As someone who has worked in the Canadian tech scene for 25 years, and rode two startups all the way to exit (i.e. acquisition by US companies), in my opinion the problem has nothing to do with exit mindset, good angels, bad angels or SRED.
It is all about talent retention. Up until early 2000, Canadian tech salaries at least somewhat kept pace with US salaries, albeit 20-30% lower.
After the dot com crash, however, for some god-forsaken reason, the surviving tech companies decided that keeping salaries low was the new path to profitability. Every year the HR departments in Vancouver and Toronto do a hush-hush survey among each other and fix their salaries to the exact same level - maybe 2% but usually closer to 1% higher than the previous year.
The result of 20 years of this is that Canadian tech salaries have fallen ridiculously behind those of US companies, resulting in a massive brain drain to the south.
Now that Amazon, Microsoft and Google are setting up shop right here in Canada, the talent drain away from Canadian companies is only accelerating.
I have no idea what it will take to make companies realize that long term success requires retention of top talent and that that in turn requires paying competitive salaries.
I made a similar move in BC and went from ~60k CAD a year to ~170k CAD. It's tougher work for the American start up but the pay differential is too big to not take advantage of. I feel like I'm throwing years of my life away to work if I work for a Canadian company.
The work is remote, I still live in the same place, but I've increased my income by 3x, I don't see how I could justify staying with a Canadian company.
Semi-flippant response forthcoming, but if you factor in cost of living differences in their respective local currencies (e.g. moving to NYC or SF pre-COVID), healthcare (pay more in the US), comparable taxes (NYC/SF) to Toronto/Vancouver, then you likely might come out roughly the same or slightly ahead in absolute amounts saved depending on the salary+bonus bumps.
The kicker though is that presumably many Canadians harbour some type of fantasy in their heads of moving back home after N years, at which point the conversion of USD back to CAD can tip the balance. Historically the USD has been worth more than CAD, except for two times in 1974 and 2007.
It gets worse because Canadians that come down for "just a few years" probably end up staying longer since the original logic that drew us down in the first place is likely still valid. Throw on top the overhead and friction of uprooting your settled life (friends and maybe kids) and then it becomes even tougher to go back.
Next thing you know, you're applying for a greencard and the rest is history.
Quite frankly the "all your money will go to healthcare" meme doesn't really apply to the kind of person who's leaving Canada for a much high-paying US tech job. A person like that will in all likelihood be working for an employer that offers access to equal or _better_ health insurance than they would have access to in Canada. If it's a big tech company the employer will pay virtually all of the premiums beyond some token amount, and out-of-pocket maximums are dramatically lower than the incremental pay raise. And even if the employer didn't pay that, the premiums would still be dwarfed by the pay raise.
Rent is certainly higher in the Bay Area, though less higher now vs. a year ago, and even so, at the income levels we're talking here (especially if going to FAANG or a unicorn), there is very little chance you'll end up with less disposable income after rent and health care.
If you want to buy a property, you have your work cut out for you since real estate is insanely expensive, though. It's not too hard if you're a dual-income high earner couple but very hard otherwise and will take a number of years of savings. This is worse than the Vancouver/Toronto housing markets, but it's less worse than you think given how crazy they are now.
>Now that Amazon, Microsoft and Google are setting up shop right here in Canada, the talent drain away from Canadian companies is only accelerating.
Maybe. Canada is bringing 400,000+ new immigrants per year until 2023 for permanent residence status, most of which are skilled workers of some kind. Probably a safe bet between that those three are setting up shop here in part because they can bring in international talent into North America more easily then with the US cracking down on it's immigration policies.
No idea on what effect it will have on salaries here though.
> Canada is bringing 400,000+ new immigrants per year until 2023 for permanent residence status
Canada is adding > 1% of its population in immigrants every year? I am curious if that is sustainable politically and economically. I suspect this will only drive down tech wages even further and put pressure on local housing markets, utilities, healthcare and social programs.
There's this movement in Canadian political circles that calls for us to have a population of ~100 million by 2100.[1]
Their argument is essentially that Canada has a lot of space (especially with climate change and all [2]), and by bringing in a lot of people from other countries, that will make Canada a more competitive country on the world stage.
In my personal opinion, I don't have anything against the movement, its just that all of these people are coming to either Toronto or Vancouver, and so those cities are becoming more and more competitive, meanwhile more conservative regions like Alberta and Quebec have a labour shortage.
Also, this might have a weird effect on French (I'm a french speaker so I might be a bit biased), but a lot of the people that are coming in right now (mainly from Eastern Europe, India, & China) only speak English, and not French. So we're seeing French go the same way as Scots or Gaelic did in the UK -- slowly dying.
Overall though, as long as we ensure that the population is distributed (I guess high housing prices are a good thing), and that people learn French, the 100 million thing isn't too bad.
[2] - https://upload.wikimedia.org/wikipedia/commons/thumb/5/5a/Ko...
- Note right now, Only Toronto - Windsor has that light blue climate (same weather as New England), and in 2100 most of Canada will, while southern Ontario and BC will have the same weather as Washington or Normandy.
We're certainly not building fast enough if that's the plan in earnest. Exceeding a certain rate of immigration also suppresses wages, according to this - https://www150.statcan.gc.ca/n1/pub/89-001-x/89-001-x2007001... . That is a ticking time bomb for public discontent as we'll simultaneously be dealing with increasing automation.
In theory, it could be done well, but it won't. All these other factors will be ignored which is just going to lead to a long wave of Conservative government in the future.
I don't think the 100 million figure is exact, its more of ambitious target that we'll try to get to, but ultimately won't affect much if we're ~20 million short or something.
or sure wages are lower because of it. But I don't think there'll be much discontent just because immigration is not as heated an issue in the US, and we have more room to grow (especially on the infrastructure side).
However, we do have to consider that immigration does allow for businesses to grow faster, because our main bottleneck -- population, becomes less of a concern. Automation is a big concern in this regard, but we can just kick that can down the road.
Doesn't Canada have special immigration programs for specific provinces that are better/offer faster path to citizenship/etc. to try to solve this problem? I am pretty sure I remember Quebec had one that was better than BC (I used to be an immigrant in BC).
You're probably thinking of the Quebec Immigrant Investor Program (https://www.immigration.ca/quebec-immigrant-investor-program). In theory applicants should "intend to settle in the province of Quebec", in practice most of them end up in Vancouver or Toronto.
Canada also adds 1% to its population in babies, who can't work at all, and are fully dependent on others for housing, healthcare, and social programs.
The number is probably lower but still the bar is high for qualified immigrants (then there's the familiar reunion/refugees/etc)
Too bad Canada treats most of them like they came in a dinghy from some weird 3rd world country and leaves some of them in survival jobs (especially in a certain big eastern province)
Canada has been at it for quite a while, otherwise the economy would be stagnating. And it has the advantage that it can chose its immigrants based on the market's needs. Compared to other countries, people coming to canada are also highly skilled:
> Over half of recent immigrants have a bachelor's degree or higher [0]
> Recent immigrants were even more likely to have a master's or doctorate degree,
with 16.7% of them holding these graduate degrees in 2016. [0]
Its sustainable politically if you call anyone who opposes the scheme racist - only a single country in the top 10 migrant contributors to Canada is of European heritage:
This is already causing long-term social problems, like sex-selective abortion which is prevalent in Indian communities in Canada even after multiple generations:
If the USA is restricting immigration, and Canada is not, this is just another driver for the top talent to flee Canada to the USA.
Canada might succeed in becoming a dumping-ground of migrants, a country of cheap back-office labour and expensive housing, but that sounds like a terrible place to live or develop any cutting-edge technology.
> Every year the HR departments in Vancouver and Toronto do a hush-hush survey among each other and fix their salaries to the exact same level - maybe 2% but usually closer to 1% higher than the previous year.
Collusion like that would almost certainly be illegal - do you have a source for that?
There is an entire industry around the collection of and aggregation of salary, benefits, and perk information. Every year your HR department pays a firm, fills out these surveys, and a few months later gets a report on salary ranges and perks for their industry.
If you think about it then it makes perfect sense, how else do businesses know they're offering competitive salaries, benefits, and perks?
Source: I consulted for a company that does these surveys and aggregates the results.
Interestingly, I haven’t ever seen actual candidate data used to determine compensation. Ie companies almost never use a candidate demanding more to actually change anything. It’s all based on these “professional comp surveyors” as the parent has described.
Unrelated: I'm sure we have our own fantasies of potential employers (or past-employers) begging us to work for them with them increasing their offers or offering other benefits - but I'm curious if that's ever actually happened to anyone.
You should absolutely negotiate salary. Saving a few ten thousands a year on salary for a department doesn't really mean that much to your manager or to the company, compared to filling that slot in the org chart.
It is but it happens all the time. Google, Facebook, Amazon, and the rest all have been caught doing it on a large scale. Most of them even agreed not to hire from each others employee pool.
I agree 100%. It’s all about talent. The existence of the TN visa ensures this will continue to be a problem until founders/investors learn this lesson. Any Canadian university graduate can go work as a “computer system analyst” (but not a programmer wink wink) in the US at anytime. That means we are constantly competing with US startups for talent, any salary advantage you think you have is because your best team members haven’t realized that yet.
But doesn't what you're describing reinforce the author's point? Tech firms in Canada aren't paying high enough wages to keep talent in their pool in order satisfy profit milestones rather than pursuing growth. That's the exact difference in mindset the author points out.
I can confirm that.. In 2010 I was looking for jobs in Vancouver after working for a US company there for the US-level salary, and the salaries in local companies were sorta ridiculous. I moved to the USA.
Btw, it was also really difficult to find a primary care doctor in Vancouver at the time, when I finally found one taking patients after a while, he (an older guy who I assume just like living where he grew up) told me that the reason is that all the doctors move to the USA if they can.
The hush hush survey is something all tech companies do in the US as well. They report their salary information to a third party company who then shares industry data back with all participants. I am not sure how this is not an illegal price signaling scheme. I heard this from a person who worked in compensation at a FAANG company.
Thanks for sharing this. What is the solution though?
"Paying salaries competitively" can also be rephrased as: "Raise as much money as you can and keep salaries on an upward trajectory". Optimising for profit is normally a good, healthy thing, but given the cheapness of capital (printing etc) sloshing about, how does one go about and build a profitable and steady company with good talent without getting yanked into this cycle?
All companies want talent, and capital has been freely available for the past 15 years in amounts previously unimaginable. It doesn't seem like there is any way to avoid this treadmill.
*Note, I am perfectly on board with paying competitive salaries, my point is that given the heavy market distortion because of all the VC money, that "competitive salary" isn't actually an accurate descriptor.
> how does one go about and build a profitable and steady company with good talent without getting yanked into this cycle?
One approach might be to build a business by cleverly leveraging the value of competitively paid software engineers. You can accomplish quite a lot through focused effort. You shouldn't need fifty ICs to develop a profitable product.
Paying professionals doesn't have to come from absurdly oversized VC rounds. Sometimes it comes from steady, profitable, sustainable growth.
> *Note, I am perfectly on board with paying competitive salaries, my point is that given the heavy market distortion because of all the VC money, that "competitive salary" isn't actually an accurate descriptor.
You're right. It isn't. We should ignore the VC funded companies, and talk instead about the big players: FAANGs. That is the new definition of a competitive salary. I suspect you'll find it dwarfs that of many VC-fuelled startups.
You can use generous equity. By far this is the most powerful tool: you may not be a VC funded unicorn so you may have to grant more.
You can be creative in the kind of perks you offer (4 hour workweek? More PTO than competitors etc). Note that there is some evidence to show that shorter work week may even result in better productivity.
It's not Canadian companies that are 'keeping salaries' low, it's Valley Companies (and to some extent, American companies) that are paying a lot.
Also - the USD varies at 1 to 1.5 CDN that has tremendous comparable effects.
The 'reason' is that a vastly disproportionate amount of the surpluses go to the winners.
'2cnd place is for chumps' - at least in the context of 'winner takes all' games.
Everywhere outside of the Valley is 'second place' and it's going to be hard to compete otherwise.
Another way of looking at it:
The market does not want Canada to be 1st place.
Canada is literally designing itself in every way to be a 'suburb' (i.e. as 'second place' country) - no specific identity (i.e. Post-Nation-Nation), high basic standard of living, high levels of material consumption, but no innovation, leadership or otherwise. The 'town square' is a shopping mall full of products and services designed elsewhere.
In crude market terms it's 'more efficient' to close the local coffee shop, put up a Starbucks and have workers take marching orders from Seattle where they can concentrate Product Innovation and R&D.
Canada used to have a few automakers - but with 'consolidation' they were all bought by US firms - which in raw market terms, makes some sense.
The same would happen to all protected industries: Bell/Telus, CTV/Global, CIBC/BMO - all of it them be snapped up instantly if they were not protected.
It doesn't matter if AT&T/Verizon are 'well managed' or 'poorly managed' relative to Bell/Telus - the fact is they are 15x bigger and that's that. 'Headquarters' will be in Virginia, not Toronto. And that's where the surpluses will go.
Canada brings in tons of 'educated workers' and then sends the best and brightest of them right away to the US (I've seen this happen time and time again). Who can blame anyone with 'no ties' to Canada moving on for 2x salary? So Canada gets 'good workers' ... and the US gets 'the talent'.
An Ontario MP, trying to attract Cisco to Toronto indicated that Canadians work for less salary than Americans and that he would do everything within his power to keep it that way.
So there you have literally the leadership trying to do what they can to keep salaries low, to keep the system firmly in '2cnd place', by design.
This is the Canadian National Strategy.
If you want to do something exceptional, go to specific places in the US where systems are designed for that.
The theory being that it's better than being in a left out US state like Arkansas, West Virginia etc..
In some ways, it's commendable, because Canada relative to the world has a really high standard of living, stable 'everything', good basic rights etc.. But of course, there is not a lot meaningful to do. That's the deal.
'Gainfully Employed' people are generally better off in the US. The healthcare there is great - when you are covered.
The risk comes for those unfortunate/unforeseen situations, and of course, when one doesn't have coverage.
Overall - it's one of those factors that goes into the equation - but for a young, single talented person, usually it's not a priority - or - it factors favourably.
It's a good point because for the 'elite economy' - US healthcare is just fine. Good in fact.
For the 'everyone economy' it's arguable that Canadian style (or something like that is better).
The H/C equation kind of reinforces what I am saying: exceptionalism vs. the commons + stability.
When the new employer is likely footing 90%+ of the bill (pretty standard in skilled professional jobs) then the answer is a clear yes. 100k CAD = ~$78k. Somebody making 100k CAD is likely commanding 110-120k USD at a minimum in the US. CAD equivalent is 140-153k CAD. Knock off $2k for healthcare out of pocket. Don’t forget the significantly lower tax burden. The worker cones out significantly ahead.
Very dependent on where you work. High tech salaries are concentrated in California, where the tax burden at your numbers will be higher than most provinces. I remember doing a comparison of BC to California, and the cross over point was about $250k USD (where taxes become more favorable in California).
I’m referring to Middle America salaries in most mid sized cities. If those same people went to NYC or SF it would be another story. Likely 2x at least.
Yes. Absolutely. It so much more than makes up for lost government benefits.
Health insurance working for a decent US tech company generally requires some out of pocket, but the amounts are really quite modest. Premiums are typically mostly paid by the employer and not considered part of your compensation. If you're single you'll probably pay nothing for insurance premiums and potentially up to a few thousand out of pocket if you're a heavy user of health care, and maybe $5k in the absolute worst case (and the out of pocket is often tax free). If you've got a family, you might pay a couple thousand per year in premiums and $10k in out of pocket maximum. These numbers are honestly chump change for people who are earning $50k-250k more, with better career prospects and more high paying employers to choose from if a particular job doesn't work out.
Tax in BC is about the same as California. And you don't have to pay for people's healthcare, so it might be cheaper from a 'total cost' perspective.
Sales tax is a few % points more, property tax is actually less in general for new buyers unless you've owned a place for +15 years in CA.
You don't get a mortgage interest tax deduction, but you have an UNLIMITED cap gains exemption on the house you live in that you sell in Canada, while the USA has a limit.
The tax system is overall more straightforward and not a pile of fade outs and patches like the US tax system is. Compare Canadian RRSPs & TFSAs to the entire 401k, IRA, Roth IRA, mega backdoor roth 401k, etc mess that they have in the US. There isn't a penalty to withdrawing from your RRSP so there really isn't much of a loan concept for them either. I don't think something like AMT exists in Canada.
Cost of goods in Canada are overall more expensive than the USA.
There's just one line in the article about low wages, but IMO that's a massive problem with the Canadian tech scene today. You cannot have a thriving startup ecosystem when your best talent leaves for the US right after graduating from college. I love Vancouver as a city and would move there in an instant if it didn't mean taking a 50%+ pay cut for the exact same role (with comparable costs of living to the Bay Area).
I know many will disagree, but I think the commentary on SR&ED killing momentum and motivation in startups is bang on, even though it's a nearly impossible thing to measure or quantify. I'm sure many fellow Canadians reading this comment can relate to the absolute draining feeling when you see that message "remember to update your SR&ED timesheets by the end of the week!".
Time tracking isn't inherently bad, or counterproductive, but I haven't once come across a startup that does their SR&ED reporting with an ounce of honesty. Timesheets are essentially fabricated based on either what the developers think their managers expect to see, or based on what the managers tell them to fill in, and it's entirely understandable - programming is not a job where tracking hours makes sense.
Rather than timesheets, it would make _so_ much more sense if instead, high level but detailed quarterly reports were made outlining what was completed, and if there needs to be more detail, an audit can be done. Timesheets kill productivity, motivation, and curiosity to try new things and accomplish actual research and development - what the SR&ED program is intended for. At the end of the day, it's the implementation of the program and the industry of consultants surrounding it that is flawed.
I can't tell if the worst part of SR&ED is management pulling you away to document your work for tax credits or management hoping you'll lie about your work for tax credits.
> That’s part of why I think that if any city in Canada has the potential to actually develop a Bay Area grade startup scene (smaller, sure, but actually the real thing), it’s clearly Montreal
I would have to agree with the conclusion of this article, Montreal has:
(i) 5 universities very close to each other(i.e. 10 to 20 minutes walk from each other) + Great public transport
(ii) Lots of government subsidies for startups, on municipal, provincial and federal levels
(iii) Small tech companies and startups can afford rent downtown (or in the mile-end), where other tech companies and universities are located. (I also have a 1200sf apt downtown for 1/6th the price of SF)
(iiii) It's an amazing market where to fail quickly. Quebec is some sort of small scale self-sufficient society where you can experiment before scaling. And outsiders tend not to look at failures in the Quebec startup scene
(iiiii) It's surprisingly easy to get funding from the massive government investment funds(IQ, CDPQ, BDC), and they have been focusing more on the startup scene lately.
(iiiiii) The french Canadian "culture" tends to be bolder and more dynamic than what you would expect in the rest of Canada. Can't hurt the ecosystem if you're expected to move fast and fail quick
(iiiiiii) Move to MTL already, we want more startups!
Those are all inputs, which are nice, but the outputs which we care about, are negligible.
Where are the exceptional companies employing a lot of people, doing 'important' or 'impactfull' things? Or the exits? Or even externalized value creation?
Edit: I will give an interesting answer to my own equation and that is Element AI. A ridiculous concept from a startup perspective, but very rational regional investment argument: round up the AI talent and give them something to do. In the end, they couldn't make money - but - they didn't lose money and they may have secured at least a foundational location for AI researchers to be employed in montreal, which is not nothing. It remains to be seen if it can be expanded, and if all those AI researchers will just end up moving to the US for more money.
It's a little bit like the 'Boston Dynamics' of Montreal - clearly something going on, but difficult to commercialize so it needs a massive company to see the strategic benefit. I feel the staff of Boston Dynamics will stay put though - they're not moving to Korea (i.e. new Hyundai owners) .
Element was a group of ex-consultants and a bunch of AI researchers with no market, no product plan.
They were going to do some 'consulting' type work, and then ostensibly use the results of that to come up with product offers.
The obvious fallibility in that is:
1) The companies they are working with will not give up their data and allow them to be used in Element Products. No way. In some cases, maybe for a fee, but in most cases it's not even viable.
2) Making viable products is really hard. You don't 'start with AI and then pick a field'. You need to understand the industry, the channels, develop relationships, develop a brand etc. and have something that's really hot.
Element eventually launched a handful of bland, generic off-the-shelf style AI products for image recognition and a few other things, each one a little bit interesting but ironically none of them worthy of really being a startup on their own.
3) Consultants and Researchers are not Startup types. Of course they can be, but not by default. Definitely some ex-Phds and ex-consultants could launch a great company, but otherwise hiring a bunch of them for big salaries and putting them in a room is not how startups form.
They work really hard, they are really smart, but they're not generally very good at finding seams and opening new markets.
4) Generally the way it's done is 'start small' and when there is 'product market fit' you scale. So Element didn't fit that model. They took on $100's of millions before any kind of product-market-fit and ran around in circles burning it.
It would have been nicer to start with a team of 10, find resonance, then start to pull in the talent.
But in some situations, raising $150M with government and institutional backers is easier than raising from traditional VC directly. Like a big government backed initiative with all the flair, PR, announcements.
The CEO of Element was literally on a public Zoom with the PM of Canada recently.
>>But in some situations, raising $150M with government and institutional backers is easier than raising from traditional VC directly. Like a big government backed initiative with all the flair, PR, announcements.
The >$150M raised, a good chunk sourced by the provincial government, is in a sense more "precious" because there's so little Canadian venture capital with low(er) risk tolerances floating around, resulting in yet further tightening of Canadian VC capital. The problem compounds itself.
The money came from Desjardins etc. because of the 'strategic' and 'nationalist' aspect of the investment.
No VC - even American one's were going to invest in that kind of boondoggle up front at those valuations.
So you're right when you say 'there isn't enough money' - at the same time, that's not the problem specifically here, and, frankly, good companies will get the money.
It was indeed a weird model, I think the tech scene here always looked at eAI like some type of outcast, leaving them alone.
But it drew attention to the AI scene, universities received massive funding in AI which is fantastic, startups grew around it, VCs started investing more in MTL(not only because of them, but it did play a role), FAANGS expanded their offices and openned AI labs downtown and in the mile-end.
I was not a fan, but the publicity they received has definetly been good for the scene.
Is there any bias against non french speaking people though? Spent a year doing my masters and that's what I came away from there with. If experiences of non-francophile immigrants in spinning startups and getting funding is good then that'll be good to know.
If you're not able to speak French, personal bias is a secondary concern. Speaking French in the workplace is legally required. Non-French-speaking immigrants will likely be able to get by in their personal lives with English in Montreal, depending on what you want to do, but if you're selling a product, the product must be available in French. Not complying with these regulations will incur fines from the OQLF.
"Speaking French in the workplace is legally required"
I don't think that's true, this is a big misconception. Unless you're working in a shop or something where you interact with clients directly you don't have to speak French. I work for a multinationale that have over 1000 employees in Montréal and everybody speaks English internally same fory previous job a small company of 40ish people
English isn't disallowed, but broadcast emails must be also in French, as well as posters, and HR materials, and so on. The OQLF was on our case about a copier that was English-only during our last inspection.
yeah I hear you and while I totally disagree with OQLF practices in the grand scheme of things I don't think it's a big deal, especially for a tech companies ... most of the posters/HR stuff is probably done by bilingual people anyways. The real shortage/competition is for engineers.
Selling something in french too isn't the problem, it's how the language of the startup needs to be in french that limits the market significantly. This law is why the center of business moved from montreal to toronto in Canada.
It is not legally required, strongly advised by the government. It would go against Section 2 of the Canadian constituion to discriminate on a language basis.
The OQLF asks for companies to use french terminology and tools where possible (the tech sector blatantly ignores it, I've always worked in english, even with french co-workers) and to offer a french translation on signs, menus and documentations in stores.
Quebec has a history of using the notwithstanding clause to push through numerous things supposedly prohibited by clause 2. You will absolutely be fined for not having employment documents available in French, or signage with French co-equal. Tech companies usually put in place a do-nothing "francisation plan" and pay any levied fines, but it's a real cost of doing business.
Not anymore, not in tech at least. Every single company is looking to hire, they don't have the luxury of cherry picking over languages.
The provincial government can be a pain in the ass sometimes, but they tend not to mess with startups or the tech sector.
My partner is running an interior design business, she is an immigrant, does not have her citizenship/PR yet, with a mediocre french and never really had problems with discrimination or legislation. All she had to do was to make sure every written signs had a french translation somewhere on them, which is common here
I love Montreal too, but being legally required to speak French drives away a lot of people who would normally come live here. Anecdotally, I know quite a few people who chose Vancouver and Edmonton over Montreal, partly because they were afraid of the language / culture surrounding the language.
Personal experience: the part you're missing is that Quebec looks down on anyone that's not from QC, maybe from the ROC, maybe from the US and maaaybe if they're from France (et oui, je suis francophone)
For each job offer I had from QC I had 3 or 4 from Toronto (which had other problems as well to be fair)
Also, Canadian startup environment is... weird? A lot of business models were castles in the air to be honest.
> 5 universities very close to each other(i.e. 10 to 20 minutes walk from each other)
Except, you know, for that minor hill between them... ;)
Shush! Don't tell them about the little hill! It's only one of them on the other side anyways, we can ignore it... here we go, MTL only has 4 universities now /s
Quebec is weird, true, but I tend to think of the Montreal Metropolitan Area as some sort of semi independant micro state
I cannot say for sure. My personal income is the same I would get in Toronto, but it's anecdotal. I know they are slightly lower on average, but when you factor in the cost of living (rent is 2x higher in TO) it is probably very similar. On the other side, I would say the quality of life is much better in MTL, as the public transportation is better, people do not live as far and are closer to the various activities, etc.
Rent in Montreal is much lower than Toronto, especially for units over 700 sqft. Toronto apartments can be affordable if you're OK with a 400-500sqft shoebox, but prices rapidly go up from there.
It's a difference of cultures. Canadian culture traditionally focuses less on making a lot of noise, standing out from the crowd, etc. Canadians are almost infamous for politeness, especially compared to Americans.
Now, couple this with the ease at which Canadian engineers can get jobs in the US and the picture emerges, bright and clear. Any Canadian with a lot of ambition may be alienated by the relaxed culture in Canada and subsequently move to the US, further reinforcing the cultural divide.
On the other hand, Canadians (and even Americans) who are disillusioned with what they may see as an excessive ambition and a relentless focus on "growth hacking" might opt to live in Canada, also reinforcing the cultural divide.
You didn’t go over the possibility that Canadians may prefer to live in Canada compared to the United States. Last time I checked there wasn’t a race war and a group of belligerents storming the capitol in Canada.
Exactly. As a Canadian, I don't have to worry about my family being harmed by racially motivated violence and discrimination. Especially since some are in demographics who disproportionally experience racially motivated violence.
Not everyone in the world idealizes the American tech sector as much as America thinks they do. Personally, I'm more drawn to the EU tech sector.
Finally, Canada's tech sector isn't worse somehow. Canadians are different, therefore our Canadian sector is going to be different too. Canadian tech companies ("startups" specifically) tend to be more driven by stability than generating the largest valuation possible. The author completely neglects the impact that culture has on the tech sector. This is a common mistake when comparing things between America and Canada.
The primary difference between Canada and the US was that Canada was small/smart/lucky enough to enact some social nets before the world became too easy to manipulate by media and the internet.
Not really. Our first attempts at universal healthcare involved general strikes from doctors and the government standing its ground. Some of the most important legislation and infrastructure in Canadian history was done under minority governments have to work with other political parties.
I would say it would it comes down to a much healthier government with more churn and not two different flavours of the same political party. I only found out this year that in certain states the ballots contain options "Vote all Democrat" or "Vote all Republican". Enshrining political parties like that into an electoral process reminds of the Soviet Union.
My implication is that the political systems in most nations are becoming more recalcitrant to acts that cause massive overhauls due to deliberate beurecracy. I would be curious if you and others think that Canada would be able to pass any new massive social program today.
So what we have now is that some countries ossified after passing lots of welfare systems while others ossified before. The ones where welfare is present end up serving a higher quality of life for its lowest ladder of folk, ensuring a better scenario for them to not radicalize much (just comparatively, look at France).
It wouldn't be too hard. Again we don't have the House / Senate split that the US does, and our parties (even the conservatives) are not too against new social programs, so the main reason why we haven't piloted a UBI or affordable housing program is because the parties (especially one in particular) only push legislation if there's already a lot of momentum behind it.
> If anything, in my book, it's more of a societal success to NOT be FAANG sized - and screw the VCs.
Agreed. I question the article measure success on wether you can attract angel or other money.
How about “no thanks, we have enough money to make this thing and we really like it, we’re happy, we make enough to keep the doors open and everyone gets a paycheck and no one suffers with or from our product”, that seems like success to me. Surely we have measurements besides how many billions of dollars a company is worth?
I mean, Canada did produce a Shopify, which while not FAANG sized is still a >$100B public tech company that for all intents and purposes is competing with one of the FAANGs (Amazon).
It's not just about size, at least not directly. FAANG companies are big in large part because they radically changed the world for the better, and most people who identify as part of the "startup scene" are hoping they can be a part of something similar.
>because they radically changed the world for the better
Did Facebook "radically changed the world for the better"?
Did Twitter?
Did Google, for that matter? Is the control it has amassed, and its imperial impact of business and ideas (and the web itself) a net positive to a good search engine and a OK email service (both of which have gotten worse over time)?
I dislike all those companies and net negative impact by all of them is undeniable. They do sell our "private" data, they do foster bad behaviors in humans. They monopolized whole industries and cemented bad ideas everywhere.
But if we would assess them overall - they indeed has changed the world for the better (in my opinion). The communication benefits provided by them to humanity is immense. Nokia's slogan - "connecting people" is the important thing, which force accelerated a lot of things on the planet.
Yeah, maybe in some other timeline different companies may have done it better, but we are not debating hypothetical, we just observe what has already happened.
Facebook is the only social media company in “FAANG”. Amazon, Apple, Netflix and Google have, I would argue, materially changed our lives for the better. They created the smartphones that are now ubiquitous and that opened up a whole marketplace of app based tech. They literally created cloud computing which has allowed more companies to focus on product ideas and get off the ground quickly. E-commerce (disrupting retail), streaming (disrupting Hollywood). Not to mention all the OSS and platform improvements that have originated at Faangs.
They have grown powerful and entities with power will often abuse it, and I would argue that regulations would be a good step in this direction. But arguing they haven’t had a positive impact on society is absurd.
Second order effects are important to consider, but the idea that the world would be better off if nobody had ever built something like Netflix or Amazon is... hard to take seriously.
Totally agree with the second order effects of incentives and milestones.
The author seems a bit overly enamored by SV though. It's really not all its cracked up to be. Stop trying to be SV. SV has produced some truly toxic companies. The world can do much better, but they wont do it by copying what works in SV. I think Canada should just experiment more. Try different things. Have the courage to forge your own path.
IMO the conclusion isn't that the scene "doesn't work" but that it's not producing a lot of "moon shots" and tends to focus on "roof shots". There is nothing inherently wrong with this strategy and it produces solid gains over time, but it's a lot harder going to accidentally create a billion dollar company. That said, Solect got acquired for 1.5B back 20 years ago, Shopify exists, it's not like there are zero Canadian unicorns, they just get produced a lot more slowly.
seems to think Canada is on track to produce a lot of unicorns in the next few years. Seems like pretty good work for a country 1/10th the size of the US.
Chinook Therapeutics
Element AI
Repare Therapeutics
Enerkem
DalCor Pharmaceuticals
Verafin
Fusion Pharmaceuticals
Stormfiser Biogas
Hootsuite
North
Element AI was acquired by ServiceNow, North was acquired by Google. Both were widely seen to be overhyped underperformers. Element was acquired for roughly the $200M it raised in financing. North also raised about $200M over its lifetime and was reportedly acquired for around $180M. Not really value creation.
Chinook Therapeutics merged with Aduro Biotech and is now headquartered in Seattle. It's publicly traded as KDNY and is worth ~831M CAD.
Hootsuite is kind of stagnant. It has been on and off being close to being worth $1B since 2014, hardly a growth story.
Verafin was purchased by NASDAQ for $2.75B. A good exit, though it took nearly 20 years to get there and now it's just another Canadian office of a US tech company.
I don't know enough about the cleantech/pharmaceutical angle, but if this list is the best we can come up with, it's far from cause for the software industry to celebrate. My feeling on articles like the one you posted is they're mostly superficial cheerleading.
Despite investing the second most into venture capital amongst all OECD countries, Canada is producing the least amount of unicorns. Not only that, of the unicorns it produces, valuation are also the lowest amongst the group (to be fair, the sample size is tiny. Plus, Canada’s unicorns are generally really new compared to that of other countries, which may have opted to stay private for a variety of reasons). For an ecosystem that is by most metrics, really well funded and really strong, the number of narwhals and unicorns that it produces is disappointing. In terms of creating billion dollars startups, Canada is ruthlessly inefficient compared to the likes of Germany, Sweden and the United Kingdom.
I’m 10 years into my career and been in Toronto the entire time. I often feel like I’m slowly wasting my talent here that would be better utilized somewhere else. Maybe Shenzen or the West coast.
I work days at a job and nights and weekends on my business. The business is doing good, it’s slowly scaling, just a long slog.
In the last 10 years I worked at around 15 different places as a contractor. I met a lot of developers and tech people in general. I get the sense that people here just don’t have the motivation or ambition for business. Maybe because house prices have shot up the last few years, or because it’s the financial capital of Canada. People just want to make money (again the house, living costs, and taxes are high) or move up the ladder. Or maybe because life is comfortable so everything moves at a slower pace.
On the technology front, growing up learning about Nortel and RIM/Blackberry, I just feel like the Innovation Ecosystem is just not here compared to
other places. Maybe it’s partially because Toronto Is just too conservative (eg. East Coast vs. West Coast mentality). There’s a lot of Fintech, Marketplace (Shopify), and SaaS Apps. Pretty much safe bets in terms of Businesses.
I think as a tech Founder part of your goal is to try to balance money generation with innovative ideation. Companies here adhere to money generation before innovative ideation, which results in “meh” businesses.
Being Asian I also feel disadvantaged. It’s like if I moved to Shenzen I would have an advantage because I’m westernized people there would value me more. But the grass is greener on the other side (aka. 996).
I think the Government protects businesses too much vs in the States. Seeing how there’s so many monopolies it’s hard for the small startups to rise up. Look at the telco monopolies and how verizon gets blocked into coming to Canada. Or how the marijuana LPs get a huge head start before the micro craft growers can enter, and you still need a bunch of license to grow and distribute.
It’s a comfortable life here though. I’m mainly here because of family.
My last point is that there is a big problem with startups being acquired by US companies. Tim Hortons got bought out by BK, North got bought out by Google. When I first started, this notable design company behind Medium, Teehan+Lax got bought out by Facebook.
Also, I think North got propped up by the tech media here even though their product was never good. v2 showed promise though, maybe they just burned too much VC/Angel/Grant money so they had to sell to Google.
>My last point is that there is a big problem with startups being acquired by US companies. Tim Hortons got bought out by BK, North got bought out by Google. When I first started, this notable design company behind Medium, Teehan+Lax got bought out by Facebook.
Basically this. US tech companies are sitting on such stacks of cash seeking for avenues to expand in line with the others that most Canadian or European companies that might make it big and join them just get bought out.
The alternative is not selling out and making that money in the long term which doesn't seem likely when instead of buying in that big company just forces itself into the market with it's cash and clout to destroy your margins.
Oh and then there's the success-stories that don't get bought out but just move to san francisco for the infrastructure or money and partnerships like gitlab, etc
Without some kind of protectionism on this front it won't change either.
I really hope Shopify succeeds and there are more successful companies like it that emerge from here. Ecobee is another Canadian startup that seems to be doing good
I read somewhere that the sale price of Canadian companies to US companies notoriously low.
That's true. Toronto is a lot like Chicago, where we have the infrastructure and the money to be great, but there just isn't that same drive that SF and NYC have.
One thing to note is that I think the parent company for Tim Horton's is now based in Toronto, albeit majority owned by a Brazilian company.
Just checked. Restaurant Brands International which also owns Popeyes, Burger King. Is majority owned by 3g capital (the brazilian company at ~30%). Famous activist investor Bill Ackmans fund owns a smaller chunk!
If you wanted to summarize that uncanny Canadian quality about television, movies, and lately startups, it's that they are the artifacts of a mandate, which is usually a condition of some kind of institutional funding, like SREDs, but also a bunch of other vehicles. The finite game is that a lot of capital and incentives come from agencies who have government mandates, which gives everything a certain tint.
So glad to read this. The author wrote a story some months ago about the reason SV angel works is because it's part of the social signalling for wealthy people. You make money, you show you can do it again, and that's what makes you a player. In Toronto, it's different.There are excellent global tech companies in Canada (Ubisoft, EcoBee, Shopify, Pornhub, etc.), but like everywhere, excellence is exceptional.
It's the "why is this weird? Oh, because they had to write around this condition of their granting agency." The US has tons of public funding as well, but much of it is defence driven, which has more general reusable business applicability than say, "culture," driven. Not sure what the solutions are, but something we should put words to as that weirdness has been a ceiling on growth and opportunity here for a couple of decades.
Building a successful startup is hard. Even a software startup. You don’t just need a few engineers who know what they’re doing. You need designers, product managers, data analysts, marketeers, PR, some sales people maybe, finance folk, people ops, and maybe even a lawyer or two who understands tech. On top of that, you need people who are capable of bringing it all together and operate different orgs as a real tech company should, ie managers.
If you have any hope of succeeding, you need to eventually fill all those positions with experienced hires. Where are all the experienced tech workers? They’re in the already established tech hubs. How do you get those experienced tech workers to move to your aspiring tech hub? I don’t know, but certainly not with lower salaries and skimpy benefits. I don’t think I would leave SF to work at a startup in Toronto, or, let’s say Houston, where I couldn’t be confident that the company would be able to fill all the other roles it needs to to succeed.
This could've just as easily been written about the Phoenix metro area. Phoenix is the 5th largest population center in the US, barely now beating Philly, and while we've had a handful of few dozen small or medium successes (and a very small handful of big ones), our startup scene is... mediocre at best. The good vs. bad angels thing is a factor: we have no REAL good angels to speak of. (Happy to be corrected here.) No one is in the game for the game's sake. And our bad angels are even few and far in between. There are a handful of VCs, family offices, and such, but they usually want lower risk, post-revenue opportunities. There are one or two "angel" groups, but they take forever to stroke a check and it's an ordeal that's discouraging and not a lot of options.
Instead, we have a lot of SF (and other prominent geo) companies moving their ops here because we have lower cost of living and lower tax rates (though our top bracket just took a big step up due to 208) and a decent talent pool.
And while there have been a few incubators and such and there's a feel good startup community in YesPHX, there isn't any real circulating _money_ here. The uber wealth in this state is concentrated in old money forms like real estate and healthcare and conservative family offices and Bruce Halle's tire money and whatever the hell Bob Parsons is up to, but we lack that interconnected network of IPO-30-and-40-something-millionaires-willing-to-throw-down. We don't have anything resembling that.
From what I've heard, SLC is doing better on this front and beating us at a game we should be winning, but no one stays here after they make success, no one rich enough to matter is willing to splash out any real money themselves, and it ends up being a self-fulfilling, far too conservative environment for startup investment.
That being said, there are definitely some great startups still trying to make a go of it here. And per Gregslist & Crunchbase, we have over 300 startups here, with over 100 of them VC funded. And you'll see successes come out of here: InfusionSoft, CampusLogic, and sure a bunch of others... but nothing quite like a mega IPO, and nothing that feeds enough capital back into a huge pool of newly minted moneyed people ready to pay it forward into the next cohort. That ecosystem is damn hard to build up, it turns out.
The Canadian startup bureaucracy is real. I find it kind of funny that the main requirement for IRAP funding is that you don't actually need the money.
It's extremely frustrating when you see a punt like Element AI get 20 million from the government, despite not having any product direction or seemingly any idea what to do with that money. It feels like people are rewarded for navigating the bureaucracy rather than actual startup success.
Companies like Myant which look so innovative but haven’t produced anything consumer related that I can purchase.
Also startups here (such as ElementAI) tend to screw over their employees with their stock options. I feel like here you get all the bells and whistles working at startups without the potential exit rewards - except for Shopify of course, their employees must all be super happy :)
Bah, this reads like a screed. The author wants Canada to be like the US, but they are fundamentally different countries with fundamentally different ethos.
The motto of the US govt. is “Life, Liberty and the pursuit of happiness.” Contrast that to the Canadian motto of “Peace, order and good government.” The rest flows from this difference in perspectives.
As for Montreal being a tech hub? Blech. The city is covertly racist to anyone who is not French Canadian. Death by a thousand cuts.
One exception is that Canadian talent can migrate to US with very little friction (both immigration wise and culture wise) but you can't do it from many other countries. For many valid reason someone talented living in China, Japan, South Korea may not end up moving to US, instead set up companies in their home country.
1) Although it may be impossible ... you might need 'more data' to prove your point and
2) "SR&ED forces you to play finite games, because it forces you to articulate what you’re spending this money on. And so you have to justify, at the very least, what problem you are solving and what specific steps you are taking to solve it. You enter the world of problem definition, where building your startup becomes Serious Work, with official time sheets and government forms. "
I think is just straight up wrong.
Not only is focusing in the problem just fine, it's actually probably a healthy thing.
The 'real answer' to these credits is that they are probably not needed, a 'good startup' should just be able to fund itself.
But the fact that forms and some degree of problem statement are required is not the problem.
Infinite growth is a delusion. Who said that behaving like a tumor is the best path for a company? Especially when we complain all the time about colossal corporations being more powerful than nations. That's what you get with infinite growth: monopolies, too-big-to-fail companies, etc.
One thing this article seems to miss is that the tech scene in Canada isn't the same as the tech scene in America because Canadian capitalism and ideals are vastly different than Americas. I'm a 6th generation Canadian who left and went to NYC to build tech companies, much to the dismay of my parents who continually asked "why are you so interested in getting above everyone else?". While I agree with a lot of what the author said, I think that the Canadian tech scene doesn't jive yet because Canadians haven't really embraced ruthless capitalism fully.
> If Montreal weren’t in Quebec, it would be an unstoppable startup scene.
I'm really puzzled by that statement. I don't see Quebec as having anything particularly different from other provinces that is harmful to startups. French? Everybody in Montreal speaks English anyway, and developing i18n software is super-trivial if you do it from the start; not something that would impact startup velocity in any meaningful way.
Or was this meant the other way around? That Quebec founders are disadvantaged in the same way that black and female founders are disadvantaged in SV?
Honestly, from what I've seen, people really are just too scared to speak French. People will pick Toronto or Vancouver over Montreal, mostly because of the language.
I haven't seen anything to suggest that Quebecois are disadvantaged, maybe except for the fact that anglo VCs will mainly try and fund anglo startups? Being bilingual is a big perk in Canada, so many from Montreal might have a leg up in that sense. But I could be wrong though.
The bit about accelerators is interesting to me. I was involved in QICSI, a Canadian startup accelerator as part of one of the startups there. I was then part of another startup from that same accelerator. Have encountered several others that have bounced from accelerator to accelerator. And it does almost seem like a very milestone and very checklist driven thing.
They all seemed to just be jumping from accelerator to accelerator. Does that happen in the USA? Do you go somewhere else after Y Combinator?
Good? Trying to be like SV and push Canada in that direction is toxic. I agree salaries should be better, but they should be better across all sectors, not just technology.
Not sure if I follow this logic. Are you saying that importing SV salaries and culture will create a Dutch disease effect in the broader Canadian economy?
"In contrast, infinite games are played for the purpose of continuing to play. You do not “win” infinite games; these are activities like learning, culture, community, or any exploration with no defined set of rules nor any pre-agreed-upon conditions for completion. The point of playing is to bring new players into the game, so they can play too. You never “win”, the play just gets more and more rewarding."
This is a good take in my opinion and generalizes to any endeavor of creation. You can't plan that. Only when you have figured everything out can you move into a production mode. In game dev, this is informally known as Czerny's method. Production is a finite game but design is an infinite game. Forcing startups to work like they are in production is a good way to lol them.
I'm from Indianapolis, but currently in South Korea, where accelerator/incubator programs are funded by the government. Angel investors work in some government agency. Centrally planned and controlled "capitalism". Engineer salaries much lower than US or Canadian salaries. Yet somehow, the Republic of Samsung/Hyundai keeps churning.
Honestly, you'll be fine. As long as you don't live on Granville in Vancouver, or Front street in Toronto, housing prices are too bad, and incomes aren't too low.
I thought this was somehow about gamification UX or actual game design or something, but the actual article title is “Why the Canadian Tech Scene Doesn’t Work”, which is more informative to me, at least.
I try to be charitable when I critique an article, so Alex please don't take this comment as a personal attack. I appreciate your writing of this article and your efforts to improve Canada. There are some truths in your article and an interesting perspective on the cascading feedback loops, which I think has merit, but there are some factual errors here that I think should be addressed.
> The problem with SR&ED credits, honestly through no fault of their own, is that you have to say what you’re doing with them.
That's not true. The SR&ED program is retrospective. It's an earned grant. If your company does real scientific or technological research you get a portion of the salaries and overhead back after you already did the research. And a small portion of consultant or contractor fees as well.
It's true that you can have your project span multiple years, but at the end of each year a new report is written with the chief technical and scientific uncertainties that were encountered and how they were addressed. I've written multiple, funded claims for my own business and for others with Paul Vice from GetGrants in Toronto. None of my claims to date have been rejected or failed to survive an audit. It pays to have professional help with these so you don't waste time doing unnecessary, distracting work. They can be assembled by the natural exhaust of real research, like Git commit logs or project plans.
> To be clear: I am not saying there are no individual success stories of Canadian startups, or that there are no good angel investors or VCs here, or that there are no individual instances of things going right.
Well, you kinda are though. Most American companies don't raise rounds in 72 hours. Even ones that go through YC sometimes fail to raise for months. It's true that it's slower here, but there are some good angels like Andrew Peek or David Crow, both of whom have invested in a company of mine. One private angel invested $50k in less than a day of thinking about it.
Also, on the topic of individual success stories: We have RIM, Shopify, and plenty of successful financial services startups. We're one tenth the size of America, we're not going to be unleashing Facebooks or Googles every couple years.
> Including salaries, which is helpful if you’re staffing entry level positions but a huge problem when you’re trying to recruit experienced managers & senior talent.
I completely agree. But there is a reason why salaries are lower here in Canada. Most of our workers don't work as hard and they don't have to worry about healthcare costs. There is less of a culture of brashness here and, subsequently, our startup scene looks different. We make less, true, but we see our families more. I'd rather have it this way, and if you're really good smart companies pay out big anyway.
Anyway, thanks for writing the article I hope you take these comments well.
> Most of our workers don't work as hard and they don't have to worry about healthcare costs.
I appreciate that you wrote such an otherwise thoughtful post. But as a founder, I think this may be a blind spot for you.
Most SV tech employees also don't have to worry about healthcare costs in any meaningful way. At every company I've worked at in the Bay Area, I've only done more than the standard 40 hours/week when I was chasing a big promotion. Or doing something I was especially excited about. And I've done OK in my career so far - I'm quite satisfied.
Whereas the salaries at most startup-y tech companies are laughable in Toronto or Vancouver compared to the housing costs (one Vancouver company seriously quoted me CAD 80k for a frontend role slinging React code 2 years ago).
The big companies in the Bay Area pay 3x the average Toronto startup. I promise you they aren't working 120 hour weeks, and I'm sure your employees aren't working 13 hour weeks.
Well, I appreciate the response. I'm not saying that the difference is huge, just that I've noticed it. The Americans I've worked with seem to get a little bit more done, generally speaking, than the Canadians. Not enough to make up for the difference, but still. And of course we're talking about distributions of productivity here. One of the fastest developers I've ever worked with was French Canadian.
I know Americans that worry about healthcare costs even if they have healthcare insurance, but now that I think of it, very few are from California so perhaps the laws or norms are different there.
Also, the big companies in the Bay Area aren't really what I'm talking about. Google tried to recruit me almost a decade ago and I turned them down. I don't want to be a cog in a machine that big. I'm comparing your typical 50 person startup to a typical 50 person startup in Canada. The salaries are about the same, but in their respective currencies. I could make $200k USD in America or I could make $200 CAD in Toronto. Shrug.
> I'm comparing your typical 50 person startup to a typical 50 person startup in Canada...I could make $200 CAD in Toronto. Shrug.
It's been a couple of years since I last looked. But I don't know any 50-person startup in Toronto that pays that much. If you know specific names... :-)
I mean, I'm sorry to break this to you but if you're good at data science or complex backend web development it's pretty common. I was making around $225k CAD a year (straight cash, not counting options) at 500px a decade ago when it was around 35 people. Now nominally I was Chief Data Scientist and it included some IP from my two person startup they acquired, but it was an aquihire and everyone knew it. I had just turned 27.
Look for startups funded by pro investors with deep pockets that operate in Canada and negotiate with a willingness to walk away.
No worries, I'm under no illusions my skill is anywhere near yours. But I think it's fair to say you'd make even more in the US. Not just <same number in USD> more. Most people would. I do as well, even though I'm nowhere near your level.
I have absolutely nothing to back up this statement, but I wonder if the problem with the Canadian tech scene is that, from a societal level, Canadians are more conservative and risk adverse.
Interesting analysis of the differences between the two scenes, but I'm not convinced of Danco's assertion that bad angels keep away the good. It seems equally possible that the attractive draw for angels (and all VCs) of a red-hot scene like SF is simply too powerful, so all the "good" angels flock there rather than waste their time in a less productive market.
The same phenomenon he describes where liquidity events propagate the cycle of early movers becoming angels could easily take place on a larger scale where an exodus of "good" angels from SF seeking value in other markets disseminates this model and evens it out a bit. This could also dampen some of the externalities created by this feverish form of capitalism i.e. ludicrous real estate prices, crushing income inequality, etc.
Of course this would take some rather weighty exogenous event taking place to make either SF or the US unattractive locations to start a business.
I have a contrarian take. The Canadian tech scene is limited not by the Captains of Canada’s industry (although it might be a factor, but not the major one) but by the simple fact that Canada’s economy and population are much smaller than the US and importantly, Canada doesn’t throw insane amounts of Cash into its Defense industry. They also cannot deficit spend forever like the US can because of the USD. I would wager these structural issues are likely to be more consequential than debating over compensation fixation.
This is poorly written. I lost interest a minute into the article and skimmed the rest of it and didn't take much from it. The blob before the first subheading just repeats that the Toronto scene is not a good one – this could have taken just 3-5 sentences, and not 5 paragraphs. The part about good/bad angels, finite/infinite game typically would have been interesting to me but I was asleep by then. I recommend putting a summary in the first blob, and/or making the subheadings more informative e.g. instead of "Angels" "Deal Speed and Founder Leverage", should say "Angels are Shortsighted and Play Finite Games" and "Deal Speeds are Magnitudes Slower".
It is all about talent retention. Up until early 2000, Canadian tech salaries at least somewhat kept pace with US salaries, albeit 20-30% lower.
After the dot com crash, however, for some god-forsaken reason, the surviving tech companies decided that keeping salaries low was the new path to profitability. Every year the HR departments in Vancouver and Toronto do a hush-hush survey among each other and fix their salaries to the exact same level - maybe 2% but usually closer to 1% higher than the previous year.
The result of 20 years of this is that Canadian tech salaries have fallen ridiculously behind those of US companies, resulting in a massive brain drain to the south.
Now that Amazon, Microsoft and Google are setting up shop right here in Canada, the talent drain away from Canadian companies is only accelerating.
I have no idea what it will take to make companies realize that long term success requires retention of top talent and that that in turn requires paying competitive salaries.