Better Know a Young Millionaire – Nolan Watson

Welcome to the next installment of Better Know a Young Millionaire.  Today, I have the pleasure of interviewing Nolan Watson, the youngest CEO of a NYSE-listed company!  Nolan is the founder and CEO of Sandstorm Gold (SAND), and is only 33 years old.  Prior to founding Sandstorm, Nolan was the CFO of Silver Wheaton (and at 26 years old, was the youngest CFO of any NYSE-listed company), where he helped raise over $1 billion in debt in equity to fund Silver Wheaton's growth to a $5 billion market capitalization in less than 5 years.

What's even more exciting are Nolan's achievements outside the office, where he has won numerous awards for his professional and charitable achievements including Business in Vancouver's CEO of the Year, Canada's Top 40 under 40 Award and the Queen Elizabeth Diamond Jubilee Medal.

Let's get to know Nolan a little better…

Getting Started

Tell me about yourself and your company?

Nolan: My name is Nolan Watson and I am the President & CEO of Sandstorm Gold Ltd. (NYSE MKT: SAND). Sandstorm provides gold stream financing to resource companies that need capital to build their mines. A gold stream involves Sandstorm making an upfront cash payment in exchange for a contract which gives us the right to purchase a percentage of the mine’s production at a fixed price. Sandstorm was launched in early 2009 and has since completed 10 gold streaming deals and grown to over $600 million in market capitalization. Our vision is to build shareholder value by completing accretive gold streams and I believe that one day we will be a multi-billion dollar gold streaming company.

I am a Chartered Accountant and Chartered Financial Analyst charterholder and I got into the streaming business back in 2005 as the first employee of a small start-up called Silver Wheaton (NYSE: SLW). I helped raise over $1 billion in debt and equity to fund the completion of a number of silver streams and Silver Wheaton grew to over $5 billion in market capitalization before I left to start Sandstorm in late 2008. I am passionate about the streaming business; it is a business that did not exist in 2004 and has since become a $20 billion industry. I could see it growing to a $100 billion in the next 10 years.

How did you make your first million?

Nolan: During the time that I was employed at Silver Wheaton, I was fortunate to own stock during the company’s significant growth from 2005 to 2008. I made my first million from selling those shares before leaving to start Sandstorm.

What was it like to be one of the youngest CEOs of a NYSE-listed company?  How did your peers and board view it?

Nolan: The way that I have made up for my age over the years is by surrounding myself with people far smarter than I am and by working extremely hard.

Nolan Watson On Investing

How do you deal with the volatility of commodities like gold? Are you concerned about the “gold bubble” bursting?

Nolan: Volatility presents opportunity. I am bullish on gold long-term because the central bankers of some of the world’s largest economies are going to require the continued use of quantitative easing in order to get their debt to GDP ratios to sustainable levels. Having said that, I am bearish on gold in the short-term and we intend to make our investments at Sandstorm accordingly and hope to profit from our decisions long-term.

Sandstorm’s average purchase price per ounce of gold is US$400 so although our margins expand and contract with the gold price, at current gold prices of US$1,350 per ounce we are generating strong free cash flow.

Where do you currently invest your money and why?

Nolan: The majority of my net worth is in Sandstorm Gold but I also have investments in a handful of other mining companies. I invest in a small number of companies, but I get to know those companies really well.

On Entrepreneurship

Is there another way to be a young millionaire without starting your own business or being an entrepreneur?

Nolan: Aside from winning the lottery or obtaining an inheritance, I don’t know of any other way [to be a young millionaire].

What's the biggest risk you ever took and do you regret it?

Nolan: The biggest risk that I ever took was investing everything I had into Sandstorm before we launched the company back in 2009. We have had tremendous growth since then and I believe that there is exciting growth ahead.

If you could make one change, what would it be?

Nolan: I would travel less and spend more time with my kids.

What advice do you have for young adults and college students when it comes to money and entrepreneurship? 

Nolan: Starting a business will be harder, will take longer and will cost more than you think it will. Be prepared. It is incredibly rewarding to be an entrepreneur, but it is also incredibly challenging, so don’t take it lightly.

What I Learned From Nolan Watson

First, I'd like to thank Nolan for taking the time to answer my questions.  It's amazing to hear from a young, successful person, who also happens to be the youngest NYSE CEO.

I'm also impressed by Nolan's business strategy.  He essentially started the gold streaming business, by combining futures and other contracts with complex financial instruments.  While scary in summary, these can actually be incredibly good investments if done correctly.  But to put these together in a successful way, you have to be incredibly knowledgeable.  That's where Nolan comes in.  He is highly educated and smart, and that is what has allowed him to transform this business into a multi-billion dollar market.

It goes to show the importance of education, in combination with street smarts and a market niche.  By putting these together, you can build a highly lucrative business.

What are your thoughts on Nolan's business and gold streaming?