never really had that kind of ambition in my life. And so that was a new thing for me. But I really took to it. And I was like, when I was in law school, I was like, I got to just get like an A and every, like I was just super competitive. Like just, you know, really, really, really, not in a, you know, not in like a toxic way or anything, but just competitive. with myself, right? Like, I wanted to, I wanted to achieve a lot. I was like, you know, like, in terms of, like, law firms, I was like, I got to get into, like, you know, the best law firm I can get into. And I was, like, super concerned with, like, prestige. And I was like, I want to make a lot of

money. And, like, I did that. And, and, you know, and that was fine. And then I was kind of at a point of my life where I think I realized that, you know, working at a fancy law firm or, like, making a lot of money. It was, like, not necessarily making me happy, right? And I was like, well, you know, what am I going to do? I got to make some changes in my life. and I would say that juncture was the time where I really, you know, did kind of take ownership over my life in the sense that it was like, well, I can kind of, you know, there's a number of different paths ahead of me, all of which seemed kind of boring. And I was like, well, I always wanted to get PhD in history, right? I always wanted to go into academics, you know, ever since I was in university. So maybe I should start looking into that. And, you know, it took a long time, but I did research. I kind of worked at the angle. I was like, well, I probably wouldn't be able to get a job as a history professor, but if I got a PhD in history, that would be an advantage on the law school teaching market. And so, like I said, it was like a calculate, like, I didn't just, I wasn't just like,

oh, I'm just going to do whatever I want and, like, made a crazy decision. I, like, really, really thought carefully about it. And I was like, this is a calculated risk. And that's a very, you know, going to law school, working as a corporate lawyer at a big law firm, and then going and getting a PhD in history is not, that's, you know, not the standard path. for lawyers. And like I said, my friends, you know, people I, you know, like friends I had at work who I confided in, they're like, they're like, bro, like, don't do that. You know, like, what are you doing? And I just had kind of faith in myself and my vision. And I had that plan B. I was like,

if this doesn't work out, like, am I going to be okay? And I was like, yeah, I will be, right? And it's kind of, it's easy for me to say, like, I didn't have a family to support, right, at that time. So it was like, I was more financially flexible. Like, once you, you start, like, once you start accruing those kind of family obligations, you can't be as, like, kind of crazy in the life decisions you make, I don't think. So some of the, some of these decisions are easier to make when you're younger than when you're older. Um, but, um, yeah, I, I just kind of pursued, I mean, it sounds corny, but I like pursued my dream. I was like, I want to teach law school. I mean, that's, when I was, I was a total nerd when I was in law

school and, like, I was like, yeah, I want to be a law professor. That's what I want to do. And then I kind of got distracted by the sort of big law career track. But yeah, I went back and I, you know, when I was writing my PhD, I was very thoughtful about like, okay, I need to publish articles before I finish my PhD because this is going to position me in a certain way on the job market. And I need to like kind of, you know, tailor the type of research I'm doing in a way that's going to be marketable on the job market. Like, I was, like, really thinking, like, long-term about this. And it worked out really well. I mean, like, I kind of had my dream job at UBC. Like, I really, I really like it.

And I really sort of like the way my life has turned out. And I think there's a lot of, there's a lot of other stuff I could talk about that I think would be more personal. And I don't know if I necessarily want to get into that. But, like, I've certainly faced, you know, challenges and tough decisions in my life where it was like, you can kind of, you know, you can get through this or you can give up. Like, you got to make a choice. And I think, you know, our lives are pretty short and just, like, don't give up. You just have to push. Like, just push forward.

And that's, you're always going to be better off, like, really, really trying to get what you want, as opposed to settling for something you're unsatisfied with. Absolutely. And I just have to say, I'm very grateful that you chose to make that decision because I really took a lot out of your business organizations course. I would say that it's definitely in my top three favorite courses that I've taken at Allard. and I'm in my third year, and I don't see my next semester being even near as a comparison to the benefits that I got.

I still have your textbook right there. I still look at it all the time because I've gained so much from your course and the way you approached it because it was so interactive, your ability to communicate the information in an interesting way, your passion and your ability to relate it. You used a lot of humor, and it genuinely felt like you wanted to be there. And so I really think that your decision to do that has come through and seeing the other people's responses, seeing other students in the course, how interested they were and how engaged the whole class was over Zoom was, I think, a testament to how strong that decision was and how much positive impact you're making by being a professor there.

Well, thank you. That's very kind. And you're right. I mean, you know, teaching over Zoom has certainly been challenging, but, you know, I've tried my best. Yes. Well, thank you very much for coming. on and I hope people get a lot out of this. Well, thank you so much for inviting me. This has been a great conversation.