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The Canadian Conspiracy

A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
January 5th, 2001


By Brent Holliday
Greenstone Venture Partners

"How many nights I prayed for this,
To let my work begin.
First we take Manhattan,
Then we take Berlin "
Leonard Cohen, First We Take Manhattan

It's 2001. Arthur C. Clarke references abound. Rather than dredge up some tired HAL references, I thought I'd make the connection to one of his earlier and better books, Childhood's End.  For those of you that haven't read it, here's the Coles Notes version:

The Overlords appear on Earth as friendly aliens.  They mingle with humans and are accepted.  They are psychic and are looking for a messiah like psychic being on Earth (They happen to look like the Devil, but that’s a tangent that I don’t want to go down, nor is it particularly useful for my metaphor).  One day they feel the power emanating from the womb of a human mother.  This is but the first of thousands of these children to be born who have the ability.  Once the children reach the age of ten or so, there psychic ability explodes, such that they are able to control the aliens.  Then all of the children leave the planet in a kind of universe expanding mind meld and Earth is turned to dust.  The End.

Cheerful book really. Yes, Mr. Clarke did experiment with mushrooms in the 50's. 

With this story in mind, I want to explain to you what the Canadian brain drain to the US is really all about.  For those of you on another planet, the brain drain issue has been burning in Canada for quite some time.  Some estimates have 250,000 technology workers from Canada in the San Francisco Bay Area alone (I tend to think it is more like 75,000).  The reports in the media say that many of these people were lured to the US by the promise of working at the world's best technology companies.  The story goes that the mighty US dollar and the rocketing stock market of the past few years exacerbated the problem by offering potential massive piles of wealth through stock options.  Further, many pundits argued that the opportunities in Canada were not as attractive because they had less chance of success, less capital and lower tolerance of risk.  There's even a web site that organizes many of these thoughts at CanadasBrainDrain.ca.  Good theories, I guess.  But it's all bunk.

The reason that we have exported our best and brightest stars in technology, from engineers to CEOs, is because we, as Canadians, aim to dominate the coming technology millennium.  It’s all part of a master plan to infiltrate and then confiscate the ability to create billion dollar technology companies.  Is this a government conspiracy?  No, we said "best" and "brightest", which eliminates all government. The whole plan was hatched by a splinter group of the CWD (Canadian World Domination) back in the early 90's.  And it is working well.

Look at the prominent Canadian senior managers or founders of big US technology companies:

Desh Deshpande, Sycamore Networks
Rob Burgess, Macromedia
Jeff Mallett, Yahoo!
Bernie Ebbers, MCI Worldcom
Bob Young, Red Hat Software
Jeff Skoll, eBay
Paul Gauthier, Inktomi
Chris Lochhead, Scient
Don Listwin, Phone.com
James Richardson, Cisco Systems

These are the senior members of the conspiracy, sent south to gain the trust of the US venture capitalists, investment bankers and media.  Actually, we have invaded the VCs, IBanks and media as well (hell, as soon as Dan Rather kicks, we have two of the three major news anchors in Peter Jennings and John Roberts).  At the conference I was at last month, I counted a dozen Canadians posing as important VCs at very large and well-respected funds.  Once we control the money...

Unsuspecting Americans have funded a flood of Canadians with big ideas in the Silicon Valley.  Many more Canadians have joined well-funded American start-ups and larger established technology companies, not just in the Valley, but in Seattle, Boston and Dallas.  These conspirators are gathering more and more information and ability. 

There are the doubters out there that figure that most of the Canadians will stay in the US and keep everything that they have learned with them, never benefiting Canadian society as a whole.  There are those that suggest that anyone who leaves dare not show their face in Canada again, lest we lynch them for taking our hard-earned taxpayer money for their publicly funded higher education and giving none of it back.  Relax.  Soon the benefits of years of hard work by Canadians in the US will start to flood back.

Does anyone remember what the Japanese did in the 70's?  They took American electronics and car manufacturing, two of the largest industries in the world, and made them Japanese.  They learned the ability from the US in the 60's and they owned that ability in the 70's and 80's. 

The key to the Canadian conspiracy is to make sure that the knowledge of that ability to create world leading technology companies continues to flow North through our heroic comrades placed in the technology companies of the US. Eventually, we can pull some of them back from the dangerous battlefields.  Bring them back to their homeland and let them re-create the companies here.  Then we Canadians can have the metaphorical universe-expanding mind meld that turns the other nation's tech industries to dust!

Or we could just do better than we are doing now by reaping the benefits of a brain gain.

{Arthur C. Clarke I am not.  But I thought I would have some fun bringing in the year 2001, eh?}

Random Thoughts –

- Why I Am A Venture Capitalist, Part 1: (From Rich Karlgaard in Forbes)

• The money that flowed into American venture capital funds in 1991 came to $3 billion. Worldwide, venture capital is now close to a $250 billion industry.  Barring any archdukes getting plinked or central bankers hoisting rates in a recession or House Ways and Means chairmen hankering to double taxes, we could see a VC industry of $500 billion by 2010.

• Between 1974 and 1995, Warren Buffett's Berkshire Hathaway and the top 20 or so VC firms had this in common: Both camps earned compound annual returns of around 35%.

• Between 1995 and 2000 Berkshire's compound annual return dropped to 23%. But the top VCs' soared to more than 100% per year. We guess that with the dot-com bubble popped, VCs will regress to their historical average of 35%. That ain't hay.

• Last year the seven general partners at Benchmark Capital in Silicon Valley harvested profits from their first fund. Each partner got $300 million.

• Sequoia Capital in Silicon Valley is run by 12 partners. Three own jets.

Letters From Last Week –

Hi,

I have been reading your article since I moved out of town and out of countryto Research Triangle Park, North Carolina over two years ago.  Since about 1995, working for a wireless applications startup company in Victoria, I have been hearing that wireless, especially wireless data, would be the next big thing.  Well, I'm still waiting.  I believe that there is a lack of 'killer apps'. I-mode in Japan seems to be the only one so far, and until something catches on here, we'll have to wait a little bit longer....

Ian Johnson
Ericsson Inc.
RTP, NC. USA

P.S. Question: If Jean Chretien believes there is no brain drain, is he calling me stupid ?

Ian:

We are all waiting for wireless apps to emerge from the hype stage.  Microsoft just announced a deal with Starbuck’s to have wireless ordering of lattes.  More fluff.  As for Jean calling you stupid…  SHHHHHHH!  You don’t want to get the politicians aware of the conspiracy.  You are part of it and you certainly don’t want to be discovered, do you?  Not until you bring all that learned ability back, anyway.

What Do You Think? Talk Back To Brent Holliday

 



Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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