Why ‘sucking up’ to foreign tech companies is a good idea

Canada can boost its tech sector by attracting the Googles and Facebooks of the world, says Lars Leckie, a Canadian venture capitalist in Silicon Valley


Prime Minister Justin Trudeau takes part in a virtual reality tour along with 3D printing technology at the new Google Canada Development headquarters in Kitchener, Ont., on Thursday, January 14, 2016. (Nathan Denette/CP)

This column is in response to an earlier Maclean’s story.

It’s been gratifying to see so many thoughtful Canadians weighing in on how our country can be more competitive in the global innovation economy.

I say “our country” even though I have lived and worked in California for almost 20 years. The reason for my wording is simple: I am among the many proud and patriotic Canadians in Silicon Valley working hard, through a group called the C100, to help our entrepreneurs build world-class technology companies back home.

We do that by connecting them with customers, capital and expertise, all of which are vital to achieving global scale quickly. And when it comes to tech, there is no greater concentration of those things than in Silicon Valley.

Canada’s best tech entrepreneurs—like those in Israel, the U.K. and elsewhere—already understand the value of building early relationships abroad, even as they increasingly choose to base their companies in Canada. It is no wonder that more Silicon Valley companies and investors are, in turn, taking greater notice of tech hubs outside the U.S. as great places to recruit talent and set up satellite operations.

Tech, more than any other, is a global industry.

It’s been surprising, then, to see protectionist sentiments arising from some quarters of the Canadian tech sector, as summed up in a Feb. 25 Maclean’s article titled, ‘Why does Trudeau keep sucking up to foreign tech companies?’

Let me take a stab at answering the headline’s provocative question: Because it’s the right thing to do, if Canada is serious about building a world-class technology sector.

Just as we gain whenever Canadians go out to work at large firms around the world and return to apply their knowledge, we gain when those companies set up in Canada. Not only do they employ talented workers, but they provide invaluable experience in how world-changing tech companies are built and managed.

Of course, we should keep doing all we can to support and favour our entrepreneurs as they build their businesses—but to do so to the exclusion of welcoming foreign tech companies onto our soil is to miss out on huge opportunities to seed our own ecosystem with the expertise, capital and winning culture we need to compete globally.

Mike Serbinis, my Queen’s University classmate, is a case in point. You might know him as founder and CEO of Kobo, and more recently, of League, a pair of Toronto tech companies. But long before either of those companies came along, Serbinis amassed considerable U.S. experience at Microsoft, Zip2 (co-founded by Canadian-educated Elon Musk of Tesla fame) and Critical Path, the last of which acquired DocSpace, the Toronto startup where Serbinis worked back in 1999.

Through a 1999 lens, it would have been easy to view the DocSpace acquisition by San Francisco-based Critical Path as just another Canadian startup selling out to the Americans, exacerbating the so-called “brain drain” of our talent to the U.S.

Instead, it equipped Serbinis to eventually return to Canada and build tech companies that have employed scores of highly skilled people and put hundreds of millions of dollars into our economy.

As Mike likes to say, winning begets winning.

Ireland offers another example of how foreign tech investment can feed a domestic ecosystem. Its tax incentives, high-quality talent, friendly regulations and low cost of living have helped attract Google, Apple, Facebook, Twitter, LinkedIn and other tech giants to its shores. Their presence has, in turn, helped fuel a startup boom as tech workers gain experience and then strike out on their own.

This same phenomenon is playing out today in Vancouver, Montreal and the Toronto-Waterloo Region corridor, where Canadian successes like Shopify, D2L, Hootsuite, Influitive and Vidyard are thriving alongside outposts of international tech giants.

To deride Trudeau for “sucking up” to Google at the recent launch of its new Kitchener-Waterloo engineering office—after he’d visited BlackBerry and the University of Waterloo that same day—would be to overlook how Google’s presence has enhanced the local tech community.

Beyond creating world-class jobs for Canadians, the company has worked with Communitech, Waterloo’s non-profit innovation centre, to set up Canada’s first Google for Entrepreneurs hub. It provides local startups with mentorship, resources and connections into Silicon Valley, and its beneficiaries include Bridgit, a construction software company that out-pitched 10 international rivals in a Silicon Valley event for female tech founders last fall, then returned to Waterloo to keep building.

Google’s acquisitions of a few local startups over the past decade financially enabled those companies’ founders to plow some of the proceeds back into other local startups in the form of angel investments, and to lead promising new ventures such as Axonify, a Waterloo software company led by CEO Carol Leaman, with whom I’ve worked on a board.

Google’s growing Waterloo presence has also served as a beacon to other Silicon Valley companies such as Square, NetSuite and most recently, Everalbum, which have established development offices that help to keep homegrown talent at home, while further building on Waterloo’s international reputation.

Far from threatening to suck up all the oxygen, as the Maclean’s piece suggests, these international companies bring new sources of oxygen, nutrients and diversity to a Canadian ecosystem that has finally regained momentum in the wake of the collapses of Nortel and BlackBerry.

Painful as those two losses were, we’ve emerged stronger for them, with several homegrown companies growing significantly; risk-capital investment trending upward; continued excellence in research in such fields as quantum computing; and a coast-to-coast explosion in startup activity supported by incubators and accelerators. This rise and fall of tech companies is part of the renewal cycle that we want to embrace and foster, as it is an essential part of the cycle in Silicon Valley. It’s more about opportunity than bad news.

Our strength can only increase as more Canadians gain exposure to the kind of success that the Googles, Apples and Facebooks of the world represent.

By all means, let’s have a vigorous discussion on the role federal policy can play in building the best innovation strategy we can for Canada. But let’s not allow protectionism and insecurity blind us to the fact that we live in a global world, and the opportunities inherent in that.

I also propose the following metric as our barometer of success: Let’s rally around the total number of technology jobs in Canada, and drive growth in that number by any and all means. This will set us up for tech success for generations to come.

To quote Mike Serbinis once more, you can think small and be angry, or you can think big and be optimistic.
When it comes to building a world-class innovation economy, Canadians have every reason to choose the latter.

Lars Leckie is Managing Director at Hummer Winblad Venture Partners in San Francisco and a founding charter member of the C100, a non-profit organization in Silicon Valley that supports Canadian technology entrepreneurship through mentorship, partnership and investment. 


Why ‘sucking up’ to foreign tech companies is a good idea

  1. Thanks Maclean’s for this effort in crystallizing this issue of innovation in the digital tech sector — the guild structure that emerges from this column was key to transparency for the understanding.

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