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

Something Ventured:
July 11th, 2002

By Brent Holliday
Greenstone Venture Partners

"Oh when I look back now,
That summer seemed to last forever.
And if I had the choice,
Ya - I'd always wanna be there,
Those were the best days of my life."
- Bryan Adams, Summer of '69

In hockey, for instance, the appropriate reaction is a clenched fist, turned skyward being thrust back and forth around the hip level. Clenched teeth and some bending at the waist are options to add a more determined look to your celebration. The "fist pump" is one of many ways to mark an important milestone, like, say, a timely goal or perhaps the most memorable instant in the history of your fair city: the occasion when it is awarded the Olympic Winter Games.

To be fair to the droll, stuffy International Olympic Committee, they certainly know how to make an announcement like the one on July 2nd feel like an actual sporting event with all of the stomach churning anticipation and absolute thrill of victory and agony of defeat. That was fun wasn't it?

So now Vancouver and Whistler are "Olympic" cities. The feeling of pride will last for seven years and beyond. The build up to the actual event will have its ups and downs to be sure. And the actual 2 weeks for the Games and following 10 days for the Paralympics will be a blur compared to all of the preparation. But the comfort I take away from this momentus event is that the world is just becoming aware of something that we already know about Vancouver and Whistler: this place is and its people are world class.

As a start-up in technology this summer, the successful Olympic bid is just one part of a slate of positive news. SARS is disappearing from Canada. The US economy is showing signs of a better second half with all of the stimulus applied by their government. Early indicators of that positive growth came in this week. For instance, temporary hiring has spiked in the past month south of the border. As any entrepreneur going through a downturn will tell you, hiring temps is the first step towards more permanent hiring. The NASDAQ finished up 21% for the first half of the year and the first technology IPO in a very long time, Form Factor, gained 26% over its opening price last week. Most of the publicly traded companies in technology have shown returns to profitability or are approaching it before year end. Even companies selling to industries with very sick value chains, like our own PMC-Sierra, are seeing the light and return to growth. The consensus estimate for PMCS is for 20% growth in revenue in 2004 and profitability versus the flat revenue through 2003.

In a nutshell, the summer of '03 should see the beginning of better days for the technology industry as a whole.

On the negative side, the amount of investment in early stage companies continues to decline in the US and Canada through the second quarter. However, the "right-sizing" of the venture capital industry is almost complete. Ridiculous amounts of available capital in the US helped create unsustainable expectations three years ago. Nowhere was that more evident than in California. In fact, if there is one very dark spot in the US right now, it is California. They are in a heap of trouble. I mean, how bad does it have to get before you actually consider the Terminator for governor? They have deficit levels in the state that are starting to rival Canada's worst days. They have collected nearly zero capital gains tax in two years and the decline in profitability of the technology sector hurt their corporate tax revenues. So now they will consider tossing their governor and bringing in Arnold to "pump up" the economy.

Getting back to the Olympics, the increased exposure will lift tourism and the jobs created by the infrastructure build-out will be welcome here. But given this shot in the arm, how can we take advantage of our new found confidence and awareness and drive people, ideas and capital our way? You might think that the link to the technology industry is tenuous, but I think it is stronger than you think

There has been some anecdotal evidence of the movement of people out of California and into Vancouver. Most are Canadian ex-pats, but some are Americans looking for a new opportunity. I am golfing with a telecom executive this week, who happens to be interested in a move here. A start-up that we are working with has some Cisco people returning from the "dead" Valley. Silicon Valley VCs are doing deals here (D-Wave) and looking for deals more seriously than they ever have.

We need to tell a better story about doing business here, particularly in technology, to counter some of the lingering stereotypes that are out there. Just this past week, Greenstone had its Silicon Valley partners up to a conference and the issue arose as to what makes BC so compelling. The anecdotal feedback from these individuals was that Californians think that the work ethic is low here and that there are very few successful technology companies. These are old issues that are not effectively countered unless you show them home grown success stories, newer success stories (like the Crystal Decisions IPO) and point them to fellow Californians, like the VCs investing here or the CEOs of companies that have operations here. Sanjay Dhawan, CEO of Fremont CA based Inkra, is one potential weapon for us to counter some of these claims with his team in Burnaby performing so well. There are many others.

We are a very proud group in Vancouver. I have seen the personal interaction of BC entrepreneurs, salespeople, government workers and financiers with their brethren south of the border and elsewhere. At the grass roots level we are proud of our industry and do a reasonable job of promoting it. Now, we have the world's attention for the next seven years. We were front page news this week. We are not some tiny alpine village hosting the games. We are a city/region of two million people, one of the largest cities to ever host a winter Games. Some folks might wonder what sustains a city this big other than the obvious beauty and quality of life. They need to learn about the people and the companies that make this an emerging and sustainable technology center. They need to get the impression that this city is on the cusp of something great built on a foundation of hard work and success.

The eyes of the world are on us. Let's make sure we put on a great show.

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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