Whether it's provincial or
federal, we are a cynical lot when it comes to politics.
I am certainly guilty of that.
My digital soap box gives me ample opportunity to
shred any policy, or lack thereof, when it comes to
technology and driving the new economy.
But what I experienced today gives me pause in my
Remember last year when I lambasted
the feds for sending a trade mission to the Silicon
March came down here (Oops, I should tell you that I am
in Redwood Shores at this minute) with some fanfare,
only to get crickets from the local industry.
A trade mission.
think it actually weakens the Valley view of Canada when
we send a government rep to help make deals for Canadian
tech companies. It's
like having your Dad come and "pave the way" for a
What words spring to mind when you say
polyester, mediocrity, 9 to 4:30pm with two 45 minute
coffee breaks and an hour lunch, bad ties, sheep,
Just a few that pop to mind, anyway.
Well, dispel those notions!
I was very pleasantly surprised by the group from
the Canadian Consulate Trade Office (CCTO), here in
put on a one day conference to help educate the Canadian
investment community as to what really goes on in
venture capital in the Silicon Valley.
This gang is sharp.
They get it.
They really get it.
It's because they are living here and have been
swept up by the madness.
The real workers in government are
people like Handol Kim, Mark Ritchie and Jeane Weaver at
the CCTO here in the Valley.
They are tapped in to the deal makers at all
levels here. They
have attracted a few hundred Canadian ex-pats to attend
their "Digital Moose" events on a regular basis.
They tirelessly work to spread the word about
Canada and its technology successes.
And many Canadian entrepreneurs are coming to
them to learn more about how to pitch the VCs down here.
Their leader is Roger Chan, a
veteran diplomat with a great attitude.
He treats his job like a business.
He talks about customer "wins" and closing
deals like any dotcom biz dev expert.
He has a marketer's mind when it comes to
creating tangible connections for Canadian companies.
But most importantly, he knows that our pace of
change in Canada in the technology industry is too slow.
So Roger and the gang have a
problem: They have just begun this effort and they are
overwhelmed by the amount of work that needs to be done
to build an effective bridge for Canadians to the
have limited or no resources to do it and not many in
Ottawa understand what is happening.
You kind of have to be here to believe it.
What do you expect the reaction
would be in Ottawa if they found out that the CCTO had
Canadian entrepreneurs presenting at this conference
telling the Canadian investors things like:
drastically increase your chances of being a success
by having a head office in the Silicon Valley
need US talent in senior management to win
NASDAQ or nothing, baby- the TSE and CDNX are not
viable exit opportunities
These statements clearly run
counter to initiatives in Ottawa to build a Canadian
At least it does in the short term.
Roger and his staff realize this.
They hope that the press doesn't focus on this
(There were National Post and Ottawa Citizen reps there
It was so refreshing to talk to
Handol later over a Moosehead (imported, along with
Smarties and Coffee Crisp for the ex-pats).
He expressed concern that Canadian companies are
coming to him in droves.
He cited a dozen early stage companies started by
Canadians in the last year in the Valley.
These weren't funded and then brought down to
find investors. These
were US companies from the beginning.
I told him about the increasing trend in
Vancouver to have companies incorporate in Seattle from
day one. Should
we be alarmed? Toss
in the brain drain factor and we might say that there is
a crisis brewing.
Handol swept his hand around the
room and said that the solution to the Valley vortex of
Canadian tech companies was right here.
In his mind, the people that have moved to the
Valley from Canada will make there way back to
opportunities in Canada, in a big way.
When they have families themselves, when they
have had a taste of the success here, when places like
Ottawa and Vancouver have great opportunities in great
companies, they will come back.
I agree with him- with some
worst possible result for Canada is if companies move,
lock, stock and barrel to the US.
I have talked before about the "global
start-up" model that Israel and Scandinavia have
is where the company builds the technology and the
business plan in its home country.
Why would anyone with an idea try and go to the
Silicon Valley right away and recruit a team?
It's nearly impossible to keep engineers in the
Valley, let alone find them in the first place.
So, stay in the home country and foster
innovation, creativity and lots of very early stage
R&D money. Then make a US subsidiary in one of the
hot areas (Valley, New York, Texas) and hire a US senior
management team to fill out or complement your existing
team. Raise money in the US (into the foreign company,
not a US company) and go public on the NASDAQ.
If Canadian companies maintain
their roots in Canada as they grow in the US and keep a
large part of the development there, we will be better
off as a country. At
least some of the expertise is growing in Canada.
This is the path that we are on.
Not all companies do this, but increasingly
technology companies in Canada are moving to this model.
One of two paths will ensue:
1) Canada becomes an outsourced R&D shop for
the US or 2) Handol's prediction comes true and
experienced ex-Canadian senior managers move back to run
operations from the friendlier side of the border but
with the same degree of success.
I don't think I need to tell you
what needs to be done to help #2 happen, do I?
Something about a leveled playing field.
Make it easier for these people to bring their
dot-com fortunes home.
If for some reason Handol is wrong
and we just end up folding our best and brightest into
the US machine, well we can always blame the government.
BS ESTI (Early Stage Technology Index):
6 out of 10
Why the precipitous drop?
Well, the BC budget was not positive to the tech
community here at all.
Another bloated spending budget from the NDP that
is based in neandrathal ideology.
Any interesting thinkers or thought leaders in
bet on it. This
will continue to drive people out and keep people from
entering our province.
Tax cuts? A
person making $45,000 a year gets an extra $100.
would have set the ESTI lower if the federal budget from
last month had been as bad, but it wasnít.
Also, the bloodbath in the markets this week has
driven the air out of option holders in local high tech
will be a respite from angel spending for a few weeks as
the markets climb back.
Uncertainty also keeps people from jumping to
new, risky ventures.
On the positive side, there were some early stage
financings in the past weeks (Knowledge Junction and
Prologic) and there a few more to come in April.
have recently joined the Scottish Enterprise
Globalisation Team, based here in Glasgow, Scotland.
Scottish Enterprise is our government's economic
development agency in Scotland and the Globalisation
Team (all 4 of us) is currently involved in a major
initiative to increase the number of global companies in
colleagues and I are all great fans of your articles in
T-Net and we look forward to each new issue. As part of
my knowledge management responsibilities for our team,
I'm currently involved in setting up an improved version
of our website (the current one is fairly basic!). Part
of the new site is going to be an e-zine and I would
very much like mention your articles in it and refer my
readers to you. The new updated site should be going
live in April/May so, if you're interested, why not pay
it a visit then? You can also visit the Scottish
Enterprise site at http://www.scotent.co.uk.
am very excited that I am now global!
I hope that my tendency to focus on things BC and
Canadian are partially relevant to you and your
colleagues in Scotland.
I think that this week's column will give you
some ideas- Mike
Myers, one of greatest Canadian exports to the world of
comedy, came up with a great tag line for you and your
global companies. In
a hilarious Saturday Night Live sketch where he was a
retailer in the US, he said to his customers, "If
it's not Scottish, it's CRAP!"
sound disappointed at the response to your budget
article, so I'll pass along the only reaction I remember
having (to your comment that the increased parental
leave made you consider having a baby): let me know when
you figure out how to have a baby and I'll invest in the
this week's column: about 13 years ago I won an office
hockey pool and boy, were the boys ever mad at me.
Especially when I told them I'd be using my winnings to
buy shoes! I know little about hockey, so the pool
organizer explained the pool rules to me. Perhaps he
used knitting or cooking similes.
was a simple, cumulative, weekly pool. I made all of my
choices based purely on the numbers that the guys showed
me how to find in the newspaper. Towards the end of the
season I overtook the leaders, when they started making
decisions based on something other than the numbers.
years later and 4,500 km away, I entered another pool. I
still didn't know anything about hockey, but I knew I
wouldn't win this pool: it was based on a complex set of
predictions based on what you knew at one (early) moment
in time. Diligence wouldn't help me, but it wouldn't be
fun for the hockey buffs if everyone didn't play. So I
made my picks based on who was Canadian and who wasn't,
with the Senators to win the Stanley Cup. The guy
running the pool won. Surprised?
for your ongoing explanations of the rules.
wife enjoyed your comment about having the baby.
Sheís all for it.
As you now realize from the NCAA basketball
results, my prediction from last column is 50% wrong as
Duke was eliminated!
I am near the bottom of that pool.
Thanks for the support.
read with great interest your March 17/00 column on
mentioned Book4golf.com and the fact that it has risen
to an atmospheric market cap based on a product/service
that won't be available for another eight months. You
also mentioned that because Book4golf.com recently
raised additional funds from a private placement (to
primarily institutional investors), there is a danger
that a drop in its stock price prior to the next round
of financing will sour existing and/or potential
investors from investing in the next round.
you mentioned Eteetime.com as a private-stage, VC-funded
competitor that, unlike Book4golf.com, does have a
running tee time booking service and has raised funds at
lower valuations. Eventually, the goal is an IPO where
public investors will invest at a higher valuation than
previous rounds, thus allowing the VCs to cash out and
liquidate their investment.
must say that I agree with your comments, particularly
as it relates to a company that appears to lack a
working product. As an investment banker working with
emerging high technology companies, you may suspect me
or the firm at which I work of being another
run-of-the-mill Vancouver brokerage firm that is only
interested in another get-rich-quick CDNX promotion. It
is not our intent to take a company public prematurely,
hype the stock, raise money at an unsustainable
valuation and risk having the client company
"orphaned." (I cannot comment on whether
Yorkton Securities had this scenario in mind for
Book4golf.com.) My personal objective is to work with
emerging high technology companies and take them public
when the time is right and also on the right stock
exchange - be it the CDNX, Toronto Stock Exchange or
NASDAQ. Subsequently, we intend to follow them and grow
with them, potentially handling them off to more senior
investment banking firms.
hope to work with high-quality technology companies and
nurture them for the long term with advisory and
financing services. As always, it's a pleasure to read
Pacific International Securities
certainly think that there are many scrupulous firms out
there that intend on making big companies through the
public markets. Yorkton
is a creative and aggressive firm with a track record.
I wasn't singling them out as much as I was
trying to point out the differences in approach and
mentality to financing.
Interestingly, nobody responded from Yorkton.
They must not be among my thousands of readers.
Or they know I am right on that particular