‘Hypergrowth passport’ could help catapult tech sector, Shopify CEO says
Lutke calls on feds to launch initiative to give Canadian companies special help
Canada needs to let freight trains be freight trains — at least metaphorically speaking.
That’s the message Shopify CEO Tobi Lutke had for Innovation Minister Navdeep Bains onstage Tuesday morning at the Elevate tech conference in Toronto, where Lutke called on the government to do a better job of helping fastgrowing technology companies scale up.
The conversation coincided with the release of a government report based on the work of a committee of technology leaders, chaired by Lutke.
Canada has a rich startup ecosystem with tens of thousands of companies, but only 0.2 per cent of Canadian technology companies are large, even though those few companies account for 34 per cent of employment.
The Digital Industries report calls for a goal of increasing the number of technology companies with more than $1 billion in revenue in Canada from 13 in 2016 to 26 companies by 2025.
Lutke said it’s those “anchor tech companies” that drive the whole sector.
“These companies are like freight trains,” he told Bains. “One of the recommendations is that we let those companies be freight trains.”
Lutke said that to achieve the kind of double-digit growth Shopify has enjoyed, companies need to maintain an unwavering focus on their business, and they simply don’t have the time to muck around with the paperwork and bureaucracy that underpins so many government assistance programs.
To that end, the Digital Industries report calls on government to create a “hypergrowth passport” for those charmed companies.
“The Hypergrowth Passport would be an accredited designation for digital firms headquartered in Canada with more than 40 per cent year-over-year revenue growth (past $1 million in one year),” the document says. “The Canada Revenue Agency (CRA) should automatically determine if companies meet these criteria as part of its tax assessment, similar to how it detects individual benefit eligibility automatically.”
Companies that meet the criteria, as part of a pilot project, would get special help from the federal government in navigating government programs, set-aside access to some services, and they’d also get a powerful seal of approval from government that the business is on track for success.
Lutke also emphasized that education is important to support Canada’s technology sector, especially when it comes to encouraging more diversity.
He said what you build and how you approach technology depends a great deal on your background and personal experience.
“Computers can be used for any- thing,” he said, adding that this is something that children need to be taught in school.
“When they are being programmed, that is being done by people no smarter than the kids themselves, and we should not treat them as black boxes.”
Bains, for his part, was generally supportive and upbeat, but mostly talked about the programs that the government has already instituted, and consultations currently unfolding on digital policy issues.
Speaking to reporters afterwards, Bains said that one big federal government innovation initiative will be getting off the ground quite soon; the $950-million innovation superclusters program will see money flowing “in a matter of weeks.”
So will the superclusters give rise to more of those big Shopify like companies with more than $1 billion in annual revenue as the Digital Industry report calls for?
“It’s not one particular policy or one particular program that’s going to create the Shopifys,” Bains said. “It’s really an ongoing effort.”