By PETER NOWAK
Special to The Globe and Mail
Thursday, December 13, 2018
Justin Thouin doesn't so much preach frugality as live it, which explains much of his personal and professional financial good fortune so far.
In 2010, he was going through a career transition when he got a notification from his mortgage provider that his rate was going up. He called the bank and stressed his long history as a customer, but it didn't get him anywhere.
He set to looking at competitors' rates. Many hours of research later, he found a better offer and took it back to his bank.
Magically, it lowered the rate, ultimately saving him $6,000 a year.
He did the same with his car insurance and got his annual fees reduced by $2,000.
"It took a lot of effort and it was uncomfortable," he says. "But unless you educate and advocate for yourself, they're going to try to make as large a profit off you as possible."
The experience served as a veritable "lightning bolt" that sparked the idea for a website where consumers could easily compare mortgage, auto insurance and credit card rates from multiple providers.
Mr. Thouin had seen numerous such websites advertised in Britain, where he spent time as vice-president of product management and business development for online gambling company Cryptologic, but he couldn't find much of the same in Canada.
In 2012, he and Cryptologic colleague Cliff Ritter launched LowestRates.ca, and the site has been growing steadily since. The site earns commissions by referring customers to providers.
The company just placed ninth on professional services consultancy Deloitte's annual Fast 50, which tracks revenue growth over a five-year period. LowestRates.ca saw 1,859 per cent revenue growth from 2014 to 2017, according to the report released last month. The Toronto-based operation is pulling in between $10million and $20-million and has 30 employees.
Mr. Thouin, 40, wasn't the stereotypically poor startup founder when he began, however. With his previous executive roles - he also served as chief operating officer for Virgin Gaming - he was financially secure before striking out on his own.
Still, his wife had doubts about the LowestRates.ca venture and wouldn't allow him to dip into their savings to fund it. If he was going to do it, he would have to take a risk.
"She said, '[people aren't] going to trust some random website," he says. "So if we run out of money, we're done and we have to go back to the corporate world."
He spoke with a venture capital company in Toronto, but got a seemingly incongruous response.
"They told me to come back once I had a million dollars in revenue," he says. "But I wouldn't need their money if I had that, would I?" Mr. Thouin found his needed funding with the unlikeliest of investors - his barber, to whom he sold a 15-per-cent stake for $150,000, valuing the business at $1-million. The company grew from there and, in 2015, Mr.
Thouin sold half of it to a group of investors.
The company has always been profitable and has never been in debt or indebted to VCs, a fact in which Mr. Thouin takes pride. He didn't draw a salary for the first few years of the business and gives himself only "modest" compensation now, or less than what he believes he could get in the corporate world.
To other startup founders, he preaches an aversion to debt and a commitment to long-term gain.
"Take as little as you can [from the business] because if your company hits it big, you want to keep as many shares as you can," he says. "No one ever regretted paying down debt, but it's a tricky balance, which is why there are no hard-and-fast rules."
Startup advisors accentuate that last point - that there's no one way for startup founders to balance their personal finances versus those of their company.
"There's no one answer that fits all," says Michelle McBane, senior investment director at the Toronto-based MaRS Accelerator Investment Fund. "You have to match up your business with the right investor. There are a lot of ways to get money in the early stages to make sure you're not living on ramen noodles."
Patrick Martinson, who advises startups as campus lead mentor at the University of Waterloo's Velocity accelerator program, also believes in the frugal approach. Mr. Martinson in 2008 helped co-found Kitchener, Ont.based Clearpath Robotics, where the same thinking was practised.
"We would always pause and think, 'Do we need to incur this expense or is there a more creative way to keep operating and growing the business?' " he says.
"We often applied that to ourselves as well."
He does caution against being too thrifty, however. Founders need to draw on some of the company's money or they'll find it difficult to concentrate on the business.
"You need to prepare yourself for a marathon and not a sprint," he says. "You need to be able to take care of yourself mental health-wise and be in a position where you can live somewhat comfortably, whatever that level might be for you."
The key now for Mr. Thouin, as well as other founders who are running companies in stable shape, is long-term future planning, such as setting aside money for family needs like education.
It's also a good time to start thinking of an exit strategy - what do they want to do next?
"If you get the feeling that the business is starting to do well, it's good to say, 'What is it that I want to achieve out of this?' " says Krista Kerr, chief executive officer of Toronto-based Kerr Financial, a fee-only financial planning firm.
"You want to be position where you have cash to either reinvest in a new business or know that you've taken care of these [needs] for your family. It's hard when you're in the throes of growing the business to do this."
Justin Thouin, CEO and co-founder of LowestRates.ca, explains how he balances business and personal finance. The key now is long-term future planning for both, experts say. JENNIFER ROBERTS/THE GLOBE AND MAIL
LowestRates.ca placed ninth on Deloitte's annual Fast 50, which tracks revenue growth over five years. JENNIFER ROBERTS/THE GLOBE AND MAIL