Richard Florida Writes That Canada Is Losing The Global Innovation Race – Globe and Mail

Canadian Venture Investment Is In Decline

Canada’s investment in R & D Has Been Anemic For Decades Compared to OECD Nations

U.S. Tech Giants Are Exploiting Canada’s Talent Base At The Expense of Canadian Startups

My long-time business partner and I, one of us in Canada and the other in Silicon Valley, last year launched a business targeted at bringing immigrant entrepreneurs to Canada, Vendange Partners. http://www.vendangepartners.com.  We spent months analyzing and investigating the Canadian entrepreneurial ecosystem, particularly Vancouver and Toronto, Canadian immigration policy, and the Canadian venture capital industry. What we found was very concerning. Last December, I wrote a blog post here detailing our findings (read more below) that Canada was nowhere close to being the next Silicon Valley. With regard to venture capital, we found that there was a lack of adequate risk capital, which could be traced to deeply rooted conservative values in the Canadian financial industry. Immigration policy was a mixed bag, with a “startup” visa program that had become a magnet for immigration scams.  Despite these disadvantages, we decided to press ahead, and are making progress.

That said, I was very interested yesterday to read the article in the Globe & Mail by University of Toronto Professor Richard Florida, and Ian Hathaway, Research Director for the Center for  American Entrepreneurship, and Senior Fellow at the Brookings Institute. The article by Florida and Hathaway draws the same conclusions as my research, providing even more precise data to support their disturbing conclusions. It is not hard to find many additional articles on these issues.  Ironically, also yesterday, a LinkedIn connection shared a post by Sciences, Innovation, and Economic Development Canada with a very upbeat, positive assessment of venture capital for startups in Canada. This is the essence of the problem. Since I came to Canada years ago now, I have seen a pollyannaish state of denial about the true situation for entrepreneurship, immigration policy, and the lack of “smart” venture capital for Canadian startups. No amount of counter-evidence has changed this mistaken rosy outlook. Without a recognition of these problems, nothing will change.

 

READ MORE: Canada Woos Tech Startups But Canada Is Not Silicon Valley December 20, 2017, mayo615.com blog post

OPINION

RICHARD FLORIDA AND IAN HATHAWAY

SPECIAL TO THE GLOBE AND MAIL

UPDATED NOVEMBER 2, 2018

Solving Canada’s startup dilemma

Source: Solving Canada’s startup dilemma – The Globe and Mail 

Canada, we increasingly hear, is becoming a global leader in high-tech innovation and entrepreneurship. Report after report has ranked Toronto, Waterloo, and Vancouver among the world’s most up-and-coming tech hubs. Toronto placed fourth in a ranking of North American tech talent this past summer, behind only the San Francisco Bay Area, Seattle, and Washington, and in 2017 its metro area added more tech jobs than those other three city-regions combined.

All of that is true, but the broader trends provide little reason for complacency. Indeed, our detailed analysis of more than 100,000 startup investments around the world paints a more sobering picture. Canada and its leading cities have seen a substantial rise in their venture capital investments. But both the country and its urban centres have lost ground to global competitors, even as the United States’ position in global start-ups has faltered.

Overall, Canada ranks fifth among countries in the number of venture capital deals and sixth in venture capital investment, trailing only the United States, India, China, Britain, and Germany. That said, Canada’s share of the world’s venture capital investment is tiny, just 1.5 percent. And it has actually declined over the past decade and a half.

But start-ups and entrepreneurship are a local phenomenon: They happen in urban areas. The good news is that a dozen or so of Canada’s cities make the list of the world’s 300-plus startup hubs. And the three largest of them – Toronto, Montreal, and Vancouver – rank among the world’s 62 leading global startup hubs.

Toronto, Canada’s top-ranked startup hub, is the only Canadian city to crack the list of the world’s top 25 startup cities. Vancouver and Montreal are in the top 50. Kitchener-Waterloo leads all Canadian cities in venture capital investment per capita, ranking 26th globally on that measure. It and Ottawa also rank among the world’s top 100 startup hubs in terms of capital invested, and Calgary is among the top 150.

The not-so-good news is that Canada and its startup cities are losing ground to startup hubs such as New York and London; Beijing and Shanghai; Bangalore and Mumbai; Berlin, Amsterdam, Stockholm, and Tel Aviv.

More worrying, Canada is failing to take advantage of the United States’ weakening position, which is attributable in part to its tighter immigration policies. While the U.S. continues to generate the largest amount of startup and venture capital activity, its share of the global total has been falling steadily, from more than 95 percent in the mid-1990s to about two-thirds in 2012, and a little more than half today. But the country that has gained the most ground is China, which now attracts nearly a quarter of global venture capital investment.

Exactly why Canada is lagging is unclear. A growing number of Canadian commentators suggest that the influx of large U.S. and Asian tech firms into Canada is sucking up tech talent that would have otherwise gone to local start-ups. But companies like Microsoft and Google are such powerful talent magnets that they are more likely to increase the overall supply. After all, San Francisco, New York, and London are homes to some of the biggest tech companies in the world, and they are also leading startup hubs.

Perhaps the brunt of Donald Trump’s anti-immigration policies has yet to be fully felt. Maybe it is because New York and the San Francisco Bay Area are close enough to lure Canadian entrepreneurs away, or maybe we are just not as entrepreneurial as we like to think.

Whatever the cause, Canada and its leading tech hubs must do more to grow their ecosystems, which already enjoy such clear advantages in talent, especially in the field of artificial intelligence, and their openness to immigration. Given the role that innovation and start-ups play in propelling economic growth and raising living standards, our economic future depends on it.

Richard Florida is University Professor at the University of Toronto’s School of Cities and the Rotman School of Management. Ian Hathaway is Research Director of the Center for American Entrepreneurship and a Senior Fellow at the Brookings Institution. They are authors of the Rise of the Global Startup City, released earlier this month.

READ MORE: Rise of The Global Startup City

Paul Polman: Corporate Strategy Visionary

My undergraduate and graduate students may find this an interesting topic for discussion and debate.

http://www.economist.com/news/business/21567062-pursuit-shareholder-value-attracting-criticismnot-all-it-foolish-taking-long

Reading this week’s Economist, I literally “stumbled upon”, not the Web app, an editorial on the resurgence of long term corporate strategy.  Translated succinctly, long term corporate strategy means simply that quarterly performance and shareholder dividends take a back seat to longer term corporate goals.  The Economist opinion piece sensibly admits that the singular focus on short term profits has led to cynical and perverse manipulation of income statements, via warped compensation plans based on share price and so on.  Global accounting practices like the “double Irish” and the “Dutch sandwich” can probably be partially attributed to this kind of thinking.  Wall Street is awash in “short-termism” as the Economist points out.  The deluge of early corporate dividends this month, in anticipation of the “fiscal cliff,”  are also probably related.

I carried on to read that management guru Peter Drucker was quoted as saying that “long-term results cannot be achieved by piling short-term results on short-term results.”   Roger Martin, the Dean of the Rotman School of Management in Toronto has called short-termism “a crummy principle that is undermining American capitalism.”  Whew!  That is pretty strong stuff.

But the “piece de resistance'” for me was learning more about Paul Polman, the CEO of Unilever.  I have my favorites in management, and they are exclusively bold leaders and mavericks:  Ted Turner (founder of CNN and America’s Cup sailor), Larry Ellison of Oracle, and Richard Branson, among others.  Gordon Moore is another bold leader, who was ahead of his time, as the visionary leader of Intel, driving the continual SLRP (strategic long-range planning) process that involved us all.  I have added Paul Polman to my list of management guru’s.  Polman is one of those corporate leaders who has risen above the battle to see the layout of the entire battlefield, and is ordering a charge toward long-term corporate thinking.  Polman is one of those people who is showing us the way out of our current mess.  I can attest from personal experience that managing long-term strategy and execution is way more fun than answering to the accounting department.

The more I think about this issue, the more compelling it seems to me.  John Chambers, CEO of Cisco Systems, when asked recently about “shareholder value,” declared his obligatory allegiance to it, but in the same breath cautioned about the rapid acceleration in the corporate life-cycle and the need for constant innovation and re-invention. Starbucks CEO, Howard Shultz, in describing his company’s long standing goal of corporate social responsibility, bridles a bit at his need to produce quarterly results at the expense of the goals.

I am also sensing a connection to our infatuation with and “celebratizing” entrepreneurship.  Some seem to feel that the right strategy is to foster the development of new Mark Zuckerberg‘s. Really?  Is that it?  Max Marmer, my outspoken favorite, CEO of Startup Genome, wrote on the Harvard Business Review blog about the “Danger of Celebratizing Entrepreneurship” http://ow.ly/eZChc.   He and others technology luminaries have also spoken out on the lack of Big Ideas in entrepreneurship.  All of these threads seem tied together in a ball of short term greed, as Polman describes it.

The dilemma is that you cannot be all things to all people. It is my fervent hope that Paul Polman, Roger Martin, and Max Marmer will all help us find a middle ground that restores long term corporate vision and dramatically improves our performance in innovation by resurrecting the Big Ideas.