This article is part of our Beyond the Family Business series.
Hosted by Luke-Hansen MacDonald, a second-generation family business leader, “Beyond the Family Business” is one of the most thoughtful and engaging podcasts about family enterprise in Canada. In the podcast, which Canadian Family Offices shares readers every two weeks, Luke goes beyond the headlines with other leaders in family businesses and family offices to explore lessons they have learned and their successes and challenges.
In this episode of “Beyond the Family Business,” Luke sits down with Derrick Hunter, the second-generation CEO of Calgary-based Bluesky Equities, a family investment group that focuses on alternative strategies and one of Canada’s most active angel investors. The son of an oil and gas entrepreneur, Hunter talks about his strategies for navigating a complex investment landscape and managing the dynamics of succession and family communication to create a multi-generational legacy.
In his conversation with Luke, Hunter shares:
- How he transitioned Bluesky from an entrepreneurial oil and gas investment firm to a broadly diversified investment group.
- Why the tendency of entrepreneurial families to concentrate on the business that made them rich also brings risks to long-term wealth.
- How Bluesky’s investments in alternatives and seed-stage technology companies help mitigate risk.
- The Hunter Family Foundation’s rationale for making “big bets” in philanthropy.
- The importance of open, transparent communication among family members and the value of expert advice.
- The differences between the mindsets of G1 and G2, and why successor generations should be given “opportunity, not obligation.”
Previous episodes of “Beyond the Family Business” on Canadian Family Offices feature K.C. Daya, Jeffrey McCain and Ian Wilson.
Transcript – Beyond the Family Business: Derrick Hunter
Luke: Hi, welcome to Beyond the Family Business, a podcast in partnership with Canadian Family Officesthat dives into the lessons, opportunities and challenges of operating a family enterprise. This podcast is brought to you by BMO Private Wealth. As a client myself, I’m proud to have them as a sponsor of this episode.
Today’s guest is Derrick Hunter. He’s Calgary-based and the second-generation CEO of Bluesky Equities, a family office investment group focused on alternative strategies such as venture capital and private equity. This is a really interesting story. First starting off with his father in the Alberta Oil Patch as a classic entrepreneur going after oil and gas operations; then later on Derrick joined the business and actually in the 2008 global financial crisis, pivoted their strategy to focus on U.S. real estate right at the perfect time. After having a huge exit in the late 2010s, Derrick was inspired by the Richardson family to think differently about his family business and focus on a diversified strategy that uses alternatives. Lastly, we discuss how Derrick has now built a team of experts that can oversee this highly complicated and diversified strategy while also producing excellent returns.
This is Beyond the Family Business podcast. Let’s jump into it.
Derrick: My name is Derrick Hunter. I was born and raised and live in Calgary, Alberta. I am the CEO of Bluesky Equities, which is a family-owned private investment management company, as well as a trustee of the Hunter Family Foundation, which is a private family foundation also based here in Calgary.
Luke: Okay, and could you tell me a little bit about that original founding story of your family business? Who was the first entrepreneur and what was that original business?
Derrick: Well, Bluesky was founded by my father. He was an oil and gas entrepreneur. His story is actually that he was doing his master’s degree at Caltech in Pasadena in 1964, and he was going to go to work for NASA. He ended up getting introduced to a dentist who was a friend of my mother’s uncle in Edmonton, and the dentist convinced him that the future was in the energy business in Canada—his name is Doug. He returned to Calgary, he was born in Calgary, in fact, and he started work as a petroleum engineering consultant. He eventually partnered up with a geologist, and the two of them started an exploration company in the mid-seventies. They were seriously wounded by the National Energy Program that Pierre Trudeau brought in, but he kept persevering and essentially built a career in upstream Canadian oil and gas exploration.
He decided in about 2001 that he wanted to leave a kind of a legacy family business. What that meant was —he hasn’t run an operating business for a very, very long time, probably since the eighties, but he had a bunch of investments in Canadian upstream energy. In 2001, he decided to put some of them into a separate investment company called Bluesky Equities.
Bluesky is actually named after a stratigraphic formation in Alberta, which was the zone that he and his partner drilled their first well in, I think in 1974 or something like that. So that’s why it’s Bluesky—it’s one word. It’s not “blue sky,” and it has nothing to do with blue sky provisions or safe harbour. It’s actually because of this stratigraphic zone. The company they ran was Bluesky Oil and Gas, and enough time had elapsed by 2001 that the company had been bought and lost in the mists of time in the eighties. By 2001, the name was available again, so we started this little portfolio company. It’s never had an operating business.
I have degrees in geology and finance, and I was an oil and gas entrepreneur as well. I had started and sold four little private energy companies on my own with partners, separately over a period of many years. By 2007, I had sold the last company that I’d started with a partner to a public company, and I decided for a whole bunch of reasons I wasn’t going to do that again.
That coincided with my father and I having lunch one day, and he said, “Well, maybe you should help me manage Bluesky,” because Bluesky at the time had no employees. It was just passive holdings in Canadian energy companies. At that time, I was 43, I’d started and sold four companies, and I was trying to figure out the next step. It just sort of worked from a timing point of view to step in.
From there, I decided that our concentration was kind of extreme. It’s kind of a long story, but basically, we moved into U.S. multifamily as an investment thesis, which turned out pretty well for us. Over the years we started adding a team, and now we’ve got essentially a family office that’s owned by our family. We don’t manage outside capital, but we have a pretty diverse portfolio of assets that we manage internally.
Luke: Very cool. Well, there’s a lot of different parts there I want to unpack, so I’ll take them piece by piece. Could you maybe first speak about what was the motivation for your dad to go from focusing exclusively on oil and gas upstream to starting to want to create this legacy family business that became Bluesky Equities? What was the driver for that transition?
Derrick: That’s a good question. I don’t know. My father is that almost stereotypical Canadian oil and gas entrepreneur. He’s a bit of a gambler. He’s had wins and losses and really an optimist because you got to be an optimist. It’s a tough cyclical industry. I don’t know what led him to do that. I will say years later, once I was involved and we started bringing in some support from a family coaching perspective, we took a lot of inspiration from the Richardson family and the fact that they’d been able to keep a business going for, at that point, for like 165 years or something, through seven generations. I think [that] was pretty remarkable. And so, we looked at that and thought, okay, that’s pretty inspirational. But what was his original [motivation], I honestly don’t know, because in 2001 when he started the company, I didn’t even know he started it. And I didn’t actually find out. I found out by accident six or seven years later.
My father was never really interested in any industry other than Canadian oil and gas exploration. He was pretty focused on it. So, I think it’s just been this gradual evolution over 25 years and really just trying to tweak the way we do things and how we make decisions, how we manage risk, capital allocation, et cetera.
Luke: Sure. And so, it wasn’t a single pivotal moment or close call. It was just a gradual transition over time from what you can see.
Derrick: Basically, what happened was, when I got involved in 2007, it was just passive investments. We didn’t have any employees. And I decided that we needed to diversify outside of oil and gas because I’d spent a number of years in it, and I was pretty disillusioned by some of the trends I saw. What we’ve seen is a move away from a really comprehensive food chain in Canadian oil and gas to now, if you want to start an oil and gas company, you need like $200 million. It used to be you could do a lot for five or 10. So, it’s fundamentally changed.
I started looking for different opportunities and I had a good friend who’d moved to the States and needed a partner to buy an apartment complex in Tulsa, Oklahoma. I used to work for a company that did development planning and stuff and knew something about the real estate business. I went down to Tulsa, saw the property, liked it, we participated, and that led to a lot of acquisitions over the next—really between 2008 and the end of 2017. We ended up buying over 15,000 apartments in 10 states in the U.S. So, it turned into a fairly substantial position on it.
You have to remember, at the time, we had a lot of tailwinds because in the global financial crisis, everybody wanted liquidity. There weren’t a lot of buyers for these things, but they still produced pretty impressive cash flow. Cap rates were pretty high. We had eight per cent average rental rate growth for five straight years. Nobody was building anything. Nobody was buying a house. So, we kind of timed it quite exquisite—perfectly. But then, really what we had done was trade one form of concentration risk, which was being heavily concentrated in Canadian energy, for another, which was heavily concentrated in U.S. multifamily. And so, the concerns I had when I started being involved with Bluesky had just transferred to another industry in another country. And obviously there’s a lot of leverage, and that sort of thing. When you’re in that business, it was also not easy to extract cash flow, states for tax reasons and so forth.
So essentially, we’d swapped one form of concentration for another. We did a transaction at the end of 2017 that resulted in us having quite a large liquidity event. And at that point, I made the decision that we were never going to have that level of concentration risk ever again. And sometimes my board complains that we’re overly diversified, but we are very diversified.
So, our goal since then, from January 2018 to today, our goal is to operate an all-weather portfolio. We want to make money every year regardless of market conditions. We want to manage our drawdowns so that we never have a permanent impairment of capital. We don’t want to have a drawdown more than 10 per cent. And basically, we want to produce positive returns every year that are sort of commensurate with the risk we take.
We’ve actually achieved that. On a risk-adjusted return basis, we’ve done very well. But we do that by constructing a portfolio where we have a lot of investments in assets that are inversely correlated or uncorrelated with each other. And when the markets are frothy, we underperform. And when the markets are doing poorly, we outperform. We’re willing to make that trade because the goal here is for this company to last indefinitely. And in order to do that, we just can’t, we don’t want to, take on undue risk and see a permanent impairment of capital. So that’s philosophically what we’ve done.
Luke: Yeah, and so it’s interesting. So, playing that back, I mean, your dad put the first domino in place or this idea of a family legacy business, but you’ve gone on your own journey since that business, since you joined that business, and you’ve taken it into real estate. And now, many years after that initial piece put in place by your dad, you then have really gotten to a true weather-tested family legacy business, which is very interesting going from that entrepreneurial concentrated approach to a preservation-of-capital approach.
I guess my follow-on question …
Derrick: Well, I think that’s the difference between G1 and G2, right?
Luke: Yeah.
Derrick: You know, sorry, I apologize.
Luke: No, absolutely. I didn’t mean to cut you off. Keep going.
Derrick: Well, I remember maybe eight or 10 years ago seeing a presentation by Hartley Richardson, and he made a comment that stuck with me too, actually. One was that every generation needs an entrepreneur if you’re going to have a family business, which I think makes sense because what I took away from that is that the things that got you to this point won’t necessarily get you to the next point because conditions change, economies change, opportunities come and go. And I think if anything, the pace of technology development obviously has just been exhilarating. So, I very much think he was right. You have to be aware that you just can’t be static if you’re running a family business. We don’t have an operating business per se, so we’re kind of unusual, different from a lot of the families that you’re probably speaking to on this podcast, but I think he’s right. You have to see where the world is heading and position yourself to take advantage of that. So, in 2014, when the price of energy collapsed and Canadian energy companies were taken out to the woodshed, we actually did quite well because we were a real estate company at that point.
The second thing he said was that in a family business, no one wants to be the generation that screws it all up, right? So, you have this pressure of wanting to, at least my view is that I want to leave it better than I found it. And so that’s meant that my dad was very entrepreneurial, and he always counseled me and my siblings. We’re a very entrepreneurial family. We run a foundation. Our biggest giving is to entrepreneurial causes, entrepreneurial thinking, and encouraging more entrepreneurship because that’s the only way you unlock economic potential for people. It’s really important. I was an entrepreneur many times over, and a lot of that was because [of] my folks, not just my father—my mother was very, very supportive of that. And so, I always felt very encouraged to start things, and I still do.
But I do think that there’s a bit of a difference. What’s the old saying? ‘You only have to get rich once,’ right? It sounds a bit hubristic, but the point is it’s a different strategy when you’re starting out versus when you’ve accumulated some assets and you want them to be there for my kids, my grandkids, my great grandkids. For a business that’s supposed to last, as I say, indefinitely, it requires a different approach to managing.
Luke: I think it’s a very unique story because so often families remain highly concentrated even, and yes, I get what you’re saying about going to the next generation, preservation of wealth is a bigger thing, but I’ve still seen that core legacy asset will often almost be the anchor on their holdings, and it limits liquidity, et cetera, over time. So, your transition is very interesting and very fast, frankly, because you’re still quite young to have gone through your own career as an entrepreneur and matured into this more diversified investor.
I guess one of the questions I’d ask is, could you speak a little bit about what experiences did you have or how did you learn how to go from starting up O&G businesses and selling them off in your early years to having a very diversified business like you do today?
Derrick: Well, you’re the first person that’s called me young in a very long time, because I’m actually 61, so I feel like I’ve been around for a while. The funny thing is people would say, when I did a geology degree originally, and then I graduated into a horrible time, a few years after that I went and did a finance degree. And so, I came out, I went from a very small toolbox to a very large toolbox.
And then I was really hesitant to go back into the oil and gas business in the early 90s because of the terrible experience in the mid-80s. But I kind of dipped my toe back in with some friends of mine from MBA school that had this idea about buying these inexpensive assets that nobody else wanted but could still produce cash flow, and we’d buy it at a very low multiple. That’s kind of how the whole thing started in about 1992.
And years later, when I started buying apartment buildings with a different friend from MBA school, people would say, well, that’s just such a departure. But to me it was actually the same thing.
We were buying established operating assets that were producing cash flow. The main questions were, what is the operating income you can drive out of these things and how well could you manage them, and what price were you going to pay? We were paying very low prices in both cases. So, to me, it was actually very similar to how I’d started in the oil and gas business, even though it didn’t really look that way to a lot of outsiders.
The question of concentration is interesting because we had a partner that we brought in, so there were really three partners in the deal. And I became concerned about concentration risk. My partners didn’t worry about it at all. They were very comfortable. One of them, his exact line was, “Great wealth comes from great concentration.” And my view was, well, so does great risk.
It’s really that trade-off between the benefit that comes from concentration of holdings but also the risk of being all in on one industry. Obviously, I’d seen my whole life the ups-and-downs in the gas business and the risk that comes from concentration on a commodity-based business where you have no control whatsoever over price and that sort of thing. And I didn’t really want to be on that wild rollercoaster ride anymore.
So, yeah, I’m very comfortable. I want to be able to sleep at night, and I see my job is to leave Bluesky in a better financial situation than I found it. And after that, it’s not my problem. But if we were really trying to hit the cover off the ball, then I might not be able to end up doing that.
Luke: Right. And so today you’ve talked high level about your current portfolio, but you’re specifically trying to ensure that, as you said, in all markets, you perform. Obviously, you’re focusing on things like correlation. I assume liquidity is also important to you, or not so much?
Derrick: We measure all of this stuff. We’ve got a good team here, and I’ve been fortunate. I have an excellent team that does a great job. We measure all this stuff: volatility, returns, liquidity. About half of our portfolio is what the industry would call alternative assets. So, this could be true hedge funds, physical precious metals. We’re probably the most active seed-stage tech investor in Alberta. We do a lot of that.
It’s interesting because when I talk to more conventional stockbroker types, I remember one of them saying, ‘Well, that’s so risky to be in alternatives.’ And my view is, well, no, that’s how you manage risk. If all you can buy is publicly traded equities and fixed income, that’s a lot of risk. And so, when you have a year, like I think it was 2023, when both were down pretty substantially, we were up that year. And it’s because we are in a lot of different asset classes that conventional brokers can’t buy for you.
And even the seed-stage tech is really interesting because everyone says, that’s so risky. And I’m like, well, we’ve invested in over a hundred technology startups in the last 12 years. We have a whole process. We’re very disciplined. In Alberta, people think that’s all we do, but it’s not. The thing that most people don’t realize is that any one of those investments is risky, but in aggregate, they’re not risky. Because the strategy that we’ve employed for 12 years has been, we write a lot of small cheques, and then we think of that as an option on the next round. Then the companies that execute, when they’re ready to do a raise, we hopefully will write a bigger cheque.
What we found is that the returns are reasonable for the risk we take and the lack of liquidity. But put on a portfolio-wide basis, it’s perfectly acceptable. On an individual stock basis, I guess that’s the point, Luke, if you only make one or two investments of that sort, the odds of losing all your money are pretty high. If you make 50, the odds of having a positive return are pretty good. And enough Canadians don’t do this, hardly any do, but there is a lot of potential there in our view.
Luke: And so that’s a very interesting element, that within alternatives, you also are doing venture capital, which is something that a lot of people stay away from because of the level of focus it requires to do well. And you’re right, a lot of the headlines have read, when I was researching this, that Derrick Hunter is the most active angel investor in Alberta and stuff like that.
I guess my question would be, one thing, we have an endowment model approach as well, and so I appreciate the complexity of these different asset classes, even within alternatives, you have hedge funds, you have multiple types of hedge funds, long and short versus merger arb [arbitrage], but then you also have outside of that, alternative assets like infrastructure or different types of real estate, private equity, and so forth. So, my point being, there are a lot of different asset classes. To do what you’re doing well, how do you fill that talent gap to be able to actually understand each of these things well enough to make prudent investments, whether it’s the early-stage tech investments or it’s hedge funds, or even just fixed income and equities for that matter?
Derrick: Well, we’re very disciplined. So, for example, you mentioned VC, let’s use that as an example. I’ve got a whole presentation that I’ve delivered to many audiences about how we do—I call it angel investing, we’re not really a VC, but we’re a large angel, let’s just say. But we have a process that we have refined over 12 years that we’re really comfortable with, and it’s very disciplined, and it’s actually worked out quite well. I’m quite comfortable with the returns that we’ve achieved.
And we pretty much have that in every one of our portfolio areas, whether it’s public equity, hedge funds, private equity. We debate a lot, but you’re never finished. It’s an exercise in continuous improvement. And we monitor the crap out of this stuff because it’s easy to make the investment, but you got to stay on top of it and keep following it rigorously the whole time you own it.
Our strategy has been, I’ve got a small team here, there’s eight of us, and every portfolio category has a lead and then there’s a sort of backup. So, we’ll have one person responsible for venture, we have another person responsible for PE, somebody else is public markets, et cetera, and hedge funds. And then our process is that we do have some redundancy because there’s always a second person that is kind of behind the lead, but the lead is responsible for being the main point of contact for the company and the main face.
What we do is that we take the view that if you are an employee of Bluesky, then you are also a de facto part of the investment committee. We have investment committee meetings every Tuesday and Thursday, and essentially everything that we’re considering, whether it’s a buy or a sell, is on the table. And everybody in the office has the opportunity to ask questions or provide feedback.
Effectively, what we try and do is arrive at a consensus on trades that we make, and most of the time we achieve that—not always. I don’t have a veto, so we have done transactions that I disagreed with, which is fine. Because really, it’s about empowerment and delegation and trusting your employees, and having confidence that they kind of know overall what our goal is as an entity in terms of our long-term objectives.
And I have to say it’s worked very well, but it’s just a process that we’ve developed and refined over years, and we’re always constantly tweaking and trying to improve. But a lot of it is based on transparency and open discretion and scheduling. In Bluesky, we have close to 200 different investments, but there’s somebody that is responsible for staying on top of each one, at least on a quarterly basis. And so, if it’s time to sell, then we will. We don’t miss it.
I guess that’s the thing. That was something I learned. My dad said when I got into Bluesky, we had a lot of investments in Canadian energy companies that were basically zeros, and nobody ever called them when it was time to sell. And so, we work really hard not to have that happen. We stay on top of all of them, but it means you have to delegate.
Luke: Yeah. Wow, that’s incredible. And that’s a very unique structure, too, to have sort of a democratized, transparent investment committee in a family-owned business.
Derrick: I think I invented it. There’s no manual. You made the point about a legacy business, and I’m like, it’s one thing for my dad to say, ‘I’m going to have a legacy business.’ Okay, what does that mean, right? There’s no manual, there’s nobody you can talk to. What does that even mean? How do you do it? What are the steps?
Luke: Yeah.
Derrick: So, it was one thing for him to say it; it was kind of my job to make his vision reality. And that’s been 18 years of just trying things and making some mistakes and then adjusting. And I’m certainly not going to tell you that what we’re doing is the right way or the only way. It’s our way, and it’s been this evolution over a long period of time. We still keep making modifications, but that is broadly speaking how we tackle it.
Luke: Right. So, I guess one of the questions, which may be too big for you to take on all at once, but is, as I mentioned earlier, a lot of the people who’d be listening, you know, are part of a family business. They’re in a concentrated state. I think your state is not the norm from what I’ve learned from other people.
Derrick: Very diverse.
Luke: What advice would you have, let’s say somebody has a liquidity event, a part or all of their concentrated position and they actually have some capital to redeploy. There’s no playbook, as you just said, but what advice would you have on where they should start on a diversification strategy?
Derrick: Yeah, that, you know, I’ve actually spoken to multiple families in that situation, asking those questions, where I’ve just sort of gotten connected to people. And I generally am happy to help people if I can, just based on our experience. It actually starts with a willingness to actually recognize the need to diversify. And it’s not always that easy. I’ve seen families that have very successful long-standing family businesses. That’s what they’re comfortable with, that’s what they know.
And then, they may, even if they’ve had some form of liquidity event, they may be thinking in terms of using that capital as future capital to invest in the same industry. And that’s kind of a natural human thing to invest in what you know. Certainly, my father was that way.
My view is, as I said, we went from basically 80 per cent Canadian energy to 80 per cent U.S. multifamily in the span of, not very long, five or six years. And I recognize that really, the only free lunch in investing is diversification. And how do you manage risk? It’s diversification and sizing. So, if you genuinely are serious as a family business about managing your risk, you’ve got to accept that that’s how you do it. It starts with whoever the patriarch is. I was quite fortunate because my father has been very supportive. And I took the company in a completely 180-degree different direction, but he was supportive all through that. That’s important and that’s not always true.
And I do think there’s a difference between G1 and G2 because it’s one thing to—you know, my father, his dad was a postal worker, so he didn’t come from anything. And he’s a smart guy and he’s got a master’s degree, but he just had the guts to start basically with nothing but his brains. And he always said to us the only security you’ve got in life is your capabilities and what you’re willing to do in your work ethic. And so, I certainly take that to heart, but it’s quite a bit different being a G2 when you’re standing on top of something that’s been established and trying to build it and grow it. And I just think philosophically I’m much more conservative than he is. For example, my son now works in the business. He’s in his late twenties and he’s a CFA, but his risk tolerances are different than mine, too. I think it comes with, if he’s 28 years old, if you’ve only really been paying attention to markets for the last 10 years, I’ve seen them 40, so it’s quite a different exposure than what he’s got.
So, I’m drifting from your question, but I think that you start with, you need to get everybody on board, which is not easy in a lot of cases. And there has to be this recognition that any business can go to zero. You just can’t predict the future. So, the recognition that building a family office is truly outside of the operating business, it can be difficult and uncomfortable, but it’s really important.
And then once you’ve made that determination, there are experts, like there are best practices, and there’s people in this country that have designations called Family Enterprise Advisors, that that’s their job is to help you have these conversations internally and understand what the values of the family are and what the objectives are for the business. We’ve used a couple of them since 2009. I highly recommend—you have to find one that’s a good fit for your family. I don’t think one size fits all, but I think just having people that can help you start in that journey that have seen it before and that know what best practices look like makes a big difference.
Luke: Yeah. No, that’s great advice. Absolutely. I’m just conscious of time here, so I want to get a couple last questions in. You mentioned you have a son. First of all, how many siblings do you have and are any of them involved in the business?
Derrick: I have three siblings, two brothers and a sister. None of them are involved in the business. We give them opportunities; we have an annual family meeting. They’re involved in the sense that our business is owned by a trust and they’re all family members, and we run this business for the benefit of family members, but they’re not actively involved in decision making. But we work really hard to make sure they have opportunities to be informed.
Luke: Sure. And so, there’s a next generation that is now bubbling up and at the age that they can participate. How might succession differ with the next generation than it did with yourself and how you came into the business?
Derrick: So, I actually have an external board, and they’ve pushed me hard going back years to think hard about succession. And so, if something happened to me, if I was hit by a bus today after our conversation, we have a plan that would enable the company to proceed without missing too much.
The question of my son, though, is a bit different. So, he’s fully qualified to work here. He spent a few years working. He graduated from a top university with a business degree in finance, and he worked for a large American private bank for several years before we brought him in. But I was very clear with our team that he’s an employee and he’s joining because he’s got the skillset. We have another employee with actually the identical background. So that part was a good fit.
But he’s 28, and will he run the business? Who knows? I mean, if he does, it’s not going to be soon. He’s got a long ways to go, and he might decide he doesn’t like working here and he is free to leave. When he came on, I said, ‘Look, you’ve got an obligation as sort of the oldest of your G3s, the oldest of your generation, you’ve sort of got an obligation to your family. You can’t escape that, but you don’t have to be an employee at Bluesky if it’s not a good fit.’ And that is true. He’s free to do what he wishes. But he’ll always have a role to play in terms of the family oversight of the business as opposed to the operations of the business. I think the fact that he has worked here for a while and understands how we make decisions is really beneficial. And as a father but also as a CEO, it’s kind of a relief because, he is financially literate and he’s well suited for the role. But just from an oversight perspective, for the benefit of his cousins and his aunts and uncles and that sort of thing, he can play a really critical role, and I’m lucky that I have a son with that expertise.
My other son is in law school, and my daughter’s sort of medically focused, so I’ve kind of got the trifecta there.
Luke: Oh, wow. The lawyer, the doctor, and the business guy.
Derrick: Yeah, it looks like it. The succession thing, though, I think it’s really—the way I put it is that there’s an opportunity but not obligation. And we’ll see what happens, but he’s at least 10 years, if not more, from being in a position to take over the business. And we have other people in the business that are capable of filling my role now if necessary.
So, there’s a difference, Luke, as you would understand, between sort of the succession for the business and succession for the family. And because the goal is to have a company that survives for the benefit of family members for a long time, we’ve kind of got a different level of oversight for the family force.
Luke: Yeah, in our case, we have a third-party CEO, so I’m president, and I am actively involved in most things that we do, both on the business side and on the personal affairs side. But it’s without a doubt the reality that the CEO, he’s the expert and he’s been with us for 10 years, and I’m lucky enough to learn from him. So, I completely understand your point. It’s very well taken as far as succession of ownership versus the leadership of the business.
Derrick: I mean, an employee can always leave, but a family member’s always going to be a family member, right?
Luke: Yeah, absolutely. Could you speak about, just pivoting a little bit here at the end, the Hunter Family Foundation? I understand you guys have been very active, certainly supporting, as you said, entrepreneurial ventures, supporting universities. Can you speak a little bit about the mission of this and also has it changed as you’ve come into the family business and taken leadership? Or has it sort of been consistent throughout the history?
Derrick: Oh, it definitely hasn’t been consistent. It was started in 1984, and the family lore is that it was a gift from my father, the engineer, to my mother, the social worker. But the reality was, it was established for tax planning purposes. And I’ve always been the third trustee—I was at university at the time. And for decades, we had a relatively small amount of money to dispense every year. And it was at Christmas time around the kitchen table, who are we giving money to? And it wasn’t really that much money. And it tended to go to Salvation Army, Junior Achievement, organizations that were well established in the community. You know, good organizations, but we tended to do a lot of repeats.
The way things unfolded is that effectively my folks had this idea that upon their demise, most of their estate would roll into the foundation, and then I would give it away. And around about 2014, I said, that’s not such a great plan, because how do I know what it is that you want us to support? So, we basically did a reorganization in 2015 that effectively resulted in our foundation growing about six times, rather rapidly. And then in conjunction with that, we hired another consulting outfit similar to an FEA, they’re not FEAs, but they’re focused on philanthropy, and they put us through our paces to really drill down on what it was that mattered to us.
And I mean, the first question was like, do we even care about making broad sweeping changes, or are we happy just affecting one individual’s life today? And I think we decided we wanted to try and use our ability to impact things to make systems changes. And we basically landed on three main pillars for support, or what we call big bets.
So the three areas that we fund are: one is entrepreneurial thinking; second is classical liberalism, by which I mean economic freedom, property rights, rule of law; and the third is mental wellness.
So, entrepreneurial thinking really stems from our belief that all economic opportunity arises from entrepreneurship, and if you want people to have opportunities in life, that’s the only way to create it. It’s the only way mankind’s ever invented.
But then the second bucket is important because you can’t really expect entrepreneurs to thrive in the absence of things like property rights, rule of law, economic freedom, et cetera. So, they kind of go hand in hand, but we consider them two separate categories.
The third category, mental wellness, is really in part an homage to my mother, who was a social worker and headed up the Canadian Association of Mental Health years and years ago, and I think a recognition of how challenging our focus—and this is actually my wife’s, my wife manages this, but it’s really a recognition about how challenging it is for young adults and teens these days with COVID, social media, just all the challenges that they are facing that I certainly didn’t grow up with.
And so, what we’ve done is that within each of those categories, we have effectively founded an organization that we call a Big Bet. On the entrepreneurial thinking side, it was the Hunter Hub for Entrepreneurial Thinking at the University of Calgary. We made a $40-million commitment to that in 2017. It is the largest donation to a Canadian university for support of entrepreneurship in Canadian history.
On the free market side, we were the original, we founded the feasibility study and were the first supporter of a news organization called The Hub. And all your listeners can look online for free, thehub.ca. I encourage everyone to do that. It’s really a non-partisan news organization that’s really rooted in classical liberal principles, and we have a great stable of writers and really good content.
And then on the mental wellness side, we created an organization called the Converged Mental Health Coalition, which is a national organization that’s designed to bring various support agencies in the mental health space under the same roof so they start talking to each other and we get more efficient. There’s a lot of squandered opportunity because most of the organizations, certainly in Alberta, are funded by the provincial government, and they see each other as competitors as opposed to collaborators. We’re trying to break down these walls between them.
So those are our buckets, those are our big bets. And then within each of those categories, we fund a number, like probably 70 organizations that typically fall within one of those three areas. I think we support a total of about 75 charities in the country every year. And we have a small allocation to things that don’t fit neatly in one of those buckets, but that’s kind of how we’ve set it up.
Our intention is that we have a budget, we manage our own endowment. My son Adam and our CIO Steve basically manage that. We have a spend-down plan, and our intention is that unlike most foundations, it will ultimately be sunset. We want to avoid mission creep, that thing you see with a lot of foundations where, three or four generations after their founding, they start supporting a lot of organizations that would have been anathema to the original founder. We’re not going to fall into that trap.
We’ve basically got a 40-year plan for spending it down, and then that’ll be all she wrote. So unlike Bluesky, which is meant to last forever, the foundation is not meant to last forever.
Luke: That’s really, really, really cool. And again, very unique to have such a well-thought-out strategy with even your approach to market and everything like that. Obviously, that consultant sounds like that was a very effective first step in that journey as well, helping you sort of bear down on what you really cared about rather than just the peanut butter spread on different things. Very unique.
Derrick: The thing is, Luke, in my experience, we’ve spent a lot of time having conversations internally about, on both the philanthropic and the for-profit side, what matters to us. What is it that we’re trying to achieve? Let’s get clarity on our mandate. And you know, I guess what I would say is what I’ve seen, and I’ve met with many, many families and family businesses, and that’s the thing, it’s so easy to defer those conversations. They can be uncomfortable or they can be time consuming. They are time consuming, there’s no question. You have to have a commitment of everybody inside the tent to work at it, right?
I don’t think it happens without outside support. In our case, it wouldn’t have. It was a different coach on the business side than it was on the foundation side because they specialize in different things. But really, their job is to make us get together and have meetings and conversations so that there’s transparency and clarity.
And I just think that’s the step most families don’t take. If the responsibility for organizing all those sessions fell on my shoulders, they’d never happen. I’ve got too many other things going on, it would be too easy to decline them. But a big part of the reason we have that infrastructure in place is to make sure the meetings happen. There’s plenty of notifications given, here’s the agenda. So, we have a meeting with all our family every two months, and it used to be once a month, now it’s bimonthly. There’s an agenda, there are notes, and we cover the foundation and we cover the business. We’re very transparent, so there’s no reason why people wouldn’t know what’s happening. It’s just essential.
And then once a year we get everybody physically together because my siblings don’t live in Calgary, but they bring their families and we sit down for two or three days and we cover the waterfront. That takes work and a certain amount of commitment, but I don’t think any family can do it on their own.
Luke: Yeah. No, that’s an excellent last piece of advice, and it’s been a very, very interesting discussion. So, thank you so much for your time. I can honestly say this is one of the most well-thought-through family strategies as far as building out that legacy playbook, as you talked about at the start, between the business side and on the philanthropic side. I really appreciate you sharing with me and my audience, and I wish you and your family all the best.
Derrick: Well, I appreciate your interest. Have a great week.
Luke: This is Beyond the Family Business podcast. Please like and subscribe. Alright, take care.
Disclaimer: This podcast is sponsored by BMO Private Wealth. The information provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. Always consult with a qualified financial advisor or professional before making any investment decisions.