By January 4, 2018

Lessons learned trying to build a profitable company using only Canadian tech

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In July 2017, I launched The Great Canadian Tech Experiment. Driving my experiment was a simple question: can I build a profitable company using only Canadian technology?

In Canada, we often take a self-deprecating posture under the guise of ‘Canadianness’. We don’t talk about our wins, and console each other for losses instead of learning from them.

In spite of that, Canadian technology is some of the best in the world. Toronto, for instance, is the fastest-growing, and second cheapest tech market in North America.

Even with all this growth in Canadian tech, I wasn’t sure the task was possible. But in a world where one could easily build a profitable company using only American technology or only European technology, I wanted to give it a go.

Six months later, I have built a profitable consulting business, powered mostly – but not entirely – by Canadian technology.

As a freelancer with BetaKit, I’ve interviewed over 60 entrepreneurs. As a two-time founder, I’ve attended over 150 tech events since I started my first company in July 2015. In the last six months, though, I’ve come to see the underbelly of Canadian tech.

Some things that bugged me during my experiment

Blame Canada

When I first got started with the project, I noticed how some speakers at events talked publicly about how Canadian tech is the best in the world, but privately responded to my experiment with incredulity.

They’d ask me if we really needed a Canadian company in a certain sector because there was already a global market leader. They’d follow up by saying they buy the “best” tech, not just “Canadian” tech.

Suffice it to say, it was surprising to see the difference between the public conviction in Canadian tech and the private doubts.

Forcing revenue from the wrong people

When I researched baseline Canadian corporate tech — CRM, email marketing, accounting, etc. — I found an annoying commonality: I had to pay before I got anything. This wasn’t the case with many American tech companies.

Now, bear with me. Obviously, companies need revenue and customers should pay for the value they receive, but I was experimenting. As a bootstrapped startup, I needed technology that would allow me to experiment and only pay when I was successful.

Looking at companies that offer a ‘freemium’ option, I noticed those companies also offer full-featured enterprise plays. They have sales teams targeting $20,000 to $200,000-plus annual contracts. However, they also have small, half-feature plays that are free or incredibly cheap for small businesses or experimenters.

It seemed as though Canadian tech companies focused on monetizing everyone instead of getting small folks in the door to build a community of prospects and close larger eventual deals.

Little investment

Thinking back to tech events I’d attended, I remember hearing the rallying cry from speakers that Canadian investors don’t take enough risks. They don’t write the small cheques that turn into the big cheques.

In order to succeed, we need to wholeheartedly believe that we are the place to be for 21st century tech innovation.

The part that confused me is that many of the people who complained about Canadians not writing enough small cheques are wealthy enough themselves to write small cheques.

Investors often also complain that Canadian startups are too early-stage. So, to wealthier Canadians who talk on stage about investors not writing small cheques: use your money and your influence to help those startups grow.

Testing, testing

For the Canadians who do write cheques — and there are plenty — there is often a push to get into the US market as soon as possible.

I don’t blame them for pushing this plan. The US market is ten times bigger than Canada and far more consumerist.

While Canada is not your startup’s growth market, it can be your niche test market with global similarities.

On the other side, Canadian tech consumers: be more willing to be the guinea pig. We take risks on American tech all the time without knowing it; we should do the same to support the tech in our own backyard.

Some things that make me hopeful about Canadian tech

Diversity is our strength

The Canadian technology ecosystem really does care about diversity.

I don’t just mean lip service, although I’d argue we talk a better game than we play currently. I mean companies and individuals showing up to support new organizations like VentureOut and Lesbians Who Tech Toronto, or growing organizations like Ladies (Canada) Learning Code.

The support of social impact apps like Helping Hands makes me hopeful because the research is clear that diversity-built products sell better and solve more problems.

Building up Canadian tech requires more than just tweeting or emphasizing buzzwords from a stage.
 

This movement is also nationwide. Tech community powerhouse Vivian Chan at Wavefront AC works to promote diversity in Vancouver startups. Ottawa-based Versature CMO Anastasia Valentine advocates heavily for diversity in the Ottawa tech community. Groups also exist around the country to promote diversity and inclusion in tech, including the quickly growing QueerTechMTL.

Where Silicon Valley has (arguably) failed, Canada can thrive.

A global village

When I told people that I lived in New York City for a brief period before choosing Toronto as my home because of the tech ecosystem here, I was met with shock and disbelief. People could not fathom that I had the chance to live in NYC but chose Toronto. I promise that mentality does not exist the other way around.

Those tides are, thankfully, turning.

Toronto Mayor John Tory has been a global advocate for Toronto tech, inviting the world to do business with us and inviting expats to return home. Startups of all sizes, such as the smaller AccessNow app to the hugely funded Element.AI and League, are explicitly global in their approach and mission but Canadian in their identity.

We used to think globally only as a market we are required to sell to. We now have begun to think globally in terms of our place in the global market.

What Canadian tech can do

Be like Canadian Idol

The Canadian tech community is strong and growing, but we have obstacles to overcome.

First and foremost, everyone in Canada should take pride in being the one who “discovered” someone who adds to our community. The community should also hold the “discoverer” in high regard.

This is how you get early-stage mentorship, sponsorship, and small-time investment. The would-be mentor/sponsor/investor stands to gain in their own personal brand even if the investment goes south, so they are more willing to take the risk. It also, you know, helps grow the ecosystem.

To anyone who thinks they have an entrepreneur with the creativity and tenacity to make it happen, yell it from the rooftops. Talk them up and invest your money (if you have it) and social capital to get them invites to events. Help them get further mentorship. Do what you can to push them to the next level.

Put your neck on the line

I implore wealthier Canadians (and Canadian tech leaders) to open their wallets a bit more and invest small cheques at very early stages, based on founder potential.

Not many Canadians can write a bunch of $20,000, $50,000, or $100,000 cheques, and that’s okay. Even the occasional $5,000 cheque can make a huge impact when many investors across the country do it at the early stages.

Invite the world to Canada

In the 150-plus tech events I’ve attended, I’ve probably seen over 1,000 speakers. I would hazard less than five percent of those were not Canadians or not immigrants who have lived in Canada for a long time.

First things first: we have brilliant people here and I am so happy to see local celebrities popping up.

However, we can’t be afraid to invite international speakers to our events and conferences. It shows them what we’re up to, gives us new perspectives, and makes sure our community is on their map.

Build the community you want to see

Canadian entrepreneurs should say they are from Canada as a statement of fact. Owning our identity means that we can bring people into that identity.

San Francisco and NYC, for example, are two of the most expensive cities in the world. However, locals will still try to convince you to move there because they believe it’s the best place in the world.

Heck, Toronto and Vancouver do San Francisco’s branding for them half the time (‘Silicon Valley North’?).

We have lengthy debates in the Toronto tech community about whether you should take relatively higher earnings in Toronto (because of our vastly lower living expenses vis a vis only slightly lower salaries) or relatively greater learning experiences in San Francisco (because of access to many of the top founders and investors in the world).

The sad part is many Canadian tech leaders advocate for the latter.

The sadder part is that the Canadian tech leaders who advocate for the latter are the same people trying to hire top talent in Canadian cities and complaining that they can’t find any.

So in that vein, I challenge the Canadian tech community to do its own recruiting.

Take all the benefits we use to hawk our goods to Silicon Valley — top talent, amazing schools, and generous government support for tech innovation — and use that to draw more brilliant people into Toronto and other Canadian cities, or draw out entrepreneurial passion in locals who are already here.

Believe in the vision

Building up Canadian tech requires more than just tweeting or emphasizing buzzwords from a stage. It requires a vision of what the world will look like when we’re done, combined with taking actions towards that vision.

In order to succeed, we need to wholeheartedly believe that we are the place to be for 21st century tech innovation, and then we have to go do whatever we can to make it better every day.

Perhaps most importantly, though, we need to invite anyone into our ecosystem who believes in our potential. There are a million ways to work in the tech ecosystem, but none will succeed with a belief that we are less-than.

Photo via Unsplash

Stefan Palios

Stefan Palios

Stefan is a Nova Scotia-based entrepreneur and writer passionate about the people behind tech. He's interviewed over 200 entrepreneurs on topics like management, scaling, diversity and inclusion, and sharing their personal stories. Follow him on Twitter @stefanpalios.

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