Something Ventured: Send People And Money
“Send lawyers, guns and money, I’ve heard enough feedback from the readers of this column to understand a few things about my subject matter. I write about macro issues (tech trends, big ideas related to BC’s technology industry) and micro issues (actual company or individual stories, anecdotes). Generally speaking, you tend to like the micro stories. I think it’s because real examples are more powerful (and interesting) than broad statements. But it may also be the fact that many of you are working in companies trying to help your product or service get to market and you just don’t deal with the macro stuff on a day to day basis. But the big issues do affect you, no matter what your role in a technology company in BC. So, in a potentially misguided attempt to try and please everyone, I will try to deliver this column’s subject matter in both macro and micro forms. My macro view comes from my job role as a VC, where I look at and participate in a variety of technology businesses. I also have the role as BC Technology Industry Association board member and Chair of its Human Resources Sub-Committee. Yes, I know this sounds incredibly exciting as you can imagine interfacing with association and government people and a group of other industry executives volunteering their time. It’s a laugh a minute. I can tell you are green with envy. As you are no doubt aware, having your BC TIA RSS feed at the top of your newsreader, the TechTalent survey was released this week. It is a much needed attempt to quantify what we have and what we need for talent in the technology industry. The report is here if you want to read it. The search for qualified people with the necessary skills to build successful products and companies is a huge burning issue, especially since the technology turnaround in 2004. Another burning issue in BC for the past twenty years (it seems) is access to sufficient capital to compete globally. There seems to be little else to discuss or get worked up about in the technology community (there is this little thing called product innovation that is equally as important to the successful creation of technology companies, but I hate to be a nag). There have been a few recommendations and actions in recent years about capital access, especially at the seed or angel level. But capital is a fickle thing. I’ll get into that a bit more later.Let’s assume for a minute that the findings in the talent survey do represent the wider population (the report itself calls for further refinement of its findings, but it’s a safe assumption given anecdotal feedback). The recommendations to help find more talent are the key discussion points. At a macro level, the recommendations amount to this:
1) Bringing Talent Into BC One is a short term fix, the other a much longer fix. If you need to bring talented engineers, marketing people, support folks, etc. into the province, you need to let them know why this is a great opportunity. If there is a gold rush going on, people will come. Look at Fort McMurray Alberta for a modern day equivalent story. If there is a perception of a gold rush, perhaps people will come. We need people from outside BC to think that technology here is a gold rush story. Perception is created by marketing. Targeted marketing is most effective in this regard. Easy right? Oh, all you need is some money and a good plan to do this properly. At the micro level, let’s say your company needs a VP Engineering and an inside sales person. What is your strategy to get them if they aren’t available here? Where is there a pool of talented people in similar or related industries? How can you get there and promote your company? Are there on-line strategies to find them? Are there local recruiters that can reach that community elsewhere? Once you identify a candidate or two, how do you ease their concerns about moving to BC? How do they get immigration status? That’s where micro and macro collide. A set of resources needs to be available for you to promote the region and smooth the process of coming here. Did any of you know about the Strategic Occupation Provincial Nominee Program in BC? Guess what? You can have certain strategic hires get their (and their families) permanent residency here. It is not a temporary work visa like NAFTA offers which is tied to the employer. Immigration is a powerful carrot for BC as this is easily one of the most desirable places to live in the world (if you can afford a house).Programs and resources are being made at the macro level by the boring old associations and government. You need to be aware of them and develop your own strategy for getting talent into your company in the short term. Other solutions and resources for you at the micro level that should be readily available include how to do successful off-shoring of support, manufacturing or development work. It is simple to do once you have the connections, but where does a small technology company start? What about the long run for building talent in BC? The hiring cycles go up and down as we so painfully saw in 2000-2003 in technology. Short term employee solutions are not the answer to growing a base of companies that survive downturns. The Tech Talent report cites continuing R&D investment, creating co-op programs for students, further extending the number of graduate student positions available every year at the universities and colleges and creating a proper employee training program for bettering the skills of your existing workers. These are all good macro programs and initiatives that will result in building more talent over time. None of these (with the exception of better training) affects your day to day lives at a company. But you need to understand the initiatives that your tax dollars will fund and support the ones that will ultimately give us a stronger, smarter technology community. The Silicon Valley was built on the backs of innovation and entrepreneurship in a pleasant place to live with at least three world class research based universities in the area (sound familiar?). The expansion of the educational facilities to include aerospace R&D really helped fuel the number of highly trained graduates in the fields of semiconductors and electrical technologies. I would say that the Valley would not be what it is today without long term thinking in the expansion of its graduate programs and world class R&D facilities. By doubling the number of graduate position in BC, we will see real benefits in a decade or less. But other things need to be done in concert with that increase in talent. I think Co-op programs are great and the University of Waterloo is a shining example of that strategy. Now, back to the money. There are two types of money to talk about… “macro” project money and “micro” company investment. The macro money is the tax dollars that can fund short and long term projects for innovation and talent creation. We need to push the government to look long term and put programs in place that help over time. Short term fixes are usually not the domain of the government as they usually end in disaster. As mentioned, some coordinated effort on immigration and promotion might help the companies in the short term to bring folks in to help the current crunch. When it comes to investment, the governments of Canada have had some short term thinking. Stimulative programs using tax credits have been dissed by many economic academics and industry people, but from the film industry to the research tax credits for all unique innovation, we have created a monster of short term thinking. From the macro view, this is wrong. From the micro view, it is part of survival in the Canadian technology wilderness. As a board member on small companies, it is awesome to get that SR&ED check every year. Weaning us off the tax credit system will be very, very hard and I am not shouting down the system. I am just explaining that it was the wrong way to go. Here’s the free market point of view that the macro folks need to heed: Capital is eventually (hopefully) rational. It finds opportunity where opportunity is perceived to be located. If there is a gold rush, the money come swooping in, often faster than the talent. By removing barriers to moving that capital into Canada and BC (yes, there are many, mostly involving tax), we grease the skids for capital investment. Once again, the perception of a gold rush is driven by good communications that there is one happening. Government can assist in that short term targeted marketing. Tax incentives don’t attract capital to opportunities as well as returns based incentives do. If some rational holder of capital can get a preferential return, they will take that upside over a few short term tax benefits any day. The US started/stimulated its early stage risk capital program that way by offering to match funs raised by VCs and limit the return to the government. They did this in the 80’s. Canada did the tax model. You can see the results in the form of less local capital available here. At the micro level, the opportunity is what attracts the capital. I got a phone call last week from my friends at a billion dollar Silicon Valley Fund. This was unusual because it has nearly always been me calling them first about a deal. They wanted to know everything about a company in Kelowna that they were tracking with a digital entertainment product. I am helping them get the attention of the CEO who is blissfully unaware of what these guys bring to the table… but they will be meeting soon. The point is that these guys in the Valley found a company in Kelowna before anyone in Vancouver had paid any attention to it. Rational capital smells opportunity and pounces. It doesn’t need any incentive, but it sure doesn’t want any barriers. From your company’s perspective, you need to attract capital by being visible, either with a product in the market or with a team or innovation (preferably both) that you can promote in a targeted way. In the end, success in technology as an industry comes from the combination of innovation, talent and capital. It is a much faster process to move capital than it is to create talent or sprout innovation. In the near term we can attract people with good incentives and opportunities. Companies will then attract capital in the short term with great business ideas and good people. In the long term we need to grow our talent base, maintain our innovation base and the capital base will follow. These are the macro issues. Regardless of whether you agree or don’t agree, get involved in the macro conversation by using the BCTIA web site (“The Voice”) or contacting Board members or the executive to talk about it. 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). Something Ventured Archive Printable edition |
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