As 2019 begins, many entrepreneurs are hopeful it will be a year of growth and expansion. Despite showing some stagnation towards the end of 2018, the Canadian tech industry continues to flourish with newly minted venture funds and equity rounds for startups.
The last year was good to Canadian tech with several funding rounds topping nine figures. When it comes to established brands setting up shop in Canada, 2018 was a bit of a weird year. In November, it was finally revealed that Amazon would skip Toronto as the choice for their second headquarters. This came after a year-long search and dozens of think pieces, studies and comprehensive research on how the move might affect the Canadian economy. Leaders in the tech scene reacted with differing views and there was no shortage of sound bites to pick up on.
“Putting up walls and keeping people out has never been Canada’s strategy,” says Sheldon Levy, CEO of NEXT Canada, in regards to the Amazon decision. “I think Canada’s strategy is making people feel that this is a place for people to grow. That said, the wealth of our country will not be made by Amazon coming here. It might create jobs, but the wealth is having great Canadian companies become the Amazons of the future.”
But that idea of creating the next Amazon could be harder than ever to pull off. As foreign multinationals enter the Canadian economy, they bring advantages in the form of a growing economy, but they also exacerbate barriers every entrepreneur has to face. One of the biggest challenges is talent (and lack thereof) to scale companies, and it is a problem that will manifest itself across all levels of business in 2019. NEXT Canada recently released a survey that asked their alumni—a list that includes companies like North, Setter, Intuitive, inkbox, Bridgit and more—about what the talent landscape will be over the next year.
Nearly half of the respondents (48 per cent) believed large foreign tech companies moving into Canada will make it harder for their companies to hire local talent. Despite the news of Amazon passing Toronto over, the last year featured large investments from leading international tech companies into the country. Below are just some of the stories revolving around international tech coming to Canada in 2018.
- Uber invests $200 million into their Canadian presence with the announcement of a new engineering hub along with added resources into their automated driving unit already that is already established in the city.
- Microsoft plans $570 million of investments through relocating their Toronto headquarters, creating 1,000 new positions, and investing in other areas such as the Cascadia innovation corridor.
- NVIDIA announced an AI research centre and Intel announced a brand new graphics chip engineering lab.
- Accenture unveiled a new innovation hub in Toronto, adding 800 highly-skilled jobs.
- Amazon expanded their Vancouver hub with 3,000 new jobs.
- Instacart, Samsung, and Pinterest also announced plans to massively expand their presence in Canada.
It has no doubt been a good year in terms of raising Canada’s notoriety as a tech destination, and some of that can even be traced to the pageantry surrounding the Amazon bid. Toronto Mayor John Tory said that the city’s Amazon HQ2 bid was downloaded over 15,000 times around the world, so the bid’s deep dives into transit, livability and available office space may have sealed the deal for large international companies to come to the city.
As nice as having new offices from Microsoft and Accenture sounds, their decision to hire thousands of highly-skilled workers creates headaches for local companies. Levy points out that this response from the NEXT Canada network is nothing new.
“It doesn’t shock me in the sense that it’s a feeling, but I’ve never quantified it in that way,” he says. “Knowing the sentiment exists, those numbers don’t surprise me at all. It’s more of an issue around producing enough talent to meet all of the demands.”
There are a few ways to dissect problems surrounding talent. One person may look at a Canadian talent shortage from a brain drain perspective and conclude that if the usual STEM graduates who are heading down to the Valley to work for Uber or to Seattle for Microsoft instead stay here to work for those brands’ Canadian locations, it’s still a win. On top of that, Canada is still doing a lot of great work when it comes to bringing in talented immigrants who can fit into high-skill jobs, and Canadian cities are becoming increasingly attractive for outside talent.
This is all a band-aid though, at least according to Levy.
“I don’t think its a brain drain problem. It’s the growth of a need for a specific type of employee, and we’re not graduating enough or educating enough who are ready to meet the needs of the economy at a running start,” he says. ” We need universities and colleges to be more in tune with what the needs of industry are. If industry wants a young person to be good to go on day one, they need to help post-secondaries with meaningful learning opportunities.”
Levy understands, perhaps more than anyone, just how the education system can better intersect with serving the needs of entrepreneurs. He served as the president of Ryerson University for 10 years and has held VP roles at York University, the University of Toronto, and UOIT. Levy was also one of the driving forces behind opening Ryerson’s DMZ.
With this kind of intersectional awareness, Levy believes the root of fixing a talent problem is not achieved by getting mad at the thought of international companies moving into Canada. Instead, it is an overhaul of how educational frameworks treat young innovators and learners.
“The distance between the success of the economy and the success of the education system is zero,” says Levy. “As long as we use the same paradigms we’ve used to form an economy that was made up of tangibles, and we try to take all of that and turn it into an intangible economy with data and IP at the centre, we will fail. The education system needs as much disruption as the business world.”
This means less of a reliance on fundamental digital skills and more of a balanced approach to entrepreneurship. New businesses most often need talented sales and marketing folks to meaningfully scale rather than a deluge of coders. Levy compares this old attitude to believing modern marketing is the same thing as being a used-car salesman, which is flawed and wildly-out-of-place thinking for the current innovation landscape.
“Marketing is using deep analytics and tools like Shopify. A marketer is someone who’s very tech savvy with lots of intangibles,” says Levy. “But they get caught in a tangible world and seem like that used-car salesman. Then when government hears a need for STEM talent, they jump to engineers and coding. Digital skills are critical, but they span far beyond being a python coder.”
The real difficulty is that there is no comprehensive way to address a problem like this. It might take a complete overhaul of how current post-secondary institutions function, where instead of emphasizing theory and coursework, there is more weight placed on real workplace experience. Or it might take programs that emphasize continuous learning and micro-credentialing. In reality, it will take a major shift in learning attitudes in order to truly prepare new workers to be ready to hit the ground running and scale businesses rapidly.
“If you think you can solve this problem without a change to post-secondary education and the emphasis there, you can’t,” says Levy. “If you think you can solve it on the margin, you’re mistaken. You can improve it, but you can’t fix it.”