THE ONES THAT GOT AWAY
Canadians working abroad share views on what drives or impedes new tech development
Ask the leaders of any technology company and they’ll tell you that hiring engineers, data scientists or mathematicians is one of their biggest challenges. STEM careers are the fastest growing part of the labour market, and some estimates put the need for technology workers at 216,000 jobs by 2021. To explore the talent gap, the Financial Post talked to innovators who have left Canada to pursue opportunities with big multinational companies, and also those who have moved here to be a part of this country’s digital transformation.
As a teenager in 1976 attending the elite Toronto high school, Upper Canada College, Michael Evans knew he wanted something different than his peers: He wanted to leave the country.
That itch initially led him to Princeton University in New Jersey, and later to a banking career in New York, London and Asia.
Today, as president of Alibaba Group. — China’s answer to Amazon.com Inc. — Evans spends the majority of his time in China and other developing countries, helping build out online payment methods, a smart logistics system and digital innovations that will allow their economies to, technologically speaking, leapfrog the developed world.
“This is not a job you can do by remote control,” Evans said in an interview while he was visiting extended family in Toronto. “But it is a job that requires you to be in the field.”
Canadian entrepreneurs who leave the country — there are many working on the bleeding edge of the innovation economy, whether in blockchain, artificial intelligence, ride-hailing or some other area — do so for different reasons. Some are enticed by the scale of countries with larger population centres, or by the advanced funding ecosystems elsewhere; others follow specific opportunities abroad; or in some cases it is simply a yen for something different.
As part of its investigation into innovation, the Financial Post spoke with some of these entrepreneurs working abroad and asked for their perspectives on what drives or impedes new technological development and how Canada is faring as digital innovations reinvent the world.
Canadians have helped build some of the most buzzed about tech companies in the world. Among them: Garret Camp, the lesser-known co-founder of the ride-hailing service Uber Technologies Inc.; Stewart Butterfield, founder of the photo-sharing service Flickr and more recently the office chat platform Slack Technologies; and Vitalik Buterin, who invented Etherium, a blockchain technology.
But for all the success stories, there is no Canadian equivalent of an Apple Inc., Amazon, Alphabet Inc. or Facebook Inc., and that void raises questions about whether Canada’s tech sector can compete in a world economy increasingly dominated by ideas and data.
“There’s no issue with innovating within Canada,” said Lance Uggla, a native of Vancouver who has grown a multibillion-dollar data business, IHS Markit, overseas from London. “But if you create a great product for global markets, the Canadian market within the global market is never going to be more than two or three per cent of your overall revenue,” he added.
And that lack of population forces many entrepreneurs to look abroad for ways to distribute their product globally.
After starting his banking career in Toronto in the 1980s, he moved to London in the 1990s as TD Bank’s head of Europe and Asia.
After the Houston-based energy trader Enron imploded in 2001, drawing new scrutiny to just how much market manipulation was occurring behind the scenes, Uggla sensed a business opportunity to bring greater transparency to various markets.
In 2003, he started Markit Ltd. in a barn north of London. By using technology to analyze large data sets, Markit was able to provide market insights that could be sold to governments, large multinational companies and other organizations.
In 2016, Markit merged with a similar company IHS Inc. in a deal valued at US$5.5 billion, where Uggla is now chief executive and chairman.
Working abroad may have provided an unintended impetus for Uggla’s entrepreneurship. Because he was working for a Canadian bank that paled in size compared to some of the global banking behemoths he was making deals with, he always believed his trading partners had more data than him.
“I think working for a Canadian bank that had a smaller footprint than the largest global banks, meant that I was dealing with a larger gap in the transparency,” he said. “It meant I had a keen interest to collect data” from them.
He says that’s how innovation occurs sometimes: An entrepreneur identifies an opportunity based on an experience.
Today, having expanded into more than 140 countries, IHS Markit is expanding and has five offices in Canada in Calgary, Vancouver, Toronto, Windsor, Ont. and Mississauga, Ont.
“If I was living in Toronto and came up with this idea, I think I could have easily built this company,” said Uggla.” I don’t think there’s any issue with attracting, recruiting and retaining great talent in Canada — you’ve got great universities, and you’ve got a vibrant business community.”
But Canada is not retaining all of its innovators.
In terms of innovation within Canada, few families share the same legacy as Michael Evans’s family. In the 1960s, his father John, co-founded McMaster University’s Medical School in Hamilton, Ont., and transformed medical education to give students hands-on experience with patients from the very start rather than rote memorization.
In the 1990s, John co-founded MaRS, an innovation hub in downtown Toronto that connects entrepreneurs with networks and capital.
Evans said that his father once dispensed sage career advice to him: “He said, ‘You’ve got to move, if you want to grow. Embrace change and take prudent risk.’ Otherwise you get caught up in the status quo.”
That bug to “embrace change” was present in Evans even in high school, when he was one of only three boys in a class of nearly 200 at UCC who moved abroad for university, and why he accepted positions on three different continents later in his career at Goldman Sachs, he said.
It’s also relevant to Alibaba’s strategy of targeting emerging economies.
In developed economies like Canada, entrepreneurs have to contend with existing services and products when they introduce any new technology. For instance, consumers have credit cards that may make them wary of using any of the various new digital payment systems.
But in places where most individuals have never had bank accounts or credit cards, people are more likely to embrace a new type of payment system.
“In developing markets, the ability to change things is welcomed by the recipients,” said Evans, and that means Alibaba has been able to rapidly grow new business services, such as Alipay, its online mobile payment system.
Other factors slow adoption in a developed country too. Banks, for example, tend to introduce new products carefully to ensure they don’t cannibalize revenue from existing products, and to ensure they don’t create any new liabilities or reputational damage. Plus, developing markets have more advanced regulatory systems.
“It’s hard to get people to change,” said Evans. “In developing countries they adapt much more quickly to technologies that can solve serious problems.”
But Evans isn’t pessimistic about Canada’s future. “There’s a huge opportunity for Canada to embrace some of these technologies,” he said.
Other entrepreneurs working abroad profess a more complicated relationship to the country.
In 2015, having just finished law school, Andrew Arruda connected with Jimoh Ovbiagele, who was studying computer science as an undergraduate at the University of Toronto where Geoffrey Hinton, sometimes called the godfather of artificial intelligence because of his work on deep learning technologies, was a professor.
They launched ROSS Intelligence, a software program that aims to streamline legal research. Using artificial intelligence and machine learning algorithms, lawyers can type in a question and ROSS looks across the vast compendium of legal case law and finds cases with relevant answers.
Almost immediately, Arruda made a decision to focus on the U.S. legal market, which has more lawyers in California alone than in all of Canada.
“You don’t have the same volume of people in Canada,” said Arruda. “Sheer volume is a big thing when you talk about entrepreneurship.”
Initially, they relied on IBM’s Watson artificial intelligence technology to build their tool and investments quickly poured in. Y Combinator, the venture fund accelerator in California that seeded Airbnb and Dropbox, was an early investor, with Comcast Corp., the Philadelphia-based global telecommunications company, and Dentons, the global law firm, also investing.
“People always ask, ‘Can Canada compete with Silicon Valley?’,” said Arruda. “And I say we shouldn’t be thinking about competing with it — there’s always going to be more capital in the U.S. by virtue of the sheer volume of people.”
“But instead of trying to change that we have to look at how we stay competitive,” he added.
As ROSS attracted more customers, and expanded its offerings from bankruptcy to all areas of law, Arruda said he sought ways to reinvest back in Canada.
In 2017, the company opened a Toronto office, with Mayor John Tory attending the ribbon-cutting ceremony. A dozen engineers initially staffed the office, and drew on machine learning and natural language research conducted by professors at three Canadian universities — in Toronto, Edmonton, and Montreal — to build a proprietary artificial intelligence system for ROSS.
This November, ROSS hired Stergios Anastasiadis, the former head of engineering at Shopify Inc., as its head of engineering, based in Toronto, which has grown to more than two dozen engineers, according to Arruda.
ROSS also attracted Canadian investment, and today, Inovia, a Montreal-based venture capital firm, is its largest investor.
“A lot of people think let’s give more tax incentives so all our entrepreneurs stay here, and don’t leave,” he said. “But I think the best route forward is to allow those entrepreneurs to leave ... and encourage them to come back.”
Arruda likens the situation to the National Hockey League, where talented Canadians often play for U.S. teams and eventually return to coach youth hockey, ensuring that Canada churns out talented hockey players. As Canadian tech companies abroad mature, he said he believes they’ll also look for ways to return to Canada.
This July, the real estate consulting firm, CBRE Group reported that Toronto had added 28,900 tech jobs in 2017 — more than Seattle, New York, Washington, D.C. and the Bay Area combined.
“We are now starting to see those people come back,” he said.