If you were to ask business executives to name the great centres of entrepreneurship, few of them—even the Canadians—would mention Canada. Yet the reality, contends venture capitalist and technology entrepreneur Leonard Brody, is that this country punches far above its weight in breeding groundbreaking companies, especially in the tech and Web sectors.
Brody, who was a senior executive at Onvia Canada, Canada’s fastest-growing startup in PROFIT magazine’s 2000 listing, is now a Vancouver-based venture partner at GrowthWorks Capital, one of Canada’s largest national technology funds. He co-wrote the recently published Everything I Needed to Know About Business¦I Learned From a Canadian, which profiles 16 Canadian entrepreneurs. In an interview with PROFIT senior editor Jim McElgunn, Brody makes the case for considering Canada one of the world’s centres of entrepreneurial excellence.
PROFIT: Just how good are Canadians as entrepreneurs?
If you look at the Canadians who’ve gone out and founded world-class technology companies, very few countries in the world are having as much of an impact on the technology business on a per-capita basis as Canada. Look at the size of the companies that have come out of here. Look at every subsector of technology and you haven’t got a Canadian company that’s doing well; rather, you’ve got a Canadian company that’s at the pole position in that sector.
Look at the Internet: Yahoo! [co-founded by a Canadian], eBay [co-founded by a Canadian], Flickr, InnerSell, Ice.com, Askmen.com. Look at wireless: Research in Motion, Sierra Wireless. Look at software: Akamai, Red Hat, Crystal Decisions. They’re not just names that people say, “Oh yeah, I’ve heard about them.” They’re real players.
What evidence do you have that Canadians are highly entrepreneurial?
There’s a ton of data. We have twice the percentage of people self-employed as the U.S. does: 20% vs. 10%. That is an important facet for Canadians to accept, that we are double the [relative] size of the entrepreneurial community south of the border. Look at The World Competitiveness Yearbook ranking Canada as the fifth-most-competitive economy in the world, and The Economist rating us as the most competitive economy globally between now and 2009. We are second in the world in quality of management practices, according to The World Competitiveness Yearbook. Canadian VCs always bellyache about how we’re not good managers, but the WCY sees that differently.
What’s driving the creation of these new companies?
One of the factors is that a family of first-generation entrepreneur success stories are now breeding alumni who are starting their own companies. Look at what’s happened in Vancouver with Electronic Arts, the world’s biggest video-game developer. A huge video-game cluster has developed as all these former EA employees have set up great companies. And because of RIM, you’ve got great companies coming out of Waterloo, such as Descartes and Sandvine.
What are typical Canadian strengths as entrepreneurs?
First, we have an innovation fabric. Our geography forced us into technology and R&D right away. Very few countries have the roots of their nationhood tied inextricably to technology, innovation and entrepreneurship. At almost every step in our history, Canadians were early adopters. We were always at the height of the adoption curve for satellite, cable, radio, television, broadband. Whenever the nation needed to use technology to unite itself, we did it.
Second, there’s respect. One of the big issues in business is trust. When you walk into a room and say you’re a Canadian, that brand means something. It means you’re trustworthy, it means you’re reliable, it means you have sustainability. And those things are critical for entrepreneurs when they’re building companies.
Another factor is the ability to see the third period. Americans tend to focus very much on the first period, whereas Canadians, while understanding the first period, are well-trained to understand sustainability. They want to understand, “Where’s this going to be in 15 years? What’s the road going to look like in 15 years?”
So Canadians design companies that are built to last?
That’s exactly right. You can see that in the much lower rates of bankruptcy here than in the U.S. for early-stage companies. In the dot-com era, for instance, not as many Canadians were burned because of that view of the long game. And that goes back to how we were raised. We grew up with very sustainable models of business. Every market had a long-standing telco, every market had a cable company, a couple of banks; we have The Bay.
Where do we need to improve?
We need to overcome our risk aversion. Canadians are not yet of the school of thought that failure is a badge of honour, not of shame. Entrepreneurs do not become great until they fail. Rupert Murdoch went bankrupt seven times. Failure is something we need to embrace. If we don’t start accepting the importance of failure as a lesson rather than a badge of shame, we are going to lose out on opportunities.
Second, we need to work on our marketing prowess. We are not good marketers. We need to get better. The very fact that we need to have a conversation about whether Canadians are good entrepreneurs says something—we wouldn’t need to have that in the U.S.
Finally, we need to become more venturesome. Canadians need to get out of this “lord of the middle kingdom” mentality. We need to start taking some serious swings for the fences. If we match that with a greater tolerance for risk and our ability to look at that third period and sustainability, we’ll have a great mix for future growth for this country.