Canada should manage its own tech growth, Shopify CEO says
TORONTO • Canada has been trying to grow its innovation sector for decades and prove that it can compete on the world’s stage, but Shopify’s founder believes the country should not be too quick to celebrate when U.S. technology giants head north of the border.
Tobi Lutke outlined his frustration at how Canadian talent and intellectual property seeps out of the country in a Tuesday interview, where he touched on the dangers of U.S. technology brands starting up branch offices in Canada.
“We want them, but it isn’t as good as people think it is,” he said, when asked about recent hype around announcements including Uber Technologies Inc.’s plans to open a new US$200 million software-engineering hub and expand its selfdriving vehicle centre in Toronto and Amazon Inc.’s efforts to expand its Vancouver technology hub.
Earlier this month, Microsoft Canada announced it was also relocating its headquarters to downtown Toronto. Soon after, computer chip giant Intel said it would be opening a graphic-chip engineering lab in the city. Samsung, LG, General Motors and Google’s parent company Alphabet have each revealed big projects in Toronto.
Toronto added more tech jobs in the past five years than anywhere else in North America, according to a report from the CBRE group, a corporate real estate and investment firm. Asked why Microsoft Canada is making the move from a nearby suburb, President Kevin Peesker pointed to the city’s status as a “hotbed of innovation.”
But the flurry of announcements is also intensifying a debate about how to ensure Canadian companies can also flourish and become global dynamos.
When U.S. businesses open in Canada, Lutke said many of them poach the country’s top talent, causing salaries to increase, but making it difficult for smaller Canadian companies to compete.
The businesses often end up acquiring the country’s intellectual property, which can be problematic too. “All of that value will accrue to the U.S. economy,” he said.
“Do we want to own something, or do we want to be a branch plant economy?” asked Bruce Croxon, a Canadian entrepreneur and venture capitalist, on Canada’s Business News Network. “Let’s make up our minds.”
Canada historically has a “mixed” record in “building local successes into global powerhouses,” according to a 2018 report from David A. Wolfe, a professor of political science and co-director of the Innovation Policy Lab at the Munk School.
“Promising startups all too often end up either moving to the U.S. or being sold to foreign (usually U.S.) investors,” the report says.
Even if foreign multinationals poach Canada’s top researchers for their Canada-based operations, Canada still misses out, experts say, because it is the foreign firm that retains all of the intellectual property and can commercialize it.
“Canada is very naive on intellectual property,” Moffat said. “We have a niceguy business culture and (intellectual property) is undervalued and underestimated.”
Prime Minister Justin Trudeau, who campaigned on a promise to leverage the country’s position as the home of major pioneering advances in artificial intelligence and machine learning to build up its tech sector, is taking notice of the moves by foreign firms
At this year’s annual conference for Shopify, he said Canadians should have “a little more swagger” when promoting their innovations, lamenting how susceptible they are to foreign investors.
“We need to do a better job of generating that capital here,” he said.
Of the 40,000 Canadian technology companies, 98 per cent are considered to be micro, said Lutke, while emphasizing that helping micro companies grow is key. And though there’s plenty of work that he said the country has to do, he added, “Canada is not in a bad spot globally.”