

Does Canada Even Need a Technology Sector? - techvibes
http://www.techvibes.com/blog/does-canada-even-need-a-technology-sector-2012-07-21

======
mef
_All of which begs a question: if our rare giants are doomed to fall and our
startups are fated to exit outside of Canada, what sort of tech sector do we
really have? More important, do we even need a tech sector?_

Bad premise -- neither of these are foregone conclusions.

Plenty of "giants" from the past two decades have fallen on both sides of the
border. There's no reason to believe a Canadian "giant" is "doomed to fall".

As for our startups being "fated to exit outside of Canada", there are plenty
of examples of companies who are growing fast and seem to be in it for the
long run (Shopify, FreshBooks, HootSuite, Wattpad). Some of these companies
may ultimately exit to a foreign buyer, but each startup launched and exited
is another shot in the arm for our burgeoning startup community, and I suspect
that an increasing number of Canadian companies will be sticking around as
this community grows.

~~~
yannickt
I think the larger issue here is that there aren't enough of these companies
to hire the best Canada-trained developers on a long term basis; the most
talented end up leaving for greener pastures (usually US). When they stay they
often choose to work remotely for a foreign company, or locally for a
satellite office, rather than contributing more directly to the local economy.

------
mcantelon
>we as citizens have tremendously high standards of living and that is largely
as a result of multiple other sectors—namely mining, foresty, and oil and gas
... Our population is but a fraction of America's, which places at an instant,
permanent, and steep disadvantage

Interesting article. Canada has been made complacent by its existence as a
resource colony. There are countries with small populations (Finland, for
example) that manage to compete globally by using their brains and its great
to see Canadian companies and VCs that aspire to that.

In addition to private tech startup funding in the US, the state funds a lot
of tech through the "defense" industry. Canada's current government seems more
interested in investing in prisons, however, than the tech sector.

~~~
jmspring
Historically, Canada has never really swung wildly in any sector. Housing,
tech, business, natural resources, etc. the only "dominant" is natural
resources and it provides a nice base. But, the economic swings have been
minor compared to here in the US.

Sure they have had RIM and Nortel which have both, basically, gone bust.
Beyond that, I can't really think of any big Canadian tech company. A number
of companies have/have had satellite offices in Canada -- Microsoft
(Richmond/Surrey) and Nokia (Kanata) come to mind. But, the country, it's
resources, and culture are pretty diverse -- BC differs from Ontario which
differs from Quebec. In some ways, I feel the US is much more homogenous than
Canada.

That said, I've known a few startups in Canada (mainly Vancouver) over the
years. However, there hasn't been a critical mass. From my observation,
Vancouver has more ties with LA (business-wise) than Silicon Valley -- more
media heavy than tech.

I'm not sure complacence has anything to do with it, there just hasn't been a
critical mass in any one area.

~~~
edwinnathaniel
Vancouver is known as Hollywood North :). This happens probably due to tax-
benefit/break and government support for the film industry (correct me if I'm
wrong) that makes movie production cheaper in Vancouver.

And yes, there aren't many big hi-tech companies in Canada. Most of them are
at most a few hundreds employees, which I supposed is big enough considering
the ratio of population compare to US (roughly 1:10).

I can't imagine there's a hi-tech company with 1k employees in Vancouver. Very
very hard. I don't think there's even a 1K (Canadian) company in Vancouver
regardless of the sector.

~~~
eps
EA Canada employs over 2000 people.

~~~
edwinnathaniel
What's the % between FTE and contractors?

------
mast
I think there is a Canadian tendency avoid risk. With the tech sector this
means that if government funding is not immediately available, nothing is
worth risking your own money. I'm reminded of one my history professors who
used to say that the American dream was to start your own company and become
wealthy. In contrast, the Canadian dream is to become a civil servant. There
are exceptions of course but most of these people go to the US. It isn't just
in the tech sector either. Look at the number of Canadian actors or singers
that go the the US.

------
dmix
There was another good analysis in the CBC of Canada's next upcoming
companies:
[http://www.cbc.ca/news/technology/story/2012/07/12/f-canadia...](http://www.cbc.ca/news/technology/story/2012/07/12/f-canadian-
technology-industry.html)

The key question is not whether there _ARE_ tech companies getting started in
Canada, it's whether they will stay in Canada once successful to help re-
invest in the industry here.

But the most common pattern presently is that companies leave before they get
(legitimately) successful. Either via acquisition or the need for capital -
both not easily found in Canadian cities as it can in SV or NYC.

~~~
allbombs
"The key question is not whether there ARE tech companies getting started in
Canada, it's whether they will stay in Canada once successful to help re-
invest in the industry here."

I think that movement is changing.. Yes, it's harder to raise money up north
but the cost for talent and gov funded programs here make Canada one of the
most attractive places to start a company. Once established, why move down
south?

~~~
potatolicious
> _"Once established, why move down south?"_

Later, and much larger, rounds of funding that is entirely unheard of in
Canada.

Also, talent. This might be inflammatory, but I venture that the bulk of
Canada's A-talent is already in the USA. Given the ease of the TN visa, I
think it's not a stretch to say that if you're offering $70K for software
engineers in Toronto, you are _not_ hiring any of Canada's top talent, because
they're all in the US making $150K+.

In my experience the few talented people who remain do so out of philosophical
or family-related reasons, and that's a tiny, tiny slice of the overall pie.

> _"I think that movement is changing.."_

As a Canadian expat in the US I disagree. In fact, if anything, in recent
years the brain drain of software talent from Canada to the US has _increased_
as the software industry heats up down south. If your top players are
consistently moving out of the country, it doesn't matter what government
programs exist, you've already lost.

Talent is 95% of the problem. So long as US companies are offering fresh
graduates $120K+ comp packages to live in sunny California, and Canadian firms
have trouble ponying up more than $60K, the brain drain will continue, and
Canada will continue to be scraping the bones of its own talent pool.

~~~
anona
> _Also, talent. This might be inflammatory, but I venture that the bulk of
> Canada's A-talent is already in the USA. Given the ease of the TN visa, I
> think it's not a stretch to say that if you're offering $70K for software
> engineers in Toronto, you are not hiring any of Canada's top talent, because
> they're all in the US making $150K+._

A computer programmer/software engineer/software developer is not technically
eligible for TN status. A 'Computer Systems Analyst' is eligible for TN
status, but as an informal rule if your jobs involves more than 10%-20% coding
you do not qualify for Computer Systems Analyst. While I'm sure many
developers are working as a Computer System Analyst, they are at risk of being
denied entry every time the enter the country if the USCIS official decides
they do not qualify. So there are still significant immigration barriers that
act to keep a good portion of Canadian talent in Canada.

~~~
potatolicious
Actually, it is not necessary for devs to be classified as CSAs - plenty enter
under the Engineer classification (I've done this myself)

The CSA is a common catch-all, since USCIS tends to frown upon CS degrees
using the Engineer title. But if you area a CE, EE, SE, etc, this is a
straightforward path.

The barriers are not significant especially when weighed against the payoff,
and consider that all of the major software firms do this so much that success
is more or less guaranteed (e.g., if you are denied your TN at the border, the
big shops will send a lawyer up to argue your case on your amended re-try).
Most companies go so far out of their way to bring in Canadian talent that it
greatly diminishes the systemic issues you're likely to experience.

------
guard-of-terra
Any country needs tech sector because it creates not just jobs but nice jobs.

Jobs that pay well, for interesting work, in non-restricted environment. To
get whose you don't have to sacrifice your soul to mindless institutions nor
be eager to consume bullshit. Jobs you can just work.

What else gives you that? Therefore, tech jobs should be priority #1.

~~~
jvm
I love me some tech employment as much as anybody that frequents hacker news,
but this just looks like tech bigotry to me.

The attitude that "all other modes of employment suck, therefore tech should
be #1" is not going to gain a lot of traction outside tech circles.

~~~
guard-of-terra
Well, isn't it true?

Tech means you create value -- you are "your own bitch". And you do it in non-
strictly-regulated area. It's not even all tech - telecoms aren't, for
example.

What other areas of employment generate jobs like these?

------
wmougayar
Think of these acquisitions as a warm-up for bigger things to come. Let's see
what these lucky entrepreneurs do with their money inside Canada.

What's more shameful is that RIM didn't produce millionaire entrepreneurs that
went on and created new companies. That could have happened and should have
happened, but it hasn't happened.

~~~
theorique
A positive side benefit has been significant endowments and support of basic
scientific research.

e.g. <http://www.perimeterinstitute.ca/>

However, it's even better if RIM had created an ecology of entrepreneurship
that could endow dozens of such institutes...

~~~
rimbo789
RIM didn't create an ecology of entrepreneurship because it already existed in
one. It was part of the start-up community that has come out of the University
of Waterloo.

~~~
theorique
Fair point, but it was probably the biggest success story out of the area and
as such was the flagship. (Responsibility to give back and all that.)

------
gamble
RIM is not a technology sector. There are plenty of Canadian technology
companies working in areas that aren't considered sexy in Silicon Valley.
Modern resource industries are highly technical. For example, most of the R&D
required to extract crude oil from tar sands was carried out in Canada.

~~~
potatolicious
This is most certainly splitting hairs - by technology they clearly meant
software. There is a lot of technology involved in just about every other
sector, but we don't classify SynCrude as a high-tech company for a lot of
reasons.

Canada's _software_ industry is anemic at best, arguably non-existent at
worst. You have a few shops working on cool stuff, but the bulk of the code
being written in the country is for institutionalized non-software companies.
What is made worse are the apologists who will point to the tiny, struggling,
barely surviving "cool" shops and insist that everything is fine.

~~~
yannickt
Not to mention even if said cool shops were thriving - and few are -, there
aren't nearly enough of them to hire, say, the 5000 workers that RIM is about
to let go. As of this writing, StackOverflow lists:

\- 31 jobs in Toronto; \- 4 jobs in Montreal; \- 2 jobs in Ottawa; \- 2 jobs
in Vancouver.

These cities account for probably more than 60% of the Canadian IT workforce.

Contrast that with: \- 28 jobs in Austin; \- 91 jobs in Seattle; \- 55 jobs in
Boston; \- 143 jobs in SF; \- 170 jobs in NYC.

There is something very wrong with this picture, especially when you consider
that Canadian universities produce a huge number of CS/CE/SE graduates every
year.

~~~
edwinnathaniel
Many Vancouver software companies do not post jobs on SO. Most of them do it
via recruiters (let's leave the discussion about the positive and negative
dealing with recruiters for some other time).

It's a tight-knit industry in Vancouver.

~~~
yannickt
Repeat the same exercise on Monster (for example), where recruiters, Canada or
US, do post jobs, and you will find that the disparity is even more
pronounced.

~~~
edwinnathaniel
I see your point there but I think the situation is a little bit different
when compare to Monster.

I was reluctant to go to recruiters at first but once I got to know one or two
recruiters with better networks, I definitely see more opportunities that may
not advertised front-and-center out there.

Vancouver is in the middle of hiring spike this year and I can assure you that
there are quite a few interesting jobs on the market right now.

------
jfb
There's a ton of cool stuff happening in Silicon Valley, but it's goofy to
claim that the unique historical context of the valley is exportable. There
isn't one technology industry any more than there is one manufacturing
industry, and a blinkered conflating of "small debt-financed web startups"
with "software" doesn't lend any clarity to the conversation.

NB: I'm moving to Canada from Silicon Valley.

------
ultrasaurus
What is a technology sector? Apparently it includes everything from
manufacturing cell phones to "Real-Time Feedback and Coaching" (Rypple)

Is the implication that if Canada isn't Silicon Valley, it should stick to
resource extraction and non-technology manufacturing?

~~~
pokoleo
What do you think the tech sector is?

As an Ex-Ryppler (intern), they were (are) definitely a tech company. I'm not
sure what your question asks?

------
Danieru
This article started with a tough question but ended on a cop out. The
conclusion is why tech, or even just plain manufacturing, would be nice to
have. Yet it is not an argument for necessity or competitive utility.

As a programming Canadian I can move to America with relative ease. Even if
Canada had a tech sector I would still have to move many hundreds of
kilometers. If I'm already moving across country away from home I must ask,
what can a Canadian city offer that Silicon Valley cannot?

~~~
agentultra
Not a whole lot. All of the money, culture, and innovation in technology is
happening outside of our borders. With few notable exceptions you will find
Canadian start ups tend to follow industry trends rather than make them. The
salaries are rather anaemic and the jobs are not terribly interesting. On top
of that most Canadian tech start-ups are forced to consider the first exit
they can get by their conservative backers. Why would you even consider a
Canadian company?

(disclosure: I work for a Canadian company.)

------
protomyth
I do wonder about one thing, and this is an honest question. Do the cultural
content and language requirements get in the way of startups?

Its stories like this [http://www.cbc.ca/news/canada/story/2012/04/06/target-
canada...](http://www.cbc.ca/news/canada/story/2012/04/06/target-canada-
review.html) that make me wonder if this would be an issue. Would youtube, if
started in Canada, have been impacted?

~~~
otoburb
I believe that if you go national in Canada you will be expected to provide a
French translation of your site. That was the first I'd heard about Ottawa
being interested in the ratio of cultural content outside of radio & TV
programming, but it's not that far of a stretch.

However, I'd opine that it's not that much different from (eventually?)
offering Spanish or other significant immigrant/minority languages on a site
in the US. You may not be under any legal obligation to do so, but it would
certainly make sense if you're trying to expand into different demographics.

~~~
excuse-me
There is no requirement to offer French outside Quebec unless you are federal
govt.

Occasionally the govt gets a committee up to consider Canadian cultural
content but it's mostly to keep the media happy - it never gets as far as
affecting any business.

------
Apocryphon
This is a really fascinating article about an interesting topic, but he spends
around a dozen paragraphs explaining the background, and only talks about his
answer in the last three. Would have liked to read more about his opinion.

------
excuse-me
In the US the government doesn't care about the tech sector, except perhaps
military. You can't help feeling that the Canadian govt is actively trying to
kill it.

Startups don't fund politicians and young people in tech don't vote. So given
a choice between rebuilding a burned down mill in a town where pine beetle
have eaten all the trees or supporting tech startups in Vancouver - you have
to look at where the votes come from.

So cancel R&D tax credits and use it to subsidise uneconomic fishing and
forestry.

Oil and mining are probably OK - they make party contributions. But even then
the fed govt is killing us. An international mining company I worked with was
planning on setting up it's R&D headquarters here - (mainly because it's
easier than the US). It takes 5+ years to get an immigration visa for a mining
engineer and their family then it takes 5+ years to get citizenship once they
are here. You can bring in fruit pickers or rig hands on a "skilled workers"
temp visa instantly of course.

In the end the company moved it to Australia, comparable cost and standard of
living - but 1year visa process and 1 year to get citizenship.

~~~
tatsuke95
> _"Startups don't fund politicians and young people in tech don't vote."_

Good points. Both easily solvable.

~~~
excuse-me
If the startup has the same sort of money to throw around as an Enron or a BP.
And if all the programmers live in a small town so that a significant
proportion of the electorate there relies on the startup.

