Minister Bains and Shopify CEO Tobias Lütke say “all hands on deck” as digital industries report drops

Tobias Lütke and Navdeep Bains

Shopify CEO Tobias Lütke now knows how the machinery of government operates.

That’s according to ISED Minister Navdeep Bains, who participated in a fireside conversation with the startup founder at Elevate on Tuesday.

The chat was moderated by Melissa Sariffodeen, co-founder and CEO of Canada Learning Code, and was ostensibly an overview of the federal government’s Digital Industries Table report, of which Lütke was named chair in November 2017.

“I do recall the Prime Minister asking me about this,” Bains said. “I said I would love to have 10 Shopify’s, 20 Shopify’s, 30 Shopify’s.”
 

The interim report states that Canada’s ICT sector (Information and Communication Technology) accounted for $42.7 billion of Canada’s GDP (2.5 percent of total) in 2016. However, 85 percent of Canada’s ICT firms employ fewer than 10 people, with large firms accounting for more than 34 percent of employment while only comprising 0.2 percent of the sector.

Both Bains and Lütke agreed that the goal of the report was to set the long-term winning conditions for the sector.

“I do recall the Prime Minister asking me about this,” Bains said. “I said I would love to have 10 Shopify’s, 20 Shopify’s, 30 Shopify’s.”

“I think we need to have a long-term vision,” Bains continued. “We recognize in government its really about a partnership model. The idea behind this comprehensive policy is that it has got to be led by business, but the government sets those conditions for success.”

The interim report sets four priority themes to create those winning conditions. One is to foster the growth of what Lütke called “freight-train companies” focused on growing beyond the $10-50 million annual revenue stage. The founder noted that companies at this stage have previously been unsupported by government innovation programs, and often choose to sell rather than scale.

“What we need is a couple more anchor companies, because they really have an outsized impact on the ecosystem,” Lütke said.

Bains noted that Canada is behind comparative to global tech when it comes to intellectual property, stating that 9 percent of Canadian companies own IP, with only 10 percent having an IP strategy.

“IP is so critical, we’re behind China and the US and so many countries,” Minister Bains said, noting that “it’s really the small businesses” that struggle, while “the larger businesses are generally pretty good on IP.”

Both Bains and Lütke also noted the need to grow Canada’s digital talent base, both in terms of digital literacy and access to digital services. Lütke spoke to creating significantly more computer science engineers, and referenced his company’s Dev Degree program, which embeds students directly into development teams at Shopify through a paid internship opportunity that culminates with an Honours Bachelor of Computer Science degree.

Bains, for his part, referenced Canada’s “digital divide,” stating that only 40 percent of rural Canada has access to high-speed internet. Through the CRTC, the federal government has committed more than $750 million to make broadband internet a basic service for all Canadians.

To overcome these challenges, Bains closed by arguing that the Canadian government and tech sector must work together, saying “it’s all hands on deck.”

“Our perspective is that government doesn’t have all the solutions, nor do we want all to have all the solutions.”

The Digital Industries Table interim report can be found here.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.