In one of the oldest industries there is, Robert McEwen has built a name and fortune for himself as someone who is willing to try new ideas. Years before wikinomics, McEwen, as founder and chairman of Goldcorp, launched the Goldcorp Challenge, an online contest where people could win prize money for helping the company identify reserves. So it’s no surprise that McEwen — who’s now chairman and CEO of gold exploration firm US Gold Corp. and of oil and gas exploration company Lexam Explorations — and his wife, Cheryl, are the driving forces behind the Toronto-based McEwen Centre for Regenerative Medicine at the University Health Network, home to cutting-edge medical and stem-cell research. In 2003, the McEwens donated $10 million to start the centre; they gave another $10 million in 2006. And they have taken an active role in the centre’s success.
McEwen spoke with Upfront editor Alex Mlynek about why he thinks regenerative medicine holds such potential, how to get the most out of your philanthropic efforts and about the delight of helping others.
Tell me about your interest in regenerative medicine.
Regenerative medicine is an area which can have profound impact on the delivery of health care in the country and in the world. It’s really an extension of asking, Where can we get the most leverage in the health-care system for the dollars invested?
I look at the health-care system and think that we’re in big trouble. The baby boom is in the process of retiring. It’s the largest piece of the population, and 80% of health-care costs occur after 60. We have a lot of very talented individuals working within the system, and they’re doing a good job. But I just don’t think the system can be scaled up from where it is today to handle the needs that are going to be on top of us in a very short period of time. We need to change the model. We have to change the cost structure.
What led you to decide to support the centre?
There were a number of factors. One was just a personal situation. In February 2002, one of my sisters died, and four months later my mother died. So all of a sudden you go, “Whoa. What’s happening here? My world’s changed.” So suddenly the end comes closer, and you say, “Well, all right, what else has happened? I’ve done pretty well in business. And I’d like to share some of it. Where would I like to share it?”
Seymour Schulich had gotten me involved putting some money into the Schulich School of Business, where I’d done my MBA, and that would have been the first what I’d call “large” donation that I made. And he said, “You won’t believe what happens when you do this. All sorts of good things come to you. And it’s all very unexpected.” I said, “Yeah, yeah, yeah.” But it started, and then I didn’t really think much about it.
And then I went to the hospital, and said I’d like to make a donation. And they said, “Where would you like to put it?” And I said, “Well, tell me all of the things you’re doing.” And they said, “Well, we have this strategic plan, and we have four key areas that will form the foundation of our future.” One of them was regenerative medicine. I tend to like areas that are innovative, and can have the potential for big change. So I said, “Well, I’d like to put our money there.”
Peter Munk was another fellow who was involved. And he said the same thing as Seymour. He said, “Things come at you that you wouldn’t expect when you give. You get more than you expect.”
Your philanthropic approach also takes into consideration business issues around the research you support?
In some ways, there’s really not a shortage of research dollars for medicine. There seems to be a great deal of time spent on writing applications, and the money is given. But I haven’t seen a great deal of accountability. That’s often countered by saying, “Well, science is inexact, and we can’t put delivery dates on our work.” And my counter to that is, “Well, maybe we should be.” And that maybe we should be doing work on products that we can use in five years, rather than maybe have something in 15.
In order to convince our populace the money going into medical research is well spent, we need to see more deliverables — more things that can be applied at a clinical level and cure the problems that are out there. That attitude is not mine alone.
Do you think enough Canadian business people are contributing in terms of philanthropy?
Everyone does it according to how they feel. Some people are built with it in them, always giving back. Others, there’s an event in their life that shakes them quite a bit, and they go, “OK, I do have a limited amount of time here. What would I like to see done?” For most people, there’s been a tendency to say, “Well, I’ll bequeath it.” And I’d suggest to anybody who’s thinking about donating, after they leave this world, that they’d get far more pleasure, and interest in their life, by doing it now.
How has opening the centre affected you personally?
It’s introduced me to a brand new world I never even thought about. I think of it, like, in my businesses I was running down a long hall toward a door at the end of the hall, and it was just blank walls either side, just heading there. When Cheryl and I put money into the hospital, some curious things started happening; some doors appeared along those walls. And you open up a door, and you walk in, and there’s this totally new world that wasn’t part of anything I was doing. And in there I saw all of these very talented people who are very committed to making everyone in Canada healthy.
You also look at the world and go, “Hmm, how does this apply?” At first it was, “Let’s just support the research.” And then I went, “This is very much like junior mining.” It’s similar risk, similar time frame, similar probability of success — very low. And then you say, “Well, what can you do in there?”
What has been the most pleasant surprise so far?
I’d say the bringing together of the centre. Recently they had a major breakthrough in their heart stem-cell research, which I thought was fabulous. So it’s just good to see there’s a vision, there are a lot of people working to make it happen, and you get these positive reinforcements. Because with regenerative medicine, stem-cell research, people look at it and say, “Well, what is this? I don’t understand this.” And it’s really a bit of an educational program, because there’s so much misconception.
What do you suggest to those who criticize stem-cell research?
Educate yourselves as to what it’s about.
What is it about stem-cell biology and regenerative medicine that you find so promising?
Well, you can take out part of your body, put it in a petri dish, alter it a bit, it grows, put it back in your body, and you’ve gotten rid of a disease, you’ve replaced a limb. You’ve done all sorts of things, but you’re doing it with your own body.
Do you feel we’re at that point now in terms of the research?
We’re starting to get there. There are major diseases like diabetes where there’s a lot of work going on. The Economist magazine recently had an article all about stem-cell research and cancer, and how they’re linked. And one of the researchers — I saw him today when I was at the hospital — John Dick, was the first scientist mentioned in this article. And he’s a Canadian. He’d been able to isolate stem cells and show the link between cancer, and that has set off a new wave of research. The stem cell is the basic entity.
Is there another area you want to do more in as a philanthropist?
Education. Leadership. I’d like to see more confidence developing in the country, within the citizenry, to take risk. To state their minds, do positive things. To make it a better place for all of us to live.
Thinking about the current financial crisis, how do you feel things will look in the future?
Well, let me step back a bit. I’m probably more libertarian than anything else. I believe there should be less government, not more. In the financial markets, in 1929 when we had the crash, [government formed] the Securities and Exchange Commission in the United States, and there were a number of rules. At the time, it seemed like a lot of rules, regulation put in place. But since then, the SEC has grown and grown in size, as have the various securities commissions in our country. And the rules have become so numerous that no one individual can understand all of them. To me, that just creates more places for people who want to get around the rules to hide.
We have this belief that if we have more regulations, we’ll all be safe. And I don’t believe that’s the case. The current financial situation is built on that same type of premise, that we can get away from risk by creating complicated financial structures that insure us against that risk. What we’re looking at today is the product of probably 20 to 30 years of sophisticated products and risk management being layered upon layer until you’ve built this large structure. And people became complacent about risk, and they said, “Well, there’s an insurance company over here that will guarantee that this event, if it happens, won’t bother us.” The trouble is, we’re finding out that a number of those organizations that gave guarantees are not solvent. So the guarantee isn’t any good. So that the risk they were trying to avoid is there.
The other thing that happened was interest rates were lowered to the point that they were below the cost of living, the CPI index. So we encourage people, the regulators and the governments, to go out and spend. And we also have a population that has grown, and everybody forgot about the bad times, and thought they were history. So you go out, and you buy a house, not as a place to live in, but as an investment. People got used to the expectation that prices were going up, interest rates were going to remain low, and life was like this. Well, if you happen to be a student of history, which I am, and you look out over time, you know that there is a period where that works, and then after that if you’re not out of the market you go down the slide, and watch all of that asset appreciation disappear.
In 1929, one of the things that brought down the stock market and the economy was overcapacity in the system, in agricultural, power generation, manufacturing. Today, we have huge overcapacity in manufacturing because we outsource to the Third World, and they’ve built these big factories that can produce for very little money.
So you’ve got overcapacity, low interest rates, speculation. Look around Toronto at all the condominiums going up. Are they being bought to be lived in, or to be flipped?Most people are buying them to flip them.
Now it’s like a game of musical chairs. Only rather than taking one chair out when the music stops, they take six out. Everybody is rushing for liquidity, and all those assumptions that were put in place to stop the risk are falling by the board. People are running for the doors; it’s like there’s a fire in the theatre. Everybody’s running for the exit, and all sorts of people are getting stomped on. And it’s very distressing to see it happen.
I felt last August that when the sub-prime issue arrived that we had reached, essentially, an inflection point in the marketplace. Up to that point, people were investing money to earn an income or a capital gain. I felt at that point, with sub-prime, people would start looking for protecting capital rather than trying to see it grow. I was buying some T-bills. One week the yield was 4.5%. And the next week it was 3.5%. Today I phoned a trader and said — and T-bill rates have gone down, and down, and down — “What are T-bills right now?” He said they are at 0.25%.
The point of inflection to me was in early September you saw Northern Rock go under, and the question was, “Where do I put my money? I only have so many guarantees.” Brokerage accounts: $60,000. Bank accounts: $100,000. So to me the answer was, you put your money in gold. Some portion of your money.
And now you have the government coming along — politicians are always easy. Someone asks them for money, and they say, “Here, have some money.” Now you see big problems in the mortgage and housing markets, and they’re going to bail them out. Well, they have to print money for that. So it’s going to devalue the purchasing power of currency. It won’t happen right away. We’ll see a series of injections of capital at increasing frequencies, and larger amounts, before we come to the end of this process. The governments have to be seen as having the answer. But they don’t know what’s going on.
Is it going to be good? In 1929, they were restrictive in their monetary policies, and trade barriers went up around the world. It remains to be seen if that will happen, but now there’s an enormous race for liquidity,and it’s like “Sell, sell, sell. At any price because I want to raise money.” There will be bounces, though. It will come, drop precipitously, and then it’s a dead-cat bounce. The market will maybe do a 30% recovery. It will go along for a bit, and then people will say, “The government’s putting more money in here. There’s something wrong with the system. So I’m not going to stick around.”
A big danger is, the government’s playing around with the rules. The bailout of some of the banks, you just look at it and say, “How can they do this? They’re stomping all over the securities rules that are out there.” Shareholders are being wiped out, and they’re just saying, “No, no — there’s no shareholder vote. We’re going to dilute you 100%, and you don’t have a vote.”
So what’s going to happen? You’re going to have increased volatility, higher level of anxiety, shock. The credit system has been compressed and constrained, so people aren’t feeling as optimistic. Let’s throw something else in this. We’re watching the baby boom about to retire. The investment profile of a retired individual is totally different than someone who is working. Someone who works invests for growth. Someone who retires invests for income. So they do not want to put their money into capital situations. They’re not going to put it into productivity improvement. They’re going to put it into yield. But if your yield on a Treasury bill is a quarter of a point, how much money do you need to retire?
So you’ve got increasing health-care costs, an infrastructure that needs to be rebuilt, and an investment pool that wants interest income. Our government’s got to wake up to the fact that somehow we have to attract the richest people in the world to decide to live in this country. They will invest in our country so that there are plenty of jobs for people who are living here and working. And very few countries have seen that yet.
There are some really big decisions that have to be made that our governments aren’t doing. We need decisiveness, and we need a plan for this country. Because right now, Canada is adrift and has no idea what it’s supposed to be.