Something
Ventured:
October 13th, 2000
By Brent
Holliday
"What
on earth you tryin' to do
It's up to you, yeah you...
And we all shine on "–
John Lennon,
Instant Karma
It's
up to us now.
Of
all of the words Justin Trudeau said at his father's
funeral, that one phrase stuck with me. On one hand, it
is so absolutely arrogant that I wanted to throw the
famous finger back at our deceased PM. Oh, it wasn't up
to us before? So what you are saying is that before PET
died, we were just a bunch of sheep being herded by the
nearly divine shepherd. Now the big, bad world is out
there and we are without our fearless leader. So rally
around boys and girls, we have to suck it up and try to
make our way. Puhlease.
On
the other hand, in keeping with the interpretation of
most of Canada, it is a phrase that really isn't
arrogant as much as it signals a major turning point in
the spirit and purpose of our country. What you should
take home from this speech, this funeral, this national
mourning is that what PET really represented was a sense
of pride and purpose for the country. He sparked debate.
He was decisive. And as such, he was divisive. In the
end, the incredible 5 days of mourning caused us all to
reflect on what it means to be a Canadian and what it
means to think of the individual's rights as a platform
for a just society.
I'll
get to the technology angle in a minute. This is
important stuff.
I
actually think the man should be a pariah in some
respects. He was not a smart economist. He really did
not have his hands on the wheel of the economy. He
simply let go of the wheel and let John Turner, his
Finance Minister, step on the gas. The result of his
bumbling was a mess that will never be repeated by any
leader, even Glen Clark. It would take a thousand fast
ferries to create the mountain of debt that he created.
Fun
PET factoids:
- Our dollar was worth more than the US dollar in
the mid-70's, after the energy crisis started and a
few years after the currency traded freely. As an
example of what happened to our economy with PET
doing crazy things like price controls and National
Energy Programs, we have dropped to 66 cents
relative to the Americans. This is where we will be
stuck for years because of our structural
disadvantages brought on by years of bad
interventionist government spending and the
resulting debt. We need a cheap currency to get our
exports out there.
- The debt started by PET and piled on by Brian
"The Chin" has left an entire generation
of people under 35 with no real clue as to why their
parents were crying last week. We don't remember
Trudeaumania. We sub 35s have been crying since we
entered the workforce because half our paycheque
disappears so that nearly half of that money can pay
the interest on the mountain of debt. Sure, the US
created tons of debt too. But they fought a Cold War
with massive defense budgets. They still managed to
kick the Japanese and German economic butts while
buried under their debt through greater innovation
and worker productivity. Canada, until very
recently, stagnated. Result: the sub 35s in the US
own houses and pay much less tax. We are still
trying to pay our student loans. Hello brain drain.
- One of PET's favourite tricks was big national
crown corporations that competed in the private
sector. This was worthy of the BC NDP for stupidity.
Air Canada, Petro-Canada and VIA Rail were all
government owned, state run operations competing
head to head in the market with entrepreneurs.
Lovely. If PET were in charge today, we'd have
Canadian Networks, a new optical networking company
to compete with Nortel, just to keep them honest and
playing fair.
I'm
only pointing out his tendency to make very, very bad
decisions as to what the government should do in an
increasingly competitive, global economy. He really
sucked at that part of the job. But, despite my growing
anger at all of this and how most retrospectives seemed
to gloss over these facts, I found myself choked up with
a tear in my eye when the nation said good-bye. As the
red receded from my vision and the vein in my temple
stopped throbbing, I came to another realization. Over
the last few years, we have turned a big corner and we
are coming on strong. This national gathering of people
showed strength and perseverance. It showed that we have
weathered a storm and we did it together. With the death
of PET, we were looking back at another time in our
history when Canada first had a sense of self. The
nostalgia for the over 35 crowd was really a longing for
that feeling in the late 60's. At the time, we had a new
flag, a new anthem, Expo 67 and a fantastic, cool, smart
PM that helped put us on the map. Things were very, very
good. In an incredible sense of timing (you gotta hand
it to him, if he had anything, it was a sense of
timing), PET has re-energized a sad sack nation, causing
us to all look around and take stock. What we see is
actually pretty good. And we should feel good again.
Where
are we now? We have done far more with far less in the
past few years. We have turned an economy up to eleven
on a scale of ten and we are now being recognized as
such on the world stage. Have you been listening to the
politicians in Ottawa in the past two months? Who
flipped the "get it" switch? They are all
talking about the right, positive steps to accelerate
technology development here in Canada. Paul Martin will
make it sound like he always got this new economy thing
when he launches the mini-budget next week. Capital
gains taxes for only 50% of you gain. Hey, that's pretty
good. Another way to look at it is that you are paying
roughly 18-20% in taxes on all of your gain. That's very
good. Now how would you rather be paid: salary taxed at
45-50% or exercisable options or dividends taxed at
18-20%. In a crappy stock market, you want a blend to be
sure, but the incentives are now aligned better for tech
workers, especially relative to the US. Heck, even
Beaker (I mean, John Manley) is out looking to change
our international perception to help Canada promote
itself better. Who was it that said that should be the
first thing we do to help the tech industry? Who was it
that kept screaming about better promotion using proper
market research and a focused blitz on key American
markets so that we rank ahead of Finland as a sexy tech
market? What was his name? It's on the tip of my
tongue...
What
is PET's legacy? A sense of pride. A sense of who we
are. A common goal is what we needed. Climbing out of
the hole that PET dug us economically is part of that
common goal. The other part is a fierce determination to
make it in a capitalistic world while holding on to our
principles of rights for the individual (PET's preferred
legacy). This mix is what makes us Canadian. We can live
and work among sixty or seventy ethnic groups. We can
make education and health care a fundamental right. We
can be fair, honest and hard-working and yes, polite.
And we can still kick ass internationally in business,
sports or the arts. This is the path we are on. To be
fair PET started us down this road for better and for
worse.
We still have lots of work to do. That's why it is up to
us now.
Random
Thoughts -
-
Next Column: A Special Guest - I am unavailable
next time around, so I have arranged for a guest
columnist to supply you with wit and wisdom. Acerbic is
one adjective. Provocative is another. He will be
nothing if not entertaining. And he gets to hide behind
my picture, so you won't pick him out in a police
lineup. Paul Kedrosky writes for the National Post, Wall
Street Journal, Industry Standard and CNNFn just to name
a few. Enjoy.
-
Market Meltdown II - Holy head rush, Batman! I'm
getting a little woozy with the churn and burn in the
markets these days. I think the sentiment right now is
if you have any money left, it is time to buy. Intel has
a P/E ratio of 22 today. That's what it had in 1995.
This company still makes gobs of money and will grow in
new markets. And it compares very favourably with other
big tech company P/E ratios, which are still 2 or 3
times higher. Can it and Microsoft and Lucent and the
rest possibly go lower? What does this market downturn
mean locally? Well, PMC-Sierra lost some serious steam.
And everyone else got whacked too. Let me ask you this?
Do you strike out on your own and start something new
when the stock options aren't worth as much anymore or
are you afraid of the uncertainty enough that the salary
and job security at the bigger company will keep you
there longer. Do you believe that new and exciting
companies can be made in the market today? Look around.
Are corporations still buying things? Are they still
increasing capacity? Has demand dropped or is supply
constrained and you can't build the damn things fast
enough? I believe that the market downturn is not
related to the health of the technology economy as much
as it is reactionary to other forces, like oil prices
etc. It's still a good time to be looking for customers.
-
Shhhhhh. Don't Tell Them - Psssst. I'll let you
in on a little secret. Fuel cells using hydrogen are not
that much more efficient than IC engines that use
gasoline. They just pollute a whole lot less and they
can be convenient sources of off-grid electricity. When
oil prices go up, the value of the alternative energy
sources does not skyrocket like the companies that make
fuel cells have recently, Ballard of course being the
biggest. You still need energy to make the hydrogen. If
there was no oil, then alternative ways to get around
would have a lot of value. But if there was no oil
(trust me, there is lots of oil still), it would be very
expensive to create pure hydrogen, given that one of the
main sources of getting the energy to electrolyse water
would be gone. They just pollute less and that's why we
want them. As long as most people don't understand this,
you can play the stock by watching the price of oil.
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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