As Trump Tightens Legal Immigration, Canada Woos Tech Firms: But Canada Is Not Silicon Valley

There Is More To High-Tech Immigration to Canada Than Meets The Eye

My long-time business partner and I, one of us in Canada and the other in Silicon Valley, earlier this year launched a business targeted at bringing immigrant entrepreneurs to Canada, Vendange Partners. http://www.vendangepartners.com

From our years’of experience in Silicon Valley and with technology entrepreneurship around the World, we knew that many of the best and brightest young entrepreneurs abroad dreamed of bringing their ideas to the United States to forge their skills and their new companies.  But from our discussions both in California and overseas it is clear that Trumpism is having a profoundly negative effect on this flow of talent into the American economy, both individual technical talent and entrepreneurial teams looking to start companies and raise capital.

The Canadian government and some of the provinces, particularly British Columbia, Ontario, Quebec, and to some degree the Maritimes, have done a commendable job of promoting high-tech immigration and entrepreneurship.  The Global Talent Stream visa is an excellent vehicle as described in The New York Times article included in this post. Global Talent Stream attempts to address the need for technical talent for companies already operating in Canada.  The competition for such talent and the salaries offered in the United States are a major problem for Canadian companies, particularly in AI and robotics. Theoretically at least, a Global Talent Stream applicant with an employer lined up can be working in Canada within about two weeks.

The so-called “startup visa” program for founders and already established teams wishing to set up in Canada is more complicated.  The program requires a committed investment from a “designated” Canadian investor and a letter of endorsement among other requirements before the visa is granted. The difficulties of doing this are something of a Catch-22. In practice in the past, endorsement letters were written by government listed “designated” investors without actual investment, but this still did not result in a wave of high-tech startups coming to Canada. The only other option is for entrepreneurs to bring a significant amount of their own capital with them to Canada.  This option has led to abuse. At its original launch under the Harper government, the startup visa program, unfortunately, became a magnet for immigration scams.  Hence, the startup visa program remains over-subscribed with applicants bringing their own capital to qualify for the “startup” visa for up to five founders.

Finally,  There is also simply too little smart Canadian venture capital and too many startups competing for the limited funds. It is also commonly acknowledged that Canada’s investment institutions and the Canadian financial mentality are not well-aligned with the Silicon Valley investment culture. Major U.S. pension funds like the California Public Employees Retirement System (better-known as CalPERS) annually invests 10% of its entire portfolio in venture capital funds. The same cannot be said generally about Canadian pensions funds and investment banks, as one example of the differences. Much lower risk debt capital and convertible debt seem to be more popular products in Canada.  In defense, it is often pointed out that the Canadian economy is roughly one-tenth the size of the United States. Yet, on a relative scale, the Canadian venture capital industry still does not compare well. Add to this the fact that the Canadian government has historically been far behind other OECD industrialized nations in R&D investment in innovation and you have major problems.  Anecdotally, the sheer amount of money and number of available investors in Silicon Valley alone is well-over 5oo compared with a mere handful in Vancouver. When the more than one thousand local indigenous BC startups actively seeking capital are layered onto the available sources of risk capital in Vancouver, there is major local competition before the immigrant entrepreneurs even arrive in Canada. Looking for risk venture capital in Canada, a la Silicon Valley is problematic.

With that candid and sobering analysis of high-tech immigration to Canada, for individuals who have taken the time to do an in-depth analysis of themselves, and the pro’s and con’s of such a major move, Canada may still offer many advantages to entrepreneurs, and those advantages are only likely to improve over time.

Vendange Partners

 

Facebook’s International Business Blunder: Following In The Footsteps of Google

With good intentions, and also a good dose of Facebook business strategy to expand its base of users, Mark Zuckerberg has struck out to promote Free Basics, a free limited Internet for the poor in less developed countries sponsored by Facebook and its local telecommunications partners. While on the face of it Free Basics would seem to have merit, Zuckerberg has run into a wall of opposition.  On close inspection of the details, Facebook’s problem, despite all of its global corporate sophistication, appears to be naïveté about the foreign markets it is trying to enter. It is possible to argue that Zuckerberg and Facebook have the best of intentions and sound arguments.  But the best of intentions and sound arguments mean nothing if the key element lacking is a clear understanding of the targeted foreign market, and the crucial need to adapt to it or fail.  Zuckerberg could have looked no further back than 2013 for clues to why he has failed.

In 2012 and 2013, I was involved in an effort to deploy wide area wireless Internet capability to broad swaths of India. This involved working with large Indian corporate partners. We were also working at a time when Google, Microsoft, and others were also busily competing to deploy so-called “white space Metro WiFi” to rural areas in lesser developed countries. Google was also experimenting with its “loon balloon” project to use high altitude balloons to deploy Internet access points in remote areas.  It quickly became clear to us that the Indian government and corporate officials wanted only an indigenous Indian Internet solution, which fit our strategy of working with Indian partners.  Google and the other big U.S. based companies were viewed as neo-colonialists. Ironically, on March 19, 2013, Google Chairman Eric Schmidt wrote an editorial in The Times of India, “Which Internet Will India Choose,” in a well-intentioned effort to convince Indian leaders of the Google vision for the Internet in India.  For all intents and purposes, Schmidt’s editorial landed on deaf ears in India.  Also, regrettably, Indian corporate culture being what it is, not much happened on the Indian side to develop their own Internet deployment solution. All of this is not unusual in foreign markets.

Read more: Eric Schmidt: Which Internet Will India Choose?

As a veteran of high technology international business, I am intrigued by these international business blunders by otherwise very sophisticated business leaders and corporations.  They seem to repeat themselves over the years, sometimes in different ways and in different markets. Years ago I stumbled on David A. Ricks book, Blunders in International Business, now in its fourth edition, with new and updated case studies.  It is enlightening and also quite funny.  I recommend the book to Mark Zuckerberg.

Mark Zuckerberg can’t believe Egypt  & India  aren’t grateful for Facebook’s free internet

The nerve. (AP Photo/Rajesh Kumar Singh)

December 28, 2015Quartz India

All Facebook CEO Mark Zuckerberg wants to do is make the world a better place for his new daughter. While he’s technically on paternity leave, he couldn’t sit idly by as India attempts to halt Internet.org, Facebook’s initiative to provide free but limited internet to the developing world.E

Last week, the Times of India reported that the country’s telecom regulatory body had asked Facebook’s partner, wireless carrier Reliance, to cease the Internet.org service as it determines whether operators should be able to price their services based on content. Responding to criticisms of the program, Zuckerberg penned an op-ed published Dec. 28 in the English-language daily. In it, he expressed annoyance that India is debating net neutrality—a principle dictating that telecom operators provide people with equal access to the internet—as the country struggles to connect its citizens to the internet.

In the process of defending Internet.org, Zuckerberg paints India—where about a billion people are not connected to the internet—as backwards for even daring to question the benefits of Facebook’s charity-like endeavor.

“Who could possibly be against this?” he asks passive-aggressively. “Surprisingly, over the last year there’s been a big debate about this in India.”

Yes, net neutrality is a big deal—and not just in India. In the US, for example, an appeals court is currently examining the legality of a new set of net-neutrality rules enacted by the Federal Communications Commission this year. But Zuckerberg almost portrays net neutrality as a first-world problem that doesn’t apply to India because having some service is better than no service.

Net neutrality activists have long argued that Internet.org provides a “walled garden” experience because the sites that users can access for free are determined by Facebook and its telecom partners, essentially making them gatekeepers to the internet for poor people.

While Zuckerberg acknowledges that Internet.org, which is currently active in more than 30 countries, does not provide people with access to the full web, he argues that it’s a step in the right direction. According to the Facebook CEO, half of the people who come online for the first time using Internet.org decide to pay for full internet access within 30 days.

Instead of wanting to give people access to some basic internet services for free, critics of the program continue to spread false claims–even if that means leaving behind a billion people.

Instead of recognizing the fact that Free Basics is opening up the whole internet, they continue to claim–falsely–that this will make the internet more like a walled garden.

Instead of welcoming Free Basics as an open platform that will partner with any telco, and allows any developer to offer services to people for free, they claim–falsely–that this will give people less choice.

Instead of recognizing that Free Basics fully respects net neutrality, they claim–falsely–the exact opposite.

Zuckerberg continues by offering an anecdote of a farmer named Ganesh, who uses the free internet service to check weather updates and commodity prices. “How does Ganesh being able to better tend his crops hurt the internet?” he asks rhetorically.

But examined more closely, his arguments don’t directly address the concerns of net neutrality activists. For the people who choose not to upgrade or can’t afford to pay for full internet access, Internet.org does indeed provide a walled garden of online content. Millions of people already have a skewed perception of the web, believing Facebook to be the internet, a Quartz analysis has shown.

Furthermore, while Facebook can add more telecom partners, which would theoretically open up the number of sites and services Internet.org users could access for free, it currently has only one partner in India, Reliance.

Zuckerberg also fails to address the claims that zero-rated services such as Internet.org amount to economic discrimination—that this is essentially poor internet for poor people. Furthermore, in an op-ed published in the Times of India in October, net-neutrality advocacy group Savetheinternet.in quoted Tim Berners-Lee, father of the internet, as saying: “Economic discrimination is just as harmful as technical discrimination, so [internet service providers] will still be able to pick winners and losers online.” Facebook’s walled garden could very well determine the sites and services that will succeed in India.

Over and over again, Zuckerberg has pointed to research showing that internet access can help lift people out of poverty. The fact remains that Internet.org provides limited, slow, and subpar access, and these limitations make it all the more difficult for people to climb the economic ladder. As Naveen Patnaik, chief minister of the Indian state Odisha, has said: “If you dictate what the poor should get, you take away their rights to choose what they think is best for them.”