Why Canada Has No Big Tech Companies | Hacker News Reader

Why Canada Has No Big Tech Companies

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94 pointsliquimoon167 comments

One thing that is rarely stated is a California law that things you do on your own equipment and time belong to you, not your employer. (Conflicts of interest aside.)

This let people experiment on the side, which sometimes failed, but sometimes discovered something useful. It takes some of the risk out of startups in the very early stages. By contrast my employer in the UK at the time claimed that anything I invented while employed by them (eg new cat food) would be owned by them, no matter how unrelated and no employer equipment used.

That's a pity. Surprisingly, a lot of what makes innovation work has to do with the law.

Bankruptcy law for example really plays a big role when it comes to innovation.

If you're willing, would you please explain the bankruptcy connection? That's kinda cool!

I mean when your company fails, you are not personally liable to pay off the debt.

In some countries, this is not the case, and it creates a big legal barrier for being entrepreneurial.

I'm not the OP, but I'm assuming they're referring to the common philosophy that if you make the cost of failure too high, people will stop trying.

In the context of bankruptcy, this means that laws that are heavily punitive towards bankruptcies, and where declaring bankruptcy threatens the basics of your entire life, people become more risk-averse.

Hey Wyatt,

I would argue that you need two things for the average person (rather than the independently wealthy) to be an entrepreneur: limited liability and bankruptcy. Without limited liability, an entrepreneur would be saddled personally with the debt of a failed venture. Without being able to declare bankruptcy as a last resort, they would not be able to discharge the debt and start fresh. Instead, they would be a debt slave to their financiers until it is repaid, which could be for the rest of their lives.

That's a lot of risk for an entrepreneur to take on, and too much for all but the most reckless -- I know my wife would never let me do that -- or those with the ability to bootstrap the venture without debt or outside investment.

I don't know about Canada, but the US has very lenient bankruptcy laws and the importance of that to innovation (as you noted) cannot be understated.

BK law in the US one case where, because things work well, people take it for granted and assume the laws work well everywhere. (They don't.)

Europeans probably think the same about healthcare. (For those not in the know, U.S. healthcare is awful and insurance companies kill thousands per year.)

I'd say that as of 2005's Bankruptcy Abuse Prevention and Consumer Protection Act our laws aren't so lenient anymore, specifically aimed at pushing most people from discharge of debts (ch7 bankruptcy) to being forced to repay a negotiated amount (ch13 bankruptcy). Theoretically it aims at snaring people who were bankrupting out of their credit card debt, but its definition of "consumer debt" is broad enough that if you took on any personal debt during the birthing of your business, odds are pretty good you can't bankrupt out of it.

It's not too bad, of course, when coupled with limited liability from the start of the business venture. In that case, the bankruptcy reform doesn't really touch you - it's only there to catch private consumers.

Also, WA: http://apps.leg.wa.gov/rcw/default.aspx?cite=49.44.140

This is extremely interesting to me. It completely conflicts with the Microsoft Employee Agreement. While Microsoft has some tolerance for moonlighting (conditioned on many things such as managerial approval), if the processes are not follow it defaults to assumed ownership of all IP created by employees.

It's not uncommon for employment contracts to claim rights/powers that are invalid. When I lived in California it was common to see rights assignment in contracts even though a case would never make it to court in most cases, as I understand it. (IANAL)

California is still own equipment, own time, lack of conflict, can't argue. Doesn't mean the employer can't make things difficult for you since they have the bigger pocket book.

The employee agreement I signed* a long time back basically reads like a contractual restatement of RCW 49.44.140. Manager approval used to be required for employees not based in Washington but that was eliminated years ago. The moonlighting and employment agreements are required reading for us prior to developing independent apps for Windows Phone.

* - I am a long-time (greater than 10 years) Microsoft employee.

Wow. You just sold me completely on WA > TX or NV.

In Canada, IP assignment only is for work done on company time & equipment unless otherwise assigned in your employment contract.

I've almost always excluded specific prior built or in-progress IP from my employment agreements without issue, as long as my employer's HR knows about it. Informing your employer of what you've created or are creating independently is almost always the best policy as it's unlikely they'll argue against it when it's early-stage (and you're protected if it becomes suddenly valuable).

More info http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic....

In California you aren't dependent on your employer being nice, or have any requirement to even inform them.

That is misleading. I've worked in California.

Firstly, obligatory invention disclosures are often enforceable if they're related to your employer's business, as they often exist to protect your mutual interests.

http://www.startupcompanylawyer.com/2009/01/08/what-do-you-n...

Secondly, IP assignment is related to this entry in the CA labour code:

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...

Which clearly states that if you're working on the same area your employer is paying you for, it's not going to be trivial to claim it as your own even if you did it on your own time.

In short, California has the benefit of making IP assignment unenforceable if it's on your own time, in an unrelated area to your employer. But it's not carte blanche.

Not a lawyer, but talked to one about this with respect to Google's employment contract. His assertion was that you would be protected if your home project was not in conflict with your duties at the company, even if the company has other branches or departments working on something similar. He referenced some case law which involved an employee at either DEC SRC or DEC WRL who was working on his own thing, started a company and DEC tried to claim ownership based on the 'we do that' variant. Except he wasn't part of the group that did the conflicting work or involved with it. It has been like 5 years now since I did that research but if I can find it I'll see if I can add it to this thread.

Note - the other interesting bit here is that if you're worried you might be at risk, just quit. After all nobody who is suing their employer for ownership of their work stays an employee (at will work clauses). Even though I had confirmed that work on my project could not legally be claimed by Google by the time I had done the research and ascertained that it would end up in a lawsuit I was already convinced it wasn't going to be a good long term fit for me. That simplified the question immensely :-)

Note I did state "conflicts of interest aside". Something search related while at Google or accounting related while at Intuit would clearly fall in that category. A new pet food would not.

Sure, I just thought the suggestion that you don't even need to disclose it, while true in theory, can be risky.

My original post wasnt intended as criticism, it really just trying to provide commentary that while Canada doesn't have the full protections of Cali, the typical contract only assigns specific areas relate to your work.

Also, related, non-competes in Ontario at least are largely unenforceable.

> In Canada, IP assignment only is for work done on company time & equipment unless otherwise assigned in your employment contract.

That's true, but it's usually part of the boilerplate. I'm not suggesting it's related to the perceived problem, but every research position I've been in has had a clause like that. One place even offered to change it for me, saying "oh that's just some boilerplate the lawyers used."

I've worked for four different companies here in Canada—two of them startups—and none of them asked for anything except standard IP assignment (e.g., time/equipment) and disclosure of in-progress or previously created works.

I work for a Canadian company and IP assignment is written in the standard contract boilerplate. AFAIK it's never been enforced, but it's there.

It was in my employment contract the last time I switched jobs. I got it taken out.

Were they research positions?

Do you know what the legal basis for this is in the UK? I'm curious and google doesn't seem to be giving me anything useful.

I also don't see how this could practically apply to all intellectual property you create whilst employed otherwise you would be open to being sued for posting on a blog since you are distributing the companies IP (i.e the words you wrote) without the companies permission.

The employment contracts will include clauses to that effect. All the company has to do is wait till you do something that appears successful and then jump in. When I worked in the UK all employment contracts I was given also prohibited any work elsewhere without company permission - eg you couldn't also work part time at a local supermarket. That is something I have never seen in California employment contracts.

An example of California law working is that the founders of Hotmail were working for other companies when they wondered why you couldn't access email in a browser. eBay was a similar hobby project.

I'm curious how enforceable this clause would be in the UK since it is usually considered to have more employee-favoured legislation than the US.

You forget that we're comparing employment law in one US state versus the employment law in a whole nation.

Huh? I'm just asking a question.

I am pretty sure an employer can't stop you working elsewhere, many of us are protected by human rights laws that void those sorts of terms.

I am not familiar with the UK, but even in the US it varies from state to state.

People who aren't explicitly protected by state law get fired for putting something on the internet that their employer doesn't like. There is an explicit carve out in California law (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...) I don't know if there are any other states that have this carve out, but that section combined with "Section 16600 of the California Business and Professions Code states that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." makes quitting your job, taking your own IP made on your own time, and competing with your employer. A protected activity. in California.

Some will tell you otherwise (Google does this) but I sought out advice from a labor law attorney on the legality of their claim and his opinion was that it was largely unenforceable. You couldn't use proprietary information in your gizmo but you could, for example, write a phone operating system on your own time and equipment, quit Google and start competing with Android and they would have a hard time preventing it. But only in California, the employment agreement would hold up in Boston for example.

Well as it was explained to me UK employment law descends from the "masters" and servants" act note the term "servant"

A quick Google seems to indicate the "Copyright, Designs and Patents Act 1988" is the relevant law

Wow. I would never have expected that in other countries what you produce on your own time is the property of your employer. That is an absolute non-starter for entrepreneurship .

It's not 'other countries', or exactly what you're saying. It's that other locals (including other states) don't explicitly state otherwise in law. In many states it's either not mentioned, or left to your employment contract details - in California, it's enshrined in the legal code.

I've done moonlighting while working for two different employers in the past. In each case, I worked out an agreement in advance with my employer that the moonlighting work was independent of the employer.

Neither had any difficulty agreeing to it, and there was never any trouble later about it. I know others who have done the same.

Just ask.

I think that IP clause in the UK is the result of a boilerplate contract. I always get them to remove it. Employers should have no right to claim ownership of what you do as a hobby IMO.

This is fairly common in Europe and other countries as well. It is not matter of law, but contract signed with your employer.

But doesn't Cali law invalidate such terms? So it is a matter of law in that the law permits such terms. Its like the right to strike - in many countries that right can't be contracted away.

From my understanding (as told to me by a senior HR professional) is that the UK and CA are similar if your IP is "related" to your work your employer owns it.

Trying to claim that as an IT professional your new cat food belongs to them would not work but if it was anything to do with IT you might be in trouble both in the USA and UK (employment law is descended from the same roots in both countrys)

I have to disagree with Terry's sentiment.

It's impudent to Vancouver's culture--and more generally the world--to insinuate that we're "blindly [competing] to build the next Silicon Valley". We're not. Canada's not. Vancouver's liberal lifestyle is innate, not superficial, not a failed attempt to clone Silicon Valley. And our immigration policy is definitely not to "bring immigrant entrepreneurs together"; it's the result of a small population, the demand for skilled workers[1], and the correction of a historically xenophobic foreign policy. This creates a large influx* of liberal and skilled immigrants--known risk takers. Hence the entrepreneurial honeypot (our social programs help). It's necessity that's bred Vancouver as a technological center, not ambition. Thus, similarities to Silicon Valley are purely coincidental, or are the result of correlated effects rising from the increasingly entrepreneurial working force.

As for investors? I don't know enough to comment.

[1]: http://www.engineerscanada.ca/files/w_Engineering_Labour_Mar... [2]: http://www.gamedevmap.com/index.php?query=Vancouver

*: Immigration levels have been relatively low, recently

Don't get me wrong. Vancouver is a much better city to live in. I love it here, and it's where I will eventually settle down.

My point is on the investors' side. Investors play a big role in the tech startup ecosystem.

When you have investors who don't get tech and who just want to get rich quickly, you run into serious problems on the road to build the next billion dollar company.

I'm originally from Vamcouver and spent the majority of my 20s there working in the Games Industry before switching more to web and mobile and then moving to the US for last 5 years. So I've obsessed and tracked this topic. I've lived in many States in the US as well as Montreal in Candada.

I think reading Steve Blank's Secret History of Silicon Valley gave me the best break through in understanding of why Silicon Valley is so dominant in tech. http://steveblank.com/secret-history/

There's just been decades and decades and billions of even World War and Cold War money poured into into it's infrastructure. The shear amount of money and momentum of peak US effort seems nearly impossible to catch up to.

My best advice to other locations is to tie into SV as best as you can and of course focus on getting to scale by bringing in external to your local economy revenue and partnerships to bootstrap, but regardless it's gonna be a long haul. SV is the Holliwood of programmers and its best to acknowledge that. If you are an actor in Canada you know you are likely going to stay small time unless you go down North West for example and break out or stick to a niche.

Completely agreed! Thanks for sharing the insight.

I appreciate the appreciation. :)

Location was important some years ago, but I think it's less and less relevant now. I think you can create amazing technology anywhere (in Latin America, in Europe, in Asia etc.)

Skype is a great example of this: they created a billion dollar company in Europe; and most of the development was done in Estonia (a country of about 1.3 million people, much less than most bigger cities).

Asia, especially Taiwan and South Korea, have some amazing examples as well (like HTC, Samsung, Asus etc.)

Yes, but it was a big deal 10 years ago, and still is today.

And it may still be relevant because of face-to-face interactions. No, Hangouts won't cut it

And Github has probably done a lot for remote work, but there's still a gap

If you're a small-time programmer unless you move to SV, what does it mean to be 'big' in programming?

>Why Canada Has No Big Tech Companies

Here's an explanation:

Because Canada prefers many more smaller companies, that actually employ people, instead of few billion dollar tech darlings with a sub par personel and even less taxes paid?

How about: why California is bankrupt, as a state, and with large swaths of the population in utter poverty, despite having the worlds largest tech companies?

California employees pay state income and sales taxes. If you broke up a large company employing 10,000 Californians into 100 small companies employing 100 Californians each, not much would change.

I refer you to historical growth of California revenues http://www.dof.ca.gov/budgeting/budget_faqs/information/docu... It's boom-driven, so you get revenue shortfalls during bust years, but on the aggregate the revenues are growing - the $97 billion of revenues in 2013-2014 budget years is still higher than 5 or 10 or 15 years ago.

Perhaps if your revenue is consistently growing, and you still cannot run a balanced budget, the problem might be on the spending side?

Yeah, the Liberal types like their social programs, and the Conservative types like their lower taxes, and no one has actually tried to reconcile those two opposing pulls.

I don't know why that obvious contradiction was never tackled. I would like to think it's because the Hollywood execs of SoCal and the ex-hippie/Silicon Valley combo of NorCal are so geographically far apart that they don't talk, but that's too simplistic, I'm sure.

I don't think social programs are all that great. Parks are slated for closure, public schools as an aggregate are below average, and public higher ed is getting just a tiny bit expensive http://www.thenation.com/blog/166898/harvard-now-cheaper-san...

I've heard prisons and state employee benefits are superb, but have had no chance to verify either claim.

Both Hollywood and Silicon Valley have what the economists call Cumulative Advantage. IOW, network effects with critical mass make them "the" destination for a people with a certain dream.

The fact that Canada doesn't have a bunch of over-valued VC funded firms doesn't mean we are unsuccessful in tech, or that we don't have any big tech companies.

Not sure what definition of 'big' the auther is using, but CGI has revenue of 10+ billion per year (more than double that of Yahoo), RIM also has revenues of over 10 billion (despite their recent troubles), and there are a whole bunch of fairly large tech companies that aren't well known but do a whole lot of revenue... http://www.branham300.com/index.php?year=2011&listing=1

The measure of economic benefit isn't just the creation of big firms, but also the amount of people employed, money put back into the economy, etc...

It is true that our investment community is far more conservative, but then again, we weathered the 'recession' better than most, and have one of the healthiest banking sectors in the world...

This kind of collective hand wringing always gives me a chuckle. I'm from Vancouver and moved down to the valley in 1998. My rationale:

  - Vancouver has a high cost of living without commensurate salaries (and often no equity).
  - Because of the wealth of technology companies, it's easy to find a job here.
  - The weather (at least in the valley) is far better than sitting in the rain (Vancouver), or snow (rest of the country).
  - Quasi-reasonable immigration policy (TN-1 visas are easy to get, although have weird drawbacks)
  - A common language, and a fairly similar culture.
  - Proximity to home (it's only a 2 1/4 hour flight back to Vancouver with no time change -- can someone start flying out of SJC instead of only SFO?).

The start-up culture really fuels the tech industry here. Since moving in '98, I've been through two IPOs where both companies ended up having billion+ dollar valuations. I think the reason why it's so successful is because of reasons I (and others) have already mentioned, but also because of:

  - decent universities
  - former military/government technology jobs
  - easy access to capital

and probably most importantly, past success. The Bay Area has this unique ecosystem where companies have been bootstrapped from nothing except an idea, and that gives other people confidence to try their own hand at a startup. This feedback loop is what keeps the valley humming.

After having been so successful being an employee at two startups that did well, I started my own company a couple of weeks ago. It's absolutely amazing the amount of support you get here, and the network of people who you can tap to ask questions and help out in your venture.

Vancouver and Toronto both have parts of the equation, but they don't have the whole package. And neither of them have the kind of past success which breeds future success.

Exactly! And it's this cycle of successes that's harder to duplicate everywhere else.

Thanks for sharing Patrick!

Can't speak to the VC angle.

I think a lot of the Bay Area power comes from having so many tech folks in one place, which is hard for Canada to manage anywhere given population. In the Bay Area, you can go for a coffee or a beer and run into a bunch of tech folks and something may come out of that. There's no where in Canada where tech has the density to make that happen in a random way (maybe Ottawa or Waterloo back in the day).

Immigration can help, for sure bringing smart minds in is never a bad thing. I've only lived in Ottawa and Toronto, I think creating the critical mass of tech folks is difficult in those cities which have other more dominant industries (government and financial/cpg respectively).

Agree that past success fuels the mentality that builds the future.

I've spoken with several start-up founders in Canada who have looked for investment. Many have moved to the US because they find that most investors here are only going to invest in something already making money. They are scared of market potential and helping to cultivate start-ups. It's a cultural thing and it won't change because we aren't American.

So, my startup is actually ramen profitable at the moment. I spoke with some local investors. The deal was to owe 30% equity in exchange for 10 enterprise clients (around $100/month)! Guess what, these are investors coming out of mining industry... Unfortunately, they don't care about the company, they care about their piece of the pie.

It's a pity.

Why are you even talking to mining investors about your tech startup? I've never heard of a tech entrepreneur in Canada taking that angle before. Everyone else talks to tech focused investors. Have you tried that? Happy to help....

Actually, I was not even raising money. I just had coffee with one of them without knowing they were investors. I haven't talked to any investors other than that. Just been focusing on building the startup. I will take on your offer for later though. My email is jerry-at-contentdj-dot-com. What's a good way to reach you?

If you eliminate mining, energy and banking Canada has essentially no internationally relevant big companies whatsoever. RIM and Bombardier are the only ones I see on the TSX 60 and the former is in its death throes. The future looks grim for Canadians.

http://en.wikipedia.org/wiki/S%26P/TSX_60

OH but we have a metric crap ton of oil in Alberta! That should hold out for a few decades while we unscrew our economic situation.

Except a big portion of the oil is owned by foreign companies. So, it's not like we are ripping all the benefits either.

I think you mean reaping, as in collecting grains at harvest time, not ripping, as slang for passing out of your anuses. Though, the imagery of a nation being so flush with money that they are collectively farting cash is somewhat amusing.

Reaping* - sorry for the typo. Thanks for the joke. :)

http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates Taking into consideration only corporate tax rates, it really is kind of an oddity. (sort the chart by corporate tax rate)

Canada's corporate tax rate is that low because of the much more attractive neighbour downstairs. It's a shame, because it really doesn't keep people/businesses from leaving Canada anyway.

Why discount those industries? If you eliminate legs and arms, I have essentially no limbs. But I get by...

I think the point is to draw attention to the nature of Canada's economy, not to discount it entirely.

I can't speak for OP, but I suggest that they're highlighting the fact that instead of a broad base of large companies in a variety of industries, Canada's big company wealth is highlighted in a narrow set of verticals.

This means that corporate investment might be more slanted towards that areas, and it also means a narrower set of potential customers for a given application.

I know what you mean, and I'm sure that's what the OP intended, but these "verticals" are energy, minerals and money. Literally everyone needs these things, which is the definition of a horizontal market.

Anyway, as a Canadian computer scientist I'd be very happy to see knowledge industry grow here.

It's not really surprising, small population and huge, resource rich landmass. It's like complaining that, outside of Oil, Saudi Arabia doesn't have any international relevant big companies.

Hmmm. Try applying that analysis elsewhere: Scandinavian countries, for example, and tell me what you find. Are they doomed too?

Firstly, Canada has a huge branch-plant economy in agriculture, manufacturing and services, which has grown over the past 70 years. Ownership != economic output. It does change the pattern of investment, of course -- less disruptive entrepreneurs and more incremental improvements.

Secondly, the world is not made of software alone. Facebook is utterly irrelevant to the world economy. The world is still sadly not made of electrons, it is made of stuff, and that stuff powered (mostly) by hydro or carbon, and run by humans that need fresh water. Those industries you discount are massively important and only getting more so globally. IF Canada doesn't provide a large chunk of the world's natural resources, others will, until we devolve into a Mad Max type future fighting over fuel or fix our renewable energy problem economically (whichever comes first). Thus, Alberta is likely the new global oil powerhouse for the next century. Saskatchewan has the largest deposit of Potash fertilizer on Earth (4+ trillion tonnes).

None of this precludes Canada from investing in tech entrepreneurship, but it does mean the incentives need to be higher than usual.

Will Canadian knowledge workers experience economic growth as individuals in the long term because of the natural resource industries? Will that growth be comparable to the US?

Many thousands of engineers are involved in the oil sands to make extraction cleaner and more economical. Similarly for mining potash at the extreme depths sometimes required. Or for natgas fracking. Those activities are going to have massive consequences to humanity.

For software developers, that doesn't help matters, but there remains a thriving software scene in certain Canadian centres (Vancouver, Toronto, Waterloo have thousands of startup each)- its just not made of behemoths.

This article is way off from what I thought was the consensus; there were a shit ton of grant dollars going into CA universities from the US govt, and silicon valley is where it is because Stanford (I'm simplifying a lot and ignoring other details, but to a first approximation I thought that was the consensus view).

Someone please correct me if I'm wrong, but the article's not convincing me. e.g. quotes like this, "Do you think Google will be a billion dollar company had they license the technology to Yahoo?" Yes, since they did. They also would have sold to Yahoo IIRC but Yahoo didn't want to pay enough (cite: http://www.paulgraham.com/googles.html).

Had Google been sold to Yahoo through licensing, they would not have become a multi-billion dollar company. That was my point.

I don't think that's the whole consensus, though it's certainly part of it.

Silicon Valley's success is commonly attributed to being within proximity of two major schools (Stanford and Berkeley) fueling the talent funnel. But that is far from a sufficient explanation.

Massive government investment in R&D helped birth the first semiconductor and aerospace companies that helped create the first critical-mass concentration of tech industry and talent.

And those were just the baby steps. The current behemoth of the Silicon Valley machinery is sustained in large part by the enormous amount of investment, as well as ease of access to said investment. Modern startups go to/stay in the Bay Area largely for funding reasons.

> "They also would have sold to Yahoo IIRC but Yahoo didn't want to pay enough"

And therein lies the difference between Canadian tech and Silicon Valley tech. In Silicon Valley Google had enough funding to keep going and reject Yahoo's offer, and thereby growing by leaps and bounds into the giant company we see today.

If they were in Canada, they would almost certainly not have had the funding, and be pressured into an early sale for less, and Google today would probably be a sub-brand of some stodgy old behemoth of an enterprise-tech company.

Funding is, IMO, Canada's biggest problem. I've worked in the Toronto side of the software industry, and still know some people on that side. Canadian tech is dominated by either very large enterprise software firms, or slow-and-steady small businesses. There is no readily available investment source to perform the type of "grow fast, shoot for the moon" type of startups that the USA is known for (see: AirBnb, Square, etc, companies that took enormous amounts of funding very quickly and scaled just as quickly).

A startup in Canada means going for profitability very quickly, and being doomed to a slow-growth strategy, as large chunks of cash are nowhere to be found.

On a more sombre/cynical note: as a Canadian expat in the US tech industry, I basically have given up hope on Canadian tech. The first step is for the industry, government, and everyone to acknowledge that Canadian tech is fundamentally dysfunctional. And I just don't see this happening. Every opening of another satellite office that exploits the large salary gap is greeted with pomp and circumstance and speeches about how Canada's being recognized for its unique technological prowess.

Gag me with a spoon.

Every opening of another satellite office that exploits the large salary gap...

I was under the impression that the satellite offices aren't just to exploit the wage gap, it's also to set up a pipeline to get more foreign engineers to the SV based motherships through the TN-1 visa.

This is true. Some are there are glorified waiting rooms. Others are "legit" an employ actual Canadians - the latter type tend to pay dramatically less than their American counterparts, and exist largely to "insourcing" tasks to a cheaper locale.

I worked for one of them, was not fun. Everything we did was basically something management didn't want to pay a $120K Californian to do. Without the giant salary gap these satellite offices simply would stop existing.

You mean "L-1". These are visas for people who've already been working for a US company, to transfer to the US. http://en.wikipedia.org/wiki/L-1_visa

TN work permissions (usually not really a "visa" as such, and note the lack of numeral) are for Canadians and Mexicans to work in the US, and have no tenure requirement with the company. http://en.wikipedia.org/wiki/TN_status

"A startup in Canada means going for profitability very quickly, and being doomed to a slow-growth strategy, as large chunks of cash are nowhere to be found." - This is dead on! That's for sharing!

I somewhat agree, but there have been plenty of exceptions to your rule. You make it sound like Canada has no startup market to speak of, which couldn't be further from the truth.

Flickr was based in Vancouver, as is HootSuite, ActiveState (the perl guys), Peer 1 Hosting, PlentyofFish. There's Shopify in Ottawa. Edmonton has Stormboard. Toronto has/had Kobo eBooks, Freshbooks, Well.ca, CryptoLogic (one of the main online gambling platforms, though they moved to Ireland), among others. On the more enterprisey side there's Layer 7 in Vancouver (API management), Bycast (bought by NetApp). There's also SMART technologies in Calgary (still independent though no longer a startup). There were many successful game companies (many WERE startups in the 1980's and 90's but are no longer): Bioware in Edmonton, Digital Extremes in London & Waterloo (Unreal & UT, Bioshock 1 & 2), BlackBox in Vancouver (Need for Speed), Uken Games in Toronto (a startup for once ;), and Ubisoft in Montreal (arguably French but most of their success came from the Canadian studio). There are also thousands of startups I haven't even mentioned in smaller communities like Halifax, K-W, Moncton.

I don't think it is necessarily bad that Canada is basically a "farm league", a ground for niche companies (only making millions, not billions). This is just an evolution of it being a "branch plant" economy for nearly 70 years since the early-mid 20th century. Clearly there is a small but thriving startup culture, particularly in Vancouver, or (for now) K-W, where good engineers don't have to go into IT, they can work at pure tech companies. Canadian startups tend to exit the only way MOST do - by acquisition. As Pmarca would say, the problem is with the poor IPO market.

Beyond IPOs, to become a disruptive multi-billion dollar play is by its nature a rare event. Add in the fact that Canada is geographically disbursed across five time zones, with huge (labour-intensive) natural resources to exploit, and the same population as California... the incentives need to be right to change Canada's industry structure. I'm not too worried about it - if one wanted to start a successful tech company in Canada, it's clear that there's enough talent to make it happen, and likely enough capital to get through seed or Series A. It might require foreign capital for subsequent growth investments, but by the time you're in the tornado, that won't be a problem.

I think something that a lot of people overlook in the rush to create the next silicon valley is the role the cities in/around these potential tech hubs play in their rise to prominence.

B2C tech startups cannot takeoff in places that don't have really high densities of people because places like that wind up having the people with the mentality to use technology to get ahead/make their lives simpler. Because of the high demand for access to pretty much everything in these kinds of cities, people there will be more likely to try new things to get an edge. Is it an accident that the big consumer startups tend to come from SF, NY, and Boston?

This doesn't seem to be a big deal, but as an example you can probably see how it helped foursquare(SF) pull ahead of Gowalla (Austin) in the location app shootout of a few years ago. Its the reason why Austin will probably not become a real startup powerhouse for another couple of years (as more and more people stream in here).

B2B is a little easier because businesses have more uniform needs that aren't usually dependent on city characteristics. But then again, a place with a higher concentration of businesses per capita will usually have that edge.

I think this is why you see smaller cities having startups that are more successful at B2B (Austin for example) but not so much in the B2C scene ... in fact the exact thing that the writer mentions in his article happens here where startups get bought out by their competition in Silicon Valley or other places.

I guess the point I'm making is for Canada to get a successful tech startup scene going, concentrate on high density cities (Toronto?) otherwise see what edge you can give companies that do B2B startups.

If you think about the technology adoption lifecycle, you not only need a concentration of people, but more importantly a concentration of early adopters. So, from that perspective, you can see why a lot of B2C apps come out of Silicon Valley. People live and breath new things there. But that's just one aspect of what makes Silicon Valley unique.

When it comes to B2B, you don't really need a concentration of early adopters to make this work. You need to solve problems for businesses (doesn't really matter where they are). More importantly, you can see revenue right away if you ARE solving a real problem. I think that's why it's relatively easier to build a B2B startup outside of the valley.

> B2C tech startups cannot takeoff in places that don't have really high densities of people because places like that wind up having the people with the mentality to use technology to get ahead/make their lives simpler.

One reason I find this unconvincing is that Toronto specifically has very similar size and density characteristics to the Bay Area. Toronto's metro area has a comparable population [1][2]; and before it was amalgamated with its suburbs, the city itself also had a very similar population and population density to San Francisco [3][4]. Toronto is also home to U Toronto which has one of the world's top CompSci departments. I suspect there is some sort of policy problem at work here rather than a lack of density, possibly as banal as drawing from a smaller talent pool.

[1] Toronto/Hamilton/Niagra area: 8.7 million http://en.wikipedia.org/wiki/Golden_horseshoe

[2] Combined San Jose/SF metro: 8.37 miilion http://en.wikipedia.org/wiki/San_Jose-San_Francisco-Oakland,...

[3] Old Toronto: Population 736k, density 19,600/mi^2 http://en.wikipedia.org/wiki/Old_Toronto

[4] San Francisco: Population 812k, density 17,620/mi^2 http://en.wikipedia.org/wiki/San_francisco

> "I suspect there is some sort of policy problem at work here rather than a lack of density, possibly as banal as drawing from a smaller talent pool."

I'm a Canadian who grew up, went to school in Canada, and am now in the US. The problem is very simple and can be summed as such:

A skilled software developer can make double to triple their salary easily by moving to the USA. And Canada and the Us have a legally porous border when it comes to exchanging workers.

Double to triple. I shit you not.

This is a huge part of what holds Canadian tech back. What kind of talent pool are you looking at when the US pays so much more, and there are relatively few legal barriers to taking these opportunities?

My girlfriend is Canadian but this is exactly what prevents us from moving there, I love Canada as a country.

But something's missing from this equation.

If wages are low in Canada because there is a glut of workers relative to the number of jobs, then why doesn't the sector expand to take advantage of the low wages?

Contrarily, if the sector is small because high wages attract workers to the states, why can't Canadian companies pay as much as the American companies? There's nothing magical about America that allows its startups and companies to pay so much; Canada isn't particularly poor itself and its companies don't even have to pay for workers' health care.

Either way, there has to be a deeper reason.

Wage rates are less elastic than simple supply/demand until you get to macroeconomic scale.

I'm obviously not an expert on Canada, so I'll try to illustrate one way it might work, but please feel free to shoot this full of holes...

Say companies in Canada start by paying their employees half of a competitive wage. Not all employees will notice. The ones who are willing to move thousands of miles will eventually disappear but there will always be new hires, right? Thus the management gets away with low wages.

I _have_ seen this exact scenario play out in several locations in the US, but not Canada.

In this scenario, the company slowly accumulates B and C players who drag down the company's reputation: death by a thousand paper cuts. The company doesn't _die_ outright, but everyone just thinks, "Oh, not a Silicon Valley level company."

At that point the company will never make enough money and can't even dream of raising wages.

Only at that large scale (companies competing for talent and then trying to turn their talent into revenue) do you start to see the effects of their salary range.

- In this scenario, the company slowly accumulates B and C players who drag down the company's reputation: death by a thousand paper cuts. The company doesn't _die_ outright, but everyone just thinks, "Oh, not a Silicon Valley level company."

Interestingly, you just described what happened to RIM.

> "then why doesn't the sector expand to take advantage of the low wages?"

It is. See: the huge presence of multinationals in Canada like IBM, SAP, even gaming giants like EA and Ubisoft. The Canadian tech industry is by no means shrinking, it's just growing in a way that doesn't fit Silicon Valley's "high pay, high benefits" mold. Canada has not seen the massive software engineering wage explosion that the US has.

Which naturally leads to your next question:

> "Contrarily, if the sector is small because high wages attract workers to the states, why can't Canadian companies pay as much as the American companies?"

This is a big and complicated question. The short answer is: because it somehow got this way and now we can't change it.

It's important to note that the US tech industry isn't all shuttles and gourmet meals either - the bulk of the industry is paid a fraction of Silicon Valley salaries, with none of the cushy benefits. The tech industry is divided into the low/mid-end and the high-end, and the two sides could not be more different.

There is an active war for talent in the high-end that keeps driving up salaries and benefits, while low/mid-end software engineering remains relatively stagnant. It's largely a group of companies working on computationally hard problems that's driving this war - folks like Google, Facebook, Microsoft, Amazon, etc. These companies are uninterested in low/mid-end talent, confining the insane salaries to only a small segment of the total industry.

This segment of the industry also largely does not exist in Canada. Canada's tech scene has, for many complex and perhaps unexplainable reasons, developed into one that is largely enterprisey. The tech jobs are largely at not-tech companies (where you're a cost center, not a profit center), and where they are at tech companies, they are at satellite offices of American or European companies.

This doesn't create a market where there is high demand for top-level talent. Complicating this somewhat is the fact that the talent war in the US has bled across the border, thanks to relatively easy immigration laws for Canadian citizens - the bleeding of talent to the south prevents the establishing of companies locally that would feed on a top-level talent pool.

So this really circles back to OP's original complaint. The reason why wages aren't rising in Canada is because companies that demand high talent do not exist in Canada. There are no major companies working on truly hard problems that would demand campuses full of top-level engineers, and thus no drivers for salary growth.

The companies that do exist cannot raise salaries wildly for a few reasons. Firstly, because they are not having trouble finding talent at the level they want at their existing salaries. Secondly, because their business model may rely on being cheaper than the US. Thirdly, there is a lack of institutional employers who employ high-end engineers which would kickstart a talent war.

Not only do you make more as a software developer in the USA, the living costs are much less (I believe the average price of a home in Canada is currently close to double that in the USA [1])

I think a person is more likely to pursue a startup and succeed at it when they can spend less time/energy covering their basic living expenses. A lot of SV giants were started by people in their garages, they simply had enough surplus resources to pursue their ideas[2].

[1]http://www.cbc.ca/news/business/story/2013/06/05/business-oe... [2] http://en.wikipedia.org/wiki/HP_Garage

In general this is not actually true. Software developers as a whole do not make much more in the USA than they do in Canada.

Only certain geographies tend to have a large number of high-paying software jobs, and those places (see: Seattle, SF, NYC, etc) tend to have inflated housing prices.

Ditto Canada, there are plenty of places where housing is cheap - but that's not where the tech jobs are. The bulk of the tech work is concentrated in cities like Vancouver, Toronto, and Montreal where housing is expensive.

That being said, being a Vancouver native I try to keep an eye out on salaries in the city vs. cost of living. Vancouver has the double whammy of being extremely expensive but not nearly making it up in pay - this is a somewhat uniquely Vancouver phenomenon though... housing in other parts of Canada is less insane.

Having worked 15+ years in both countries (SF, NY, Toronto, Calgary), you're not wrong. But this is a bit misleading.

In the SF Bay Area or NYC, yeah, double to triple. But a lot of that is cost-of-living related. Housing is half (or even less) the price in most cases, with Vancouver being an exception. I paid $2700/month for my 800 sq. ft place in Pac Heights with parking, we pay maybe $2200/month with property taxes in Calgary for a 1600 sq. foot house w/ 2 car garage just slightly north of the Bow River. Whereas a small 2br in NY in the West village was $4k a month 10 years ago.

That said, most living-in-Canada techs making good coin are either (a) working at Vancouver startups, who pay reasonably (b) working as contractors doing boring/annoying work that pays well, (c) working for international tech companies who pay the same rate in Canada as they do in the USA (usually in field sales or consulting - this is what I currently do).

The main reason I don't think this holds Canadian tech back is that many people meet their significant other here and don't want to deal with the hassle of leaving - they like the rockies, for example, or have family, or love snow. Or they're stuck for one reason or another (child custody, etc.). There's also a rather poisonous political environment in the USA that adds a cost to one's stay there.

I also think it's a great opportunity for companies to thrive in Canada and retain talent by paying them well and giving them access to lifestyle incentives. Not quite a startup, but an example: Cenovus energy has a startup-like culture in some ways after being spun out in 2002. They give employees every 2nd Friday off, they have major perks for working families, discount family passes to Banff/Lake Louise for skiing, and pay extremely well (usually bridging your pension, RSUs as part of a signing bonus).

Being from Vancouver myself, I frequently go back and do the math on cost of living. No matter which way you bend the math, even accounting for the (massively) inflated housing prices in the Bay Area or NYC the American salary still comes out ahead. Far ahead, even. I've heard Canadian friends use this sometimes as a reason to not consider state-side opportunities, but in their cases it's simply not true.

Granted, this is math for a single guy with no children - so YMMV.

I don't disagree with any of the facts you've laid out - but I do disagree heavily on whether or not this is holding Canadian tech back. There are certainly people who won't move to the US for any number of reasons - family, lifestyle, geography, politics, etc.

But the fact of the matter is that there are over 300,000 Canadians in the Bay Area[1] - clearly the number of people willing to jump south of the border overwhelms the number of people who will not. This represents nearly 1% of the entire population of Canada. The brain drain is very real, it's biased towards the more desirable parts of the talent pool, and it's happening at a mind-bogglingly large scale. While the brain drain will never claim everyone, it's certainly claiming enough talent that I think it's hard to argue that it's not having a massively negative effect on the industry domestically.

[1] http://business.financialpost.com/2013/07/10/why-canada-is-f...

I held highly similar views in my 20's when I was single with no children. I encouraged all my friends to move to the states, that Canada's brain drain was zombifying the country etc. I even had a dart board with John Roth (ex Nortel CEO)'s face on it because of the way he bragged about paying Canadians less than Americans.

This was in the 90's during the dot com boom... but the world kept turning, Canada didn't implode, there's still talent here, and I eventually moved back to have a family (no way do I want one raised in the USA).

I have plenty of friends staying in the USA for the reasons you state and I may go back some day when our kid(s) are older for the reasons you cite. But I'll just say that money isn't everything ... it's arguably the single most important thing.. others factors eventually add up however.

Don't get me wrong - what I'm saying is not meant to be prescriptive, for you or anyone. I'm not necessarily saying that Canadians should all move to the US to get paid more.

And hell, I may be back someday - I can't see it, but I can't discount it. I do like Vancouver too much to stay away forever.

My point is that empirically, money matters to people. Those 300,000 Canadians aren't hanging out in the USA for fun, they are largely there because of the market gap. This is an enormous loss of talent for Canada.

Now, we can argue about whether or not they're making the right decision being in California, paying Bay Area rent, etc etc, but the fact of the matter is that they're doing it, which puts them in the US, and not Canada, and harming the Canadian tech industry. We're training a huge number of capable technologists, exporting the bulk of them to the US, and the domestic tech industry is poorer for it.

I do not see anything slowing the brain drain by an appreciable degree, except to hugely raise engineering salaries in Canada. I don't think there's a chance in hell of this happening. And I believe that the brain drain, at its current scope and scale, is having a large chilling effect on creating the sort of companies and jobs that the blog author is talking about.

There are still certainly tech jobs in Canada, there are even (some) very well-paid ones, but Canada cannot hope to have even a sliver of the scale of the Valley's success unless it can retain its own talent pool.

It should be noted also that the link from my previous post is an op-ed by the CEO of HootSuite, itself one of the bigger successes to come out of the Canadian startup scene, where he claims that the shallow talent pool (and the brain drain) is a large growth-limiter on his business.

Where he and I disagree is that he advocates for more immigration and education as a solution. Based on what we've seen with Canadians moving south, I think it's a sure bet that the immigrants he proposes to import will likewise drift southwards, and the extra graduates he proposes to educate will do the same. Short of some kind of indentured servitude you can't prevent that from happening. We even have companies like Microsoft and Facebook who specifically set up Canadian offices for the purpose of greasing this "Canadian immigration as gateway to USA" process along.

Of course, IMO the real solution HootSuite's talent woes is to make their pay market-competitive with the American companies that are draining their talent pool...

Largely agreed, though I am skeptical about your southward immigration theory, and do think (in lieu of broad based salary increases) that immigration is a good solution to Canada's talent shortage. Why? Look at our whole discussion - clearly it is the US's solution! :)

My point is that (a) US immigration reform is dying in the house of representatives, there's a chance the US will make it harder and harder for Canadians to stay there. I know I had my complications. Canadians largely enter the US on TN visas, which have gotten easier (the 3 year renewal requirement vs. 1 year). An immigration-unfriendly administration could make this harder.

H1B's are also possible lately as the quotas haven't been being hit since the financial downturn, but they have always been highly controversial.

(b) Canadians require citizenship before they can be eligible for a TN visa to the USA. It's a long period of time for a Canadian immigrant to achieve citizenship in Canada and THEN move to the USA.

Anecdotally, I have seen what you're suggesting (a southwards movement), but not with the majority. For example - my colleagues & friends that have received permanent residency in Canada from India (usually engineers from Infosys or TCS that were part of the onshore crew of a contract) have mostly stayed in Canada, with a couple of exceptions that moved to the USA for a specific job opportunity and used the L1 visa to do it.

>> 300,000 Canadians in the Bay Area... This represents nearly 10% of the entire population of Canada.

Canada's population is ~33 million, so that would be about 1%, not 10%. Still a surprisingly big number, though.

D'oh. Brain fart. My bad :(

Lower salaries is a benefit for business (and startup), not a disadvantage.

There's the military role in funding technology as well. Silicon Valley's proximity to Moffett Field isn't coincidental, and Canada's funding for military contractors is nowhere near the same level.

I would half agree with this in that military contractors and engineering firms are in fact centred in the National Capital Region (Ottawa-Gatineau) instead of Toronto. This has a lot to do with the fact that Toronto is the financial hub of the country, but the military and military deals are done in Ottawa with the government. So even though the Greater Toronto Area has a number of engineering schools within a couple of hours drive, it's not conducive towards building an engineering culture the same way Ottawa, Montreal, or Silicon Valley is.

This is complete bullshit. The logic is: create entrepreneur culture to create huge companies. This is not how huge companies arise, rather a healthy small business culture is created. As it turns out, tech in Canada at this scale is vibrant. A single example: the number of mobile development companies in Toronto is staggering (a huge number of iOS apps are developed in Toronto).

I'll have to admit that is exactly how my family thrived. Parents with little to no education, survive by creating a small business when no one would give them a job.

Hootsuite is Canadian too, from Vancouver.

I don't live there, so maybe I'm missing something, but is Silicon Valley really something to glamorize and try to replicate? I always thought that technology is supposed to be distributed rather than centralized. Centralizing something allows you to exploit economies of scale, but also invites parasites in to free-ride. And the Valley does seem to attract a lot of parasites.

I think technology should be distributed to leverage the economy of scale. But here, I am talking about the startup ecosystem. If you look at the big Internet companies, you will be amazed to see how many of them come out of the valley. That's why the rest of the world is trying to jumpstart this. The problem is it's not as simple as copying what's working at the surface.

Technology (the product) can be decentralized. But the generation of ideas that create the products is a separate thing from the product itself. Many would say there is a geographic aspect to the generation of ideas... that people, for some reason, need to be in proximity to each other. When bright people work together they produce much more interesting things than when working in isolation from each other. And from observation, it also seems that bright people seek each other out. This isn't to say SV is great or doesn't have its issues, but it seems to attract the brightest people from around the world (and possibly 'parasites' as you mention, as well).

I don't think most places like Canada want to replicate SV... just the part about creating large successful tech companies. The article suggests this might be helped by allowing people to actually get and stay there. It's not really about 'centralized technology' but more about creating a culture where people from around the world can come together and make these things happen.

>> I don't live there, so maybe I'm missing something, but is Silicon Valley really something to glamorize and try to replicate?

Nope not really but you're in HN and most people here tend to think that Silicon Valley is like Mt. Olympus or something. There are a lot of startups out there that are very successful and not in Silicon Valley.

But the concentration is what counts here. After all, Silicon Valley is merely a region. You cannot compare it to the rest of the world.

is Silicon Valley really something to glamorize and try to replicate?

Silicon Valley has the lowest latency in searches, both for job seekers and for employers. If you're looking for someone with deep experience in 3 disjointed areas of technology, you can find that person in SV. You can't easily find that person anywhere else. You have to train someone into the role, or convince the one matching person in the world to move.

For extremely specialized queries, SV still has a continuous labor market while the rest of the world is discrete. If you're doing the kind of get-big-or-die red-ocean gambit that VCs like to fund, that latency risk is undesirable.

Other than that, I think SV is overrated. There are probably 20 places in the country (many cheaper and with fewer douches) where it's not hard to find generally smart, technical people in large numbers.

Anyway, I can't imagine anyone under 45 willingly living in "Silicon Valley" unless that includes San Francisco. The reason for moving out to the suburbs is to get a cheaper place and more land, but the Valley doesn't have that going for it because even suburban houses with disastrous commutes are expensive.

Anyway, I can't imagine anyone under 45 willingly living in "Silicon Valley"

In my experience, a large percentage of engineers of any age have suburban tendencies. There are way more "nerd's nerds" down in the valley. If you want to run into people who build robots as hobby projects, they will be at Menlo Park Techshop on the weekends, not at Dear Mom. (although I've heard these days that a lot of maker-hacker types live in Oakland)

they will be at Menlo Park Techshop on the weekends, not at Dear Mom

SF isn't only bars; they could also be at Noisebridge.

It would be cool if the Silicon Valley area could somehow be replicated without the tech industry. I wouldn't mind living in the Atherton of the 1950s.

Here's an industry analysis I did on Vancouver a while back:

http://vancouverdata.blogspot.ca/2010/09/what-is-work-of-dog...

In Vancouver we have MDA, which makes satellites, PMC Sierra, PlentyOfFish, HootSuite, PhoneGap. Not huge, but substantial. Oh, and a dark horse named D-Wave.

And we had Creo and Flickr.

We don't have much of a military presence to help with R&D funding, hence Ottawa's slightly bigger scene. They almost got rid of the only army base on the West Coast a few years ago in fact.

There was an article on here a while back about what made a good startup city. We do have some old wealth (mining cos), some great universities, and nice weather by Canadian standards.

Also doesn't help that we're a 2 hr flight from San Fran!

If the right pieces fell into place, despite being a Bay Area native, I would consider Vancouver if I were starting a company. It would have to be one that didn't depend on bay area connections (VCs, etc). I've spent a lot of time in Vancouver, and yes, it has tech companies but for some reason has never become a technology hub. However, the blend of urban and amazing outdoors (yes, it rains, and I recall a July trying to get around during downpours and a bus strike) make it a tempting place for me.

It has great connectivity, cultural diversity, easy access to both Seattle and SF (a couple of hour drive/flight), a hub for asia, a great university in UBC.

There is a lot going on there that should make it more open to tech companies, but it has always been more of media than a tech town.

I raised 80k in a couple weeks for a little startup in van. Which ain't huge, but was (almost) enough. Just gotta meet some rich folk!

- There is a lot going on there that should make it more open to tech companies, but it has always been more of media than a tech town.

It's slowly changing now. Facebook, Twitter, Amazon and Microsoft all have their offices here.

It has been a little while since I last checked, but the Amazon and MSFT offices were more towards Richmond than Van proper, but still a good sign.

Though some of those offices were, from what I recall, a method to get around issues in dealing with US work visa issues for foreign talent...

Seattle to Vancouver is not a two hour drive. 3 or 4 hours, depending on the border.

I've done the drive to Richmond in a bit over two hours. A couple generally can mean 2-3. Three is certainly more normal. NEXUS/SENTRI helps.

Yeah I'm an American who went to school here in Vancouver, started a company, doing well, but probably moving myself and the company back to the States soon as it's very difficult to get a VISA. The new startup VISA only applies to companies that are fundraising.

Hey Jeff! Jerry here.

Sorry to hear that. Should catch up soon!

If you finished a post-secondary program you're (probably) entitled to a post-graduate work permit. Beyond that, there's Federal Skilled, Federal CEC programs and BC PNP. Are you sure that you've explored all your options? You may want to talk to an immigration lawyer if you didn't yet.

We're too busy importing people with "masters degrees" from Indian and Chinese "universities". I'm pretty sure this is worth more points than having a degree from even an ivy league school.

Just in case this is useful to you one day: A travel visa is a normal, uncapitalized noun "visa". The capital "VISA" is a trademark of the credit card company. Neither is an acronym.

Trivia: VISA is in fact a recursive acronym, much like GNU: Visa International Service Associaton.

Actually a recursive backronym, according to Wikipedia, but unfortunately {{citation needed}}.

I've worked in Vancouver at a startup, and to me it seems that the goals of a Canadian startup are just more conservative. No one ever expected to become a Facebook, or a Google or even Nortel or RIM for that matter. The philosophy has been mostly to create a profitable company, in the more traditional sense-- consistent revenue that can employ people. No one is looking for giant cash injections from VCs, nor are we throwing lavish parties and giving away Porsches at company picnics (cough Trilogy cough). We aim smaller than 'murica so of course we don't have any mega tech companies. And we're happy for it, at least I know I am.

Thanks for sharing.

The philosophy has been mostly to create a profitable company, in the more traditional sense-- consistent revenue that can employ people. - I share with this philosophy exactly.

The thing I am pointing out is that because of the VC gap, startups are dealing with the lack of cash infusion to really hit a homerun. As a result, Canadian tech companies stall after growing to a certain size. The options were taking VC money with bad terms or getting bought by US companies.

US companies are buying profitable Canadian businesses at a bargain price, reaping all the benefits of job creation and ambitious business goals.

Why Canada Has No Big ____ Companies would be a more interesting article/video. The biggest Canadian company seems to have an annual revenue of "just" 50 billion. On the list of largest Companies, Canada is not even present: http://en.wikipedia.org/wiki/List_of_largest_companies_by_re... I am not trying to bash Canada, but compared to others in the global arena, Canada isn't really known to be a player with large corporations.

I assume you meant billion, not million.

Ah yes. Corrected!

Looks to me that likely candidates are population size and age of the country.

Having only 35 million people spread across one of the largest countries in the world makes it difficult to spawn consumer and retail conglomerates. Nintendo and Sony excelled in part because Japan was a perfect playground for testing personal technologies. Walmart had 300 million customers, 90% of which live in extremely developed locations, which allowed for retail stores to spread quickly and profitably across the states.

Further, having a history of less than 50 years means that less sustained activity has likely been driven from within Canada as opposed to from overseas. Given the choice of where to locate, a tycoon from Toronto had the choice of working out of London.

Scale. When I compare the USA to Canada, I usually think ten to one.

The branch plant mentality, and the resource give away. It's a big US company in Canada reaping the benefits (but only 1/10 of what they reap in the USA.) And yes sometimes, it's a big (as in big for Canada) Canadian company in the USA reaping (ten times) the benefit but that's rare.

Canada's 100 biggest companies by revenue in 2012...

http://www.theglobeandmail.com/report-on-business/rob-magazi...

  22  BCE Inc.(De11)               19,588,000 	7.69
  20  Bombardier Inc.(De11)1       18,882,000 	11.99
  26  Research In Motion(Ma12)1    18,456,000 	-7.33
  27  Bombardier Aerospace(De11)1  18,347,000 	-1.14
  29  Bell Canada(De11)            17,133,000 	9.34
  53  Telus Communications(De11)   10,397,000 	8.4
  54  Telus Corp.(De11)            10,397,000 	6.27
  64  IBM Canada(De11)              9,051,000 	14.3

A few big "tech" companies, but mostly insurance, Canadian chartered banks, and "branch-plant" resource extraction. I like flickr, but I don't see it on the list.

Not even 10 years ago this same kind of post could have been written except the complaint back then wasn't that investors were boneheaded but that "Canada is full of entrepreneurs who don't think big enough and aren't aggressive enough!"

That narrative is, mostly, dead. Thankfully.

Now the entrepreneurs in this country have left the bad investors in their dust and the angel and VC community is playing catchup.

The author's point has some merit but it is hardly "the reason" we have so few billion $ companies.

The point worth making is: we are making progress. If we take the time to quantify it I'd guess that the ecosystem here is evolving more quickly than almost anywhere else in the world.

The other point being missed entirely is that there is no barrier for US investors to invest in Canada. Many (tempted to say most but I'm not sure) tech/web seed and A rounds in Canada now have some level of US (read: valley) participation. There are no legal or economic barriers to cross border investing anymore. The idea of a "Canadian investor" is becoming completely moot.

> Not enough people have the gut and commitment to create or help create something truly meaningful.

That's not the whole story by any means. No matter where you are the problems are almost always money and time. In this case, how much will it cost to lure people to Canada, which is not know for big tech? Google didn't happen overnight, but now that it exists, any new tech company is competing with Google in a way for top talent, if that is what they are after. So, not only would Canada need to grow a Google, they'd have to compete with Google. That is difficult. Throw a less friendly business climate than the U.S. into the mix, and that is just more money and time that would be required.

All of that said, sure Canada is spoiled and lazy, but that's no different than the U.S. We expect too much.

There are potential big players but American companies come and buy them out when they get competitive size: Softimage, Discreet, Maya, ATI, Matrox, ...

Matrox didn't get acquired but kinda changed their target markets.

Just swap out Canada for Australia and you get a similar story.

While there are a few smaller tech companies here and there, the only larger home-grown one I can name at the moment is Atlassian (owners of BitBucket, Hip Chat etc). And they have international offices now I believe.

I remember reading a few years back, local startups were either moving to, or establishing a presence in the US to try to secure VC funding.

I was wondering closer to home why Harvard and Stanford skate circles around my alma mater MIT when it comes to billionaire dollar tech IPOs. Having attended all the three, the tech culture is deepest at MIT. The business culture is deepest at Stanford.

This may change as MITs Drew Houstons Drop Box is monetized.

While Silicon Valley is no doubt a unique place, it's odd to follow the quote:

"We don’t have billion dollar Internet companies with the likes of Microsoft, Google, Facebook, and Amazon."

With a discussion only of Silicon Valley, given 2 of 4 are based in Seattle.

I'm becoming more and more convince that this is a cultural thing and less about laws/taxes. Entrepreneurship requires risk-taking which (we) Canadians are less likely to do than our American cousins.

Canada had Nortel and RIM - both were pretty big in their heydays

And ATI, and Matrox, Alias Systems, OpenText, and QNX... These may not be huge, but they did pretty well in their respective industries.

I saw this title hoping that the article was about how canada doesn't have any big tech conglomerates, and that it's a good thing.

What's the best way for a young entrepreneur from Montreal to live the startup dream? Can I start a company in the US? Should I start my company here and move to the US? How does that work?

I don't have any measurable "unique skill", nor do I have millions to invest. Is there any way for me to move to SV and get proper funding?

Theres opentext in Canada...

Yep and their market cap is almost as big as their neighbor, RIM.

Research In Motion is a pretty big tech company... Just saying.

Nortel was also huge, though screwed up big time.

canada has serious issues. I wanted to go for a conference there + meet a few startups. Turns out you need 2 months to get a tourist/business visa!

Thanks for commenting. Did you know about the Startup Visa? http://www.techvibes.com/blog/foreign-startup-visa-program-2...

From the states ? Because from europe you can go there without visa.

I'm pretty sure Americans can come to Canada without a visa. I know (firsthand) that Canadians can definitely go there without one.

I think you will need a passport though. Visa no.

Yes, you need a passport these days (or a Nexus pass if you're a frequent crosser). It's new, and it's mostly because Canadians need a passport to enter the US in the security theatre aftermath of 911. Until recently all you needed was a birth certificate or citizenship status card to go either way; the visa was implicit.

Residents of some border states (WA, MI, NY, VT)and some Canadian provinces (BC, MB, ON, QC) can also obtain "Enhanced Drivers Licenses" that can be used as entry documents at land and water crossings. A US Passport Card is also convenient if you're prone to forgetting your passport. Nexus can also be used between many US and Canadian airports. Nexus holders can register with US Global Entry just by checking a box on the application.

My favorite Nexus benefit is avoiding hours of waiting in line at major US/Canada border crossings, especially on holiday weekends.

One potential drawback for some people is that applicants to Trusted Traveler programs receive a criminal background check.

US government Western Hemisphere Travel Initiative Info: http://www.getyouhome.gov/html/eng_map.html

I find it hard to believe you couldn't attend a conference and visit a couple of startups on a normal entry from the US, unless you are not a US citizen?

I've been to Vancouver many times as a tourist, a few times for conferences / standards meetings, no problem, no visa required.

This doesn't sound right.

A visa is required for business visits, unless all you are doing is "meetings". However they'll usually sell you one at the airport.

So of course, everything becomes a "meeting"... ><

You get grilled at immigration. Of course the second time through you know the exact terminology to use!

Depends how you answered the questions and what type of border services agent you got.

A former employer of mine had U.S. based employees that were subject experts / trainers on proprietary systems - Written internally, used internally. We had to do training sessions via teleconference after the border services turned our trainer back. Our Legal followed up with border services and was given the requirement that we advertise nationally for someone to fill the training role for a period of i-can't-recall how many weeks then re-apply if not able to fill the role from a hardworking but unemployed fellow Canadian.

It was utter crap. Time we didn't have to look for a person who didn't ( couldn't ) exist seeing as it was a new system, written outside Canada. Trainers had crossed previously to fill similar roles without issue. go figure. We ended up doing it over the phone..

tourist visa and business visa are two different thing, it isn't a tourist/business visa.

As a Canadian travelling to the US for business, we have the same process. But if you're going to a conference, you're fine, I used to do it all the time (from Canada to the US).

Who told you it was going to take two months?

We're in the middle of a long strike by our diplomats and consulate workers, which is pushing visa processing times far longer than they usually are. It should fix itself once they and the gov't reach a new deal and the backlog is dealt with.

s/Canada/Australia/

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