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.
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.
It'll be an interesting discussion point at next week's Startup Festival in Montreal.
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.
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.
I've got the same advice from at least two Vancouver VCs. I also worked for a company that was forced by their VC to open second (and completely useless) office in Seattle, because the "presence in the US" was said to be essential.
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).
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.
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?
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.
One of many reasons I'm not seriously considering coming back to Alberta (even though I loved living there) - in my experience, even most of Australia, where I'm living currently, has a much deeper talent pool and access to gov't VC funding.
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.
They make FPS-style training programs for service rigs, among other things. Thanks for the offer, I'll pass it on.
If you are making $1000/day on the oil patch then you can put up with it, but why would you move there for a regular dev job?
But seriously, who wants to live in Edmonton? I know a bunch of people at BioWare, and the company is the only reason they're in Edmonton. They complain about the weather constantly.
That's absolutely not the issue. In fact, Canada's national past time is to psycho analyse Americans. If anything we understand them better then they themselves.
Also there is tons of money available. The issue is smart money. We raised all our money in New York City.
In our case, it was about talking to users outside of the Blackberry bubble. After we moved down to the Valley, we started seeing more and more people use Fitbit and other quantified self devices, as well as all the cool new fitness tracking apps on Android and iOS. That helped drive our feature set for Pebble.
This seems like a false premise. I would guess people who live in the valley are just as disconnected from the rest of the states as people who live in Canada. Perhaps more so.
There is a feedback loop between not being able to raise sufficient money, and not being able to afford the most talented people...
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.
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.
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.
It would be interesting to see a breakdown from Waterloo of how many postings are in the US vs Canada and how large the companies are. Sort of like a litmus test for the tech scene there.
I'm also surprised at the lack of news from the Waterloo incubator, especially on this site.
I live in SF currently, and recently accepted another job in NYC. Apples to apples, the pay in SF/SV is easily 100% higher than Toronto right now.
The gap is even higher in NYC (150%+), though of course, cost of living is going to eat up most of that. With the bubble heating up even more right now, I know people who are picking up comp packages 200%+ higher than the going rate in Canada.
There is simply no reason to go back - critical mass of talented, dedicated people. Interesting work. Ludicrous sums of money.
For a while, I had trouble working because of health issues so I decided to work part-time while getting medicated and going through physio.
Much harder to do that in the U.S. without a sort of group insurance. The cost of subscribing to an individual plan with my condition would probably be through the roof.
However, because of socialized medicine in Canada, I had far less financial pressure on myself as my medicine and visits were obviously covered.
It turns out it's hard to find an excellent job in Canada. Though I'm now working for Shopify, which appears to be the only really great option for me here, the other three of them have recently moved to New York, the Valley, and North Carolina.
The problem with the tech scene in Canada is a chicken and egg one. We need good companies to prevent skilled tech workers from moving to the States, but we need skilled workers to build good companies. Moving to a Canadian startup hub, if one is ever designated, is not significantly easier for most people than moving to the Valley.
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.
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.
I'd most certainly be in line to apply.
These discussions--largely theoretical--have centered around three problems:
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);
- 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.
A lot of the points that are raised here are really valid - Canada has a lot going for it culturally and in quality of life.
But the infrastructure to help foster and grow companies simply isn't there. Surprisingly little is computerised - government, banking, even dealing with cellphone and internet companies (who are overpriced) almost always involves finding out that you can't do what you want online, or in any digital format, so you either need to send cheques and forms by mail or sit in an office somewhere while someone does the data entry of your form while you wait.
You don't even have a lot of the b2b services that you can get elsewhere. There's nothing like stripe, devpay, google checkout here, it's difficult/expensive to get your hands on mobile devices for testing, and even existing IT services all have the opaque "call us for pricing" bullshit that you get from services that don't have enough volume to be fair/transparent.
Canada seems to focus on one large tech company darling until it gets run into the ground for whatever reason, but along the way seems to ignore the small businesses that could turn into the next big-ish thing. Flickr, AbeBooks and PhoneGap all pretty much got sold under the radar, and companies that are still in Canada, like HootSuite, seem to be getting equally ignored.
Yeah, Canada's an awesome place to live, but in terms of a place for startups, it seems like it'd be much easier to move somewhere conducive to running your business.
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.
Demand for talented engineers in Canada vastly outstrips available supply. Period.
Engineers are in really high demand in Toronto for web/mobile.
PhD rocket scientists on Canadarm are supervised by new electrical engineering graduates. There is a special exemption to allow university science profs to supervise PhD students but the engineering institute is campaigning against it.
It's a nice place to work in many ways, but it is like working in Britain in the 70s
The title of "Professional Engineer" (P.Eng.) is reserved by law to those who are granted that title by the self-governing engineering bodies of each province (e.g. Professional Engineers of Ontario). You can't legally represent yourself as an Engineer in Canada unless you are a registered P.Eng. The title does indeed attach professional liability, and is a method of ensuring responsibility and safety in engineering projects.
The issue with Vancouver is not software patents, but capital recycling. Most of our tech capital leaves Vancouver instead of staying to be reinvested, this is why mining works so well in Vancouver, there is a huge amount of capital recycling, similar to what you'd see in the bay area in tech. (Oddly enough SF also has a fairly large mining sector)
The big advantages to Canada that I see are SRED funding (70% of your dev salary could be paid by the feds), and CMF funding if you're doing a digital media project (75% of costs covered up to $500K for development, production and operations for a total of $1.5 mm)
It is simply unaffordable. The prices has been inflated through speculation to insane levels, mostly driven by Asians dumping boatloads of US cash back into the North Am economy. Talked to a realtor lady few years ago - she would show 5-6 houses to a Chinese buyer (on a two day visit here) and he'd end up buying 4 of them, 1 mil a piece. Things gotten worse since then.
Here, have a look - http://www.crackshackormansion.com
There's no need to prove that for H1B; it's only needed then sponsoring for employment based green card.
"- Relatively low cost (compared to, say, San Francisco);"
That is true for most of Canada. Vancouver is expensive, but other cities are cheaper than SF. I have a 1 bedroom apartment in one of the nicest areas of Montreal for $650 per month.
I know the home prices are going to be high, but tbh, it seems Australia is also quite high! If one was willing to live in the suburbs, a bit away from the city, is it really as bad as people say?
Also, how is the tech scene in Victoria?
Canada is one of the few developed countries who hasn't seen their housing bubble burst yet, and the bubble is most pronounced in coastal BC and the Greater Toronto Area. Vancouver, for a time, was riding some of the highest housing prices in the world.
But that tide is turning, as it has everywhere else in the world. Sooner than later there will be deals to be had.
Wife and I agree that we would rent for a while as the rents are quite low compared to mortgages and we would see what happens. Either way, IMO, when mortgages are 2x-3x higher than rents, it doesn't make much fiscal sense to buy.
Thanks for the heads up!
I don't mean to be negative but popularity and great tech scene may go hand in hand.
I'm also a person who likes smaller places, but need to be close to an international airport (for work) so Victoria has that going for it.
My wife is a GP and likes to be in smaller communities so she can connect with the people more, so that is playing in her mind.
And we have kids and don't really want to raise them in a "city". That, and the schools in Victoria seem to be really good...and they have a good French immersion school. Our kids speak French, but neither my wife or I can properly teach them to read or write...so we wanted to send them to French school until about 8th grade.
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.
Wages aren't exactly the greatest, expenses aren't exactly the lowest - and there's a real lack of depth in both talent and places to work. On the other hand, there are plenty of people doing start ups because they don't want to leave - you just have to know where to look.
(also, sent you an email)
It might be booming for Victoria since a industry sector that is actually growing in the area, but I doubt it's much compared to NYC/SF. For comparison, Seattle across the pond pays more, is easier to find a job, has significantly cheaper housing, shopping, airfare and taxes and doesn't have a housing bubble waiting to pop. And your not stuck on an island with a $50 & 3 hr one way ferry barrier. Victoria can be a frustrating place at times.
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.
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.
* 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?
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.
I work for another startup - Wave Accounting. I left a fairly safe, well paying job to come here. I'm paid well, my work-life balance is great, and I love my work. And I have 3 kids and a wife who is in grad school (paying off my mortgage early helped with the decision, to be fair)
As far as the GGP comment, I know a few of the Shopify guys because they have a Winnipeg office and they're brilliant people. I'm sure it would be a treat to work there.
Keep in mind that the parent (top) said he's working in government, that's top-notch benefit that you can't get anywhere else. If startups can offer the same level of pay and benefit, even with risk, people will flock to startups.
Having said that, there's one more scenario that I've seen people prefer to choose:
1) Get a fairly stable job (albeit boring one)
2) Do 8-4PM
3) Work on side projects/hobby/small businesses on your free time
Why work for startups or small-medium companies where you may have to work slightly harder and get paid either slightly or way less?
It's just... different...
I think redthrowaway kind of summed it up. It's not you, it's me. In my current situation, I'm probably the last person that you'll see trying to work for a start up. Not right now at least. There's a time and place for everything.
While going for coffee would be fun, I don't want to waste your time seeing as you're doing what our city needs to be done. We need more people like you, and more companies like Shopify.
Did you just call Ottawa "the City"? Sorry buddy, Kanata is not "Silicon Valley North".
I remember this spring at an event (SPAC), they were at the career fair with a banner saying something like "Don't go work in Kanata, it sucks" or something similar, I don't remember the wording exactly. It was pretty funny given they had their banner right in the middle of the hallway, next to the other companies that are actually in Kanata. It was pretty badass!
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.
I find the focus on public companies to be misguided. Why not look at job creation instead?
I was thinking of going back to Toronto where I went to university and have a network but it doesn't seem very promising.
If I may take a wild guess it is probably due to the nature of their console games being seasonal (and they're not a stranger to medium-to-big size layoffs).
Radical Entertainment recently closed their door in Vancouver as well.
One of the patterns in the gaming industry in Vancouver, as far as I know, is that those who felt more adventurous decided to quit their job from EA and started their own game companies (and thus poached those who are still working for EA). Once they hit "Success", EA may buy them only to either:
1) Lay them off next season
2) They decided that EA is not for them and thus quit their job
... either 1) or 2) start the next cycle...