The Canadian IT Business Syndrome

Canada’s pace in the technology industry is too slow. Commercializing innovation and business are a tough race. Only the swift and the lucky survive. I’m starting to believe the heart of the problem lies in our attitude. We plod along and make excuses as others pass us.

- Will Pate, Toronto Entrepreneur and Host of CommandN

The preceding was a quote from the StartupNorth blog. In this post, Will discusses Canada’s shortcomings in the IT sector. I believe that Canada’s shortcomings can be tied back to something I like to call “Canada’s Big Brother Syndrome”. I use the term “Big Brother” in the most un-Orwellian sense. Big Brother is a reference to Canada’s actual big brother, the United States. Thus I shall use “big brother” as an improper noun.

Having lived in both countries for a good number of years, I can definitely tell you that, like it or not, Canadians are constantly trying to prove themselves to their big brother. It’s a constant “look what I can do” of robotic arms, Blackberry’s, and video cards (ATI, is now owned by AMD). Like any good little brother, Canada wants to play road hockey with his older brothers. But everybody knows that Canada, in it’s current state, can not keep up with the big boys. It is really cute to watch Canada dress up in it’s big brother’s old clothes and score a couple of sympathy goals, but at the end of the day, Canada is not serious competition. I think this can change, and I am trying my darnedest to make it change.

Canada’s IT sector is in a perpetual state of dress up. We dress up in suits, write fifty page business plans, and do SWOT analysis until the cows come home. But at the end of the day, it gets us nowhere. IT is not a traditional business, and it shouldn’t be treated as one. The US discovered this during the personal computer revolution of the 1970’s, but Canada still acts like all this flashy business stuff will take us to the top. It won’t, and in fact, it will actually drag us down. This industry, especially the consumer end of it, is all about substance and taste, and Canada has neither. Show me one really great consumer oriented IT company in Canada. I can’t seem to find one. We have RIM, but everyone agrees that RIM does enterprise level products. The Blackberry Perl is a modest shot in the dark to get consumers hooked on the crack, but it is getting devoured by iPhone and other consumer oriented devices. RIM can compete because it works in an industry that is void of taste, and more often than not, substance.

The Canadian venture capital industry is a prime example of what holds us back. Lets contrast a successful Canadian VC firm, Brightspark, versus a successful VC firm from the USA, Y Combinator. Brightspark is based in Toronto (which is why I should only say nice things about them, but hey, I have a knack for pissing off people I shouldn’t), while Y Combinator is based in the Bay Area (they run their summer funding rounds in Cambridge). Brightspark’s website looks like it was freshly pulled from the Internet Time Machine, and vacuum sealed from the precious 2001 dotcom burst. It is full of flashy graphics, pages upon pages of text with sub-navigation, and other tasteless wonders. While Y Combinator has a beautiful minimalist theme and tasteful orange Tic-Tac/Web 2.0 compliments that would make Michael Cera leap for joy (watch Juno to get the reference). Venture Capital is a relatively simple concept, why should your site be so complicated?

Now I want to turn your attention to the first paragraph of text from each firm’s about us webpage. First up is Brightspark (god, that name just yells FLASHY!):

Brightspark has established itself as Canada's leading early-stage software venture fund. Brightspark works closely with entrepreneurs to develop and build market-leading software companies. Our innovative investment approach allows us to capitalize on our many years of entrepreneurial, investment and operational experience, in order to actively help early-stage companies through their development and growth phase. Our investments in startups range from the "product concept" stage where we work with domain experts looking to commercialize an idea or technology, to working with experienced entrepreneurs looking to scale their existing business.

Now we have Y Combinator’s:

Y Combinator does seed funding for startups. Seed funding is the earliest stage of venture funding. It pays your expenses while you're getting started.

Anyone else get the sense that Brightspark is compensating for something? Well I sure do, lets take a look at each firm’s portfolio.

For fairness, I am going to look at the first three companies mentioned on each firm’s site. On Brightspark’s side we have HYPER SUPER DUPER FANTASTIC NAMES such as: Borderfree, Infotriever, and Think Dynamics (unsurprisingly acquired by another tasteless company that likes to call itself Big Blue). On Y Combinator’s side we have: Reddit, Loopt, and ClickFacts. Yes, their names are a bit too Web 2.0 for my taste, but at least they aren’t as lame as Think Dynamics. It’s also blatantly obvious that Brightspark funds companies that can compete in the tasteless enterprise world, while Y Combinator makes companies that are targeted towards consumers that might actually be attracted to something that has some thought out design and style.

Finally, lets look at how you apply for funding from each firm. Brightspark wants you to email them all of your documentation. I’m assuming this is your business plan and whatever else you can write that includes the words “innovative”, “market oriented”, and “leveraged services”. Y Combinator says you shouldn’t have a business plan, and if you submit a business plan they won’t even look at it. They want you to fill out an application, and that’s it. Y Combinator also lays everything out on the table before you even apply such as: how much cash you will probably get for how much of your company, where you will need to move, and how the interview process works. They even tell you how to impress them. Why should seeking VC money be a mystery?

So, what can Canadians do? First, we need to drop the silly “look at me” attitude. Stop putting maple leafs on every little thing you do. It just makes our society look like more of a joke because we have to constantly remind ourselves that we are in Canada. We need to stop this corporate culture of mundanity and professionalism. Professionalism gets in the way of innovation. We should be focused on making great products, and not on suits, cluttered logos, and PR managed Mission Statements. Most of all, we need to take risks and be crazy. I’ve said this before, and I am saying it again, great rewards only come to those that take great risks. Drop the executive attitude and focus on your products and services. You will get attention when you stop saying the word innovation, and start actually innovating.