My Start as a Mailroom Clerk
I’m no kid—I’m in my late fifties with some gray hairs to prove it. My passions are helping people live better lives, music, technology, real estate and, of course, investing; I’ve been an investor for more than three decades.
I grew up in Vancouver, British Columbia and often jokingly say that I went to the “School of Hard Knocks” and then attended the “University of Failure,” graduating summa cum laude. But in reality, I graduated high school in 1979 and went to a local Vancouver community college for a program in small business and entrepreneurship, where I was mentored by Don Siemens, who guided me toward the brokerage business.
The Stockbroker Period
Although deflated, I was not going to let someone else dictate my future. Finally, in 1982, I moved up from being a clerk and a messenger to a full-fledged stockbroker at Canarim Investment Corporation (now Canaccord Genuity Group Inc.), again thanks to Don Siemens, who somehow was able to open the one door that led directly to the palatial private office of the then-president of the firm, Peter Brown. It was a relatively short interview, and I am not exactly sure what I said or did to land the job, but I did. I will forever be grateful because his decision to hire me changed my life.
As part of my on-the-job training, I spent time on the trading desk of Canarim and on the trading floor of the now-closed Vancouver Stock Exchange.The Exchange has been repurposed into a hotel and office tower to accommodate the continued population growth of Vancouver, my hometown. Soon, I was assigned my own desk. I was given the Yellow Pages to start prospecting and cold calling for customers, which was very tough work.
After many, many such calls, I made some headway and slowly started to reel in customers. To commemorate my very first order on Aug. 4, 1982, I kept the now-faded, but originally blue-colored trading ticket, time-stamped at 9:50 a.m. It’s framed now and hanging in my office, which is in a building I used to deliver to as a messenger and now proudly own.
Although I worked hard at it for several years, the brokerage business was not for me. You see, to make a good living, you must recommend new stocks to your clients constantly. Are there really that many good stock bargains around at any one time? If so, why did the world’s greatest stock investor, Warren Buffett, a man I also like to emulate, say that he finds only two great ideas a year?
Early Investments
So, in 1987, just months before the market crash that saw the Dow drop by 23 percent, I left the brokerage business and started investing on my own, in earnest, in companies with great products. I also tried my hand at starting and managing a few small businesses, ranging from old tech auto salvage to a few new- technology companies.
Early on, many of my investments did poorly; some even failed outright. But nothing compared to losing my mother in a matter of days, right after which I hit a low point and became clinically depressed. With the passage of time and a lot of help and support from my family and friends, my lugubrious state of mind slowly but surely cleared.
Many pounds lighter from my depressed state, I went back to work and regained my stride. I decided to become a venture capitalist. I would back companies with promising technologies. I would fund them with some of my own money and raise the rest mainly through friends, family and stock offerings to outside investors.
I learned how to deploy capital in much better ways and eventually surrounded myself with a smart core team of executives who have now been with me for decades. Some of my investments have worked out well, and some have not.
Although a potential return and profit is a factor in my investment decisions, my primary motivator has been, and continues to be, my desire to help smart entrepreneurs, inventors and scientists to create and commercialize products and technologies that not only generate profits but also make the world a better place.
Making an Impact
My style of investing is called impact investing, which is meant to provide capital to “companies, organizations and funds with the intention to generate social and environmental impact alongside a financial return,” as described in the 2017 Annual Impact Investor Survey released by the Global Impact Investing Network.
Impact investing is why I invested in the development of a bio-artificial liver device after my mother passed away from liver failure at
age 57. Her passing was the catalyst that motivated me to try to save others from the same illness.
It’s also why I invested and now have controlling positions in two innovative publicly traded technology companies.
The first is SolarWindow, which has developed liquid coatings that turn ordinary windows into transparent electricity-generating windows. Imagine entire buildings becoming vertical power generators. Imagine a Tesla topping up its batteries from the solar energy captured by its windows and sunroof. It’s why I have invested $30 million into this company and recently became chairman of its board.
The second public company is RenovaCare, which has developed the SkinGun™ to spray a patient’s own skin stem cells onto severe burns and wounds. So far, more than 70 severe burn victims have been experimentally treated, with many leaving the hospital in a matter of days. The potential benefit of this company to burn victims everywhere warranted my $20 million investment.
Hello, Real Estate
Like every investor I know, my goal has always been to generate the highest risk-adjusted returns possible. However, market volatility, excessive fees, bad recommendations and conflicted advice always seem to get in the way.
So, wanting less risk, greater cash flow and some diversification, I decided to get into high-quality commercial real estate in 2006, forming the real estate arm of my family office. From the very start, my team and I broke away from conventionality and constrained thinking, placing the needs of others ahead of our own. We treated everyone, not just our tenants, with respect, courtesy and integrity.
We relied on a factor more crucial than “location, location, location.” Yes, there is something more important than location in real estate, which I write about in my book “Double-Digit Returns, In Good Markets and Bad.” We took on traits typical of luxury hoteliers, rather than typical of landlords. Shocking many, especially our tenants, we even lowered rents when we didn’t have to.
Almost immediately, my team and I started generating what many would characterize as exceptional returns. Before I knew it, my portfolio was worth $50 million, with modest debt. Surprisingly, my returns got better and better. Unlike many, we sailed right through the so-called Great Recession. Before too long, the value of my real estate portfolio zoomed right past the $100 million mark.
Since I started my career with little education and no money to speak of, it took quite a while for this reality to set in. I still reminisce about my early days as a messenger, delivering packages in the pouring rain to many downtown buildings, including two that I proudly own today.
The Audit Results
After a decade in business, which included the tough years of 2008 and 2009, we retained leading appraisers to provide market valuations and engaged an independent accounting firm to perform an examination of our in-house investment returns.
The independent accountant’s report that came back stopped me in my tracks. My team and I had generated annualized returns on equity of 33 percent per year (simple interest) for the 10 years ended Dec. 31, 2015.
More recently, for the 13 years ended Dec. 31, 2018, our relatively low-risk annualized returns stood at 45 percent per year, walloping most benchmarks and further validating the long-term financial benefits of the strategies revealed in my book.
During this same 13-year period, the NASDAQ generated annualized returns of 15 percent per year, while the Dow gained about 9 percent per year and the S&P 500 Index was up just 7.5 percent per year.
Of course, this is not to suggest that investing in publicly traded companies should be avoided. For investors and entrepreneurs with the right temperament, such investments can and do have the potential to generate significant returns.
In fact, I hold significant positions in two public companies (described earlier) which are chosen selectively and in alignment with my “impact” approach of investing.
By the way, I am not a financial adviser and the information in this article is not to be construed as financial advice or any other kind of recommendation or a solicitation of an offer to buy or sell any of the securities of any of the companies I discuss.
Harmel S. Rayat
Harmel S. Rayat began as a clerk and messenger boy in the mailroom of a Westcoast brokerage firm. Soon after, he became a stockbroker and eventually decided to invest full-time in 1987, just before Black Monday when stock markets around the world crashed. Early on, many of his investments did poorly, some even failed outright. With the help and support of many around him, he persevered through challenging times, both financial and personal. In due course, he learned how to deploy capital in much better ways and surrounded himself with an exceptional executive team. Today, he manages a family office with a diversified portfolio ranging from commercial real estate to significant stakes in breakthrough technology companies. He can be reached through LinkedIn, Twitter, Instagram, Facebook, or his company’s website. www.taliajevan.com.
