How does Canada become the next Silicon Valley without trying to become the next Silicon Valley?
It’s a bit of an existential mind-bender – a paradox akin to Schrodinger’s Cat, the quantum thought experiment.
A panel of experienced tech folks tackled the question this week as part of a broader conversation about the recent blossoming of the Canadian technology scene.
A torrent of tech company IPOs, a growing herd of unicorns, an expanding pod of narwhals, a rapid surge in the amount of capital being raised, a huge rise in exit values, and a lengthening list of extraordinary success stories have put the country’s tech ecosystem in the global spotlight.
As Douglas Soltys, host of the panel discussion and Editor-in-Chief of the news site BetaKit, put it, “Canadian tech is having a moment.”
The remarkable success supports the view that Canada has all the building blocks to become a global tech heavyweight.
But, as Soltys has been arguing for several years, that shouldn’t mean defining the Canadian tech ecosystem in relation to Silicon Valley, the current but struggling holder of tech's world heavyweight championship belt.
His panel concurred, with a few nuanced jabs, hooks and crosses thrown in.
“The Valley did not beat Boston by being Boston, and we're not going to beat the Valley by being the Valley,” said Chris Albinson, a venture capitalist and passionate Canadian who recently left San Francisco after more than 20 years to become the CEO and President of Communitech in Waterloo Region.
Albinson, who has also been making the point for years, said Canada needs to use its own unique attributes, and develop its own intentional strategy, to execute on its potential to become a global tech powerhouse.
He also said that Canada needs to leverage the red-hot "competition for awesome" that's taking place right now in the country's tech ecosystem.
Paul Teshima, Chief Client Experience Officer and Head of Invest at fintech phenom Wealthsimple, had his own take on the question.
“We’re not Silicon Valley North but I'm not anti-Valley,” he said. “Some people try to paint them as an enemy and I actually think, if anything, you need to build great relationships and networks in the Valley to be successful globally. I think it's really important.”
Soltys pushed the discussion along a related tangent, asking the panel to comment on what distinguishes Canada as a tech leader and how that intersects with the hot topic of “mission-driven” companies.
“I would talk to founders and CEOs about the Canadian values that I believe in, and the Canadian values that have led our great country for a long time – humility over ego, performance over spotlight, data privacy, ethical AI – all of that over monetization,” said Laura Lenz, a Partner in OMERS Ventures who leads the fund’s Canadian investments.
Teshima drew an interesting analogy based on the contrast between musicians Kanye West and Beck.
“I do think that up here in Canada we have a really interesting opportunity because our leadership style is different,” he said. “I one time wrote a blog post, ‘Would you rather be Kanye or Beck?’ Even though Beck has had a lot of success, Kanye is the rock star and I feel like you could be really successful in Canada being Beck, being that humble, determined, driven leader who doesn't necessarily need to be in the spotlight all the time but really has a mission and really cares about value for his clients and for his employees.”
Albinson – a venture capitalist who co-founded The C100 to help Canadian tech founders make connections in the Valley – said Canada has a “massive opportunity” to build on its reputation as a trusted nation that values “tech for good” and thinks deeply about the impact of technology on society.
“We need to go execute against that, and why tech-for-good is a brand for Canada that we all should be very proud of and also be curators of,” he said. “Deloitte’s Fast 50 showed (that) 65 per cent of the fastest-growing private companies in the country are using AI or ML in some form and applied way. Why don’t we own ethical AI and talk about it? And then people will trust us, which they don’t trust U.S. tech right now, they don’t trust Chinese tech right now.”
The conversation also touched on the shortage of tech talent in Canada. All three panelists said it was the biggest challenge facing Canadian tech companies.
“I’ve talked to over 330 founders just in the last 40 days coast to coast,” said Albinson. “Challenge No. 1 is talent, Challenge No. 2 is talent, Challenge No. 3 is talent. That is the biggest issue for our ecosystem right now.”
Canada has been known in the past as a place where tech salaries were cheaper than elsewhere. But to recruit talent now, Lenz said that OMERS Ventures has to go beyond tech hubs like Ottawa and Waterloo Region and look at global compensation benchmarks.
Salaries aside, all three panelists said that workplace culture and “mission-driven” companies are the biggest factors for many employees.
“I think everybody wants to work for a mission-driven company right now, regardless of age,” said Lenz. “I think COVID has taught us a lot; some of the inequalities that we’ve all been exposed to or made aware of in the last year have taught us a lot about working for a mission-driven company.”
Teshima, who had always worked as a founder or co-founder before joining Wealthsimple last fall, said he was blown away by how many employees had joined the company because “something in their past had affected them to say I care about financial freedom and financial literacy more than other things in my life, and I want to join a company (that’s) helping other Canadians achieve that.
“That, to me, is part of the differentiation as to why you can attract great talent if you align on that mission and values,” he said.
In the quest for talent, Albinson said Canada’s immigration policies should continue to make it faster and less onerous for skilled people to come work here.
“Canada just got recognized as the best place in the world to live and we should be shouting that from the rooftops to the smartest people all around the planet” he said.
The panel was also asked what government programs were most effective in shaping the current success of the Canadian tech industry.
“Hands down it’s SR&ED,” said Teshima, referring to the federal Scientific Research and Experimental Development tax incentive program. “In my experience, it has been the most beneficial by far.”
Lenz agreed but also mentioned the government’s Venture Capital Action Plan (VCAP) and its Venture Capital Catalyst Initiative (VCCI), both created to encourage private-investment companies to support startups.
Albinson said all three programs were good, but he ranked Canada’s university system and co-op programs as the main forces shaping the current success of Canada’s tech ecosystem.
“I think the thing we underestimate when we think about government is the amazing institutions that are funded by tax dollars, like the University of Waterloo,” he said. “And the co-op program where those students go out and sit in Amazon and Facebook and Microsoft in the Valley and they come back, and folks like Mike Litt and the team at Vidyard, and Martin Basiri at ApplyBoard, and say, ‘Yeah, we're going to build our own company here.’”
He and Lenz also gave credit to the Business Development Bank of Canada (BDC).
“We had a desert from 2000 to 2010; there was no private venture capital in the ecosystem and BDC stepped up and put the whole thing on their back and put life-support on the ecosystem,” Albinson said. “We would not be talking about the successes we’re talking about today if they hadn't stepped up.”