
Canada’s vanishing tech sector - graeme
http://www.theglobeandmail.com/technology/canadas-vanishing-tech-sector/article4396596/?page=all
======
JumpCrisscross
»" _Many Bay Street investment dealers have lost all interest in the sector,
content with the flow of deals in mining and oil and gas._ "

This is indicative of Dutch disease, the process by which a country's natural
sources drain investment from its human capital, producing a structural
competitive disadvantage in the latter.

It usually manifests through resources firms pushing the exchange rate too
high for manufacturing et al to compete. In a country with restricted and/or
irregularly risk-averse capital supply, however, it could also arise as such,
i.e. with limited capital seeking low-risk resources assets. This would imply
regulatory constraints on Canada's capital markets.

------
mcmatterson
This article is depressingly spot on.

What worries me most is an inability to set Nortel aside in the ongoing
historical narrative of tech in this country. The seemingly inevitable decline
of RIM may well put us over a tipping point in this regard, putting us in a
situation where we're so paralyzed as a nation by what's happened in the past
that we can't bring ourselves to look to the now, much less to the future. We
can't get over Nortel in the same way that we continue to look back at the
Summit Series year after year after increasingly annoying year; adding RIM
onto the pile of failed Canadian tech stories is going to make a mountain that
will take decades for us to come to terms with, all the while distracting us
from getting shit done.

As a country, if we continue to look to the past for lessons about how to
build success, we're going to be building a country that is cribbing off the
skeletons of failure. Sadly, looking towards the lessons of the past and
staying in the shallow waters that result are very much a part of the Canadian
way. I worry that we'll be spending so much time wringing our hands over
Nortel and RIM (especially outside the sector, which is where most of the
money comes from) that we'll be unable to spot the next big thing.

~~~
HorizonXP
As a Canadian working to bootstrap his own startup, I'd have to agree with
everything you and the article have said.

It'll be an interesting discussion point at next week's Startup Festival in
Montreal.

------
trevoro
As one of those "early tech exit" Canadian entrepreneurs, this article really
hits home for me. When I first started out I talked to several successful
entrepreneurs who were living in Vancouver at the time and got some rather
interesting advice. Paraphrasing: Move to the valley. There are too many
reasons to be there. Don't be a patriot - and don't be a martyr.

Lack of critical mass in any of these "tech hubs", overall aversion to risk,
lower paying jobs, and ease of moving to the valley are all cards stacked
against you before you even start.

Many smart people realize that and they leave - critical mass is incredibly
difficult to achieve when you're still bleeding all that talent. This is why
having anchor tenants - large companies that draw talent in is so important.
We can just never seem to have more than one at at time, and then they're mis-
managed into oblivion.

~~~
haberman
Why skip over Seattle, which is much closer to Vancouver than the bay, and has
a pretty thriving tech scene (both startups and big players like Amazon,
Facebook, Google, and Microsoft)?

~~~
Danieru
You're right, we should blame them as well.

Woe is us.

On the other hand I do not see anything wrong with our Canadian talent drain.
Canadian software engineers are not for want of jobs, I imagine we have the
easiest time moving to the states of any nationality. Many of us are in the
same time zone!

If it is not for lack of opportunities then why does Canada 'need' a tech
sector? I think the truth is we _want_ a tech sector.

Just because we want something does not mean we know how to manage it. Chances
are we'd mismanage it. Take our submarine fleet. Up until a few years ago
about half of our submarines were stationed in Edmonton, a land locked city.
Then we bought used British ones that managed to catch on fire, in the middle
of the ocean.

------
latch
I spent my life in Ottawa, including the first 10 years of my professional
life there, before getting out. I'm sure everyone has a different perspective,
but as a coder, the problem is clearly talent.

Overwhelmingly, programmers are below average. Management are textbook gantt
charts and timesheets. It's pretty much the problem that you see throughout
the industry, except it's every single company. If shopify is an exception,
it's a recent one.

Ottawa is particularly bad because it's a government town. 9-5 is a rule.
Lot's of consulting companies. Lot's of certified managers. There's a huge
sense of entitlement. The city is geographically large with bad
transportation, so you have long commutes (Toronto's no different).

------
realo
There is a lot of high-tech stuff happening in Canada. Montreal is very
attractive to gaming companies, for example. Quebec City is a hub for high-
tech optics companies. The Enhanced Full Rate codec for GSM was developed in
Universite de Sherbrooke (Quebec):
<http://en.wikipedia.org/wiki/Enhanced_full_rate> .

There is a startup festival next week in Montreal:
<http://startupfestival.com/>

The problem is that all this occurs in the French-speaking part of Canada
(Quebec), NOT in Ontario. There is a strong push against anything that would
actually help Quebec become stronger financially, as this might trigger a
greater willingness for independence.

That is why the Globe&Mail did not mention Quebec at all in their article.

Sad, but not unexpected.

~~~
myth_drannon
Gaming companies in Montreal are a sad joke and represent everything that is
wrong with Canadian tech. 37 % of game developer salary is paid by provincial
government. Our tax money is given to France's business elites.

~~~
realo
And in what manner does this situation prevent high-tech stuff from happening
in Montreal, with Quebec talent?

The idea here is that a critical mass of talent is being raised in Montreal.

I agree with you that this is a good example of what is wrong with high tech
in Canada: why is it that French investors are willing to invest money in
Montreal, but Toronto Investment banks don't?

In what manner are Canadian VC's prevented from doing exactly the same thing
as the French?

~~~
excuse-me
Montreal VCs don't invest in Montreal startups, they invest in getting tax
credits and grants - it's the same reason call centers "invest" in the
maritimes

------
erohead
It's amazing how most of these articles just talk about the difficulties of
raising money. As if that's the only important thing missing in Canada for
startups. What about the difficulty of finding out what users want (when your
customers are all in the US), the lack of a concentrated talent pool of people
in your sector (hard to network let alone hire), lack of sector-specific
mentors. All much harder to do in Canada at the moment.

~~~
blindhippo
I can attest to the lack of talent in my area (Alberta).

Our company spent over a year looking for a junior PHP developer. Literally
couldn't find one anywhere (the few bites we did get had no clue how to
actually program in any language). And on a personal level - I've never been
able to find a decent mentor anywhere. Local user groups are anemic and tend
to be filled with nothing but MBA's and "idea guys" looking for dev talent, so
networking is a total bust.

While this situation is great for a contractor/young developer with talent (in
demand, loads of bargaining power) - it's frustrating as all heck once you buy
into a company and want to take it to the next level.

Our province is bursting with resource money - yet very little of it is being
directed at creating a sustainable economic sector based on something other
then crap that can be pulled out of the ground.

~~~
gigantor
The lack of PHP/Rails developers in Alberta is unfortunate, but the cause is
that enterprise development dominates the industry, with .net and Java
projects taking up nearly all the market share and the rest existing in very
niche markets. Software development exists here primarily to facilitate stuff
being pulled from the ground.

Have you considered using .net for your startup? There is the obvious drawback
of having to license the Microsoft stack, but ASP MVC is now mature enough to
being a solid backend platform for a startup, and your odds at finding a
talented .net developer in Alberta are magnitudes greater than the platforms
hyped in Silicon Valley. The BizSpark program also gives you a 3 year free run
at MS licensing.

As an experienced contractor in the Calgary area, I'd go as far as saying the
Oil & Gas has created a large surplus of .net developers especially in the
last 3 years, which explains the booming IT headhunting sector here, and
hiring capable developers seems to take only a handful of days from start to
finish.

~~~
uvtc
If there's a lot of Java devs there, the poster might also consider using a
JVM-based language. No licensing with MS required, and it should be a
relatively painless transition for Java devs.

------
jbarham
I'm Canadian and worked in high-tech in Ottawa, Toronto and Vancouver until
2006. Then I moved to Southern California and worked there until 2010 (on a
work visa) and have been in Australia since.

In Ottawa I worked for the federal government. It paid off my student debt but
professionally was a dead end (although that's mostly true of any government
town). I then worked for a branch office of an American company in Toronto
(although FWIW most of the developers were Romanian) before moving to
Vancouver where the startup I worked for folded in the aftermath of the dot-
com bust.

I loved living in California but hated the restrictions of the H1B work visa
so moved to Australia (my wife is Aussie) largely so I create my own startup,
which I've done (<https://www.SlickDNS.com>). The weather in particular in
California is fantastic.

The fact of the matter is that compared to the US the high-tech economy in
Canada is very small. There are really only a handful of _cities_ with a high-
tech sector (Montreal, Toronto, Ottawa, Calgary?, Vancouver) whereas the US
has at least as many _regions_ with sizeable high-tech sectors (Seattle,
Silicon Valley, SoCal, Texas, Research Triangle, Boston, NYC).

In all of the cities in Canada, the weather is worse, salaries are lower,
taxes are higher, and houses cost more than pretty much any of the US regions
I mentioned barring perhaps SF or NYC. (Vancouver's real estate is notably
expensive, largely because it's an easy way for nominal immigrants from Hong
Kong to park their money.) So financially the US is unbeatable, but the price
you pay is having to put up with the Kafkaesque US immigration system and work
visa restrictions.

Australia's economy is actually quite similar to Canada's in that it's
dominated by the natural resources sector. House prices are also similarly in
a bubble (e.g., try comparing prices for 3 bedroom houses in Melbourne vs.
Austin), but on the plus side the weather down here is better. I do miss Tim
Hortons though.

------
saeidm
The problem extends beyond financing. As even the article says, successful
companies like Shopify are able to raise $$$ from the US. It's also a scale
problem. Canada has has, by my count, four micro tech scenes (Waterloo,
Vancouver, Toronto, Ottawa). In a Country with such a small population, there
really still isn't a "hub" for tech. With talent so dispersed (and much of it
moving to the US as it is), it's hard to get talent for good ideas in one
place.

~~~
jaems33
Indeed. Big companies like Microsoft and Google tend to snatch a good portion
of highly skilled engineers, while most designers (product and visual) tend to
head towards New York City or San Francisco for better growth and money.

~~~
dkubb
IME the remaining skilled engineers want to work remotely.

The last 8 years I've worked almost exclusively for US based businesses as a
remote contractor. It's the best of both worlds, I can charge competitive
rates but have a relatively overall lower cost of living and access to free
healthcare. Taxes are higher in Canada, but it works out that I'm way ahead
than if I lived in SF or NY.

The downside is that I occasionally do miss the one-on-one interaction I get
with team. It helps that I've begin working for a co-op, and I'm often working
as a team with the same devs on new client projects. I also do lots of oss
work, which helps me keep my skills up by working on challenging projects as
part of a community.

~~~
CountHackulus
That's interesting, I've always wanted to do something like that and never
really figured out how. Mind giving details? Or if you'd rather not do it
here, just send me an email, it's my username at gmail.

~~~
dkubb
I don't mind talking about it here. I've worked solo for a number of years
after leaving a stable full time job. I did a lot of open source work and
through the community I've come in contact with a group of devs who work
together on client projects.

The people running the coop are responsible for finding us the new contracts,
and they add something on top while I get to charge decent rates. I know I
could probably market myself and earn the same thing without the middleman,
but I don't have to worry about keeping the pipeline full, billing,
negotiations, etc.. having someone else handle that frees me up to focus on
development.

The nice thing about this arrangement is that since we're a team we can work
on larger projects than I would otherwise be able to bid on myself. Instead of
having to juggle 5 or 10 projects to fill all my billable hours in a month, I
can easily do it with just a couple. I'm also able to go much deeper and work
on 6-12 month contracts, rather than doing short, trivial projects.

------
cal5k
As an individual Canadian entrepreneur, really your only course of action is
to ignore the talk of doom and gloom and just get shit done.

It does seem to be the reality, though, that beyond a certain stage the only
way to get a good valuation is to work with American VCs.

~~~
imack
I'm actually surprised that the article didn't touch on how the rules have
been loosened so that American VCs can play in Canada a lot easier.

------
justincormack
This is fairly true of pretty much every country except the US. Finland had
Nokia, now in decline. Germany still has SAP but that's it. The UK has nothing
large left, all sold abroad (last one was Autonomy). Most countries have never
had a big tech company at all.

~~~
kristofferR
You forgot another continent, Asia.

~~~
justincormack
Well there is Samsung, a few companies in China. The Indian companies are
mostly services, not tech. So similar.

------
nickler
Many say it best, risk averse. Early stage, tech savvy angels are as rare as
sunny weather here in Vancouver. There are about 3 in total, all working out
of Growlab.

That being said, complaining about it won't get it fixed. Growlab is doing
yeoman's work to get the SV money pipe flowing north, they just need help.
They need better companies with bigger ideas, more aggressive founders, and
one decent exit. All it will take to lure some money out of the mining and oil
sector is a couple big returns, and I see a few that aren't far off.

Tough as hell trying to raise out here, but it only makes you stronger.

------
willhsiung
Saw a post in Engineer Blogs recently,
<http://engineerblogs.org/2012/07/wtf-17-seditious-traitor/>, which was
written from a Canadian who decided to move to China to seek out tech
opportunities. Kind of wondering if Canada's tech industry with RIM and Nortel
is like Detroit in general with the auto industry - as the big companies go,
so does everything else.

------
dmix
If the United States passes the startup visa act, it would be vanishing much
quicker.

I'd most certainly be in line to apply.

~~~
khuey
Good news for Canada then. The odds of the US coming up with a rational
immigration policy are pretty low.

------
cletus
I am an Australian/British dual-citizen (born in Australia but lived and
worked some ~3 years in London and ~1 year in Zurich) who now works in New
York. I've had discussions with various people (mainly other engineers) on the
topic of how one would go about starting a startup.

These discussions--largely theoretical--have centered around three problems:

1\. Where?

2\. The route to funding/profitability; and

3\. Visa/residency issues.

(3) of course depends on (1) and the nationalities and residencies of the
respective founders. As a UK citizen I luckily have the right to reside
anywhere in the EU. For the US unfortunately I need a visa but Australians
have access to the E3 visa, which has a lower bar to issuance than even the
H1B (there is no need for the employer to "prove" they can't find someone
local, which is essentially a legal circus) but there are issues in using work
visas to found companies.

There are I believe many foreign engineers in the US in the same boat as me.

I've looked into the possibility of either situating in Canada or at least
using it as a stepping stone. It could have a lot going for it, for example:

\- Vancouver is relatively speaking close to Seattle and the Bay area;

\- No health insurance problems (comparatively);

\- Relatively low cost (compared to, say, San Francisco);

\- English-speaking;

\- Cultural similarities.

And here's where Canada really has an opportunity to attract fledgling
companies: software patents. If Canada were to invalidate software patents
then they'd essentially be providing a safe haven for small companies until
they're large enough to defend themselves. Of course, trolls can still go
after US operations (if, say, you hosted in the US) but you would be at least
partially protected.

Sadly, the Canadian government seems to be just an inept when it comes to IP
issues as other Western governments (and, worse, it seems to take its lead
from the US).

But if you go look at the Canadian immigration sites you find out that:

\- getting residency is relatively difficult; and

\- engineers aren't even on the list of high-demand occupations (whereas
restaurant managers are, for example).

Now Canadians could be concerned that if such a program existed people would
use it until they could get to the US and I suspect that would happen a lot
but I think that's fine because a certain percentage would stay. Some would
employ Canadians, at least for a time. Some of those would go when the startup
move. Some wouldn't.

That's how ecosystems form. It's not an exercise in being better than say
Silicon Valley. Like so much else in life, it's simply an exercise in
persistence and ultimately a numbers game.

Beyond those options I'm not sure where next someone in my shoes might
otherwise go. London and Germany (I lived in Cologne for a time and loved it)
are obvious choices.

In a bootstrapping scenario or even at a seed-funding level it would be ideal
to keep costs low. Costs in the Bay Area for talent and even housing, etc are
bordering nightmarish and I say this as someone who lives in Manhattan.
Finding and retaining talent in SF/SV must be torture for new companies.

Personally I prefer New York but hey YMMV.

Anyway, back to Canada, it seems to have the same problem Australia does in a
way: it's too focused in ripping stuff out of the ground and selling it than
it is on tech. Oh well, their loss.

~~~
randomdata
_engineers aren't even on the list of high-demand occupations_

Probably because there is no demand. My local municipal government was
recently looking for someone to maintain their website, which is little more
than a simple blog. The job description essentially laid out the job as your
basic, run of the mill CRUD application. The kind of stuff kids in high school
do for fun.

When you read down to the requirements section though, they were asking for a
CS degree and a bunch of other stuff you would normally expect to find from a
$200K/year job at Google, not a mediocre pay, small government job. The fact
that they can actually ask for such ridiculous requirements and fill the
position speaks to there being far more supply than demand, at least from my
point of view.

~~~
cal5k
Absolute nonsense. The only reason that probably got posted was because
whoever posted it had no idea what they were doing.

Demand for talented engineers in Canada vastly outstrips available supply.
Period.

~~~
a3camero
I attended an event in Waterloo, Ontario, Canada in the summer with about 50
local developers. At the end they had an informal few minutes where people who
are hiring can stand up and pitch. There were a half dozen people from medium
to large companies (e.g. Electronic Arts was one of the large ones). They
asked who was looking for work and not a single person raised their hand.

------
Sukotto
Many non-tech friends/family have told me that Victoria BC has a booming tech
industry (esp in gaming). _Can anyone confirm that for me_? I haven't found
very much online about it so feel a bit doubtful.

I'm Canadian and moving back to Victoria next month from NY. The current plan
is to push hard on a small service business for the airline industry (so I'm
not in a hurry to find a new job). Even so, I've been away for over a decade
and the place is likely to have changed a lot.

If you are in Victoria, the island, Vancouver, or the sunshine coast, I would
love to buy you lunch (or just a coffee) and chat about the lay of the tech
landscape in the area. Email's in my profile if you're up for it.

~~~
imack
Victoria "booming" is a pretty extraordinary claim. I'm in Vancouver, and
there is at least some startup activity, but I can't think of much in
Victoria. Maybe from a non-tech perspective it looks that way, but look at the
companies in both locations and see which are hiring. It's probably the most
objective way of finding out which is "booming".

------
unfocused
I've been recently asking my Engineer friends about this very topic. I've
always known that it's not the same as it was. I wish I was wrong. Quite a few
have left the field, and others have left the country. I've been working in
the high tech sector in Ottawa for 10 years now.

I started out working for (big surprise) a start up telecom company as a co-op
student. I loved it. Then tried the government. I wanted to kill myself. So I
tried hard to stay in the private sector. I got a job at Newbridge, which had
just been acquired by Alcatel, a company from France. (Alcatel is now Alcatel-
Lucent). I was there when they started laying off people. It was around 2001
when things started going south. The start up I worked for went bankrupt
shortly after.

So now I was done school. Quite a few friends from different universities had
gone south to Cisco, Nvidia, etc. Meanwhile, I tried to get into QNX, but then
money became an issue for them and nothing materialized. Jobless, I waited and
took anything I could get my hands on, including the dreaded Government, which
turned out to be OK. I told myself I'd do this until things settle down and
then I'd jump right back to the private sector.

Boy was I wrong. Most of the people, as mentioned in the article, were still
put-off by the Nortel debacle. I knew people my senior, who had 20+ years of
Engineering who couldn't get hired because they had too much experience.
Pretty funny. They took off to the US, eventually returning to start their own
company, but swearing never to work for a big corp again. They said the were
tired of making other people rich.

In fact, they never really cared at that point to grow a company into a giant
one. They just wanted enough to enjoy life. Management in the high tech had a
sort of arrogance about them. Too much of a show off in my opinion.

And here we are years after Nortel sunk. Nortel was full of mismanagement.
Quite the ego they had. They would have keg parties almost every Friday. Where
the hell was the money coming from?!?

The tech sector had been saturated with Engineers and Comp Sci people with the
promise of big money. A dime a dozen they were. Most didn't really have what
it took, but they did it for the job. We all know that's not sustainable.

It's as though the Canadian high tech people need to go see a Psychologist.
They're stuck like a sports team who just had a bad losing streak. They love
looking and emulating the US in the aesthetics and show, but don't realize
that there's more to it than that. I don't know, I shouldn't speak on behalf
of an entire sector, I don't know that much. But something about how they went
about things.

Needless to say, the risk taking and drive is no longer here because most of
the people that had it aren't here either. And the ones that did remain, are
still a bit jaded and don't want to play that game anymore. You need risk
takers, and our society is not that anymore. We've all been scared into taking
the safe route. This includes myself. Yup, I changed to a different position
in the government (really, really boring - but I have a baby now) and at the
moment, don't plan to leave. Maybe once the mortgage is paid off, and the kid
is older I'll take risks again, but until then, I'm not willing to take a
risk. Working for a corporation is silly to me because you have ZERO control.
That may be one reason why there aren't going to be many RIMs or Nortels
coming up in Canada. People don't trust large corps anymore, so the odds of
building one isn't going to get any better.

My 2 cents on this issue. Hopefully I'm wrong and people with guts (not like
me) will take some risks. Who knows what the future holds.

~~~
xal
Well, you are right but you are looking in the wrong areas of the City. I'm
clearly biased, being the founder of Shopify, but we are here to change
everything you mentioned above and we have succeeded so far when everyone told
us we couldn't. Feel like going for a coffee?

~~~
redthrowaway
I'm a big fan of shopify, so don't take this the wrong way, but would you
really be a good fit for someone with a baby and a mortgage? Currently, he's
making decent money, with great pension and benefits, doing incredibly boring
work. He could leave all that behind and work for shopify, for what? A couple
fun years of lower total compensation without the security?

As someone who's finishing up college, I'd hop on that in a heartbeat. If I
had a kid and a house, though? Far less likely.

~~~
xal
Ok this is super difficult to answer because you only gave me circumstantial
information instead of data that I need to make a recommendation. The
questions that need answering are:

    
    
      * How high is the individuals potential on an absolute scale?
      * Is the current environment providing a steady way to reach this high potential 
        in a reasonable time frame?
    

If the answer is something like "high,no" then it seems to me that the
opportunity cost of not coming to Shopify would be very high.

We are huge on work life balance because this is something that we can do much
better in Canada then in the Valley. There are about 5 core hours in the day
that we want people to be there ( 11 to 4 ) for meetings. We pay child support
bonus, gym membership, catered free high quality lunch every day, we do tons
of offsite events etc etc etc.

Now, let me read between the lines. I assuming we are talking about a dev
position. The fact is that there is essentially 100% employment for great
programmers. That's unlikely to be change in our lifetime. The reasons for
that are complex but googling for "Software is eating the World" is a good
starting point. Given this, it worries me when people talk about risking their
pension and secure jobs. The only thing that's at risk in ones career is to
not hit your personal full potential. If you don't agree with that then
Shopify will not be a culture fit.

Also: A ton of people at Shopify, including me, have kids and mortgage but.

~~~
khuey
You explicitly pay people more money if they have kids? That's interesting ...
I've never heard that one before.

~~~
infinite8s
Any company that covers the premium for a family health plan is paying 'more'
for employees with families.

------
mwd_
To give a sense of what the job market is like here in Vancouver, I know a few
people who accepted great offers at Google or similar companies after getting
only a couple of mediocre offers locally. There are some interesting startups
here for sure and I haven't had trouble finding work but the major tech
employers are not on the same level as what you find in the Bay Area.

The talent drain that exists unfortunately forms a self-perpetuating cycle. It
lowers the quality of remaining talent, so there are fewer successful
companies, and as a result there are fewer potential tech investors of the
kind they have in the Bay Area. This is a perennial problem in Canada that has
affected multiple industries in a similar way.

Another local problem in Vancouver is the high cost of living. Even Toronto
suffers from this somewhat. They're both pretty appealing cities but they
don't necessarily have the best "price to performance" ratio.

------
JabavuAdams
Toronto's a hotbed of tech, but you won't find many of the companies listed on
an exchange.

I find the focus on public companies to be misguided. Why not look at job
creation instead?

------
taigeair
I've just moved back to SF bay after 8 years and am looking for a job. I
realized there are so many Canadians here! Almost all from waterloo too.

I was thinking of going back to Toronto where I went to university and have a
network but it doesn't seem very promising.

------
devb0x
As a South African developer with 14 years experience, and looking at moving
from South Africa, what are the names of some of these events I should look at
to make contact with some of these co's?

------
gruseom
IMO, here is the salient part of the article:

"risk-averse"

------
christofd
agreed. been looking at this for a while. If you're Canada based you gotta
reach out internationally (Europe, U.S., Asia) to acquire funds, projects,
ideas. Thinking domestic is not optimal.

------
Apocryphon
Even within EA, Bioware's not doing too hot as a division, isn't it?

~~~
teamonkey
It's doing OK, but I think EA wanted Mass Effect 3 to sell more than it did.

~~~
gamble
ME3 actually exceeded expectations, despite all the online whinging. It's the
failure of TOR to achieve WoW-killing success that's keeping the stock low.

