Why Canada Has No Big Tech Companies

http://blog.contentdj.com/2013/07/20/why-canada-has-no-big-tech-companies/

by liquimoon • 13 years ago

94 167 13 years ago

blog.contentdj.com

canada has serious issues. I wanted to go for a conference there + meet a few startups. Turns out you need 2 months to get a tourist/business visa!

liquimoon20• 13 years ago

Thanks for commenting. Did you know about the Startup Visa? http://www.techvibes.com/blog/foreign-startup-visa-program-2...

byroot• 13 years ago

From the states ? Because from europe you can go there without visa.

cdmckay• 13 years ago

I'm pretty sure Americans can come to Canada without a visa. I know (firsthand) that Canadians can definitely go there without one.

jmspring5• 13 years ago

I find it hard to believe you couldn't attend a conference and visit a couple of startups on a normal entry from the US, unless you are not a US citizen?

I've been to Vancouver many times as a tourist, a few times for conferences / standards meetings, no problem, no visa required.

This doesn't sound right.

rogerbinns6• 13 years ago

A visa is required for business visits, unless all you are doing is "meetings". However they'll usually sell you one at the airport.

GoodIntentions• 13 years ago

Depends how you answered the questions and what type of border services agent you got.

A former employer of mine had U.S. based employees that were subject experts / trainers on proprietary systems - Written internally, used internally. We had to do training sessions via teleconference after the border services turned our trainer back. Our Legal followed up with border services and was given the requirement that we advertise nationally for someone to fill the training role for a period of i-can't-recall how many weeks then re-apply if not able to fill the role from a hardworking but unemployed fellow Canadian.

It was utter crap. Time we didn't have to look for a person who didn't ( couldn't ) exist seeing as it was a new system, written outside Canada. Trainers had crossed previously to fill similar roles without issue. go figure. We ended up doing it over the phone..

pedalpete• 13 years ago

tourist visa and business visa are two different thing, it isn't a tourist/business visa.

As a Canadian travelling to the US for business, we have the same process. But if you're going to a conference, you're fine, I used to do it all the time (from Canada to the US).

Who told you it was going to take two months?

redthrowaway• 13 years ago

We're in the middle of a long strike by our diplomats and consulate workers, which is pushing visa processing times far longer than they usually are. It should fix itself once they and the gov't reach a new deal and the backlog is dealt with.

jeffblake• 13 years ago

Yeah I'm an American who went to school here in Vancouver, started a company, doing well, but probably moving myself and the company back to the States soon as it's very difficult to get a VISA. The new startup VISA only applies to companies that are fundraising.

liquimoon20• 13 years ago

Hey Jeff! Jerry here.

Sorry to hear that. Should catch up soon!

raquo• 13 years ago

If you finished a post-secondary program you're (probably) entitled to a post-graduate work permit. Beyond that, there's Federal Skilled, Federal CEC programs and BC PNP. Are you sure that you've explored all your options? You may want to talk to an immigration lawyer if you didn't yet.

skylan_q3• 13 years ago

We're too busy importing people with "masters degrees" from Indian and Chinese "universities". I'm pretty sure this is worth more points than having a degree from even an ivy league school.

robotresearcher3• 13 years ago

Just in case this is useful to you one day: A travel visa is a normal, uncapitalized noun "visa". The capital "VISA" is a trademark of the credit card company. Neither is an acronym.

otterley• 13 years ago

Trivia: VISA is in fact a recursive acronym, much like GNU: Visa International Service Associaton.

vinceguidry• 13 years ago

I don't live there, so maybe I'm missing something, but is Silicon Valley really something to glamorize and try to replicate? I always thought that technology is supposed to be distributed rather than centralized. Centralizing something allows you to exploit economies of scale, but also invites parasites in to free-ride. And the Valley does seem to attract a lot of parasites.

liquimoon20• 13 years ago

I think technology should be distributed to leverage the economy of scale. But here, I am talking about the startup ecosystem. If you look at the big Internet companies, you will be amazed to see how many of them come out of the valley. That's why the rest of the world is trying to jumpstart this. The problem is it's not as simple as copying what's working at the surface.

robotcookies• 13 years ago

Technology (the product) can be decentralized. But the generation of ideas that create the products is a separate thing from the product itself. Many would say there is a geographic aspect to the generation of ideas... that people, for some reason, need to be in proximity to each other. When bright people work together they produce much more interesting things than when working in isolation from each other. And from observation, it also seems that bright people seek each other out. This isn't to say SV is great or doesn't have its issues, but it seems to attract the brightest people from around the world (and possibly 'parasites' as you mention, as well).

I don't think most places like Canada want to replicate SV... just the part about creating large successful tech companies. The article suggests this might be helped by allowing people to actually get and stay there. It's not really about 'centralized technology' but more about creating a culture where people from around the world can come together and make these things happen.

jister• 13 years ago

> I don't live there, so maybe I'm missing something, but is Silicon Valley really something to glamorize and try to replicate?

Nope not really but you're in HN and most people here tend to think that Silicon Valley is like Mt. Olympus or something. There are a lot of startups out there that are very successful and not in Silicon Valley.

liquimoon20• 13 years ago

But the concentration is what counts here. After all, Silicon Valley is merely a region. You cannot compare it to the rest of the world.

michaelochurch2• 13 years ago

is Silicon Valley really something to glamorize and try to replicate?

Silicon Valley has the lowest latency in searches, both for job seekers and for employers. If you're looking for someone with deep experience in 3 disjointed areas of technology, you can find that person in SV. You can't easily find that person anywhere else. You have to train someone into the role, or convince the one matching person in the world to move.

For extremely specialized queries, SV still has a continuous labor market while the rest of the world is discrete. If you're doing the kind of get-big-or-die red-ocean gambit that VCs like to fund, that latency risk is undesirable.

Other than that, I think SV is overrated. There are probably 20 places in the country (many cheaper and with fewer douches) where it's not hard to find generally smart, technical people in large numbers.

Anyway, I can't imagine anyone under 45 willingly living in "Silicon Valley" unless that includes San Francisco. The reason for moving out to the suburbs is to get a cheaper place and more land, but the Valley doesn't have that going for it because even suburban houses with disastrous commutes are expensive.

rdouble3• 13 years ago

Anyway, I can't imagine anyone under 45 willingly living in "Silicon Valley"

In my experience, a large percentage of engineers of any age have suburban tendencies. There are way more "nerd's nerds" down in the valley. If you want to run into people who build robots as hobby projects, they will be at Menlo Park Techshop on the weekends, not at Dear Mom. (although I've heard these days that a lot of maker-hacker types live in Oakland)

rdouble3• 13 years ago

It would be cool if the Silicon Valley area could somehow be replicated without the tech industry. I wouldn't mind living in the Atherton of the 1950s.

rogerbinns6• 13 years ago

One thing that is rarely stated is a California law that things you do on your own equipment and time belong to you, not your employer. (Conflicts of interest aside.)

This let people experiment on the side, which sometimes failed, but sometimes discovered something useful. It takes some of the risk out of startups in the very early stages. By contrast my employer in the UK at the time claimed that anything I invented while employed by them (eg new cat food) would be owned by them, no matter how unrelated and no employer equipment used.

liquimoon20• 13 years ago

That's a pity. Surprisingly, a lot of what makes innovation work has to do with the law.

Bankruptcy law for example really plays a big role when it comes to innovation.

wcarss• 13 years ago

If you're willing, would you please explain the bankruptcy connection? That's kinda cool!

mathgladiator• 13 years ago

Also, WA: http://apps.leg.wa.gov/rcw/default.aspx?cite=49.44.140

brg2• 13 years ago

This is extremely interesting to me. It completely conflicts with the Microsoft Employee Agreement. While Microsoft has some tolerance for moonlighting (conditioned on many things such as managerial approval), if the processes are not follow it defaults to assumed ownership of all IP created by employees.

rdl• 13 years ago

Wow. You just sold me completely on WA > TX or NV.

parasubvert9• 13 years ago

In Canada, IP assignment only is for work done on company time & equipment unless otherwise assigned in your employment contract.

I've almost always excluded specific prior built or in-progress IP from my employment agreements without issue, as long as my employer's HR knows about it. Informing your employer of what you've created or are creating independently is almost always the best policy as it's unlikely they'll argue against it when it's early-stage (and you're protected if it becomes suddenly valuable).

More info http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic....

rogerbinns6• 13 years ago

In California you aren't dependent on your employer being nice, or have any requirement to even inform them.

smosher2• 13 years ago

In Canada, IP assignment only is for work done on company time & equipment unless otherwise assigned in your employment contract.

That's true, but it's usually part of the boilerplate. I'm not suggesting it's related to the perceived problem, but every research position I've been in has had a clause like that. One place even offered to change it for me, saying "oh that's just some boilerplate the lawyers used."

jiggy20113• 13 years ago

Do you know what the legal basis for this is in the UK? I'm curious and google doesn't seem to be giving me anything useful.

I also don't see how this could practically apply to all intellectual property you create whilst employed otherwise you would be open to being sued for posting on a blog since you are distributing the companies IP (i.e the words you wrote) without the companies permission.

rogerbinns6• 13 years ago

The employment contracts will include clauses to that effect. All the company has to do is wait till you do something that appears successful and then jump in. When I worked in the UK all employment contracts I was given also prohibited any work elsewhere without company permission - eg you couldn't also work part time at a local supermarket. That is something I have never seen in California employment contracts.

An example of California law working is that the founders of Hotmail were working for other companies when they wondered why you couldn't access email in a browser. eBay was a similar hobby project.

ChuckMcM2• 13 years ago

I am not familiar with the UK, but even in the US it varies from state to state.

People who aren't explicitly protected by state law get fired for putting something on the internet that their employer doesn't like. There is an explicit carve out in California law (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...) I don't know if there are any other states that have this carve out, but that section combined with "Section 16600 of the California Business and Professions Code states that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." makes quitting your job, taking your own IP made on your own time, and competing with your employer. A protected activity. in California.

Some will tell you otherwise (Google does this) but I sought out advice from a labor law attorney on the legality of their claim and his opinion was that it was largely unenforceable. You couldn't use proprietary information in your gizmo but you could, for example, write a phone operating system on your own time and equipment, quit Google and start competing with Android and they would have a hard time preventing it. But only in California, the employment agreement would hold up in Boston for example.

walshemj2• 13 years ago

Well as it was explained to me UK employment law descends from the "masters" and servants" act note the term "servant"

A quick Google seems to indicate the "Copyright, Designs and Patents Act 1988" is the relevant law

EricDeb• 13 years ago

Wow. I would never have expected that in other countries what you produce on your own time is the property of your employer. That is an absolute non-starter for entrepreneurship .

count• 13 years ago

It's not 'other countries', or exactly what you're saying. It's that other locals (including other states) don't explicitly state otherwise in law. In many states it's either not mentioned, or left to your employment contract details - in California, it's enshrined in the legal code.

WalterBright• 13 years ago

I've done moonlighting while working for two different employers in the past. In each case, I worked out an agreement in advance with my employer that the moonlighting work was independent of the employer.

Neither had any difficulty agreeing to it, and there was never any trouble later about it. I know others who have done the same.

Just ask.

toble2• 13 years ago

I think that IP clause in the UK is the result of a boilerplate contract. I always get them to remove it. Employers should have no right to claim ownership of what you do as a hobby IMO.

qwerta• 13 years ago

This is fairly common in Europe and other countries as well. It is not matter of law, but contract signed with your employer.

smegel• 13 years ago

But doesn't Cali law invalidate such terms? So it is a matter of law in that the law permits such terms. Its like the right to strike - in many countries that right can't be contracted away.

walshemj2• 13 years ago

From my understanding (as told to me by a senior HR professional) is that the UK and CA are similar if your IP is "related" to your work your employer owns it.

Trying to claim that as an IT professional your new cat food belongs to them would not work but if it was anything to do with IT you might be in trouble both in the USA and UK (employment law is descended from the same roots in both countrys)

zinssmeister2• 13 years ago

Why Canada Has No Big ____ Companies would be a more interesting article/video. The biggest Canadian company seems to have an annual revenue of "just" 50 billion. On the list of largest Companies, Canada is not even present: http://en.wikipedia.org/wiki/List_of_largest_companies_by_re... I am not trying to bash Canada, but compared to others in the global arena, Canada isn't really known to be a player with large corporations.

gyardley• 13 years ago

I assume you meant billion, not million.

zinssmeister2• 13 years ago

Ah yes. Corrected!

brg2• 13 years ago

Looks to me that likely candidates are population size and age of the country.

Having only 35 million people spread across one of the largest countries in the world makes it difficult to spawn consumer and retail conglomerates. Nintendo and Sony excelled in part because Japan was a perfect playground for testing personal technologies. Walmart had 300 million customers, 90% of which live in extremely developed locations, which allowed for retail stores to spread quickly and profitably across the states.

Further, having a history of less than 50 years means that less sustained activity has likely been driven from within Canada as opposed to from overseas. Given the choice of where to locate, a tycoon from Toronto had the choice of working out of London.

mmphosis• 13 years ago

Scale. When I compare the USA to Canada, I usually think ten to one.

The branch plant mentality, and the resource give away. It's a big US company in Canada reaping the benefits (but only 1/10 of what they reap in the USA.) And yes sometimes, it's a big (as in big for Canada) Canadian company in the USA reaping (ten times) the benefit but that's rare.

Canada's 100 biggest companies by revenue in 2012...

http://www.theglobeandmail.com/report-on-business/rob-magazi...

  22  BCE Inc.(De11)               19,588,000 	7.69
  20  Bombardier Inc.(De11)1       18,882,000 	11.99
  26  Research In Motion(Ma12)1    18,456,000 	-7.33
  27  Bombardier Aerospace(De11)1  18,347,000 	-1.14
  29  Bell Canada(De11)            17,133,000 	9.34
  53  Telus Communications(De11)   10,397,000 	8.4
  54  Telus Corp.(De11)            10,397,000 	6.27
  64  IBM Canada(De11)              9,051,000 	14.3

A few big "tech" companies, but mostly insurance, Canadian chartered banks, and "branch-plant" resource extraction. I like flickr, but I don't see it on the list.

foobarqux2• 13 years ago

If you eliminate mining, energy and banking Canada has essentially no internationally relevant big companies whatsoever. RIM and Bombardier are the only ones I see on the TSX 60 and the former is in its death throes. The future looks grim for Canadians.

http://en.wikipedia.org/wiki/S%26P/TSX_60

Everlag• 13 years ago

OH but we have a metric crap ton of oil in Alberta! That should hold out for a few decades while we unscrew our economic situation.

liquimoon20• 13 years ago

Except a big portion of the oil is owned by foreign companies. So, it's not like we are ripping all the benefits either.

skylan_q3• 13 years ago

http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates Taking into consideration only corporate tax rates, it really is kind of an oddity. (sort the chart by corporate tax rate)

orbitur• 13 years ago

Canada's corporate tax rate is that low because of the much more attractive neighbour downstairs. It's a shame, because it really doesn't keep people/businesses from leaving Canada anyway.

robotresearcher3• 13 years ago

Why discount those industries? If you eliminate legs and arms, I have essentially no limbs. But I get by...

InclinedPlane• 13 years ago

I think the point is to draw attention to the nature of Canada's economy, not to discount it entirely.

mattzito• 13 years ago

I can't speak for OP, but I suggest that they're highlighting the fact that instead of a broad base of large companies in a variety of industries, Canada's big company wealth is highlighted in a narrow set of verticals.

This means that corporate investment might be more slanted towards that areas, and it also means a narrower set of potential customers for a given application.

bane• 13 years ago

It's not really surprising, small population and huge, resource rich landmass. It's like complaining that, outside of Oil, Saudi Arabia doesn't have any international relevant big companies.

parasubvert9• 13 years ago

Hmmm. Try applying that analysis elsewhere: Scandinavian countries, for example, and tell me what you find. Are they doomed too?

Firstly, Canada has a huge branch-plant economy in agriculture, manufacturing and services, which has grown over the past 70 years. Ownership != economic output. It does change the pattern of investment, of course -- less disruptive entrepreneurs and more incremental improvements.

Secondly, the world is not made of software alone. Facebook is utterly irrelevant to the world economy. The world is still sadly not made of electrons, it is made of stuff, and that stuff powered (mostly) by hydro or carbon, and run by humans that need fresh water. Those industries you discount are massively important and only getting more so globally. IF Canada doesn't provide a large chunk of the world's natural resources, others will, until we devolve into a Mad Max type future fighting over fuel or fix our renewable energy problem economically (whichever comes first). Thus, Alberta is likely the new global oil powerhouse for the next century. Saskatchewan has the largest deposit of Potash fertilizer on Earth (4+ trillion tonnes).

None of this precludes Canada from investing in tech entrepreneurship, but it does mean the incentives need to be higher than usual.

foobarqux2• 13 years ago

Will Canadian knowledge workers experience economic growth as individuals in the long term because of the natural resource industries? Will that growth be comparable to the US?

skylan_q3• 13 years ago

I've spoken with several start-up founders in Canada who have looked for investment. Many have moved to the US because they find that most investors here are only going to invest in something already making money. They are scared of market potential and helping to cultivate start-ups. It's a cultural thing and it won't change because we aren't American.

liquimoon20• 13 years ago

So, my startup is actually ramen profitable at the moment. I spoke with some local investors. The deal was to owe 30% equity in exchange for 10 enterprise clients (around $100/month)! Guess what, these are investors coming out of mining industry... Unfortunately, they don't care about the company, they care about their piece of the pie.

It's a pity.

jmacd2• 13 years ago

Why are you even talking to mining investors about your tech startup? I've never heard of a tech entrepreneur in Canada taking that angle before. Everyone else talks to tech focused investors. Have you tried that? Happy to help....

devbug• 13 years ago

I have to disagree with Terry's sentiment.

It's impudent to Vancouver's culture--and more generally the world--to insinuate that we're "blindly [competing] to build the next Silicon Valley". We're not. Canada's not. Vancouver's liberal lifestyle is innate, not superficial, not a failed attempt to clone Silicon Valley. And our immigration policy is definitely not to "bring immigrant entrepreneurs together"; it's the result of a small population, the demand for skilled workers[1], and the correction of a historically xenophobic foreign policy. This creates a large influx* of liberal and skilled immigrants--known risk takers. Hence the entrepreneurial honeypot (our social programs help). It's necessity that's bred Vancouver as a technological center, not ambition. Thus, similarities to Silicon Valley are purely coincidental, or are the result of correlated effects rising from the increasingly entrepreneurial working force.

As for investors? I don't know enough to comment.

[1] http://www.engineerscanada.ca/files/w_Engineering_Labour_Mar... [2]: http://www.gamedevmap.com/index.php?query=Vancouver

*: Immigration levels have been relatively low, recently

liquimoon20• 13 years ago

Don't get me wrong. Vancouver is a much better city to live in. I love it here, and it's where I will eventually settle down.

My point is on the investors' side. Investors play a big role in the tech startup ecosystem.

When you have investors who don't get tech and who just want to get rich quickly, you run into serious problems on the road to build the next billion dollar company.

trustfundbaby• 13 years ago

I think something that a lot of people overlook in the rush to create the next silicon valley is the role the cities in/around these potential tech hubs play in their rise to prominence.

B2C tech startups cannot takeoff in places that don't have really high densities of people because places like that wind up having the people with the mentality to use technology to get ahead/make their lives simpler. Because of the high demand for access to pretty much everything in these kinds of cities, people there will be more likely to try new things to get an edge. Is it an accident that the big consumer startups tend to come from SF, NY, and Boston?

This doesn't seem to be a big deal, but as an example you can probably see how it helped foursquare(SF) pull ahead of Gowalla (Austin) in the location app shootout of a few years ago. Its the reason why Austin will probably not become a real startup powerhouse for another couple of years (as more and more people stream in here).

B2B is a little easier because businesses have more uniform needs that aren't usually dependent on city characteristics. But then again, a place with a higher concentration of businesses per capita will usually have that edge.

I think this is why you see smaller cities having startups that are more successful at B2B (Austin for example) but not so much in the B2C scene ... in fact the exact thing that the writer mentions in his article happens here where startups get bought out by their competition in Silicon Valley or other places.

I guess the point I'm making is for Canada to get a successful tech startup scene going, concentrate on high density cities (Toronto?) otherwise see what edge you can give companies that do B2B startups.

liquimoon20• 13 years ago

If you think about the technology adoption lifecycle, you not only need a concentration of people, but more importantly a concentration of early adopters. So, from that perspective, you can see why a lot of B2C apps come out of Silicon Valley. People live and breath new things there. But that's just one aspect of what makes Silicon Valley unique.

When it comes to B2B, you don't really need a concentration of early adopters to make this work. You need to solve problems for businesses (doesn't really matter where they are). More importantly, you can see revenue right away if you ARE solving a real problem. I think that's why it's relatively easier to build a B2B startup outside of the valley.

jvm2• 13 years ago

B2C tech startups cannot takeoff in places that don't have really high densities of people because places like that wind up having the people with the mentality to use technology to get ahead/make their lives simpler.

One reason I find this unconvincing is that Toronto specifically has very similar size and density characteristics to the Bay Area. Toronto's metro area has a comparable population [1][2]; and before it was amalgamated with its suburbs, the city itself also had a very similar population and population density to San Francisco [3][4]. Toronto is also home to U Toronto which has one of the world's top CompSci departments. I suspect there is some sort of policy problem at work here rather than a lack of density, possibly as banal as drawing from a smaller talent pool.

[1] Toronto/Hamilton/Niagra area: 8.7 million http://en.wikipedia.org/wiki/Golden_horseshoe

[2] Combined San Jose/SF metro: 8.37 miilion http://en.wikipedia.org/wiki/San_Jose-San_Francisco-Oakland,...

[3] Old Toronto: Population 736k, density 19,600/mi^2 http://en.wikipedia.org/wiki/Old_Toronto

[4] San Francisco: Population 812k, density 17,620/mi^2 http://en.wikipedia.org/wiki/San_francisco

potatolicious9• 13 years ago

"I suspect there is some sort of policy problem at work here rather than a lack of density, possibly as banal as drawing from a smaller talent pool."

I'm a Canadian who grew up, went to school in Canada, and am now in the US. The problem is very simple and can be summed as such:

A skilled software developer can make double to triple their salary easily by moving to the USA. And Canada and the Us have a legally porous border when it comes to exchanging workers.

Double to triple. I shit you not.

This is a huge part of what holds Canadian tech back. What kind of talent pool are you looking at when the US pays so much more, and there are relatively few legal barriers to taking these opportunities?

_delirium2• 13 years ago

There's the military role in funding technology as well. Silicon Valley's proximity to Moffett Field isn't coincidental, and Canada's funding for military contractors is nowhere near the same level.

canistr• 13 years ago

I would half agree with this in that military contractors and engineering firms are in fact centred in the National Capital Region (Ottawa-Gatineau) instead of Toronto. This has a lot to do with the fact that Toronto is the financial hub of the country, but the military and military deals are done in Ottawa with the government. So even though the Greater Toronto Area has a number of engineering schools within a couple of hours drive, it's not conducive towards building an engineering culture the same way Ottawa, Montreal, or Silicon Valley is.

endergen2• 13 years ago

I'm originally from Vamcouver and spent the majority of my 20s there working in the Games Industry before switching more to web and mobile and then moving to the US for last 5 years. So I've obsessed and tracked this topic. I've lived in many States in the US as well as Montreal in Candada.

I think reading Steve Blank's Secret History of Silicon Valley gave me the best break through in understanding of why Silicon Valley is so dominant in tech. http://steveblank.com/secret-history/

There's just been decades and decades and billions of even World War and Cold War money poured into into it's infrastructure. The shear amount of money and momentum of peak US effort seems nearly impossible to catch up to.

My best advice to other locations is to tie into SV as best as you can and of course focus on getting to scale by bringing in external to your local economy revenue and partnerships to bootstrap, but regardless it's gonna be a long haul. SV is the Holliwood of programmers and its best to acknowledge that. If you are an actor in Canada you know you are likely going to stay small time unless you go down North West for example and break out or stick to a niche.

liquimoon20• 13 years ago

Completely agreed! Thanks for sharing the insight.

endergen2• 13 years ago

I appreciate the appreciation. :)

amix• 13 years ago

Location was important some years ago, but I think it's less and less relevant now. I think you can create amazing technology anywhere (in Latin America, in Europe, in Asia etc.)

Skype is a great example of this: they created a billion dollar company in Europe; and most of the development was done in Estonia (a country of about 1.3 million people, much less than most bigger cities).

Asia, especially Taiwan and South Korea, have some amazing examples as well (like HTC, Samsung, Asus etc.)

raverbashing• 13 years ago

Yes, but it was a big deal 10 years ago, and still is today.

And it may still be relevant because of face-to-face interactions. No, Hangouts won't cut it

And Github has probably done a lot for remote work, but there's still a gap

jond3k• 13 years ago

If you're a small-time programmer unless you move to SV, what does it mean to be 'big' in programming?

pseut• 13 years ago

This article is way off from what I thought was the consensus; there were a shit ton of grant dollars going into CA universities from the US govt, and silicon valley is where it is because Stanford (I'm simplifying a lot and ignoring other details, but to a first approximation I thought that was the consensus view).

Someone please correct me if I'm wrong, but the article's not convincing me. e.g. quotes like this, "Do you think Google will be a billion dollar company had they license the technology to Yahoo?" Yes, since they did. They also would have sold to Yahoo IIRC but Yahoo didn't want to pay enough (cite: http://www.paulgraham.com/googles.html).

liquimoon20• 13 years ago

Had Google been sold to Yahoo through licensing, they would not have become a multi-billion dollar company. That was my point.

potatolicious9• 13 years ago

I don't think that's the whole consensus, though it's certainly part of it.

Silicon Valley's success is commonly attributed to being within proximity of two major schools (Stanford and Berkeley) fueling the talent funnel. But that is far from a sufficient explanation.

Massive government investment in R&D helped birth the first semiconductor and aerospace companies that helped create the first critical-mass concentration of tech industry and talent.

And those were just the baby steps. The current behemoth of the Silicon Valley machinery is sustained in large part by the enormous amount of investment, as well as ease of access to said investment. Modern startups go to/stay in the Bay Area largely for funding reasons.

"They also would have sold to Yahoo IIRC but Yahoo didn't want to pay enough"

And therein lies the difference between Canadian tech and Silicon Valley tech. In Silicon Valley Google had enough funding to keep going and reject Yahoo's offer, and thereby growing by leaps and bounds into the giant company we see today.

If they were in Canada, they would almost certainly not have had the funding, and be pressured into an early sale for less, and Google today would probably be a sub-brand of some stodgy old behemoth of an enterprise-tech company.

Funding is, IMO, Canada's biggest problem. I've worked in the Toronto side of the software industry, and still know some people on that side. Canadian tech is dominated by either very large enterprise software firms, or slow-and-steady small businesses. There is no readily available investment source to perform the type of "grow fast, shoot for the moon" type of startups that the USA is known for (see: AirBnb, Square, etc, companies that took enormous amounts of funding very quickly and scaled just as quickly).

A startup in Canada means going for profitability very quickly, and being doomed to a slow-growth strategy, as large chunks of cash are nowhere to be found.

On a more sombre/cynical note: as a Canadian expat in the US tech industry, I basically have given up hope on Canadian tech. The first step is for the industry, government, and everyone to acknowledge that Canadian tech is fundamentally dysfunctional. And I just don't see this happening. Every opening of another satellite office that exploits the large salary gap is greeted with pomp and circumstance and speeches about how Canada's being recognized for its unique technological prowess.

Gag me with a spoon.

rdouble3• 13 years ago

Every opening of another satellite office that exploits the large salary gap...

I was under the impression that the satellite offices aren't just to exploit the wage gap, it's also to set up a pipeline to get more foreign engineers to the SV based motherships through the TN-1 visa.

liquimoon20• 13 years ago

"A startup in Canada means going for profitability very quickly, and being doomed to a slow-growth strategy, as large chunks of cash are nowhere to be found." - This is dead on! That's for sharing!

parasubvert9• 13 years ago

I somewhat agree, but there have been plenty of exceptions to your rule. You make it sound like Canada has no startup market to speak of, which couldn't be further from the truth.

Flickr was based in Vancouver, as is HootSuite, ActiveState (the perl guys), Peer 1 Hosting, PlentyofFish. There's Shopify in Ottawa. Edmonton has Stormboard. Toronto has/had Kobo eBooks, Freshbooks, Well.ca, CryptoLogic (one of the main online gambling platforms, though they moved to Ireland), among others. On the more enterprisey side there's Layer 7 in Vancouver (API management), Bycast (bought by NetApp). There's also SMART technologies in Calgary (still independent though no longer a startup). There were many successful game companies (many WERE startups in the 1980's and 90's but are no longer): Bioware in Edmonton, Digital Extremes in London & Waterloo (Unreal & UT, Bioshock 1 & 2), BlackBox in Vancouver (Need for Speed), Uken Games in Toronto (a startup for once ;), and Ubisoft in Montreal (arguably French but most of their success came from the Canadian studio). There are also thousands of startups I haven't even mentioned in smaller communities like Halifax, K-W, Moncton.

I don't think it is necessarily bad that Canada is basically a "farm league", a ground for niche companies (only making millions, not billions). This is just an evolution of it being a "branch plant" economy for nearly 70 years since the early-mid 20th century. Clearly there is a small but thriving startup culture, particularly in Vancouver, or (for now) K-W, where good engineers don't have to go into IT, they can work at pure tech companies. Canadian startups tend to exit the only way MOST do - by acquisition. As Pmarca would say, the problem is with the poor IPO market.

Beyond IPOs, to become a disruptive multi-billion dollar play is by its nature a rare event. Add in the fact that Canada is geographically disbursed across five time zones, with huge (labour-intensive) natural resources to exploit, and the same population as California... the incentives need to be right to change Canada's industry structure. I'm not too worried about it - if one wanted to start a successful tech company in Canada, it's clear that there's enough talent to make it happen, and likely enough capital to get through seed or Series A. It might require foreign capital for subsequent growth investments, but by the time you're in the tornado, that won't be a problem.

shirro• 13 years ago

s/Canada/Australia/

quinndupont• 13 years ago

This is complete bullshit. The logic is: create entrepreneur culture to create huge companies. This is not how huge companies arise, rather a healthy small business culture is created. As it turns out, tech in Canada at this scale is vibrant. A single example: the number of mobile development companies in Toronto is staggering (a huge number of iOS apps are developed in Toronto).

TheLegace• 13 years ago

I'll have to admit that is exactly how my family thrived. Parents with little to no education, survive by creating a small business when no one would give them a job.

bigtones• 13 years ago

Hootsuite is Canadian too, from Vancouver.

ktavera• 13 years ago

Research In Motion is a pretty big tech company... Just saying.

tensor• 13 years ago

Nortel was also huge, though screwed up big time.

elchief2• 13 years ago

Here's an industry analysis I did on Vancouver a while back:

http://vancouverdata.blogspot.ca/2010/09/what-is-work-of-dog...

In Vancouver we have MDA, which makes satellites, PMC Sierra, PlentyOfFish, HootSuite, PhoneGap. Not huge, but substantial. Oh, and a dark horse named D-Wave.

And we had Creo and Flickr.

We don't have much of a military presence to help with R&D funding, hence Ottawa's slightly bigger scene. They almost got rid of the only army base on the West Coast a few years ago in fact.

There was an article on here a while back about what made a good startup city. We do have some old wealth (mining cos), some great universities, and nice weather by Canadian standards.

Also doesn't help that we're a 2 hr flight from San Fran!

miguelrochefort• 13 years ago

What's the best way for a young entrepreneur from Montreal to live the startup dream? Can I start a company in the US? Should I start my company here and move to the US? How does that work?

I don't have any measurable "unique skill", nor do I have millions to invest. Is there any way for me to move to SV and get proper funding?

bittired• 13 years ago

Not enough people have the gut and commitment to create or help create something truly meaningful.

That's not the whole story by any means. No matter where you are the problems are almost always money and time. In this case, how much will it cost to lure people to Canada, which is not know for big tech? Google didn't happen overnight, but now that it exists, any new tech company is competing with Google in a way for top talent, if that is what they are after. So, not only would Canada need to grow a Google, they'd have to compete with Google. That is difficult. Throw a less friendly business climate than the U.S. into the mix, and that is just more money and time that would be required.

All of that said, sure Canada is spoiled and lazy, but that's no different than the U.S. We expect too much.

anuraj• 13 years ago

Canada had Nortel and RIM - both were pretty big in their heydays

corresation• 13 years ago

And ATI, and Matrox, Alias Systems, OpenText, and QNX... These may not be huge, but they did pretty well in their respective industries.

Patrick_Devine• 13 years ago

This kind of collective hand wringing always gives me a chuckle. I'm from Vancouver and moved down to the valley in 1998. My rationale:

  - Vancouver has a high cost of living without commensurate salaries (and often no equity).
  - Because of the wealth of technology companies, it's easy to find a job here.
  - The weather (at least in the valley) is far better than sitting in the rain (Vancouver), or snow (rest of the country).
  - Quasi-reasonable immigration policy (TN-1 visas are easy to get, although have weird drawbacks)
  - A common language, and a fairly similar culture.
  - Proximity to home (it's only a 2 1/4 hour flight back to Vancouver with no time change -- can someone start flying out of SJC instead of only SFO?).

The start-up culture really fuels the tech industry here. Since moving in '98, I've been through two IPOs where both companies ended up having billion+ dollar valuations. I think the reason why it's so successful is because of reasons I (and others) have already mentioned, but also because of:

  - decent universities
  - former military/government technology jobs
  - easy access to capital

and probably most importantly, past success. The Bay Area has this unique ecosystem where companies have been bootstrapped from nothing except an idea, and that gives other people confidence to try their own hand at a startup. This feedback loop is what keeps the valley humming.

After having been so successful being an employee at two startups that did well, I started my own company a couple of weeks ago. It's absolutely amazing the amount of support you get here, and the network of people who you can tap to ask questions and help out in your venture.

Vancouver and Toronto both have parts of the equation, but they don't have the whole package. And neither of them have the kind of past success which breeds future success.

liquimoon20• 13 years ago

Exactly! And it's this cycle of successes that's harder to duplicate everywhere else.

Thanks for sharing Patrick!

z2600• 13 years ago

Can't speak to the VC angle.

I think a lot of the Bay Area power comes from having so many tech folks in one place, which is hard for Canada to manage anywhere given population. In the Bay Area, you can go for a coffee or a beer and run into a bunch of tech folks and something may come out of that. There's no where in Canada where tech has the density to make that happen in a random way (maybe Ottawa or Waterloo back in the day).

Immigration can help, for sure bringing smart minds in is never a bad thing. I've only lived in Ottawa and Toronto, I think creating the critical mass of tech folks is difficult in those cities which have other more dominant industries (government and financial/cpg respectively).

Agree that past success fuels the mentality that builds the future.

pierlux• 13 years ago

There are potential big players but American companies come and buy them out when they get competitive size: Softimage, Discreet, Maya, ATI, Matrox, ...

Matrox didn't get acquired but kinda changed their target markets.

jmspring5• 13 years ago

If the right pieces fell into place, despite being a Bay Area native, I would consider Vancouver if I were starting a company. It would have to be one that didn't depend on bay area connections (VCs, etc). I've spent a lot of time in Vancouver, and yes, it has tech companies but for some reason has never become a technology hub. However, the blend of urban and amazing outdoors (yes, it rains, and I recall a July trying to get around during downpours and a bus strike) make it a tempting place for me.

It has great connectivity, cultural diversity, easy access to both Seattle and SF (a couple of hour drive/flight), a hub for asia, a great university in UBC.

There is a lot going on there that should make it more open to tech companies, but it has always been more of media than a tech town.

elchief2• 13 years ago

I raised 80k in a couple weeks for a little startup in van. Which ain't huge, but was (almost) enough. Just gotta meet some rich folk!

liquimoon20• 13 years ago

- There is a lot going on there that should make it more open to tech companies, but it has always been more of media than a tech town.

It's slowly changing now. Facebook, Twitter, Amazon and Microsoft all have their offices here.

jmspring5• 13 years ago

It has been a little while since I last checked, but the Amazon and MSFT offices were more towards Richmond than Van proper, but still a good sign.

Though some of those offices were, from what I recall, a method to get around issues in dealing with US work visa issues for foreign talent...

seanmcdirmid• 13 years ago

Seattle to Vancouver is not a two hour drive. 3 or 4 hours, depending on the border.

jmspring5• 13 years ago

I've done the drive to Richmond in a bit over two hours. A couple generally can mean 2-3. Three is certainly more normal. NEXUS/SENTRI helps.

Maven911• 13 years ago

Theres opentext in Canada...

ja27• 13 years ago

Yep and their market cap is almost as big as their neighbor, RIM.

Mikeb85• 13 years ago

The fact that Canada doesn't have a bunch of over-valued VC funded firms doesn't mean we are unsuccessful in tech, or that we don't have any big tech companies.

Not sure what definition of 'big' the auther is using, but CGI has revenue of 10+ billion per year (more than double that of Yahoo), RIM also has revenues of over 10 billion (despite their recent troubles), and there are a whole bunch of fairly large tech companies that aren't well known but do a whole lot of revenue... http://www.branham300.com/index.php?year=2011&listing=1

The measure of economic benefit isn't just the creation of big firms, but also the amount of people employed, money put back into the economy, etc...

It is true that our investment community is far more conservative, but then again, we weathered the 'recession' better than most, and have one of the healthiest banking sectors in the world...

neona• 13 years ago

I saw this title hoping that the article was about how canada doesn't have any big tech conglomerates, and that it's a good thing.

grishas• 13 years ago

I've worked in Vancouver at a startup, and to me it seems that the goals of a Canadian startup are just more conservative. No one ever expected to become a Facebook, or a Google or even Nortel or RIM for that matter. The philosophy has been mostly to create a profitable company, in the more traditional sense-- consistent revenue that can employ people. No one is looking for giant cash injections from VCs, nor are we throwing lavish parties and giving away Porsches at company picnics (cough Trilogy cough). We aim smaller than 'murica so of course we don't have any mega tech companies. And we're happy for it, at least I know I am.

liquimoon20• 13 years ago

Thanks for sharing.

The philosophy has been mostly to create a profitable company, in the more traditional sense-- consistent revenue that can employ people. - I share with this philosophy exactly.

The thing I am pointing out is that because of the VC gap, startups are dealing with the lack of cash infusion to really hit a homerun. As a result, Canadian tech companies stall after growing to a certain size. The options were taking VC money with bad terms or getting bought by US companies.

US companies are buying profitable Canadian businesses at a bargain price, reaping all the benefits of job creation and ambitious business goals.

jmacd2• 13 years ago

Not even 10 years ago this same kind of post could have been written except the complaint back then wasn't that investors were boneheaded but that "Canada is full of entrepreneurs who don't think big enough and aren't aggressive enough!"

That narrative is, mostly, dead. Thankfully.

Now the entrepreneurs in this country have left the bad investors in their dust and the angel and VC community is playing catchup.

The author's point has some merit but it is hardly "the reason" we have so few billion $ companies.

The point worth making is: we are making progress. If we take the time to quantify it I'd guess that the ecosystem here is evolving more quickly than almost anywhere else in the world.

The other point being missed entirely is that there is no barrier for US investors to invest in Canada. Many (tempted to say most but I'm not sure) tech/web seed and A rounds in Canada now have some level of US (read: valley) participation. There are no legal or economic barriers to cross border investing anymore. The idea of a "Canadian investor" is becoming completely moot.

wluu• 13 years ago

Just swap out Canada for Australia and you get a similar story.

While there are a few smaller tech companies here and there, the only larger home-grown one I can name at the moment is Atlassian (owners of BitBucket, Hip Chat etc). And they have international offices now I believe.

I remember reading a few years back, local startups were either moving to, or establishing a presence in the US to try to secure VC funding.

coldtea• 13 years ago

Why Canada Has No Big Tech Companies

Here's an explanation:

Because Canada prefers many more smaller companies, that actually employ people, instead of few billion dollar tech darlings with a sub par personel and even less taxes paid?

How about: why California is bankrupt, as a state, and with large swaths of the population in utter poverty, despite having the worlds largest tech companies?

prostoalex2• 13 years ago

California employees pay state income and sales taxes. If you broke up a large company employing 10,000 Californians into 100 small companies employing 100 Californians each, not much would change.

I refer you to historical growth of California revenues http://www.dof.ca.gov/budgeting/budget_faqs/information/docu... It's boom-driven, so you get revenue shortfalls during bust years, but on the aggregate the revenues are growing - the $97 billion of revenues in 2013-2014 budget years is still higher than 5 or 10 or 15 years ago.

Perhaps if your revenue is consistently growing, and you still cannot run a balanced budget, the problem might be on the spending side?

elangoc• 13 years ago

Yeah, the Liberal types like their social programs, and the Conservative types like their lower taxes, and no one has actually tried to reconcile those two opposing pulls.

I don't know why that obvious contradiction was never tackled. I would like to think it's because the Hollywood execs of SoCal and the ex-hippie/Silicon Valley combo of NorCal are so geographically far apart that they don't talk, but that's too simplistic, I'm sure.

peter303• 13 years ago

I was wondering closer to home why Harvard and Stanford skate circles around my alma mater MIT when it comes to billionaire dollar tech IPOs. Having attended all the three, the tech culture is deepest at MIT. The business culture is deepest at Stanford.

This may change as MITs Drew Houstons Drop Box is monetized.

mpg33• 13 years ago

I'm becoming more and more convince that this is a cultural thing and less about laws/taxes. Entrepreneurship requires risk-taking which (we) Canadians are less likely to do than our American cousins.

philipkimmey• 13 years ago

While Silicon Valley is no doubt a unique place, it's odd to follow the quote:

"We don’t have billion dollar Internet companies with the likes of Microsoft, Google, Facebook, and Amazon."

With a discussion only of Silicon Valley, given 2 of 4 are based in Seattle.

Why Canada Has No Big Tech Companies

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