Something
Ventured:
November 3rd, 2000
By Brent
Holliday
"Mellow
is the man,
Who knows what he's been missing.
Many many men,
Can't see the open road. "–
Led Zeppelin, Over
The Hills And Far Away
As
my guest columnist pointed out last time, I was indeed
away. Far away. With ample time for reflection and
relaxation in the Greek Islands (full of history and
beauty), one might think that I would have new theories
or sparks of creative thought to expand on here in my
forum. Here's what I came up with:
Only
in Mediterranean countries will you actually have the
chance to see knuckle hairs in your food.
I dunno, it just kind of hit me as I was pondering the
state of the world over dinner.
Regardless
of whether I really had synthesized anything halfway
inspiring to write about, it all has to be put off until
we get these damn elections out of the way. I can't
avoid this topic. November 2000 will be a unique month
in history when both Canada and the US choose new
governments. As we all contemplate the future of the
technology industry, locally or globally, these
elections are important.
Does
next Tuesday's election of the US President and the
Congress affect our industry in BC? Yes. Here's how. The
choice will affect the results here in Canada. The
extent to which the Liberals will get a majority or how
close the Alliance comes to forcing a minority
government will be affected by what we see and hear in
the US election. In my humble opinion, I don't think
George W. Bush winning next week means that the
similarly right wing Alliance is stronger. Au contraire.
When America wakes up the next morning and realizes what
it means to have a further right Republican president,
Canadians will chill to the Alliance. And vice versa.
Just a hunch.
Big
issues in technology will be affected by the election
and the subsequent policy shifts including Internet
taxes, privacy legislation, the Department Of Justice
and its attacks on Microsoft, the FTC and its evaluation
of mega deals like AOL and Time Warner and many other
areas where governments intervene. Ramifications of
these shifts in policy will affect the world's
technology industry.
Personally,
W (pronounced dubble-ya) as President scares me. Not
because of his ideals, his party or his policies. I just
don't think the man will be a good leader of the world's
largest and most powerful nation. America's dominance of
the world means that it must be led by someone that can
command respect internationally. And I think there will
far too much giggling going on when W tries to broker
peace deals.
Back
in Canada, the election has become all about technology.
After seven years of not knowing the meaning of or
successfully mentioning the word "Internet",
Mr. Chretien has fallen in love with it. Paul Wells of
the National Post wrote a very funny piece after the Red
Book policy release ridiculing the announcement of the
policy platform. While I think it invites cynicism for
the sitting government to have found technology religion
just in time for an election, I believe that there is
more than just political rhetoric being floated in the
Red Book III. The focus on innovation, increases to
R&D and exultation of all things Internet is very
positive. It means that the new government will be built
on the foundation of a "Smarter Canada".
Excellent.
But
there is a problem. In fact there are two. The first
problem with the Liberals is that they think that
government should take an active role in helping
"Canadians in the New Economy."
I
have to side on the approach of the Alliance when it
comes to making Canada a leader in information
technology and other "new economy" industries.
Get government out of the way. As much as possible, the
industry will grow by having policies that encourage
businesses to be created and sustained without a
government employee involved directly. There are
definitely active roles in education and access to
technology that the Liberals properly tout. They can
overhaul the CRTC to make the market more competitive
for communications. They can be proactive on on-line
privacy and copyright laws. But I get worried about some
new grand HRDC handout plan for "stimulating"
new economy jobs. Can you imagine? Every business with a
webmaster gets $100,000 in handouts, even if you are a
bakery. Don't laugh. Jane Stewart might get re-elected.
The
second problem is that the apparent discovery of the
Internet seems out of date by a year or two. They are
guaranteeing Internet access to everyone, but who wants
to bet that they claim a 28.8 K modem connection shared
by 250 students counts as a connected school. They want
to create a portal for Canadians, called access.ca that,
get this, "will take Canadian to Canadian sites
first" and "will jump start demand for
Canadians seeking on-line shopping". So now the
government wants to be your home page and take business
out of the hands of the private sector companies that do
this already. Regardless of the interference of the
access.ca site, it is just plain dumb. Who gave them
that advice? Didn't anyone tell them that it won't work.
A portal for all Canadians. That's so 1997. Next they'll
be telling us that they will provide all sorts of new
Canadian content to help us keep our culture relevant in
the face of the American monster. Oops. They did say
that in Red Book III, page 9, under "Putting More
Canada in Canada"
I
don't want to affect your vote, but this is pretty much
a done deal. The Liberals will be back. They have taken
some pretty major steps in taxation (personal, capital
gains and corporate) that we have screamed for and
finally got. They are all for a smart, connected,
innovative Canada that creates tons of new ventures.
Hey, I'll buy that, as long as they know that they have
to make good on those promises and that type of
thinking. We will make sure that they stop the stupid
initiatives like access.ca and stick to the smart ones.
We will lobby for policies that don't require direct
government intervention.
Like
I said earlier, the degree to which the Liberals hold
power may be affected by the US. In the end, we have
Papa Jean back for term three and a technology industry
that is top of mind. And that's a hell of a lot more
support than any other government at any time in
Canadian history. Now we have to use this opportunity to
grow fast.
Random
Thoughts -
-
The BC ESTI (Early Stage Technology Index) is much lower
now at 5.5 out of 10. We are seeing a hesitation among
early stage angel investors as some prepare to take
write downs and losses for the year. Those that have
made money are hesitant to invest as they are new to the
investing business and are not taking advantage of that
new $500,000 capital gains tax deferral. So the early
stage is being hit. For Vancouver entrepreneurs, there
was a breathless time in late 1999 and much of 2000
where they were calling the shots on investment and
valuation. Sorry to say that the tightening of the
market has made that harder to do. But, the good news is
that new companies are springing up with revenue
generating business models. Flat and significantly hit
public stocks have engineers and managers thinking about
foregoing the options that are underwater and trying
something new. We are better off here than in Seattle or
the Valley where the wild success has been followed by
wild failures.
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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