Stephen Smith, executive chairman and co-founder of First Financial at his company’s Toronto offices.STORY CONTINUES BELOW THESE SALTWIRE VIDEOS
“I do this for the intellectual challenge,” he said. “That’s what the acquisition of Home Capital is: an intellectual challenge. It is not about the money.”That belief is strong even though Smith once lost every nickel he had in the early 1980s, declared personal bankruptcy and had to move in with his younger sister, Mary Louise, a.k.a.
He bought a quadplex near the University of Toronto, leveraged himself to the hilt, started developing townhouses in the downtown core and watched his finances implode when interest rates spiked in 1982. He describes the experience as a slow-motion disaster: all his eggs were in one basket, and market forces beyond his control kept squeezing the basket until it broke.Smith became depressed. He was 33, and suddenly living with his kid sister.
The men rarely socialize with one another. They are not buddies, despite having been in business together for almost 35 years. They talk shop in Smith’s office Tuesdays, and while they don’t always see eye to eye on everything, their disagreements never get personal. Even as chief executive, he could still be found fiddling around with the in-house technology, working out the bugs and coding updates right up until a few years ago when someone at the company — which today has around 1,600 employees and about $130 billion in mortgages under administration — politely mentioned it probably wasn’t appropriate for the boss to be doing such things.
“If Stephen decides he wants to do something, he works at it and works at it and works at it,” Tawse said. “At an age when people typically start giving things up, he takes them up.” “I knew Stephen wasn’t slowing down,” Jim Leech, the former chief executive of the Ontario Teachers’ Pension Plan, said.
Leech and Smith have since become friends and enjoy discussing business philosophy, among other subjects. Coming from the institutional investing space, Leech is all about diversification. Smith is a little different. He co-founded a non-bank, mortgage loan company, partnered in a deal to buy a mortgage insurance company, and is now buying a company that provides housing loans to borrowers who can’t get them elsewhere. To summarize: He knows what he knows.
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