Should we blame the government? Or blame society? Or should we blame the images on tv? No! Blame Canada!

Download 27.35 Kb.
Size27.35 Kb.
Something Ventured
March 31st, 2000
“Should we blame the government?

Or blame society?

Or should we blame the images on TV?

Blame Canada!” – South Park Cast, Blame Canada

Q: What is Canada’s favourite pastime?

A: Blaming our own government.

Whether it’s provincial or federal, we are a cynical lot when it comes to politics. I am certainly guilty of that. My digital soap box gives me ample opportunity to shred any policy, or lack thereof, when it comes to technology and driving the new economy. But what I experienced today gives me pause in my bureaucrat bashing…
Remember last year when I lambasted the feds for sending a trade mission to the Silicon Valley? Sergio Marchi came down here (Oops, I should tell you that I am in Redwood Shores at this minute) with some fanfare, only to get crickets from the local industry. A trade mission. Really. I think it actually weakens the Valley view of Canada when we send a government rep to help make deals for Canadian tech companies. It’s like having your Dad come and “pave the way” for a successful date.
Quick! What words spring to mind when you say “Bureaucrat”? Ottawa, polyester, mediocrity, 9 to 4:30pm with two 45 minute coffee breaks and an hour lunch, bad ties, sheep, inflexible, expendable. Just a few that pop to mind, anyway. Well, dispel those notions! I was very pleasantly surprised by the group from the Canadian Consulate Trade Office (CCTO), here in California. They put on a one day conference to help educate the Canadian investment community as to what really goes on in venture capital in the Silicon Valley. This gang is sharp. They get it. They really get it. It’s because they are living here and have been swept up by the madness.
The real workers in government are people like Handol Kim, Mark Ritchie and Jeane Weaver at the CCTO here in the Valley. They are tapped in to the deal makers at all levels here. They have attracted a few hundred Canadian ex-pats to attend their “Digital Moose” events on a regular basis. They tirelessly work to spread the word about Canada and its technology successes. And many Canadian entrepreneurs are coming to them to learn more about how to pitch the VCs down here.
Their leader is Roger Chan, a veteran diplomat with a great attitude. He treats his job like a business. He talks about customer “wins” and closing deals like any dotcom biz dev expert. He has a marketer’s mind when it comes to creating tangible connections for Canadian companies. But most importantly, he knows that our pace of change in Canada in the technology industry is too slow.
So Roger and the gang have a problem: They have just begun this effort and they are overwhelmed by the amount of work that needs to be done to build an effective bridge for Canadians to the Valley. Guess what? They have limited or no resources to do it and not many in Ottawa understand what is happening. You kind of have to be here to believe it.
What do you expect the reaction would be in Ottawa if they found out that the CCTO had Canadian entrepreneurs presenting at this conference telling the Canadian investors things like:

  • You drastically increase your chances of being a success by having a head office in the Silicon Valley

  • You need US talent in senior management to win

  • Its NASDAQ or nothing, baby… the TSE and CDNX are not viable exit opportunities

These statements clearly run counter to initiatives in Ottawa to build a Canadian technology industry. At least it does in the short term. Roger and his staff realize this. They hope that the press doesn’t focus on this (There were National Post and Ottawa Citizen reps there all day).

It was so refreshing to talk to Handol later over a Moosehead (imported, along with Smarties and Coffee Crisp for the ex-pats). He expressed concern that Canadian companies are coming to him in droves. He cited a dozen early stage companies started by Canadians in the last year in the Valley. These weren’t funded and then brought down to find investors. These were US companies from the beginning. I told him about the increasing trend in Vancouver to have companies incorporate in Seattle from day one. Should we be alarmed? Toss in the brain drain factor and we might say that there is a crisis brewing.
Handol swept his hand around the room and said that the solution to the Valley vortex of Canadian tech companies was right here. In his mind, the people that have moved to the Valley from Canada will make there way back to opportunities in Canada, in a big way. When they have families themselves, when they have had a taste of the success here, when places like Ottawa and Vancouver have great opportunities in great companies, they will come back.
I agree with him… with some caveats. The worst possible result for Canada is if companies move, lock, stock and barrel to the US. I have talked before about the “global start-up” model that Israel and Scandinavia have adopted. This is where the company builds the technology and the business plan in its home country. Why would anyone with an idea try and go to the Silicon Valley right away and recruit a team? It’s nearly impossible to keep engineers in the Valley, let alone find them in the first place. So, stay in the home country and foster innovation, creativity and lots of very early stage R&D money. Then make a US subsidiary in one of the hot areas (Valley, New York, Texas) and hire a US senior management team to fill out or complement your existing team. Raise money in the US (into the foreign company, not a US company) and go public on the NASDAQ. Simple. Ahem.
If Canadian companies maintain their roots in Canada as they grow in the US and keep a large part of the development there, we will be better off as a country. At least some of the expertise is growing in Canada. This is the path that we are on. Not all companies do this, but increasingly technology companies in Canada are moving to this model. One of two paths will ensue: 1) Canada becomes an outsourced R&D shop for the US or 2) Handol’s prediction comes true and experienced ex-Canadian senior managers move back to run operations from the friendlier side of the border but with the same degree of success.
I don’t think I need to tell you what needs to be done to help #2 happen, do I? Something about a leveled playing field. Make it easier for these people to bring their dot-com fortunes home.
If for some reason Handol is wrong and we just end up folding our best and brightest into the US machine, well we can always blame the government.
Random Thoughts:

  • BS ESTI (Early Stage Technology Index): 6 out of 10
    Why the precipitous drop? Well, the BC budget was not positive to the tech community here at all. Another bloated spending budget from the NDP that is based in neandrathal ideology. Any interesting thinkers or thought leaders in Victoria? Don’t bet on it. This will continue to drive people out and keep people from entering our province. Tax cuts? A person making $45,000 a year gets an extra $100. Whooppee. I would have set the ESTI lower if the federal budget from last month had been as bad, but it wasn’t. Also, the bloodbath in the markets this week has driven the air out of option holders in local high tech companies. There will be a respite from angel spending for a few weeks as the markets climb back. Uncertainty also keeps people from jumping to new, risky ventures. On the positive side, there were some early stage financings in the past weeks (Knowledge Junction and Prologic) and there a few more to come in April.

Responses From Last Column:
I have recently joined the Scottish Enterprise Globalisation Team, based here in Glasgow, Scotland. Scottish Enterprise is our government's economic development agency in Scotland and the Globalisation Team (all 4 of us) is currently involved in a major initiative to increase the number of global companies in Scotland.
My colleagues and I are all great fans of your articles in T-Net and we look forward to each new issue. As part of my knowledge management responsibilities for our team, I'm currently involved in setting up an improved version of our website (the current one is fairly basic!). Part of the new site is going to be an e-zine and I would very much like mention your articles in it and refer my readers to you. The new updated site should be going live in April/May so, if you're interested, why not pay it a visit then? You can also visit the Scottish Enterprise site at
Best wishes,

Diane Gordon.

I am very excited that I am now global! I hope that my tendency to focus on things BC and Canadian are partially relevant to you and your colleagues in Scotland. I think that this week’s column will give you some ideas… Mike Myers, one of greatest Canadian exports to the world of comedy, came up with a great tag line for you and your global companies. In a hilarious Saturday Night Live sketch where he was a retailer in the US, he said to his customers, “If it’s not Scottish, it’s CRAP!”
You sound disappointed at the response to your budget article, so I'll pass along the only reaction I remember having (to your comment that the increased parental leave made you consider having a baby): let me know when you figure out how to have a baby and I'll invest in the technology!
Re this week's column: about 13 years ago I won an office hockey pool and boy, were the boys ever mad at me. Especially when I told them I'd be using my winnings to buy shoes! I know little about hockey, so the pool organizer explained the pool rules to me. Perhaps he used knitting or cooking similes.
It was a simple, cumulative, weekly pool. I made all of my choices based purely on the numbers that the guys showed me how to find in the newspaper. Towards the end of the season I overtook the leaders, when they started making decisions based on something other than the numbers.
Ten years later and 4,500 km away, I entered another pool. I still didn't know anything about hockey, but I knew I wouldn't win this pool: it was based on a complex set of predictions based on what you knew at one (early) moment in time. Diligence wouldn't help me, but it wouldn't be fun for the hockey buffs if everyone didn't play. So I made my picks based on who was Canadian and who wasn't, with the Senators to win the Stanley Cup. The guy running the pool won. Surprised?
Thanks for your ongoing explanations of the rules.
Christine Merriman
My wife enjoyed your comment about having the baby. She’s all for it. As you now realize from the NCAA basketball results, my prediction from last column is 50% wrong as Duke was eliminated! I am near the bottom of that pool. Thanks for the support.
Hi, Brent,
I read with great interest your March 17/00 column on T-Net.
You mentioned and the fact that it has risen to an atmospheric market cap based on a product/service that won't be available for another eight months. You also mentioned that because recently raised additional funds from a private placement (to primarily institutional investors), there is a danger that a drop in its stock price prior to the next round of financing will sour existing and/or potential investors from investing in the next round.
Meanwhile, you mentioned as a private-stage, VC-funded competitor that, unlike, does have a running tee time booking service and has raised funds at lower valuations. Eventually, the goal is an IPO where public investors will invest at a higher valuation than previous rounds, thus allowing the VCs to cash out and liquidate their investment.
I must say that I agree with your comments, particularly as it relates to a company that appears to lack a working product. As an investment banker working with emerging high technology companies, you may suspect me or the firm at which I work of being another run-of-the-mill Vancouver brokerage firm that is only interested in another get-rich-quick CDNX promotion. It is not our intent to take a company public prematurely, hype the stock, raise money at an unsustainable valuation and risk having the client company "orphaned." (I cannot comment on whether Yorkton Securities had this scenario in mind for My personal objective is to work with emerging high technology companies and take them public when the time is right and also on the right stock exchange - be it the CDNX, Toronto Stock Exchange or NASDAQ. Subsequently, we intend to follow them and grow with them, potentially handling them off to more senior investment banking firms.
We hope to work with high-quality technology companies and nurture them for the long term with advisory and financing services. As always, it's a pleasure to read your column.
Best regards,

David Ing

Pacific International Securities
I certainly think that there are many scrupulous firms out there that intend on making big companies through the public markets. Yorkton is a creative and aggressive firm with a track record. I wasn’t singling them out as much as I was trying to point out the differences in approach and mentality to financing. Interestingly, nobody responded from Yorkton. They must not be among my thousands of readers. Or they know I am right on that particular company. We’ll see. Thanks for writing.

Share with your friends:

The database is protected by copyright © 2020
send message

    Main page